Definition of Chapter 3
Entrepreneur
a person who organizes, operates and takes a risk for a new business venture
business plan
a document containing the business objectives and important details about operations, finance and owners of the new business.
Capital employed
a total value of capital used in the business
Internal growth
External growth
occurs when a business expands its existing operations.
when a business takes over or merges with another business. It is often called integration as one firm is integrated into another one.
merger
the owners of two businesses agree to join their firms together to make one business.
takeover
one business buys out the owners of another business which then becomes part of the 'predator' business (the firm which has taken it over).
Horizontal integration
Vertical integration
when one firm mergers with or takes over another one in the same industry at the same stage of production.
when one firm mergers with or takes over another one in the same industry but at a different stage of production.
Forward
Backward
Conglomerate integration
when one firm mergers with or takes over a firm in a completely different industry. This is also known as diversification.