Ch 1 Enterprise:  Intrapreneur – Employee of the business who

takes direct responsibility for turning an

 Consumer goods – the physical and tangible
innovative idea into a profitable product or
goods sold to the general public – include durable business venture.
consumer goods like cars and washing machines
and non-durable goods like food, drinks and  Business Plan – Written documents that
sweets that can be used only once. describes a business, its objectives, strategies,
financial forecast and the market it operates in.
 Consumer services – the non-tangible products
sold to the general public. It includes hotel Ch # 2 Business Structure:
accommodation, insurance services and train
 Primary Sector Business Activity – Firms
journeys.
engaged in farming, fishing, oil extraction and all
 Consumer – Individual who buys goods and other industries that extract natural resources so
services for their own use. that they can be used and processed by other
firms.
 Customer – Individual, group of individuals or
an organisation who purchase goods and services  Secondary Sector Business Activity – Firms
from a business. that manufacture and process products from
natural resources including computers, brewing,
 Factor of Production – Resources required by baking, and clothes-making and construction.
business to commence production of goods and
services.  Tertiary Sector Business Activity – Firms that
provide services to consumers and other
 Capital goods – the physical goods the industry
businesses such as retailing, transport, insurance,
uses to aid in producing other goods and services,
banking, hotels, tourism and
such as machines and commercial vehicles.
telecommunications.
 Adding value – increasing the difference
 Quaternary Sector Business Activity – Firms
between the cost of purchasing bought-in
that provides information related services. It
materials and the price the finished goods are sold
includes R&D, ICT, computing, web designing
for.
and management consultancy, etc.
 Added value – the difference between the costs
 Public Sector – It comprises of organisations
of purchasing bought-in materials and the price
accountable to and controlled by the central or
the finished goods are sold for.
local government.
 Opportunity cost – the benefit of the next most
 Private Sector – It comprises of businesses
desired option given up.
owned and controlled by individuals or groups of
 Entrepreneur – someone who takes the financial individuals.
risk of starting and managing a new venture.
 Mixed Economy – Economic resources are
 Enterprise – Action of showing initiatives to owned and controlled by private and public
take risk to start up a business. sectors.

 Branding – Process of differentiating or making  Free-Market Economy – economic resources

a product unique relative to competitors by are owned largely by the private sector with little
developing a symbol, name, image or trademark state intervention.
etc.
 Command Economy – Economic resources are
 Multinational Business (MNC) – A business owned, planned and controlled by the state.
firm that has its head office in one nation, but with
 Sole Trader – A business in which one person
operating branches, factories in other countries.
provides the permanent finance and, in return, has

BUSINESS 9609 AS DEFINATION ARRANGED BY SAUD AKRAM 1

 full control of the business and can keep all of the services. E.g. Consumers' cooperative, Farmers'
profits. cooperative and Workers' cooperative, etc.
 Partnership – A business formed by two or more  Franchise – A business that uses the name, logo
people to carry on a business together, with and trading systems of an existing successful
shared capital investment and, usually, shared business.
responsibilities.
 Franchiser – Person or Business selling license
 Limited Liability – The only liability or containing rights of their brand image, name or
potential loss the shareholder has if the company identity to someone who wants to open shops and
fails is the amount invested in the company, not sell products under that brand identity.
the total wealth of the shareholder.
 Franchisee – Person or Business purchasing
 Unlimited Liability – Founder or Owners of the license that contains rights to operate under,
business bear full, legal responsibility for debt of usually a successful established brand.
the business which can risk their personal assets.
 Joint venture – two or more businesses agree to
 Private limited company – A small to medium- work closely together on a particular project and
sized business owned by shareholders who are create a separate business division to do so.
often members of the same family; this company
 Joint Venture – When two or more firms agree
cannot sell shares to the general public.
to work closely together on a particular project
 Share – A certificate confirming part ownership and establish a completely separated business
of a company and entitling the shareholder owner division to commence operation of that project.
to dividends and certain shareholder rights.
 Social Enterprise – A business with mainly
 Shareholder – A person or institution owning social objectives that injects most of its profit
shares in a limited company. back into the business with aims based on societal
welfare rather than profit motive. They following
 Public limited company – A limited company, the triple bottom line.
often a large business, with the legal right to sell
shares to the general public. Prices are quoted on  Triple Bottom Line – Three objectives of social
the national stock exchange. enterprise:- Economic (Financial), Social and
Environmental.
 Public corporation – A business enterprise
owned and controlled by the state-also known as Ch # 3 Size of Business:
nationalised industry.
 Revenue – Total value of sales made during a
 Memorandum of association – This states the certain time period of business operation.
name of the company, the address of the head
 Capital Employed – Total value of long-term
office through which it can be contacted, the
finance invested into a business.
maximum share capital for which the company
seeks authorisation and the declared aims of the  Market Capitalisation – Total value of issued
business. shares of the business firm.
 Articles of association – This document cover  Market Share – Sales of a business as a
the internal working and control of the business- proportion of total market sales.
for example, the names of the directors and the
procedures to be followed at meetings will be  Small Business – A business with a limited scale
detailed. of operations. Its characteristics consist of having
fewer employees and lower revenue compared to
 Cooperative – Jointly owned business whose large enterprises. Such businesses are usually
members operate it considering their mutual privately owned and operated.
benefits, to produce or distribute goods and

