Understanding Business 12e by Nickels, McHugh, McHugh

Understanding Business by Nickels, McHugh, McHugh (12th edition) is the 12th edition of the Understanding Business textbook authored by William G. Nickels, University of Maryland, James McHugh, St. Louis Community College at Forest Park, Susan McHugh, Applied Learning Systems, and published by McGraw-Hill Education, New York, NY in 2019.

• Absolute advantage. The advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries.
• Accounting. The recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions.
• Accounting cycle. A six-step procedure that results in the preparation and analysis of the major financial statements.
• Accounts payable. Current liabilities involving money owed to others for merchandise or services purchased on credit but not yet paid for.
• Acquisition. One company's purchase of the property and obligations of another company.
• Administered distribution system. A distribution system in which producers manage all of the marketing functions at the retail level.
• Administrative agencies. Federal or state institutions and other government organizations created by Congress or state legislatures with delegated power to pass rules and regulations within their mandated area of authority.
• Advertising. Paid, nonpersonal communication through various media by organizations and individuals who are in some way identified in the advertising message.
• Affirmative action. Employment activities designed to "right past wrongs" by increasing opportunities for minorities and women.
• Agency shop agreement. Clause in a labor–management agreement that says employers may hire nonunion workers; employees are not required to join the union but must pay a union fee.
• Agents/brokers. Marketing intermediaries who bring buyers and sellers together and assist in negotiating an exchange but don't take title to the goods.
• American Federation of Labor (AFL). An organization of craft unions that championed fundamental labor issues; founded in 1886.
• Annual report. A yearly statement of the financial condition, progress, and expectations of an organization.
• Annuity. A contract to make regular payments to a person for life or for a fixed period.
• Apprentice programs. Training programs involving a period during which a learner works alongside an experienced employee to master the skills and procedures of a craft.
• Arbitration. The agreement to bring in an impartial third party (a single arbitrator or a panel of arbitrators) to render a binding decision in a labor dispute.
• Assembly process. That part of the production process that puts together components.
• Assets. Economic resources (things of value) owned by a firm.
• Auditing. The job of reviewing and evaluating the information used to prepare a company's financial statements.
• Autocratic leadership. Leadership style that involves making managerial decisions without consulting others.
• Balance of payments. The difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment.
• Balance of trade. The total value of a nation's exports compared to its imports over a particular period.
• Balance sheet. Financial statement that reports a firm's financial condition at a specific time and is composed of three major accounts: assets, liabilities, and owners' equity.
• Banker's acceptance. A promise that the bank will pay some specified amount at a particular time.
• Bankruptcy. The legal process by which a person, business, or government entity unable to meet financial obligations is relieved of those obligations by a court that divides any assets among creditors, allowing creditors to get at least part of their money and freeing the debtor to begin anew.
• Bargaining zone. The range of options between the initial and final offer that each party will consider before negotiations dissolve or reach an impasse.
• Barter. The direct trading of goods or services for other goods or services.
• Benchmarking. Comparing an organization's practices, processes, and products against the world's best.
• Benefit segmentation. Dividing the market by determining which benefits of the product to talk about.
• Bond. A corporate certificate indicating that a person has lent money to a firm.
• Bonds payable. Long-term liabilities that represent money lent to the firm that must be paid back.
• Bookkeeping. The recording of business transactions.
• Brain drain. The loss of the best and brightest people to other countries.
• Brainstorming. Coming up with as many solutions to a problem as possible in a short period of time with no censoring of ideas.
• Brand. A name, symbol, or design (or combination thereof) that identifies the goods or services of one seller or group of sellers and distinguishes them from the goods and services of competitors.
• Brand association. The linking of a brand to other favorable images.
• Brand awareness. How quickly or easily a given brand name comes to mind when a product category is mentioned.
• Brand equity. The value of the brand name and associated symbols.
• Brand loyalty. The degree to which customers are satisfied, like the brand, and are committed to further purchases.
• Brand manager. A manager who has direct responsibility for one brand or one product line; called a product manager in some firms.
• Brand name. A word, letter, or group of words or letters that differentiates one seller's goods and services from those of competitors.
• Breach of contract. When one party fails to follow the terms of a contract.
• Break-even analysis. The process used to determine profitability at various levels of sales.
• Broadband technology. Technology that offers users a continuous connection to the Internet and allows them to send and receive mammoth files that include voice, video, and data much faster than ever before.
• Budget. A financial plan that sets forth management's expectations, and, on the basis of those expectations, allocates the use of specific resources throughout the firm.
• Bundling. Grouping two or more products together and pricing them as a unit.
• Bureaucracy. An organization with many layers of managers who set rules and regulations and oversee all decisions.
• Business. Any activity that seeks to provide goods and services to others while operating at a profit.
• Business cycles. The periodic rises and falls that occur in economies over time.
• Business environment. The surrounding factors that either help or hinder the development of businesses.
• Business intelligence (BI) (or analytics). The use of data analytic tools to analyze an organization's raw data and derive useful insights from them.
• Business law. Rules, statutes, codes, and regulations that are established to provide a legal framework within which business may be conducted and that are enforceable by court action.
• Business plan. A detailed written statement that describes the nature of the business, the target market, the advantages the business will have in relation to competition, and the resources and qualifications of the owner(s).
• Business-to-business market (B2B market). All the individuals and organizations that want goods and services to use in producing other goods and services or to sell, rent, or supply goods to others.
• Buying stock on margin. Purchasing stocks by borrowing some of the purchase cost from the brokerage firm.
• Cafeteria-style fringe benefits. Fringe benefits plan that allows employees to choose the benefits they want up to a certain dollar amount.
• Capital budget. A budget that highlights a firm's spending plans for major asset purchases that often require large sums of money.
• Capital expenditures. Major investments in either tangible long-term assets such as land, buildings, and equipment or intangible assets such as patents, trademarks, and copyrights.
• Capital gains. The positive difference between the purchase price of a stock and its sale price.
• Capitalism. An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit.
• Cash-and-carry wholesalers. Wholesalers that serve mostly smaller retailers with a limited assortment of products.
• Cash budget. A budget that estimates cash inflows and outflows during a particular period like a month or a quarter.
• Cash flow. The difference between cash coming in and cash going out of a business.
• Cash flow forecast. Forecast that predicts the cash inflows and outflows in future periods, usually months or quarters.
• Centralized authority. An organizational structure in which decision-making authority is maintained at the top level of management at the company's headquarters.
• Certificate of deposit (CD). A time-deposit (savings) account that earns interest to be delivered at the end of the certificate's maturity date.
• Certification. Formal process whereby a union is recognized by the National Labor Relations Board (NLRB) as the bargaining agent for a group of employees.
• Certified public accountant (CPA). An accountant who passes a series of examinations established by the American Institute of Certified Public Accountants (AICPA).
• Chain of command. The line of authority that moves from the top of a hierarchy to the lowest level.
• Channel of distribution. A whole set of marketing intermediaries, such as agents, brokers, wholesalers, and retailers, that join together to transport and store goods in their path (or channel) from producers to consumers.
• Claim. A statement of loss that the insured sends to the insurance company to request payment.
• Climate change. The movement of the temperature of the planet up or down over time.
• Closed shop agreement. Clause in a labor–management agreement that specified workers had to be members of a union before being hired (was outlawed by the Taft-Hartley Act in 1947).
