Business buzzword dictionary
Above-the-line promotions – marketing communications
using mass advertising media.
Accountant – a person who specializes in keeping and
inspecting financial records and preparing financial
statements.
Accounting year – the 12-month period for which a
business prepares its income statement.
Accounts receivable – a balance sheet term for debtors.
It is the total amount of money owed to the business
by customers who have purchased items on credit
terms payable within the next 12 months.
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.
Brand name – a name used to identify and distinguish
specific goods, services or businesses from others.
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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 with it 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.
1

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.
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Business buzzword dictionary
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.
2

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.
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Business buzzword dictionary
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.
3

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.
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Business buzzword dictionary
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.
4

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.
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Business buzzword dictionary
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.
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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, co-
ordinating, 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.
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Business buzzword dictionary
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.
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 Business buzzword dictionary

Mortgage – a long-term loan to buy property. Organizational chart – a diagram of an organizational

structure.
Motivation – a desire to work hard and the satisfaction
obtained from doing so. Organizational structure – how roles, responsibilities
and management authority are allocated within an
Motivational theories – ideas about what motivates
organization.
people at work.
Overheads – or indirect costs, are the day-to-day
Multi-skilling – training employees in a variety of skills
running costs of an organization.
so they are more flexible in the work they can do.
Overstocking – or holding excess inventory, means a
Multinational – a company or corporation with business
business has purchased and stored far more goods
operations in more than one country.
than necessary or desirable.
Net cash flow – total cash inflows less total cash
Overtrading – this happens when a business expands
outflows per period.
too quickly and takes on more work than it is able to
Net earnings – the take-home pay of an employee after finance and complete.
any payroll and income taxes, pension contributions
Partnership – a legal agreement between two or more
and/or trade union subscriptions have been deducted
people, usually up to 20, to jointly own, finance and
from gross earnings.
run a business, and to share its profits.
Negative externalities – detrimental impacts on other
Penetration pricing – setting price low at product
people or organizations resulting from the actions of
launch to encourage sales and consumer acceptance
another.
of the new product.
Niche marketing – a marketing strategy aimed at a
Performance ratios – measures of how well a business
small, specialized market.
is using its assets to earn profits.
Niche market – a small part or segment of a large
Performance-related pay – financial rewards given to
market consisting of consumers with specialized
an employee or group of employees in recognition of
tastes or preferences.
high achievement and productivity.
Non-current assets – (or fixed assets) are long-lived
Permanent capital – the non-repayable capital of a
assets, including machinery and equipment. They
company, equal to the total of shareholder’s funds
remain productive for more than one year.
invested in that company.
Non-current liabilities – (long-term liabilities or loan
Person specification – or job specification, is a document
capital) are loans and other amounts owed by a
listing the skills, qualifications, experience and personal
business to other people or organizations that will fall
qualities a person needs to do a specific job.
due for payment after one year.
Personal selling – face-to-face marketing communications
Non-price competition – rivalry between businesses
with a customer.
over different features of their products, such as
quality, image and packaging, and their customer Persuasive advertising – advertising designed to
services, after-sales care and advertisements. influence consumer preferences, encourage brand
switching and increase sales.
Non-renewable resources – natural resources that cannot
be replaced or reproduced once they have been used up. Physiological needs – basic human needs for food,
clothing and shelter in order to survive.
Off-the job training – training employees away from
their normal workplace. Piece rate – a wage rate per unit of output produced by
an employee.
On-the-job training – training employees while they
carry out their normal duties. Planning controls – laws and regulations that
restrict the type and scale of development in
Open communications – can be read or listened to
certain areas to protect local residents and the
by anyone.
natural environment.
Open economy – a country that trades freely with other
Point-of-sale promotions – promotions targeted at
countries.
the customer at places where a product is displayed
Opportunity cost – the benefit lost by not consuming or and sold.
producing the next best alternative product.

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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 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.
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Business buzzword dictionary
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.
8

Quota sampling – choosing consumers to interview
according to pre-specified characteristics, such as age
or sex.
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.
© OUP: this may be reproduced for class use solely for the purchaser’s institute
Business buzzword dictionary
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.
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 Business buzzword dictionary

Socio-economic group – a group of consumers with Trade union – (or labour union) an association
similar social, economic and/or educational status. representing employees in a particular workplace or
industry, the aim of which is to negotiate improved
Sole trader – a business organization owned and
pay and working conditions with employers.
controlled by one person.
Trade credit – short-term finance provided by a supplier
Span of control – the number of subordinate staff a
to a business customer. The customer will often have
manager supervises.
between 30 and 90 days in which to pay for each
Specialization – focusing production on a single or purchase from its supplier.
limited range of products in order to make the best
Two-way communications – these involve direct
use of scarce resources.
feedback from the receiver to the sender of a message
Stock market – the global market for the purchase and or information.
sale of new or existing shares (or stocks) in public
Unemployment – people who are willing and able to
limited companies.
work but cannot find paid employment.
Subsidiary – a company that is completely or partly
Unlimited liability – the owners of a business are
owned by another company or corporation.
legally responsible for the full amount of its debts.
Sustainable development – producing goods and
Value added – the difference between the price of a
services without depleting natural resources and
product and the cost of the natural and man-made
harming the natural environment.
materials, components and resources used to make it.
Takeover – the acquisition of one firm by another with
Variable costs – costs that vary directly with output
or without the agreement of its owners.
(also known as direct costs).
Tall structure – an organization with a long chain of
Venture capital – funding for business start-ups and
command and in which managers have a relatively
small businesses with exceptional growth potential.
narrow span of control.
Verbal communications – spoken messages.
Target market – a group of consumers (or market
segment) that a business will design its products and Vertical communications – messages and information
marketing strategies to appeal to. passed up and down a chain of command.
Teamworking – dividing the workforce into small groups Vertical integration – the formation of a larger enterprise
of employees and giving them the responsibility for through merger or takeover between two or more firms
planning and organizing their own areas of work. at different stages of production of the same product.
Technological spillovers – the application of a new Voluntary redundancy – when an employee chooses to
technology developed in one sector to the products leave employment in return for monetary compensation.
and production processes of other industrial sectors.
Wages – weekly or monthly payments in exchange for
Tertiary sector – service industries. labour supplied to a particular occupation.
Test marketing – a limited field trial of a new product Working capital – money available to a business (from
or promotion to test consumer reaction. its holdings of cash or other assets that can be
sold off quickly for cash) to finance its day-to-day
Time rate – a wage rate per hour worked by an employee.
operations or running costs.
Total quality management (TQM) – continuous
Working capital – capital available to a business to pay
improvement in products and every business process
its day-to-day running costs. It is calculated as current
at every stage of production.
assets less current liabilities (or net current assets).
Trade barriers – policy instruments (including import
Wholesaler – an intermediary that buys and stores
tariffs and quotas) used by a government to protect
products in bulk from producers and sells small
businesses and jobs in its national economy from
quantities to retailers.
global competition.
Written communications – handwritten or
Trade credit – deferred payment terms offered by suppliers
electronically typed messages.
for goods and services they supply to a business.
Workforce planning – determining the right size,
Trade union – an organization of employees who
skills and composition of a workforce a business will
have joined together to negotiate improved pay and
require to fulfil its future needs and objectives.
working conditions with their employers.

© OUP: this may be reproduced for class use solely for the purchaser’s institute 10