Business

Glossary
Management
Glossary Compiled By
Shetu Ranjan Biswas
BBA (MS) & MBA (IM)
University of Chittagong
shetubiswas@gmail.com

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

1
A
Accounting is the process of identifying, measuring and communicating economic information
to permit informed judgments and decisions by users of the information.

Accounting Breakeven Point: The level at which total sales is equal to total cost. It is
calculated as being the number of units that need to be sold to make zero profit.

Accounting Profit: Accounting profit is the difference between total revenue and total cost
excluding the opportunity cost of owner’s resources such as time and capital.

Amortization- A noncash charge similar to depreciation except that it is used to write off the
costs of intangible assets.

Assets of bank: What a bank owns, including loans, reserves, investment, securities, and
physical assets. Bank’s largest asset category is loan which generates investment revenue,
Critical asset is reserves.

Asset based loans: Loan secured by a business firm’s assets, particularly accounts receivables
and inventory.

Asset liability Management: The process of decision making to control a bank or other
financial institution’s exposure to interest rate risk.

Asset liquidity management: A strategy for meeting liquidity needs, in which liquid funds are
stored in readily marketable assets that can be quickly converted into cash as needed.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

2
B
Balance of payments of a country is a systematic record of all economic transactions (value of
all goods, all gifts, foreign aid, capital investments or loans and all gold coming in and going out)
between the residents of reporting country and the residents of the foreign country in a given
period of time. It consists of 3 types of accounts: current A/C, capital A/C and Official reserve
A/C.

Balance of trade is the statement of visible transaction between the residents of reporting
country and foreign country.

Balance Liquidity Management: The combined use of both asset management and liability
management to cover liquidity needs.

Bank is a financial institution which earns profit through acceptance of deposit, extending credit,
issuing notes and cheques, receiving and paying interest.

Schedule Bank refers to those banks which are working within the country and enlisted in
the schedule of central bank ,i.e. AB Bank

Non- Schedule Bank refers to those banks whose name doesn’t appear at the list of
scheduled bank maintained by central bank, such as Jubilee Bank.

Banking systems

Branch Banking: An arrangement in which a bank offers a full range of services from
multiple locations, including a head office and one or more branch offices.

Chain Banking: Chain banking is a system where an individual or a small group or

members of a family controls two or more banks. Introduced in USA in 1930.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

3
Group banking: The term group banking refers to bringing two or more banks under single
control and management. Group banking refers to two or more individually incorporated
banks operating under the control of a holding company.

Agent Banking: A bank that acts in same capacity on behalf of another bank. It can mean
any of three types of bank.

 The bank in a loan syndicate that advices other participating banks.

 A bank that participates in the credit card program of another bank by issuing credit cards
and performing other duties.
 A foreign bank doing business in the U S on behalf of its parents banks, performing such
tasks as issuing international letter of credit but not accepting deposit.

Deposit Banking: Deposit banking is a system of banking where the banks involve
themselves only in acceptance of deposits repayable on demand and lending money to trade
and industry for short periods not exceeding a year or meeting the working capital
requirements.

Mixed banking: Mixed banking is a system where banks combine both the deposit banking
and investment banking functions.

An investment bank is a financial institution that assists individuals, corporations, and

governments in raising capital by underwriting and/or acting as the client's agent in the
issuance of securities.

A merchant bank is a financial institution which provides capital to companies in the form
of share ownership instead of loans. A merchant bank also provides advisory on corporate
matters to the firms they lend to. In the United Kingdom, the term "merchant bank" refers to
an investment bank

Basic Banking or life line banking: Low cost deposits and other services that are designed
to meet the needs of customer of limited means.

Affiliated bank: Bank whose stock has been acquired by a holding company.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

4
 Unit banking: Unit banking means a system of banking under which banking services are
provided by single office. It grew in USA. Different unit banks in the USA are linked with
each other and with other financial centers through “Correspondent Bank”. There is no
branch. Govt. does not permit to open branch office. It operates actively in a small area or
local area. Some sometimes it is called localized bank.

Bank rate is the interest rate charged by central bank for loans made by it either to its member
banks or to the money market.

Benchmarking is the search for the best practices among competitors or noncompetitors that
lead to their superior performance.

Bill of exchange is an instrument containing a direction to pay certain amount of money only to
or to the order of certain person or to the bearer of the instrument. Types of BOE include Inland
bill, foreign bill, time bill, demand bill, accommodation bill and trade bill.

Bill of lading is a receipt for goods delivered to a ship for carriage.

Bond- A long-term debt instrument.

Brainstorming is an approach to improve problem discovery and solving by encouraging

unfettered suggestions and ideas, usually from a group of individuals.

Brand - A name, term, design, symbol, or any other feature that identifies one seller’s good or
service as distinct from those of other sellers.

Break even analysis is a method of determining the relationship between total cost and total
revenue at various levels of production or sales activities.

Budget is a numerical plan for allocating resources to specific activities.

Sales budget: The sales budget is an estimate of future sales, often broken down into both
units and dollars. It is used to create company sales goals.

Production budget: Product oriented companies create a production budget which

estimates the number of units that must be manufactured to meet the sales goals. The

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

5
 production budget also estimates the various costs involved with manufacturing those units,
including labor and material.

Cash Flow/Cash budget: The cash flow budget is a prediction of future cash receipts and
expenditures for a particular time period. It usually covers a period in the short term future.
The cash flow budget helps the business determine when income will be sufficient to cover
expenses and when the company will need to seek outside financing.

