13. Business
Buzzwords
Do you know the difference between a 401(k)
and a Keogh plan? Any idea what "cherry picking" or "CPM"
means? How about Chapter 7 vs. Chapter 11? This section contains terms you may encounter
during the interview process or while you are doing your company research.
Spend a few minutes brushing up your business vocabulary and avoid sounding out
of touch.
Management
barriers to entry
Any factor that prevents
the entry of a competitor into an industry or market. Examples include high startup costs and heavy
competition.
benchmarking
When a company compares
its business practices with the best practices of other companies as a means of
improving its own practices.
Chapter 7/Chapter 11
The two legal methods for
a company to file for bankruptcy.
Under Chapter 11, the company is allowed to continue in operation while it
attempts financial restructuring and payment of debts. Under Chapter 7, the
company is shut down and its assets liquidated in order to pay off its debts.
competitive advantage
The aspects of a company that make it more
competitive than other companies in the same market or industry; examples
include high quality, customer service and brand equity.
corporate culture
The general feeling of a company reflected
in the particular values, norms and behaviors that are expected of employees by
management; the "way things are done" in the company.
decentralization
A management strategy that
involves the diffusion of power throughout different levels of a company.
diversification
A strategy of spreading
risk between several markets, industries or product lines. Investors diversify, and thus spread risk, by
choosing several different types of investments.
employee stock ownership plan (ESOP)
A program in which
employees receive shares of stock in the company where they work. This transfer of stock to the employees is a form of
compensation or reward that is often used by management as a source of
motivation.
empowerment
A strategy intended to increase employees'
motivation by increasing their involvement in their work.
idle time
The time spent waiting to continue working
on a process because of some delay or bottleneck.
incentive plans
Incentive plans include any form of reward
used to motivate employees, often based on increasing profits, sales,
productivity or maintaining market position.
intellectual property
Ideas or works with legal rights to
ownership held by their inventors, creators or owners such as patents, copyrights
and artistic works (films, books, etc.).
job depth
The amount of influence individuals have
over their jobs and workplaces.
job satisfaction
The combined attitudes and beliefs (positive
or negative) that one holds about the various aspects of a job.
joint venture
A legal agreement between
two or more companies to work together in cooperation to achieve some
particular goal.
mission statement
A short statement by a
company stating its values, purposes and strategies.
quality circle
A company-sponsored
activity in which several employees from different areas of the company work
together to discuss and solve problems related to the quality of a product or
service.
strategic planning
The formation of goals and
the development of strategies to achieve these goals.
synergy
The idea that the combination of two efforts
will create a benefit that is greater than the sum of the individual efforts.
For example, the value of the production of two companies working together on a
project is greater than if the two companies had worked independently on the
same product.
Marketing
available market
The group of consumers who
have an interest in a product or service, access to it and sufficient income to
purchase it.
bundling
The grouping of several
products and/or services into one package. Bundling benefits buyers by condensing several purchases into one.
Companies benefit by reducing the ability of consumers to compare individual
product prices with those of competing companies.
cherry picking
Purchasing several
products that are usually sold as a bundle, from a variety of different
companies.
cold call
Frequently used in telemarketing; an
unannounced sales pitch or sales call to a potential customer.
cost per thousand (CPM)
The cost to an advertiser
of reaching one thousand people with an advertisement. Marketing departments can use CPM to compare two
sources of advertising within the same medium.
differentiated marketing
A marketing strategy used by companies to
increase sales volume. The company will segment a market and offer specially
tailored goods/services to each separate and distinct element.
direct marketing
Marketing strategy intended to make sales,
rather than create preferences or name-brand recognition, by interacting directly
with a target market and giving its members a chance to respond. An example
would be a telemarketer calling a person from a target market and giving her an
opportunity to purchase a product.
discretionary income
The income remaining after
taxes and after paying for the essentials (housing, food, etc.).
distribution channels
Paths by which goods move
from the manufacturer to the ultimate consumer. (Also known as marketing channels)
events marketing
The association of a
product, service or company with an event of interest to a target market. Companies will typically sponsor these events in
exchange for advertising during the event.
focus group
A group of individuals who are involved in a
discussion on a particular topic lead by a
facilitator. The discussion can be effective at further defining the question
at issue as well as revealing new questions.
freelance
A type of work that is
completed on a job-by-job basis by an independent contractor.
