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Glossary

A

accounting Process of recording, classifying, and sum­marizing the financial activities of an organization.

accounting equationAssets equal liabilities plus own­ers' equity .

accrual basis Accounting method in which revenue is recorded when a sale is made and expense is recorded when incurred .

acquisition Combination of two companies in which one company purchases the other and remains the dominant corporation .

activity ratios Financial ratios that indicate the amount of business a company is doing .

administrative law Rules, regulations, and interpreta­tions of statutory law set forth by administrative agencies and commissions .

administrative skills Technical skills in information gathering, data analysis, planning, organizing, and other aspects of managerial work .

advertisingAny paid form of impersonal presentation made by an identified sponsor through a mass com­munication medium on behalf of goods, services, or ideas .

advertising platform Statement that defines the target audience and summarizes the benefits and features of the product that will be used to motivate the buyer .

advocacy advertising Institutional advertising that addresses hotly debated public issues .

arbitrationProcess for resolving a labor-contract dis­pute in which an impartial third party studies the issues and makes a binding decision .

assetsPhysical objects and intangible rights that have economic value to the owner .

auditAccountant's evaluation of the fairness and reli­ability of a client's financial statements .

authorityPower granted by the organization and ac­knowledged by the employees .

authorization cardsSign-up cards designating a union as the signer's preferred bargaining agent .

authorized stockShares that a corporation's board of directors has decided to sell eventually .

B

balance of paymentsSum of all payments one nation has made to other nations minus the payments it has received from other nations during aspecific period of time .

balance of tradeRelationship between the value of goods and services anation exports and those it im­ports .

balance sheetFinancial statement that shows assets, liabilities, and owners' equity on a given date .

bankruptcyLegal procedure by which a person or a business that is unable to meet financial obligations is relieved of debt .

barriers to entryFactors that make it difficult to launch a business in a particular industry .

barteringTrading by exchanging goods or services di­rectly rather than through a medium like money .

bear marketsFalling stock markets.

blacklistSecret list circulated among employers to keep union organizers from getting jobs .

blue-chip stocksEquity instruments issued by large, well-established companies and paying relatively stable dividends .

board of directorsGroup of people, elected by the shareholders, who have the ultimate authority in guiding the affairs of a corporation .

bondCertificate of indebtedness that is sold to raise funds .

bonusCash payment in addition to the regular wage or salary, which serves as a reward for achievement .

bookkeepingRecord-keeping, clerical phase of ac­counting .

brokerIndividual registered to sell securities .

brokersAgents that specialize in a particular commod­ity .

budgetFinancial plan for a company's future activities that estimates proposed expenditures and forecasts how they will be financed .

bullmarkets Rising stock markets .

business agentFull-time union staffer who negotiates with management and attempts to resolve grievances brought up by union members .

business and industrial sellingSelling of products to businesses and organizations for resale or for use in their operations .

business cycleFluctuations in the rate of growth that an economy experiences over a period of several years.

business interruption insuranceInsurance that covers losses resulting from temporary business closings .

C

cash basisAccounting method in which revenue is re­corded when payment is received and expense is re­corded when cash is paid .

cash discountDiscount offered to buyers who use cash instead of credit .

centralized organizationConcentration of authority and responsibility at the top .

central processing unitCommand and control center of a computer .

certificate of depositNote issued by a bank that guar­antees to pay the depositor a relatively high interest rate for a fixed period of time .

certificationProcess by which a union is officially rec­ognized by the National Labor Relations Board as the bargaining agent for a group of workers .

Certified Management AccountantsAccountants who have fulfilled the

requirements for certification as specialists in management accounting.

Certified Public AccountantsProfessionally licensed accountants who

meet certain requirements for edu­cation and experience and who pass

an examination .

chain of commandPathway for the flow of authority from one level of an organization's employees to the next .

chief executive officerPerson appointed by a corpora­tion's board of directors to carry out the board's poli­cies and supervise the activities of the corporation .

circular flowContinuous exchange of goods and ser­vices for money among the participants in an eco­nomic system .

claimsDemands for payment by an insurance company due to some loss by the insured .

classical theory of motivationView that money is the predominant motivator in the workplace .

closed shopWorkplace in which union membership is a condition of employment .

code of ethicsWritten statement setting forth the prin­ciples that should guide an organization's decisions .

commodity businessBusiness in which products are undifferentiated, so that price becomes the chief competitive weapon .

commodity exchangesMarkets where contracts for raw materials are bought and sold .

common lawLaw based on the precedents established by judges' decisions .

common stockShares whose owners have the last claim on distributed profits and assets.

communicationExchange of information .

compensationPayment of employees for their work .

