Chapter 6: The Business Organisation Flashcards Preview

GCSE AQA Business Studies Unit 1 and Unit 2 > Chapter 6: The Business Organisation > Flashcards

Flashcards in Chapter 6: The Business Organisation Deck (20):
1

Merger

An agreement between business owners to combine two businesses owners and operate as a larger one

2

Takeover

Purchasing another business from it's owner

3

Horizontal integration

Joining two businesses in the same industry and stage of production (e.g two hairdressing business)

4

Vertical backward integration

Joining two businesses in the same industry but a different stage or production, towards the supplier (e.g a computer manufacturers takeover of a 'chip' maker)

5

Diversification

Joining two businesses in different industries (e.g an insurance company merges with a publishing business)

6

Vertical forward integration

Joining two businesses in the same industry but a different stage of production, towards the customer (e.g a farmer's takeover a butcher's shop)

7

Limited company

A business recognised as a legal unit that offers investors (shareholders) limited liability

8

Private limited company (ltd)

A company that cannot sell shares to the general public. It is not listed on the Stock Exchange

9

Public limited company (PLC)

A company able to sell shares to the general public by being listed on the Stock Exchange

10

Limited liability

Investors (shareholders) in a limited company can only lose their investment in the business if it fails; they cannot be forced to sell assets to pay off firm's debts

11

Shareholders

Part owners of a limited company - they own shares in it

12

Dividend

Payment made to shareholders from company profits - usually made annually

13

Divorce between ownership and control

When directors control public limited company and thousands of shareholders own it, but the two groups may have different objectives

14

Ethical objective

A business aim to 'do the right thing' according to the values and beliefs of managers, even if this is not the most profitable way (e.g. pay workers in low-wage countries above average rates)

15

Environmental objective

A business aim to protect the environment during its operations (e.g. to recycle waste water). This will reduce social costs

16

Social costs

The costs of business activity, including both financial and costs paid by the firm and the costs on society (e.g. factory pollution)

17

Social benefits

The benefits of a business activity, not just to the firm but to society (e.g. new jobs created by business expansion)

18

Globalisation

Increasing trend for goods to be traded internationally and or companies to locate abroad

19

Offshoring

Making products or parts of products in other countries. Services can be offshored too, as with telephone call centres moving to India

20

Multinational

A business with operations in more than one country