Capital
Buildings, equipment, tools, and other
goods needed to produce a product, or the
money used to purchase these items.
R.O.I.
Return On Investment. A comparison of
the money earned or lost on an investment
to the amount of money invested.
Monopoly
A market that only has one producer, and
has no competition. A company that has a
monopoly is able to charge higher prices
because consumers have nowhere else to
go.
Buying goods from other countries to sell
in your own country
Importing
Feasibility Analysis
The process used to test a business concept.
Profit
The money leftover after all the expenses
of a business have been deducted from the
income.
What it costs to make and market a product
Investment
Equilibrium
Point at which supply equals demand,
neither leaving a surplus or a shortage.
Scarcity
When demand is higher than supply.
Scarcity allows businesses to increase
prices.
The quantity of goods or services that
consumers are willing and able to buy
Demand
Franchise
Legal agreement to market a company’s
products or services in a particular area.
Entrepreneurship
The process of getting into and operating
one’s own business.
Exporting
Making goods in your own country and
sending them to other countries
Competition
When several businesses strive for the
same customer or market.
Consumer Product Safety Commission
Watchdog for consumers over products that
may be hazardous.
Equal Employment Opportunity
Commission
Protects the rights of employees age, race,
color or national origin, religion, gender or
physical challenge.
Minimum wage and maximum working
hours are identified. Children under 16
cannot work full-time except if employed
by parents.
Ensures safe and healthy working
conditions for employees.
Fair Labors Standard Act
Occupational Safety & Health Act
Fair Packaging and Labeling Act
The Supply Curve
Requires manufacturers truthfully label
products, showing all raw materials used in
the production process.
The Demand Curve
Graph of Equilibrium
Target Market
The specific market segment toward all of
a business’s activities are directed.
Demographics
Statistical data that describes a given
market by criteria such as age, gender, and
income.
Psychographics
Statistical data that describes a given
market by criteria such as personality,
opinions, and lifestyle.
Geographics
Study of the market based on where
customers live by region, state, city, and/or
area.
Buying Characteristics
Customers will purchase products or
services from companies they know or
have experience with. Customers have
knowledge of and personal experiences
with the actual goods or services.
Group of people whose opinions are
studied to determine the opinions/buying
preferences of a larger population.
Process of grouping a market into smaller
subgroups defined by specific
characteristics.
Business that offers similar products as
your business.
Market Segmentation
Competitive Analysis
Market Research
Mission Statement
Expresses specific goals for the company.
Channels of Distribution
The path a product takes from producer to
final user (consumer.) Includes
transportation, storage & product handling.
A graphic representation of the company’s
organizational structure.
Organizational Chart
Marketing Mix
The 4 P’s. Product, Price, Place,
Promotion
Partnership
A business with two or more owners who
share ideas, abilities, or financial
obligations. Partners do not have to share
equally. Division of partnership interests
spelled-out in Partnership Agreement.
Allows customers to obtain products or
services with the promise to pay later.
Credit
Corporation
This legal form of ownership operates apart
from its owners, and lives-on after the
owner dies. Registered by state operated
apart from its owners. Ownership
represented by shares of stock – public or
private.
Promotional Mix
Includes advertising, publicity, personal
selling, and sales promotions.
Price Lining
Pricing strategy that is used to offer
products in the same line and several
different prices; low, medium & high.
Promotional Pricing
Pricing method that lowers prices for a
limited time to stimulate demand.
Perpetual Inventory
Inventory system that us updated on a daily
basis.
Quantity Discounts
Pricing method that is often used when
ordering t-shirts for the school – the larger
the order, the cheaper the per-unit price.
Summary of a company’s profit or loss
during any one given period of time Also
known as a Profit & Loss Statement.
The one-time expenses paid to establish a
business.
Income Statement
Start-up Costs
COGS
Cost of Goods Sold – the cost of inventory
to be sold in a business
Net Income
Gross income minus operating expenses.
Break-Even Point
The volume of sales that must be made to
cover all expenses of the business
Equity Capital
Cash invested in a business in exchange for
an ownership stake in the business.
Collateral
Security in the form of assets you pledge to
a lender.
Fixed Expenses
Lease payment, salaries, insurance,
advertising. Expenses that do not change
with the number of units sold.
Expenses that do change with the number
of units sold or produced.
Variable Expenses
Gross Income
Total income minus COGS sold.
Focus Group
Capacity
Code of Ethics
Global Company
A group of people whose opinions are
studied to determine the opinions/buying
preferences of a larger population.
Your ability to repay a loan based on
incoming and outgoing cash flow.
Behavior guidelines that describes
appropriate conduct for a business or
organization.
A business that sells products in its own
country.
Domestic
A business that sells product in more than
one country.
Web-based business
A business that generates their revenue
directly from their website.
Primary Data
Research collected for the first time and
relates directly to the collector’s study.
Secondary Data
Information collected by someone else for
their own purpose.
Five Steps of Market Research
1. Identify Your Information Needs
2. Obtain Secondary Resources
3. Collect Primary Data
4. Organize the Data
5. Analyze the Data
A small, specialized segment of the market
based on customer’s needs.
Niche
Direct Competitors
Offer similar products
Indirect Competitors
Offer close substitutes that meet the same
basic need.
Industrial Markets
Group of customers who buy products or
services for business to use; (not consumerbased)
Critical factor in the success of a business,
especially for retail stores.
Owned and operated by one person. Easy
to create. Owner receives all profits, incurs
any losses, and is liable for the debts of the
business.
Location
Sole Proprietorship
Advertising
Paid non-personal presentation of ideas
directed toward a mass audience.
Publicity
Free placement of newsworthy items about
company, etc. in the media.
Personal Selling
Giving an oral presentation to one or more
potential buyers.
Promotions
Use of incentives or interest-building
activities to create demand.
Competition-Based Pricing
Lower or raise of products/services based
on what the competition is doing.
Odd/Even Pricing
Odd numbers suggest bargains ($19.99).
Even numbers suggest higher quality
($20.00)
Assets
Represent things of value that person or
company owns and has in its possession or
something that will be received and can be
measured objectively.
What a person or company owes to
others—creditors, suppliers, tax authorities,
employees, etc.. They are obligations that
must be paid under certain conditions and
time frames.
Ownership in a business.
Liabilities
Equity
The 5 C’s of Credit to Qualify for a Loan
Character
Capacity
Capital
Collateral
Conditions