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IB Business Management Definitions

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Terms in this set (33)

A distinct legal entity, operating as a business. A company is able to own assets and incur liabilities in its own right. Companies are owned by shareholders.

A business is an organization or enterprising entity engaged in commercial, industrial or professional activities.

An individual who operates as a business. There is no legal distinction between the individual and the business. The sole trader has unlimited liability for any debts incurred by the business.

A type of unincorporated business organization in which multiple individuals (general partners) managed the business and are equally liable for its debts. Each partner share responsibility for the company's profits and losses, debts and liabilities.

Any item of economic value owned by an individual or corporation, especially that which could be converted to cash.
eg. securities, inventory, office equipment

An obligation that legally binds an individual or company to settle a debt

Limited Liability

The type of investment in which a partner or investor can't lose more than the amount invested. So, the investor or partner isn't personally responsible for the debts and obligations of the company.

Unlimited Liability

The liability of an individual for the actions of a business are not limited to the value of the equity that they hold in the form of shares.

The residual value of a businesses' assets once all liabilities have been accounted for.
Equity = Assets - Liabilities

Shares/stock represent a fraction of ownership of a company.

Vision Statement (1.3)

A statement of what the organization would like to achieve or accomplish in the long term.

Mission Statement

A statement of the business's core aims, phrased in a way that motivates employees and stimulates interest from outside groups.

A long term plan of action for the whole organization, designed to achieve a particular goal.

A short term policy or decision aimed at resolving a particular problem or meeting a specific part of the overall strategy.

Moral guidelines that determine decision making.