Inventory Goods and materials that
are held in stock in a warehouse or
in any other similar premises. The
term can also refer to the total value
of a company’s assets, including raw
materials, and unfinished and
finished products.
Investment In business terms, the
activity of purchasing bonds or
shares in a company. Can also refer
to a company’s expenditure on items
intended to yield an increase in
operational performance, such as
new tools.
Kaizen The Japanese term for
“good change,” in business. It refers
to continuous improvement to
enhance productivity.
Leverage The extent to which
people or companies fund their
activities with borrowed money.
When high leverage is widespread in
the economy, the degree of debt can
create a short-term boom; but this is
often followed by a crash.
Leveraged buy-out (LBO)
The acquisition of a business by
a company or group of individuals
using a large proportion of
borrowed money.
Liability The financial obligations of
a company to outsiders or claims
against its assets by outsiders.
Liquidity The ease with which an
asset can be bought or sold, without
adversely affecting the asset’s value.
Cash is the most liquid asset, since
its value remains constant.
Long tail A term coined by UK
writer and entrepreneur Chris
Anderson to describe how the overall
sales of niche products at the thin
“tail” of a demand curve may be
greater than sales of the most popular
products at the “head.”
Market The consumers who buy a
product or service. Also refers to any
physical or virtual location where
buyers and sellers trade goods, such
as a store or a website.Marketing Promoting the sale of
products or services to consumers or
other businesses. Effective marketing
identifies, anticipates, and responds
to customers’ needs.Market leader A product or
company that has the largest
market share.Market share A business’s
percentage of sales in a specific
industry or sector.Merger The combining of two or
more businesses to form a separate
organization with a new identity. The
goal of a merger is often to increase
shareholder value beyond the sum
of the two (or more) companies.Micro loan A small loan made to
entrepreneurs or small businesses.Micropreneur An entrepreneur
who starts and builds a small
business of their own, often while
on salaried employment.M-commerce An abbreviation
of “mobile commerce,” the use of
portable devices such as laptops and
smartphones to conduct business
transactions online.Monopoly A market in which
only one company is active.
Monopoly companies generally
have low product diversity, which
they can sell at a high price due to
lack of competition.Niche market A small group of
people with an interest in a product
or service that is not addressed by
mainstream providers.Off-balance-sheet finance
Accounting methods whereby some
liabilities or assets are not recorded
on a company’s balance sheet.Open innovation The idea that
a business’s talent base, and
consequently its insight into new
products and services, can be
expanded by drawing on expertise
from outside the company, often via
social media and the Internet.Operating margin A measure of
profitability—the ratio of a company’s
operating profit to its revenue.Outsourcing The contracting out of
specific tasks or functions in a
business to outside companies.Overhead Any ongoing expense of a
business, such as rent of premises;
also known as “operating expense.”Positioning A marketing strategy
that establishes a distinct position
for a brand in the market.Private equity A type of
investment in which private assets
or borrowed funds are used to
finance private companies (those not
listed on a public stock exchange).Private limited company (Ltd)
A company in which the liability of
members is limited to the value of
their investment in the company.
The company’s shares cannot be
bought and sold by the public. Private
limited company is a term used
primarily in the UK. The closest US
equivalent is limited liability company.Product portfolio A strategy that
involves assembling a diverse range
of products or business units.Profit The surplus of a company’s
revenue after all expenses, taxes,
and operating costs have been met.342 GLOSSARY