Accounts payable

a balance sheet term for creditors. It is the total amount of money owed by the business to suppliers who have sold items on credit terms that it must repay within the next 12 months.

Acid test ratio

current assets less inventories expressed as a ratio of current liabilities.

Ancillary firms

firms that supply business support services to other organizations, such as transportation, marketing and equipment maintenance services.

Appreciation (in the value of a currency)

a rise in the value or market price of a national currency against another currency or currencies.

Arbitration

a process involving the judgement of an independent person or body to help resolve industrial disputes between workers and employers.

Autocratic leadership

telling employees what to do without consultation.

Average cost

the cost of producing each unit of output.

Balance of payments

a record of all the financial transactions between a country and all the other countries with which it trades.

Balance sheet

a statement recording the value of assets, liabilities and capital of a business on a given date.

Bankruptcy

a term used for a business that is declared in law as unable to pay its debt.

Batch production

production of a limited number of identical products to meet a specific requirement or customer order. Each new batch may be slightly different from the last one produced.

Below-the-line promotions

marketing promotions that do not use mass media. Also known as Sales promotions.

Brand name

a name used to identify and distinguish specific goods, services or businesses from others.

Branding

the process of creating distinctive and durable perceptions of a product in the minds of consumers.

Break-even analysis

using cost and revenue data to calculate the break-even level of output.

Break-even level of output

the minimum level of output a business will need to produce and sell to cover its costs.

Building regulations

rules governing how buildings, including factories, shops and offices, should be constructed.

Business cycle

recurrent periods of recession, recovery and boom in business activity and economic growth in a national economy.

Business objective

a goal or aim the owners, managers and employees in a business work towards.

Business stakeholders

people and organizations with a direct or indirect interest in business activities and performance.

Business plan

a written statement about a business idea: how it will be organized, what the owners want to achieve and how they will do so.

Business target

an objective expressed as a value or volume to achieve by a given date.

Capital employed

long-term capital from non-current liabilities and shareholders’ funds invested in a business (therefore also equal to total assets – current liabilities).

Capital expenditure

money spent on the purchase or acquisition of non-current assets such as premises and machinery.

Capital-intensive

a firm or production process that requires more capital equipment than labour.

Cash flow cycle

the continuous flow of cash into and out of a business over time.

Cash flow forecast

a projection of anticipated monthly cash inflows and outflows to estimate future cash requirements.

Cash inflow

cash received by a business.

Cash outflow

cash paid out by a business.

Cash reserve

a holding of cash over and above what is needed to meet immediate payments. The reserve is held on the business premises or in an easy-access bank account.

Cash

notes and coins available for immediate payment.

Centralized organization

an organization in which authority, responsibility and decision-making is concentrated at the top of the chain of command.

Chain of command

the line of management authority in a hierarchical organization.

Closed shop

trade union membership in a firm is made a compulsory condition of employment within that firm.

Collateral

assets of value that a customer can offer as security against a loan. If the customer is unable to repay the loan the lender can sell off the assets instead.

Collective bargaining

negotiation between organized workers, usually through a trade union, and their employer or employers to agree wages and working conditions.

Communication barriers

obstacles and problems that prevent effective communication.

Communication breakdowns

a failure to communicate accurately and effectively.

Competition

rivalry between businesses trying to win consumers’ acceptance, sales and loyalty.

Compulsory redundancy

when a job is cut and the employee is forced to leave employment in return for monetary compensation.

Computer-aided design (CAD)

the use of computer systems to create, modify and optimize the design of a product.

Computer-aided manufacturing (CAM)

the use of computers to control and monitor the use of machinery and equipment in a manufacturing process.

Consumer protection laws

legal controls on businesses designed to protect consumers from misleading or inaccurate marketing claims, unfair trading practices and the production and sale of damaged, faulty or dangerous goods and services.

Consumers

people and organizations who are willing and able to buy goods and services.

Consumption

the using up of goods and services to satisfy consumer needs and wants.

Contracting market

a market in which consumer demand and sales revenues are falling over time; there is a downward trend in sales.

Cost of sales

the cost of the items sold, for example the cost of purchasing the goods from suppliers or the variable costs of the materials and labour used to produce the goods or to provide the services sold.

Cost-plus pricing

adding a mark-up for profit over the average cost of producing a product.