Marketing budget: The marketing budget is an estimate of the funds needed for
promotion, advertising, and public relations in order to market the product or service.

Project budget: The project budget is a prediction of the costs associated with a particular
company project. These costs include labor, materials, and other related expenses. The
project budget is often broken down into specific tasks, with task budgets assigned to each.

Revenue budget: The Revenue Budget consists of revenue receipts of government and the
expenditure met from these revenues. Tax revenues are made up of taxes and other duties
that the government levies.

Expenditure budget: A budget type which include of spending data items.

From national perspective:

1. Government Budget: a Government Budget is a document plan of public revenue

and expenditure that is often passed by the legislature approved by the chief executive
or president and presented by the finance minister to the nation. The budget is also
known as the annual financial statement of a country. Government budgets are of
three types:

i. Balanced Budget: when government revenue and expenditures are equal.

ii. Surplus Budget: when anticipated revenue is more than expenditure

iii. Deficit Budget: when anticipated expenditure is greater than revenues.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

6
 2. Capital Budget: A Capital Budget includes planed outlays for capital assets with
long expected lives and which are designed to produce or support operations. Like
land building machinery office equipment furniture and fixture.

3. Supplementary Budget: there is a range of the budget minimum and maximum. The
minimum budget is called supplementary budget. During the budget year
unanticipated needs may arise that affect the central budget. An agency may, for
example, need more money than planned. In such a situation the government can
revise the central government budget by proposing an increase. This is known as
supplementary budget.

Budgeting is the planned allocation of available funds to each department within a company.

Budgetary control denotes using budget as a means of controlling managerial functions and
activities.

Bureaucracy—a form of organization characterized by division of labor, a clearly defined

hierarchy, detailed rules and regulations, and impersonal relationships.

Business may be defined as human activity directed towards producing or acquiring wealth
through buying or selling.

Business cycle refers to fluctuation in output and employment with alternative period of boom
and recession.

Business environment consists of the surrounding factors that either help or hinder the
development of business.

Business plan is a written document that describes the business, the goods or service, the
customers, the competition, the financing and all the activates necessary to enter business and
make or sell a good or service.

Business Profit is the difference between business income and business expenses.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

7
C
Call Money Rate: Interbank short-term borrowing rate.

CAMELS Rating: CAMELS stands for Capital adequacy, Asset quality, Managements
efficiency, Earning capacity, liquidity and Sensitivity of market risk. CAMELS Rating means
assigning a numerical rating to a bank. It actually a five principle areas to be examined in
evaluating a banking organization

Canons of Tax:

a) Canon of equity

b) Canon of certainty

c) Canon of convenience

d) Canon of economy

Capital Markets- The financial markets for stocks and for intermediate or long-term debt (one
year or longer).

Capital market instrument:

1. Common stock

2. Preferred stock

3. Mortgaged bond

4. Treasury notes and bonds.

5. Corporate notes and bonds.

6. Municipal notes and bonds.

7. Govt. notes and bonds

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

8
Cash Credit: Cash credit is a type of working capital facility which is generally sanctioned by
bank to industrial business and trading units

Cash Reserve ratio: Cash reserve ratio is the amount of funds that a bank have to keep with the
central bank.

Central bank: Central bank is main govt. controlled bank in a country, which controls the
financial affairs of the country by fixing main interest rates, issuing currency, supervising the
commercial banks and controlling the foreign exchange rate,

Circular-flow of money- a visual model of the economy that shows how money flows through
markets among households and firms.

Chain of command is the continuous line of authority that extends from upper organizational
levels to the lowest levels and clarifies who reports to whom.

Charismatic leader—an enthusiastic, self-confident leader whose personality and actions

influence people to behave in certain ways

Channel -A set of interdependent organizations involved in the process of making a product or

service available for use or consumption by consumer or business user.

Cheque is a bill of exchange drawn upon a specified banker and payable on demand.

CHIPS- Clearing House Interbank Payment System- electronic payment system that transfers
funds and settles transaction in US $.

Clearing house - a centralized system that provides clearing and settlement service for its
members. Or, an institution where cheques and other commercial papers drawn on member
banks are settled so that only net balance are payable.

Code of ethics, a formal statement of an organization's primary values and the ethical rules it
expects its employees to follow, is a popular choice for reducing that ambiguity.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

9
Comparative advantage theory (David Ricardo) states that a country should produce and
export those goods for which it is relatively more productive than other countries and import
those goods for which other countries are relatively more productive than others.

Competitive advantage is what sets an organization apart, that is, its distinct edge. That distinct
edge comes from the organization's core competencies. For example, Dell has developed a
competitive advantage from its ability to create a direct-selling channel that's highly responsive
to customers

Competitor Intelligence is a process by which organizations gather information about their

competitors and get answers to questions such as: Who are they? What are they doing? How will
what they're doing affect us?

Consortium - activities of individuals, groups and organizations aimed at protecting consumer

rights.

Consumer behavior - The behavior of the consumer or decision maker in the market place of
products and services.

Consumer Price Index (CPI) a measure of the overall cost of the goods and services bought by
a typical consumer.

Contract is a legally enforceable, voluntary agreement between two or more parties.

Controlling involves monitoring actual performance, comparing actual to standard and taking
actions if necessary.

Cooperative society is an association for supplying goods or carrying some branch of industry,
the profit which go to the members.

