Glossary Business studies

LYIS/GLOSSARY/BUSINESS STUDIES

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ADDED VALUE: Value added means the amount by which the value of a product rises as a result of a persons or firms part in the production of a good or a service. After each stage, a product is worth more than it was at the start of that stage, because extra work (value) has been added. The value added includes the cost of all parts, wages, overheads and an allowance of profit. Value added = Selling price Cost of materials it contains. ADVERTISING: Advertising is an aspect of marketing which uses one or a range of media to communicate with the public. OR The activity of attracting public attention to a product or business, as by paid announcements in the print, broadcast, or electronic media. OR Advertising is the non-personal communication of information usu ally paid for and usually persuasive in nature about products, services or ideas by identifying sponsors through the various media. AIDA: A simple way of planning an advert design is to use AIDA model. AIDA stands for Attention, Interest, Desire and Action. This is usually used with more expensive products that are not purchased very often. AUTOCRATIC LEADERSHIP: It is where the managers like to make all the important decisions and closely supervise and control the workers. Because managers dont trust workers and simply give orders (one -way communication, mainly to p to down) that they are expected to be obeyed or followed. They tell employees only what the need to know and keep themselves separate from the employees. AUTOMATION: It is the replacing of human labour by machines. It happens in offices as well as factories and has shed many jobs as machines have replaced people. AUTONOMOUS WORK GROUP: This is where a group of workers is given responsibility for a particular process, product or development. They can decide as a group how to complete the task or organize the jobs. The workers can become more involved in the decision -making and take responsibility for this process. E.g.; production team, quality circles, management teams etc. BARRIERS TO EFFECTIVE COMMUNICATION: Barriers to effective communication are the obstacles which create confusion, misunderstanding and may even lead to break down of communication process.

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BARRIERS TO ENTRY: The factors that might deter or preven t a business from entering as a market, especially as an international market. BATCH PRODUCTION: This is where similar products are made in blocks or batches of a product without continuous specification. E.g.; producing bread and cakes in batches, constructing similar houses etc. BENCH MARKING: It is a process by which a firm compares its activities with the leaders in its industry or in the world. It is used by some organizations to discover best practices in other firms to implement standards. (Firms usually bench mark as customers generally believe that branded goods are of better quality.) BONUS: A bonus is an additional amount of payment above the basic pay as a reward for good work. It maybe a payment for good time -keeping, meeting targets or just for long service. BRAND IMAGE: It is an identity or image given to a product which gives it a personality of its own and distinguishes it from its competitors brand. BRAND LOYALTY: It is when consumers keep on buying the same brand again and again instea d of choosing a competitors brand. It means the will keep buying the same brand of a product instead of trying other similar products. BRAND NAMES: It is the unique name of a product that distinguishes one product from other brands. A legally protected brand name is called a trademark. BRAND: A brand is the identity of a specific product, service, or business. A brand can take many forms, including a name, sign, symbol, color combination or a slogan. BREAK-EVEN POINT: This is the output at which the firms total revenue is equal to its total cost. Hence, the business is making neither profit, nor loss. Break-Even = Fixed Cost Contribution. Contribution = Selling Price Variable cost. BUDGETS: Budgets are financial targets/plan for the future which shows a detailed estimate of the future income and financial needs of a business.(income and expenditure) BUSINESS ANGELS: Business angels are individuals who invest between 10000 and 100000, often for an exchange in equity stake. A typical Angel might make one or two investments in a three year period, either

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individually or together with a small group of friends, relative s or business associates. Most investments are in start-ups or early stage expansion.

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BUSINESS ENVIRONMENT: Business environment means the surroundings and conditions in which business operates. BUSINESS ETHICS: Business ethics are the moral principals applied for the running of the business. These standards are sometimes set by a code of conduct or by a code of practice agreed by the industry as a whole or may be a set of principles used by an individual company. BUSINESS STUDIES: Business studies is about management and enterprise. It looks at how businesses are created, how they develop, grow, survive crises and perhaps eventually decline. It focuses on the people whose skills affect this process and uses theory to analyze the causes and effects of different management approaches. BUSINESS: A business is an organization which provides goods or services. So the term business is used to describe all the commercial activities undertaken by various organizations which produce and supply goods and services and it affects nearly every part of our life and enables us to satisfy our needs and wants. CAD: It is when a product can be designed or its design modified using computer program. So the designers no longer have to make complicated drawings by hand, hence speed up designing. (Computer-Aided Design) CAM: It means any use of computers to control machine and for production, planning, and control. (Computer-Aided Manufacturing) CAPITAL EMPLOYED: This is the total long-term and permanent capital of the business which has been used to pay for the net assets of the business. Capital Employed = Net Assets OR Capital employed = Shareholders Fund + Long -term Liabilities. CASH FLOW ANALYSIS: It is the study of the businesss cash flows, with the purpose of maintaining an adequate cash flow for the business, and to provide the basis for cash flow management. CASH FLOW CYCLE: A cash flow cycle shows the stages between paying out cash for labor, materials etc and receiving cash from the sale of goods.

