Page 342 - (DK) The Business Book

340

GLOSSARY

Acquisition The purchase of the competition. This can include Closed innovation The idea,
whole or part of a business by many things, from name, design, popular in the 20th century, that
another business. logo, and packaging to broader, innovation in a company should take
external affiliations that may set place strictly within its own walls, by
Activity-based costing (ABC) it apart from its rivals (such as its own employees, rather than
A method of business accounting ethical trading standards and drawing on knowledge, ideas, and
that analyzes overhead costs to production initiatives). expertise from outside.
determine which activities create
which costs. This results in a more BRIC economies An acronym Collusion An agreement between
accurate analysis of costs than for the four emerging economies of two or more companies not to
traditional cost accounting, which Brazil, Russia, India, and China. compete, so that they can fix prices.
measures direct costs and then adds They are considered by some to
an estimate of overheads. pose a challenge to Western Commodity A term for any item,
economic supremacy. product, or service that can be freely
Asset Any economic resource bought, sold, and traded.
that is owned by a company that Budget A financial plan that lists all
can be used to generate value for planned expenses and incomes of Comparative advantage The
the business. business unit, project, or venture. ability to produce goods or services
at a lower opportunity cost than rivals.
Balance sheet A summary of a Bull market A financial term
company’s financial value, describing a period in which share Competitive advantage A strategy
incorporating its assets, liabilities, values increase, leading to optimism whereby companies position
and equity of the owners, which and economic growth. themselves ahead of competitors
is usually published at the end either by charging less or by
of its financial year. Buy out Taking control of a company differentiating their services or
by purchasing a controlling interest products from those of their rivals.
Bankruptcy A legal declaration of its stock.
that an individual or a company Conglomerate A corporation that
is insolvent, meaning that they Capital The money and physical is made up of two or more businesses
cannot repay their debts. assets (such as machinery and that may operate across different
infrastructure) used by a company to fields and sectors.
Benchmarking A method of produce an income.
evaluating a company by comparing Corporation An independent legal
its perfomance and practices with Cartel A group of businesses that entity, owned by shareholders, that
those of the market-leading agrees to cooperate in such a way is authorized to conduct business.
business or businesses. that the output of their goods or Corporations exist separately and
services is restricted, and prices are apart from their employees and
Board In business, a term that refers driven up. shareholders and have their own
to the board of directors of a rights and liabilities: they can
company or organization. Board Cash flow The incomings and borrow money, own assets, and sue
members are either elected or outgoings of cash in a business, or be sued.
appointed to oversee the company’s representing its operating activities.
activities and performance. Cost accounting A method of
CEO An acronym for Chief Executive business accounting that aims to
Brand The perceived “identity” Officer, the highest executive in a determine costs by measuring direct
of a company or product that company. Appointed by and costs and then adding an estimate
distinguishes it from the reporting to the board. of overheads.