global marketing
Marketing activity with a
goal of achieving production efficiencies by producing standardized products
for all consumers without a particular emphasis on local or regional
differentiation.
latent market
A group of people with a
similar need or desire for a product that does not yet exist.
list broker
One who arranges for the sale or rental of
specific lists of people within a target market.
market share
Total number of units sold by a particular
company expressed as a percentage of the total number of units sold by the
entire market. An effective means of measuring competitive progress.
media buyer
A person who plans for the
purchase of space and time for advertising in various media for his/her
clients.
niche marketing
The specialization by a company to serve a
small, particular segment of a market that is usually of little interest to
major competitors.
penetrated market
The customers within the
potential market who have already purchased the market's product.
potential market
The group of consumers who
have access to a product or service, a need for it and sufficient income to
purchase it.
press release
A prepared statement that
is distributed to the media.
product mix
The collection of products a company offers
to the market. A product mix can be either wide/broad (offering a large number
of products) or narrow/limited (offering only a few products).
public relations (PR)
A strategy used to increase the public's
knowledge and acceptance of a company, its products or services; often used to
counter negative publicity.
public-service advertisement (PSA)
An advertisement focusing on the public's
welfare, usually displayed with donated time or space.
rate card
A brochure that lists the costs of
advertising with one particular medium, such as a particular radio station,
television channel, newspaper, magazine or Web site.
target market
The segment of the market
actively pursued by a company.
telemarketing
A direct-marketing tool in which a consumer
is called by a seller, or the consumer calls the seller, the product or service
is described, and the consumer decides whether or not to purchase.
trademark
The legal right of a
seller granted by the government to the exclusive use of a symbol or brand.
transit advertising
A form of advertising appearing on vehicles
(buses, subways, taxis, etc.) used to target specific geographic markets.
undifferentiated marketing
A marketing strategy that
considers the market as a whole, that is, with no segmentation. Also know as mass marketing.
unearned revenue
Used to describe payment
in advance for services not yet rendered or future goods.
Finance
American Stock Exchange (AMEX)
The second-largest stock
exchange in the
annuity
A contract that guarantees
periodic payments at some future point in time, often after retirement.
balance of trade
The net difference, in
currency, between a country's imports and exports over a certain period of
time.
bearer bond
A security that does not have a registered
owner; possession determines ownership.
blanket purchase order
A contract that allows for the purchase of
items from a supplier over a fixed period of time; it is used to reduce the
number of purchase orders.
blue chip stock
A common stock that has
consistently paid dividends over a long period of time.
bond
A debt obligation of an organization to pay
a specific amount at a specific time, often used to
raise capital.
carrying costs
The costs of holding
inventories.
Chapter 7 / Chapter 11
Two legal methods for a
company to file for bankruptcy.
Under Chapter 11, the company is allowed to continue in operation while it
attempts financial restructuring and payment of debts. Under Chapter 7, the
company is shut down and its assets liquidated in order to pay off its debts.
common stock
Documents that represent
ownership in a corporation.
Owners of common stock, shareholders, usually are involved in the election of
corporation officials.
consolidation
The inclusion of
subsidiaries in the financial statements of the parent company.
disclosure
The part of a company's financial statement
that includes an explanation of its financial position and operating results.
diversification
A strategy of spreading
risk between several markets, industries, or product lines. Investors diversify, and thus spread risk, by
choosing several different types of investments (for example, a mix of stocks,
bonds and cash).
dividend
The transfer of a
company's earnings to stockholders in the form of cash, property, or additional
stock.
Dow Jones Industrial Average (DJIA)
The average value of a representative group
of about 30 blue chip stocks used to judge entire market movement and value.
Dun & Bradstreet reports
A subscription service
that provides information on the credit worthiness of companies.
finance lease
A contract between lessor
and lessee wherein the lessee agrees to make payments totaling the purchase
price and finance charges for an asset for the life of the asset.
fixed costs
Expenses, such as rent and
utilities, which do not change even if there is an increase or decrease in
sales.
going private
The change in which a
company goes from public ownership to private ownership through the repurchase
of its shares from the public.
going public
When a company sells to
the public a portion of its common shares to raise capital.
gross domestic product (GDP)
A measure of the total output produced and
income earned within the
indirect cost
An expense not directly
attributable to a particular unit of production, such as marketing expenses.
long-term asset
An asset expected to provide economic
benefits over a period of several years.
market risk
The group of factors that
affect the price of stocks, such as inflation and interest rates.
money markets
Markets for the sale of
short-term debts, such as certificates of deposit and Treasury bills.
