Key Business Concepts and Terminology

Capital

Fixed Capital

Buildings, installations, and machinery permanently dedicated to production. These depreciate gradually with use and eventually need replacement.

Working Capital

Invested in resources transformed during production, including raw materials, manufactured products, currency, credit, and labor. These are consumed in production and must be reported consistently. Includes variable capital.

Company Elements

• Human factors
• Material factors
• Organization
• Environment

Social Costs

Costs that affect society.

Shares

Equal, indivisible units of capital in a limited liability company, which are not negotiable.

Stocks

Equal portions of a corporation, typically documented in nominative or bearer securities and are negotiable.

Liability

Unlimited Liability

When business owners are personally liable for all business debts, present and future.

Limited Liability

When partners or shareholders are liable for debts only up to the amount of invested capital.

Labor Relations

Worker's Statute

The fundamental legal framework governing the workplace.

Unions

Worker organizations formed to defend their rights collectively through collective bargaining.

Collective Agreement

An agreement between a company and its employees regulating work conditions and rules within a company or sector.

Work Contract

An agreement between employer and employee outlining the specific terms of the employment relationship.

Production & Costs

Production Threshold

The minimum quantity of a component at which internal production becomes more cost-effective than external purchase.

Breakeven Point

The sales volume at which a business starts making a profit.

Sustainable Production

Production using renewable resources without generating pollution.

Optimal Order Quantity

The material quantity minimizing total inventory management costs.

Sales & Marketing

Sales Department

Responsible for activities ensuring goods and services reach consumers.

Market

Comprised of buyers and sellers of a particular product.

Perfect Competition

Characterized by product homogeneity, numerous buyers and sellers, complete information, and free entry and exit. Price is determined by supply and demand.

Monopoly

Imperfect competition with one seller and many buyers.

Oligopoly

Imperfect competition with few sellers and many buyers.

Monopolistic Competition

Imperfect competition with many buyers and sellers of a non-homogeneous product.

Market Research

The process of collecting, processing, and analyzing information about the environment, competition, and consumers.

Market Share

The percentage of total product sales a company holds.

Brand

A name, term, symbol, design, or combination thereof, identifying a company's goods and services and differentiating them from competitors.