Business all terms

Above-the-line promotion

Placing adverts using the media.

Acid test ratio

Similar to the current ratio but excludes stocks from current assets. Sometimes called the quick ratio.

Advertising

Communication between a business and its customers whereby messages are placed in the media to encourage the purchase of products.

Agent or broker

An intermediary that brings together buyers and sellers.

Anti-competitive practices or restrictive trade practices

An attempt by firms to prevent or restrict competition.

Assets

Resources used or owned by the business in production.

Assisted areas

Areas that are designated as having economic problems by the UK or EU and are eligible for support in a variety of forms.

Auditing

An accounting procedure which checks thoroughly the accuracy of a company's accounts.

Authority

The right to command and make decisions.

Balance of trade or visible balance

The difference between visible exports and visible imports.

Balance sheet

A summary at that time of business assets, liabilities and capital.

Barriers to entry

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

Batch production

A method which 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 systems

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

Boston matrix

A 2 x 2 matrix which describes products according to the market share they enjoy and whether the market has any potential for growth.

Brand names

The name of a product which consumers see as being different from those of rivals.

Break-even

The level of output where total costs and total revenue are exactly the same. Neither a profit nor a loss is made.

Break-even chart

A graph which shows total cost and total revenue. The break-even point is where total cost and total revenue intersect.

Brownfield site

Areas of land which were once used for urban development.

Budget

A plan that shows how much money a business expects to spend or receive in a future period of time.

Business

An organisation which produces goods and services.

Business ethics

Ideas about what is morally right or wrong in business.

Capital

A source of funds provided by the owners of the business used to buy assets.

Capital-intensive production

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

Cash flow

The flow of money into and out of a business.

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.

Chain of command

The route through which orders are passed down in the hierarchy.

Commission

A payment based on the value of sales, usually a percentage of sales made.

Communication

The sending and receiving of messages.

Communication barriers

Things that get in the way of communication.

Communication channels

Routes along which information travel in a business.

Communication media

The different methods by which information can be sent.

Competition-based pricing

Pricing strategies based on the prices charged by rivals.

Computer numerically-controlled machines (CNCs)

Machines which carry out the instructions fed by computers.

Computer-aided design (CAD)

The use of computers to design products.

Computer-aided manufacturing (CAM)

Where computers link and control the design and production of goods in manufacturing.

Computer-integrated manufacturing (CIM)

The use of computers to control the entire production process.

Consumer goods

Goods and services sold to individuals (consumers) rather than businesses.

Consumer panels

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

Contract of employment

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

Cost plus or cost-based pricing

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

Costs

Expenses that must be met when setting up and running a business.

Current assets

Assets likely to be changed into cash within a year.

Current liabilities

Debts that have to be repaid within a year.

Current ratio

Assesses the firm?s liquidity by dividing current liabilities into current assets.

Curriculum vitae

A document used by a job seeker which lists personal details, qualifications, work experience, referees and other details.

De-industrialisation

The decline in manufacturing.

Debenture

A long-term loan to a business.

Deed of partnership

A binding legal document which states the formal rights of partners.

Delegation

Authority to pass down from superior to subordinate.

Department

A section in a business where all employees have similar skills and specialise in particular activities.

Destroyer or predatory pricing

Setting a low price until rivals have gone out of business.

Devaluation

The depreciation or fall in the value of a currency.

Direct cost

A cost which can be clearly identified with a particular unit of output.

Direct selling

Where businesses sell their products directly to consumers.

Discrimination

Favouring one person over another.

Diseconomies of scale

Rising average costs when a firm becomes too big.

Distributed profit

Profit that is returned to the owners of a business.

Distribution channel

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

Dividend

Money paid to shareholders (owners of the business) when profit is distributed.

Division of labour

Specialisation in specific tasks or skills by individuals.

Downsizing

The process of reducing capacity, usually by laying off staff.

Drawings

The money taken from the business by the owner(s) for personal use.

E-commerce

The trading of goods and services electronically.

E-tailing

Ordering goods online and taking delivery at home.

Economic growth

An increase in income, output and expenditure over a period of time.

Economies of scale

Falling average costs due to expansion.

Employment tribunal

A court which deals with cases involving disputes between employers and employees.

Entrepreneur

An individual who organises the factors of production and risks their own money in a business venture.

Equity

Another term for share capital.

Exchange rate

The price of one currency in terms of another.

Exports

Goods and services sold overseas.

Extension strategies

Methods used to prolong the life of a product.

External communication

Communication between the business and those outside such as customers, investors or the authorities.

External economies of scale

The cost benefits that all firms in the industry can enjoy when the industry expands.

External recruitment

Appointing workers from outside the business.

Factors of production

The resources used to produce goods and services. They include land, labour, capital and enterprise.

Fiscal policy

Using changes in taxation and government expenditure to manage the economy.

Fixed assets

Assets with a life span of more than one year.

Fixed capital

The stock of "man-made" resources such as machines and tools used to help make goods and services.

Fixed costs

Costs that do not vary with the level of output.

Flotation

The process of a company "going public".

Flow production

Large-scale production of a standard product, where each operation on a unit is performed continuously one after the other, usually on a production line.

Formal communication

The use of recognised channels when communicating.

Formal organisation

The internal structure of a business as shown by an organisation chart.

Franchise

Where a business (the franchisor) allows another operator (the franchisee) to trade under their name.

Free trade

Trade between nations that is completely without government restrictions.

Fringe benefits

"Perks" over and above the normal wage or salary.

Gearing

The amount of capital raised from loans in relation to the amount raised from the sale of shares.

Globalisation

The growing integration of the world?s economies.

Goods

Physical products such as a mobile phone, a packet of crisps or a pair of shoes.

Greenfield sites

Areas of land, usually on the outskirts of towns and cities, where businesses develop for the first time.

Gross pay

Pay before deductions.

Gross profit

Sales revenue

Gross profit margin or mark-up

Gross profit expressed as a percentage of turnover.

Hierarchy

The order or levels of responsibility in an organisation from the lowest to the highest.