competitive advantageQuality that makes a product more desirable than those offered by the competition .

comprehensive general liability insuranceLiability in­surance that covers a wide variety of losses, except certain losses specifically mentioned in the policy .

computer-aided designUse of computer graphics in the development of products or processes .

computer-aided engineeringUse of computers for engi­neering .

consumer marketIndividuals who buy goods or ser­vices for personal

use .

consumer promotionsSales promotions aimed at end users .

contingency leadershipLeadership style promoting flexibility and adoption of the style most appropriate to current conditions .

contingent business interruption insuranceProtects a business from losses due to an interruption in the de­livery of supplies .

continuityDuration of a media advertising campaign and timing of the messages .

contractExchange of promises enforceable by law .

controllerHighest-ranking accountant in a firm, re­sponsible for overseeing all accounting functions .

controllingProcess of ensuring that organizational objectives are being attained and of correcting deviations if those objectives are not being reached .

control unitComputer component that supervises and coordinates the computer's operations .

conveniencegoods Products that are readily available, low-priced, and heavily advertised and that consum­ers buy quickly and often .

convenience storesFood stores that offer convenient locations and hours but stock a limited selection of goods .

cooperativesAssociations of people or small companies with similar interests, formed to obtain greater bar­gaining power and other economies of scale .

corporate cultureOrganizational climate or set of val­ues that guides and colors the atmosphere within a company .

corporationLegally chartered enterprise with most of the legal rights of a person, including the right to con­duct a business, to own and sell property, to borrow money, and to sue or be sued .

correlationStatistical relationship between two ormore variables .

cost-benefit analysisComparison of the costs and bene­fits of a particular action for the purpose ofassessing its desirability .

cost of capitalThe average rate of interest a firm pays on its combination of debt and equity .

cost of goods soldCost of producing or acquiring a com­pany's products for sale during a given period .

cost-of-living adjustmentClause in a union contract that ensures that wages will rise in proportion to in­flation .

cost per thousandCost of reaching 1,000 people in a medium's audience .

couponingDistribution of certificates that entitle buy­ers to a discount on a particular item .

craft unionsUnions made up of skilled artisans belong­ing to a single profession or practicing a single craft .

credit life insuranceCoverage that guarantees repay­ment of a loan or an installment contract if the bor­rower dies .

credit unionsCooperative financial institutions that provide loan and savings services to their members .

crime insuranceInsurance against loss from theft .

crisis managementSystem for minimizing the harm that might result from some unusually threatening situation .

critical path methodScheduling method that estimates the smallest amount of time in which a whole project can be completed by projecting the time needed for completion of the longest sequence of tasks (the criti­cal path) .

currencyBills and coins that make up the cash money of a society .

currentassets Cash and other items that can be turned back into cash within one year .

current liabilitiesObligations that must be met within a year.

current ratioMeasure of a company's short-term li­quidity, calculated by dividing current assets by cur­rent liabilities .

customized marketing Amarketing program in which each individual customer is treated as a separate seg­ment .

customs dutiesFees imposed on goods brought into the country .

cyclical variationChange that occurs in a regularly re­peating pattern .

D

debit cardForm of plastic money that automatically decreases a person's bank account when used .

debtFunds obtained by borrowing .

debt ratiosFinancial ratios (sometimes called coverage ratios) that indicate the extent of a company's burden of long-term debt .

debt-to-equity ratioMeasure of the extent to which a business is financed by debt as opposed to invested capital, calculated by dividing the company's total liabilities by owners' equity .

debt-to-total-assets ratioMeasure of a company's abil­ity to carry long-term debt, calculated by dividing total liabilities by total assets .

decentralized organizationDelegation of authority and responsibility to employees in lower positions .

decertificationProcess by which workers take away a union's right to represent them .

deductibleAmount of loss that must be paid by the in­sured before the insurer will pay for the rest .

deedLegal document by which an owner transfers an interest in real property to a new owner .

defaultFailure to pay back a debt .

delegationAssignment of authority, responsibility, and accountability to lower-level employees .

demandSpecific quantity of a good or service that con­sumers are willing and able to buy at a given price at a given time .

demand curveSeries of points on a graph showing the relationship between price and quantity demanded .

demand depositMoney in a checking account that can be used by the owner at any time .

differentiated marketingMarketing program aimed at several different market segments, each of which re­ceives a different marketing mix .

directingProcess of getting people to work effectively and willingly .

direct mailAdvertising sent directly to sales prospects through the U.S. Postal Service or by private carriers .

disability income insuranceInsurance that protects an individual against loss of income while that individ­ual is disabled as the result of an illness or accident .

discount pricingOffering a reduction in price .

