Business Management key terms and definitions:
Unit 1.1
1. Business plan refers to the document that sets out the business idea, its goals and objectives and
other details of how the business will operate (such as
its marketing, operations, and finance). It is often a crucial part of an attempt to raise external
sources of finance.
2. Businesses are organizations involved in the production of goods and/or the provision of services.
3. Consumers are the people or organizations who actually use a product.
4. Customers are the people or organizations that buy the product.
5. Entrepreneurs are owners or operators of an organization who manage, organize and plan the
other three factors of production. They are risk takers who exploit business opportunities in return
for profits.
6. Intrapreneurship is the act of behaving as an entrepreneur but as an employee within a
large business organization. Intrapreneurs work in an entrepreneurial capacity, with authority to
create innovative products or new processes for the organization.
7. Needs are the basic necessities that a person must have to survive, e.g. food, water,
warmth, shelter and clothing.
8. Primary sector refers to businesses involved in the cultivation or extraction
of natural resources, e.g. farming, mining, quarrying, fishing, oil exploration and forestry.
9. Product can refer to both goods and services. Goods are physical products, e.g. cars, books and
food. Services are intangible products, e.g. haircuts, bus rides, education and health care.
10. Quaternary sector is a subcategory of the tertiary sector, where businesses are involved
in intellectual, knowledge-based activities that generate and share information, e.g.
information communications technology and research organizations.
11. Secondary sector is the section of the economy where business activity is concerned with the
construction and manufacturing of products.
12. Sectoral change refers to a shift in the relative share of gross domestic product (or national
output) and employment that is attributed to each business sector.
13. Tertiary sector refers to the section of the economy where business activity is concerned with
the provision of services to customers.
14. Wants are people’s desires, i.e. the things they would like to have, e.g. a larger home, a
new smartphone or to go on an overseas holiday.
,Unit 1.2
1. Charities are non-profit social enterprises that provide voluntary support for
good causes (from society’s point of view), such as protection of children, animals and the
natural environment.
2. Cooperatives are for-profit social enterprises set up, owned, and run by their members, who
might be employees and/or customers.
3. A company (or corporation) refers to a business that is owned by shareholders. It has been
issued a certificate of incorporation, giving it a separate legal identity from its owners.
4. Deed of partnership is the legal contract signed by the owners of a partnership. The formal deeds
specify the name and responsibilities of each partner and their share of any profits or losses.
5. Incorporation means that there is a legal difference between the owners of a company and the
business itself. This ensures that the owners are protected by limited liability.
6. An initial public offering (IPO) occurs when a business sells all or part of
its business to shareholders on a stock exchange for the first time.
7. Limited liability is a restriction on the amount of money that owners can lose if their business
goes bankrupt, i.e. shareholders cannot lose more than they invested in the company.
8. Microfinance is a type of financial service aimed at entrepreneurs of small businesses, especially
females and those on low incomes.
9. Non-governmental organizations (NGO) are private sector not-for-profit social enterprises that
operate for the benefit of others rather than primarily aiming to make a profit, e.g. Oxfam and
Friends of the Earth.
10. Partnerships are a type of private sector business owned by 2-20 people (known as partners).
They share the responsibilities and burdens of running and owning the business.
11. A private limited company is a business owned by shareholders with limited liability but whose
shares cannot be bought by or sold to the general public.
12. The private sector is the part of the economy run by private individuals and businesses, rather
than by the government, e.g. sole traders, partnerships, companies and cooperatives.
13. A public limited company is an incorporated business that allows the general public to buy and
sell shares in the company via a stock exchange. All shareholders enjoy limited liability.
14. Public-private partnerships occur when the government works together with the private sector
to jointly provide certain goods or services.
15. The public sector is the part of the economy controlled by the government. Examples
include state health and education services, the emergency services and national defense.
16. A sole trader is a self-employed person who runs and controls the business and is the sole person
held responsible for its success (profits) or failure (unlimited liability).