National Association of Securities
Dealers Automated Quotation System (NASDAQ)
A primary market for
over-the-counter trading of stocks.
Stocks quoted on NASDAQ are simultaneously listed on the NYSE as well as other
regional stock exchanges.
The largest stock exchange
in the
opportunity costs
The amount lost by choosing one activity
over its next best alternative when both options cannot be chosen. For example,
the opportunity cost of leaving a job to go to school is the salary of the job
because it will no longer be earned.
overhead
The costs of running a company that are not
directly attributable to the products or services produced, such as utilities
and maintenance.
par value
The face value of a
security.
preferred stock
A type of stock that gives
its owner preference over common stockholders in the distribution of earnings
and rights to the company's assets, often paying dividends.
price controls
A power of the government
to set the price of a product or service above or below its market price.
privately held company
A company whose shares of ownership are not
traded publicly
Securities & Exchange Commission
(SEC)
The governmental agency
that regulates financial reporting, accounting and the trading and auditing of
public companies.
simple interest
The interest paid on the principal of a loan
when no compounding of interest occurs
spin-off
A portion of a larger company which becomes
a separate company that functions independently
spreadsheet
A table with rows and columns of numbers
often used with financial statements
stock index
An indicator used to report and measure
changes in value of a representative group of stocks, such as the Dow Jones
Industrial Average.
10-K
An annual filing made by a
company to the Securities and Exchange Commission detailing its
financial information.
trade deficit
The debt incurred by importing products with
a value greater than the value of the products exported (see balance of
trade).
transfer price
The price one part of a company charges
another part within the same company for a product or service that is often an
input for a final product
underwriting
The guarantee of a bank to a company issuing
securities that it will purchase any remaining securities at a fixed price if
all are not sold.
write-down
The reduction in book value of an asset when
there is an indication that its value has decreased.
Benefits
& Compensation
co-payment
The portion of a medical expense, often a percentage, that must be paid by the patient even after
paying a deductible. Example: A patient's medical expense is $1200 and
she has a $200 deductible and a co-payment of 20%. After paying the $200
deductible, $1000 remains to be paid. Having a 20% co-payment, the patient will
pay $200 (20%) and the insurance will pay $800 (80%).
covered expense
The medical services and
products for which an insurance company agrees to pay. Some services typically not covered are cosmetic
surgery or experimental drugs; these must be paid by the patient.
deductible
The portion of a medical expense (usually a
fixed amount, say $200) that a patient must pay before the insurer considers
paying any remaining balance.
employee stock ownership plan (ESOP)
A program in which
employees receive shares of stock in the company where they work. This transfer of stock to the employees is a form of
compensation or reward that is often used by management as a source of
motivation.
401(k) plan
An retirement plan that allows an employee to set aside
a certain percentage of his/her income in a retirement account. The money in
the account is usually invested, and often the employer will contribute to this
account on behalf of the employee. The money placed in this account is not
taxed until it is withdrawn.
health maintenance organization (HMO)
A form of managed care
that emphasizes preventative and early primary care, often with little or no co-payments
or deductibles. The
patient is usually restricted to seeing a provider who is a part of the HMO's
network. This provider is the primary care physician who must approve any
specialty care.
hygiene factors
The workplace conditions (compensation,
working conditions, management policies, etc.) required to keep employees
satisfied.
incentive plans
Incentive plans include any form of reward
used to motivate employees, often based on increasing profits, sales,
productivity, or maintaining market position.
Keogh plan
A retirement account for
the self-employed or for the employees of unincorporated businesses. Contributions, as with a 401(k) plan, are not
taxed until they are withdrawn.
managed care
A form of medical care designed to control
costs by having the medical provider accept discounts, share risk or use case
managers.
PPO
A preferred provider organization (PPO) is
designed to reduce costs by having patients see providers who have agreed to
offer service at reduced costs. Patients are allowed to see other non-PPO
providers, but they are subject to higher deductibles and co-payments.
pension plan
An agreement by an employer to pay for
retirement benefits for employees. This money is usually placed in a pension
fund.
sexual harassment
Any physical or psychological abuse based
solely on sex that threatens the victim's employment status or interferes with
his/her work performance.
universal coverage
A system that provides
access to health care for all citizens within a country.