discount rateInterest rate charged by the Federal Re­serve on loans to member banks .

discount storesRetailers that sell a variety of goods below the market price by keeping their overhead low .

discretionary incomeMoney that can be spent on non-essentials .

discretionary orderMarket order that allows the broker to decide when to trade a security .

discrimination ina social and economic sense, denial of opportunities to individuals on the basis of some characteristic that has no bearing on the ability of these persons to perform .

disinflationEconomic condition in which the rate of price increases moderates .

dispatchingIssuing of work orders and routing papers to department heads and supervisors .

disposable personal incomeMoney that a family has to spend after paying taxes .

distributed dataprocessing Computer networks in which many computers (usually of different sizes) are spread over a geographic area and connected by tele­phone lines .

distribution centersWarehouse facilities that specialize in collecting and shipping merchandise .

distribution mixCombination of middlemen and chan­nels that a producer uses to get a product to end users .

divestitureSale of part of a company .

dividendsPayments to shareholders from acompany's earnings .

divisional organizationForm of organization based on similar outputs .

division of laborSpecialization in or responsibility for some portion of an organization's overall task .

door-to-door sellingType of retail selling in which the salesperson calls on homes in order to sell merchan­dise or services .

double-entry bookkeepingWay of recording financial transactions that requires two entries for every trans­action so that the accounting equation is constantly in balance .

Е

earnings per share Measure of a firm's profitability for each share of outstanding stock, calculated by divid­ing net income by shares of stock outstanding .

ecologyRelationship among living things in the water, air, and soil and the nutrients that support them .

economic communitiesOrganizations of nations that remove barriers to trade among their members and that establish uniform barriers to trade with non-member nations .

economic order quantityThe optimal, or least-cost, quantity of inventory that should be ordered .

economic systemWay a society distributes its resources to satisfy its people's needs .

economies of scaleSavings from manufacturing, mar­keting, or buying large quantities .

elastic demandSituation in which a percentage change in price produces a greater percentage change in the quantity sold .

electronic funds transfersystems Computerized sys­tems for performing financial transactions .

electronic mailUse of computers for transmitting per­sonal messages .

electronic officeWorkplace with a minimum of paper communication .

embargoTotal ban on trade with a particular nation or in a particular product .

employee stock ownership plan (ESOP)Program ena­bling employees to become owners or part owners of a company .

endowment insuranceLife insurance that guarantees death benefits for a specified period of years, after which the face value of the policy is paid to the policyholder .

entrepreneursPeople who organize the other three fac­tors of production in order to produce goods and services more efficiently and who accept the risk of failure .

equilibrium pricePoint at which quantity supplied and quantity demanded are in balance .

equityFunds obtained by selling shares of ownership in the company .

expensesCosts created in the process of generating rev­enues.

experience curvePredictable decline of all costs associ­ated with a product as the total number of units pro­duced increases .

experimentData-collection method in which the inves­tigator tries to find out how one set of conditions will affect another set of conditions by setting up a situa­tion in which all factors and events involved may be carefully measured .

exportingSelling and shipping goods or services to another country .

express contractContract derived from words, either oral or written .

external dataInformation obtained from sources out­side the records of the business itself .

extra expense insuranceCovers the added expense of operating the business in temporary facilities after an event such as a fire or flood .

F

feedback systemArrangement whereby managers re­ceive reports on a regular basis .

fidelity bondMechanism that protects employers from dishonesty on the part of employees .

field salespeopleSales representatives who leave their place of business to call on potential customers .

FIFOMethod of pricing inventory under which the costs of the first goods acquired are the first ones charged to cost of goods sold .

finance companiesFinancial institutions that special­ize in making loans

financial accountingArea of accounting concerned with preparing financial information for users out­side the organization .

financial futuresLegally binding agreements to buy or sell financial instruments at a future date .

financial managementEffective acquisition and use of money .

fiscal policyUse of government revenue collection and spending to influence the business cycle .

fiscal yearAny 12 consecutive months used as an ac­counting period .

fixed assetsAssets retained for long-term use, such as land, buildings, machinery, and equipment .

fixed costsBusiness costs that must be covered no mat­ter how many units of a product a company sells .

focused factoryManufacturing facility that deals with only one narrow set of products .

four P'sMarketing elements — product, price, place, and promotion .

franchiseBusiness arrangement whereby an individual obtains rights from a larger company to sell a well-known product or service .

franchiseePerson or group to whom a corporation grants an exclusive right to the use of its name in a certain territory, usually in exchange for an initial fee plus monthly royalty payments .

franchiserCorporation that grants a franchise to an individual or group

free-market systemEconomic system in which the way people spend their money determines which products will be produced and what these products will cost .

free tradeInternational trade unencumbered by any restrictive measures

frequencyAverage number of times an advertising mes­sage reaches a given person or household .

fringe benefitsCompensation other than wages, sala­ries, and incentive programs .

