Business Studies 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.

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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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.
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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.
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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.
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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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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.
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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 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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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 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.
Compiled by: Mudassir Karnolwal 03152112990 - 03002862716
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.
Teamworking – 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.
Compiled by: Mudassir Karnolwal 03152112990 - 03002862716
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.