Coordination means achieving harmony of individual and group efforts toward the achievement
of goals.

Correlation is a measure of association between two or more variables.

Correlation Analysis is a statistical technique used to indicate the nature and degree of
relationship existing between one variable and the other(s).

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

10
Corporation- A legal entity created by a state, separate and distinct from its owners and
managers, having unlimited life, easy transferability of ownership, and limited liability.

Corporate bonds: Debt security issued by private corporations with maturities longer than five
years.

Corporate Notes: Debt security issued by private corporations with maturities five years or less.

Corporate governance addresses the relationship between various participants in determining

the overall direction and performance of corporations. It consists of three primary participants—
shareholders, management, and the board of directors.

Corporate Portfolio Analysis- The first portfolio matrix—the BCG matrix—developed by the
Boston Consulting Group, introduced the idea that an organization's businesses could be
evaluated and plotted using a 2 × 2 matrix to identify which ones offered high potential and
which were a drain on organizational resources. The horizontal axis represents market share,
which was evaluated as either low or high; and the vertical axis indicates anticipated market
growth, which also was evaluated as either low or high. Based on its evaluation, the business was
placed in one of four categories:

Contemporary Planning Techniques: Project Management, Scenario Planning.

Cost refers to the total amount of money spent on the production of a commodity.

Credit control - techniques used by central bank to stabilize the supply of money in country or
to keep the supply of money at optimum level.

Crowding out: Crowding out is a situation where there is a little money available for lending to
private companies due to heavy borrowing of the government.

Crowding-out effect the offset in aggregate investment that results when expansionary fiscal
policy raises the interest rate and thereby reduces spending.

Current Ratio- This ratio is calculated by dividing current assets by current liabilities. It
indicates the extent to which current liabilities are covered by those assets expected to be
converted to cash in the near future.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

11
 D
Decentralization is the degree to which lower-level employees provide input or actually make
decisions

Decision means making choices from two or more alternatives.

Decision support system (DSS) - A decision support system (marketing definition) is a

systematic collection of data, techniques and supporting software and hardware by which an
organization gathers and interprets relevant information from business and the environment and
turns it into a basis for making management decisions.

Decision tree is a way to analyze a decision. It involves decision points, chance events and
probabilities.

Demand for a commodity refers to the desire backed by ability to pay and willingness to buy it.

Depreciation- The charge to reflect the cost of assets used up in the production process.
Depreciation is not a cash outlay.

Differentiation consists of creating differences in the firm’s products or service offerings by

creating something that is perceived industry-wide as being unique and valued by customers.

Discount window: Department within each central bank that lands legal reserves to eligible
institutions for short period of time.

Downsizing cutting out entire layers of management in the organization.

Dual banking system: A system of banking regulations in which both federal and state
authorities have significant regulatory powers and supervisory power over the activities of
commercial banks.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

12
E
Economic growth refers to an increase in the real output of goods and services or increment of
GDP.

Economic development implies change in income, savings and investment along with
progressive change in socio economic structure of a country. Economic development is a broader
concept than economic growth

Economic or financial profit: Economic profit is the difference between total revenue and total
cost including the opportunity cost of owner’s resources such as time and capital. (Total revenue
minus total operating cost minus opportunity cost)

Economics is the study of how a society chooses to use scarce resources to produce goods and
services and to distribute them for consumption.

Economies of scale (scale effect): Reduction in the average cost of (per unit) production when
output is increased. Dis-Economies of scale: If the average cost of (per unit) production rise
with output is called dis-economics of scale.

Economics of scope: Employing the same management, staff and facilities to offer multiple
products or services thereby helping to reduce the cost of (per unit) production. Or by increasing
sales reduce per unit cost.

Economic Order Quantity (EOQ): The optimal batch size for an order that minimizes the total
period cost, including cost of ordering (setup cost), inventory holding cost, and cost of materials
procured. For setup cost S, holding cost H, and throughput R, the optimal batch size Q* is given
by Q* = square root (2 x S x R/H) .

Economic Profit is the amount of money which remains after expenses and opportunity cost are
subtracted from resources.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

13
Economic System is the set of structures and processes that guides the allocation of resources
and shapes the conduct of business activity in a country. There are 3 types of economic systems:

Market economy is an economic system in which most goods and services are produced
by the private sector rather than the public sector and prices of goods and services are
determined by the forces of supply and demand. For example USA, CANADA.

Command or planned economy is an economic system in which most of the goods and
services are produced by the public sector and Govt. controls all the factors of production
and make all production and distribution decision. i.e. CUBA.

Mixed Economy- A combination partly Market economy and partly command economy.

Economic value added (EVA)/ Residual Value is a tool for measuring corporate and divisional
performance. It's calculated by taking after-tax operating profit minus the total annual cost of
capital.

Efficiency refers to getting the most output from the least amount of inputs. Efficiency is often
referred to as "doing things right"—that is, not wasting resources.

Effectiveness is often described as "doing the right things"—that is, those work activities that
will help the organization reach its goals

Elasticity- The degree that an economic variable changes in response to a change in another
economic variable. For example, how much library use changes according to how far an
individual must travel for library services?

Embargo is a total ban on certain imports and exports.

Entrepreneur is an individual who creates a new business firm and continues to manage it until
its success.

