Apart from the banking, marketing, and finance specific terminology, an organization also requires a basic understanding of some other terminology pertaining to business. In this article, we have listed some other terminology to help enhance the Business and Common Knowledge (BCK) vocabulary.
Other Business Terminology
Here is an alphabetically arranged list of other business terminology.
An acquisition is a process where a financially strong organization takes over a relatively weaker firm. It also controls all its business operations. For example, Ola’s acquisition of FoodPanda.
Bankruptcy refers to economic insolvency. In bankruptcy, an individual’s assets are liquidated to pay off all liabilities. Further, it is done with the help of a bankruptcy trustee or a Court of Law.
In business, bottom-line refers to an organization’s income after deducting all expenses from the revenue. The expenses, usually include interest paid on loans, general costs, administrative costs, taxes, etc.
It is similar to the concept of Net Profits as that is what matters the most to a business. However, nowadays, the evaluation of an organization’s performance also includes the contribution to the communities and conservation of the environment.
Corporate Forms of Business Organisation
A business organization has a corporate form when in the eyes of law, it the business entity and the owners are distinct from each other. Further, a business entity can own assets and borrow from others like an artificial legal person.
Therefore, the liability of the owners is limited to a pre-determined amount. A good example of the corporate form of a business organization is a Company.
Corporate governance is a system which oversees the affairs of a corporation. The objective is to ensure that the corporation conducts its affairs ethically and as per the provisions of the law. Some examples of the system of corporate governance are:
- The Board of Directors who appoint and oversee the management team
- The independent audits of the corporation’s accounts
- Reporting the performance of the business to the stock exchanges and business media, etc.
Globalization is a systematic process of removing the barriers to the international capital flow and the international trade in goods and services. Therefore, this results in the greater integration of a country’s economy with the economy of the rest of the world.
In accounting, goodwill is the difference between what a company pays when it buys the assets of another company and the book value of those assets. In business, goodwill is also the company’s reputation, the loyalty of its customers, etc.
In business terminology, liberalization is a systematic process of easing the Government’s control over the private business activities. Many years ago, businesses had to obtain licenses and permits from the Government to start or grow a business.
Since the 1990s, when the Government of India launched the New Economic policy (NEP), liberalization was one of the three main pillars. The other two pillars are privatization and globalization.
Every company has a Mission statement which defines its present scope of business. It is the answer to the questions: Who we are? and What we do? Hence, mission statements describe an organization’s present capabilities, customer focus, activities, and business makeup.
Proprietary Forms of Business Organizations
Contrary to the corporate form, in proprietary forms, the law does not distinguish between the business entity and its owners. Therefore, the liabilities of the business are the liabilities of the owners. Further, the best representative examples of the proprietary forms of business organizations are sole-proprietorships and partnerships.
Privatization is a systematic process of dispensing of the state ownership of business enterprises. Further, one way of doing this is by listing the shares of public corporations on stock exchanges.
Sustainable Development (SD)
SD is a broad measure of the development of a country. It includes both economic and non-economic parameters. Hence, sustainable development emphasizes simultaneous attention to economic growth, social equity, and environmental conservation.
Triple Bottom Line (TBL)
In today’s times, businesses evaluate their performance based on three important aspects:
- Attaining profits
- Caring for people or communities
- Caring for the planet or the environment
TBL is an equal emphasis on these three aspects. Further, at the macro level, this results in a more evolved notion of the development of a country’s economy, society, and ecology.
A company which is performing poorly for a long time starts recovering financially, it is called a turnaround. Also, for an effective turnaround, a company must:
- Acknowledge and identify its problems
- Consider changes in management
- Develop and implement a problem-solving strategy
A Vision statement is a roadmap of a company’s future. It provides specifics about customer focus and technology. It also speaks about the possible geographic and product markets along with a plan to develop more capabilities. Some vision statements also talk about the kind of company that the management wants to create.
Solved Question on Business Terminology
Q1. What is the difference between a mission and vision statement of an organization?
Answer: Mission and Vision statements, usually, summarize an organization’s goals and objectives. A mission statement describes the current focus of the company and the level of performance that it desires. On the other hand, a vision statement describes what the company wants to be in the future. It also talks about the future of the industry, society, or world that the company wants to change.