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CASH FLOW FORECAST: It is an estimate of the future cash flows of a business, usually on a month by month basis. This will show the expected cash balance at the end of each month. CASH FLOW STATEMENT: It is a summary of all cash flows affecting a business during a given period of time such as a month, a quarter of a year. CASH FLOW: Cash flow of a business is the inflow and outflow of cash over a period of time. It is a cycle that determines the solvency of a business. CASH INFLOWS: Cash inflows are the sum of money received by a business during a period of time (movements of cash into business). CASH OUTFLOWS: Cash outflows are the sum of money paid out by the business during a period of time (movements of cash out of the business). CHAIN OF COMMAND (SCALAR CHAIN): Chain of command is the structure in an organization which allows instructions (authority) to be passed down from senior management to lower levels of management. The chain of command is the communication route in an organization. The length of the chain of command will depend on the number of levels there are within a firm. CHAIN OF PRODUCTION: Chain of production shows the stages through which a product passes during production and it will be different for different products. There will be added value i n each stage in the chain of production. CIM: It is where computers are used to control large parts of the manufacturing process. A central computer may co -ordinate the flow of parts to the production line or directly control robots and other automated equipments. (Computer Integrated Manufacturing) CLOSED SHOP: A closed shop is where all the employees should be a member of the same trade union. To get employment in this business, one would have to agree to become a union member. COLLECTIVE BARGAINING: It is negotiations between one or more Trade Unions and one or more employers (or employer associations) on pay and conditions of employment. They may negotiate on wages, holidays, hours of work or other working conditions or practice.

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COMMUNICATION NETS: Communication nets are the ways in which members of a group communicate with each other. COMMUNICATION: Communication is the transferring of a message from the sender to the receiver, who understands the message. COMPETITIVE PRICING: It is when a product is priced in line with or just below competitors prices to try to capture more of the market. It is time taking and costly to identify the price charged by the competitors. CONCILIATION: The bringing together of the sides in a dispute to try to settle it in a way that both sides can accept. Both sides try to understand, and come to terms with one others point of view. CONGLOMERATE GROWTH: It is when a firm merges with or takes over a firm in a different industry. This is also known as diversification. CONTRACT OF EMPLOYMENT: It is a legal document that sets out the rights and duties of both the employer and employee with regard to a job. The employer must let the employee have a wri tten statement of the terms and conditions of employment and to be issued within one month of starting work. CORPORATE RESPONSIBILITY/CORPORATE SOCIAL RESPONSIBILITY: Corporate responsibility is the term used to describe the attempts by the individual bu siness to behave in an ethical manner. COST-BENEFIT ANALYSIS: Cost-benefit analysis is the valuation by a Government agency of all external and private costs and benefits resulting from businesses decisions. CRAFT UNION: A craft union is trade union which represents a particular type of skilled workers. E.g.; Musicians Union. CREDIT CRUNCH: A credit crunch is a liquidity crisis. Banks become nervous about lending money to each other and to personal and business customers. Where they are prepared to lend, they charge higher rates of interest to cover the risk. The result is a big fall in the supply of credit and an increase in the cost of borrowing. CURRENT ASSETS: It is assets in a company which can be realized in cash, sold or consumed within a year. Typically the sum of cash, cash equivalents, receivables, inventories, prepaid expenses and other current assets. E.g.; cash, debtors, stock.

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CURRENT LIABILITIES: It is a companys debts or obligations that are due within one year. Current liabilities appea r on a companys balance sheet and include short term debt, accounts payable, accrued liabilities and other debts. E.g.; creditors, overdraft etc. DEBENTURES: Debenture is a document that either creates a debt or acknowledges it. In corporate finance, the term issued for medium to long-term debt instrument used by large companies to borrow money. DE-INDUSTRIALIZATION: The decline of a countrys traditional manufacturing industry due to exhaustion of raw materials, loss of markets and competition from New ly Industrialized Countries (NICs). DE-LAYERING: The traditional way to achieve a flatter organizational structure is through de-layering. De-layering involves removing one or more levels of hierarchy from the organizational structure. DELEGATION OF AUTHORITY: Delegation of authority means the passing down of authority to perform tasks from higher to lower levels in the organization. DEMOCRATIC LAEDERSHIP: This type of leadership will put trust on employees and encourage them to make decisions. The m anagers will delegate them to the authority to perform some task (empowerment) and listen to their opinions. So it can take a long time to reach a final decision due to discussions and there will be two-way communication. DEVALUATION: It is when the price of a currency is officially decreased in a fixed exchange rate system. DEVELOPMENT AREA: It is a region of a country where businesses will receive financial support from the government to establish there. High unemployment is often a problem in these are as. It is synonymous to Brown Field and Enterprise Zone. DIAGONAL COMMUNICATION: This occurs when communication takes place between people holding different ranks in different departments. DIRECT COST: These costs are costs that are a direct result of producing a particular product. E.g.; material cost, wages. DIRECT SERVICES: Direct services are those services which are produced and consumed simultaneously. E.g.; the services provided by doctors, lawyers, teachers etc.

