Business Management Vocabulary

Key concepts

change, ethics, sustainability and creativity

what is a business

Individuals or organizations trying to earn a profit by providing products that satisfy people's needs

What is an entrepreneur?

an individual who starts a new business or introduces a new product and takes risks

four business functions

Human resource management, finance and accounts, marketing and operation management

four business activity sectors

Primary, Secondary, Tertiary and Quaternary sectors

Primary sector of business activity

extraction or harvesting, eg farming, fishing, oil extraction.

Secondary sector of business activity

manufacturing and production, eg manufacturing and processing of products from natural resources

Tertiary sector of business activity

services and distribution, eg retailing, transport or delivery.

Quaternary sector of business activity

Knowledge and info, eg IT businesses and consulting

Public sector businesses

owned and run by the government to provide public services

Private sector businesses

businesses owned by individuals or companies aiming to make a profit

Sole trader

a business owned and run by an individual who keeps all profits but have unlimited liability

Partnership

a business owned by two or more people who share profits and responsibilities

Private limited company (Ltd)

a business with private shareholders, shares not sold to the public

Public limited company (Plc)

a large business whose shares are sold on the stock market publicly

for profit social enterprises

aims to make profits but also help the society and environment

non profit social enterprises

reinvests all profits into social or environmental goals

non-governmental organization (NGO)

a non profit group independent from the government, focused on social or humanitarian causes.

Incorporated businesses

Companies that are separate legal entities from their owners, limited liability

un-incorporated businesses

companies that are one with their owners, unlimited liability

Mission Statement

declaration of the purpose of an organization's existence and it's core values

Vision Statement

outlining an organization's aspirations

common business objectives

growth, profit, protecting shareholder value, ethical objectives

strategic objectives

medium to long term plans of action

tactical objectives

short-term goals that affect a section of the organization

Corporate Social Responsibility (CSR)

the conscious consideration of ethical and environmental practice related to business activity

what are business stakeholders

any individual, group or organisation which a direct interest/involvement in operations and performance of a business.

stakeholder conflicts

differences in varying needs and priorities

internal stakeholders

employees, shareholders, managers and directors

external stakeholders

suppliers, customers, pressure groups and local community, competitors and government

start-up capital

money raised and needed by a new business in order to meet initial costs

working capital

current assets - current liabilities

Capital expenditure

money spent by a business or organization on acquiring or maintaining fixed assets, such as land, buildings, and equipment.

Revenue expenditure

Spending on business resources that have already been consumed or will be very shortly/operating expenses

internal sources of finance

internal, personal, profits, managing working capital and sale of assets.

short term external sources of finance

bank overdraft, trade credit and debt factoring

medium term external sources of finance

hire purchase, leasing and medium term bank loans

long term external sources of finance

equity finance, long term loans, debentures/bonds.

external sources of finance

grants, venture capital, business angels, crowdfunding, subsidies, micro financing

retained profit

internal source of finance, saving up money made, quick source of cash

sale of assets

selling items the business owns but no longer needs, quick source of cash

owners capital

personal savings, high risk and limited funds.

bank loan

external source of finance, good for large purchases but interest can be charged and collateral may be required

collateral

an asset or item on hold as security for repayment of a loan, to be forfeited in the event of a default.

overdraft

allowing a business to spend more than inside its bank account short term for emergencies

trade credit

buying goods/services now and paying later

share capital

raising money by selling shares in the company

types of costs

direct costs and indirect/overhead costs