Creditors

people, suppliers and other organizations to whom a business owes money.

Current assets

cash, inventories and accounts receivable. They will be used up by a business within the next 12 months to make payments.

Current liabilities

accounts receivable, bank overdrafts and any other amounts owed by a business to other people or organizations that will fall due for payment within the next 12 months.

Current ratio

the value of current assets expressed as a ratio of the value of current liabilities.

Customers

consumers who buy goods or services from business organizations.

Debenture

a loan certificate issued for sale by a company that can be bought and resold by investors. The final holder of the certificate at maturity is repaid in full plus interest.

Debt finance

repayable long-term loans.

Debtor

a customer that owes a business money for goods and services it purchased on trade credit.

Decentralized organization

an organization in which a lot of authority, responsibility and decision-making is delegated to lower levels of management.

Default

failure to repay debt finance.

Delegation

assigning tasks to other employees in a chain of command.

Delivery lead time

the time lag between placing an order for a product and its delivery.

Department

subdivision of a business organization that specializes in performing a particular job or function.

Depreciation (in the value of a currency)

a fall in the value or market price of a national currency against another currency or currencies.

Destruction pricing

cutting price, sometimes below costs, to force a rival out of business.

Developed economy

a country with a wide range of industries and a large tertiary sector.

Developing economy

a country that is seeking to develop its resources, create jobs and increase incomes and living standards through industrialization.

De-industrialization

the decline of manufacturing and the growth of services in developed economies.

Democratic leadership

consulting employees before making decisions.

Diversification

a business strategy that involves producing a variety of different products and/or expanding into different markets to expand total sales and reduce the risk to the business from a fall in demand for any one product or in any one market.

Direct costs

costs that can be attributed to a specific activity or the production of a particular product.

Disciplinary procedure

formal rules and actions followed in an organization when an employee breaches his or her contract of employment.

Diseconomies of scale

rising average costs due to a business being too big to operate efficiently.

Dismissal

terminating the employment of an employee.

Direct discrimination

the unequal treatment of job applicants or employees because of differences in their race, religion, sex, disability, age or other characteristics.

Disposable income

personal income that is available to spend or save after the deduction of personal income or payroll taxes.

Disruptive technologies

new products, materials or processes that completely change the way businesses produce and operate or completely change what consumers want and buy.

Distributed profit

profit after tax paid out to the business owners or as dividends to company shareholders.

Distribution channel

the people and organizations involved in the physical movement and the transfer of goods and services from producers to consumers.

Division of labour

the dividing up of a production process into a number of sequential tasks, with each one completed by a different worker or group of employees.

Downsizing

reducing the size of the workforce in an organization.

Dumping

exporting cheap, subsidized goods to another country to force its firms out of business.

E-commerce

promoting, buying and selling goods and services using electronic systems connected to the Internet. This can be business to business (B2B) or business to consumer (B2C).

Economic boom

a period during which business activity, output and prices increase rapidly.

Economic growth

an increase in the total output or GDP of a national economy.

Economic recession

a period of declining business activity, falling output, employment and incomes.

Economies of scale

a fall in the average cost of producing each unit due to an increase in the scale of production.

Employee share ownership

rewarding employees with shares in the ownership of the company they work for.

Employment contract

a formal legal agreement between an employer and an employee that details the workplace duties and responsibilities the employee will perform in return for an agreed wage or salary.

Employment laws

legislation that governs the rights and responsibilities of employees and their employers.

Employment tribunal

(or industrial tribunal) a court of law that determines a dispute over employment rights between an employer and an employee.

Enterprise

business know-how, skills and qualities including the willingness to take considered financial and other business risks.

Entrepreneur

a person with the know-how and willingness to take the risks and decisions necessary to set up and run a business.

Entrepreneur

an enterprising person who is willing and able to take the risks and decisions necessary to organize resources to produce goods and services.

Entrepreneurship

the process of identifying a business opportunity, organizing the resources needed to start and run a business and taking both the risks and the rewards it involves.

Ethical firms

businesses that take account of the impact their decisions and actions can have on other people and organizations, communities and the natural environment.

Equity finance

permanent capital raised by a company from the sale of its shares.

Exchange rate

the market price or value of a national currency in terms of another currency.

Expanding market

a market in which consumer demand and sales revenues are rising over time; there is an upward trend in sales.