• Cloud computing. A form of virtualization in which a company's data and applications are stored at offsite data centers that are accessed over the Internet (the cloud).
• Collective bargaining. The process whereby union and management representatives form a labor–management agreement, or contract, for workers.
• Command economies. Economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow.
• Commercial bank. A profit-seeking organization that receives deposits from individuals and corporations in the form of checking and savings accounts and then uses some of these funds to make loans.
• Commercialization. Promoting a product to distributors and retailers to get wide distribution, and developing strong advertising and sales campaigns to generate and maintain interest in the product among distributors and consumers.
• Common law. The body of law that comes from decisions handed down by judges; also referred to as unwritten law.
• Common market. A regional group of countries that have a common external tariff, no internal tariffs, and a coordination of laws to facilitate exchange; also called a trading bloc. An example is the European Union.
• Common stock. The most basic form of ownership in a firm; it confers voting rights and the right to share in the firm's profits through dividends, if offered by the firm's board of directors.
• Communism. An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production.
• Comparative advantage theory. Theory that states that a country should sell to other countries those products that it produces most effectively and efficiently, and buy from other countries those products that it cannot produce as effectively or efficiently.
• Competition-based pricing. A pricing strategy based on what all the other competitors are doing. The price can be set at, above, or below competitors' prices.
• Compliance-based ethics codes. Ethical standards that emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers.
• Compressed workweek. Work schedule that allows an employee to work a full number of hours per week but in fewer days.
• Computer-aided design (CAD). The use of computers in the design of products.
• Computer-aided manufacturing (CAM). The use of computers in the manufacturing of products.
• Computer-integrated manufacturing (CIM). The uniting of computer-aided design with computer-aided manufacturing.
• Concept testing. Taking a product idea to consumers to test their reactions.
• Conceptual skills. Skills that involve the ability to picture the organization as a whole and the relationship among its various parts.
• Conglomerate merger. The joining of firms in completely unrelated industries.
• Congress of Industrial Organizations (CIO). Union organization of unskilled workers; broke away from the American Federation of Labor (AFL) in 1935 and rejoined it in 1955.
• Consideration. Something of value; consideration is one of the requirements of a legal contract.
• Consumerism. A social movement that seeks to increase and strengthen the rights and powers of buyers in relation to sellers.
• Consumer market. All the individuals or households that want goods and services for personal consumption or use.
• Consumer price index (CPI). Monthly statistics that measure the pace of inflation or deflation.
• Contingency planning. The process of preparing alternative courses of action that may be used if the primary plans don't achieve the organization's objectives.
• Contingent workers. Workers who do not have the expectation of regular, full-time employment.
• Continuous process. A production process in which long production runs turn out finished goods over time.
• Contract. A legally enforceable agreement between two or more parties.
• Contract law. Set of laws that specify what constitutes a legally enforceable agreement.
• Contract manufacturing. A foreign company's production of private-label goods to which a domestic company then attaches its brand name or trademark; part of the broad category of outsourcing.
• Contractual distribution system. A distribution system in which members are bound to cooperate through contractual agreements.
• Contrarian approach. Buying stock when everyone else is selling or vice versa.
• Controlling. A management function that involves establishing clear standards to determine whether or not an organization is progressing toward its goals and objectives, rewarding people for doing a good job, and taking corrective action if they are not.
• Convenience goods and services. Products that the consumer wants to purchase frequently and with a minimum of effort.
• Conventional corporation (C corporation). A statechartered legal entity with authority to act and have liability separate from its owners.
• Cookies. Pieces of information, such as registration data or user preferences, sent by a website over the Internet to a web browser that the browser software is expected to save and send back to the server whenever the user returns to that website.
• Cooling-off period. When workers in a critical industry return to their jobs while the union and management continue negotiations.
• Cooperative (co-op). A business owned and controlled by the people who use it -- producers, consumers, or workers with similar needs who pool their resources for mutual gain.
• Copyright. A document that protects a creator's rights to materials such as books, articles, photos, and cartoons.
• Core competencies. Those functions that the organization can do as well as or better than any other organization in the world.
• Core inflation. CPI minus food and energy costs.
• Core time. In a flextime plan, the period when all employees are expected to be at their job stations.
• Corporate distribution system. A distribution system in which all of the organizations in the channel of distribution are owned by one firm.
• Corporate philanthropy. The dimension of social responsibility that includes charitable donations.
• Corporate policy. The dimension of social responsibility that refers to the position a firm takes on social and political issues.
• Corporate responsibility. The dimension of social responsibility that includes everything from hiring minority workers to making safe products.
• Corporate social initiatives. Enhanced forms of corporate philanthropy directly related to the company's competencies.
• Corporate social responsibility (CSR). A business's concern for the welfare of society.
• Corporation. A legal entity with authority to act and have liability separate from its owners.
• Cost of capital. The rate of return a company must earn in order to meet the demands of its lenders and expectations of its equity holders.
• Cost of goods sold (or cost of goods manufactured). A measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale.
• Countertrading. A complex form of bartering in which several countries may be involved, each trading goods for goods or services for services.
• Craft union. An organization of skilled specialists in a particular craft or trade.
• Credit unions. Nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members.
• Critical path. In a PERT network, the sequence of tasks that takes the longest time to complete.
• Cross-functional self-managed teams. Groups of employees from different departments who work together on a long-term basis.
• Current assets. Items that can or will be converted into cash within one year.
• Customer relationship management (CRM). The process of learning as much as possible about customers and doing everything you can over time to satisfy them -- or even exceed their expectations -- with goods and services.
• Damages. The monetary settlement awarded to a person who is injured by a breach of contract.
• Data analytics. The process of collecting, organizing, storing, and analyzing large sets of data ("big data") in order to identify patterns and other information that is most useful to the business now and for making future decisions.
• Database. An electronic storage file for information.
• Data processing (DP). Name for business technology in the 1970s; included technology that supported an existing business and was primarily used to improve the flow of financial information.
• Dealer (private-label) brands. Products that don't carry the manufacturer's name but carry a distributor or retailer's name instead.
• Debenture bonds. Bonds that are unsecured (i.e., not backed by any collateral such as equipment).
• Debit card. An electronic funds transfer tool that serves the same function as checks: it withdraws funds from a checking account.
• Debt financing. Funds raised through various forms of borrowing that must be repaid.
• Decentralized authority. An organizational structure in which decision-making authority is delegated to lower-level managers more familiar with local conditions than headquarters management could be.
• Decertification. The process by which workers take away a union's right to represent them.
• Decision making. Choosing among two or more alternatives.
• Deflation. A situation in which prices are declining.
• Demand. The quantity of products that people are willing to buy at different prices at a specific time.
• Demand deposit. The technical name for a checking account; the money in a demand deposit can be withdrawn anytime on demand from the depositor.
• Demographic segmentation. Dividing the market by age, income, and education level.
• Demography. The statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income.
• Departmentalization. The dividing of organizational functions into separate units.
• Depreciation. The systematic write-off of the cost of a tangible asset over its estimated useful life.
• Depression. A severe recession, usually accompanied by deflation.
• Deregulation. Government withdrawal of certain laws and regulations that seem to hinder competition.
• Devaluation. Lowering the value of a nation's currency relative to other currencies.