Entrepreneurship is the process whereby an individual or a group of individuals uses organized

efforts and means to pursue opportunities to create value and grow by fulfilling wants and needs
through innovation and uniqueness, no matter what resources are currently controlled.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

14
Enterprise Resource Planning (ERP)- a large scale information system for integrating and
synchronizing many activities in the extended enterprise.

Equilibrium is defined as the state of rest or balance from which there is no tendency for
change.

Ethics refers to rules and principles that define right and wrong conduct

Executive Support System (ESS) addresses nonroutine decisions requiring judgment,

evaluation and insight because there is no agreed-on procedure for arriving at a solution.

Exchange - All activities associated with receiving something from someone by giving
something voluntarily in return.

Exchange control denotes the methods by which a country controls the demand for and supply
of foreign currency.

External environment refers to forces and institutions outside the organization that potentially
can affect the organization's performance. The external environment is made up of two
components, the specific environment and the general environment.

F
Factors of production refer to those goods and services which help in the productive process.

Finance is the study of money within the firm, the business function responsible for finding
funds, manage them and determine their best use.

Financial Analysis: Financial analysis also refers financial statement analysis or accounting
analysis. The process of evaluating businesses, projects, budgets and others financial entities to
determine their suitability for investment. Financial analysis is used to analyze whether an entity
is stable, solvent, liquid or profitable enough to be invested in.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

15
Financial assets: A financial asset is an intangible asset that derives value because of contractual
claim. Like bonds, stocks, debentures and bank deposit. Cash is financial asset because its value
is based on what it represents. Non Financial or real Assets: An asset with a physical value such
as real estate, equipment, machinery, gold, oil, commodity. But the value of financial asset can
be based on nonfinancial asset like the value of future contract is based on the value of the
commodities represented by that contract.

Financial Breakeven: Level of EBIT at which firms EPS equal zero. The higher the point or
level the higher the financial risk. Financial breakeven is the point where NPV is greater than or
equal to zero. The point where there is economic value added.

Financial Instrument: A document that has a monetary value or represents a legally

enforceable agreement between two or more parties regarding a right to payment of money.
Example cheque, draft, bond, stock, bill of exchange, option.

Financial Intermediaries- financial institutions through which savers can indirectly provide
funds to borrowers.

Fiscal Deficit or deficiency: When a government’s total expenditure is more than its revenue is
called fiscal deficit. A fiscal deficit is a positive economic event because deficit helps countries
climb out of economic recession.

Fiscal policy refers to the measure which is adopted by the govt. regarding taxation, expenditure
and borrowing.

Difference between monetary and fiscal policy: While the main objective of fiscal
policy is to increase the aggregate output of the economy, the main objective of the
monetary policies is to control the interest and inflation rates.

Fiscal policy relates to government spending and revenue collection. For example, when
demand is low in the economy, the government can step in and increase its spending to
stimulate demand. Or it can lower taxes to increase disposable income for people as well
as corporations.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

16
 Monetary policy relates to the supply of money, which is controlled via factors such as
interest rates and reserve requirements (CRR) for banks. For example, to control high
inflation, policy-makers (usually an independent central bank) can raise interest rates
thereby reducing money supply.

Forecasting is an important part of organizational planning and managers need forecasts that
will allow them to predict future events effectively and in a timely manner.

Foreign direct investment refers to investment made to acquire lasting interest in enterprises
operating outside of the economy of the investor.

- Green field investment

- Merger /Acquisition
- Brownfield investment.

Foreign exchange is the national currency of another country that is required to carry out
international transactions.

Foreign exchange market (Forex, FX, or currency market) is a worldwide decentralized over
the counter financial market for the trading of currencies.

Foreign exchange rate is the number of units of a given currency that exchange for a unit of
some other currency.

Foreign Aid is the international transfer of capital, goods, or services from a country or
international organization for the benefit of the recipient country or its population. Aid can be
economic, military, or emergency humanitarian (e.g., aid given following natural disasters).

Franchising is a system for selective distribution of goods and/or service under a brand name
through outlets owned by independent business owners.

Free Trade- A policy of no restriction on the movement of goods and services

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

17
G
Gearing Ratio: Debt to equity ratio.

Generic strategies are that firms can use to overcome the five forces and attain competitive
advantage. The first, overall cost leadership, is based on creating a low cost position relative to
one’s peers. The second, differentiation, requires that the firm (or business unit) create products
and/or services that are unique and valued. Finally, firms following a focus strategy must direct
their attention (or “focus”) toward narrow product lines, buyer groups or geographical markets.

GDP stands for the Gross Domestic Product, a measurement of the annual productivity of the
property and labor of all citizens and foreign residents within the geographic borders of a country
including its foreign territories such as embassies and purchased military bases abroad.

Glass ceiling is a perceived barrier that exists in some organizations that keeps women from
advancing to the top management.

Globalization reflects the trend of firms buying, selling and distributing products and services in
most countries and regions of the world.

Glocalization- The development and selling of products or services intended for the global
market, but adapted to suit local culture and behaviour. (Think globally, act locally.)

Global Strategy- a firm whose emphasis is on lowering costs tends to follow a global strategy.

GNP stands for the Gross National Product, a measurement of the annual economic productivity
of the property and labor of all but only citizens of a country regardless where this activity
occurs in the world.

Goals - A broadly stated guideline what the organization or individual wants to achieve. Goals
are not always quantifiable. For example, a company’s goal may be increasing market share.

