1. Business Organisation Key Terms
Small Business Ownership
• Sole Trader: A business owned by one person.
• Partnership: An agreement between 2-20 people to jointly run a business and to share profits and risks.
• Deed of Partnership: This is a legal document which shows how responsibilities, profits and workload are
to be shared.
• Sleeping Partner: A partner who puts in finance but does not take part in running the business.
• Unlimited Liability: Responsibility for the debts of a business extends to the owner’s personal wealth. E.g
their home and possessions could be used to pay off debts.
Large Business Ownership
• Limited Companies: A business structure which has a separate legal identity to its owners known as share-
holders.
• Memorandum of Association: The document which outlines the external information of the company.
• Limited Liability: Responsibility for debt is limited to the amount of money put into a business.
• Private Limited Company (Ltd): A company that is owned by shareholders but shares are not for sale to
the general public.
• Public Limited Company (PLC): company where shares may be sold to the general pub-
lic through the stock exchange.
• Board of Directors: Are appointed by shareholders to decide policy and run the com-
pany.
• Dividend: Payments made to shareholders from the profits of a company.
• Franchise: The right to trade under an established name.
• Franchisee: The person or organisation buying the right to operate a franchise outlet.
• Franchisor: The person or organisation selling the right to operate a franchise.
Business Organisation Key Terms
Small Business Ownership
• Sole Trader: A business owned by one person.
• Partnership: An agreement between 2-20 people to jointly run a business and to share profits and risks.
• Deed of Partnership: This is a legal document which shows how responsibilities, profits and workload are
to be shared.
• Sleeping Partner: A partner who puts in finance but does not take part in running the business.
• Unlimited Liability: Responsibility for the debts of a business extends to the owner’s personal wealth. E.g
their home and possessions could be used to pay off debts.
Large Business Ownership
• Limited Companies: A business structure which has a separate legal identity to its owners known as share-
holders.
• Memorandum of Association: The document which outlines the external information of the company.
• Limited Liability: Responsibility for debt is limited to the amount of money put into a business.
• Private Limited Company (Ltd): A company that is owned by shareholders but shares are not for sale to
the general public.
• Public Limited Company (PLC): company where shares may be sold to the general pub-
lic through the stock exchange.
• Board of Directors: Are appointed by shareholders to decide policy and run the com-
pany.
• Dividend: Payments made to shareholders from the profits of a company.
• Franchise: The right to trade under an established name.
• Franchisee: The person or organisation buying the right to operate a franchise outlet.
• Franchisor: The person or organisation selling the right to operate a franchise.

2. Business Organisation Key Terms
Growth
• Diversification: This is when a business expands by moving into new markets. This might be achieved by a
merger.
• Horizontal Integration: One firm merging with another in the same industry at the same stage of produc-
tion.
• Lateral Integration: A firm expands by moving into a smaller, but different, area of production eg. build-
ing society buys an estate agent.
• Merger: The owners of two businesses agree to join their firms together to make one larger business.
• Vertical Integration: One firm merges with another at a different stage in the production chain.
Structure & Organisation
• Business Plan: A detailed outline of a business’ intention over a period of time.
• Chain of Command: A structure within a firm allowing instructions to be passed downwards through the
organisation.
• Objectives: Targets for a business to judge its success over a period of time. Objectives must be
S.M.A.R.T
• Organisational Structure: The levels of management and division of responsibilities within an organisation.
• SWOT: An analysis of the strengths, weaknesses, opportunities and threats of a business.
• Start up Costs: Costs paid out when setting up a new business or when expanding an existing one.
Business Organisation Key Terms
Growth
• Diversification: This is when a business expands by moving into new markets. This might be achieved by a
merger.
• Horizontal Integration: One firm merging with another in the same industry at the same stage of produc-
tion.
• Lateral Integration: A firm expands by moving into a smaller, but different, area of production eg. build-
ing society buys an estate agent.
• Merger: The owners of two businesses agree to join their firms together to make one larger business.
• Vertical Integration: One firm merges with another at a different stage in the production chain.
Structure & Organisation
• Business Plan: A detailed outline of a business’ intention over a period of time.
• Chain of Command: A structure within a firm allowing instructions to be passed downwards through the
organisation.
• Objectives: Targets for a business to judge its success over a period of time. Objectives must be
S.M.A.R.T
• Organisational Structure: The levels of management and division of responsibilities within an organisation.
• SWOT: An analysis of the strengths, weaknesses, opportunities and threats of a business.
• Start up Costs: Costs paid out when setting up a new business or when expanding an existing one.