• Digital natives. Young people who have grown up using the Internet and social networking.
• Direct marketing. Any activity that directly links manufacturers or intermediaries with the ultimate consumer.
• Direct selling. Selling to consumers in their homes or where they work.
• Disability insurance. Insurance that pays part of the cost of a long-term sickness or an accident.
• Discount rate. The interest rate that the Fed charges for loans to member banks.
• Disinflation. A situation in which price increases are slowing (the inflation rate is declining).
• Distributed product development. Handing off various parts of your innovation process -- often to companies overseas.
• Diversification. Buying several different investment alternatives to spread the risk of investing.
• Dividends. Part of a firm's profits that the firm may distribute to stockholders as either cash payments or additional shares of stock.
• Double-entry bookkeeping. The practice of writing every business transaction in two places.
• Dow Jones Industrial Average (the Dow). The average cost of 30 selected industrial stocks, used to give an indication of the direction (up or down) of the stock market over time.
• Drop shippers. Wholesalers that solicit orders from retailers and other wholesalers and have the merchandise shipped directly from a producer to a buyer.
• Dumping. Selling products in a foreign country at lower prices than those charged in the producing country.
• E-commerce. The buying and selling of goods over the Internet.
• Economics. The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals.
• Economies of scale. The situation in which companies can reduce their production costs if they can purchase raw materials in bulk; the average cost of goods goes down as production levels increase.
• Electronic funds transfer system (EFT system). A computerized system that electronically performs financial transactions such as making purchases, paying bills, and receiving paychecks.
• Embargo. A complete ban on the import or export of a certain product, or the stopping of all trade with a particular country.
• Empowerment. Giving frontline workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests.
• Enabling. Giving workers the education and tools they need to make decisions.
• Enterprise resource planning (ERP). A newer version of materials requirement planning (MRP) that combines the computerized functions of all the divisions and subsidiaries of the firm -- such as finance, human resources, and order fulfillment -- into a single integrated software program that uses a single database.
• Enterprise zones. Specific geographic areas to which governments try to attract private business investment by offering lower taxes and other government support.
• Entrepreneur. A person who risks time and money to start and manage a business.
• Entrepreneurial team. A group of experienced people from different areas of business who join together to form a managerial team with the skills needed to develop, make, and market a new product.
• Entrepreneurship. Accepting the risk of starting and running a business.
• Environmental scanning. The process of identifying the factors that can affect marketing success.
• Equity financing. Money raised from within the firm, from operations or through the sale of ownership in the firm (stock or venture capital).
• Equity theory. The idea that employees try to maintain equity between inputs and outputs compared to others in similar positions.
• Ethics. Standards of moral behavior; that is, behavior accepted by society as right versus wrong.
• Everyday low pricing (EDLP). Setting prices lower than competitors and then not having any special sales.
• Exchange rate. The value of one nation's currency relative to the currencies of other countries.
• Exchange-traded funds (ETFs). Collections of stocks that are traded on exchanges but are traded more like individual stocks than like mutual funds.
• Exclusive distribution. Distribution that sends products to only one retail outlet in a given geographic area.
• Executor. A person who assembles and values your estate, files income and other taxes, and distributes assets.
• Expectancy theory. Victor Vroom's theory that the amount of effort employees exert on a specific task depends on their expectations of the outcome.
• Exporting. Selling products to another country.
• Express warranties. Specific representations by the seller that buyers rely on regarding the goods they purchase.
• External customers. Dealers, who buy products to sell to others, and ultimate customers (or end users), who buy products for their own personal use.
• Extranet. A semiprivate network that uses Internet technology and allows more than one company to access the same information or allows people on different servers to collaborate.
• Extrinsic reward. Something given to you by someone else as recognition for good work; extrinsic rewards include pay increases, praise, and promotions.
• Facility layout. The physical arrangement of resources (including people) in the production process.
• Facility location. The process of selecting a geographic location for a company's operations.
• Factoring. The process of selling accounts receivable for cash.
• Factors of production. The resources used to create wealth: land, labor, capital, entrepreneurship, and knowledge.
• Federal Deposit Insurance Corporation (FDIC). An independent agency of the U.S. government that insures bank deposits.
• Finance. The function in a business that acquires funds for the firm and manages those funds within the firm.
• Financial accounting. Accounting information and analyses prepared for people outside the organization.
• Financial control. A process in which a firm periodically compares its actual revenues, costs, and expenses with its budget.
• Financial management. The job of managing a firm's resources so it can meet its goals and objectives.
• Financial managers. Managers who examine financial data prepared by accountants and recommend strategies for improving the financial performance of the firm.
• Financial statement. A summary of all the transactions that have occurred over a particular period.
• Fiscal policy. The federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending.
• Fixed assets. Assets that are relatively permanent, such as land, buildings, and equipment.
• Flat organizational structure. An organizational structure that has few layers of management and a broad span of control.
• Flexible manufacturing. Designing machines to do multiple tasks so that they can produce a variety of products.
• Flextime plan. Work schedule that gives employees some freedom to choose when to work, as long as they work the required number of hours.
• Focus group. A small group of people who meet under the direction of a discussion leader to communicate their opinions about an organization, its products, or other given issues.
• Foreign direct investment (FDI). The buying of permanent property and businesses in foreign nations.
• Foreign subsidiary. A company owned in a foreign country by another company, called the parent company.
• Formal organization. The structure that details lines of responsibility, authority, and position; that is, the structure shown on organization charts.
• Form utility. The value producers add to materials in the creation of finished goods and services.
• 401(k) plan. A savings plan that allows you to deposit pretax dollars and whose earnings compound taxfree until withdrawal, when the money is taxed at ordinary income tax rates.
• Franchise. The right to use a specific business's name and sell its products or services in a given territory.
• Franchise agreement. An arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory.
• Franchisee. A person who buys a franchise.
• Franchisor. A company that develops a product concept and sells others the rights to make and sell the products.
• Free-market economies. Economic systems in which the market largely determines what goods and services get produced, who gets them, and how the economy grows.
• Free-rein leadership. Leadership style that involves managers setting objectives and employees being relatively free to do whatever it takes to accomplish those objectives.
• Free trade. The movement of goods and services among nations without political or economic barriers.
• Freight forwarder. An organization that puts many small shipments together to create a single large shipment that can be transported cost-effectively to the final destination.
• Fringe benefits. Benefits such as sick-leave pay, vacation pay, pension plans, and health plans that represent additional compensation to employees beyond base wages.
• Fundamental accounting equation. Assets = Liabilities + Owners' equity; this is the basis for the balance sheet.
• Gantt chart. Bar graph showing production managers what projects are being worked on and what stage they are in at any given time.
• General Agreement on Tariffs and Trade (GATT). A 1948 agreement that established an international forum for negotiating mutual reductions in trade restrictions.
• General partner. An owner (partner) who has unlimited liability and is active in managing the firm.
• General partnership. A partnership in which all owners share in operating the business and in assuming liability for the business's debts.
• Generic goods. Nonbranded products that usually sell at a sizable discount compared to national or privatelabel brands.
• Geographic segmentation. Dividing the market by cities, counties, states, or regions.
• Goals. The broad, long-term accomplishments an organization wishes to attain.
• Goal-setting theory. The idea that setting ambitious but attainable goals can motivate workers and improve performance if the goals are accepted, accompanied by feedback, and facilitated by organizational conditions.