Exports

goods and services sold overseas. Their sale involves the receipt of revenues from consumers in other countries.

Extension strategies

marketing methods used to extend sales and the profitable life of a mature product.

External benefit

a benefit created by a business activity that is enjoyed by people or organizations without them having to pay for it.

External communications

sending or receiving information and messages to or from individuals or organizations outside of a business.

External cost

a cost imposed by a business activity on other people or organizations.

External growth

an increase in the size of a firm through the takeover of, or merger with, other enterprises.

External economies of scale

cost advantages arising from locating near to other similar businesses. This is because areas where similar businesses cluster together attract ancillary firms.

External recruitment

attracting job applicants from outside an organization to fill job vacancies.

External sources of finance

money raised from organizations and individuals that are not part of the business.

Factor substitution

replacing one factor of production with another in a production process. For example, advanced capital equipment has replaced labour in many modern production processes.

Factors of production

productive resources used to make goods and services.

Firms

organizations that produce goods and services.

Final accounts

the income statement and balance sheet a business will produce at the end of its accounting year.

Fixed capital

money invested in non-current assets with long productive lives, including premises, machinery and vehicles.

Fixed costs

costs that do not vary with output (also known as overheads).

Flat structure

an organization with a short chain of command and in which managers have a relatively wide span of control.

Flotation

when shares in a public limited company are made available for sale to the general public for the first time through a stock exchange.

Flow production

mass production of a large number of identical items in a continuous, usually automated, process.

Footloose industries

industries that have no need to locate near their markets or sources of materials.

Foreign direct investment (FDI)

direct investment in productive assets in a country by an individual or business of another country, either by buying an established company or by expanding the operations of an existing business in that country.

Foreign exchange market

the global market for buying and selling national currencies. The market determines the price or rate at which one currency can be exchanged for another national currency.

Franchise

an agreement by one company with another business organization to permit the distribution of its goods or services using its trademark or brand name.

Fringe benefits

non-financial rewards or “perks”.

Full-time employment

a job that usually requires 35 or more hours of work each week.

Gearing ratio

the proportion of total capital invested by a business in assets that has been financed by debt.

General partner

a partner with unlimited liability.

Globalization

increasing trade, interconnections and interactions between people, firms and governments in different national economies.

Going concern

a business that has sufficient financial and other resources to continue operating indefinitely. A business that is no longer a going concern is a business that is bankrupt.

Government grant

a non-repayable sum of money given by a local, state or central government to another person or organization for a particular purpose; for example, to fund business start-up including the purchase of equipment and/or training.

Gross domestic product (GDP)

the value of the total annual output of a national economy.

Gross profit

revenue from sales less the cost of the items sold.

Gross profit margin

gross profit as a percentage of revenue.

Health and safety laws

legal controls designed to set minimum standards of safety and cleanliness to reduce the risk of injury and ill health resulting from working.

Hierarchy

the layers of management and command in an organization.

Highly geared

a term used to describe a business that has far more debt finance than equity finance.

Hire purchase

paying for a non-current asset in instalments. The supplier continues to own the asset until it has received payment in full.

Horizontal communications

messages and information passed between different departments in an organization.

Horizontal integration

the formation of a larger enterprise through merger or takeover between two or more firms in the same industry and at the same stage of production.

Illiquid

term used to describe a business that has insufficient cash or other current assets it can convert quickly and easily to cash.

Imports

goods and services purchased from countries overseas. Their purchase involves making payments to producers in other countries.

Import tariff

an indirect tax added to the prices of imported goods to reduce consumer demand for them.

Incorporated business

a business organization with a separate legal identity from its owners.

Income statement

a financial statement used to record and report the income, expenses, profit or loss of a business.

Insolvency

the inability of a business to pay its debts because it has run out of cash.

Internal growth

or organic growth, involves an increase in the scale of production within a firm through the employment of additional factors of production.

International competitiveness

how the prices of items traded internationally compare. For example, an increase in the prices of imported goods will make them relatively less competitive than the same goods produced by domestic firms in the importing country.

Indirect discrimination

when a group of people is disadvantaged by their sex, race, religion or other characteristics because they fail to meet an unjustified requirement for a job.

Induction training

teaching new employees about the organization they work for.

Industrial action

organized disruptive actions, such as a strike or work to rule, that workers may take to increase their bargaining power over wage or other demands or to address their grievances.

