Business Terminology

Goods

tangible items manufactured by businesses

Services

intangible offerings of business that can’t be held, touched, or stored

Business-to-Business (B2B)

Selling products and services between two businesses, rather than to a consumer

Business-to-Consumer (B2C)

Selling products and services directly to a consumer, the end user.

Business

An organization that strives for a profit by providing goods and services desired by its consumers

Purpose of a Business

“Maximize the value of a firm to its owners”

Shareholder 

owns a share of a company’s stock. A shareholder could be an individual, a company, or an institution 

Stakeholder

Anyone involved with or affected by an organization (Shareholders, consumers, employees, community members, etc.)

Profit 

The difference between the amount earned and the amount spent in buying, operating, or producing something

Revenue

The total amount earned from selling goods and services

Expenses

What it costs to produce goods and services as well as operate your business

Accounting

The system of recording, tracking, and analyzing an organization's financial transactions to understand its financial position and performance (preparing reports, ensuring compliance with laws and standards, and providing information for decision-making)

Finance

The management of money, including how individuals, businesses, and governments raise, spend, invest, borrow, save, and forecast their financial resources to achieve their goals.

Management

The process of organizing and coordinating resources, people, and tasks to achieve specific goals efficiently and effectively

Management information systems (MIS)

A computer system that collects, processes, stores, and disseminates business data to support decision-making and strategic planning with an organization

Marketing

The process of creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society 

Supply chain management

The coordination and management of all activities involved in creating and delivering a product or service, from the initial sourcing to the final delivery to the end consumer

Cross-Functional teams

Groups of people who belong to different functional/expertise domains 

Value proposition

the unique benefit a company provides to customers who buy their goods and services

Information Technology

The equipment and techniques used to manage and process information

Data

Raw, unorganized facts that can be moved and stored

Information

Data that has been processed, interpreted, organized, structured, or presented in a way that makes it meaningful or useful 

Spreadsheet

A computer application that enables a user to save, sort, and manage data in an arranged form of rows and columns. It allows the entry, calculation, and storage of data in columns and rows

Database

An organized collection of data stored and accessed electronically

Database Management System (DMS)

Software that allows you to quickly and easily enter, store, organize, select, and retrieve data in a database. It tracks the data and allows users to query the database for the information they need

Enterprise Resource Planning (ERP) Systems

A computerized resource planning system that incorporates information about the firm’s suppliers and customers with its internally generated data

Cloud Computing

The delivery of computing services over the internet, allowing for flexible, on-demand access to resources such as software and data storage. 

Information Security

The processes and tools designed and deployed to protect sensitive business information from modification, disruption, destruction, and inspection

Network Segmentation

Architectural design of a network to manage security and access

Cyber Security

The practice of protecting systems, networks, and programs from digital attacks. These attacks are usually aimed at accessing, changing, or destroying sensitive information, exploiting money from users, or interrupting normal business processes.

Operations

the design, execution, and control of operations that convert resources into desired goods and services, and implement a company’s business strategy

Logistics

the coordination across the supply chain involving the flow of goods, services, people, facilities, or supplies 

Supply chain 

the entire sequence of securing inputs, producing goods, and delivering goods to customers 

Procurement

the action of obtaining raw materials, human resources, and capital

Inputs

Natural resources, raw materials, human resources, and capital

Inventory Management

The determination of how much of each type of inventory a firm will keep on hand and the ordering, receiving, storing, and tracking of inventory 

Just-in-time inventory management 

An inventory management system that receives goods from suppliers at the exact time they are needed to reduce storage costs 

Production

the creation of products and services

outputs

products and services

supply chain sustainability

the management of environmental, social, and economic impacts, and the encouragement of good government practices, throughout the life cycles of goods and services

Financial accounting

Accounting that focuses on preparing external financial reports that are used by outsiders, such as lenders, suppliers, investors, and government agencies, to assess the financial strength of a business.

Managerial accounting 

accounting that provides financial information that managers inside the organization can use to evaluate and make decisions about current and future operations

Auditing

The process of reviewing the records used to prepare the financial statements and issuing a formal auditor’s opinion indicating whether the statements have been prepared in accordance with accepted accounting rules 

Tax 

Strategizing for a reduction in tax obligations aligned with IRS regulations and preparing required documentation

Certified public accountant (CPA) 

an accountant who has completed an approved bachelor’s degree program, passed a test prepared by the American Institute of CPA’s, and met state requirements. Only a CPA can issue an auditor’s opinion on a firm’s financial statements.