• Goods. Tangible products such as computers, food, clothing, cars, and appliances.
• Government and not-for-profit accounting. Accounting system for organizations whose purpose is not generating a profit but serving ratepayers, taxpayers, and others according to a duly approved budget.
• Greening. The trend toward saving energy and producing products that cause less harm to the environment.
• Grievance. A charge by employees that management is not abiding by the terms of the negotiated labor–management agreement.
• Gross domestic product (GDP). The total value of final goods and services produced in a country in a given year.
• Gross output (GO). A measure of total sales volume at all stages of production.
• Gross profit (or gross margin). How much a firm earned by buying (or making) and selling merchandise.
• Hawthorne effect. The tendency for people to behave differently when they know they are being studied.
• Health savings accounts (HSAs). Tax-deferred savings accounts linked to low-cost, high-deductible health insurance policies.
• Hierarchy. A system in which one person is at the top of the organization and there is a ranked or sequential ordering from the top down of managers who are responsible to that person.
• High–low pricing strategy. Setting prices that are higher than EDLP stores, but having many special sales where the prices are lower than competitors'.
• Horizontal merger. The joining of two firms in the same industry.
• Human relations skills. Skills that involve communication and motivation; they enable managers to work through and with people.
• Human resource management (HRM). The process of determining human resource needs and then recruiting, selecting, developing, motivating, evaluating, compensating, and scheduling employees to achieve organizational goals.
• Hygiene factors. In Herzberg's theory of motivating factors, job factors that can cause dissatisfaction if missing but that do not necessarily motivate employees if increased.
• Identity theft. The obtaining of individuals' personal information, such as Social Security and credit card numbers, for illegal purposes.
• Implied warranties. Guarantees legally imposed on the seller.
• Importing. Buying products from another country.
• Import quota. A limit on the number of products in certain categories that a nation can import.
• Inbound logistics. The area of logistics that involves bringing raw materials, packaging, other goods and services, and information from suppliers to producers.
• Income statement. The financial statement that shows a firm's profit after costs, expenses, and taxes; it summarizes all of the resources that have come into the firm (revenue), all the resources that have left the firm, expenses, and the resulting net income or net loss.
• Incubators. Centers that offer new businesses low-cost offices with basic business services.
• Independent audit. An evaluation and unbiased opinion about the accuracy of a company's financial statements.
• Individual retirement account (IRA). A tax-deferred investment plan that enables you (and your spouse, if you are married) to save part of your income for retirement; a traditional IRA allows people who qualify to deduct from their reported income the money they put into an account.
• Industrial goods. Products used in the production of other products. Sometimes called business goods or B2B goods.
• Industrial unions. Labor organizations of unskilled and semiskilled workers in mass-production industries such as automobiles and mining.
• Inflation. A general rise in the prices of goods and services over time.
• Infomercial. A full-length TV program devoted exclusively to promoting goods or services.
• Informal organization. The system that develops spontaneously as employees meet and form cliques, relationships, and lines of authority outside the formal organization; that is, the human side of the organization that does not appear on any organization chart.
• Information systems (IS). Technology that helps companies do business; includes such tools as automated teller machines (ATMs) and voice mail.
• Information technology (IT). Technology used to store, retrieve, and send information efficiently.
• Information utility. Adding value to products by opening two-way flows of information between marketing participants.
• Initial public offering (IPO). The first public offering of a corporation's stock.
• Injunction. A court order directing someone to do something or to refrain from doing something.
• Insider trading. An unethical activity in which insiders use private company information to further their own fortunes or those of their family and friends.
• Institutional investors. Large organizations -- such as pension funds, mutual funds, and insurance companies -- that invest their own funds or the funds of others.
• Insurable interest. The possibility of the policyholder to suffer a loss.
• Insurable risk. A risk that the typical insurance company will cover.
• Insurance policy. A written contract between the insured and an insurance company that promises to pay for all or part of a loss.
• Intangible assets. Long-term assets (e.g., patents, trademarks, copyrights) that have no real physical form but do have value.
• Integrated marketing communication (IMC). A technique that combines all the promotional tools into one comprehensive and unified promotional strategy.
• Integrity-based ethics codes. Ethical standards that define the organization's guiding values, create an environment that supports ethically sound behavior, and stress a shared accountability among employees.
• Intensive distribution. Distribution that puts products into as many retail outlets as possible.
• Interactive promotion. Promotion process that allows marketers to go beyond a monologue, where sellers try to persuade buyers to buy things, to a dialogue in which buyers and sellers work together to create mutually beneficial exchange relationships.
• Interest. The payment the issuer of the bond makes to the bondholders for use of the borrowed money.
• Intermittent process. A production process in which the production run is short and the machines are changed frequently to make different products.
• Intermodal shipping. The use of multiple modes of transportation to complete a single long-distance movement of freight.
• Internal customers. Individuals and units within the firm that receive services from other individuals or units.
• International Monetary Fund (IMF). Organization that assists the smooth flow of money among nations.
• Internet2. The private Internet system that links government supercomputer centers and a select group of universities; it runs more than 22,000 times faster than today's public infrastructure and supports heavy-duty applications.
• Intranet. A companywide network, closed to public access, that uses Internet-type technology.
• Intrapreneurs. Creative people who work as entrepreneurs within corporations.
• Intrinsic reward. The personal satisfaction you feel when you perform well and complete goals.
• Inverted organization. An organization that has contact people at the top and the chief executive officer at the bottom of the organization chart.
• Investment bankers. Specialists who assist in the issue and sale of new securities.
• Invisible hand. A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all.
• Involuntary bankruptcy. Bankruptcy procedures filed by a debtor's creditors.
• ISO 14001. A collection of the best practices for managing an organization's impact on the environment.
• ISO 9001. The common name given to quality management and assurance standards.
• Job analysis. A study of what is done by employees who hold various job titles.
• Job description. A summary of the objectives of a job, the type of work to be done, the responsibilities and duties, the working conditions, and the relationship of the job to other functions.
• Job enlargement. A job enrichment strategy that involves combining a series of tasks into one challenging and interesting assignment.
• Job enrichment. A motivational strategy that emphasizes motivating the worker through the job itself.
• Job rotation. A job enrichment strategy that involves moving employees from one job to another.
• Job sharing. An arrangement whereby two part-time employees share one full-time job.
• Job simulation. The use of equipment that duplicates job conditions and tasks so that trainees can learn skills before attempting them on the job.
• Job specifications. A written summary of the minimum qualifications required of workers to do a particular job.
• Joint venture. A partnership in which two or more companies (often from different countries) join to undertake a major project.
• Journal. The record book or computer program where accounting data are first entered.
• Judiciary. The branch of government chosen to oversee the legal system through the court system.
• Junk bonds. High-risk, high-interest bonds.
• Just-in-time inventory control (JIT inventory control). A production process in which a minimum of inventory is kept on the premises and parts, supplies, and other needs are delivered just in time to go on the assembly line.
• Keynesian economic theory. The theory that a government policy of increasing spending and cutting taxes could stimulate the economy in a recession.
• Knights of Labor. The first national labor union; formed in 1869.
• Knockoff brands. Illegal copies of national brand-name goods.
• Knowledge management. Finding the right information, keeping the information in a readily accessible place, and making the information known to everyone in the firm.
