Business keywords

Ch-1 Enterprise:
Entrepreneur: an individual who has the idea for a new business, starts it
up and carries most of the risks but benefits from the rewards
Customer: an individual consumer or organization that purchases goods
or services from a business
Consumer: an individual who purchases goods and services for personal
use
Consumer goods: the physical and tangible goods sold to customers that
are not intended for resale. These include durable consumer goods,
such as cars and washing machines, and non-durable consumer goods
such as food, drinks and sweets, that can be used only once
Consumer services: the non-tangible products sold to consumers that
are not intended for resale. These include hotel accommodation,
insurance services and train journeys
Factors of production: the resources needed by business to produce
goods or services
Capital goods: the physical goods used by industry to aid in the
production of other goods and services, such as machines and
commercial vehicles
Enterprise: the action of showing initiative to take the risk to set up a
business
Adding value: increasing the difference between the cost and bought-in
inputs (materials) and the selling price of the finished goods
Added value: the difference between the cost of purchasing bought-in
inputs (materials) and the selling price of the finished goods
Branding: the process of differentiating a product by developing a
symbol, name, image or trademark for it
Opportunity cost: the next most desired option that is given up
Intrapreneur: a business employee who takes direct responsibility for
turning an idea into a profitable new product or business venture
Multinational business: a business organization that has its headquarters
in one country, but with operating branches, factories and assembly
plants in other countries
Business plan: a written document that describes a business, its
objectives, its strategies, the market it is in and its financial forecasts
Ch-2 Business structure
Private limited company: a business that is owned by shareholders who
are often members of the same family, this company cannot sell shares
to the general public
Initial public offering (IPO): an offer to the public to buy shares in a
limited company
Public limited company (plc.): a company whose shares are tradable on
the stock exchange and can be bought and sold by the public
Public sector: organizations accountable to and controlled by central or
local government (the state)
Private sector: businesses owned and controlled by individuals or a
group of individuals
Mixed economy: economic resources are owned and controlled by both
private and public sectors
Free-market economy: economic resources are owned largely by the
private sector with very little state intervention
Command economy: economic resources are owned, planned and
controlled by the state
Public corporation: a business enterprise owned and controlled by the
state aka a nationalized industry
Sole trader: a business in which one person provides the permanent
finance and, in return, has full control of the business and is able to keep
all of the profits
Unlimited liability: business owners have full legal responsibility for the
debts of the business
Partnership: a business formed by two or more people to carry on a
business altogether, with shared investments and usually, shared
responsibilities
Limited liability: the only liability or potential loss a shareholder has, if the
company fails, is the amount invested in the company, not the total
wealth of the shareholder
Share: a certificate confirming part-ownership of a company and entitling
the shareholder owner to dividends and certain shareholder rights
Shareholder: a person or institution owning shares in a limited company
Memorandum of Association: this states the name of the company, the
address of the head office through which it can be contacted, the
maximum share capital for which the company seeks authorization and
the declared aims of the business
Articles of Association: this document covers the internal workings and
control of the business, the names of directors and the procedures to be
followed at meetings
Cooperative: a jointly owned business operated by members for their
mutual benefit, to produce or distribute goods or services- as in
consumers’ cooperatives or farmers’ cooperatives
Franchise: the legal right to use the name, logo and trading systems of
an existing successful business
Franchiser: a person/business that sells the right to open stores and sell
products or services, using the brand name and brand identity
Franchisee: a person or business that buys the right from the franchiser
to operate the franchise
Joint venture: two or more businesses agree to work closely together on
a particular project and create a separate division to do so
Social enterprise: a business with mainly social objectives that re-invests
most of its profits into benefitting society rather than maximizing returns
to owners
Incorporation: when a business is set up as a limited company, meaning
it is a separate legal entity and its owners have limited liability
Board of directors: elected by the shareholders of a company to take
decisions about running and managing the business
Ch-3 Size of business
Revenue: the total value of sales made during trading period = selling
price * quantity sold
Capital employed: the total value of all long-term finance invested in the
business
Market capitalization: the total value of a company’s issued share
Market share: sales of the business as a proportion of total market sales
Organic/Internal growth: expansion of a business by means of opening
new branches, shops or factories
External growth: business expansion achieved by integrating with
another business by either a merger or takeover
Merger: an agreement by owners and managers of two businesses to
bring them together in a new combined business. Referred to as friendly
merger.
Takeover: when a company buys more than 50% of the shares of
another company and becomes its controlling owner. It can be called an
acquisition.
Horizontal integration: integration with a business in the same industry at
the same stage of production
Vertical integration: integration with a business in the same industry
Forward vertical integration: vertical integration with a customer business
Backward vertical integration: vertical integration with a supplier
business
Conglomerate integration: integration with a business in a different
industry
Synergy: literally means that ‘the whole is greater than the sum of parts’-
it is often assumed that the new business will be more successful than
the original separate business
Strategic alliance: agreement between the organizations to commit
resources to achieving a specific objective while remaining independent