G

general obligation bondsMunicipal bonds backed by the issuing agency's general taxing authority .

general partnershipPartnership in which all partners have the right to participate as co-owners and are individually liable for the business's debts .

generic productsProducts of minimum quality in plain packaging that bears only the name of the item, not of its producer .

givebacksContract provisions that represent a decrease in union members' pay and other benefits .

global corporationsMultinational corporations that sell the same product(s) in the same way throughout the world .

goalsBroad, long-term targets or aims .

going publicAct of raising capital by selling shares in a company to the public for the first time .

goods-producing businessesBusinesses that produce tangible products .

goodwillValue assigned to a business's reputation, cal­culated as the difference between the price paid for the business and the underlying value of its assets .

government sellingSelling of goods and services to gov­ernment buyers .

grapevineUnofficial lines of communication in an or­ganization that bypass the formal chain of command .

grievancesComplaints that management is violating some aspects of a labor contract .

gross national product (GNP)Total value of all the final goods and services produced by an economy over a period of time .

gross profitAmount remaining when the cost of goods sold is deducted from net sales .

gross sales Allrevenues received from the sale of goods or services .

H

holding companyCompany that owns most, if not all, of another company's stock but that does not actively participate in the management of that other com­pany .

horizontal conflictConflict between channel members at the same level in the distribution chain .

horizontal mergersCombinations of companies that are direct competitors in the same industry.

human relationsThe way two or more people interact with one another .

human relations skillsSkills required in order to un­derstand other people and to interact effectively with them .

human resource managementExpansion of personnel management to include strategic planning .

hygiene factorsAspects of the work environment that are demotivating only if deficient .

I

industrial advertisingAdvertising aimed at wholesal­ers, retailers, or industrial/institutional buyers .

industrial/organizational marketCustomers who buy goods or services for resale or for use in conducting business .

industrial process consumablesExpense items that are used directly in the production process .

industrial unionsUnions representing both skilled and unskilled workers from all phases of a particular in­dustry .

inflationEconomic condition in which prices rise steadily throughout the economy .

informal groupsSets of people linked by personal inter­ests and attitudes and who rely on one another for approval .

informal organizationOrganizational characteristics and relationships that are not part of the formal structure but that influence how the organization accomplishes its goals .

informationData in a form relevant for making deci­sions .

in-house salespeopleSales representatives who remain in their place or business to serve potential customers who visit or call .

injunctionCourt order directing someone to do some­thing or refrain from doing it .

input devicesPeripheral devices used to enter data into the computer .

insider tradingEmployee's or manager's use of infor­mation gained in the course of his or her job that is not generally available to the public in order to bene­fit from fluctuations in the stock market .

institutional advertisingAdvertising that promotes an organization as a whole rather than a specific prod­uct .

institutional investorsOrganizations that own many shares of stock; typical examples are banks, mutual funds, pension funds, insurance companies, founda­tions and companies that invest money entrusted to them by others .

in-store demonstratorSales representative who works on behalf of a producer in a retail setting and shows potential buyers how to use the producer's merchan­dise .

intellectual propertyPersonal property such as ideas, songs, or any mental creativity .

intensive distributionApproach to distribution that involves placing the product in nearly every available outlet.

inventory turnover ratioMeasure of the time a com­pany lakes to turn its inventory into sales, calculated by dividing cost of goods sold by the average value of inventory for a period .

investment banksFinancial institutions that specialize in helping companies or government agencies raise funds .

involuntary bankruptcyBankruptcy proceedings initi­ated by a firm's creditors .

issued stockAuthorized shares that have been released to the market .

J

job analysisProcess by which jobs are studied to deter­mine the tasks and dynamics involved in performing them .

job descriptionStatement of the tasks involved in a given job and the conditions under which the holder of the job will work .

job enrichmentDividing work in an organization so that workers have more responsibility for the total process .

job sharingSplitting a single full-time job between two workers for their convenience .

job shopFirm that produces dissimilar items or that produces its goods or services at intervals .

job specificationStatement describing the kind of per­son who would be best for a given job — including the skills, education, and previous experience that the job requires .

joint ventureEnterprise supported by the investment of two or more parties for mutual benefit .

junk bondsBonds that pay ahigh interest rate because of the low credit rating of the issuer .

justicePhilosophy used in making ethical decisions that aims to insure the equal distribution of burdens and benefits .

just-in-time systemA continuous process of inventory control that, through teamwork, seeks to deliver a small quantity of materials to where they are needed precisely when they are needed .