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DISECONOMIES OF SCALE: Diseconomies of scale mean the factors that lead to an increase in average costs as a business increases beyond optimum size in the long run. DISMISSAL: It is when an employer ends a contract of employment because of their poor performance or bad behaviour at work. DISPOSABLE INCOME: It is the money a person has left to spend after deductions, that is, tax and national insurance have been paid. It is a persons net pay which they can use as they wish. Disposable Income = Gross Pay Statutory Deductions. DIVIDEND: It is the share of profit given by the company to its shareholders. DIVISION OF LABOUR: The technique of breaking down of production process into a large number of smaller tasks done by specialists (experts) is known as division of labour. EARNINGS PER SHARE: Public companies may also report income as earnings per share, which is net profit after tax (net income) divided by the number of shares outstanding. ECONOMIC GROWTH: Economic growth is an increase in the value of goods and services produced by an economy over time. ECONOMIC RESOURCES: Economic resources are factors of production used to produce goods and services to satisfy human wants they include human resource: Labour and Entrepreneur, man -made resource: Capital and natural resource: Land. ECONOMIES OF SCALE: Economies of scale are the factors that lead to a reduction in average costs as a business increases in size in the long run. EFFICIENCY: It means to use the resources of the business as well as possible in a way that the firm gets the most benefit from them. EFTPOS: Electronic Funds Transfer at Point Of Sale is a way of paying for goods that involve the transfer of money electronically from customers accounts to a retailer. EMBARGO: An embargo is a complete ban on imports of certain goods to a country. An embargo may be used to stop imports of dangerous goods.

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EMPLOYERS ASSOCIATION: These are groups of employers who join together to give benefits to their members, also known as Em ployer Federations or Trade Associations. The members pay an annual subscription and in return they will receive benefits. EQUITY CAPITAL: It is that part of the capital of a limited company that is held in ordinary shares. EXCHANGE RATE APPRECIATION: When the value of the countrys currency goes up as compared to other currencies is known as appreciation. EXCHANGE RATE DEPRECIATION: When the value of the countrys currency falls as compared to other currencies it is known as depreciation. EXCHANGE RATE: Exchange rate is the rate at which one countrys currency can be exchanged for another currency. In other words, exchange rate of a country is its value in terms of other countries currencies. EXTERNAL GROWTH: When a business takes over or merges with another business. It is often called integration as one firm is integrated into another one. FEED BACK: It is the reply from the receiver which shows whether the message has been received and understood, and if necessary, acted upon. FISCAL POLICY: It is the government policy whereby it brings about expected changes in the economy either by increasing or decreasing tax rate and government spending. FIXED ASSETS (NON-CURRENT): These are items of value owned by the business, which are likely to be kept by the business for more than one year. E.g.; premises, motor vehicle, building etc. FIXED COST: Fixed costs are the costs of fixed factors that do not change when the level of output changes. It is also known as overheads. Rent and rates are examples of fixed costs. FLOW PRODUCTION: This is when large quantities of a product are produced in a continuous process. It is called such because products are flowing down the production line. E.g.; oil refining. FOREIGN EXCHANGE MARKET: It is defined as the market where foreign exchange is traded at a price which is expressed by the exchange

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rate. It enables to exchange different currencies by consumers, firms and government according to their demand and supply.

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FRANCHISE: A franchise is a business based upon the use of the brand names, logos and trading methods of an existing successful business. FRANCHISEE: The business taking out the franchise is called Franchisee. FRANCHISOR: The business granting the franchise is called Franchisor. FRINGE BENEFITS: These are benefits given to the employees in addition to their wages or salaries. The fringe benefits or perks are not given in the form of money and are liable to income tax. Exampl e; company car, free pension, health insurance, cheap meals etc. GEARING: Gearing is the relationship between the loan capital and share capital of a business. A company is said to be high geared if it has a large proportion of loan capital to share capita l. A low geared company has a relatively small amount of loan capital. Gearing Ratio = Loan Capital Share Capital 100 . GENERAL UNION: A general union is a Trade Union which represents workers from a variety of trades and industries. They are often uns killed but also include semi-skilled workers. E.g.; The Manufacturing Science and Finance Union. GLOBALIZATION: It occurs when firms see the scope of their business as being carried out on a world wide scale. Such firms are said to operate on a global scale. Global firms see the world as one large market rather than as a number of separate markets. They want to sell the same product in the same way everywhere. GO SLOW: A go slow is when employees do their normal tasks but more slowly than usual or at as minimum a pace as possible in order to slow down production, but avoid disciplinary action or deliberately take longer to complete their normal tasks. GOODWILL: An intangible asset which provides a competitive advantage such as a strong brand, reputation, or high employee morale. This can be part of a businesss assets and can be given a value. GRAPEVINE: The network of informal communication is called grapevine because the origin and direction of the flow cannot be easily traced.

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HIERARCHY: It shows the different levels of management and authority responsibility distribution in the organization. HIGH HOURLY RATE: It implies that the hourly rate is higher than the previous years hourly rate or hourly rate paid by similar businesses. INCORPORATED BUSINESS: An organization formed with state governmental approval to act as an artificial person to carry on business (or other activities), which can sue or be sued, and (u nless it is non-profit) can issue shares of stock to raise funds with which it can start a business or increase its capital. INDIRECT COST: These are the costs that do not relate directly to a particular product and are shared between all the products the business produces. E.g.; rent, rates, office expenses. INDIRECT SERVICES: Indirect services are produced and consumed at different times. There is a time gap between production and consumption of indirect services. E.g.; insurance, banking, transport etc . INDUCTION TRAINING: It is when an introduction is given to new employee, explaining the firms activities, customs and procedures and introducing them to their new fellow workers. It helps the employees to find their way around the organization. INDUSTRIAL RELATION: The negotiations and relationship between a trade union and an employer is known as industrial relations. INDUSTRIALIZATION: It is a process of social and economic change whereby human society is transformed from a pre -industrial to an industrial state. This social and economic change is closely linked with technological innovation, particularly the development of large -scale energy production and metallurgy. INFLATION: Inflation is a sustainable increase in the general price level of goods and services over a period of time due to which value of money falls. INTERNAL GROWTH (ORGANIC): Internal growth occurs when a business expands its existing operations by selling mo re of its existing products. This could be achieved by investing more, selling to a wider market and it takes a long time for many businesses to provide a sound base for themselves.