Industrial sector

a group of firms specializing in similar products or using similar production processes.

Industrial structure

the relative size and importance of industrial sectors in an economy.

Inflation

a sustained rise in the average level of prices in a national economy.

Informative advertising

advertising that provides factual information about goods, services or organizations.

Insolvency

inability to pay short-term debts.

Internal communications

messages and information passed between people within an organization.

Internal recruitment

filling a job vacancy from the existing workforce within an organization.

Internal sources of finance

capital that a business can raise from its own resources.

International trade

the exchange of goods, services and money across national borders.

Internet

the shared global computing network that enables electronic communications between all connected computing devices.

Inventories

stocks of materials, work-in-progress and finished goods stored by a business to ensure uninterrupted production and to meet peaks in consumer demand.

Job analysis

identifying a job vacancy and the tasks and responsibilities of that job.

Job description

a document describing the tasks and responsibilities required to do a job.

Job enlargement

adding tasks to a job without increasing responsibility.

Job enrichment

increasing the degree of challenge in a job by adding tasks that require more skill and responsibility.

Job production

the production of a single item or items made to order, usually involving labour intensive techniques.

Job rotation

enabling employees within a team to swap tasks with each other.

Job satisfaction

how content an employee is with his or her job.

Joint venture

a contractual agreement between two or more organizations to share the expertise, investment, management, costs, profits and risks of forming a new business. The new business may produce and sell an existing product to a new market or develop an entirely new product.

Joint-stock companies

limited companies or corporations – are jointly owned by their shareholders.

Just-in-time inventory control

keeping inventories of materials and work-in-progress to a minimum by taking delivery of new parts and materials only when they are needed for production.

Kaizen

the continuous improvement of production processes to remove waste and increase efficiency.

Labour-intensive

a firm or production process that uses more labour than capital equipment.

Labour productivity

average output or revenue per employee.

Laissez-faire leadership

allowing employees the freedom to organize their work and make their own decisions about how best to achieve business objectives.

Lateral integration

or conglomerate merger, involves merger or takeover between two or more firms in different industries to form a single, larger enterprise.

Lean production

improving efficiency and eliminating waste in a production process so that products can be made better, cheaper and faster.

Leasing

renting the use of a non-current asset, usually with the option to buy it at a later date.

Lifestyle segmentation

dividing up consumers into groups according to their hobbies, interests and opinions.

Legal minimum wage

the minimum amount of money workers must be paid for their employment per period of time.

Limited liability

the legal responsibility of the owners of a business to repay its debts is limited to the amount of capital they invest in the business.

Limited partner

a partner with limited liability.

Liquidity

a measure of the ability of a business to raise cash from its current assets to meet its immediate and short-term debts.

Liquidation

a legal procedure to close a bankrupt business involving the sale of its remaining assets to pay off its debts.

Liquid asset

an asset, such as money held in a bank account, that is easily converted into cash.

Liquidity problem

not having enough liquid assets to convert to cash quickly.

Liquidity ratios

or solvency ratios, measure the ability of a business to settle its current liabilities from its cash and other current assets

Logistics

the science of moving things, including managing inventories, transportation and distribution systems.

Long-term finance

funds available to a business over many years, usually for investments in Non-current assets.

Management functions

the roles and responsibilities of managers, including planning, organizing, coordinating, commanding and controlling how labour and other resources are used in an organization.

Management

the organization and co-ordination of people and activities in order to achieve agreed aims and objectives.

Managing director

the most senior manager in a company (also called the chief executive officer or CEO in some companies).

Manufacturing

the process of converting natural resources into other products.

Market conditions

features or characteristics of a given market, including the degree of competition between producers and the numbers, types and spending levels of different groups of consumers.

Market entry

targeting promotion and sales of a new or existing product at a group of consumers, often overseas, that has not previously been targeted by the producer.

Market leader

the firm with the largest share of a market or market segment measured by its share of the total number of units sold or total value of sales per period.

Market research

the collection and analysis of data about consumers’ preferences, spending patterns and other market conditions.

Market segment

an identifiable group of individual or business consumers sharing similar characteristics or preferences.

Market segmentation

grouping together consumers who have similar characteristics, preferences and buying habits.

Market share

the proportion of total sales of a product achieved by one firm.

Market

all the producers and consumers of a given product.

