Entrepreneurship Vocab Flashcards
Acquisition
The purchase of a company by another, larger firm absorbs the smaller company into its operations.
Board of directors
A group of individuals elected by a firm’s shareholders and charged with overseeing, and taking legal responsibility for, the firm’s actions.
Chief Executive Officer (CEO)
The person responsible for the business’s overall performance.
Co-operative
A cooperative is an organization that is owned and controlled by the people to meet their common economic, social, and/or cultural needs and aspirations through a jointly-owned and democratically controlled business (enterprise). The people of the cooperative are those who use its products, supplies, and/or services. Profits are also often returned back to the members of the cooperative, however, cooperatives are often more focused on services for members than for investments.
Common stock
Shares whose owners usually have the last claim on the corporation’s assets (after creditors and owners of preferred stock) but who have voting rights in the firm.
Conglomerate merger
A merger of two firms in completely unrelated businesses.
Corporate governance
The relationship between shareholders, the board of directors, and other top managers in the corporation.
Divestiture
Occurs when a company sells part of its existing business operations to another company.
Employee stock ownership plan (ESOP):
When a corporation buys its stock with loaned funds and gives them to its employees. Employees “earn’’ the stock based on some condition such as seniority. Employees control the stock’s voting rights immediately, even though they may not take physical possession of the stock until specified conditions are met. This aligns the employees’ interests with those of the shareholders, as they are shareholders themselves.
Entrepreneur
A business person who accepts both the risks and the opportunities involved in creating and operating a new business venture.
Franchise
A form of business by which the owner (franchisor) of a product, service, or method obtains distribution/marketing through affiliated dealers (franchisees).
example: McDonalds
Franchising agreement
Specifies the duties and responsibilities of the franchisee and the franchiser.
Friendly takeover
An acquisition in which the management of the acquired company welcomes the firm’s buyout by another company.
General Partner
A partner who is actively involved in managing the firm and has unlimited liability.
Horizontal merger
A merger of two firms that have previously been direct competitors in the same industry.
Hostile takeover
An acquisition in which the management of the acquired company fights the firm’s buyout by another company.
Initial Public Offering (IPO):
Selling shares of stock in a company for the first time to the general investing public.
Inside directors
Members of a corporation’s board of directors who are also full-time employees of the corporation.
Limited liability
Investor liability is limited to their investments in the corporation; courts cannot touch the personal assets of investors if the corporation goes bankrupt.
Limited partner
A partner who generally does not participate actively in the business, and whose liability is limited to the amount invested in the partnership.
Merger
The union of two companies to form a single new business.
Microenterprise
An enterprise that the owner operates part-time from the home while continuing regular employment elsewhere.
Outside directors
Members of a corporation’s board of directors who are not also employees of the corporation on a day-to-day basis.
Parent corporation
A corporation that owns a subsidiary.
Partnership
A business with two or more owners who share in the operation of the firm and financial responsibility for the firm’s debts.
Preferred stock
Shares whose owners have the first claim on the corporation’s assets and profits but who usually have no voting rights in the firm.
Private corporation
A business whose stock is held by a small group of individuals and is not usually available for sale to the general public.
Public corporation
A business whose stock is widely held and available for sale to the general public.
Small business
An independently owned and managed business that does not dominate its market.
Sole proprietorship
A business owned and usually operated by one person who is responsible for all of its debts.
Spinoff
The strategy of setting up one or more corporate units as new, independent corporations. The corporation that does the spin-off is a parent corporation. (division of a business, type of divestiture)
Stock
A share of ownership in a corporation.
Stockholders/shareholders
Those who own shares of stock in a company.
Strategic alliance
An enterprise in which two or more persons or companies temporarily join forces to undertake a particular project.
Subsidiary corporation
One that is owned by another corporation.
Tender offer
An offer to buy shares made by a prospective buyer directly to a corporation’s shareholders.
Unlimited liability
Unlimited liability is when one or more business owners or partners are liable for their company’s debts and tax compliance. It is very different to a limited liability company (LLC), whose business structure is designed specifically to insulate individual partners or stakeholders from risk.
Vertical merger
A merger of two firms that have previously had a buyer-seller relationship.
Managerial Accounting
Capturing the business’s day-to-day financial activities in pursuit of an organization’s goals.
