BUSINESS VOCAB UNITS 1-2 IAL

above-the-line

promotion placing adverts using the media

acid test ratio

similar to the current ratio but excludes stocks from current assets. A more severe test of liquidity.

add value

offering extra features when selling a product, such as high-quality customer service, which helps to exceed customer expectations.

administration

where a failing business appoints a specialist to rescue the business or winds it up.

advertising

communication between a business and its customers where images are placed in the media to encourage the purchase of products.

agent or broker

an intermediary that brings together buyers and sellers.

aims

what a business tries to achieve in the long term.

amortisation

the writing off of an intangible asset.

anti-competitive or restrictive practices

attempts by firms to prevent or restrict competition.

appreciated (of a currency)

a rise in the value of a currency.

articles of association

a document that provides details of the internal running of a limited company.

assets

resources that belong to a business.

authorised share capital

the maximum amount that can be legally raised.

authority

the right to command and make decisions.

autocratic leadership

a leadership style where a manager makes all the decisions without consultation.

average cost or unit cost

the cost of producing one unit, calculated by dividing the total cost by the output.

bank overdraft

an agreement between a business and a bank that means a business can spend more money than it has in its account (going "'overdrawn'). The overdraft limit is agreed and interest is only charged when the business goes overdrawn.

barriers to entry

obstacles that make it difficult for new firms to enter a market.

batch production

a method that involves completing one operation at a time on all units before performing the next.

below-the-line promotion

any promotion that does not involve using the media.

bonus

a payment in addition to the basic wage for reaching targets or in recognition of service.

boom

the peak of the economic cycle where GDP is growing at its fastest.

Boston matrix

a 2x2 matrix model that analyses a product portfolio according to the growth rate of the market and the relative market share of products within the market.

brand name

a name, term, sign, symbol, design or any other feature that allows consumers to identify the goods and services of a business and to differentiate them from those of competitors.

break-even

when a business generates just enough revenue to cover its total costs.

break-even chart

a graph containing the total cost and total revenue lines, ilustrating the break-even output.

break-even output

the output a business needs to produce so that its total revenue and total costs are the same.

break-even point

the point at which total revenue and total costs are the same.

breaking-bulk

dividing a large quantity of goods received from a supplier before selling them on in smaller quantities to customers.

budget

a quantitative economic plan prepared and agreed in advance.

budgetary control

a business system that involves making future plans, comparing the actual results with the planned results and then investigating the causes of any differences.

buffer stocks

stocks held as a precaution to cope with unforeseen demand.

bushel

customary unit of weight or mass. Historically equal to 8 gallons (35 litres). Modern use: equal to a mass defined differently for each commodity.

business plan

a plan for the development of a business, giving details such as the products to be made, resources needed and forecasts such as costs, revenues and cash flow.

capacity utilisation

the use that a business makes of its resources.

capital

money put into the business by the owners.

capital expenditure

spending on business resources that can be used repeatedly over a period of time.

capital gain

the profit made from selling a share for more than it was bought.

capital-intensive

production methods that make more use of machinery relative to labour.

capital productivity

the amount of output each unit of capital (e.g. one machine) produces.

cash flow forecast

the prediction of all expected receipts and expenses of a business over a future time period which shows the expected cash balance at the end of each month.

cash inflows

the flow of money into a business.

cash outflows

the flow of money out of a business.

cell production

involves producing a family of products in a small self-contained unit (a cell) within a factory.

centralisation

a type of business organisation where major decisions are made at the centre or core of the organisation and then passed down the chain of command.

certificate of incorporation

a document that declares a business is allowed to trade as a limited company.

chain of command

the way authority and power is organised in an organisation.

choices

in business, deciding between alternative uses of resources.

collateral

an asset that might be sold to pay a lender when a loan cannot be repaid.

collective bargaining

a method of determining conditions of work and terms of employment through negotiations between employers and employee representatives.

collusion

two (or more) businesses agreeing to a restrictive practice such as price fixing.

commission

percentage payment on a sale made to the salesperson.

competitive advantage

an advantage that enables a business to perform better than its rivals in the market.

competitive pricing

pricing strategies based on the prices charged by rivals.

complementary goods

goods that are purchased together because they are consumed together.

consultation

listening to the views of employees before making key decisions that affect them.

consumer durables

goods that can be used repeatedly over a period of time, such as cars and household appliances.

consumer income

the amount of income remaining after taxes and expenses have been deducted from wages.

consumer panels

groups of customers who are asked for feedback about products over a period of time.

consumer price index (CPI)

a common measure of price changes used in the EU.

consumer trends

the habits or behaviours of consumers that determine the goods and services they buy.

contract of employment

a written agreement between an employer and an employee in which each has certain obligations.

contribution

the amount of money left over after variable costs have been subtracted from revenue. The money contributes towards fixed costs and profit.

co-operatives

business organisations owned by its members, who have equal voting rights

copyright

a legal right that grants the creator of an original work exclusive rights for its use and distribution. Usually only for a limited time.

cost of sales

the direct costs of a business.

cost plus pricing

adding a percentage (the mark-up) to the costs of producing a product to get the price.

credit crunch

a time when borrowing money becomes difficult because banks reduce the amount they lend and charge high interest rates.

crowd funding

where a large number of individuals (the crowd) invest in a business or project on the Internet, avoiding the use of a bank.

current assets

liquid assets, i.e. those assets that will be converted into cash within 1 year.

current liabilities

money owed by the business that must be repaid within 1 year.

current ratio

assesses whether or not a business has enough resources to meet any debts that arise in the next 12 months. It is found by dividing current liabilities into current assets.

curriculum vitae (CV)

a document that lists personal details, qualifications, work experience, referees and other information about the jobseeker.

database

an organised collection of data stored electronically with instant access, searching and sorting facilities.

debenture

a long-term loan to a business.

debt factoring

when a financial institution called a factor takes over the administration of a company's receivables (= money owed by suppliers). The factor pays the business the money that suppliers owe to it immediately, in return for a percentage.

decentralisation

a type of business organisation where decision making is pushed down the chain of command and away from the centre of the organisation.

deed of partnership

a binding legal document that states the formal rights of partners.

delayering

removing layers of management from the hierarchy of an organisation.

delegation

the passing of authority further down the managerial hierarchy.

demand

the quantity of a product bought at a given price over a given period of time.

demand curve

a line drawn on a graph that shows how much of a product will be bought at different prices.

democratic leadership

a leadership style where managers allow others to participate in decision making.

depreciated (of a currency)

a fall in the value of a currency.

design mix

the range of features that are important when designing aproduct.

direct selling

producers selling their products directly to consumers.

discretionary

non-essential spending or spending that is not automatic.

discrimination

favouring one person over another. For example, in the EU it is unlawful to discriminate on grounds of race, gender, age and disability.

distribution

the delivery of goods from the producer to the consumer.

distribution channel

the route taken by a product from the producer to the customer.

division of labour

specialisation in specific tasks or skills by an individual.

downsizing

the process of reducing capacity, usually by laying off staff

downturn

a period in the economic cycle where GDP grows, but more slowly.

e-commerce

the use of electronic systems to sell goods and services.

economic growth

the rise in output of an economy as measured by the growth in Gross Domestic Product (GDP). usually as a percentage.

economic variables

measures within the economy which have effects on business and consumers. Examples include unemployment, inflation and exchange rates. e

conomic, trade or business cycle

regular fluctuations in the level of output in the economy.

efficiency

producing a level of output where average cost is minimised.

emotional branding

the practice of using the emotions of a consumer to build a brand.

employment tribunal

a court that deals with cases involving disputes between employers and employees