BUSINESS LANGUAGE QUICK REFERENCE GUIDE FOR SMALL BUSINESS 2007 148 SLIDE OJO OJO OK OK OK.pdf

8/12/2019 BUSINESS LANGUAGE QUICK REFERENCE GUIDE FOR SMALL BUSINESS 2007 148 SLIDE OJO OJO OK OK OK.pdf

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Business Language

Quick Reference Guide forSmall Business

2oo7

Diana Jean GuthrieD J Arts Publication

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Business language reference guide


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From employees to management understanding the terminology creates

better understanding of small business and the !or" place#

$eputation if you !ear the name be careful ho! you play the game#

%&erything you say or do portrays a message to someone# Be sure thatyour actions portray the image that you !ant your business to ha&e#


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An organi*ation that pro&ides goods and ser&ices to earn profits#

Profits

+he differences bet!een businesses re&enue and its e,penses#

%conomic system

A nations system for allocating its resources among its citi*ens#

-abor .human resources/

+he physical and mental capabilities of people as they contribute to

economic production#

0apitol

+he funds needed to create and operate a business enterprise#

Factors of production


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$esources used in the production of goods and ser&iceslabor capitol

entrepreneurs physical resources and information resources#

%ntrepreneur

An indi&idual !ho accepts the ris"s and opportunities in&ol&ed increating and operating a ne! business &enture#

Physical resources

+angible things organi*ations use in the conduct of their business#

nformation resources

Data and other information used by business#

Planned economy

%conomy that relies on a centrali*ed go&ernment to control all or most

factors of production and to ma"e all or most production and allocation

decisions#

3ar"et economy


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%conomy in !hich indi&iduals control production and allocation

decisions through supply and demand#

3ar"et

3echanism for e,change bet!een buyers and sellers of a particular goodor ser&ice#

nput mar"et

3ar"et in !hich firms buy resources from supplier households#

4utput mar"et

3ar"et in !hich firms supply goods and ser&ices in response to demand

on the part of households#

Pri&ati*ation

Process of con&erting go&ernment enterprise into pri&ately o!ned

companies#

0apitalism


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3ar"et economy that pro&ides for pri&ate o!nership of production and

encourages entrepreneurship by offering profits as an incenti&e#

3i,ed mar"et economy

%conomic system featuring characteristics of both planned and mar"eteconomies#

5ocialism

Planned economic system in !hich the go&ernment o!ns and operatesonly selected ma)or sources of production#

Demand

+he !illingness and ability of buyers to purchase a good or ser&ice#

-a! of demand

Principle that buyers !ill purchase .demand/ more of a product as its

price drops and less as its price increases#

Demand cur&e


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Graph sho!ing ho! many units of a product !ill be demanded .bought/at different prices#

5upply

+he !illingness and ability of producers to offer a good or ser&ice forsale#

-a! of supply

Principle that producers !ill offer .supply/ more of a product for sale asits price rises and less as its price drops#

5upply cur&e

Graph sho!ing ho! many units of a product !ill be supplied .offered forsale/ at different prices#

Demand and supply schedule

Assessment of the relationships bet!een different le&els of demand andsupply at different price le&els#

%6uilibrium price .mar"et price/


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Profitma,imi*ing price at !hich the 6uantity of goods demanded andthe 6uantity of goods supplied are e6ual#

5urplus

5ituation in !hich 6uantity supplied e,ceeds 6uantity demanded#

5hortage

5ituation in !hich 6uantity demanded e,ceeds 6uantity supplied#

Pri&ate enterprise

%conomic system that allo!s indi&iduals to pursue their o!n interests

!ithout undue go&ernment restrictions#

0ompetition

ying among businesses for the same resources or customers#

Perfect competition


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3ar"et or industry characteri*ed by numerous small firms producing anidentical product#

3onopolistic competition

3ar"et or industry characteri*ed by numerous buyers and relati&elynumerous sellers trying to differentiate their products from those of

competitors#

4ligopoly

3ar"et or industry characteri*ed by a handfull of .generally large/

sellers !ith the po!er to influence the price of their products#

3onopoly

3ar"et or industry in !hich there is only one producer !hich can

therefore set the price of its product#


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8atural monopoly

ndustry in !hich one company can most efficiently supply all needed

goods and ser&ices#

Business cycle

Pattern of short term ups and do!ns .e,pansions and contractions/ in an

economy#

Aggregate output

+otal 6uantity of goods and ser&ices produced by an economic system

during a gi&en period#

5tandard of li&ing

+he total 6uantity of goods and ser&ices that a country9s citi*ens can

purchase !ith the currency used in their economic system#

Gross domestic product .GDP/


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+otal &alue of all goods and ser&ices produced !ithin a gi&en period bya national economy through domestic factors of production#

8ominal GDP

GDP measured in current dollars or !ith all components &alued atcurrent prices#

$eal GDP

GDP calculated to account for changes in currency &alues and pricechanges#

Producti&ity

3easure of economic gro!th that compares ho! much a systemproduces !ith the resources needed to produce it#

8ational debt

Amount of money that a go&ernment o!es its creditors#

5tability


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0ondition in an economic system in !hich the amount of moneya&ailable and the 6uantity of goods and ser&ices produced are gro!ing at

about the same rate#

nflation

4ccurrence of !ide spread price increases throughout an economic

system#

0onsumer price inde, .0P/

3easure of the prices of typical products purchased by consumers li&ing

in urban areas#

:nemployment

-e&el of )oblessness among people acti&ely see"ing !or" in an economic

system#

$ecession

Period during !hich aggregate output as measured by GDP declines#

Depression


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Particularly se&ere and longlasting recession#

Fiscal policies

%conomic policies that determine ho! the go&ernment collects and

spends its re&enue#

3onetary policies

Go&ernment economic policies that determine the si*e of a nation9s

monetary supply#

5tabili*ation policy

Go&ernment policy embracing both fiscal and monetary policies !hose

goal is to smooth out fluctuations in output and unemployment and tostabili*e prices#

%thics

Beliefs about !hat are right and !rong or good and bad in actions thataffect others#

%thical beha&ior


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Beha&ior conforming to generally accepted social norms concerningbeneficial and harmful actions#

:nethical beha&ior

Beha&ior that does not conform to generally accepted social normsconcerning beneficial and harmful beha&ior#

Business ethics

%thical or unethical beha&iors by a manager or employee of anorgani*ation#

3anagerial ethics

5tandard of beha&ior that guide indi&idual managers in their !or"#

5ocial responsibility

+he attempt of a business to balance its commitments to groups and

indi&iduals in its en&ironment including customers other businessesemployees in&estors and local communities#

4rgani*ational sta"eholders


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+hose groups indi&iduals and organi*ations that are directly affected bypractices of an organi*ation and !ho therefore ha&e a stea" in its

performance#

0onsumerism

Form of social acti&ism dedicated to protecting the rights of consumers in

their dealings !ith businesses#

0ollusion

llegal agreement bet!een t!o or more companies to commit a !rongful

act#

;histle blo!er

%mployee !ho detects and tries to put an end to a company9s unethical

illegal or social irresponsible actions by publici*ing them#

0hec" "itting


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llegal practice of !riting chec"s against money that has not yet beencredited at the ban" on !hich the chec"s are dra!n#

nsider trading

llegal practice of using special "no!ledge about a firm for profit or gain#

4bstructionist stance

Approach to social responsibility that in&ol&es attempts to deny or co&er

up &iolations#

Defensi&e stance

Approach to social responsibility by !hich a company meets only

minimum legal re6uirements in its commitments to groups andindi&iduals in its social en&ironment#