BUSINESS 9609 AS DEFINATION ARRANGED BY SAUD AKRAM 2

  Family Business – A business where decision- Ch # 4 Business Objective:
making process occurs with members of a family.
 Business Objectives – A stated measurable
It is typically managed and controlled by family
target of the business written in its business plan
members across multiple generations, with
that it hopes to achieve.
family interests influencing its operation and
strategy.  Corporate Social Responsibility (CSR) – When
businesses take interest of the society in
 Organic Growth – Expansion of a business by
consideration, and by taking accountability for
establishing new plants, stores, or factories. Also
known as internal growth. the impact of their decisions and activities on
various stakeholders as well as the environment.
 External Growth – Expansion of a business
 Pressure Group – An association created by
through integration or takeover of another
business. group of individuals with a common interest or
goal, thus putting pressure on corporations and
 Merger – Agreement by owners and managers of government to change specific policies so that
two businesses to unite them together into a new their aim is achieved. It is usually for betterment
combined business. It's referred to as friendly of society.
merger.
 SMART Objectives – Aims that are specific,
 Takeover – When a company buys more than measurable, achievable, realistic and time-
50% of shares of another business and becomes limited.
its owner. Also known as acquisition.
 Annual (Company) Report – Document
 Horizontal Merger – Integration with a business containing details of a firm's activities over a
in the same industry in the same stage of year, including its financial accounts.
production.
 Business Strategy – Long-term plan consisting
 Vertical Integration – Integration with a steps of action of a business, tailored to achieve a
business in the same industry in different stage of specific objective.
production.
 Tactic – Short-term plan of action which is a part
 Backward Vertical Integration – Integration of the overall strategy to achieve its main aim.
with a business in the same industry in the earlier
 Target – Short-term objective of the corporation
stage of production. It integrates with supplier
that must be completed in order to achieve their
business.
overall objective.
 Forward Vertical Integration – Integration with
 Ethical Code (Code of Conduct) – Document
a business in the same industry in the later stage
of production. It integrates with retailer business. detailing company's rules and guidelines on
employee behaviour that must be followed by all
 Conglomerate Integration – Integration with a the workers.
business in the different industry in the different
stage of production. Ch #5 Stakeholders in a Business:
 Stakeholders – Individuals or groups who can be
 Synergy – "The whole is greater than the sum of
affected by, and have an interest in, any action
parts". It is usually assumed that combined
taken by an organisation.
business organisations are more successful than
its original separate entities.  External Stakeholders – Individuals or groups
who are separate from the business but are
 Strategic Alliance – Agreement between two
affected by or interested in its operations.
firms to commit resources to accomplish a certain
aim while retaining its independence from each
other.