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JOB ANALYSIS: It is the breaking down of jobs into its various parts. This helps the manager to see what the job consists of and whether the work merits a new person. The information may be used to prepare a job description and to decide the qualification and the exper ience needed and whether the post should be part-time or full-time. JOB APPRAISAL: An appraisal is a method of assessing the effectiveness of an employee against agreed targets. It is used in large organizations. The linking appraisal with performance -related pay has made appraisal popular. JOB CENTRES: Job centre are government run offices that advertise local job vacancies notified to them by local employers. JOB DESCRIPTION: Job description outlines the tasks, duties and responsibilities to be carried out by someone employed to do a specific job. It may be sent with an application form to a person applying for a job. It clearly states the duties of the job and helps the applicants to decide whether or not they want the job. JOB ENLARGEMENT: Job enlargement is where extra tasks of a similar level of work are added to a workers job description. This will reduce repetition involved in a persons work but overtime this will not increase a persons job satisfaction. JOB ENRICHMENT: It means giving workers more interesting, challenging and complex tasks that require more skill and/or responsibility. Additional training may be necessary to enable the employee to take on extra tasks. Workers should obtain a greater sense of achievement and possibly more recog nition of their work when they have successfully completed a tougher work. JOB PRODUCTION: This type of production involves the output of a single product to individual specification. E.g.; a tailor stitches garments according to customers order. JOB ROTATION: It involves workers swapping (rotating) round and doing each specific tasks for only a limited time and then changing round again. It is hoped to make boring jobs less tedious (boring) and to motivate employees by increasing their job satisfaction and get the job done.

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JOB SPECIFICATION: It is a document which outlines the personal requirements, qualification, expertise, physical characteristics etc needed

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for a job. It is also known as personal specification. This information is important part of the recruitment and selection and also provide the basis as to decide where the job may be advertised and whether an applicant is suitable for the post or not.

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JOINT VENTURE: It is a contractual agreement joining together two or more parties or businesses for the purpose of executing a particular business undertaking. All parties agree to share in the profits and losses of the enterprise. JUST IN TIME (JIT): It is a manufacturing system for keeping stock levels of raw materials and comp onent work-in-progress parts to a minimum and is made available just before they are needed so that minimum capital will be blocked in stock and saves on warehouse expenses. It helps to undertake other activities in the factory space. KAIZEN: Kaizen is a Japanese term which means continuous improvement. Improvement not only occurs due to investing more money in machinery but also by the co -operation of the workers. So workers frequently meet and discuss the problems of work and try to find solutions or workers are encouraged to forward their ideas to improve the quality of products. LAISSEZ FAIRE LEADERSHIP: Laissez is a French term which means leave to do. This type of leaderships tend to make all broad objectives of the business known to employees, b ut then they are left to make their own decision and organize their own work. Communication can be difficult in this type of organization as clear direction will not be given and the leader has a very limited role to play. LAY OFF: It means suspending or terminating the employment of workers because there is no work for them to do. If the laying off involves a permanent termination of employment, redundancy payments will be involved. It occurs when a business is in financial trouble and need to reduce its level of operations and workforce, continuous dislocation of production due to disruption at the suppliers factory etc. LEAN PRODUCTION: Lean production techniques are used by businesses to cut down waste and therefore increase efficiency. LIMITED (LTD): It means the liability of the shareholders is limited up to the amount invested by them in the company or up to an agreed amount.

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LIQUIDITY: It is the ability of a business to pay its short-term debts as they become due. The liquidity of a firm will depend on how easily it can turn its current assets into cash. LOAN CAPITAL: It consists of the long term loans of a business. It will include bank loans and debentures and possibly company bonds. LOCKOUT: It is when a firm locks out employees from their work places (premises). This may happen in a dispute when a firm believes that the workers may try to take over the premises or there is some s ecurity risk. MACRO ENVIRONMENT (PEST): The factors which are beyond the immediate control of the firm is called Macro environment like Political, Economical, Social, Technological etc. MARKET CAPITALIZATION: Those businesses which have more market capitalization are considered as larger firms, and businesses which have less market capitalization are considered as small firms. MARKET ORIENTED BUSINESS: Market oriented business is one which always tries to give consumers what they want and carries out ma rket research to find out about them before a product is being developed and produced. Market oriented businesses are better able to survive and be successful because they always keep a close watch on the price and products of other firms and are usually m ore prepared for changes in customer tastes. MARKET RESEARCH: Market research is the systematic gathering, recording, and analysis of data about issues related to marketing products and services. The goal of the marketing research is to identify and asses s how changing elements of the marketing mix impacts customer behaviour. MARKET SEGMENTATION: Market segmentation is the breaking down of a market for a product into different groups or types of consumers who have different needs or characteristics and ea ch segment may be targeted differently. MARKET STRUCTURE: The characteristics of a market which determine the behavior of firms operating within it. MARKET: Market is any arrangement through which buyers and sellers can have business transaction.(trade of goods and services)