Accommodati&e stance


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Approach to social responsibility by !hich a company if specificallyas"ed to do so e,ceeds legal minimums in its commitments to groups

and indi&iduals in its social en&ironment#

Proacti&e stance

Approach to social responsibility by !hich a company acti&ely see"s

opportunities to contribute to the !ell being of groups and indi&iduals in

its social en&ironment#

5ocial audit

5ystematic analysis of a firm9s success in using funds earmar"ed for

meeting its social responsibility goals#

5mall business administration .5BA/

Federal agency charged !ith assisting small business#

5mall business


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ndependently o!ned and managed business that does not dominate itsmar"et#

Business plan

Document in !hich the entrepreneur summari*es his or her businessstrategy for the proposed ne! &enture and ho! that strategy !ill be

implemented#

enture 0apitol 0ompany

Group of small in&estors !ho in&est money in companies !ith rapid

gro!th potential#

5mall business in&estment company .5B0/

Go&ernmentregulated n&estment 0ompany that borro!s money from

5BA to in&est in or lend to small business#

5mall business de&elopment center .5BD0/


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Program designed to consolidate information from &arious disciplinesand ma"e it a&ailable to small business#

Franchise

Arrangement in !hich a buyer .franchisee/ purchases the right to buyand sell the good or ser&ice of the seller .franchiser/#

General partnership .acti&e partner/

Partner !ho acti&ely manages a firm and !ho has unlimited liability forits debts#

-imited partner

Partner !ho does not share in a firm9s management and is liable for itsdebts only to the limits of said partner9s in&estments#

5ole proprietorship

Business o!ned and usually operated by one person !ho is responsiblefor all its debts#

:nlimited liability


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-egal principle holding o!ners responsible for paying off all debts of abusiness#

-imited liability

-egal principle holding in&estors liable for a firm9s debts only to thelimits of their personal in&estments in it#

0orporation

Business that is legally considered an entity separate from its o!ners andis liable for its o!n debts# 4!ner9s liability e,tends to the limits of their

in&estments#

+ender offer

4ffer to buy shares made by a prospecti&e buyer directly to a target

corporation9s shareholder !ho then ma"e indi&idual decisions about

!hether to sell#

Double ta,ation


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5ituation in !hich ta,es may be payable both by a corporation on itsprofits and by shareholders on di&idend incomes#

0losely held corporation .or pri&ate/

0orporation !hose stoc" is held by only a fe! people and is nota&ailable for sale to the general public#

Publically held corporation .or public/

0orporation !hose stoc" is !idely held and a&ailable to the generalpublic#

5 0orporation


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Form of o!nership allo!ing professionals to ta"e ad&antage of corporatebenefits !hile granting them limited business liability and unlimited

professional liability#

3ultinational 0orporation .transnational/

Form of corporation spanning national boundaries#

0orporation go&ernance

$oles of shareholders directors and other managers in corporatedecision ma"ing#

5toc" holder .or shareholders/

4!ner of shares or stoc" in a corporation#

5toc"

5hare of o!nership in a corporation

Preferred stoc"


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5toc" that offers its holders fi,ed di&idends and priority claims o&erassets but no corporate &oting rights#

0ommon stoc"

5toc" that pays di&idends and guarantees corporate &oting rights butoffers last claims o&er assets#

Board of directors

Go&erning body of a corporation that reports to its share holders anddelegates po!er to run its daytoday operations !hile remaining

responsible for sustaining its assets#

0hief e,ecuti&e officer .0%4/

+op manager hired by the board of directors to run a corporation#

5trategic alliance

5trategy in !hich t!o or more organi*ations collaborate on a pro)ect for

mutual gain#

Joint &enture


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5trategic alliance in !hich the collaboration in&ol&es )oint o!nership of ane! &enture#

%mployee stoc" o!nership plan .%54P/

Arrangement in !hich a corporation holds its o!n stoc" in trust for itsemployees !ho gradually recei&e o!nership of the stoc" and control its

&oting rights#

nstitutional in&estor

-arge in&estor such as a mutual fund or a pension fund !hich purchases

large bloc"s of a corporate stoc"#

3erger

+he union of t!o corporations to form a ne! corporation#

Ac6uisition

+he purchase of one company by another#

Di&estiture

5trategy !hereby a firm sells one or more of its business units#


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5pinoff

5trategy of setting up one or more corporate units as ne! independent

corporations#

Globali*ation

Process by !hich the !orld economy is becoming a single independent

system#

mport

Product made or gro!n abroad but sold domestically#

%,port

Product made or gro!n domestically but shipped or sold abroad#

General agreement on tariffs and trades .GA++/

nternational trade agreement to encourage the multilateral reduction or

elimination of trade barriers#


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8orth American free trade agreement .8AF+A/

Agreement to gradually eliminate tariffs and other trade barriers among

:nited 5tates 0anada and 3e,ico#

%uropean :nion .%:/

Agreement among ma)or !estern %uropean nations to eliminate or ma"e

uniform most trade barriers affecting group members#

;orld trade organi*ation .;+4/

4rgani*ation through !hich member nations negotiate trading

agreements and resol&e disputes and trade policies and practices#

Absolute ad&antage

+he ability to produce something more efficiently than any other country

can#

0omparati&e ad&antage

+he ability to produce some products more efficiently than others


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8ational competiti&e ad&antage

nternational competiti&e ad&antage stemming from a combination of

factor conditions demand conditions related and supporting industries

and firm strategies structures and ri&alries#

Balance of trade

%conomic &alue of all products a country e,ports minus the economic

&alue of all products it imports#

+rade deficit

5ituation in !hich a country9s imports e,ceed its e,ports creating a

negati&e balance of trade#

+rade surplus

5ituation in !hich a country9s e,ports e,ceed its imports creating a

positi&e balance of trade#

Balance of payments

Flo! of all money into or out of a country#


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%,change rate

$ate at !hich the currency of one nation can be e,changed for the

currency of another country#

%uro

A common currency shared among most of the members of the %uropean

:nion .e,cluding Denmar" 5!eden and the :nited =ingdom#

%,porterFirm that distributes and sells products to one or more foreign countries#

mporter

Firm that buys products in foreign mar"ets and then imports them forresale in its home country#

nternational firm

Firm that conducts a significant portion of its business in foreigncountries#


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3ultinational firm

Firm that designs produces and mar"ets products in many nations#

-icensing agreement

Arrangement in !hich firms choose foreign indi&iduals or organi*ations

to manufacture or mar"et their products in another country#

Branch office

Foreign office set up by an international or multinational firm#

5trategic alliance

Arrangement .also called )oint &enture/ in !hich a company finds a

foreign partner to contribute appro,imately half of the resources neededto establish and operate a ne! business in the partner9s country#

Foreign direct in&estment .FD/

Arrangement in !hich a firm buys or establishes tangible assets in

another country#

>uota


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Business practice la!