, 17. Social enterprises are revenue-generating business with social objectives at the core
of their operations. They can be for-profit or non-profit businesses, but all profits or surpluses
are reinvested for that social purpose rather than being distributed to shareholders and owners.
18. State-owned enterprises are organizations wholly owned by the government.
19. A stock exchange is a marketplace for trading stocks and shares of public
limited companies. Examples include the London Stock Exchange (LSE) and the New York
Stock Exchange (NYSE).
20. Unlimited liability is a feature of sole traders and ordinary partnerships who are legally liable
for all monies owed to their creditors, even if this means that they have to sell their
personal possessions to pay for their debts.
Unit 1.3
1. Aims are the long-term goals of a business, often expressed in the firm’s mission statement. They
are a general statement of a firm’s purpose or intentions and tend to be qualitative in nature.
2. The Ansoff matrix (1957) is an analytical tool to devise various product and market
growth strategies, depending on whether businesses want
to market new or existing products in either new or existing markets.
3. Corporate social responsibility (CSR) is the conscientious consideration of ethical and
environmental practices related to business activity. A business that adopts CSR acts morally
towards its various stakeholder groups and the wellbeing of society as a whole.
4. An ethical code of practice is the documented beliefs and philosophies of an organization.
5. Ethics are the moral principles that guide decision-making and strategy. Morals are concerned
with what is considered to be right or wrong, from society’s point of view.
6. A mission statement refers to the declaration of an organization’s overall purpose. It forms the
foundation for setting the objectives of a business.
7. Objectives are the relatively short-term targets of an organization. They are often expressed as
SMART objectives.
8. SMART objectives are targets that are specific, measurable, achievable, realistic
and time constrained.
9. Strategies are plans of action that businesses use to achieve their targets, i.e. the long-term
plans of the whole organization.
10. SWOT analysis is an analytical tool used to assess the internal strengths and weaknesses and the
external opportunities and threats of a business decision, issue or problem.
11. Tactics are the short-term plans of action that firms use to achieve their objectives.
, 12. A vision statement is an organization’s long-term aspirations, i.e. where it ultimately wants to
be.
Unit 1.4
1. Conflict refers to situations where stakeholders have disagreements on certain
matters due to differences in their opinions. This can lead to arguments and tension between
the various stakeholder groups.
2. External stakeholders of a business are individuals and organizations not part of the organization
but have a direct interest in its activities and performance, e.g. customers, suppliers, pressure
groups and the government.
3. Internal stakeholders of a business are members of the organization, e.g. the employees,
managers, directors and shareholders of the organization.
4. Pressure groups consist of individuals with a common concern (such as environmental
protection) who seek to place demands on organizations to act in a particular way
or to influence a change in their behavior.
5. Shareholders (or stockholders) are the owners of a limited liability company. Shares in
a company can be held by individuals and other organizations.
6. Stakeholders are individuals or organizations with a direct interest (known as
a stake) in the activities and performance of
a business, e.g. shareholders, employees, customers, and suppliers.
Unit 1.5
1. Business cycle refers to the fluctuation in the level of business activity over time. Countries
tend to move through the cycle of booms, recessions, slumps, recovery, and growth.
2. Deregulation is the removal of government rules and regulations which constrain an
industry to enhance efficiency and encourage more competition within the industry.
3. Economic growth measures changes in the Gross Domestic Product of a country over time. It
occurs if there is an increase in GDP for two consecutive quarters.
4. Ethics are the moral values and judgements (of what is right) that society believes businesses
ought to consider in their decision-making.
5. The exchange rate is the value of a country’s currency in terms of other currencies.
6. Inflation occurs when the general price level in an economy continuously rises. It
is measured by changes in the cost of living for the average household in a country.
7. Interest rate is a measure of the price of money in terms of the amount charged for borrowed
funds or how much is offered on money that is saved.