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MARKETING BUDGET: It is the financial plan for the marketing of a product or product range for some specified period of time. It specifies how much money is available to market the product. MARKETING MIX: This is the full range of activities that may be used by a business to market its products (goods or services). This mix is usually referred to as the FOUR Ps of the marketing. The four Ps are Product, Price, Promotion and Place (traditional marketing mi x). But there are seven elements in the marketing mix that is product, price, promotion, place, people, physical environment and packaging. MARKETING STRATEGY: It is a report that sets out the marketing objectives of a business. It refers to the business as a whole, not just to one product. MARKETING: marketing is the management process which identifies customer wants, anticipates their future wants and then goes about satisfying them profitably. MASS MARKET: The mass market is a general business term describing the largest group of consumers for a specified industry product. It is the opposite extreme of the term niche market. MASS PRODUCTION: This involves the output of identical and standardized products. Production is continuous and the production i nputs tend to be highly specialized. E.g.; car production, T.V. production, Audio etc. MATURITY: This is the point in the product life cycle when the sales and profit of the product are at their highest and the product is firmly established in the market. MERCHANDISING: The methods used by the retailers to display the goods available for sale in their shops are collectively called merchandising. MERGER: Merger or amalgamation is when the owners of two businesses agree to join their firms together to make one business. MICRO ENVIRONMENT: The factors which are in the immediate control of the firm is called Micro environment like suppliers, workforce, investors etc. MINIMUM WAGES: The lowest level of wages that an employer can legally pay a worker for the work done.

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MONETARY POLICY: This is the government policy on the money supply controlled by Central Bank by which interest rates are either increased or decreased to bring out expected effect in an economy. MONOPOLISTIC COMPETITION: A market structure with freedom of entry and exit, differentiated products and a large number of competitors. MONOPOLY: A market structure in which only one firm supplies the entire output, and there are no barriers to entry and exit. MOTIVATION: Motivation is the inner drive that directs a persons behavior towards goals. Motivation can be defined as a process which energizes, directs and sustains human behaviour. MULTINATIONAL COMPANIES/TRANSNATIONAL (MNCs): A multinational corporation (MNC) or transnational corporation (TNC), also called multinational enterprise (MNE), is a corporation or an enterprise operating in several countries but managed from one (home) country. NATIONALIZATION: It is the transfer of ownership from private sector to public sector industry is called as Nationalization. NEGOTIATION: It is when there is a joint decision making involving bargaining between representatives of the management and of the work force within a firm. The aim is to arrive at a mutually acceptable agreement. NET ASSETS: It shows the net value of all the assets owned by the business. These assets must be paid for, or financed by money to put into the business in two ways as shareholders, fund and long -term liabilities. Net Assets = Fixed Assets + Working Capital. NET CASH FLOW: The difference between the inflow and outflow of cash during a specific period (e.g.; a week, month) is known as the net cash flow. Net Cash Flow = Total Cash Inflow Total Cash Outflow. NET EARNINGS: It is a persons total income from all sources minus any deductions. NET SALES: Net sales mean net value of the sales for which the company has sent invoices during the period. Net Sales = Total Sales Sales Returns.

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NICHE MARKET: It is a small usually specialized segment of a much larger market. It may be a very narrow, but specialized part of an existing market. NO STRIKE AGREEMENT: It is reached when the trade unions and the management agree to have pay dispute settled by an independent Arbitrator instead of taking industrial actions. But both side s have agreed to accept the decision of the Arbitrator. OFF THE JOB TRAINING: It is all the training that is done away from the actual work place. This may take place in any training agency or local college, although many firms also have their own train ing centre. It can be used to develop more general skills and knowledge that can be used in a variety of situations. A broad range of skills can be taught using these techniques. OLIGOPOLY: A market structure with a small number of dominant firms, producing heavily branded products with some barriers to entry. ON THE JOB TRAINING: It is the training that takes place in the place of work. It may consist of being shown the job step -by-step by an experienced worker, or it may simply be watching someone do a job and trying to copy that person. OPERATING PROFIT: It is the profit made from a firms normal and regular business activities. OPPORTUNITY COST: The next best alternative forgone while making a choice of good or service. OVER DRAFT: It is an agreement with a bank that allows a customer to draw out more money than is in the current account, up to an agreed limit. An overdraft is shown as a current liability in a firms balance sheet. OVER TIME BAN: An over time ban is when employees refuse to work longer than their normal working hours as they are not obliged to. It may disrupt the firm, especially at very busy times or when there is a special order that has to be finished quickly. PACKAGING: It refers to all the activities involved in designing the physical container or wrapper for a product. Packaging of a product goes along with branding. It is also used for promotion and selling appeal helps to protect, preserve, transport, inform, and sell the products.

