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Business Terms

Above-the-line promotion

Methods of advertising that involve using the mass media to promote a product. Examples of above the line methods include television and radio advertising, advertisements in newspapers and magazines and advertising on posters and billboards.

Absolute advantage

An economic term used to discuss international trade between two or more countries. One country has an absolute advantage for a particular product if it can produce it cheaper than another country. This may be because it is more efficient, uses fewer resources or has lower costs than the rival country.

Accounts

A systematic way of recording the financial history of a business over a period of time. Accounts are a key part of financial management and will be of interest to anyone with a financial interest in the business, including managers, shareholders and the government. The main accounts that a business should keep are a cash flow forecast, profit and loss account and balance sheet.

Acquisition

When one business purchases another entire business or part of a business. It is possible to make an acquisition of a whole business, a product line or a brand name.

Added value

The way in which a business increases the worth of its inputs and sells them for a higher amount than they were purchased for. For example, a restaurant chef is able to produce a quality meal from basic ingredients and sell the meal for far more than the cost of the ingredients. The main sources of added value are convenience and speed, branding, quality, design and the product’s unique selling point.

Advertising

A key method of promotion that involves a business using paid-for communication through the media to publicise and position its products and services in the minds of customers. The two main functions of advertising are to inform and to persuade.