Ch-4 Business objectives

Business objective: a stated measurable target that a business plans to
achieve
Corporate social responsibility (CSR): when businesses consider the
interests of society by taking responsibility for the impact of their
decisions and activities on customers, employees, communities, and the
environment
Pressure group: organizations created by people with a common interest
or aim, who put pressure on businesses and governments to change
policies so that an objective is reached
Triple bottom line: the three objectives of social enterprises. Economic,
social and environmental
SMART objectives: aims that are specific, measurable, achievable,
realistic and time-limited
Business aim: a long-term goal that a business hopes to achieve
Mission statement: a brief statement of the business’s core aims,
phrased in a way to motivate employees and to stimulate interest from
outside groups
Annual (company) report: a document that gives details of a company’s
activities over the year, including its financial accounts
Business strategy: a long-term plan of action for a business, designed to
achieve a particular objective
Tactic: a short-term action as part of an overall strategy
Target: a short-term goal that must be reached before an overall
objective can be achieved
Budget: a detailed financial plan for the future
Ethical code (code of conduct): a document detailing a company’s rules
and guidelines on staff behavior that must be followed by all employees
5- Stakeholders in a business
Stakeholders: individuals or groups who can be affected by and have an
interest in, any action taken by an organization
External stakeholders: individuals or groups who are separate from the
business but are affected by or interested in its operations
Internal stakeholders: individuals or groups who work within the
business, or own it, and are affected by the operations of the business
Trade union: an organization of working people with the objective of
improving the pay and working conditions of its members and providing
them with support and legal services
Stakeholder concept: the view that businesses and their managers have
responsibilities to a wide range of groups, not just shareholders (aka
stakeholder theory)
Ch-10 Human resource management
Human resource management (HRM): the strategic approach to the
effective management of employees so that they help the business gain
a competitive advantage
Workforce planning: forecasting the number of workers and the skills
that will be required by the organization to achieve its objectives
Workforce audit: a check on the skills and qualifications of all existing
workers/managers
Labor turnover: measures the rate at which employees are leaving an
organization
Recruitment: the process of identifying the need for a new employee,
defining the job to be filled and the type of person needed to fill it, and
attracting suitable candidates for the job
Selection: the series of steps by which candidates are interviewed,
tested and screened to choose the most suitable person for a vacant
post
Recruitment agency: a business that offers the service of recruiting
applicants for vacant posts
Job description: a detailed list of the key points about the job to be filled,
stating all its key terms and responsibilities
Person specification: a detailed list of the qualities, skills and
qualifications that a successful applicant will need to have
Applicant form: a set of questions answered by a job applicant to give a
potential employer information about the applicant, such as educational
background and work experience
Curriculum vitae (CV): a detailed document highlighting all of a person’s
professional and academic achievements, work experience and awards
Resume: a less detailed document than a CV, which itemizes work
experience, educational background and special skills relevant to the job
being applied for
Reference: comment from a trusted person about an applicant’s
character or person’s work experience
Assessment center: a place where a range of tests is used to judge job
applicants or their potential ability to perform particular roles
Internal recruitment: when a business aims to fill a vacancy from within
its existing workers
External recruitment: when a business aims to fill in a vacancy with a
suitable applicant from outside of the business, such as an employee of
another organization
Employment contract: a legal document that sets out the terms and
conditions governing a worker’s job
Redundancy: when a job is no longer required, the employee doing this
job becomes unnecessary through no fault of their own
Dismissal: being dismissed or fined from a job due to incompetence or
breach of discipline
Unfair dismissal: ending a worker’s employment contract for a reason
that the law regards as being unfair
Employee morale: overall outlook, attitude and level of satisfaction of
employees when at work
Employee welfare: employees’ health, safety and level of morale when
at work
Work-life balance: a situation in which employees are able to allocate the
right amount of time and effort to work and to their personal life outside
work
Equality policy: practices and processes aimed at achieving a fair
organization where everyone is treated in the same way without
prejudice and has the opportunity to fulfill their potential
Diversity policy: practices and processes aimed at creating a mixed
workforce and placing a positive value on diversity in the workplace
Training: work-related education to increase work force skills and
efficiency
Induction training: introductory training program to familiarize new
recruits with the systems used in the business and the layout of the
business site
On-the-job training: instruction at the place of work on how a job should
be carried out
Off-the-job training: training undertaken away from the place of work
Multi-skilling: the training of an employee in several skills to allow for
greater efficiency within the business
Employee appraisal: the process of assessing the effectiveness of an
employee judged against pre-set objectives
Industrial action: measures taken by the workforce or trade union to put
pressure on management to settle an industrial dispute in favor of
employees
Collective bargaining: the process of negotiating terms of employment
between an employer and a group of workers who are usually
represented by a trade union official
Trade union recognition: when an employer formally agrees to conduct
negotiations on pay and working conditions with a trade union rather
than bargain individually with each worker
Ch-11 Motivation
Motivation: the internal and external factors that stimulate the desire in
works to be continually interested in, and committed to, doing a job well
Piece rate: payment to a worker for each unit produced
Self-actualization: a sense of self-fulfillment reached by feeling enriched
and developed by what one has learned and achieved
Motivators (motivating factors): aspects of a worker’s job that can lead to
positive job satisfaction, such as achievement, recognition, meaningful
and interesting work, responsibility, and advancement at work
Hygiene factors: aspects of a worker’s job that have the potential to
cause dissatisfaction, such as pay, working conditions, status and over-
supervision by managers
Job enrichment: aims to use the full capabilities of workers by giving
them the opportunity to do more challenging and fulfilling work
Time-based wage rate: payment to a worker made for each period of
time worked (e.g. one hour)
Salary: annual income that is usually paid on a monthly basis
Bonus: a payment made in addition to the contracted wage or salary
Commission: a payment to a salesperson for each sale made
Performance-related pay: a bonus scheme to reward employees for
above-average work performances
Profit sharing: a bonus for employees based on the profits of the
business, usually paid as a proportion of basic salary
Share-ownership scheme: a scheme that gives employees shares in the
company they work for or allows them to buy those shares at a discount
Fringe benefits: benefits given, separate from pay, by an employer to
some or all employees
Job rotation: a scheme that allows employees to switch from one job to
another
Job enlargement: an attempt to increase the scope of a job by
broadening or deepening the tasks undertaken
Job redesign: the restructuring of a job to make the work more
interesting, satisfying and challenging
Development: the gaining of new or advanced skills and knowledge as
well as opportunities to apply what is gained
Employee promotion: the advancement of an employee within a
business to a higher level of responsibility and status
Employee status: the level of recognition offered by an employer to a
worker in terms of pay, level of responsibility and benefits
Employee participation: active engagement of employees involved in
decision-making within an organization
Team working: production is organized so that groups of workers
undertake complete units of work
Empowerment: the giving of skills, resources, authority and opportunity
to employees so that they can take decisions and be accountable for
their work
Quality circle (QC): a voluntary group of workers, who meet regularly to
discuss, and try to resolve, work related problems and issues
Ch-12 Management
Manager: the person responsible for setting objectives, organizing
resources and motivating workers so that the objectives of the business
are met
Management: the organization and coordination of activities in order to
achieve the defined objectives of the business
Autocratic management: a management style where one manager takes
all decisions with very little, if any, input from others
Democratic management: a management style that encourages the
active participation of workers in taking decisions
Paternalistic management: a management style based on the view that
the manager is in a better position than the workers to know what is best
for an organization
Laissez-faire management: a management style that leaves much of the
business decision-making to the workforce
Theory X: the view that some managers believe that employees are lazy,
fear-motivated and in need of constant direction
Theory Y: the view that some managers believe employees are internally
motivated, enjoy their work and are prepared to take on additional
responsibilities