• Law of large numbers. Principle that if a large number of people are exposed to the same risk, a predictable number of losses will occur during a given period of time.
• Leading. Creating a vision for the organization and guiding, training, coaching, and motivating others to work effectively to achieve the organization's goals and objectives.
• Lean manufacturing. The production of goods using less of everything compared to mass production.
• Ledger. A specialized accounting book or computer program in which information from accounting journals is accumulated into specific categories and posted so that managers can find all the information about one account in the same place.
• Letter of credit. A promise by the bank to pay the seller a given amount if certain conditions are met.
• Leverage. Raising needed funds through borrowing to increase a firm's rate of return.
• Leveraged buyout (LBO). An attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing.
• Liabilities. What the business owes to others (debts).
• Licensing. A global strategy in which a firm (the licensor) allows a foreign company (the licensee) to produce its product in exchange for a fee (a royalty).
• Limited liability. The responsibility of a business's owners for losses only up to the amount they invest; limited partners and shareholders have limited liability.
• Limited liability company (LLC). A company similar to an S corporation but without the special eligibility requirements.
• Limited liability partnership (LLP). A partnership that limits partners' risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision.
• Limited partner. An owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment.
• Limited partnership. A partnership with one or more general partners and one or more limited partners.
• Line of credit. A given amount of unsecured short-term funds a bank will lend to a business, provided the funds are readily available.
• Line organization. An organization that has direct two-way lines of responsibility, authority, and communication running from the top to the bottom of the organization, with all people reporting to only one supervisor.
• Line personnel. Employees who are part of the chain of command that is responsible for achieving organizational goals.
• Liquidity. The ease with which an asset can be converted into cash.
• Lockout. An attempt by management to put pressure on unions by temporarily closing the business.
• Logistics. The marketing activity that involves planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit.
• Loss. When a business's expenses are more than its revenues.
• M-1. Money that can be accessed quickly and easily (coins and paper money, checks, traveler's checks, etc.).
• M-2. Money included in M-1 plus money that may take a little more time to obtain (savings accounts, money market accounts, mutual funds, certificates of deposit, etc.).
• M-3. M-2 plus big deposits like institutional money market funds.
• Macroeconomics. The part of economics study that looks at the operation of a nation's economy as a whole.
• Management. The process used to accomplish organizational goals through planning, organizing, leading, and controlling people and other organizational resources.
• Management by objectives (MBO). Peter Drucker's system of goal-setting and implementation; it involves a cycle of discussion, review, and evaluation of objectives among top and middle-level managers, supervisors, and employees.
• Management development. The process of training and educating employees to become good managers and then monitoring the progress of their managerial skills over time.
• Managerial accounting. Accounting used to provide information and analyses to managers within the organization to assist them in decision making.
• Manufacturers' brands. The brand names of manufacturers that distribute products nationally.
• Market. People with unsatisfied wants and needs who have both the resources and the willingness to buy.
• Marketing. The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
• Marketing concept. A three-part business philosophy: (1) a customer orientation, (2) a service orientation, and (3) a profit orientation.
• Marketing intermediaries. Organizations that assist in moving goods and services from producers to businesses (B2B) and from businesses to consumers (B2C).
• Marketing mix. The ingredients that go into a marketing program: product, price, place, and promotion.
• Marketing research. The analysis of markets to determine opportunities and challenges, and to find the information needed to make good decisions.
• Market price. The price determined by supply and demand.
• Market segmentation. The process of dividing the total market into groups whose members have similar characteristics.
• Maslow's hierarchy of needs. Theory of motivation based on unmet human needs from basic physiological needs to safety, social, and esteem needs to self-actualization needs.
• Mass customization. Tailoring products to meet the needs of a large number of individual customers.
• Mass marketing. Developing products and promotions to please large groups of people.
• Master limited partnership (MLP). A partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax.
• Materials handling. The movement of goods within a warehouse, from warehouses to the factory floor, and from the factory floor to various workstations.
• Materials requirement planning (MRP). A computer-based operations management system that uses sales forecasts to make sure that needed parts and materials are available at the right time and place.
• Matrix organization. An organization in which specialists from different parts of the organization are brought together to work on specific projects but still remain part of a line-and-staff structure.
• Maturity date. The exact date the issuer of a bond must pay the principal to the bondholder.
• Mediation. The use of a third party, called a mediator, who encourages both sides in a dispute to continue negotiating and often makes suggestions for resolving the dispute.
• Mentor. An experienced employee who supervises, coaches, and guides lower-level employees by introducing them to the right people and generally being their organizational sponsor.
• Merchant wholesalers. Independently owned firms that take title to the goods they handle.
• Merger. The result of two firms forming one company.
• Microeconomics. The part of economics study that looks at the behavior of people and organizations in particular markets.
• Micropreneurs. Entrepreneurs willing to accept the risk of starting and managing the type of business that remains small, lets them do the kind of work they want to do, and offers them a balanced lifestyle.
• Middle management. The level of management that includes general managers, division managers, and branch and plant managers who are responsible for tactical planning and controlling.
• Mission statement. An outline of the fundamental purposes of an organization.
• Mixed economies. Economic systems in which some allocation of resources is made by the market and some by the government.
• Monetary policy. The management of the money supply and interest rates by the Federal Reserve Bank.
• Money. Anything that people generally accept as payment for goods and services.
• Money supply. The amount of money the Federal Reserve Bank makes available for people to buy goods and services.
• Monopolistic competition. The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different.
• Monopoly. A degree of competition in which only one seller controls the total supply of a product or service, and sets the price.
• Motivators. In Herzberg's theory of motivating factors, job factors that cause employees to be productive and that give them satisfaction.
• Multinational corporation. An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management.
• Mutual fund. An organization that buys stocks and bonds and then sells shares in those securities to the public.
• Mutual insurance company. A type of insurance company owned by its policyholders.
• NASDAQ. A nationwide electronic system that communicates over-the-counter trades to brokers.
• National debt. The sum of government deficits over time.
• Negligence. In tort law, behavior that causes unintentional harm or injury.
• Negotiable instruments. Forms of commercial paper (such as checks) that are transferable among businesses and individuals and represent a promise to pay a specified amount.
• Negotiated labor–management agreement (labor contract). Agreement that sets the tone and clarifies the terms under which management and labor agree to function over a period of time.
• Net income or net loss. Revenue left over after all costs and expenses, including taxes, are paid.
• Networking. The process of establishing and maintaining contacts with key managers in one's own organization and other organizations and using those contacts to weave strong relationships that serve as informal development systems.
• Niche marketing. The process of finding small but profitable market segments and designing or finding products for them.
• Nonbanks. Financial organizations that accept no deposits but offer many of the services provided by regular banks (pension funds, insurance companies, commercial finance companies, consumer finance companies, and brokerage houses).
• Nonprofit organization. An organization whose goals do not include making a personal profit for its owners or organizers.
• North American Free Trade Agreement (NAFTA). Agreement that created a free-trade area among the United States, Canada, and Mexico.
• Notes payable. Short-term or long-term liabilities that a business promises to repay by a certain date.
• Objectives. Specific, short-term statements detailing how to achieve the organization's goals.
• Off-the-job training. Training that occurs away from the workplace and consists of internal or external programs to develop any of a variety of skills or to foster personal development.