BUSINESS 9609 AS DEFINATION ARRANGED BY SAUD AKRAM 3

  Internal Stakeholders – Individuals or groups  Reference – A recommendation or comment
who work within the business, or own it, and are about an applicant’s character or past work
affected by the operations of the business. performance.
 Trade Union – Organisations of working people  Assessment Centre – A place where job
with the objective of improving the pay and candidates are tested on their abilities to perform
working conditions of its members and providing a role.
them with support and legal services.
 Internal Recruitment – Filling a job from
 Stakeholder Concept – The view that businesses within the current employees of the business.
and their managers have responsibilities to a wide
 External Recruitment – Hiring someone from
range of groups, not just shareholders. Also
outside the company for a job.
known as stakeholder theory.
 Employment Contract – A legal document
outlining the terms of a worker’s job.
Ch # 10 Human Resource Management (HRM):
 Redundancy – When a job is no longer needed,
 Human Resource Management (HRM) – The and the employee is let go.
strategic approach to managing employees so
 Dismissal – Being fired from a job due to poor
they help the business succeed.
performance or breaking rules.
 Workforce Planning – Predicting how many
 Unfair Dismissal – Being fired for a reason that
workers and what skills will be needed to meet
is not legally justified.
company goals.
 Employee Morale – The overall mood and
 Workforce Audit – Checking the skills and
satisfaction of employees at work.
qualifications of current employees and
managers.  Employee Welfare – The health, safety, and
wellbeing of employees in the workplace.
 Labour Turnover – The rate at which employees
leave a company.  Work-Life Balance – Managing time and effort
between work and personal life.
 Recruitment – Finding and attracting people to
fill a job position.  Equality Policy – Rules to ensure everyone is
treated fairly and has equal opportunities.
 Selection – The steps taken to interview, test, and
choose the right candidate for a job.  Diversity Policy – Policies to create a diverse
 Recruitment Agency – A business that helps workforce and value differences.
companies find candidates for job openings.  Training – Work-related education to improve
 Job Description – A list of the main tasks and skills and efficiency.
responsibilities of a job.  Induction Training – Training to introduce
 Person Specification – A list of the skills, new employees to the company and its systems.
qualities, and qualifications needed for a job.  On-the-Job Training – Training given at the
 Curriculum Vitae (CV) – A detailed document workplace while doing the job.
showing a person’s education, work experience,  Off-the-Job Training – Training done away
and achievements. from the workplace.
 Resume – A shorter document summarizing  Multi-skilling – Training employees in
work experience, education, and skills relevant to multiple skills for more flexibility.
the job.

