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Level 14

Ownership & Internal Organisation


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Sole trader
The most common form of business ownership and the easiest to set up. One owner means profits do not have to be shared, but there is the disadvantage of unlimited liability.
Partnership
A business association between two or more people. They usually have between 2 and 20 members.
Limited Liability
This is a legal protection for the owners of a company that limits the debts owed by an individual owner to the sum of money that they put into their business.
Unlimited Liability
Sole traders' debts are unlimited, so if they find themselves in debt, they may have to sell personal possessions to pay for business debts.
Company
A group of companions who have come together to set up a business. The business they set up becomes a legal body, separate from the owners. This is also called incorporation.
Private Limited Company
Usually a small, family-run company, shares can only be bought directly from the company.
Public Limited Company
Shares can be bought and sold on the stock exchange, and this business can have a large number of shareholders.
Franchise
A business that contracts to offer certain goods and services from a larger parent company (p 669) Colin
joint venture
a partnership in which two or more companies (often from different countries) join to undertake a major project
Multinational
A company with its headquarters in one country but which produces and sells its products in other countries.
PLC
Short for 'Public Limited Company'
LTD
Short for 'Limited', and refers to a private limited company.
Organisation Chart
Shows the roles and responsibilities of people in an organisation and the relationships between them.
Role
This refers to what an individual does in an organisation. For example, a Marketing Manager will have a different role to a Factory Worker.
Hierarchy
Every organisation has one of these, it describes the number of levels in a business, and how employees are organised by rank or seniority.
Chain of Command
Levels of responsibility in an organisation. For example, senior management are at the top. Supervisors report to junior managers, junior managers report to middle managers, and middle managers report to the senior managers.
Span of Control
Refers to the number of people an individual manages or supervises directly. This can be narrow, meaning few people, or wide, meaning many people.
Flat Organisation
In this type of organisation, managers delegate responsibility to subordinate staff, and managers have far more trust in employees. An example of a business that would be flat is a design business.
Management
An activity that helps an organisation achieve its objectives by managing the resources of the organisation.
AGM
Annual General Meeting. This is a meeting held each year, where shareholders have the power to remove and appoint the board of directors.
communication
distrust created by mixed goals leads to reduced __________, which requires trust.
Intranet
An internal communication system in an organisation, internet-based, but protected so that it is only available to members of an organisation.
Team Briefing
A formal method of internal communication, where the team leader informs the team about recent developments inside the business.
Memo
This is short for memorandum, and is a short note, or a thing to be remembered. These are usually received in the form of email messages.
EDI
Electronic Data Interchange is a large-scale system for purchasing goods electronically. It is a network link that allows retailers to pay suppliers electronically, reducing time, paperwork and costs.
Level 15