-a! or regulation go&erning business practices in gi&en countries#

0artel

Association of producers !hose purpose is to control supply and prices#

Dumping

Practice of selling a product abroad for less than the cost of production#

Goal

4b)ecti&e that a business hopes and plans to achie&e#

5trategy

Broad set of organi*ational plans for implementing the decisions madefor achie&ing organi*ational goals#


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0orporate strategy

5trategy for determining the firm9s o&erall attitude to!ard gro!th and

the !ay it !ill manage its business on product lines#

Business strategy .or competiti&e strategy/

5trategy at the businessunit or productline le&el focusing on a firm9s

competiti&e position#

Functional strategy5trategy by !hich managers in specific areas decide ho! best to achie&e

corporate goals through producti&ity#

3ission statement

4rgani*ation9s statement of ho! it !ill achie&e its purpose in the

en&ironment in !hich it conducts business#

-ong term goal

Goal set for an e,tended time typically fi&e years or more into the future#

5hort term goal


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Goal set for the &ery near future typically less than one year#

ntermediate goal

Goal set for a period of one to fi&e years into the future#

5trategy formulation

0reation of a broad program for defining and meeting an organi*ational

goal#

5trategic goal

-ongterm goal deri&ed directly from a firm9s mission statement#

5;4+ analysis

dentification and analysis of organi*ational strengths and !ea"nesses

and en&ironmental opportunities and threats as a part of strategy

formulation#

%n&ironmental analysis


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Process of scanning the business en&ironment for threats andopportunities#

4rgani*ational analysis

Process of analy*ing a firm9s strengths and !ea"nesses#

5trategic plan

Plan reflecting decisions about resource allocations company priorities

and steps needed to meet strategic goals#+actical plan

General short range plan concerned !ith implementing specific aspects of

a company9s strategic plan#

4perational plan

Plan setting shortterm targets for daily !ee"ly and monthly

performance#

0ontingency plan


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dentifying aspects of a business or its en&ironment that might entailchanges in strategy#

0risis management

4rgani*ation9s methods for dealing !ith emergencies#

3anagement

Process of planning organi*ing and controlling an organi*ation9s

resources to achie&e its goals#Planning

3anagement process of determining !hat an organi*ation needs to do

and ho! best to get it done#

4rgani*ing

3anagement process of determining ho! best to arrange an

organi*ation9s resources and acti&ities into a coherent structure#

Directing


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3anagement process of guiding and moti&ating employees to meet anorgani*ation9s ob)ecti&es#

0ontrolling

3anagement process of monitoring an organi*ation9s performance toensure that it meets its goals#

+op manager

3anager responsible to the board of directors and stoc"holders for a

firm9s o&erall performance and effecti&eness#

3iddle manager

3anager responsible for implementing the strategies policies and

decisions made by top manager#

Firstline managers

3anager responsible for super&ising the !or" of employees#

+echnical s"ills

5"ills needed to perform speciali*ed tas"s#


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4rgani*ational structure

5pecification of the )obs to be done !ithin an organi*ation and the !ays

in !hich they relate to one another#

4rgani*ational chart

Diagram depicting a company9s structure and sho!ing employees !here

they fit into its operations#

0hain of command

$eporting relationships !ithin a company#

Job speciali*ation

+he process of identifying the specific )obs that need to be done and

designating the people !ho !ill perform them#

Departmentali*ation

Process of grouping )obs into local units#


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Profit center

5eparate company unit responsible for its o!n costs and profits#

0ustomer departmentali*ation

Departmentali*ation according to types of customers li"ely to buy a gi&enproduct#

Product departmentali*ation

Departmentali*ation according to specific products being created#

Process departmentali*ation

Departmentali*ation according to production processes used to create a

good or ser&ice#

Geographic departmentali*ation

Departmentali*ation according to areas ser&ed by a business#


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Functional departmentali*ation

Departmentali*ation according to groups9 functions or acti&ities#

$esponsibility

Duty to perform an assigned tas"#

Authority

Po!er to ma"e the decisions necessary to complete a tas"#

Delegation

Assignment of a tas" responsibility or authority to subordinate#

Accountability

-iability of subordinates for tas"s assigned by managers#

0entrali*ed organi*ation


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4rgani*ation in !hich most decisionma"ing authority is held by upperle&el management#

Decentrali*ed organi*ation

4rgani*ation in !hich a great deal of decisionma"ing authority isdelegated to le&els of management at points belo! the top#

Flat organi*ational structure

0haracteristics of decentrali*ed companies !ith relati&ely fe! layers of

management and relati&ely !ide span of control#

+all organi*ational structure

0haracteristic of centrali*ed companies !ith multiple layers of

management and relati&ely narro! spans of control#

5pan of control

8umber of people super&ised by one manager#


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-ine of authority4rgani*ational structure in !hich authority flo!s in a direct chain of

command from the top of the company to the bottom#

-ine departmentDepartment directly lin"ed to the production and sales of a specific

product#

5taff authority

Authority based on e,pertise that usually in&ol&es ad&ising line

managers#

5taff members

Ad&isors and counselors !ho aid line departments in ma"ing decisions

but do not ha&e the authority to ma"e final decisions#

0ommittee and team authority

Authority granted to committees or !or" teams in&ol&ed in a firm9s daily

operations#


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Functional organi*ationForms of business organi*ation in !hich authority is determined by the

relationships bet!een group functions and acti&ities#

Di&isional organi*ation4rgani*ational structure in !hich corporate di&isions operate as

autonomous businesses under the larger corporation umbrella#

Di&ision

Department that resembles a separate business in producing and

mar"eting its o!n products#

3atri, structure

4rgani*ational structure in !hich teams are formed and team members

report to t!o or more managers#

nternational organi*ational structure

Approaches to organi*ational structure de&eloped in response to the

need to manufacture purchase and sell in global mar"ets#


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nformal organi*ation8et!or" unrelated to a firms9 authority structure of e&eryday social

interactions among company employees#

Grape&ine

nformal communication net!or" that runs through an organi*ation#

ntrapreneuring

Process of creating and maintaining the inno&ation and fle,ibility of a

small business en&ironment !ithin the confines of a large organi*ation#

5er&ice operations

Acti&ities producing intangible and tangible products such as

entertainment transportation and education#

Goods production

Acti&ities producing tangible products such as radios ne!spapers

busses and te,tboo"s#

:tility


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A product9s ability to satisfy human !ants#

4perations management .production/

5ystematic direction and control of the process that transform resources

into finished products that create &alue and pro&ide benefits to

customers#

4perations manager .production/

3anagers responsible for production in&entory and 6uality control#

4perations process

5et of methods used in production of a good or ser&ice#

Analytic process

Production process in !hich resources are bro"en do!n into components

to create finished products#

5ynthetic process

Production process in !hich resources are combined to ma"e finished

products#


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Production schedule specifying the se6uence and critical path forperforming the steps in a pro)ect#

4perations control

Process of monitoring production performance by comparing results !ith

plans#

Follo! up

Production control acti&ity for ensuring that production decisions are

being implemented#

3aterials management

Planning organi*ing and controlling the flo! of materials from design

through distribution of finished goods#

5tandardi*ation

:se of standard and uniform components in the production process#

Purchasing


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Ac6uisition of ra! materials and ser&ices that a firm needs to produce itsproducts#