Market-oriented firm

a business that focuses on identifying consumer needs and wants using market research.

Marketing budget

a financial plan for the marketing of a product.

Marketing mix

the combined elements of a marketing strategy focused on the design, price, promotion and place of sale of a product.

Market size

the total sales revenue or turnover for a particular product over a given period of time.

Marketing strategy

a plan detailing the marketing objectives of a business and the actions and resources needed to achieve them.

Marketing

the anticipation, identification, creation and satisfaction of consumer needs and wants.

Merger

combining two or more firms with the agreement of the owners to form a larger enterprise.

Micro-finance

small loans and other financial services provided by specialist organizations to people who are poor and unable to use traditional banks.

Mission statement

a brief written statement of the purpose and objectives of a business organization.

Mixed economy

an economy that combines private sector and public sector ownership of resources and provision of goods and services.

Mortgage

a long-term loan to buy property.

Motivation

a desire to work hard and the satisfaction obtained from doing so.

Motivational theories

ideas about what motivates people at work.

Multi-skilling

training employees in a variety of skills so they are more flexible in the work they can do.

Multinational

a company or corporation with business operations in more than one country.

Net cash flow

total cash inflows less total cash outflows per period.

Net earnings

the take-home pay of an employee after any payroll and income taxes, pension contributions and/or trade union subscriptions have been deducted from gross earnings.

Negative externalities

detrimental impacts on other people or organizations resulting from the actions of another.

Niche marketing

a marketing strategy aimed at a small, specialized market.

Niche market

a small part or segment of a large market consisting of consumers with specialized tastes or preferences.

Non-current assets

(or fixed assets) are long-lived assets, including machinery and equipment. They remain productive for more than one year.

Non-current liabilities

(long-term liabilities or loan capital) are loans and other amounts owed by a business to other people or organizations that will fall due for payment after one year.

Non-price competition

rivalry between businesses over different features of their products, such as quality, image and packaging, and their customer services, after-sales care and advertisements.

Non-renewable resources

natural resources that cannot be replaced or reproduced once they have been used up.

Off-the job training

training employees away from their normal workplace.

On-the-job training

training employees while they carry out their normal duties.

Open communications

can be read or listened to by anyone.

Open economy

a country that trades freely with other countries.

Opportunity cost

the benefit lost by not consuming or producing the next best alternative product.

Organizational chart

a diagram of an organizational structure.

Organizational structure

how roles, responsibilities and management authority are allocated within an organization.

Overheads

or indirect costs, are the day-to-day running costs of an organization.

Overstocking

or holding excess inventory, means a business has purchased and stored far more goods than necessary or desirable.

Overtrading

this happens when a business expands too quickly and takes on more work than it is able to finance and complete.

Partnership

a legal agreement between two or more people, usually up to 20, to jointly own, finance and run a business, and to share its profits.

Penetration pricing

setting price low at product launch to encourage sales and consumer acceptance of the new product.

Performance ratios

measures of how well a business is using its assets to earn profits.

Performance-related pay

financial rewards given to an employee or group of employees in recognition of high achievement and productivity.

Permanent capital

the non-repayable capital of a company, equal to the total of shareholder’s funds invested in that company.

Person specification

or job specification, is a document listing the skills, qualifications, experience and personal qualities a person needs to do a specific job.

Personal selling

face-to-face marketing communications with a customer.

Persuasive advertising

advertising designed to influence consumer preferences, encourage brand switching and increase sales.

Physiological needs

basic human needs for food, clothing and shelter in order to survive.

Piece rate

a wage rate per unit of output produced by an employee.

Planning controls

laws and regulations that restrict the type and scale of development in certain areas to protect local residents and the natural environment.

Point-of-sale promotions

promotions targeted at the customer at places where a product is displayed and sold.

Part-time employment

a job that usually requires less than 35 hours of work each week.

Policy instrument

a measure used by a government to achieve its economic objectives. They include public expenditures, taxes and interest rates.

Positive externalities

beneficial impacts on people or businesses resulting from the actions of another.

Positive working capital

exists when a business has sufficient money left over after it has paid its short term debts to continue paying its day-to-day running costs. That is, the cash and other liquid assets held by the business exceed its current liabilities.

Pressure group

an organization or group of people that aims to change the behaviour of a business that fails to act in a socially or environmentally responsible way through publicity and protest.