Group is defined as two or more interacting and interdependent individuals who come together
to achieve particular goals.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

18
H
Hedging means entering into a forward contract in order to protect the home currency value of
foreign currency denominated assets and liabilities in their balance sheet.

Holding company structure (also referred to as a conglomerate) is another type of divisional

structure. Whereas SBUs are used to group similar divisions, the holding company structure is
used to manage a portfolio of unrelated businesses.
Human Resource management (HRM) is the planning, organizing, directing and controlling of
the procurement, development, compensation, integration, maintenance and separation of human
resources for the purpose of contributing to organizational, individual and societal objectives.

I
IMF: The international monetary fund is an organization of 188 countries, working to foster
global monetary cooperation, secure financial stability, facilitate international trade, promote
high employment and sustainable economic growth and reduce poverty around the world.

Import tariff is a duty or tax levied against goods brought into a country.

Index numbers are statistical devices designed to measure the relative changes in the level of a
certain phenomenon in two or more situations

Indifference curve shows different combinations of two commodities, which give the consumer
an equal satisfaction.

Indifference Map is a group of indifference curves for two commodities showing different
levels of satisfaction.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

19
Inflation is the rise in the average level of prices for all goods and services in a particular time
period, with a corresponding decline in the purchasing of the money.

Disinflation refers to a process of bringing down prices moderately from their high level.

Deflation means excessive fall in prices of goods and services and money incomes in
factors of production.

Reflation means moderate degree of controlled inflation.

Stagflation- a situation when recession is accomplished by unemployment & high inflation.

Recession and Depression: recession is a situation in which GDP growth rate is negative
for three consecutive quarters. If recession becomes worst it is called depression. Recession
is common but depression is rare, both are generally come with deflation.

Initial Public Offering (IPO) Market- The market for stocks of companies that are in the
process of going public.

Innovation is the process of taking a creative idea and turning it into a useful product, service, or
work method. Types of innovation include Radical innovation, incremental innovation,
technical innovation, managerial innovation, product innovation, process innovation.

Insurance is written contracts that transfer the risk of loss from the insured to the insurer,
according to the terms specified in the contract.

Interest Rate spread or bank spread: the difference between lending rate and borrowing rate.

Internal Rate of Return (IRR)- The discount rate that forces a project’s NPV to equal zero.

International Business consists of all commercial transactions- including sales, investments and
transportation- that take place between two or more countries.

- Direct investment
- Portfolio investment

Intrapreneur is an entrepreneurial person employed by a corporation and encouraged to be

innovative and creative.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

20
Intrapreneurship or Corporate Renewal is the process by which large organizations seek to
utilize, maintain or retain the edge in innovation and profit-making by asking employees to
swamp business within the business.

Intuitive decision making is a subconscious process of making decisions on the basis of

experience and accumulated judgment.

ISO 9000 is a series of international quality management standards established by the

International Organization for Standardization that set uniform guidelines for processes to ensure
that products conform to customer requirements. These standards cover everything from contract
review to product design to product delivery.

ISO 9001 is related to design, development, production, installation and servicing. It is

applicable to companies which are involved from designing of product to its final production.

ISO 9002 is related to production and installation. It is applicable to those companies that
produce products on the basis of customers’ specification.

ISO 9003 is related to final inspection and test.

ISO 9004 is related to guidelines in quality management that should be considered in

establishing and maintaining an effective quality system.

ISO 14000 is a set of standards for environmental performance.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

21
J
Job is a ‘group of tasks to be performed every day.

Job Analysis is a process of studying and collecting information relating to operations and
responsibilities of a specific job. The products of job analysis are job description, job
specification and job evaluation.

Job Description implies objective listing of the job title, tasks, and responsibilities involved in a
job.

Job rotation aims at shifting the jobs for an employee in required intervals in order to remove
the boredom and create enough motivational levels to work for the organization.

Job Specification involves listing of employee qualifications, skills and abilities required to
meet the job description.

Just-in-time (JIT) is defined as “a philosophy of manufacturing based on planned elimination of

all waste and on continuous improvement of productivity”.

K
Key success factor (KSF) is a factor that is necessary for a firm to compete effectively in a
market niche.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

22
L
Law is a standard or rule established by a society to govern the behaviours of its members.

Law of demand states that there is a negative or inverse relationship between the price and
quantity demanded of a commodity over a period of time.

Leader is someone who can influence others and who has managerial authority.

Leading is the process of influencing people so that they will strive willingly and
enthusiastically toward achievement of group goals.

Letter of credit (L/C) is a document issued by a banker on behalf of a customer authorizing

payment to a supplier when the conditions specified in the document are met.

Liability of bank: What a bank owes including notably customer deposits. Bank’s most
important liability is checkable deposit which is the part of the economy’s M1 money supply.
Largest liabilities include other types of deposit (saving deposit, certificate of deposit, and
money market deposit)

Licensing is a method of entering foreign market in which the company enters into an
agreements with a license in the foreign market, offering the right to use the manufacturing
process, trademark, patent, trade secret or other item of value for a fee or royalty.

Liquidity Ratios- Ratios that show the relationship of a firm’s cash and other current assets to
its current liabilities.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

23
M
M1: Cash plus checking accounts deposit. It is measure of all currency in circulation not in
vaults.

M2: M1 plus saving account & money market accounts.

M3: M2 plus large deposit and other large long term deposit.

M0: Physical currency

Macroeconomics studies aggregated indicators such as GDP, unemployment rates, and price
indices to understand how the whole economy functions.