BUSINESS 9609 AS DEFINATION ARRANGED BY SAUD AKRAM 4

  Employee Appraisal – Evaluating an  Fringe Benefits – Additional perks given by an
employee’s performance based on set goals. employer, separate from regular pay.
 Industrial Action – Workers taking action to  Job Rotation – A system where employees
pressure management during a dispute. switch between different jobs.
 Collective Bargaining – Negotiating working  Job Enlargement – Expanding a job by
conditions between a group of employees who broadening or deepening the tasks
are usually represented by trade union undertaken.
officials and their employer.
 Job Redesign – Restructuring a job to make it
 Trade Union Recognition – When a company more interesting, satisfying, and challenging.
agrees to negotiate with a trade union instead
 Development – Gaining new or advanced skills
of individual workers.
and knowledge, with opportunities to apply
Ch 11# Motivation: them.
 Motivation – The internal and external factors  Employee Participation – Actively involving
that stimulate the desire in workers to stay employees in decision-making within the
interested in and committed to doing a job company.
well.
 Teamworking – Organizing production so
 Self-Actualisation – A sense of self-fulfillment groups of workers complete entire units of
achieved through learning and work together.
accomplishments.
 Empowerment – Providing employees with
 Job Enrichment – Using the full capabilities of the skills, resources, authority, and
workers by giving them more challenging and opportunities to make decisions and be
fulfilling tasks. responsible for their work.
 Piece Rate – Payment to a worker for each unit  Quality Circle (QC) – A voluntary group of
produced. workers who meet regularly to discuss and
solve work-related problems.
 Time-Based Wage Rate – Payment made to a
worker for each period of time worked. Ch # 12 Management:
 Salary – Annual income, typically paid  Manager – The person responsible for setting
monthly. goals, organizing resources, and motivating
workers to achieve business objectives.
 Commission – Payment to a salesperson for
each sale made.  Management – The coordination and
organization of activities to accomplish the
 Bonus – An additional payment on top of the business's defined goals.
agreed wage or salary.
 Autocratic Management – A style where one
 Performance-Related Pay – A bonus scheme
manager makes all decisions with little to no
that rewards employees for above-average input from others.
work performance.
 Paternalistic Management – A style where the
 Profit Sharing – A bonus given to employees
manager assumes they know what is best for
based on company profits, usually as a
the organization, similar to a parental figure.
proportion of their salary.
 Laissez-Faire Management – A style where
 Share-Ownership Scheme – A program that
most business decisions are left to the
gives employees shares in the company or workforce.
allows them to buy shares at a discount.
BUSINESS 9609 AS DEFINATION ARRANGED BY SAUD AKRAM 5
  Democratic Management – A style that  Customer/Market Orientation – An approach
encourages workers to actively participate in that focuses on making product decisions
decision-making. based on consumer demand identified through
market research.
 Theory X – The belief that some managers
hold, thinking employees are lazy, need  Product Orientation – An approach that
constant supervision, and are motivated by focuses on producing products that a company
fear. can make or has traditionally made, and then
trying to sell them.
 Theory Y – The belief that some managers
hold, thinking employees are self-motivated,  Market Size – The total value or volume of
enjoy their work, and are willing to take on sales in a market over a specific time period.
extra responsibilities.
 Market Growth – The percentage increase in
Nature of Marketing: the total market size (by volume or value) over
a given period.
 Marketing Objectives – The goals set for the
marketing department to help the business  Brand Leader – The brand with the largest
achieve its overall company objectives. market share.
 Marketing – The management task of  Consumer Products – Goods or services sold
identifying and satisfying customer needs directly to end users.
profitably by delivering the right product at
 Industrial Products – Goods or services sold to
the right price, place, and time.
other businesses.
 Corporate Objectives – Clear and realistic
 Mass Marketing – Selling standardized
goals set for the entire company.
products to the entire market without
 Marketing Strategy – A detailed plan of action differentiation.
that outlines how a business will achieve its
 Niche Marketing – Identifying a small
marketing goals and gain a competitive
segment of a larger market and offering
advantage.
products tailored specifically to that segment.
 Equilibrium Price – The price at which the
 Market Segmentation – Dividing a market
quantity demanded by consumers equals the
into distinct customer groups with common
quantity supplied by producers.
needs and marketing different products to
 Demand – The amount of a product that each group.
consumers are willing and able to buy at a
 Consumer Profile – A detailed picture of a
specific price during a certain time period.
business's consumers, showing their age,
 Supply – The amount of a product that income, location, gender, and social class.
businesses are willing to offer at a specific
 Customer Relationship Marketing (CRM) –
price during a certain time period.
Using marketing strategies to build strong
 Market Segment – A smaller group within a relationships with customers, ensuring loyalty
larger market where consumers share similar and repeat business.
characteristics.
Market Research:
 Industrial Market – The market for products
 Market Research – The process of gathering,
sold by businesses to other businesses (B2B).
recording, and analyzing information about
 Consumer Market – The market for products customers, competitors, and the market.
sold by businesses to individual consumers
(B2C).

