Common Business Terminologies
Business and its Facets
After going through this chapter, you shall be able to understand the following concepts.
- Technical Facet of Business Terminology
- Commercial Facet
- Financial Facet
- HR Facet
- Administrative Facet
The domains of Business and Commercial Knowledge never stop expanding; they are always growing and evolving, drawing their vocabulary from various disciplines of business. The format of this unit is similar to a Summary of words or BCK dictionary. We encourage you to keep yourself better informed and read more to understand the business world elaborately.
Business - Many Facets of the Same Reality
A business can be studied from technical, commercial, economic, social and political perspectives. These different perspectives are like different windows to the same room; however, depending upon our need we may just open one window at a time. All these perspectives are important and we should not be blinded by our own field of education or mastery in it. For example; for a marketing professional, a firm is all about its products, pricing, places of distribution and promotion but for an accountant; it is more about assets, liabilities, capital, sales and expenses. However, in reality it is both, an accounting firm and a business marketing its produce.
All these perspectives use jargons or special words which are used by only a particular profession or group.
Technically a business is a massive transformation process which generates output from input. Inputs of a business are the various goods including raw materials, minerals, as well as agricultural products which are used for further processing into finished goods of the business. It is therefore, important to know the terminologies which pertain to commodity markets.
A business comprises of the popular Ps of marketing which are- Product, Price, Place and Promotion for the marketing of goods and additional P of People which connects with customers; Physical Evidence (eg. hygiene in a hospital or hotel) and Processes e.g. customer service time, etc for services marketing. In this case, BCK would involve awareness of terminologies pertaining to domestic and international consumer markets.
From the perspective of finance; a business implies investment, returns and risks involved. This facet includes business financing and development of financial markets; maintenance of accounts; preparation of revenue statement and statement of financial position of a business. Activities like cost, revenue and profit estimation also form crucial part of the periodic reporting of the firm.
From the perspective of an HR; business is all about people, serving different roles, responsibilities and occupying different positions in a business. People are the most important resource of an organisation despite the fact that this asset do not form part of a company’s balance sheet. Their individual competencies, motivation and morale have a major impact on the health of the organisation. Thus, all the processes and vocabulary of retaining and attracting talented, enthusiastic and ethical human resource forms an integral part of the BCK lexicon.
BCK pertains to various rules, regulations, approvals and clearances governing a business, which are needed to start and carry on any form of business organisation. It is concerned with the internal management and governance.
You must read newspapers and magazines to make yourself better equipped with business terminologies. You may also prepare a dictionary for yourself. Learning the use of symbols and signage in business and commercial world may be a lot of fun too.
We have mentioned these facets separately, though in reality, they mostly overlap. Let’s understand this with an example. Let’s take technical and commercial facets; the associated terminologies of order processing, deliveries, inventory management and payments would be same, whether it is in-bound or out-bound. Secondly; as we stated before, BCK lexicon is always expanding and is vast as an ocean. A lot of practice and hard work goes into understanding these terminologies and building one’s own vocabulary.
After going through this chapter, you shall be able to understand the different terms used by professionals working in finance, stock and commodity market.
Agent: An agent is a brokerage firm which buys and sells shares on behalf of its client. It can never be the owner of such shares at any point of these transactions.
Amortize: To charge a regular portion of expenditure over a fixed period of time. Let’s understand this with an example: If some asset was purchased for 2, 00,000 and is to be amortized over ten years, the financial statements will show an expense of 20,000 every year for the upcoming ten years.
Annuity Due: An annuity is an investment for which payments occur at the beginning of each period.
Annuity: A series of payments made for an investment which are of equal amounts and at fixed intervals for a specified number of periods.
Appreciation: Appreciation is an increase in value of an asset. If a machine’s cost was 5 lakh last year and is now worth 6 lakh, it has appreciated in value by 1 lakh.
Arbitrage: Simultaneous purchase and sale of two identical commodities or instruments is referred to as Arbitrage. Price variations in two different markets are taken advantage of by selling and purchasing simultaneously. For example: Gold can be purchased in one country and simultaneously sold in another.
Asset: Asset means an economic resource that is retained for future economic benefit. Assets are classified into 3 broad heads; f…
To view the complete topic, please