Unit 1.1
1. Business plan refers to the document that sets out the business idea, its goals and objectives and
other details of how the business will operate (such as
its marketing, operations, and finance). It is often a crucial part of an attempt to raise external
sources of finance.
2. Businesses are organizations involved in the production of goods and/or the provision of services.
3. Consumers are the people or organizations who actually use a product.
4. Customers are the people or organizations that buy the product.
5. Entrepreneurs are owners or operators of an organization who manage, organize and plan the
other three factors of production. They are risk takers who exploit business opportunities in return
for profits.
6. Intrapreneurship is the act of behaving as an entrepreneur but as an employee within a
large business organization. Intrapreneurs work in an entrepreneurial capacity, with authority to
create innovative products or new processes for the organization.
7. Needs are the basic necessities that a person must have to survive, e.g. food, water,
warmth, shelter and clothing.
8. Primary sector refers to businesses involved in the cultivation or extraction
of natural resources, e.g. farming, mining, quarrying, fishing, oil exploration and forestry.
9. Product can refer to both goods and services. Goods are physical products, e.g. cars, books and
food. Services are intangible products, e.g. haircuts, bus rides, education and health care.
10. Quaternary sector is a subcategory of the tertiary sector, where businesses are involved
in intellectual, knowledge-based activities that generate and share information, e.g.
information communications technology and research organizations.
11. Secondary sector is the section of the economy where business activity is concerned with the
construction and manufacturing of products.
12. Sectoral change refers to a shift in the relative share of gross domestic product (or national
output) and employment that is attributed to each business sector.
13. Tertiary sector refers to the section of the economy where business activity is concerned with
the provision of services to customers.
14. Wants are people’s desires, i.e. the things they would like to have, e.g. a larger home, a
new smartphone or to go on an overseas holiday.
,Unit 1.2
1. Charities are non-profit social enterprises that provide voluntary support for
good causes (from society’s point of view), such as protection of children, animals and the
natural environment.
2. Cooperatives are for-profit social enterprises set up, owned, and run by their members, who
might be employees and/or customers.
3. A company (or corporation) refers to a business that is owned by shareholders. It has been
issued a certificate of incorporation, giving it a separate legal identity from its owners.
4. Deed of partnership is the legal contract signed by the owners of a partnership. The formal deeds
specify the name and responsibilities of each partner and their share of any profits or losses.
5. Incorporation means that there is a legal difference between the owners of a company and the
business itself. This ensures that the owners are protected by limited liability.
6. An initial public offering (IPO) occurs when a business sells all or part of
its business to shareholders on a stock exchange for the first time.
7. Limited liability is a restriction on the amount of money that owners can lose if their business
goes bankrupt, i.e. shareholders cannot lose more than they invested in the company.
8. Microfinance is a type of financial service aimed at entrepreneurs of small businesses, especially
females and those on low incomes.
9. Non-governmental organizations (NGO) are private sector not-for-profit social enterprises that
operate for the benefit of others rather than primarily aiming to make a profit, e.g. Oxfam and
Friends of the Earth.
10. Partnerships are a type of private sector business owned by 2-20 people (known as partners).
They share the responsibilities and burdens of running and owning the business.
11. A private limited company is a business owned by shareholders with limited liability but whose
shares cannot be bought by or sold to the general public.
12. The private sector is the part of the economy run by private individuals and businesses, rather
than by the government, e.g. sole traders, partnerships, companies and cooperatives.
13. A public limited company is an incorporated business that allows the general public to buy and
sell shares in the company via a stock exchange. All shareholders enjoy limited liability.
14. Public-private partnerships occur when the government works together with the private sector
to jointly provide certain goods or services.
15. The public sector is the part of the economy controlled by the government. Examples
include state health and education services, the emergency services and national defense.
16. A sole trader is a self-employed person who runs and controls the business and is the sole person
held responsible for its success (profits) or failure (unlimited liability).