Balance sheet

A financial statement that summarizes a firm’s financial position at a specific point in time

Accounting equation

Assets= Liabilities+Owner’s equity

Assets

things of value owned by a firm

Liabilities 

what a firm owes to its creditors; also called debts 

Owners’ equity (or shareholders’ equity) 

the total amount of investment in the firm minus any liabilities; also called net worth 

Income statement

A financial statement that summarizes a firm’s revenues and expenses and shows its total profit or loss over a period of time 

Revenues 

the dollar amount of a firm’s sales plus any other income it recieved from sources such as interest, dividends, and rents 

Cost of goods sold

expenses directly related to the buying of or producing of a firm’s goods or services

Gross profit

revenue-cost of goods sold

Other expenses

other costs, such as salaries, utilities, and rents

Earnings per share (EPS)

The ratio of net profit to the number of shares of common stock outstanding; measures the number of dollars earned by each share of stock

Financial Planning

preparing the financial plan, which projects revenues, expenditures, and financing needs over a given period

Investment (spending money)

Investing the firm’s funds in projects and securities that provide high returns in relation to their risks

Financing (raising money)

Obtaining funding for the firm’s operations and investments and seeking the best balance between debt (borrowed funds) and equity (funds raised through the sale of ownership in the business)

Commercial banks 

Profit-oriented financial institutions that accept deposits, make business and consumer loans, invest in government and corporate securities, and provide other financial services 

Investment banking

Help companies raise long-term financing. Firms that act as intermediaries, buying securities from corporations and governments and reselling them to the public.

Real estate

A specialized branch of finance that deals with the financing and investment structures used by developers, investors, and owners to acquire, develop, and retain real estate properties primarily in the commercial sector (and residential sector)

Equity 

A form of business financing consisting of funds raised through the sale of stock (ownership in a business) 

Common stock 

A security that represents an ownership interest in a corporation 

Dividends 

Payments to stockholders from a corporation’s profits 

Public company

A company with shares of stock traded in the public market, typically on a stock exchange.

Initial public offering

A company’s first sale of stock to the public

Ticker symbol

a unique abbreviation used to identify the shares of a publicly traded company

Share price

The price of a single share of a company’s stock

Debt 

A form of business financing consisting of borrowed funds that must be repaid with interest over a stated time period 

Bonds

Long-term debt obligations (liabilities) issued by corporations and governments

Interest

A fixed amount of money paid by the borrower (for a bond, loan, or mortgage) to the lender on a regular schedule

4 P’s of marketing

Product, price, promotion, and place

Market segmentation

the process of separating, identifying, and evaluating the layers of a market in order to identify a target market 

Target market 

The specific group or demographic of consumers toward which a firm could direct its marketing efforts. It is often divided into segments so that marketing strategies can be directed to a more specific target 

Human resource management (HR or HRM)

involves coordinating, managing, and allocation human capital, or employees, in ways that move an organization’s goals forward 

Entrepreneurship

Understanding when a market opening arises that no other provider is addressing, and knowing how to capitalize on this new opportunity at the right time. An entrepreneur is an individual or a small group of partners who strike out on an original path to create a new business.

Management consulting 

focuses on helping organizations operate effectively through an outside perspective on problem-solving, best practices, and strategy to help companies improve their performance 

Contingency

Plans that identify alternative courses of action for very unusual or crisis situations 

Operational Planning

The process of creating specific standards, methods, policies, and procedures that are used in specific functional areas of the organization

Controlling

the process of assessing the organization’s progress toward accomplishing its goals; includes monitoring the implementation of a plan and correcting deviations from the plan 

Corporate culture

the set of attitudes, values, and standards that distinguishes one organization from another

Vision statement

a short description of an organization’s aspiration and the wider impact it aims to create. Focuses more on the “why” or meaning behind the company’s actions 

Mission statement 

Used by a company to explain, in simple and concise terms, its purpose for being. Typically focuses more on the “what” and “how” of the company 

Values 

the core values are the beliefs and behaviors that a company considers non-negotiable 

Effectiveness

the ability to produce the desired result or good

Efficiency

using the least amount of resources to accomplish the organization’s goals

Extrovert

Introvert

Sensing

Intuition

Feeling

Thinking

Perceiving 

Judging 

Lead with ____ , follow with ____

Benefits, features

7 Mays Core Competencies

1. Leadership

2. Communication

3. teamwork

4. critical thinking

5. management of people and projects

6. ethical decision making

7. creating opportunities

6 Critical Thinking Steps 

1. Organize the information 

2. Define the problem

3. Analyze the data 

4. Construct arguments that address the problem 

5. Critique the arguments 

6. Communicate your conclusions 

Johnson’s 6 questions

1. Did you read the instructions?

2. Could you explain this to a peer?

3. Does my work fulfill the requirements?

4. What are my peers likely to do in this situation?

5. Am I doing anything unique?

6. What extra things am I doing?