BUSINESS 9609 AS DEFINATION ARRANGED BY SAUD AKRAM 6

  Primary Research – Collecting original, first-  Services – Non-physical products that fulfill
hand data directly related to the business’s customer needs, like teaching, plumbing, or
needs. banking.
 Secondary Research – Using existing data that  Brand – A unique name, symbol, or trademark
was collected for a different purpose. that distinguishes a product from its
competitors.
 Qualitative Data – Non-numerical data that
gives insight into the motivations and  Intangible Attributes – Qualities of a product
behaviors of consumers. that are based on customer opinions and are
difficult to measure or compare.
 Quantitative Data – Numerical data from
research that can be analyzed statistically.  Tangible Attributes – Measurable features of a
product that can easily be compared with
 Sampling – Selecting a group of respondents
others.
from a larger population for research
purposes.  Unique Selling Point (USP) – A distinctive
feature of a product that sets it apart from
 Sample – A selected group of people competitors.
participating in market research, representing
the broader target market.  Product Differentiation – The unique qualities
of a product that make it stand out from
 Sampling Bias – When the chosen sample competitors.
doesn’t accurately represent the entire
population, giving some people a higher  Product Positioning – How consumers
chance of being selected. perceive a product compared to its
competitors.
 Arithmetic Mean – The average value
calculated by adding up all the data points and  Product Portfolio Analysis – Reviewing a
dividing by the number of points. business’s range of products to decide how
best to allocate resources.
 Mode – The value that appears most
frequently in a data set.  Product Life Cycle – The stages of a product's
sales from launch to withdrawal from the
 Median – The middle value in an ordered set market.
of data, dividing it into two equal halves.
 Consumer Durable – A product designed for
 Range – The difference between the highest
reuse with a long lifespan, like a car or washing
and lowest values in a data set.
machine.
 Coding – The process of labelling and
 Extension Strategy – A plan to extend the
organising qualitative data to identify the
maturity phase of a product’s life before
main themes and the links between them.
launching a new one.
Marketing Mix – Product:
 Boston Matrix – A tool for analyzing a
 Marketing Mix – The four key decisions— company’s product range in terms of market
product, price, promotion, and place—that share and growth.
ensure effective marketing of a product.
Marketing Mix – Price:
 Product – Goods or services created during
 Mark-Up Pricing – Adding a fixed profit
the production process and sold to meet margin to the cost of a product to set its price.
customer needs.
 Goods – Physical products like cars or soap
bars.
BUSINESS 9609 AS DEFINATION ARRANGED BY SAUD AKRAM 7
  Cost-Plus Pricing – Setting a price by  Digital Promotion – Marketing and promoting
calculating the unit cost and adding a set profit products using digital platforms, primarily on
margin. the internet but also via mobile devices.
 Contribution-Cost Pricing – Pricing based on  E-commerce – Conducting transactions for
variable costs to contribute to fixed costs and buying and selling goods and services through
profit. online platforms.
 Competitive Pricing – Setting prices based on Marketing Mix – Place:
what competitors are charging.
 Channel of Distribution – The network of
 Price Discrimination – Charging different intermediaries that a product goes through
prices to different customer groups for the from the producer to the final consumer.
same product or service.
 Online Marketing (E-commerce) – Using the
 Dynamic Pricing – Adjusting prices based on internet, email, and mobile communications
demand and customers’ willingness to pay. for selling and marketing products directly
through electronic commerce.
 Penetration Pricing – Setting a low price to
encourage high sales volume.  Digital Distribution – The delivery of digital
media content such as music, videos, software,
 Price/Market Skimming – Charging a high and games over the internet.
price for a new product with low price
sensitivity due to uniqueness.  Physical Distribution – The processes involved
in moving finished products efficiently from
 Psychological Pricing – Setting prices to align
the production facility to the consumer.
with customers’ perceived value of a product.
 Integrated Marketing Mix – Ensuring that all
Marketing Mix – Promotion:
marketing decisions and strategies align with
 Promotion – The use of various methods like one another to deliver a clear and consistent
advertising, sales promotions, personal selling, message to consumers about the product.
direct mail, trade fairs, sponsorships, and Nature of Operation:
public relations to inform and persuade
consumers to make a purchase.  Intellectual Capital – The intangible assets of
a business, including human capital (skilled
 Advertising – Paid communication using
employees), structural capital (information
platforms such as TV, newspapers, and
systems and databases), and relational capital
cinemas to inform and convince customers.
(strong relationships with suppliers and
 Direct Promotion – A variety of promotional customers).
efforts targeting specific consumers directly,
 Transformational Process – Activities that
often referred to as direct marketing.
convert inputs into outputs, adding value
 Sales Promotion – Offering special deals and during the process to produce goods or
incentives to consumers or retailers to boost services for customers.
short-term sales and encourage repeat
 Productivity – The measure of output
purchases.
generated from a given set of inputs, such as
 Promotion Mix – The blend of promotional output per worker over a specific time period.
strategies a company uses to market its
 Level of Production – The total number of
products.
units produced within a certain time frame.