L

leverageUse of borrowed funds to finance a portion of an investment .

leveraged buyoutSituation in which an individual or group of investors purchases a company with the debt secured by the company's assets .

liabilitiesDebts or obligations a company or govern­ment owes to other individuals or organizations .

liability insuranceInsurance that covers losses arising either from injury to an individual or from damage to other people's property .

licensingAgreement to produce and market another company's product in exchange for a royalty or fee .

licensingGiving rights to a company to use a well-known name or symbol in marketing its products .

lifestyle businessesSmall businesses intended to pro­vide the owner with a comfortable livelihood .

lifetime securityArrangement that gives workers some protection against temporary layoffs due to economic slowdowns and against job loss due to downsizing or plant closings .

limited partnershipPartnership composed of one or more general partners and one or more partners whose liability is usually limited to the amount of their capital investment .

limited service banksInstitutions that can make com­mercial loans or offer checking services but cannot do both .

long-term servicesRelatively important and enduring activities provided by outside vendors who support the operations of a business .

loss exposuresAreas of risk in which a potential for loss exists .

M

management information systemStructure designed to generate an orderly and timely flow of relevant infor­mation to support management decision making .

manufacturing resource planningCompany-wide com­puter system that coordinates data from all depart­ments in order to maintain minimum but sufficient inventories and a smooth production process .

margin requirementsLimits set by the Federal Reserve on the amount of money that stockbrokers and banks may lend customers for the purpose of buying stocks .

margin tradingBorrowing money from brokers to buy stock, paying interest on the borrowed money, and leaving the stock with the broker as collateral .

marketPeople who need or want a product and who have the money to buy it .

marketable securitiesStocks, bonds, and other invest­ments that can be turned into cash quickly .

market economiesEconomic systems in which goals are achieved by the action of the free market, with a minimum of government intervention .

marketingProcess of planning and executing the con­ception, price, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives .

marketing conceptBelief that a business must deter­mine and satisfy customer needs in order to make a profit .

marketing mixBlend of elements satisfying a chosen market .

marketing researchProcess of gathering information about marketing problems and opportunities .

marketing strategyOverall plan for marketing a prod­uct .

market orderAuthorization for a broker to buy or sell securities at the best price that can be negotiated at the moment .

market segmentationDivision of a market into sub­groups .

market segmentsGroups of individuals or organiza­tions within a market that share certain common characteristics .

market sharePercentage of total industry sales that are made by a particular company .

market share liabilityConcept that extends strict prod­uct liability by dividing responsibility for injuries among all manufacturers in an industry in accord­ance with their market share at the time of the injury

mediaVehicles used to reach an advertising audience .

media mixCombination of print, broadcast, and other media used in an advertising campaign .

median Midpoint, or the point in a group of numbers at which half are higher and half are lower .

media planOutline of advertising strategy that in­cludes a budget and a schedule for using various media .

mediationProcess for resolving a labor-contract dis­pute in which a neutral third party meets with both sides and attempts to steer them toward a solution .

middle managementLevel of management encompass­ing those who implement the goals of lop man­agement and who coordinate the work of operating managers .

middle managersThose in the middle of the manage­ment hierarchy who serve as a conduit between top and supervisory management .

middlemenBusinesspeople who channel goods and ser­vices from producers to consumers .

minicomputersComputers of intermediate size and cost .

minoritiesIn asocial and economic sense, categories of people that society at large singles out for discrimi­natory, selective, or unfavorable treatment .

MIS managerPerson responsible for implementing and overseeing an organization's management informa­tion system .

missionOverall purpose of an organization .

monetary policyTactics for expanding or contracting the money supply as a means of influencing the econ­omy .

moneyAnything used by a society as atoken of value in buying and selling goods and services .

money market accountsBank accounts that pay money-market interest rates and permit the deposi­tor to write a limited number of checks .

money market FundsMutual funds that invest in short-term securities .

monopolyMarket in which there are no direct competi­tors, so that one company controls the industry or market .

N

net incomeProfit or loss of a company, determined by subtracting expenses from revenues .

net salesAmount remaining after cash discounts, re­funds, and other allowances are deducted from gross sales .

networkingSeeking to broaden one's effectiveness in an organization or industry by forming relationships with others in the same and related fields .

network timeAdvertising time purchased on national networks to guarantee that a message will be broad­cast to hundreds of local affiliated stations .

no-fault insurance lawsLaws limiting lawsuits con­nected with auto accidents .

no-load fundsMutual funds that do not carry a sales charge.

nonprofit corporationsIncorporated institutions whose owners have limited liability and that exist to pro­vide a social service rather than to make a profit .

