It is useful, and in some situations will prove to be important, to know business phrases and specific terms which are commonly used. The exact meaning of such words and phrases is not always intuitively obvious, especially for non native speakers, such as me. There are many, many phrases used in business. I have listed the most common phrases here.
“USE IT OR LOSE IT” mentality:
Can refer to management in the organization trying to use up surplus in the budget to make sure that the budget does not shrink in the next year.
“GIVE LIP SERVICE”
Is a business phrase used when someone talks about something passionately but they do not actually do anything about it.
Refers to something troublesome but necessary. For example, in business, inventory is often referred to as a “necessary evil”. Many organizations have to hold inventory so that they have goods available for the convenience of customers. This makes inventory “necessary”. It is “evil” because money has to be investment in inventory and such money does not earn any return. Therefore, organizations try to minimize the amount of funds tied up in inventory while still avoiding stock outs (being out of stock) and keeping up with scheduled production. This is generally called Inventory Management.
“A BIG FISH IN A SMALL POND”
Someone or a company who is very successful, influential and powerful but exists in a very small market or region. This is a very common business phrase and was made popular in Hollywood movies about organized crime.
“HAVING SKIN IN THE GAME”
Usually refers to entrepreneurs having their own money invested and therefore, when they are also taking the risk. The term is generally used when someone is asking for support and has also invested in the venture. Therefore they will also lose something should the venture or initiative fail.
“CAN’T SEE THE FOREST FOR THE TREES”
Refers to an inability to see the big picture due to only focusing on the small details. This is another very, very popular business phrase
Attitude means someone is trying to pass responsibility to another party. For example, blaming someone else for the loss, so one does not have to cover the cost.
“EXAMINED WITH A FINE-TOOTH COMB”
Means examine something properly and diligently.
“THE TONE AT THE TOP”
Refers to the attitudes of the leadership team regarding business ethics and corporate governance. It refers to the ethical atmosphere in the workplace. This is a less common business phrase. It is most popular in the US, Canada and the UK.
“INFORMATION SUPERWAY” (as coined by Al Gore)
Refers to the Web. It is used to indicate that the Web allows internet users to “travel” in search of information and that all other internet users also “travel” in the same direction (in search of information). This is similar to a motor highway. The Web is situated on top of the internet and allows internet users to share information on the internet by using a URL, which refers to the Uniform Resource Locator. The Web originated from work done by developers Robert Gailiau and Tim Berners-Lee in the European Centre for Nuclear Research (CERN) in Geneva in 1989. Internet refers to the entire infrastructure which allows otherwise incompatible individual computers to communicate with each other, regardless of where they are located. Basically, the internet refers to all computers, telephone or cable lines and network cables that make it possible for any computer to communicate with any other computer, as long as they are connected to the internet.
“BELOW THE RADAR”
Refers to something not being easily detectable. For example, an enterprise may try to operate “below the radar” by making every effort to not draw attention to its existence. This business phrase was taken from the military who mainly used radar to watch for approaching enemy aircraft.
“TYRANNY OF THE URGENT”
Refers to a situation when an individual has, what seems to be, an endless list of very urgent tasks. Such tasks are usually of a low priority. It often refers to activity rather than achievement. Such tasks can take up all day and at the end of the day one may feel that nothing was accomplished. This phrase may also refer to time when one has to make decisions which are less than ideal due to lack of time available to make such decisions.
“TULE OF THUMB”
Is a guideline regarding proper actions based on what is rational and based on past experience. Such guidelines are generally a rough approximation of what is the right thing to do.
For a business this may have several meanings:
One of them is in the area of finance. In the Jeremy Siegel’s book “The Future for Investors”, he refers to a “growth trap” to argue that growth of the company should not be an acceptable reason to regard certain shares as a good investment. The reason for this is the expected growth of the company is already built into the price of shares. Therefore, the only way an investor can obtain above-average returns is if the company grows faster than was anticipated when price of shares was determined. This is easy to understand with the example of the Gordon model which is used for the valuation of shares.
In the field of entrepreneurship, however, the “growth trap” refers to a situation whereby due to rapid growth, a business’s cash flow situation is deteriorating because additional financing is required prior to cash being generated from additional sales.