Ch-17 Nature of marketing

Marketing objectives: the goals set for the marketing department to help
the business achieve its overall (corporate) objectives
Marketing: the management task of identifying and meeting the needs of
customers profitably by getting the right product at the right price to the
right place at the right time
Corporate objectives: well-defined and realistic goals that are set for the
whole company
Marketing strategy: a plan of action giving details of how a business
intends to achieve its marketing objectives by creating competitive
advantage
Equilibrium price: the price level at which demand is equal to supply
Demand: the quantity of a product that consumers are willing and able to
buy at a given price in a specific time period
Supply: the quantity of a product that firms are prepared to supply at a
given price in a specific time period
Market segment: a subgroup of a whole market in which consumers
have similar characteristics
Industrial market: the selling of products by businesses to other
businesses, also known as business to business or B2B
Consumer market: the selling of products by businesses to the final end
user, also known as business to consumer or B2C
Consumer (or market) orientation: an outward-looking approach that
bases product decisions on consumer demand, as established by
market research
Product orientation: an inward-looking approach that focuses on making
products that can be made – or have been made for a long time – and
then trying to sell them
Market size: the total value (or quantity) of sales of all producers within a
market in a given time period
Market growth: the percentage change in the total size of a market
(volume or value) over a period of time
Brand leader: brand with the highest share of the market
Consumer products: goods or services sold to end users
Industrial products: goods or services sold to businesses
Mass marketing: selling standardized products or a range of products in
the same way to the whole market
Niche marketing: identifying and exploiting a small segment of a larger
market by developing differentiated products to suit that segment
Market segmentation: the identification of different groups of customers
with common needs within a market and the marketing of different
products or services to those consumer groups
Consumer profile: a qualified picture of a business’s consumers,
showing data about their age groups, income levels, location, gender
and social class
Customer relationship marketing: using marketing activities to build and
establish good customer relationships so that the loyalty of existing
customers can be maintained