NOW accountInterest-bearing checking account with a minimum balance requirement.

O

objectivesSpecific, short-range targets or aims .

observationTechnique of watching or otherwise moni­toring all incidents

of the particular sort that the in­vestigator wants to study .

odd lotsStock sold in quantities of less than 100 shares .

odd pricingSetting a price at an odd amount slightly below the next highest dollar figure .

off-pricestores Retailers that offer bargain prices by maintaining low overhead and acquiring merchan­dise at below-wholesale cost .

oligopolyMarket in which there are few sellers .

on-lineprocessing systems Computer networks that process data interactively .

open-book creditPayment terms that allow the pur­chaser to take possession of goods and pay for them later .

open-market operationsActivity of the Federal Reserve in buying and selling government bonds on the open market .

open orderLimit order that does not expire at the end of a trading day .

open shopWorkplace in which nonunion workers pay no dues.

operating expenses Allcosts of operation that are not included under cost of goods sold .

operating incomeAmount remaining when operating expenses are deducted from gross profit .

operating managersThose whose power and responsi­bility are limited to a narrow segment of the organi­zation's activities .

organizingProcess of arranging resources to carry out the organization's plans .

orientationSession or procedure for acclimating a new employee to the organization.

outplacementJob-hunting and other assistance that a company provides to laid-off workers.

outputdevices Peripheral devices used to transmit pro­cessed data from the computer to the user.

P

parent companyCompany that owns most, if not all, of another company's stock and that takes an active part in managing that other company.

partnershipUnincorporated business owned and oper­ated by two or more persons under avoluntary legal association.

participative managementSystem for involving em­ployees in a company's decision making .

par valueArbitrary value assigned to a stock.

pattern bargainingNegotiating similar wages and ben­efits for all companies within a particular industry.

payeePerson or business a check is made out to.

penetration pricingIntroducing a new product at a low price in hopes of building sales volume quickly.

pension plansCompany-sponsored programs for pro­viding retirees with income.

performance appraisalEvaluation of an employee's work according to specific criteria.

peripheral devicesComputer components that are not part of the central processing unit.

perksSpecial class of fringe benefits made available to a company's most valuable employees.

permissive subjectTopic that may be omitted from col­lective bargaining

personal propertyAll property that is not real property .

personal sellingPerson-to-person interaction between buyer and seller aimed at convincing the buyer to react favorably to the seller's product.

personnel managementAdministrative activities re­lated to acquiring workers, preparing them for work, overseeing their performance, and providing com­pensation.

place utilityConsumer value added by making a prod­uct available in a convenient location .

planned economiesEconomic systems in which re­source-allocation decisions are made by the central government.

planningEstablishment of objectives for an organiza­tion and determination of the best ways to accom­plish them.

poinl-of-purchase displayAdvertising or display mate­rials set up at a retail location to encourage sales of an item.

policiesGuidelines for activity.

political action committeesGroups formed under fed­eral election laws to raise money for candidates.

price-earnings ratioComparison of a stock's market price with its earnings per share.

price leaderMajor producer in an industry that tends to set the pace in establishing prices.

price liningOffering merchandise at a limited number of set prices.

pricing chainSeries of prices established as the product passes from producer to wholesaler to retailer to cus­tomer; each intermediary raises the price in order to make aprofit and cover the cost of buying and han­dling the product.

private accountantsIn-house accountants employed by organizations and businesses.

private brandsBrands that carry the label of a retailer or wholesaler rather than a manufacturer .

private corporationsCorporations whose stock is not available to the general public .

private lawLaw that concerns itself with relationships between individuals, between an individual and a business, or between two businesses .

product advertisingAdvertising designed to sell one or more identifiable products or services.

product developmentStages through which a product idea passes, from initial conceptualization to actual appearance in the marketplace .

product differentiationFeatures that distinguish one company's product from another company's similar product .

productionTransformation of resources into a form that people need or want .

production and operations managementCoordination of an organization's resources in order to manufac­ture its goods or produce its services .

production controlProduction planning, routing, scheduling, dispatching, and follow-up and control in an effort to achieve efficiency and high quality .

production forecastingEstimating how much of a com­pany's goods and services must be produced in order to meet future demand .

production sharingPlan for rewarding employees not on the basis of overall profits but in relation to cost savings resulting from increased output .

productivityThe measured relationship of the quantity and quality of units produced and the labor per unit of time; indicates the efficiency of production .

product liabilityCompany's responsibility for injuries or damages that result from use of a product the com­pany manufactures or distributes.

product-liability lawLaw that holds a manufacturer liable for injuries caused by a defective product.

