Unit 1, Chap 1-The need for and nature of business activity

This is a list of definitions that you need to know for Unit 1, Chapter 1.

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Preview of Unit 1, Chap 1-The need for and nature of business activity

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1. Articles of Association: concern the internal workings and control
of the business, eg; names of directors and the procedures to be
followed at meetings will be detailed.
2. De-industrialisation: The decline in the relative significance of
secondary industry that tends to occur in advance 'service'-based
3. Franchise: A business that is based upon the purchase of a
franchise licence from the franchisor. This allows the name,logo, and
products to be used. Franchise businesses have a lower failure rate
than non-franchise firms.
4. Holding Company: A holding company is the one that owns and
controls a number of seperate businesses, yet does not unite them
into one unified company.
5. Joint Venture: The setting up of a business enterprise by two or
more firms, often with a specific regional or product responsibility.
6. Limited Liabilty: Shareholders are only personally liable to those
original investment in the company in the event of business failure.
They cannot be asked to contribute more funds to an insolent
7. Memorandom of Association: A legal document required before a
business can become an incorporated company. It contains the
objectives, the amount of authorised share capital and the types of
shares to be sold.
8. Opportunity Cost: The cost of a decision expressed in terms of the
lost benefit form the next nost desired option.
9. Partnership: A legal form of business organisation in which two or
more people-the partners- trade collectively.
10. Primary Industry: Businesses that operate in industries that are
concerned with agriculture, fishing, and extraction of raw materials.
11. Private limited company: An icorporated business that is owned
by shareholders but does not have the legal right to offer shares for
sale to the public. They are often family-owned businesses.
12. Private Sector: That part of economy operated by private
individuals or privately owned businessses.
13. Privatisation: The process of selling state-owned (public sector)
businesses to the private sector.
14. Public Limited Company: An incorporated business that has a
legal right to offer shares for sale to the public. Shares of these
companies are listed on the Stock Exchange.
15. Public Sector: Comprises organisations accountable to and
controlled by the local or central government. These usually

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Secondary Industry: made up of indistries engaged in
manufacturing products or construction.
17. Sole Trader: An individual owning and operating a business on
his/her own.
18. Tertiary Industry: business activity that provides services for
consumers and other businesses.…read more


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