5upplier selection

Process of finding and selecting suppliers from !hom to buy#

n&entory control

n&entory materials management recei&ing storing handling and

counting of ra! materials both partly finished goods and finished goods#

-ean system

Production system designed for smooth production flo!s that a&oid

inefficiencies eliminates unnecessary in&entories and continuously

impro&es production process#

Justintime production .J+/

Production method that brings together all materials and parts needed at

each production stage at the precise moment they are re6uired#


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3aterial re6uirements planning .3$P/Production method in !hich a bill of materials is used to ensure that the

right amounts of materials are deli&ered to the right place at the right

time#

Bill of materials

Production control tool that specifies the necessary ingredients of a

product the order in !hich they should be combined and ho! many of

each is needed to ma"e one batch#

>uality control

3anagement of the production process designed to manufacture goods

or supply ser&ices that meet specific 6uality standards#

>uality

A product9s fitness for use for its success in offering features that

consumers !ant#

+otal 6uality management .+>3/ .or 6uality assurance/


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+he sum of all acti&ities in&ol&ed in getting high 6uality products into the

mar"et place#

Performance 6uality

+he performance features offered by a product#

>uality reliability

0onsistency of a product9s 6uality from unit to unit#

>uality o!nership

Principle of total 6uality management that holds that the 6uality belongs

to each person !ho creates it !hile performing the )ob#

0ompetiti&e product analysis

Process by !hich a company analy*es a competitor9s products to identify

desirable impro&ements#

5tatistical process control .5P0/3ethods for gathering data to analy*e &ariations in production acti&ities

to see !hen ad)ustments are needed#


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0ontrol chart

Process control method that plots test samples on a diagram to determine

!hen a process is beginning to depart from normal operating conditions#

>uality(cost study

3ethod of impro&ing 6uality by identifying current costs and areas !ith

the greatest costsa&ing potential#

nternal failures

$educible costs incurred during production and before bad parts lea&e

the plant#

%,ternal failures

$educible costs incurred after defecti&e parts ha&e left the plant#

54 ?@@@

Program certifying that a factory laboratory or office has met the 6ualitymanagement standards of the nternational 4rgani*ation for

5tandardi*ation#


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Business process reengineering

$edesigning of business processes to impro&e 6uality performance and

customer ser&ice#

4utsourcing

5trategy of paying suppliers and distributors to perform certain business

processes or to pro&ide needed materials and resources#

5upply chain

Flo! of information materials and ser&ices that starts !ith ra! materials

suppliers and continues through other stages in the operations process

until the product reaches the end customer#

5upply chain management .503/

Principle of loo"ing at the supply chain as a !hole in order to impro&e

the o&erall flo! through the system#


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Job analysis

5ystematic analysis of )obs !ithin an organi*ation#

Job description

4utline of the duties of a )ob !or"ing conditions and the toolse6uipment and materials used to perform it#

Job specification

Description of the s"ills abilities and other credentials re6uired by a )ob#

$eplacement chart

-ist of each management position !ho occupies it ho! long that person

!ill li"ely stay in the )ob and !ho is 6ualified as a replacement#

%mployee information system .s"ills in&entory/

0omputeri*ed system containing information on each employee9s

education s"ills !or" e,perience and career aspirations#

$ecruiting


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Process of attracting 6ualified persons to apply for )obs an organi*ation is

see"ing to fill#

nternal recruiting

0onsidering present employees as candidates for )ob openings#

%,ternal recruiting

Attracting persons outside the organi*ation to apply for )obs#

alidation

Process of determining the predicti&e &alue of a selection techni6ue#

4nthe)ob training

+raining sometimes informal conducted !hile an employee is at !or"#

4ffthe)ob training

+raining conducted in a controlled en&ironment a!ay from the !or" site#

estibule training


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4ff the )ob training conducted in a simulated en&ironment#

Performance appraisal

%&aluation of an employee9s )ob performance in order to determine the

degree to !hich the employee is performing effecti&ely#

0ompensation system

5et of re!ards that organi*ations pro&ide to indi&iduals in return for

their !illingness to perform &arious )obs and tas"s !ithin the

organi*ation#

;ages

0ompensation in the form of money paid for time !or"ed#

5alary

0ompensation in the form of money paid for discharging the

responsibilities of a )ob#

ncenti&e program

5pecial compensation program designed to moti&ate high performance#


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Bonus

ndi&idual performance incenti&e in the form of a special payment made

o&er and abo&e the employee9s salary#

3erit salary system

ndi&idual incenti&e lin"ing compensation to performance in non sales

)obs#

ariable pay .or pay for performance/

ndi&idual incenti&e that re!ards a manager for especially producti&e

output#

Profitsharing plan

ncenti&e plan for distributing bonuses to employees !hen company

profits rise abo&e a certain le&el#

Gain sharing plan

ncenti&e plan that re!ards groups for producti&ity impro&ements#

Payfor"no!ledge plan


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ncenti&e program to encourage employees to learn ne! s"ills or become

proficient at different )obs#

Benefits

0ompensation other than !ages or salaries#

;or"ers9 compensation insurance

-egally re6uired insurance for compensating !or"ers in)ured on the )ob#

0afeteria benefit plan

Benefit plan that sets limits on benefits per employee each of !hom may

choose from a &ariety of alternate benefits#

%6ual employment opportunity

-egally mandated nondiscrimination in employment on the basis of race

creed se, or national origin#

Protected class


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5et of indi&iduals !ho by nature of one or more common characteristics

are protected under the la! from discrimination on the basis of that

characteristic#

%6ual employment opportunity commission .%%40/

Federal agency enforcing se&eral discriminationrelated la!s#

Affirmati&e action plan

Practice of recruiting 6ualified employees belonging to racial gender or

ethnic groups !ho are underrepresented in an organi*ation#

Act of 1?7@ .45


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Practice of instance or ma"ing un!elcome se,ual ad&ances in the !or"

place#

>uid pro 6uo harassment

Form of se,ual harassment in !hich se,ual fa&ors are re6uested in

e,change for )obrelated benefits#


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$ange of !or"ers9 attitudes &alues and beha&iors that differ by gender

race and ethnicity#

=no!ledge !or"ers

%mployees !ho are of &alue because of the "no!ledge they posses#

0ontingent !or"er

%mployee hired on something other than a fulltime basis to supplement

an organi*ation9s permanent !or" force#

-abor regulations

Process of dealing !ith employees !ho are represented by a union#

-abor union

Group of indi&iduals !or"ing together to achie&e shared )obrelated

goals such as higher pay shorter !or"ing hours more )ob security

greater benefits or better !or"ing conditions#

0ollecti&e bargaining

P b hi h l b d t ti t diti f


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Process by !hich labor and management negotiate conditions of