Management is a set of activities (Including planning and decision making, organizing, leading
and controlling) directed at an organization-resources (human, financial, physical and
information)with the aim of achieving organizational goals in efficient and effective manner.

Manager is someone who works with and through other people by coordinating their work
activities in order to accomplish organizational goals.

Manager VS leader: Managers are appointed to their position. Their ability to influence is
based on the formal authority inherent in that position. In contrast, leaders may either be
appointed or emerge from within a work group. Leaders are able to influence others to perform
beyond the actions dictated by formal authority

Management Information Systems (MIS) is a formal system of gathering, integrating,

comparing, analyzing and dispersing information internal and external to the enterprise in a
timely, effective and efficient manner.

Market generally means a place or a geographical area, where buyers with money and sellers
with their goods meet to exchange goods for money. In Economics market refers to a group of
buyers and sellers who involve in the transaction of commodities and services.

Marketing – A social and managerial process whereby individuals and groups obtain what

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

24
they need and want through creating and exchanging products and value with others.

Matrix structure is an organizational structure that assigns specialists from different functional
departments to work on one or more projects being led by project managers.

Merger is combining two or more business enterprises into a single entity.

Micro banking or microfinance a means of extending credit, usually in the form of small
loans with no collateral, to nontraditional borrowers such as the poor in rural or undeveloped
areas

Micro economics is the study if particular firms or particular household, individual price, wage,
industries and commodities.

Mission is the central guiding concept describing the fundamental reason for the existence of an
organization.

Motivation is the willingness to exert high levels of effort to reach organizational goals,
conditioned by the effort's ability to satisfy some individual need.

Monetary policy is policy that employs the central bank’s control over the supply and cost of
money as an instrument for achieving the objectives of economic policy.

Money Markets- The financial markets in which funds are borrowed or loaned for short periods
(less than one year).

Money market instruments:

1. Treasury bill: a debt obligation of govt. by law with as original maturity of 1 year or less.

2. Commercial paper: a short-term debt obligation normally issued by accompany with a

high credit rating.

3. Bankers acceptance: a bank’s commitment to pay a stipulated amount of money on a

specified future date under specified conditions.

4. Certificate of deposit: an interest bearing receipt for the deposit of funds in a bank for a
stipulated time.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

25
 5. Repurchase agreement

6. Short term treasury notes and bonds

7. International emergency deposit

Monopoly is a market structure in which there is a single seller, there are no close substitutes for
the commodity it produces and there are barriers to entry.

Multinational corporations (MNCs) are those organizations which maintain significant

operations in multiple countries but are managed from a base in the home country. Sony,
ExxonMobil.

N
National Income is the value of final goods and services produced in a year.

Nationalization: The taking of property with or without compensation by the govt.

Negotiation is the process of bargaining with one or more parties to arrive at a solution that is
acceptable to all.

Negotiable Instrument means a written document which creates a right in favor of some person
and which is freely transferable .i.e. promissory note, bill of exchange etc.

Net Present Value (NPV)- A method of ranking investment proposals using the NPV, which is

equal to the present value of future net cash flows, discounted at the cost of capital.

Net national product = GNP -depreciation.

Net worth- Total assets - total liabilities

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

26
O
Off –balance sheet Items: Off –balance sheet Items are those assets or liabilities which don’t
appear on the balance sheet. For example:

1. Guarantees which are given by banks to company

2. L/C issued by banks to company

3. Litigation cost

4. Contingent Liabilities

Off –balance sheet financing: financing in which the assists and liabilities involved don’t
appear on the firm’s balance sheet.

Oligopoly refers to a form of imperfect competition where there will be only a few sellers
producing either homogenous or differentiated products.

Operating income: Operating income is the income that comes from a bank’s ongoing operation
that income is generated from loans. Noninterest income of bank service charge of deposit
account and off balance-sheet activities which generates from fees or trading profits for the bank.

Operating Expenses: The expenses incurred in conducting the banks ongoing operations. Major
element is interest payment on its deposits. Noninterest expenses include the cost of running a
banking business. Elements salaries of teller and officer, rent on bank building, purchase of
equipment such as desks and bolds and service cost of equipment.

Opportunity Cost is the cost of choosing to use resources for a purpose, which results oon
sacrificing the next best alternative for the use of those resources.

Over-the-Counter (OTC)- Market A large collection of brokers and dealers, connected

electronically by telephones and computers, that provides for trading in unlisted securities.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

27
P
Partnership is an association of people, usually 2-20 person, who carry on business together for
the purpose of making profit. For bank 2-10 person.

Planning function involves the process of defining goals, establishing strategies for achieving
those goals, and developing plans to integrate and coordinate activities.

Per capita income - A nation’s or other geographic market’s total income divided by the
number of persons in its population.

PERT network is a flowchart like diagram that depicts the sequence of activities needed to
complete a project and the time or costs associated with each activity.

Point-of-sale (POS) - A data collection system that electronically receives and stores bar code
information derived from a sales transaction. This could the zip codes for library users,
facilitating the library in determining geographic market are that users reside in.

Policy is a guideline to channel a manager's thinking in a specific direction.

Political risk- confiscation, expropriation, domestication.