BUSINESS 9609 AS DEFINATION ARRANGED BY SAUD AKRAM 8

  Production – The process of turning inputs,  Economic Order Quantity – The most cost-
like raw materials and labor, into finished effective quantity of stock to reorder,
products or services. balancing delivery and storage costs.
 Efficiency – The ability to produce outputs at  Buffer Inventory – The minimum amount of
the highest ratio of output to input. stock that must be kept to ensure
uninterrupted production in case of supply
 Effectiveness – Achieving business goals by delays or sudden increases in demand.
utilizing inputs in a way that meets customer
needs and business objectives.  Re-order Quantity – The number of units
ordered every time a new stock order is placed.
 Sustainability of Operations – Maintaining
business practices over the long term by  Lead Time – The duration between placing an
ensuring environmental protection and order for supplies and receiving the delivery.
preserving the quality of life for future
 Re-order Level – The inventory level at which
generations.
a new order is triggered to avoid running out
 Labour Intensive – A production process that of stock.
requires a high amount of labor compared to
 Supply Chain – The interconnected system of
the use of capital equipment.
businesses and activities involved in the
 Capital Intensive – A production process that production and distribution of a product, from
relies heavily on machinery and equipment raw materials to the final delivery to the
rather than labor input. customer.
 Job Production – The creation of a unique  Supply Chain Management – Managing the
product that is specifically designed to meet an entire process from sourcing raw materials to
individual customer's needs. delivering the finished product, aiming to
minimize costs while improving customer
 Batch Production – Producing a set of
service.
identical items in groups, where each product
passes through stages of production  Just-in-Time (JIT) Inventory Management –
simultaneously. A strategy that avoids holding stock by
ensuring materials arrive just as needed for
 Flow Production –Continuous production
production and that finished goods are made
where products are made in an ongoing
to order.
process without interruption.
 Just-in-Case (JIC) Inventory Management – A
 Mass Customisation – The use of advanced,
strategy that reduces the risk of stock
flexible technology in production lines to
shortages by maintaining higher levels of
create personalized products according to buffer inventory.
individual customer preferences.
Capacity Utilisation and Outsourcing:
Inventory Management:
 Maximum (Full) Capacity – The highest level
 Inventory – Materials and goods that a
of output a business can consistently achieve
business keeps on hand to enable production over time.
and meet customer demand.
 Capacity Utilisation – The percentage of the
 Inventory Management – The process of
maximum output capacity that is currently
managing the ordering, storage, and use of a
being used.
company's inventory.
 Outsourcing – Hiring another business to
handle part of the production process instead