employment for union represented !or"ers#

0ost of li&ing ad)ustment .04-A/

-abor contract clause tying future salary or !age increases to changes in

consumer purchasing po!er#

;age reopener clause

0lause allo!ing !age rates to be renegotiated during the life of a labor

contract#

5tri"e

-abor action in !hich employees temporarily !al" off the )ob and refuse

to !or"#

%conomic stri"e

5tri"e usually triggered by stalemate o&er mandatory bargaining items#

5ympathy stri"e .secondary stri"e/

5tri"e in !hich one union stri"es to support action initiated by another#


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5tri"e brea"er

;or"er hired as permanent or temporary replacement for a stri"ing

employee#

3ediation

3ethod of resol&ing a labor dispute in !hich a third party suggests but

does not impose a settlement#

oluntary

3ethod of resol&ing a labor dispute in !hich both parties agree to submit

to the )udgment of a neutral party#

0ompulsory arbitration

3ethod of resol&ing a labor dispute in !hich both parties are legally

re6uired to accept the )udgment of a neutral party#

Psychological contract

5et of e,pectations held by an employee concerning !hat he or she !ill

contribute to an organi*ation .referred to as contributions/ and !hat the

organi*ation !ill in return pro&ide the employee .referred to as


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organi*ation !ill in return pro&ide the employee .referred to as

inducements/#

Job satisfaction

Degree of en)oyment that people desire from performing their )ob#

3orale

4&erall attitude that employees ha&e to!ards their !or" place#

+urno&er

Annual percentage of an organi*ation9s !or" force that lea&es and must

be replaced#

3oti&ation

+he set of forces that cause people to beha&e in certain !ays#

0lassical theory of moti&ation

+heory that !or"ers are moti&ated solely by money#


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p y y

+heory of moti&ation holding that people are moti&ated to !or" to!ards

re!ards that they !ant and that they belie&e that they ha&e a reasonable

chance of obtaining#

%6uity theory

+heory of moti&ation holding that people e&aluate their treatment by

employers relati&e to the treatment of others#

$einforcement

+heory that beha&ior can be encouraged or discouraged by means of

re!ards and punishments#

3anagement by ob)ecti&es .3B4/

5et of procedures in&ol&ing both managers and subordinates in setting

goals and e&aluating progress#


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+elecommuting


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Form of fle,time that allo!s people to perform some or all of a )ob a!ay

from the standard office setting#

-eadership

Process of moti&ating others to !or" to meet specific ob)ecti&es#

3anagerial style

Pattern of beha&ior that a manager e,hibits in dealing !ith subordinates#

Autocratic style

3anagerial style in !hich managers generally issue orders and e,pect

them to be obeyed !ithout 6uestion#

Democratic style

3anagerial style in !hich managers generally as" for input from

subordinates but retain final decision ma"ing po!er#

Freereinstyle

3anagerial style in !hich managers typically ser&e as ad&isers to


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subordinates !ho are allo!ed to ma"e decisions

0ontingency approach to managerial style

Approach to managerial style holding that the appropriate beha&ior in

any situation is dependant .contingent/ on the uni6ue elements of thatsituation#

3ar"eting

+he process of planning and e,ecuting the conception pricingpromotion and distribution of ideas goods and ser&ices to create

e,changes that satisfy indi&idual and organi*ational ob)ecti&es#

alue

$elati&e comparison of a product9s benefits !ith its costs#

0onsumer goods

Products purchased by consumers for personal use#


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ndustrial goods

Products purchased by companies to produce other products#

5er&icesntangible products such as time e,pertise or an acti&ity that can be

purchased#

$elationship mar"eting3ar"eting strategy that emphasi*es lasting relationships !ith customers

and suppliers#

%,ternal en&ironment

4utside factors that influence mar"eting programs by posing

opportunities or threats#

5ubstitute product

Product that is dissimilar to those of competitors but can fulfill the same

d


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need#

Brand competition

0ompetiti&e mar"eting that appeals to consumer perceptions of similar

products#

nternational competition

0ompetiti&e mar"eting of domestic products against foreign products#

3ar"eting manager

3anager !ho plans and implements the mar"eting acti&ities that result

in the transfer of products from producer to consumer#

3ar"eting plan

Detailed strategy for focusing mar"eting efforts on consumer needs and

!ants#

3ar"eting mi,

+he combination of product pricing promotion and distribution

t t i d t " t d t


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strategies used to mar"et products#

Product

Good ser&ice or idea that is mar"eted to fill consumer needs and !ants#

Product differentiation

0reation of a product or product image that differs enough from e,isting

products to attract consumers#

Distribution

Part of the mar"eting mi, concerned !ith getting products from

producers to customers#

+arget mar"et

Group of people that ha&e similar !ants and needs and that can be

e,pected to sho! interest in the same products#

3ar"et segmentation

Process of di&iding a mar"et into categories of customer types#


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Geographic &ariables

Geographical units that may be considered in de&eloping a segmentation

strategy#

Demographic &ariables

0haracteristics of populations that may be considered in de&eloping a

segmentation strategy#

Psychographic &ariables

0onsumer characteristics such as lifestyles opinions interests and

attitudes that may be considered in de&eloping a segmentation strategy#

0onsumer beha&ior

arious facets of the decision process by !hich customers come to

purchase and consume products#

Brand loyalty

Pattern of regular consumer purchasing based on satisfaction !ith a

product#


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$ational moti&es

$easons for purchasing a product that are based on logical e&aluation of

product attributes#

%motional moti&es

$easons for purchasing a product that are based on non ob)ecti&e factors#

Data !arehousing

Process of collecting storing and retrie&ing data in electronic files#

Data mining

Application of electronic technologies for searching sifting andreorgani*ing data in order to collect mar"eting information and target

products into the mar"etplace#

ndustrial mar"et

4rgani*ational mar"et consisting of firms that buy goods that are either

con&erted into products or used during production#


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$eseller mar"et

4rgani*ational mar"et consisting of intermediaries that buy and resell

finished goods#

nstitutional mar"et

4rgani*ational mar"ets consisting of non go&ernmental buyers of goods

and ser&ices such as hospitals churches museums and charitable

organi*ations#

Feature

+angible 6uality that a company builds into a product#

alue pac"age

Product mar"eted as a bundle of &alueadding attributes including

reasonable costs#

0on&enience good(ser&ice

ne,pensi&e product purchased and consumed rapidly and regularly#


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5hopping good(ser&ice

3oderately e,pensi&e infre6uently purchased product#

5pecialty good(ser&ice

%,pensi&e rarely purchased product#

%,pense item

ndustrial product purchased and consumed rapidly and regularly for

daily operations#

0apital item

%,pensi&e longlasting infre6uently purchased industrial product such

as a building#

Product mi,

Group of products that a firm ma"es a&ailable for sale#


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Product line

Group of similar products intended for a similar group of buyers !ho

!ill use them in similar !ays#

Discount

Price reduction offered as an incenti&e to purchase#

5peed to mar"et

5trategy for introducing ne! products to respond 6uic"ly to customer or

mar"et changes#

Product life cycle .P-0/

5eries of stages in a product9s profitproducing life#

Branding

Process of using symbols to communicate the 6ualities of a product made

by a particular producer#

Brand a!areness


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Brand a!areness

%,tent to !hich a brand name comes to mind !hen the consumer

considers a particular product category#

8ational brand

Brandnamed product produced by !idely distributed by and carrying

the name of a manufacturer#

-icensed brand

Brandname product for !hose name the seller has purchased the right

from an organi*ation or an indi&idual#

Pri&ate brand .or pri&ate label/

Brandname product that a !holesaler or retailer has commissioned from

a manufacturer#

Pac"aging

Physical container in !hich a product is sold ad&ertised or protected#


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Brea" e&en analysis


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Brea" e&en analysis

For a particular selling price assessment of the seller9s cost &ersus

re&enues at &arious sales &olumes#

Brea" e&en point

5ales &olume at !hich the seller9s total re&enue from sales e6uals total

costs .&ariable and fi,ed/ !ith neither profit nor loss#

Price s"imming

5etting an initially high price to co&er ne! product costs and generate a

profit#

Penetration pricing

5etting an initially lo! price to establish a ne! product in the mar"et#

Price lining

5etting a limited number of prices for certain categories of products#

Psychological pricing


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Psychological pricing

Pricing tactic that ta"es ad&antage of the fact that consumers do not

al!ays respond rationally to started prices#

4dde&en pricing

Psychological pricing tactic based on the premise that customers prefer

prices not stated in e&en dollar amounts#

Distribution mi,

+he combination of distribution channels by !hich a firm gets its

products to end users#

ntermediary

ndi&idual or firm that helps to distribute a product#

;holesaler

ntermediary !ho sells products to other businesses for resale to final

customer#

$etailer


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ntermediary !ho sells products directly to customers#