Planning involves defining the organization's goals, establishing an overall strategy for
achieving those goals, and developing a comprehensive set of plans to integrate and coordinate
organizational work.
Price discrimination means the practice of selling the same commodity at different prices to
different buyers.
Primary data: Those data which do not already exist in any form, and thus have to be collected
for the first time from the primary source(s).
Primary Markets- Markets in which corporations raise capital by issuing new securities.

Primary Reserve: absolutely non- earning liquid asset held by a bank. Such As: Cash in hand of
bank, Cash reserved in vault of bank, Cash holding with central bank, Demand deposit with other
bank. Secondary reserve: the aggregate of highly liquid earning assets.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

28
 Types of primary reserve:

1. Legal reserve: that portion of primary reserve which the law requires a bank to
maintain.

2. Working reserve: cash reserve maintained in excess of the legal minimum reserve to
meet depositor claims to satisfy credit needs of the community and to provide
protection against unforeseen withdrawals.

Private Public Partnership (PPP). Private public partnership is a long term partnering
relationship between the public & private sectors to deliver services. Through PPP , the public
sector seeks to bring together the expertise and resources of the public and private sectors to
provide service to the public at the best value for money. There are many possible PPP models
including joint venture ,strategic partnership to make better uses of govt. assets.

Privatization: the act of returning state owned or state run companies back to the private sector
,usually by selling them off.

Probability is a quantitative measure of uncertainty - a number that conveys the strength of our
belief in the occurrence of an uncertain event.

Problem is a discrepancy between an existing and a desired state of affairs.

Product- A bundle of attributes or features, functions, benefits and uses capable of exchange,
usually in tangible or intangible forms.

Product mix - The full set of products offered by an organization e.g., books, videos, etc.

Product life cycle - The four stages products go through from birth to death: introductory,
growth, maturity, and decline

Productivity is an economic measures of efficiency those summaries the value of outputs

relative to the value of inputs used to create them.

Project is any series of activities and tasks that have a specific objective to be completed within
certain specification, have defined start and ending dates, have funding limit.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

29
Project management can be defined as the planning , directing and controlling of resources to
meet the technical cost and time constraints of the project.

Promissory Note/ Pro note/ Hand Note - a promissory note is an instrument I writing
containing an unconditional undertaking signed by the maker, to pay a certain sum of money
only to or to the order of a certain person, or to the bearer of the instruments.

Porter’s Five Forces Model of Industry Competition

Project is a one-time-only set of activities that has a definite beginning and ending point in time.

Project management is the task of getting a project's activities done on time, within budget, and
according to specifications.

Price- Price is the amount of money charged for a product or service, or the sum of the values
that consumers exchange for the benefit of having or using the product or service.

Purchasing power parity is the number of units of a country’s currency required to buy the
same amounts of goods and services in the domestic market that one unit of income would buy
in the other country. PPP was developed by Swedish economist Gustav Cassel in 1918.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

30
Q
Quality is the ability of a product or service to reliably do what it's supposed to do and to satisfy
customer expectations.
Quick (Acid Test) Ratio- This ratio is calculated by deducting inventories from current assets
and then dividing the remainder by current liabilities.

Quotas are a quantity control on imported goods.

R
Reengineering- the radical redesign of all aspects of a business to achieve major gains in cost,
service or time.

Regression refers to the statistical technique that establish a relationship between a dependent
variable and one or more independent variables. Equation : Y= a+bx.

Repo Rate: Repurchase Agreement (repo) rate is the discount rate at which a central bank
repurchases government securities from commercial banks. Depending on the level of money
supply it decides to maintain in the country's monetary system. To temporary expand the money
supply the central bank decreases repo rate so that banks can swap their holdings of government
securities for cash. To contract money supply it increase repo rate. Current repo rate 7.25%

Reverse Repo Rate: the rate at which the central bank borrows money from commercial bank.

Resources are the assets of the organization and include financial (debt, equity, retained
earnings, and other financial holdings); physical (equipment, buildings, raw materials, or other
tangible assets); human (experiences, skills, knowledge, and competencies of people); intangible
(brand names, patents, reputation, ); and structural/cultural (history, culture, work systems,
working relationships, level of trust, policies, and structure).

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

31
 Tangible resources are assets that are relatively easy to identify and include financial,
physical, organizational, and technological resources that an organization uses to create
value for its customers

Intangible resources are much more difficult for competitors to account for or imitate.
These include human resources, innovation resources, and reputation resources.

Return on investment (ROI) is the ratio between income and assets employed.

Risks are those conditions in which the decision maker is able to estimate the likelihood of
certain alternatives or outcomes.

S
Secondary data: they already exist in some form: published or unpublished in an identifiable
secondary source.

Secondary Markets- Markets in which securities and other financial assets are traded among
investors after they have been issued by corporations.

Sequencing problem is a problem in which it is necessary to determine the orders or sequences

of jobs in which they should be performed as to minimize the total effectiveness or the sum of
the pertinent costs.

Shadow banking: Shadow banking is any lending or borrowing that takes place outside banking
system. It is a collection of non-bank financial intermediaries that services similar to bank.

Shadow Price: Shadow price is a proxy value of goods that does not reflect the actual value of
goods. It is used when no market value for a good exists. Shadow price is often defined by what
an individual must give up to gain an extra unit of the goods.

Simulation is a method of learning about a real system by experimenting with a model that
represents the system.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

32
Six Ms concept: 1. Men 2. Machine 3. Market 4. Method 5. Money 6. Materials

Social Business: Social business day is 28 June. Social business is a non loss non dividend
company designed to address a social objective with highly reputed market place of today. It is
different from non profit because the business should seek to generate a modest profit but this
will be used to expand the company’s reach improve the product or service.