Price competition

rivalry between similar businesses over the selling prices of their products.

Price elastic demand

when a small change in price causes a significant change in demand.

Price elasticity of demand

the responsiveness of consumer demand to a change in price.

Price inelastic demand

when a change in price causes only a modest (small) change in demand.

Price skimming

setting the initial price high at product launch in order maximize profits in the short run when there is little or no competition.

Price war

intense price competition between rival businesses.

Primary research

new data collection from “field research”.

Primary sector

industries that produce or extract natural resources.

Private benefits

the financial benefits (sales revenues and other incomes) of a business activity.

Private costs

the financial (fixed and variable) costs of a business activity.

Private sector

that part of an economy owned and operated by private individuals and privately owned businesses.

Product benchmarking

comparing rival products so that a firm is able to match or improve on them.

Product life cycle

the profile of sales and profitability of a product over its commercial lifespan. It is characterized by a number of different stages starting with product development and launch and ending with maturity and eventual decline.

Product portfolio

the range of different products produced and marketed by a business at any given point in time.

Product-oriented firm

a business that focuses on production processes and products.

Production

using resources to provide goods and services to satisfy consumer needs and wants.

Production

using resources to make goods and services to satisfy consumer needs and wants.

Productivity

a measure of the efficiency of use of resources in a business by comparing the volume or value of output with the resource inputs used in production.

Profit after tax

profit remaining after corporation tax or tax on profits has been deducted.

Profit maximization

choosing production methods, outputs and prices that will earn the business the greatest amount of profit possible from the resources it uses.

Profit margin

profit before tax as a percentage of revenue.

Profit margin

the difference between the selling price per unit and the average cost per unit.

Profit sharing

rewarding employees with a percentage of the profits of the business organization they work for.

Profit

gross profit less all other expenses.

Profit

a surplus of revenue over costs of production.

Profitability

the ability of a business to continually generate revenues that exceed its costs.

Promotional pricing

reducing the price of a product for a short period of time to boost sales, for example to sell off old and unwanted inventory.

Psychological pricing

using prices to influence consumer perceptions of a product.

Public corporation

a government-owned enterprise created to carry out a governmental function or public service.

Public relations

actions to establish and maintain a good company and product image with the general public.

Public sector

that part of an economy owned and controlled by government and government-owned organizations.

Qualitative data

written or verbal information.

Quality assurance

the setting and monitoring of quality standards across an organization and ensuring that they are met.

Quantitative data

numerical information.

Quota sampling

choosing consumers to interview according to pre-specified characteristics, such as age or gender.

Quota

a limit on the volume of imported goods allowed into a country.

Quality

producing a good or service that is fit for the purpose intended and meets customer expectations.

Quality control

checking the quality of a good or service for any defects or errors at the end of its production process.

Random sampling

choosing consumers to interview or survey at random.

Ratio analysis

using accounting ratios to measure, monitor and compare the financial performance of a business over time and with other businesses.

Real income

the value of an income measured in terms of how much it willa buy. As prices rise, real income will therefore fall.

Recruitment

the process of attracting job applicants, for example using job advertisements.

Regional policy

government policy aimed at encouraging businesses to locate in underdeveloped areas within a country.

Research and development

improving existing products and the discovery, testing and development of new products, materials or production processes, to gain a competitive advantage or to increase social welfare.

Restricted communications

messages or information intended only to be received by an identified person or group of people.

Retailer

a business organization specializing in the sale of products to consumers.

Retained profit

profit saved by a business for reinvestment that is not returned to the owners as dividends.

Return on capital employed (ROCE)

profit expressed as a percentage of the capital employed in a business.

Revenue

proceeds from the sale of goods and services to customers.

Reverse engineering

taking apart competing products to discover their strengths and weaknesses and how they were made.

Revenue expenditure

money spent on day-to-day running costs.

Retained profit

profit after tax that has not been distributed to owners but is instead held by the business for reinvestment.

Sampling bias

choosing consumers to interview or survey who are not fully representative of those in the target population in terms of their characteristics, buying behaviour, tastes or opinions.

Search engine

an Internet application or website that hunts for, gathers and reports information available on the Internet.

Secondary research

desk-based research using data from existing sources.

Secondary sector

industries involved in processing natural resources, manufacturing or construction.

