when two companies or units of a
business are joined together.Takeover The purchase of one
business by another.Treasury function Using a
company’s treasury (its financial
operations department) to achieve
the optimum balance between
liquidity and income from the
company’s cash flows. Other
activities can include profit
generation, risk management,
planning and operations, and
shareholder relations.Unique Selling Proposition (USP)
A marketing strategy whereby
companies distinguish their products
from their rivals by offering
customers something that their
competitors do not or cannot offer.Value chain The theory of US
professor Michael Porter that the
chain of a company’s interrelated
activities can be exploited to add
value to its products or services.
These activities relate to the flow of a
product from production to purchase
by the customer.Venture capital Funds invested in
a start-up at its earliest phase.Viral marketing The launching of a
product or service via the Internet or
social media to attract rapid and
widespread consumer interest.Working capital The capital
available for use in the day-to-day
operations of a business, calculated
as the difference between current
assets and current liabilities.Publicly traded company
In a publicly traded company the
liability of members is limited to
the value of their investment in
the company. A publicly trated
company’s shares are traded on the
stock market and can be bought
and sold by the general public.
Recession The period of time in
which the total output of an
economic area decreases.
Reserves In business, profits
retained by a company for future use
and not distributed to shareholders.
Return on Equity (ROE) A
measure of a company’s financial
performance, based on profit and the
equity of shareholders.
Return on Investment (ROI) The
ratio of money gained to the amount
invested in the company.
Revenue Also known as sales and
turnover, the income earned by a
business over a period of time. The
revenue earned depends on the price
and number of items sold.
Risk In investment terms, risk
is the uncertainty associated with
an investment or asset. A high-risk
investment, for example, may yield a
high return; but if unsuccessful,
it could cause the investor to lose
everything. Operational risk is the
risk of failure due to shortcomings in
procedures, people, or systems.
Securities An umbrella term for a
range of investment instruments
that are traded on stock markets,
such as bonds, options, and shares.
Shadow bank A nonbank financial
institution—such as the treasury
function of a business—that lends
money to businesses. Shadow banks
offer similar services as traditional
banks, but are not subject to
supervisory and regulatory burdens.Share A unit of ownership in a
company, signifying ownership
of stock.Shareholder An individual or
organization that holds shares in
a company. A shareholder is also
known as a stockholder.Speculating Making high-risk
investments that could yield
large returns, but bear a high risk
of resulting in loss.Start-up A business that has—or is
being—launched from scratch.Stock The equity stake of the
shareholders in a business. The
term also describes goods owned
by a business that are held on its
premises or in a warehouse, and are
available for sale or distribution.Stock market A place where bonds
and stocks or shares in a company
are bought and sold.Supply The amount of a product
or service that is available for
consumers to buy.Supply chain The people and
processes involved in the production
and distribution of goods or services.Surplus An excess in supply over
demand—when the production
of goods, services, or resources
exceeds their consumption.Sustainability A strategy in
which the business ensures that
the resources it uses will be
replaced, such as a paper
manufacturer planting trees.Synergy The supposed additional
performance benefit that is achievedGLOSSARY 343