Distribution channel

8et!or" of independent companies through !hich a product passes

from producers to end users#

Direct channel

Distribution channel in !hich a product tra&els from producer to end

users !ithout intermediaries#

5ales agent(bro"er

ndependent intermediary !ho usually represents many manufacturers

and sells to !holesalers and retailers#

ndustrial distribution .business/

8et!or" of channel members in&ol&ed in the flo! of manufactured

goods to industrial customers#


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-arge product line retailer characteri*ed by organi*ation into speciali*ed

departments#


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Bargain retailer

$etailer carrying a !ide range of products at bargain prices#

5uper mar"et

-arge product line retailer offering a &ariety of food or food related items

in speciali*ed departments#

5pecialty store

5mall retail store carrying one product line or a category of related

products#

Discount house

Bargain retailer that generates large sales &olume by offering goods at

substantial price reduction#

0atalog sho!room

Bargain retailer in !hich customers place orders for catalog items to be


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pic"ed up at onpremises !arehouses#

Factory outlet

Bargain retailers o!ned by the manufacturers !hose products it sells#

;arehouse club .or !holesale club/

Bargain retailer offering large discounts on brandname merchandise to

customers !ho ha&e paid annual membership fees#

0on&enience store

$etail store offering easy accessibility e,tended hours and fast ser&ice#

Directresponse retailing

8onstore retailing by direct interaction !ith customers to inform them of

products and to recei&e sales orders#

3ail order .or catalog mar"eting/

Form of nonstore retailing in !hich customers place orders for catalog

merchandise recei&ed through the mail#


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+elemar"eting

8onstore retailing in !hich the telephone is used to sell directly to

customers#

%lectronic retailing

8onstore retailing in !hich information about the seller9s products and

ser&ices is connected to consumer9s computers allo!ing consumers torecei&e the information and purchase the products in the home#

ecatalog

8onstore retailing in !hich the internet is used to display products#

%lectronic storefront

0ommercial !eb site in !hich customers gather information about

products buying opportunities placing orders and paying for purchases#

;arehousing

Physical distribution operation concerned !ith the storage of goods#


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0ybermall

0ollection of &irtual storefronts .businesses and !ebsites/ representing a

&ariety of products and product lines on the internet#

nteracti&e mar"eting

8onstore retailing that uses a !eb site to pro&ide realtime sales and

customer ser&ice#

ideo mar"eting

8onstore retailing to consumers &ia standard and cable tele&ision#

Physical distribution

Acti&ities needed to mo&e a product efficiently from manufacturer to

customer#

Pri&ate !arehouse

;arehouse o!ned by and pro&iding storage for a single company#

Public !arehouse


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ndependently o!ned and operated !arehouse that stores goods for

many firms#

4rder fulfillment

All acti&ities in&ol&ed in completing sales transaction beginning !ith

ma"ing the sale and ending !ith ontime deli&ery to the customer#

Promotion

Aspect of the mar"eting mi, concerned !ith the most effecti&e

techni6ues for selling a product#

Positioning

Process of establishing an identifiable product image in the minds of the

consumer#

Promotional mi,

0ombination of tools used to promote a product#

Ad&erti*ing

Promotional tool consisting of paid nonpersonal communication used

by an identified sponsor to inform an audience about a product


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by an identified sponsor to inform an audience about a product#

Ad&erti*ing media

ariety of communication de&ices for carrying a seller9s message to

potential customers#

Direct mail

Ad&erti*ing medium in !hich messages are mailed directly to

consumers9 home or place of business#

3edia mi,

0ombination of ad&erti*ing media chosen to carry a message about aproduct#

Personal selling

Promotional tool in !hich a salesperson communicates oneonone !ithpotential customers#

4rder processing

Personal selling tas" in !hich salespeople recei&e orders and see to their

handling and deli&ery


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handling and deli&ery#

0reati&e selling

Personal selling tas" in !hich sales people try to persuade buyers to

purchase products by pro&iding information about their benefits#

3issionary selling

Personal selling tas" in !hich sales people promote their firms and their

products rather than try to close a sale#

5ales promotion

5hortterm promotional acti&ity designed to stimulate consumer buyingor cooperation from distributers and sales agents#

0oupon

5ales promotion techni6ue in !hich a certificate is issued entitling thebuyer to a reduced price#


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nternet

Gl b l d i i " i illi f i h


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Global data communication net!or" ser&ing millions of computers !ith

information on a !ide &ariety of topics and pro&iding communication

flo!s among certain pri&ate net!or"s#

%lectronic information technologies .%+/

nformationsystems applications based on telecommunications

technologies that use net!or"s of applications or de&ices to communicate

information by electronic means#

%lectronic conferencing

0omputer based system that allo!s you to communicate simultaneously

from different locations &ia soft!are or telephone#

Group!are

5oft!are that connects members of a group for shared email distribution

electronic meetings appointments and group !riting#

Data communication net!or"

Gl b l t " . h i t t/ th t it t d t d


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Global net!or" .such as internet/ that permits users to send to send

electronic messages and information 6uic"ly and economically#

nternet ser&ice pro&ider .5P/

0ommercial firm that maintains a permanent connection to the net and

pro&ides temporary connections to subscribers#

;orld ;ide ;eb

5ubsystem of computers pro&iding access to the internet and offering

multimedia and lin"ing capabilities#

;eb ser&er

Dedicated !or"station customi*ed for managing maintaining and

supporting !eb sites#

Bro!ser

5oft!are supporting the graphics and lin"ing capabilities necessary tona&igate the ;orld ;ide ;eb#

5earch engine

+ool that searches !eb pages containing the user9s search terms and then


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+ool that searches !eb pages containing the user s search terms and then

displays pages that match#

ntranet

Pri&ate net!or" of internal !eb sites and other sources of information

a&ailable to a company9s employees#

Fire!all

5oft!are and hard!are system that pre&ents outsiders from accessing a

company9s internal net!or"#

%,tranet

nternet allo!ing outsiders access to a firm9s internal information system#

3asscustomi*ation

Fle,ible production process that generates customi*ed products in high

&olume at lo! costs#

%nterprise resource planning .%$P/

-arge information system for integrating all the acti&ities of a company9s

business units#


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=no!ledge !or"er

%mployee !ho uses information and "no!ledge as ra! materials and

!ho relies on information technology to design ne! products or business

systems#

5ystem operations personnel

nformationsystem employees !ho run a company9s computer

e6uipment#

3anagement information system .35/5ystem used for transforming data into information for later use#