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PARTNERSHIP DEED: The agreement between the partners put down in writing forms for the Partnership Deed. It is a document containing the various aspects agreed upon by the partners. It is also called the Partnership Agreement or Articles of Partnership. PARTNERSHIP: Partnership exists when two or more people carry on business together with a view to make a profit. The maximum number of partners allowed is twenty, except in professional partnerships like solicitors, accountants etc. The partners set out on a Deed (agreement) of partnership. The deed contains all the terms and conditions for the running of the business. PATERNALISTIC LEADERSHIP: It is when managers make decisions in best interest of workers after consultation. The leader act s like the head of a family, doing what is thought to be the best for the firm and its workers and the reasons for a decision are explained. However the leaders make all the major decisions themselves and delegate very little. PEAK OR BOOM: A period in the business cycle when the business activity is at a very high level. During boom, business confidence, investment and employment will be high. Many firms will be experiencing high levels of demand and profits will be high for most firms, but wages, interest and prices are likely to be rising. PENETRATION PRICING: It is when the price is set lower than the competitors prices in order to be able to enter a new market. It ensures that sales are made and the new product enters the market. The product is sold at a low price so sales revenue may be low. PERFECT COMPETITION: A market structure with perfect knowledge, many buyers and sellers, freedom of entry and exit and a homogeneous product. PERFORMANCE RELATED PAY (PRP): It is a payment which is related to the effectiveness of the employee in order to motivate or encourage his/her performance. It is very like a bonus and is usually paid to salary owners. PICKETING: It is when employees guard (who are taking industrial action stand) at the entrance or outside their work place to prevent or protest at the delivery of goods, arrival and departure of other employees and demonstrate with banners or slogans etc. they try to persuade other employees not to go to work. If they are successful, then the production at the factory may be halted altogether.

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PIECE RATE: It is where the workers a paid depending on the quantity of the products they produce; the more they make, the more they get paid. Workers will usually be paid a fixed amount for each item they make. PLC: Plc means public limited company and the shares of the company are offered to the public subscription. PRESSURE GROUPS: Organizations that develop in order to tackle a matter of vital interest to the members of the group (e.g.; campaigning against businesses that cause pollution, or test their products on animals). They do not have any direct political power, but they often aim to influence the actions of local government and central government, as well as the actions of the businesses. Pressure groups can easily be classified as follows; 1. Interest groups: These groups are established to further the interests of its members and to make the general public aware of its cause. 2. Cause groups: These groups are established to further a particular cause as to make the general public aware of this cause. The basic difference between the two groups is that interest groups are motivated by self-interest, whereas cause groups are more concerned about other people and the environment. pressure groups try to exert influence in a number of ways, including arranging boycotts of products, creating adverts publicly for the business, holding public demonstrations, and lobbying the government. Basically, pressure groups aim to create as much publicity and awareness of their cause as possible, in the hope that this will stop the businesses from continuing their actions. Their success of a pressure group in achieving its aim(s) will depend on a number of factors, the most important of which are; 1. Their available funds and resources 2. Their organizations ability 3. Their level of public sympathy 4. Their access to important politicians and people in powerful positions in the Industry. 5. Their reputation. PRESSURE GROUPS: Pressure groups are organizations the share common interests or point of views which they seek to promote. They try to influence others to bring about change through lawful and peaceful methods. PRICE ELASTICITY: Elasticity shows the response of a products demand (customers) towards its price changes. A small change in price leads to a

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greater change in the quantity demanded and a small decrease in the price of a product or increase in the price of the close substitute product leads to a greater increase in the quantity demanded.

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PRICE SKIMMING: It is where a high price is set for a new product on the market. The high price may be due to new invention or high quality. It may put off some customers due to high price. PRICE TAKER: A firm that is unable to influence the price at which it sells its products. PRIMARY PRODUCTION: Primary production makes use of the gifts of nature; here raw materials are extracted from nature. It is the first stage of production. It includes mining, fi shing, forestry, farming etc. Primary production is also called primary industry. PRIVATE BENEFITS: The result of business decision to the business and its owners which includes revenue from sales, resulting profits and dividends to pay to shareholders is known as private benefits. PRIVATE COSTS: The costs involved when businesses produce and sell products or services are known as private costs. It includes things such as wages to the employees cost of advertising, raw materials etc. PRIVATE SECTOR: Private sector is made up of firms that are owned privately. They are owned either by individuals or business groups operating as sole traders, partnerships, co-operatives and limited companies. Their main purpose is to make profit. PRIVATISATION: It is the transfer of ownership from public sector to the private sector industry is called as Privatization/De -nationalization. PROACTIVE FIRMS: These firms try to anticipate change in their external environment. They monitor their environment. PRODUCT LIFE CYCLE: It is a theory stating that all products go through a number of similar stages before they come to an end or are withdrawn from the market. The length of the cycle will be different for each product. PRODUCT ORIENTED BUSINESS: Product oriented business is where a firm decides what to produce and what price to charge for its products without taking the market into full account. They often produce basic necessities of life.

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PRODUCTION: Production is the process by which raw materials are transformed (converted) into semi finished/ finished goods suitable for use and delivered to customers at the right time, at the right place, right quantity, right quality, at the right price. PRODUCTIVITY AGREEMENT: It is where the workers and management agree for an increase in benefits, in return for an increase in productivity. Because presently workers would be producing a larger output in the same time as before. PRODUCTIVITY: Productivity is the output measured against the inputs (usually labour) used to create it over a given period of time. Productivity = Output input (Number of employees). PROFIT SHARING: It is a system where by a proportion of a company profit is paid out to the employees. It acts as an incentive since workers share in the success of the firm. It is paid out as a bonus either at the end of the financial year or every half year. PROFITABILITY: Profitability means the ability of a firm to generate net income (profit) on a consistent basis. It is often measured by different profitability ratios. PROMOTION PRICING: It is when a product is sold at a very low price for a short period of time. It is helpful to clear the unwanted stock that will not sell. But the sales revenue will be low due to low price. PROMOTION: Promotion is the part of the marketing mix where it is decided how a product should be marketed or sold. Promotion is itself a mix of methods like advertising, sales promotion, direct marketing, sponsorship, personal selling, after sales service and custome r care etc. PROSPECTUS: It is a preliminary printed statement that describes an enterprise (as a business or publication) and that is distributed to prospective buyers, investors, or participants as an invitation to buy the shares or debentures of the company. PSYCHOLOGICAL PRICING: It is when a particular attention is paid to the effect that the price of a product will have upon consumers perceptions of the product. It involves charging a very high price for a high quality product to target those who bu y it as a status symbol, charging price which is just below a whole number. PUBLIC SECTOR: Public sector business organization is one which is owned, managed and controlled by the government or any local authority.

