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Mission statement

A statement that communicates an organization's purpose, focus, and identity as a business entity, guiding everyday decision-making on a long-term basis.

Stakeholder

Any individual or group with an interest in, or affected by, the activities and decisions of a business — either internal (e.g. employees, managers) or external (e.g. customers, government).

Publicly held company

A company whose shares are sold to the general public, typically through a stock exchange, with shareholders having limited liability.

CSR (Corporate Social Responsibility)

The commitment of a business to operating in an ethical and sustainable way that considers the impact of its decisions on society, the environment, and stakeholders beyond just profit.

USP (Unique Selling Proposition)

A distinctive feature or benefit of a product or business that differentiates it from competitors and makes it more attractive to customers.

Franchise

A business arrangement where a franchisor grants a franchisee the right to operate under its brand, using its systems and products, in exchange for fees or royalties.

Joint venture

A form of external growth where two or more businesses agree to create a separate, jointly owned entity to pursue a specific business goal or project.

Autocratic leadership

A leadership style where the manager makes decisions independently without consulting employees, and authority is concentrated at the top.

Democratic leadership

A leadership style where the manager involves employees in decision-making, encourages participation, and delegates authority.

Delegation

The process of assigning authority and responsibility for specific tasks to subordinates while the manager retains overall accountability.

Tall organizational structure

An organizational structure with many hierarchical levels, a long chain of command, and a narrow span of control at each level.

Barrier to communication

Any factor that prevents or distorts the effective transmission of a message between sender and receiver, such as noise, jargon, or information overload.

Motivation

The internal and external factors that stimulate an individual to take action toward achieving a goal, including intrinsic factors (satisfaction, challenge) and extrinsic factors (pay, bonuses).

Span of control

The number of subordinates directly managed and supervised by one manager.

Loan capital

External finance obtained by borrowing a fixed sum of money from a lender (e.g. a bank), which must be repaid with interest over an agreed period.

New share issue (equity finance)

External finance raised by a company selling new shares to investors, which does not need to be repaid but dilutes existing ownership.

Cash flow

The movement of money into (inflows) and out of (outflows) a business over a given period; distinct from profit because it measures actual liquidity not accounting profit.

Gross profit margin

A profitability ratio that measures gross profit as a percentage of sales revenue: (Gross profit / Sales revenue) × 100.

Current ratio

A liquidity ratio measuring a business's ability to pay short-term debts: Current assets / Current liabilities. Above 1 indicates positive liquidity.

Break-even point

The level of output at which total revenue equals total costs, meaning the business makes neither a profit nor a loss.

Working capital

The funds available for day-to-day operations, calculated as current assets minus current liabilities.

Market-orientated

An approach where a business bases its decisions and product development on identifying and responding to the needs and wants of customers through market research.

Product-orientated

An approach where a business focuses on producing a product based on its own expertise or capabilities, with limited emphasis on customer research or demand.

Market segmentation

The process of dividing a total market into distinct groups of consumers who share similar characteristics, needs, or buying behaviors.

Primary market research

The collection of new, first-hand data gathered directly from respondents through methods such as surveys, interviews, focus groups, or observations.

Niche market

A small, specific segment of a larger market with specialized needs that mainstream businesses may not address.

Penetration pricing

A pricing strategy where a product is initially priced low to gain market share, with the intention of raising prices once a customer base is established.

Outsourcing

The practice of contracting an external business to perform tasks or provide services that were previously done internally.

Economies of scale

The cost advantages a business gains as it increases its output, resulting in a lower average (unit) cost of production.

Flow production

A method of production where identical products are manufactured continuously in a sequential process, allowing high volume and low unit costs.

Batch production

A method of production where a group of identical products is made together as one batch before the production line switches to a different product.

Margin of safety

The difference between actual output/sales and the break-even output — the amount by which sales can fall before the business makes a loss.

Circular business model

A business model that aims to eliminate waste by keeping resources in use for as long as possible through reuse, repair, remanufacturing, and recycling.