0omputeraided design .0AD/

0omputerbased electronic technology that assists in designing products

by simulating a real product and displaying it in threedimensional

graphics#

0omputeraided manufacturing .0A3/

0omputer system used to design and control e6uipment needed in the

manufacturing process#


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Decision support system .D55/

nteracti&e computerbased system that locates and presents information

needed to support decision ma"ing#

%,ecuti&e support system .%55/

>uic"reference informationsystem application designed specially forinstant access by upper le&el management#

Database

0entrali*ed organi*ed collection of related data#

Artificial intelligence .A/

0omputersystem application that imitates human beha&ior by

performing physical tas"s using thought processes sensing and

learning#

$obotics

0ombination of computers and industrial robots for use in manufacturing

operations#


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%,pert system

Form of artificial intelligence that attempts to imitate the beha&ior or

thought process of human e,perts in a particular field#

0omputer net!or"

All the computers and information technology de&ices that by !or"ingtogether dri&e the flo! of digital information throughout a system#


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Application program

5oft!are .such as ;ord for ;indo!s/ that process data according to a

user9s needs#

;ord processing program

Application program that allo!s computers to store edit and print

letters and numbers for documents created by users#

%lectronic spreadsheet

Application program !ith a ro!andcolumn format that allo!s users to

store manipulate and compare numeric data#

Database management program

Applications program for creating storing searching and manipulating

an organi*ed collection of data#

0omputer graphics program

Applications program that con&erts numeric and character data into

pictorial information such as graphs and charts#


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Presentation graphics soft!are

Applications that enable users to create &isual presentations that can

include animations and sound#

Des"top publishing

Process of combining !ordprocessing and graphics capability to

produce &irtually typeset6uality te,t from personal computers#

Graphical user interface .G:/

5oft!are that pro&ides a &isual display to help users select applications#

con

5mall image in a G: that enables users to select applications or

functions#

3ultimedia communication system

0onnected net!or" of communication appliances .such as fa,es or +9s/

that may be lin"ed to other forms of mass media .such as printpublications or + programming/#


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;ide area net!or" .;A8/

8et!or" of computers and !or"stations located far from one anotherand lin"ed by telephone or satellite#

-ocal area net!or" .-A8/

8et!or" of computers and !or"stations usually !ithin a company thatare lin"ed together by cable#

Boo" "eeping

$ecording of accounting transactions#

0lient ser&er net!or"

nformationtechnology system consisting of clients .users/ that are

electronically lin"ed to share net!or" resources pro&ided by a ser&er

such as a host computer#

Accounting

0omprehensi&e system for collecting analy*ing and communicating

financial information#


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Accounting information system .A5/

4rgani*ed means by !hich financial information is identified measured

recorded and retained for use in accounting statements and managementreports#

0ontroller .or chief accounting officer/

Person !ho manages all of a firm9s accounting acti&ities#

0ertified public accountant .0PA/

Accountant licensed by the state and offering ser&ices to the public#

Financial accounting system

Field of accounting concerned !ith e,ternal users of a company9s

financial information#

3anagerial accounting system .or management/

Field of accounting that ser&es internal users of a company9s financial

information#


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Audit

5ystematic e,amination of a company9s accounting system to determine

!hether its financial reports fairly represent its operations#

Generally accepted accounting principles .GAAP/

Accepted rules and procedures go&erning the content and form of

financial reports#

3anagement ad&isory ser&ices

5peciali*ed accounting ser&ices to help managers resol&e a &ariety of

business problems#

Pri&ate accountant

5alaried accountant hired by a business to carry out its daytoday

financial acti&ities#

0ertified management accountant .03A/

Professional recognition of management 6ualifications a!arded by the

institution of management accountants#

A t


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Asset

Any economic resource e,pected to benefit a firm or indi&idual !ho

o!ns it#

-iability

Debt o!ed by a firm to an outside organi*ation or indi&idual#

-i6uidity

%ase !ith !hich an asset can be con&erted into cash#

4!ner9s e6uity

Amount of money that o!ners !ould recei&e if they sold all of a firm9s

assets and paid off all of its debts#

Financial statement

Any of se&eral types of reports summari*ing a company9s financial status

and measuring its financial health#

B l h t


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Balance sheet

Financial statement dealing !ith a firm9s assets liabilities and o!ner9s

e6uity#

0urrent assets

Asset that can or !ill be con&erted into cash !ithin the follo!ing year#

Account recei&able .or recei&able/

Amount due from a customer !ho has purchased goods on credit#

3erchandise in&entory

0ost of merchandise that has been ac6uired for sale to customers and is

still on hand#

Prepaid e,pense

%,pense such as a prepaid rent !hich is paid before the upcoming period

in !hich it is due#

Fi,ed asset


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Fi,ed asset

Asset !ith long term use or &alue such as land buildings and

e6uipment#

Depreciation

Process of distributing the cost of an asset o&er its life#

ntangible asset

8onphysical asset such as a patent or trademar" that has economic

&alue in the form of e,pected benefit#

Good!ill

Amount paid for an e,isting business abo&e the &alue of its other assets#

0urrent liability

Debt that must be paid !ithin the year#

Account payable .or payable/

0urrent liability consisting of bills o!ed to suppliers plus !ages and

ta,es due !ithin the upcoming year#


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-ongterm liability

Debt that is not due for more than one year#

Paidin capital

Additional money abo&e proceeds from stoc" sale paid directly to a firm

by its o!ner#

$etained earning

%arnings retained by a firm for its use rather than paid as di&idends#

ncome statement .or profitandloss statement/

Financial statement listing a firm9s annual re&enues and e,penses so that

a bottom line sho!s annual profit or loss#

$e&enues

Funds that flo! into a business from the sale of goods or ser&ices#


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0ost of goods sold

+otal cost of obtaining materials for ma"ing the products sold by a firm

during the year#

Gross profit .or gross margin/

$e&enues obtained from goods sold minus the cost of goods sold#

4perating e,penses

0ost other than the cost of goods sold incurred in producing a good or

ser&ice#

4perating income

Gross profit minus operating e,penses#


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Financial ratio for e&aluating management9s use of a firm9s assets#

-i6uidity ratio

5 l ti i fi 9 bilit t it i di t d bt


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5ol&ency ratio measuring a firm9s ability to pay its immediate debts#

0urrent ratio

5ol&ency ratio that determines a firm9s credit!orthiness by measuring its

ability to pay current liabilities#

;or"ing capital

Difference bet!een a firm9s current assets and current liabilities#

Debt ratio

5ol&ency ratio measuring a firm9s ability to meet its longterm debts#

Debttoo!ner9s e6uity ratio .or debttoe6uity ratio/

5ol&ency ratio describing the e,tent to !hich a firm is financed through

borro!ing#

Debt


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A firm9s total liabilities#

-e&erage

Ability to finance an in&estment through borro!ed funds#

$eturn on e6uity

Profitability ratio measuring income earned for each dollar in&ested#

%arning per share

Profitability ratio measuring the si*e of the di&idend that a firm can pay

shareholders#

n&entory turno&er ratio

Acti&ity ratio measuring the a&erage number of times that in&entory is

sold and restoc"ed during the year#

Foreign currency e,change rate


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alue of a nation9s currency as determined by mar"et forces#