BUSINESS 9609 AS DEFINATION ARRANGED BY SAUD AKRAM 9

 of doing it in-house with the company's  Current Liabilities – Debts or obligations that
employees. are due to be paid within one year.
 Excess Capacity – It occurs when current  Capital Expenditure – The purchase of long-
output levels are lower than the business's full term assets, like machinery or buildings,
production capacity, also called spare capacity. expected to last for more than one year.
 Rationalisation – The process of cutting  Revenue Expenditure – Spending on
capacity by shutting down factories or operational costs and short-term assets, such
production units. as wages and inventory.
 Capacity Shortage – When the demand for a  Retained Earnings – Profit kept in the
company's products surpasses its production business after taxes, rather than being paid out
capacity. as dividends.
 Business Process Outsourcing (BPO) – A type  Internal Sources – Finance raised from within
of outsourcing where specialized contractors the business, such as from retained earnings or
manage specific business functions like human the sale of assets.
resources or finance.
 External Sources – Finance raised from
Business Finances: outside the business, such as loans or
investments from banks.
 Start-up Capital – The initial capital required
by an entrepreneur to establish a business.  Non-current Assets – Long-term assets held
and used by the business for more than one
 Working Capital – Funds needed to cover raw
year.
materials, day-to-day expenses, and credit
extended to customers.  Overdraft – A pre-arranged credit limit with a
bank that allows a business to borrow money
 Short-term Finance – Finance needed for as needed.
periods of up to one year.
 Factoring – Selling accounts receivable to a
 Long-term Finance – Finance required for third party in exchange for immediate cash.
periods longer than one year.
 Hire Purchase – A method of buying an asset
 Profit – The surplus remaining after all costs
with fixed payments over time, with ownership
have been subtracted from total revenue.
transferred after the final payment.
 Liquidity – The ability of a business to meet its
 Leasing – Renting an asset for a fixed period,
short-term financial obligations.
avoiding the need for long-term capital to
 Administration – When external purchase the asset outright.
administrators manage a business that cannot
 Long-term Loans – Loans that do not need to
pay its debts, with the intention of selling it as be repaid for at least one year.
a going concern.
 Debentures – Long-term bonds issued by
 Bankruptcy – A legal procedure that involves
companies to raise finance, often with a fixed
liquidating a business or property to pay off interest rate.
debts.
 Share (Equity) Capital – Permanent finance
 Liquidation – When a business stops trading
raised by selling shares in the business.
and sells its assets to pay creditors.
 Business Mortgages – Long-term loans
 Current Assets – Assets that are cash or can be
secured against a property used for business
converted to cash within a year, such as purposes.
inventory or trade receivables.
BUSINESS 9609 AS DEFINATION ARRANGED BY SAUD AKRAM 10
  Venture Capital – Risk capital invested in  Overtrading – Expanding a business too
start-ups or small businesses with high growth quickly without sufficient finance, leading to
potential. cash flow problems.
 Collateral Security – An asset pledged to a Cost:
lender that may be sold to repay a loan if the
 Cost Centre – A department or section of a
borrower defaults.
business that incurs costs but does not
 Rights Issue – An offer to existing generate revenue.
shareholders to purchase additional shares at
 Direct Costs – Costs directly linked to the
a discounted price.
production of goods and services.
 Microfinance – Financial services provided to
 Indirect Costs – Costs that cannot be directly
individuals or small businesses who lack access
allocated to a specific unit of production.
to traditional banking services.
 Fixed Costs – Costs that remain unchanged
 Crowd Funding – Raising small amounts of
regardless of output in the short term.
capital from a large number of people to
finance a new business or project.  Variable Costs – Costs that vary depending on
the level of output.
Forecast and Management of Cashflow:
 Total Cost – The sum of fixed and variable
 Cash Flow – The net balance of cash moving
costs.
into and out of a business.
 Profit Centre – A division of a business to
 Insolvent – When a business cannot meet its
short-term debts. which both revenues and costs are assigned,
allowing profit calculation.
 Cash Flow Forecast – An estimate of future
 Average Cost – The total cost divided by the
cash inflows and outflows.
number of units produced.
 Cash Inflow – Money in form of note received
 Full Costing – A costing method that assigns
by a business.
all direct and indirect costs to products or
 Cash Outflow – Money in form of cash spent divisions.
by a business.
 Contribution Per Unit – The price of a product
 Net Cash Flow – The difference between cash minus its variable costs.
inflows and outflows over a given period.
 Break-even Point – The output level at which
 Opening Cash Balance – The amount of cash a total revenue equals total costs, resulting in
business holds at the beginning of a period. neither profit nor loss.
 Closing Cash Balance – The amount of cash  Break-even Analysis – The process of
held at the end of a period, which becomes the calculating the break-even point using cost
opening balance for the next period. and revenue data.
 Credit Control – Monitoring customer debts  Margin of Safety – The difference between
to ensure they are paid within the agreed time actual output and the break-even output level.
frame.
 Bad Debt – Unpaid bills that are unlikely to be
Budgeting:
collected.
 Budgeting – Planning future financial
activities by setting performance targets.

BUSINESS 9609 AS DEFINATION ARRANGED BY SAUD AKRAM 11

  Budget Holder – The individual responsible
for setting and managing a budget.
 Variance Analysis – The process of comparing
actual results to the budgeted figures and
analyzing the differences.
 Delegated Budgets – Budgets for which junior
managers are given responsibility for setting
and achieving targets.
 Incremental Budgeting – A budgeting method
that uses the previous year's budget as a
starting point, with adjustments for the
current year.
 Zero Budgeting – A budgeting method where
every expense must be justified, and no funds
are allocated automatically.
 Favourable Variance – A change from the
budget that results in higher-than-expected
profit.
 Flexible Budgeting – A budgeting approach
that allows for cost adjustments if sales or
output levels change.
 Adverse Variance – A change from the budget
that results in lower-than-expected profit.

BUSINESS 9609 AS DEFINATION ARRANGED BY SAUD AKRAM 12