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Their objective is to provide goods or s ervices at a reasonable price and has welfare motive. They are also known as Public (Sector) Undertakings.

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QUALITY ASSURANCE: It is the steps taken by the firms to make sure that there is a known standard of quality built into all its products and als o make sure that the standards of quality it sets are met in all aspects of its work. QUALITY CONTROL: It is the method used by the firms to make sure that their products are of the right quality. This is usually done by inspecting the product at every stage during production or by testing the goods at every stage of production. QUALITY: Quality is the features or the characteristics of a product that best satisfies the needs and wants of the customers. QUOTA: These are the most serious barriers to trade, because they place an upper limit on the quantity of foreign goods entering a country. A quota reduces the quantity of imports without changing their prices. REACTIVE FIRMS: These firms wait until change has happened and then decide what to do. They are taken by surprise and tend to move from one crisis to another. As a result, decision making is rushed and tends to be less effective. RECESSION: It is a phase in the business cycle when economic activity is falling. There will be a fall in GDP, consumer s pending on goods and services. Some may begin to lay off workers. RECOVERY/EXPANSION: During this stage of the business cycle, income will rise and the business output will begin to increase. Firms will invest more and consumers will start to increase spe nding. Many businesses will be taking on more employees. RECRUITMENT: It involves attracting and selecting the best candidates for vacancies that arises in the business. Some firms recruit all their jobs through their personnel department (human resource department) or Employment Agencies. It is a long process starting from when vacancy arises and till the starting of training. REDUNDANCY BENEFITS: The amount paid to an employee that has been laid off (redundant), often calculated in relation to the length of employment is called redundancy benefits.

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REDUNDANCY/RETRENCHMENT: It happens when employees lose their jobs because they are no longer needed by the employer. It is not due to any aspect of their work being unsatisfactory but may occur when the business needs to reduce the number of its employees. There is no redundancy if a person is replaced by someone doing the exact same work. RETAINED PROFIT: Business (especially limited companies) usually keeps some part of the profit every year for the future use, this is also known as ploughed back profit. RETRENCHMENT: An employee is said to be retrenched when his or her job becomes redundant and the employer either cannot offer the employee any alternative position, or any alternative position offered by the employer cannot be accepted by the employee. REVALUATION: It is the official increase in the price of a currency within a fixed exchange rate system. REVENUE: Revenue means the money (income) received by a business by selling its goods or services. ROYALTY: It is a payment made by the franchisee for the use of franchise. The amount is usually a percentage of revenues obtained through its use. SALES PROMOTION: Sales promotion is used to support advertising and encourage new or existing consumers to buy the p roduct. It is used in the short term to boost sales. This is sometimes known as below the line advertising technique. SATURATION: A stage in the products life cycle in which everyone who might want the product already has it. If a company is in this sta ge, then it could indicate that the company is not innovative, or that competitors have been able to provide superior product offerings. SCALE OF PRODUCTION: Scale of production describes either the quantity produced or the size of the plant used for prod uction. Thus, large scale production means that goods are produced in very large quantities, which needs large factories. SCARCITY: It means that available resources are not enough to satisfy everyones wants completely.

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SECONDARY PRODUCTION: Secondary production converts raw materials into manufactured goods. It gets raw materials produced by the primary industry and changes them into finished or semi -finished goods. It is second stage of production. It includes fish factory, garment factory etc. SHAREHOLDERS FUND: This is the total sum of money invested into the business by the owners of the company shareholders. This money is invested in two ways; share capital and reserves (profit and loss account reserves or Retained Profit). Shareholders Fund = Share Capital + Reserves/Retained Profit. SHARES: Shares are the units into which the capital of a limited company is divided. Shares are of two kinds; ordinary shares and preference shares. SHOP STEWARD: A shop steward is an unpaid representative of a trade union at factory/office level. If the worker decides to join the trade union they will pay an annual subscription (a yearly fee). SINGLE UNION AGREEMENT: A single union agreement is when a firm recognizes only one Trade Union at representing all its employees. Workers can join other unions but the firm will only deal with one union. All collective bargaining is therefore between the firm and that one union. SOCIAL BENEFITS: These are the positive effects that a firm or an industry has upon its society. SOCIAL COST: The spillover effects or negative externalities caused to the whole of society as a result of a business decision. It is made up of private cost of the business plus external costs. SOCIAL RESPONSIBILITY: A firm which is ethical with regard to the society as a whole and the community within which it is based and takes decisions that may benefit stakeholders other than shareholders described as social responsibility. SOLE TRADE: The simplest and the most common form of private sector business is the sole trader, sole proprietorship, or one man businesses. It is owned and controlled by a single person, who invest entire capital and run the business with or without assistance. SOLVENCY: Solvency is when the value of a companys total a ssets is greater than the total of its external debts. This means that if a company

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closed and all of its assets were sold it would be able to pay off all of its debts. It is illegal for a company to trade if it is insolvent.

