Business Terms and Definitions: A Comprehensive List
Business Terms and Definitions
Financial Terms
Income Budget
The budget which sets out estimates of the likely demand for and value of the firm’s sales.
Interest Rates
The additional cost for borrowing money.
Liquidity
The measure of how close an asset is to cash.
Loans
Borrowing money from the bank.
Long-Term Liabilities
Debts that have longer than a year to be paid back.
Loss Leaders
A low price on a product to attract customers.
Margin of Safety
The difference between the actual level of output and the break-even output.
Mortgages
Long-term loans used to pay for expensive things like buildings.
Non-Current Assets
Assets that are harder to turn into cash.
Overdrafts
The ability to take out more money from the bank than is already there.
Business Operations and Strategy
Inputs
The resources (land, labor, capital, enterprise) that go into producing goods and services.
Integration
Growth of a business gradually.
International Trade
Countries able to exchange produce between each other.
Just in Time Systems
Having stock come into the business just as needed.
Lean Production
Making the business more efficient by reducing the amount of inputs, usually in terms of time.
Leasing
Being able to rent machinery, vehicles, and equipment.
Location
The place (or places) from which a firm does business. Can be both a physical location and also virtual.
Market Growth
The percentage growth in the size of the market, measured over a specific period.
Market Research
The process of planning, collecting, and analyzing data relevant to help make marketing decisions.
Market Segmentation
The process of dividing a market into smaller sections (segments) which contain customers with similar needs and wants.
Market Share
The share of the total market that is owned by a particular business, product, or brand. Usually expressed in percentage terms. The firm with the largest percentage market share is known as the market leader.
Market Size
The total value or quantity of demand in a specific market over a specific period. Can be measured in value terms (e.g., sales) or in terms of quantities (e.g., units) bought or sold.
Market
Any place (e.g., physical, electronic) where buyers and sellers come together with a view to exchanging transactions.
Monopolies
When a business has more than 25% of the market share.
Multinationals
Businesses that have operations in other countries.
Niche Market
A smaller part of a larger market in which customers have more specific needs and wants.
Opportunity Cost
The cost of a decision as measured by the benefits foregone of the next best alternative.
Organizational Charts
Charts showing the structure of a business.
Patent
The right to be the only user or producer of a specified product or process.
Penetration Pricing
A low price on a product to gain market share.
Primary Research
Market research that involves the collection of data that does not yet exist.
Product Life Cycle
The life cycle a product goes through in terms of levels of demand.
Profit
The difference between total sales and total costs.
Promotional Pricing
Prices on sale to boost sales for a short term.
Human Resources and Management
Industrial Relations
The relationship between employer groups and employee groups.
Job Enrichment
Making employees’ jobs more interesting.
Job Production
Producing one product that generally meets specific requirements.
Job Rotation
Switching employees’ jobs around.
Motivation Theory
Maslow’s theory of what is the hierarchy of needs for all employees.
Perks
Benefits that employees receive as part of the employment package.
Piece Rates
Employees paid by the number of items made.
Business Structures
Limited Liability
Shareholders are only liable for the money they have invested: not for the overall debts and liabilities of their company.
Partnership
A business owned by 2-20 people.
Public Limited Companies
Businesses that can sell shares on the stock exchange.
Public Sector Businesses
Businesses owned by the government.