• Oligopoly. A degree of competition in which just a few sellers dominate the market.
• One-to-one marketing. Developing a unique mix of goods and services for each individual customer.
• Online retailing. Selling goods and services to ultimate customers (e.g., you and me) over the Internet.
• Online training. Training programs in which employees complete classes via the Internet.
• On-the-job training. Training at the workplace that lets the employee learn by doing or by watching others for a while and then imitating them.
• Open-market operations. The buying and selling of U.S. government bonds by the Fed with the goal of regulating the money supply.
• Open shop agreement. Agreement in right-towork states that gives workers the option to join or not join a union, if one exists in their workplace.
• Operating expenses. Costs involved in operating a business, such as rent, utilities, and salaries.
• Operating budget (or master budget). The budget that ties together the firm's other budgets and summarizes its proposed financial activities.
• Operational planning. The process of setting work standards and schedules necessary to implement the company's tactical objectives.
• Operations management. A specialized area in management that converts or transforms resources (including human resources) into goods and services.
• Organizational culture (or corporate culture). Widely shared values within an organization that provide unity and cooperation to achieve common goals.
• Organization chart. A visual device that shows relationships among people and divides the organization's work; it shows who is accountable for the completion of specific work and who reports to whom.
• Organizing. A management function that includes designing the structure of the organization and creating conditions and systems in which everyone and everything work together to achieve the organization's goals and objectives.
• Orientation. The activity that introduces new employees to the organization; to fellow employees; to their immediate supervisors; and to the policies, practices, and objectives of the firm.
• Outbound logistics. The area of logistics that involves managing the flow of finished products and information to business buyers and ultimate consumers (people like you and me).
• Outsourcing. Contracting with other companies (often in other countries) to do some or all of the functions of a firm, like its production or accounting tasks.
• Over-the-counter market (OTC market). Exchange that provides a means to trade stocks not listed on the national exchanges.
• Owners' equity. The amount of the business that belongs to the owners minus any liabilities owed by the business.
• Participative leadership (democratic leadership). Leadership style that consists of managers and employees working together to make decisions.
• Partnership. A legal form of business with two or more owners.
• Patent. A document that gives inventors exclusive rights to their inventions for 20 years.
• Penetration strategy. Strategy in which a product is priced low to attract many customers and discourage competition.
• Pension funds. Amounts of money put aside by corporations, nonprofit organizations, or unions to cover part of the financial needs of members when they retire.
• Perfect competition. The degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product.
• Performance appraisal. An evaluation that measures employee performance against established standards in order to make decisions about promotions, compensation, training, or termination.
• Personal selling. The face-to-face presentation and promotion of goods and services.
• Place utility. Adding value to products by having them where people want them.
• Planning. A management function that includes anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives.
• PMI. Listing all the pluses for a solution in one column, all the minuses in another, and the implications in a third column.
• Podcasting. A means of distributing audio and video programs via the Internet that lets users subscribe to a number of files, also known as feeds, and then hear or view the material at the time they choose.
• Possession utility. Doing whatever is necessary to transfer ownership from one party to another, including providing credit, delivery, installation, guarantees, and followup service.
• Precedent. Decisions judges have made in earlier cases that guide the handling of new cases.
• Preferred stock. Stock that gives its owners preference in the payment of dividends and an earlier claim on assets than common stockholders if the company is forced out of business and its assets sold.
• Premium. The fee charged by an insurance company for an insurance policy.
• Price leadership. The strategy by which one or more dominant firms set the pricing practices that all competitors in an industry follow.
• Primary boycott. When a union encourages both its members and the general public not to buy the products of a firm involved in a labor dispute.
• Primary data. Data that you gather yourself (not from secondary sources such as books and magazines).
• Principle of motion economy. Theory developed by Frank and Lillian Gilbreth that every job can be broken down into a series of elementary motions.
• Private accountant. An accountant who works for a single firm, government agency, or nonprofit organization.
• Problem solving. The process of solving the everyday problems that occur. Problem solving is less formal than decision making and usually calls for quicker action.
• Process manufacturing. That part of the production process that physically or chemically changes materials.
• Producer price index (PPI). An index that measures the change in prices at the wholesale level.
• Product. Any physical good, service, or idea that satisfies a want or need plus anything that would enhance the product in the eyes of consumers, such as the brand name.
• Product analysis. Making cost estimates and sales forecasts to get a feeling for profitability of newproduct ideas.
• Product differentiation. The creation of real or perceived product differences.
• Production. The creation of finished goods and services using the factors of production: land, labor, capital, entrepreneurship, and knowledge.
• Production management. The term used to describe all the activities managers do to help their firms create goods.
• Productivity. The amount of output you generate given the amount of input (e.g., hours worked).
• Product liability. Part of tort law that holds businesses liable for harm that results from the production, design, sale, or use of products they market.
• Product life cycle. A theoretical model of what happens to sales and profits for a product class over time; the four stages of the cycle are introduction, growth, maturity, and decline.
• Product line. A group of products that are physically similar or are intended for a similar market.
• Product mix. The combination of product lines offered by a manufacturer.
• Product placement. Putting products into TV shows and movies where they will be seen.
• Product screening. A process designed to reduce the number of new-product ideas being worked on at any one time.
• Profit. The amount of money a business earns above and beyond what it spends for salaries and other expenses.
• Program evaluation and review technique (PERT). A method for analyzing the tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the total project.
• Program trading. Giving instructions to computers to automatically sell if the price of a stock dips to a certain point to avoid potential losses.
• Promissory note. A written agreement with a promise to pay a supplier a specific sum of money at a definite time.
• Promotion. All the techniques sellers use to inform people about and motivate them to buy their products or services.
• Promotion mix. The combination of promotional tools an organization uses.
• Prospect. A person with the means to buy a product, the authority to buy, and the willingness to listen to a sales message.
• Prospecting. Researching potential buyers and choosing those most likely to buy.
• Prospectus. A condensed version of economic and financial information that a company must file with the SEC before issuing stock; the prospectus must be sent to prospective investors.
• Psychographic segmentation. Dividing the market using the group's values, attitudes, and interests.
• Psychological pricing. Pricing goods and services at price points that make the product appear less expensive than it is.
• Public accountant. An accountant who provides accounting services to individuals or businesses on a fee basis.
• Publicity. Any information about an individual, product, or organization that's distributed to the public through the media and that's not paid for or controlled by the seller.
• Public relations (PR). The management function that evaluates public attitudes, changes policies and procedures in response to the public's requests, and executes a program of action and information to earn public understanding and acceptance.
• Pull strategy. Promotional strategy in which heavy advertising and sales promotion efforts are directed toward consumers so that they'll request the products from retailers.
• Purchasing. The function in a firm that searches for quality material resources, finds the best suppliers, and negotiates the best price for goods and services.
• Pure risk. The threat of loss with no chance for profit.
• Push strategy. Promotional strategy in which the producer uses advertising, personal selling, sales promotion, and all other promotional tools to convince wholesalers and retailers to stock and sell merchandise.
• Qualifying. In the selling process, making sure that people have a need for the product, the authority to buy, and the willingness to listen to a sales message.
• Quality. Consistently producing what the customer wants while reducing errors before and after delivery to the customer.
• Quality of life. The general well-being of a society in terms of its political freedom, natural environment, education, health care, safety, amount of leisure, and rewards that add to the satisfaction and joy that other goods and services provide.