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SPAN OF CONTROL: Span of control is the number of subordinates working directly under a manager. It can be either wide or narrow. If the number of subordinated working under a manager is more, it is a wider span of control. If it is less, it is a narrow span of control.

SPECIALIZATION: Concentration in the production of good and service by an individual, firm, industry or country through which they gain expertise in it. Specialization is the division of productive activities among people, industry, region and countries as no individual, industry or area or country is totally self sufficient.

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STAKEHOLDERS: Stakeholders are individuals or groups which affect and are affected by the business. They are two types; internal and external. STOCK TURNOVER RATIO: It is the number of times a year the average stock can be sold off. It measures the speed at which the stock is cleared. Sometimes it is also called as rate of stock turn. Stock Turnover Ratio = Cost Of Goods Sold Average Stock . STRIKE: It is when employees refuse to work. They do so during an industrial action to pressure on their employers in pursuit of a claim. In this case trade union members as well as employers lose money. SWOT ANALYSIS: This is a technique used to help the marketing department to assess a product or to review the whole or part of an organization in terms of its Strength, Weaknesses, Opportunities, and Threats. TAKEOVER (ACQUISITION): It is when one business buys out the another business which then becomes a part of the predator business. TARGET AUDIENCE: A target audience or a target group is the primary group of people that something, usually and advertising campaign is aimed at appealing to market the products. A target audience can be people of a certain age group, gender, marital status etc. TARGET MARKET: It is the market segment at which a firm aims its marketing. The exact part the market targeted will depend on the results

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of the firms market research, and the marketing mix used will depend on the target market.

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TARIFF: Tariff means a type of tax imposed on imports or which increases the cost of import. TERTIARY PRODUCTION: Tertiary production is the part of the economy that provides services to other industries and to the public. It is made up of firms that sell and distribute goods produced by the primary and secondary industries. It is third stage of production. It also includes all other services like banking, insuran ce and transport. They all help to make trade and the distribution of goods run smoothly. These are sometimes known as Transnational Businesses or Global Businesses. This is the current share price multiplied by the number of shares. TIME RATE: It is a payment according to the length of time worked rather than according to the amount of goods produced. Basic wages are often worked out based on a time rate. TOTAL COST: It includes all the costs involved in the production of products or services. (Total Cost = Fixed Cost + Variable Cost) TQM: Total Quality Management aims at making all employees at every level in a firm responsible for the quality of the firms products as everyone is responsible for the quality of his or her own work. TRADE BLOC: A trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where regional barriers to trade (tariffs and non-tariff barriers) are reduced or eliminated among the participating states. TRADE CYCLES/BUSINESS CYCLES: The business cycle is a useful way of showing the countrys growth records. At bottom of the cycle, economic growth will be low or perhaps even negative. At the top, economic growth will be relatively high. It is argued that all economies go through these cycles, which illustrates fluctuations in economic activity. TRADE UNION: Trade union is an organization or group of workers to achieve better wages, better working conditions and job security through collective bargaining. TRADEMARK: It is a name, logo or symbol used to distinguish a product from competitors products. It is an essential part of branding. A legally protected brand name is called a trade mark.

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TRAINING: Training is a process whereby an individual acquires job related skills and knowledge. It is about applying knowledge to work. The main benefits of training are improved productivity and motivation of staff and better quality products being made. TROUGH/SLUMP/DEPRESSION: A slump occurs when the economy is in the bottom of the business cycle. Many firms will be going out of business and unemployment levels will be very high. UNINCORPORATED BUSINESS: It is any business that has not been incorporated by statute (law) or by the register of companies. It is run either a sole trader or a partnership. An incorporated business does not have its own separate legal existence. Its owners will be personally liable for all the debts of the business, that is, they have unlimited liability. UNIQUE SELLING POINT (USP): It is when the retailer is displaying the products in a particular place in the shop such that the customers could identify them easily which helps in easy disposal of the products. UNLIMITED LIABILITY: Unlimited liability is when the owners are personally liable for the debts of the business and it needs to be paid even from the personal properties of the owners. VARIABLE COST: Variable costs are the costs that change in direct relation to the output of a firm. It increase with increasing output and vice-versa. Cost of material and direct labour are examples of variable costs. VENTURE CAPITAL: Venture capitalist provide fund for small and medium sized companies that appear to have some potential, but are considered too risky by other investors. Venture capitalists often use their own funds, but also attract money from other financial institutio ns and business angels. WORK COUNCILS: These are committees made up of the representatives of the workers and the managers within a firm. They meet regularly to talk about problems and plans for the future. WORK TO RULE: A work to rule is when the rules are strictly obeyed so that work is slowed down. So workers stick rigidly to the rules and regulations laid down by the Company in order to slow down the amount of work done. WORKING CAPITAL: It is the cash available for the enterprise for the day-to-day operations. It allows bills to be paid while awaiting payment of

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cash for sales. In accounting, it is current assets minus current liabilities. Working Capital = Current Assets Current Liabilities.

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