Selection

assessing the suitability of applicants for a job and choosing the most suitable candidate.

Separate legal identity

a business organization considered to be legally separate from its owners.

Shareholders

owners of limited companies or corporations.

Shareholders’ funds

the share capital and retained profits shareholders have invested in their company. Also called shareholders’ equity or the owners’ capital.

Short-term finance

funds available to a business for up to a year or so, usually used to fund operating expenditures.

Shortlisting

selecting the most promising candidates for a job from a set of job applications.

Sifting

comparing and marking job applications against the requirements of a person specification.

Single union agreement

an agreement between an employer and a trade union that the union can represent all workers in the organization.

Social benefit

the total benefit to society of a business activity: the sum of the private and external benefits of that activity.

Social cost

the total cost to society of a business activity: the sum of the private and external costs of that activity.

Social entrepreneur

a person who uses his or her business skills to set up and run organizations to maximize improvements in social and environmental well-being rather than profit.

Social enterprise

a private sector organization with social or environmental objectives that reinvests surplus revenues it makes towards meeting these objectives rather than paying them as profits to its owners.

Social media

Internet applications that enable users to create and share content or to participate in social networking.

Social needs

human desires to communicate and interact with other people.

Socio-economic group

a group of consumers with similar social, economic and/or educational status.

Sole trader

a business organization owned and controlled by one person.

Span of control

the number of subordinate staff a manager supervises.

Specialization

focusing production on a single or limited range of products in order to make the best use of scarce resources.

Stock market

the global market for the purchase and sale of new or existing shares (or stocks) in public limited companies.

Subsidiary

a company that is completely or partly owned by another company or corporation.

Sustainable development

producing goods and services without depleting natural resources and harming the natural environment.

Takeover

the acquisition of one firm by another with or without the agreement of its owners.

Tall structure

an organization with a long chain of command and in which managers have a relatively narrow span of control.

Target market

a group of consumers (or market segment) that a business will design its products and marketing strategies to appeal to.

Team Working

dividing the workforce into small groups of employees and giving them the responsibility for planning and organizing their own areas of work.

Technological spillovers

the application of a new technology developed in one sector to the products and production processes of other industrial sectors.

Tertiary sector

service industries.

Test marketing

a limited field trial of a new product or promotion to test consumer reaction.

Time rate

a wage rate per hour worked by an employee.

Total quality management (TQM)

continuous improvement in products and every business process at every stage of production.

Trade barriers

policy instruments (including import tariffs and quotas) used by a government to protect businesses and jobs in its national economy from global competition.

Trade credit

deferred payment terms offered by suppliers for goods and services they supply to a business.

Trade union

an organization of employees who have joined together to negotiate improved pay and working conditions with their employers.

Trade union

(or labour union) an association representing employees in a particular workplace or industry, the aim of which is to negotiate improved pay and working conditions with employers.

Trade credit

short-term finance provided by a supplier to a business customer. The customer will often have between 30 and 90 days in which to pay for each purchase from its supplier.

Two-way communications

these involve direct feedback from the receiver to the sender of a message or information.

Unemployment

people who are willing and able to work but cannot find paid employment.

Unlimited liability

the owners of a business are legally responsible for the full amount of its debts.

Value added

the difference between the price of a product and the cost of the natural and man-made materials, components and resources used to make it.

Variable costs

costs that vary directly with output (also known as direct costs).

Venture capital

funding for business start-ups and small businesses with exceptional growth potential.

Verbal communications

spoken messages.

Vertical communications

messages and information passed up and down a chain of command.

Vertical integration

the formation of a larger enterprise through merger or takeover between two or more firms at different stages of production of the same product.

Voluntary redundancy

when an employee chooses to leave employment in return for monetary compensation.

Wages

weekly or monthly payments in exchange for labour supplied to a particular occupation.

Working capital

money available to a business (from its holdings of cash or other assets that can be sold off quickly for cash) to finance its day-to-day operations or running costs.

Working capital

capital available to a business to pay its day-to-day running costs. It is calculated as current assets less current liabilities (or net current assets).

Wholesaler

an intermediary that buys and stores products in bulk from producers and sells small quantities to retailers.

Written communications

handwritten or electronically typed messages.

Workforce planning

determining the right size, skills and composition of a workforce a business will require to fulfil its future needs and objectives.