Introduction to Business Glossary


absolute advantage:  when a country has a monopoly on producing a product or is able to produce it at a cost below that of all other countries.

advertising: paid nonpersonal communication through various media by organizations and individuals who are in some way identified in the advertising message.

affirmative action: employment activities designed to “right past wrongs” endured by women and minorities.

annual report: a yearly statement of the financial condition and progress of an organization covering a one-year period.

balance sheet: the financial statement which reports the financial position of a firm on a specific date. A balance sheet is composed of assets, liabilities and owner’s equity.

blue chip stocks: stocks of high-quality companies.

brand: a name, symbol, or design (or combination of these) that identifies the goods and services of one seller or group of sellers and distinguishes them from those of competitors.

brand awareness: the first product recalled when a product category is mentioned.

brand equity: a combination of factors such as awareness, loyalty, perceived quality, the feeling and images, and any other emotion people associate with a brand name.

budget: a financial plan that allocates resources based on projected revenues.

broker:  a wholesaler who brings together buyers and seller on a temporary basis.

business: an organization or economic system where goods and services are exchanged for one another or for profit.

business plan: a detailed written statement that describes the nature of the business, the target market, the advantages the business will have over competitors, and the resources and qualifications of the owners.

business enterprise: an organization involved in exchanging goods, services or money to earn a profit.

capitalism: an economic system in which all or most of the means of  production and distribution are privately owned and operated for profit.

cognitive dissonance: consumer doubts after the purchase about whether or not the purchase was the best product at the best price.

collective bargaining: the process whereby union and management representatives reach a negotiated labor-management agreement.

commerce: activities which remove all hindrance that stands in the way of satisfying human wants.

commodity exchange: securities exchange which specializes in the buying and selling of precious metals and minerals and agricultural goods.

common stock: the most basic form of ownership of firms; it includes voting rights and dividends if dividends are offered by the firm.

contract: a legally enforceable agreement between two or more parties.

core competencies: functions that the organization can do as well or better than anyone else in the world.

cross-functional teams: groups of employees from different departments who work together on a semi-permanent basis (as opposed to the temporary teams established in matrix-style organizations).

dividends: the part of the firm’s profits that goes to stockholders.

entrepreneurial team: a group of experienced people from different areas of business who join together to form a managerial team with the skills needed to develop, make and market new products.

Federal Deposit Insurance Corporation (FDIC): an independent U.S. government agency that insures bank deposits.

fixed assets: resources of a permanent nature, such as land, buildings, furniture, and fixtures.

focus group: a small group of people who meet under the direction of a discussion leader to communicate their feelings concerning an organization, its products, or other important issues.

General Agreement on Tariffs and Trade (GATT): agreement among 124 countries which provided a forum for negotiating mutual reductions in trade restrictions.

givebacks: concessions made by unions to help employers remain competitive and save jobs.

global marketing: selling the same product in essentially the same way everywhere in the world.

golden parachute: a sizable severance package for corporate managers whose jobs may be threatened by a takeover by another firm.

green product: a product whose production, use, and disposal don’t damage the environment.

gross domestic product (GDP): the total value of goods and services produced in a country in a given year.

horizontal merger: the joining of two firms in the same industry.

hygiene factors: factors that cause dissatisfaction if they are missing, but do not motivate if they are increased.

income stock: stocks that offer a high dividend.

industry: the process of producing something with a view to earning the profit.

information superhighway: the network of computers and telecommunications equipment that links people throughout the world into one unified communications system.

insider trading: the use of knowledge or information that a person gains through his or her position that allows the person to benefit from fluctuations in stock prices.

intangible assets: items that are not included in the current and fixed assets categories.

integrated marketing: the merging of all organizational efforts to please customers, employees, and other stakeholders.

job rotation: job enrichment strategy involving moving employees from one job to another.

joint stock company: an association of many persons who contribute money or money ‘s worth to a common stock and employ it for a common purpose.

joint venture: a partnership in which companies (often from two or more different countries) join.

laissez-faire (free-reign) leadership: leadership style that involves managers setting objectives and employees being relatively free to do whatever it takes to accomplish those objectives.

leveraged buyout: an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing.

line of credit: the amount of unsecured short-term credit a bank will lend a borrower that is agreed to ahead of time. 

Management by Objectives(MbO): a system of goal setting and implementation that involves a cycle of discussion, review, and evaluation of objectives.

managing diversity: building systems and a culture that unite different people in a common pursuit without undermining their diversity.

managerial accounting: the provision of information and analysis to managers within the organization to assist them in decision making.

mass customization: the design of custom-made products and promotions, including advertising.

merger: the result of two firms forming one company.

multiculturalism: a process of optimizing the contribution of people from different cultures.

multinational corporation: an organization that does manufacturing and make from in many different countries.

mutual fund: an organization that buys stocks and bonds and then sells shares in those securities to the public.

niche marketing: the process of finding very small but profitable market Segments and designing custom-made products for those People.

North American Free Trade Agreement: an agreement through which the United States, Canada, And Mexico formed a free trade area.

 Outsourcing: assigning various functions, such as accounting and legal work, to outside organizations.

personal selling: face-to-face presentation and promotion of products and services plus searching out prospects and providing follow-up service.

partnership: the relationship between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. 

promotion: an attempt by marketers to inform people about the product to persuade them to participate in an exchange.

reengineering: the rethinking and radical redesign of organizational processes to achieve dramatic improvements.

relationship marketing: establishing and maintaining beneficial exchange relationships with internal and external customers and all the other stakeholders of the organization.

restructuring: redesigning organizations to make them more productive.

sole proprietorship: a business owned by one person who liable for all debts.

stock exchange: an organization whose members can buy and sell Securities to the public.

strategic (long-range) planning: a process of determining the major goals of the organization and the policies and strategies for obtaining and Using resources to achieve those goals.

target marketing: the process by which an organization decides which market segments to serve.

trademark: a brand that has been given exclusive legal protection for Both the brand name and pictorial design.

unemployment rate: the number of civilians who are unemployed and tried to Find a job within the prior four weeks.

union: employee organizations that have the main goal of representing members in employee-management bargaining about job-related issues.

venture capitalist: individuals or organizations which invest in new businesses In exchange for partial ownership of the company.

vertical merger: the joining of two companies involved in different stages of related businesses.


Contributor: Sanzida Ferdous

From Mawlana Bhashani Science & Technology University