, 17. Social enterprises are revenue-generating business with social objectives at the core
of their operations. They can be for-profit or non-profit businesses, but all profits or surpluses
are reinvested for that social purpose rather than being distributed to shareholders and owners.
18. State-owned enterprises are organizations wholly owned by the government.
19. A stock exchange is a marketplace for trading stocks and shares of public
limited companies. Examples include the London Stock Exchange (LSE) and the New York
Stock Exchange (NYSE).
20. Unlimited liability is a feature of sole traders and ordinary partnerships who are legally liable
for all monies owed to their creditors, even if this means that they have to sell their
personal possessions to pay for their debts.
Unit 1.3
1. Aims are the long-term goals of a business, often expressed in the firm’s mission statement. They
are a general statement of a firm’s purpose or intentions and tend to be qualitative in nature.
2. The Ansoff matrix (1957) is an analytical tool to devise various product and market
growth strategies, depending on whether businesses want
to market new or existing products in either new or existing markets.
3. Corporate social responsibility (CSR) is the conscientious consideration of ethical and
environmental practices related to business activity. A business that adopts CSR acts morally
towards its various stakeholder groups and the wellbeing of society as a whole.
4. An ethical code of practice is the documented beliefs and philosophies of an organization.
5. Ethics are the moral principles that guide decision-making and strategy. Morals are concerned
with what is considered to be right or wrong, from society’s point of view.
6. A mission statement refers to the declaration of an organization’s overall purpose. It forms the
foundation for setting the objectives of a business.
7. Objectives are the relatively short-term targets of an organization. They are often expressed as
SMART objectives.
8. SMART objectives are targets that are specific, measurable, achievable, realistic
and time constrained.
9. Strategies are plans of action that businesses use to achieve their targets, i.e. the long-term
plans of the whole organization.
10. SWOT analysis is an analytical tool used to assess the internal strengths and weaknesses and the
external opportunities and threats of a business decision, issue or problem.
11. Tactics are the short-term plans of action that firms use to achieve their objectives.
, 12. A vision statement is an organization’s long-term aspirations, i.e. where it ultimately wants to
be.
Unit 1.4
1. Conflict refers to situations where stakeholders have disagreements on certain
matters due to differences in their opinions. This can lead to arguments and tension between
the various stakeholder groups.
2. External stakeholders of a business are individuals and organizations not part of the organization
but have a direct interest in its activities and performance, e.g. customers, suppliers, pressure
groups and the government.
3. Internal stakeholders of a business are members of the organization, e.g. the employees,
managers, directors and shareholders of the organization.
4. Pressure groups consist of individuals with a common concern (such as environmental
protection) who seek to place demands on organizations to act in a particular way
or to influence a change in their behavior.
5. Shareholders (or stockholders) are the owners of a limited liability company. Shares in
a company can be held by individuals and other organizations.
6. Stakeholders are individuals or organizations with a direct interest (known as
a stake) in the activities and performance of
a business, e.g. shareholders, employees, customers, and suppliers.
Unit 1.5
1. Business cycle refers to the fluctuation in the level of business activity over time. Countries
tend to move through the cycle of booms, recessions, slumps, recovery, and growth.
2. Deregulation is the removal of government rules and regulations which constrain an
industry to enhance efficiency and encourage more competition within the industry.
3. Economic growth measures changes in the Gross Domestic Product of a country over time. It
occurs if there is an increase in GDP for two consecutive quarters.
4. Ethics are the moral values and judgements (of what is right) that society believes businesses
ought to consider in their decision-making.
5. The exchange rate is the value of a country’s currency in terms of other currencies.
6. Inflation occurs when the general price level in an economy continuously rises. It
is measured by changes in the cost of living for the average household in a country.
7. Interest rate is a measure of the price of money in terms of the amount charged for borrowed
funds or how much is offered on money that is saved.