• Rack jobbers. Wholesalers that furnish racks or shelves full of merchandise to retailers, display products, and sell on consignment.
• Ratio analysis. The assessment of a firm's financial condition using calculations and interpretations of financial ratios developed from the firm's financial statements.
• Real time. The present moment or the actual time in which something takes place.
• Recession. Two or more consecutive quarters of decline in the GDP.
• Recruitment. The set of activities used to obtain a sufficient number of the right people at the right time.
• Relationship marketing. Marketing strategy with the goal of keeping individual customers over time by offering them products that exactly meet their requirements.
• Reserve requirement. A percentage of commercial banks' checking and savings accounts that must be physically kept in the bank.
• Resource development. The study of how to increase resources and to create the conditions that will make better use of those resources.
• Restructuring. Redesigning an organization so that it can more effectively and efficiently serve its customers.
• Retailer. An organization that sells to ultimate consumers.
• Retained earnings. The accumulated earnings from a firm's profitable operations that were reinvested in the business and not paid out to stockholders in dividends.
• Revenue. The total amount of money a business takes in during a given period by selling goods and services.
• Reverse discrimination. Discrimination against whites or males in hiring or promoting.
• Reverse logistics. The area of logistics that involves bringing goods back to the manufacturer because of defects or for recycling materials.
• Right-to-work laws. Legislation that gives workers the right, under an open shop, to join or not join a union if it is present.
• Risk. (1) The chance an entrepreneur takes of losing time and money on a business that may not prove profitable. (2) The chance of loss, the degree of probability of loss, and the amount of possible loss.
• Risk/return trade-off. The principle that the greater the risk a lender takes in making a loan, the higher the interest rate required.
• Roth IRA. An IRA where you don't get upfront deductions on your taxes as you would with a traditional IRA, but the earnings grow tax-free and are also tax-free when they are withdrawn.
• Rule of indemnity. Rule saying that an insured person or organization cannot collect more than the actual loss from an insurable risk.
• Sales promotion. The promotional tool that stimulates consumer purchasing and dealer interest by means of short-term activities.
• Sampling. A promotional tool in which a company lets consumers have a small sample of a product for no charge.
• Savings and loan association (S&L). A financial institution that accepts both savings and checking deposits and provides home mortgage loans.
• Savings Association Insurance Fund (SAIF). The part of the FDIC that insures holders of accounts in savings and loan associations.
• Scientific management. Studying workers to find the most efficient ways of doing things and then teaching people those techniques.
• S corporation. A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships.
• Secondary boycott. An attempt by labor to convince others to stop doing business with a firm that is the subject of a primary boycott; prohibited by the Taft-Hartley Act.
• Secondary data. Information that has already been compiled by others and published in journals and books or made available online.
• Secured loan. A loan backed by collateral (something valuable, such as property).
• Securities and Exchange Commission (SEC). Federal agency that has responsibility for regulating the various exchanges.
• Selection. The process of gathering information and deciding who should be hired, under legal guidelines, for the best interests of the individual and the organization.
• Selective distribution. Distribution that sends products to only a preferred group of retailers in an area.
• Self-insurance. The practice of setting aside money to cover routine claims and buying only "catastrophe" policies to cover big losses.
• Service Corps of Retired Executives (SCORE). An SBA office with volunteers from industry, trade associations, and education who counsel small businesses at no cost (except for expenses).
• Services. Intangible products (i.e., products that can't be held in your hand) such as education, health care, insurance, recreation, and travel and tourism.
• Service utility. Adding value by providing fast, friendly service during and after the sale and by teaching customers how to best use products over time.
• Sexual harassment. Unwelcome sexual advances, requests for sexual favors, and other conduct (verbal or physical) of a sexual nature that creates a hostile work environment.
• Shopping goods and services. Those products that the consumer buys only after comparing value, quality, price, and style from a variety of sellers.
• Shop stewards. Union officials who work permanently in an organization and represent employee interests on a daily basis.
• Sinking fund. A reserve account in which the issuer of a bond periodically retires some part of the bond principal prior to maturity so that enough capital will be accumulated by the maturity date to pay off the bond.
• Six Sigma quality. A quality measure that allows only 3.4 defects per million opportunities.
• Skimming price strategy. Strategy in which a new product is priced high to make optimum profit while there's little competition.
• Small business. A business that is independently owned and operated, is not dominant in its field of operation, and meets certain standards of size (set by the Small Business Administration) in terms of employees or annual receipts.
• Small Business Administration (SBA). A U.S. government agency that advises and assists small businesses by providing management training and financial advice and loans.
• Small Business Investment Company Program (SBIC Program). A program through which private investment companies licensed by the Small Business Administration lend money to small businesses.
• Smart card. An electronic funds transfer tool that is a combination credit card, debit card, phone card, driver's license card, and more.
• Social audit. A systematic evaluation of an organization's progress toward implementing socially responsible and responsive programs.
• Social commerce. A form of electronic commerce that involves using social media, online media that support social interaction, and user contributions to assist in the online buying and selling of products and services.
• Socialism. An economic system based on the premise that some, if not most, basic businesses should be owned by the government so that profits can be more evenly distributed among the people.
• Social Security. The term used to describe the Old-Age, Survivors, and Disability Insurance Program established by the Social Security Act of 1935.
• Sole proprietorship. A business that is owned, and usually managed, by one person.
• Sovereign wealth funds (SWFs). Investment funds controlled by governments holding large stakes in foreign companies.
• Span of control. The optimum number of subordinates a manager supervises or should supervise.
• Specialty goods and services. Consumer products with unique characteristics and brand identity. Because these products are perceived as having no reasonable substitute, the consumer puts forth a special effort to purchase them.
• Speculative risk. A chance of either profit or loss.
• Staffing. A management function that includes hiring, motivating, and retaining the best people available to accomplish the company's objectives.
• Staff personnel. Employees who advise and assist line personnel in meeting their goals.
• Stagflation. A situation when the economy is slowing but prices are going up anyhow.
• Stakeholders. All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address.
• Standard of living. The amount of goods and services people can buy with the money they have.
• State capitalism. A combination of freer markets and some government control.
• Statement of cash flows. Financial statement that reports cash receipts and disbursements related to a firm's three major activities: operations, investments, and financing.
• Statistical process control (SPC). The process of taking statistical samples of product components at each stage of the production process and plotting those results on a graph. Any variances from quality standards are recognized and can be corrected if beyond the set standards.
• Statistical quality control (SQC). The process some managers use to continually monitor all phases of the production process to ensure that quality is being built into the product from the beginning.
• Statutory law. State and federal constitutions, legislative enactments, treaties of the federal government, and ordinances -- in short, written law.
• Stockbroker. A registered representative who works as a market intermediary to buy and sell securities for clients.
• Stock certificate. Evidence of stock ownership that specifies the name of the company, the number of shares it represents, and the type of stock being issued.
• Stock exchange. An organization whose members can buy and sell (exchange) securities for companies and investors.
• Stock insurance company. A type of insurance company owned by stockholders.
• Stocks. Shares of ownership in a company.
• Stock splits. An action by a company that gives stockholders two or more shares of stock for each one they own.
• Strategic alliance. A long-term partnership between two or more companies established to help each company build competitive market advantages.
