Page 344 - (DK) The Business Book

342 GLOSSARY

Inventory Goods and materials that Market The consumers who buy a Off-balance-sheet finance
are held in stock in a warehouse or product or service. Also refers to any Accounting methods whereby some
in any other similar premises. The physical or virtual location where liabilities or assets are not recorded
term can also refer to the total value buyers and sellers trade goods, such on a company’s balance sheet.
of a company’s assets, including raw as a store or a website.
materials, and unfinished and Open innovation The idea that
finished products. Marketing Promoting the sale of a business’s talent base, and
products or services to consumers or consequently its insight into new
Investment In business terms, the other businesses. Effective marketing products and services, can be
activity of purchasing bonds or identifies, anticipates, and responds expanded by drawing on expertise
shares in a company. Can also refer to customers’ needs. from outside the company, often via
to a company’s expenditure on items social media and the Internet.
intended to yield an increase in Market leader A product or
operational performance, such as company that has the largest Operating margin A measure of
new tools. market share. profitability—the ratio of a company’s
operating profit to its revenue.
Kaizen The Japanese term for Market share A business’s
“good change,” in business. It refers percentage of sales in a specific Outsourcing The contracting out of
to continuous improvement to industry or sector. specific tasks or functions in a
enhance productivity. business to outside companies.
Merger The combining of two or
Leverage The extent to which more businesses to form a separate Overhead Any ongoing expense of a
people or companies fund their organization with a new identity. The business, such as rent of premises;
activities with borrowed money. goal of a merger is often to increase also known as “operating expense.”
When high leverage is widespread in shareholder value beyond the sum
the economy, the degree of debt can of the two (or more) companies. Positioning A marketing strategy
create a short-term boom; but this is that establishes a distinct position
often followed by a crash. Micro loan A small loan made to for a brand in the market.
entrepreneurs or small businesses.
Leveraged buy-out (LBO) Private equity A type of
The acquisition of a business by Micropreneur An entrepreneur investment in which private assets
a company or group of individuals who starts and builds a small or borrowed funds are used to
using a large proportion of business of their own, often while finance private companies (those not
borrowed money. on salaried employment. listed on a public stock exchange).

Liability The financial obligations of M-commerce An abbreviation Private limited company (Ltd)
a company to outsiders or claims of “mobile commerce,” the use of A company in which the liability of
against its assets by outsiders. portable devices such as laptops and members is limited to the value of
smartphones to conduct business their investment in the company.
Liquidity The ease with which an transactions online. The company’s shares cannot be
asset can be bought or sold, without bought and sold by the public. Private
adversely affecting the asset’s value. Monopoly A market in which limited company is a term used
Cash is the most liquid asset, since only one company is active. primarily in the UK. The closest US
its value remains constant. Monopoly companies generally equivalent is limited liability company.
have low product diversity, which
Long tail A term coined by UK they can sell at a high price due to Product portfolio A strategy that
writer and entrepreneur Chris lack of competition. involves assembling a diverse range
Anderson to describe how the overall of products or business units.
sales of niche products at the thin Niche market A small group of
“tail” of a demand curve may be people with an interest in a product Profit The surplus of a company’s
greater than sales of the most popular or service that is not addressed by revenue after all expenses, taxes,
products at the “head.” mainstream providers. and operating costs have been met.