3oney

Any ob)ect that is portable di&isible and stable and ser&es as a medium

of e,change a store &alue and a unit of account#

31

3easure of the money supply that includes only the most li6uid

.spendable/ forms of money

0urrency

Go&ernment issued paper money and metal coins#

0hec"

Demand deposit order instructing a ban" to pay a gi&en sum to a

specified payee#

Demand deposit


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Ban" account funds that may be !ithdra!n at any time#

32

3easure of the money supply that includes all components of 31 plus

the forms of money that can be easily con&erted into spendable form#

+ime deposit

Ban" funds that cannot be !ithdra!n !ithout notice or transferred by

chec"#

3oney mar"et mutual funds

Fund of shortterm lo! ris" financial securities purchased !ith assets of

in&estoro!ners pooled by a nonban" institution#

0ommercial ban"

Federalorstatechartered financial institution accepting deposits that it

uses to ma"e loans and earn profits#

Prime rate


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nterest rate a&ailable to a ban"9s most credit!orthy customers#

5a&ings and loan .5C-/

Financial institution accepting deposits and ma"ing loans primarily for

home mortgages#

3utual sa&ings ban"

Financial institution !hose depositors are o!ners sharing in its profits#

0redit union

Financial institution that accepts deposits from and ma"es loans to only

its members usually employees of a particular organi*ation#

Pension fund

8ondeposit pool of funds managed to pro&ide retirement income for its

members#

nsurance company

8ondeposit institution that in&ests funds collected as premiums charged

for insurance co&erage#


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Finance company

8ondeposit institution that speciali*es in ma"ing loans to businesses and

consumers#

5ecurities in&estment dealer .bro"er/

8ondeposit institution that buys and sells and bonds both for in&estorsand for its o!n accounts#

ndi&idual retirement account .$A/

+a,deferred pension fund !ith !hich !age earners supplement otherretirement funds#

+rust ser&ice

Ban" management of an indi&idual9s in&estments payments or estate#


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Federal $eser&e 5ystem .the fed/

0entral ban" of the :nited 5tates !hich acts as the go&ernment9s ban"ser&es member commercial ban"s and controls the nation9s money

supply#


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Float

+otal amount of chec"s !ritten but not yet cleared through the federal

ser&ice#

3onetary policy

Policy by !hich the Federal $eser&e manages the nation9s money supply

and interest rates#

$eser&e re6uirement

Percentage of its deposits that a ban" must hold in cash or on deposit

!ith the Federal $eser&e#

Discount rate

nterest rate at !hich member ban"s can borro! money from the Federal$eser&e#


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4penmar"et operations

+he federal reser&es sales and purchases of securities in the open mar"et#

5electi&e credit controls

Federal $eser&e authority to set both margin re6uirements for consumer

stoc" purchases and credit rules for other consumer purchases#

Debit card

Plastic card that allo!s an indi&idual to transfer money bet!een

accounts#

Pointofsale terminal .P45/

%lectronic de&ise that allo!s customers to pay retail purchases !ith debit

cards#

5mart card

0reditcardsi*e plastic card !ith an embedded computer chip that can

be programmed !ith electronic money#

e0ash


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%lectronic money that mo&es bet!een consumers and businesses &ia

electronic transmission#

;orld Ban"

:nited 8ations agency that pro&ides a limited scope of financial ser&ices

such as funding national impro&ements in underde&eloped countries#

nternational monetary fund .3F/

:nited 8ations agencies consisting of 1@ nations that ha&e combined

resources to promote stable e,change rates pro&ide temporary short

term loans and ser&e other purposes#

5ecurities

5toc"s and bonds representing secured or assetbased claims by

in&estors against issuers#

Primary securities mar"et

3ar"et in !hich ne! stoc"s and bonds are sold#

5ecurities and %,change 0ommission .5%0/

Federal agency that administers :#5# securities la! to protect the

i i bli d i i hl f i i "


123/148

in&esting public and maintain smoothly functioning mar"ets#

n&estment ban"s

Financial institution engaged in issuing and reselling ne! securities#

5econdary securities mar"et

3ar"et in !hich stoc"s and bonds are traded#

Par &alue

Face &alue of a share of stoc" set by the issuing company9s board of

directors#

3ar"et &alue

0urrent price of a share of stoc" in the stoc" mar"et

Boo" &alue

alue of a common stoc" e,pressed as total o!ner9s e6uity di&ided bythe number of shares of stoc"#


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Blue chip stoc"

0ommon stoc" issued by a !ellestablished company !ith a sound

financial history and a stable pattern of di&idend payouts#

0umulati&e preferred stoc"

Preferred stoc" on !hich di&idends not paid in the past must be paid to

stoc"holders before di&idends can be paid to common stoc"holders#

5toc" e,change

4rgani*ation of indi&iduals formed to pro&ide an institutional setting in

!hich stoc" can be traded#

Bro"er

ndi&idual or organi*ation that recei&es and e,ecutes buyandsell orders

on behalf of other people in return for commissions#

4&erthecounter mar"et .4+0/

4rgani*ation of securities dealers formed to trade stoc" outside the


125/148

4rgani*ation of securities dealers formed to trade stoc" outside the

formal institution setting of organi*ed stoc" e,changes#

8ational association of securities dealers automated 6uotation system

.8A5DA>/

4rgani*ations of securities dealers !ho o!n buy and sell their o!n

securities o&er a net!or" of electronic communications#

Bond

5ecurity through !hich an issuer promises to pay the buyer a certain

amount of money by a specific future date#

Go&ernment bond

Bond issued by the federal go&ernment#

3unicipal bond

Bond issued by a state or local go&ernment#

0orporate bond

Bond issued by a company as a source of longterm funding#


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$egistered bond

Bond bearing the name of the holder and registered !ith the issuing

company#

Bearer bond

Bond re6uiring the holder to clip and submit a coupon to recei&e an

interest payment#

5ecured bond

Bond bac"ed by pledges of assets to the bondholder#

Debenture

:nsecured bond for !hich no specific property is pledged as security#


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Priceearnings ratio

0urrent price of a stoc" di&ided by the firm9s annual earnings per share#

" d


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3ar"et inde,

5ummary of price trends in a specific industry and(or the stoc" mar"et as

a !hole#

Bull mar"et

Period of rising stoc" prices

Bear mar"et

Period of falling stoc" prices#

Do! Jones industrial a&erage .DJA/

3ar"et inde, based on prices of @ of the largest industrial firms listed on

the .85%/#

5tandard C Poor9s composite inde,

3ar"et inde, based on the performance of @@ industrial firms @utilities @ financial institutions and 2@ transportation companies#

8A5DA> composite inde,


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> p

alue!eighted mar"et inde, that includes all 8A5DA>listedcompanies both domestic and foreign#

3ar"et order

4rder to buy or sell a security at the mar"et price pre&ailing at the timethe order is placed#

-imit order

4rder authori*ing the purchase of a stoc"

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BUSINESS LANGUAGE QUICK REFERENCE GUIDE FOR SMALL BUSINESS 2007 148 SLIDE OJO OJO OK OK OK.pdf

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