Social responsibility as a business firm's obligation, beyond that required by law and
economics, to pursue long-term goals that are good for society.

Stakeholders are any constituencies in the organization's external environment that are affected
by the organization's decisions and actions
Statutory Liquidity Ratio: Amount of liquid assets such as cash, precious metals or other
approved securities that a financial institution must maintain as reserves other than cash with the
central bank. SLR 19%.

Strategy is a comprehensive plan for accomplishing an organization’s goal.

Strategic business units (SBU) single businesses of an organization in several different

businesses that are independent and that formulate their own strategies are often called.

Strategic management consists of the analysis, decisions, and actions an organization

undertakes in order to create and sustain competitive advantages.

Supply Chain Management- The design and management of seamless, value-added process
across organizational boundaries to meet the real needs of the end customer .

Statistics is a science that deals with the methods of collecting, classifying, presenting,
comparing and interpreting numerical data collected to throw some light on any sphere of
enquiry

Subsidy is a “financial contribution provided directly or indirectly by a government and which

confers a benefit.”.

Supply means the goods offered for sale at a price during a specific period of time.

Supply Chain- The supply chain denotes the process by which components are moved and
produced from raw material to the ultimate consumer.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

33
SWAP is an agreement between two companies to exchange cash flows in the future. It defines
the date when cash flows are to be paid and the way of calculation of cash flows.

SWOT analysis - An examination of the internal factors of a company to identify strengths and
weaknesses, and the external environment to identify opportunities and threats.

SWIFT- Society For Worldwide Inter-bank Financial Telecommunication- a member

owned cooperative through which financial world conducts its business operation with speed.

Syndicate is an association of two or more businesses joined together to accomplish specific

business goals.

System is a set of interrelated and interdependent parts arranged in a manner that produces a
unified whole. The two basic types of systems are closed and open. Closed systems are not
influenced by and do not interact with their environment. In contrast, open systems dynamically
interact with their environment.

T
Tactics are the action plans by which strategies are implemented.
Tariff, derived from a French word meaning rate, price, or list of charges, is a customs duty or a
tax on products that move across borders.
Tax is a compulsory contribution from the person to the State to defray the expenditure incurred
in the common interest of all without any reference to the special benefits conferred.

Terms of trade (TOT) of a nation are defined as the ratio of the price of its export commodity
to the price of its import.

Time Series- A series of observations, on a variable, recorded after successive intervals of time
The successive intervals are usually equal time intervals, e.g., it can be 10 years, a year, a
quarter, a month, a week, a day, and an hour, etc. Components of time series: trend, cycle,
irregular and seasonal.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

34
TQM refers to long term commitment to continuously quality improvement throughout the
organization and with the active participation of all members at all levels and all types to meet
and exceed the customer expectation.

Training is a learning experience in that it seeks a relatively permanent change in an individual

that will improve the ability to perform on the job.

Transnational corporation (TNC)—a company that maintains significant operations in more

than one country but decentralizes management to the local country. Nestlé.

Transfer price is the price that one unit of an organization charges another unit of the same
organization for a product or service. Methods of transfer pricing includes: variable cost/
incremental cost, full cost, cost plus a mark up, external market price, negotiable price.

Transportation model deals with the situation in which a particular commodity shipped from
sources to destinations in a such a way that the transportation cost is minimum, while satisfying
both the supply limits and the demand requirements.

Transshipment problem deals with how to transship a commodity from source to source, or
source to destination or destination to destination.

Treasury bill: A short term non coupon bearing instrument issued by the government to finance
its debt. Maturity is less than one year from its issue date.

Treasury bond: A long term coupon bearing instrument issued by the government to finance its
debt. Maturity is more than 10 years from its issue date which promise investors a fixed rate of
return

Treasury note: A long term coupon bearing instrument issued by the government to finance its
debt. Maturity is 1-10 year from its issue date which promises investors a fixed rate of return.

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

35
W
Window Dressing- Techniques employed by firms to make their financial statements look better
than they really are.

Whistle - Blower is an employee who informs superiors, media or the government regulatory
agency about unethical behaviour within an organization.

WB: The World Bank is actually comprised of five separate arms. These are IBRD, IDA, IFC,
and MIGA & ICSID. The two arms IBRD & IDA work primarily with government and together
are commonly known as World Bank. Two other arms IFC & MIGA directly support private
business investing in developing countries. The fifth arm ICSID which arbitrates disagreement
between foreign investor & governments.

Difference between WB & IMF:

1.IMF concerns itself with macroeconomic issue such as balance of payment issues,
international trade policy and exchange rates, The WB is to deal with issues more related
to structure within a country as how and what the government spends money on financial
institution labor market and trade policy. WB concern itself more with development
projects such as dam construction, building roads, schools and hospital etc.

2. IMF provides short term loans to develop the cyclical disturbance in economy where
as WB provides a long term loan for distressed economy.

3. IMF oversees the monetary system of the world and adds to the currency reserve of its
member countries through allocation of SDR.

Working Capital- The part of the capital of a company that is employed in its day-to-day
trading operation. It consists of current assets (trading stock, debtors and cash) minus current
liabilities (trade creditors)

SHETU RANJAN BISWAS, BBA & MBA (IM), UNIVERSITY OF CHITTAGONG.

36