product life cycleStages of growth and decline in sales and earnings.

product linesGroups of products that are physically similar or that are intended for similar markets.

product mixComplete list of all products that a com­pany offers for sale.

profitMoney left over after expenses and taxes have been deducted from sums received from the sales of goods or services.

public corporationsCorporations that offer their stock to the general public; also known as closely held cor­porations.

public goodsGoods or services that can more efficiently be supplied by government than by individuals or businesses for themselves.

publicityUnpaid media coverage of news about an or­ganization.

public lawLaw that concerns itself with relationships between the government and individual citizens.

pull strategyPromotional strategy that stimulates con­sumer demand, which then exerts pressure on whole­salers and retailers to carry a product.

Q

qualifiedVerified as having the need, the means, and the authority to make a purchase.

quality assurance Acompany wide system of practices and procedures to assure that company products sat­isfy customers.

quality circlesRegularly scheduled meetings of about five to fifteen workers (who usually work in the same area) to identify and suggest solutions to quality, safety, and production problems.

quality controlRoutine checking and testing of a prod­uct or process for quality against some standard.

quantity discountDiscount offered to buyers of large quantities.

R

rack jobbersMerchant wholesalers that are responsible for setting up and maintaining displays in a particu­lar store area.

random samplingSelecting a sample in a way that gives all items or persons in the larger group an equal chance of being selected.

rate of returnPercentage increase in the value of an investment.

ratificationProcess by which union members accept or reject a contract negotiated by union leaders.

ratio analysisComparison of two elements from the same-year's financial results, stated as a percentage or ratio.

rational motiveLogical reason for doing something.

reachNumber of households that are exposed to an advertising schedule in a given time.

real propertyLand and anything permanently attached to it.

real-time systemsComputer networks that can receive and process data quickly enough to affect some on­going physical activity.

recessionPeriod during which national income, em­ployment, and production all fall.

recruitersMembers of the human resource staff who are responsible for obtaining new job candidates.

regional exchangesStock exchanges that handle securi­ties of companies that operate locally.

repetitive manufacturingRepeated, steady production of identical goods or services.

replacement costCost of replacing a lost or damaged item with a new one.

reserve requirementPercentage of a bank's deposits that must be kept on hand .

reservesFunds a financial institution keeps on tap to meet projected withdrawals .

restructuringProcess of changing the nature of a com­pany by reordering its ownership, composition, oper­ation, and/or work force .

resumeSummary of education, experience, interests, and other personal data compiled by the applicant for a job .

retailersFirms that sell directly to the public .

retail sellingDirect selling of goods or services to peo­ple who want the items for their personal use .

retained earningsNet increase in assets (cash and out­standing receivables) for an accounting period; part of owners' equity.

return on investmentProfit equal to a certain percent­age of a business's invested capital. Ratio be­tween the income earned by a firm and total owners' equity .

return on salesRatio between income before taxes and net sales .

revenue bondsMunicipal bonds backed by revenue generated by the projects financed with the bonds .

revenuesAmount of money received from sales of goods or services and from miscellaneous sources such as interest, rent, and royalties .

revolving line of creditGuaranteed line of credit .

right-to-work lawsLaws giving employees the explicit right to keep a job without joining a union .

risk-control techniquesMethods of minimizing losses.

risk-financing techniquesPaying to restore losses .

risk managementProcess of evaluating and minimizing the risks faced by a company .

round lotsStock sold in 100-share quantities .

routingSpecifying the sequence of operations and the path the work will take through the production facil­ity .

rulesProcedures covering one situation only .

S

salariesWeekly, monthly, or yearly cash compensation for work .

-/sales officeProducer-owned operation that only takes orders .promotionDirect inducement that motivates someone to purchase a product .

sales prospect Potential customer .

sampleSmall part of a large group.

savings and loan associationsBanks offering savings, interest-bearing checking,and mortgages.

savings banksMostly in New England, banks offering interest-bearing checking, savings, and mortgages.