• Strategic planning. The process of determining the major goals of the organization and the policies and strategies for obtaining and using resources to achieve those goals.
• Strict product liability. Legal responsibility for harm or injury caused by a product regardless of fault.
• Strike. A union strategy in which workers refuse to go to work; the purpose is to further workers' objectives after an impasse in collective bargaining.
• Strikebreakers. Workers hired to do the jobs of striking workers until the labor dispute is resolved.
• Supervisory management. Managers who are directly responsible for supervising workers and evaluating their daily performance.
• Supply. The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time.
• Supply-chain management. The process of managing the movement of raw materials, parts, work in progress, finished goods, and related information through all the organizations involved in the supply chain; managing the return of such goods, if necessary; and recycling materials when appropriate.
• Supply chain (value chain). The sequence of linked activities that must be performed by various organizations to move goods from the sources of raw materials to ultimate consumers.
• SWOT analysis. A planning tool used to analyze an organization's strengths, weaknesses, opportunities, and threats.
• Tactical planning. The process of developing detailed, short-term statements about what is to be done, who is to do it, and how it is to be done.
• Tall organizational structure. An organizational structure in which the pyramidal organization chart would be quite tall because of the various levels of management.
• Target costing. Designing a product so that it satisfies customers and meets the profit margins desired by the firm.
• Target marketing. Marketing directed toward those groups (market segments) an organization decides it can serve profitably.
• Tariff. A tax imposed on imports.
• Tax accountant. An accountant trained in tax law and responsible for preparing tax returns or developing tax strategies.
• Tax-deferred contributions. Retirement account deposits for which you pay no current taxes, but the earnings gained are taxed as regular income when they are withdrawn at retirement.
• Taxes. How the government (federal, state, and local) raises money.
• Technical skills. Skills that involve the ability to perform tasks in a specific discipline or department.
• Technology. Everything from phones and copiers to computers, medical imaging devices, personal digital assistants, and the various software programs that make business processes more effective, efficient, and productive.
• Telecommuting. Working from home via computer and modem.
• Telemarketing. The sale of goods and services by telephone.
• Term insurance. Pure insurance protection for a given number of years.
• Term-loan agreement. A promissory note that requires the borrower to repay the loan in specified installments.
• Test marketing. The process of testing products among potential users.
• Time deposit. The technical name for a savings account; the bank can require prior notice before the owner withdraws money from a time deposit.
• Time-motion studies. Studies, begun by Frederick Taylor, of which tasks must be performed to complete a job and the time needed to do each task.
• Time utility. Adding value to products by making them available when they're needed.
• Top management. Highest level of management, consisting of the president and other key company executives who develop strategic plans.
• Tort. A wrongful act that causes injury to another person's body, property, or reputation.
• Total fixed costs. All the expenses that remain the same no matter how many products are made or sold.
• Total product offer. Everything that consumers evaluate when deciding whether to buy something; also called a value package.
• Trade credit. The practice of buying goods and services now and paying for them later.
• Trade deficit. An unfavorable balance of trade; occurs when the value of a country's imports exceeds that of its exports.
• Trademark. A brand that has exclusive legal protection for both its brand name and its design.
• Trade protectionism. The use of government regulations to limit the import of goods and services.
• Trade surplus. A favorable balance of trade; occurs when the value of a country's exports exceeds that of its imports.
• Training and development. All attempts to improve productivity by increasing an employee's ability to perform. Training focuses on short-term skills, whereas development focuses on long-term abilities.
• Transparency. The presentation of a company's facts and figures in a way that is clear and apparent to all stakeholders.
• Trial balance. A summary of all the financial data in the account ledgers that ensures the figures are correct and balanced.
• Trial close. A step in the selling process that consists of a question or statement that moves the selling process toward the actual close.
• Umbrella policy. A broadly based insurance policy that saves you money because you buy all your insurance from one company.
• Unemployment rate. The number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks.
• Uniform Commercial Code (UCC). A comprehensive commercial law, adopted by every state in the United States, that covers sales laws and other commercial laws.
• Uninsurable risk. A risk that no insurance company will cover.
• Union. An employee organization that has the main goal of representing members in employee–management bargaining over job-related issues.
• Union security clause. Provision in a negotiated labor–management agreement that stipulates that employees who benefit from a union must either officially join or at least pay dues to the union.
• Union shop agreement. Clause in a labor–management agreement that says workers do not have to be members of a union to be hired, but must agree to join the union within a prescribed period.
• Unlimited liability. The responsibility of business owners for all of the debts of the business.
• Unsecured loan. A loan that doesn't require any collateral.
• Unsought goods and services. Products that consumers are unaware of, haven't necessarily thought of buying, or find that they need to solve an unexpected problem.
• Utility. In economics, the want-satisfying ability, or value, that organizations add to goods or services when the products are made more useful or accessible to consumers than they were before.
• Value. Good quality at a fair price. When consumers calculate the value of a product, they look at the benefits and then subtract the cost to see if the benefits exceed the costs.
• Variable costs. Costs that change according to the level of production.
• Variable life insurance. Whole life insurance that invests the cash value of the policy in stocks or other high-yielding securities.
• Venture capital. Money that is invested in new or emerging companies that are perceived as having great profit potential.
• Venture capitalists. Individuals or companies that invest in new businesses in exchange for partial ownership of those businesses.
• Vertical merger. The joining of two companies involved in different stages of related businesses.
• Vestibule training. Training done in schools where employees are taught on equipment similar to that used on the job.
• Viral marketing. The term now used to describe everything from paying customers to say positive things on the Internet to setting up multilevel selling schemes whereby consumers get commissions for directing friends to specific websites.
• Virtual corporation. A temporary networked organization made up of replaceable firms that join and leave as needed.
• Virtual networking. A process that allows software-based networked computers to run multiple operating systems and programs, and share storage.
• Virtual private network (VPN). A private data network that creates secure connections, or "tunnels," over regular Internet lines.
• Virus. A piece of programming code inserted into other programming to cause some unexpected and, for the victim, usually undesirable event.
• Vision. An encompassing explanation of why the organization exists and where it's trying to head.
• Volume segmentation (or usage segmentation). Dividing the market by usage (volume of use).
• Voluntary bankruptcy. Legal procedures initiated by a debtor.
• Web 2.0. The set of tools that allow people to build social and business connections, share information, and collaborate on projects online (including blogs, wikis, social networking sites and other online communities, and virtual worlds).
• Web 3.0. A combination of technologies that adds intelligence and changes how people interact with the web, and vice versa (consists of the semantic web, mobile web, and immersive Internet).
• Whistleblowers. Insiders who report illegal or unethical behavior.
• Whole life insurance. Life insurance that stays in effect until age 100.
• Wholesaler. A marketing intermediary that sells to other organizations.
• Will. A document that names the guardian for your children, states how you want your assets distributed, and names the executor for your estate.
• Word-of-mouth promotion. A promotional tool that involves people telling other people about products they've purchased.
• World Bank. The bank primarily responsible for financing economic development; also known as the International Bank for Reconstruction and Development.
• World Trade Organization (WTO). The international organization that replaced the General Agreement on Tariffs and Trade, and was assigned the duty to mediate trade disputes among nations.
• Yellow-dog contract. A type of contract that required employees to agree as a condition of employment not to join a union; prohibited by the Norris-LaGuardia Act in 1932.