Types of Business
What is a private sector organisation?
A business owned by individuals or companies rather than the state.
What is an SME?
An independent small or medium-sized enterprise; the employee limit varies between countries.
What is a business objective?
A result that a firm aims to achieve.
What is a state-owned enterprise (SOE)?
A business owned and controlled by the government/state.
What is organic growth?
Growth achieved by increasing a firm’s own capital equipment or labour force.
When is profit maximisation achieved?
When the difference between total revenue and total cost is greatest; in the standard model, where MC = MR with rising MC.
What is a sole trader?
A business owned and controlled by one person.
What is a merger or takeover?
The joining of two or more firms under common ownership.
When is revenue maximisation achieved?
When total revenue is highest and marginal revenue equals zero.
What is a partnership?
A business owned by two or more partners who share capital, risks and responsibility.
What is horizontal integration?
The joining of firms in the same industry at the same stage of production.
What is sales volume maximisation?
Maximising the quantity sold, usually subject to a profit-satisficing constraint.
What is a co-operative?
A business owned by its members, with each member having one vote on major decisions.
What is vertical integration?
The joining of firms at different stages of production in the same industry.
What is the principal-agent problem?
A problem that can arise when ownership and control are separated: managers may pursue objectives that differ from those of the owners/shareholders.