S corporationsCorporations with no more than 35 shareholders that may be taxed as partnerships .

secured bondsBonds backed by specific assets .

secured loansLoans backed up with something of value that the lender can claim in case of default, such as a piece of property .

securitiesDocuments proving debt or ownership that may be bought or sold .

securitizationAct of repackaging loans and selling them as securities .

selective credit controlsFederal Reserve's power to set credit terms on various types of loans .

selective distributionApproach to distribution that re­lies on a limited number of outlets .

self-insuranceArrangement whereby a company in­sures itself by accumulating funds to pay for any losses, rather than buying insurance from another company .

selling expensesAll the operating expenses associated with marketing goods or services .

situational managementManagement style that em­phasizes adapting general principles to the specific objectives of one's own business .

skimmingCharging a high price for a new product dur­ing the introductory stage, then lowering the price later on .

slowdownDecrease in worker productivity used as a tactic to pressure management .

smallbusinesses Companies that are independently owned and operated and are not dominant in their field .

socialismEconomic system characterized by public ownership and operation of key industries combined with private ownership and operation of less vital industries .

soft manufacturingFlexible manufacturing .

softwareComputer programs .

sole proprietorshipBusiness owned (and usually oper­ated) by a single individual.

span of controlBreadth of a manager's authority .

span of managementNumber of people amanger di­rectly supervises .

staffThose who supplement the line organization by providing advice and specialized services .

staffingProcess of matching the right people with the right jobs .

T

target marketsSpecific groups of customers to whom a company wants to sell a particular product .

tariffsTaxes levied on imports .

tax creditAmount deducted from the income on which a person or business is taxed .

technical skillsAbility to perform the mechanics of a particular job .

telemarketingSales of goods and services by telephone .

time-sharingsystems Computer networks in which pro­cessing tasks are done one at a lime for the various terminals .

time utilityConsumer value added by making a prod­uct available at a convenient lime .

titleLegal ownership of property.

top managementLevel of management encompassing those who have the most power and responsibility in the organization .

tortNoncriminal act (other than breach of contract) that results in injury lo person or property .

trade allowanceDiscount that a producer offers to a wholesaler or retailer .

trade creditCredit obtained by the purchaser directly from the supplier .

trade deficitNegative trade balance .

trade discountDiscount offered to a wholesaler or re­tailer .

trademarkBrand that has been given legal protection so that its owner has exclusive rights to its use .

trade promotionsSales promotions aimed at other businesses .

trade showIndustry gathering in which producers set up displays and demonstrate products to potential customers .

traitsPersonal characteristics .

trait theoryView that certain personal characteristics make people better leaders .

transactionExchange between parties .

transaction costsCosts of trading securities, including the broker's commission and taxes .

transfer paymentsPayments by government to individ­uals that are not made in return for goods and ser­vices .

Treasury billsShort-term debt issued by the federal government .

Treasury notesDebt securities issued by the federal government that generally mature within 1 to 7 years .

U

umbrella policiesInsurance that provides businesses with coverage beyond what is provided by other parts of a liability policy .underground economyEconomic activity that is not reported .

underwritersInsurance company employees who de­cide which risks to insure, or how much, and for what premiums .

unemployment insuranceGovernment-sponsored pro­gram for assisting workers who are laid off or, to a lesser extent, who quit their jobs .

unlimited liabilityLegal condition under which any damages or debts attributable to the business can also be attached to the owner, because the two have no separate legal existence .

unsecured bondsBonds backed only by the reputation of the issuer .

unsecured loanLoan requiring no collateral but a good credit rating .

upper-level managersThose at the top of an organiza­tion's management hierarchy .

V

value-added taxesTaxes paid at each step in the distri­bution chain on the difference between the cost of inputs and the price obtained for outputs at that step .

variable costsBusiness costs that increase with the number of units produced .

variable life insuranceWhole life insurance policy that allows the policyholder to decide how to invest the cash value .

variablesChangeable factors in an experiment.

variety storesStores that sell a wide selection of low-priced items .

venture capitalistsInvestment specialists who provide money to finance new businesses in exchange for a portion of the ownership, with the objective of mak­ing a considerable profit on the investment .

vertical conflictConflict between channel members at different levels in the distribution chain .

vertical marketingsystems Planned distribution chan­nels in which members coordinate their efforts to optimize distribution activities .

vertical mergersCombinations of companies that par­ticipate in different phases of the same industry .

voluntary bankruptcyBankruptcy proceedings initi­ated by the debtor .

W

wagesCash payment based on a calculation of the num­ber of hours the employee has worked or the number produced .

wants Things that are desirable or useful in light of a person's experiences, culture, and personality .

warehouse Facility for storing backup stocks of supplies or finished products.

warrantyGuarantee or promise .

whole life insuranceInsurance that provides both death benefits and savings for the insured's lifetime, provided that the premiums are paid

wholesalersFirms that sell products to other firms that buy them for resale or for industrial use .

worker buyoutDistribution of financial incentives to workers who voluntarily depart, usually undertaken in order to shrink the payroll .

workers' compensation insuranceInsurance that par­tially replaces lost income, medical costs, and reha­bilitation expenses for employees who are injured on the job .

working capitalCurrent assets minus current liabilities.

Y

yellow-dog contractAgreement forcing workers to promise, as a condition of employment, not to join or remain in a union .