This growth problem is further exacerbated due to the difficulty of obtaining external financing. Businesses may need additional financing to hire more personnel to handle increased sales and to buy extra inventory and raw materials. Therefore, the situation may occur where a rapidly growing businesses is profitable but has cash flow problems. “Creative Destruction” was developed by the distinguished Harvard economist Joseph Schumpeter in his landmark book “Capitalism, Socialism and Democracy” published in 1942.
Schumpeter used the phrase “Creative Destruction” to describe the “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” Schumpeter further states that “This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in.”
Schumpeter argued that capitalism exists in the state of “creative destruction” where innovation leads to new companies replacing old ones. He viewed entrepreneurship as a catalyst for growth of the economy. In short, this phrase refers to something new replacing (destroying) something older. It has become a very commonly used buzzword.
Is a word that is very popular and buzzing around hallways, corridors, newpapers etc. “Social networking” recently became a buzzword with the rise of Facebook and Twitter. This is probably the most popular and common of all business phrases.
“THINKING OUTSIDE THE BOX”
The generation of ideas which are not ordinary and not confined to common thinking patterns. This is probably the second most popular and common of all business phrases.
Means seeing the overall objective and purpose of the task rather than just being obsessive and noticing the details. This is probably the third most popular and common of all business phrases.
“BUILD A BETTER MOUSETRAP AND THE WORLD WILL BEAT A PATH TO YOUR DOOR”
This sentence is in fact paraphrased. The actual sentence was “If a man has good corn or wood, or boards, or pigs, to sell, or can make better chairs or knives, crucibles or church organs, than anybody else, you will find a broad hard-beaten road to his house, though it be in the woods”.
This was later paraphrased as “If a man can write a better book, preach a better sermon, or make a better mousetrap, than his neighbour, though he build his house in the woods, the world will make a beaten path to his door.”. And later it was again paraphrased as “Build a better mousetrap and the world will beat a path to your door”.
The original sentence is attributed to Ralph Waldo Emerson in the late nineteenth century. The paraphrased quote implies that innovation is self-promotional. In other words, if one builds a better product then the world will find the ways to acquire such an improved new invention.
In reality, promotion of a very innovative and useful product is still required to educate and inform customers about a new product or service (new “mousetrap”) and how customers can buy a new product or service (how customers can find the “door”).
Moreover, the perception of customers often plays a more significant role than the actual superiority of the product. This, again, brings the importance of promotion to the surface.
Interestingly, according to the book “Build a Better Mousetrap” by Kassinger & Ruth, mousetraps are the “most frequently invented device in U.S. history”. It is interesting to know whether this has anything to do with the famous quote above.
Someone whose image, perception amongst peers, influence or reputation is much greater than his actual accomplishments and track-record.
Activity conducted internally (inside an organization). For example, a business can create an “in-house” newsletter. Businesses also can create advertising “in-house” instead of engaging an advertising agency to do such work.
When one party has a superior level of specific knowledge compared to another party. However, the other party could greatly benefit from knowing such specific information. For example, asymmetric information can refer to the chance that management knows more about the current real performance of the firm and future growth projections than outside investors. “BOOTSTRAPPING”
Generally means something is accomplished due to one’s own initiative and without external help. In entrepreneurship, a bootstrapping or bootstrap financing, means an entrepreneur uses his or her initiative to find capital or use capital more efficiently to survive. It includes minimization of the company’s investments and refers to such situations as leasing instead of buying, adapting just-in-time inventory system, operating a business from home, obtaining free publicity instead of paying for advertising and using other free resources as much as possible.
Other examples of bootstrap financing include factoring and trade credit. Factoring means a business sells its accounts receivable to factor or another financial institution at a discount rate. Factor refers to the financial institution whose business is to purchase accounts receivable from other companies. Trade credit refers to situations when suppliers provide their products and services on credit. Suppliers usually extend interest free credit for 30, 60 or 90 days.
“CHAIN OF COMMAND”
Is an orderly line of authority within the organization or organization’s reporting structure. It is a term taken from the military. An organizational chart illustrates the chain of command. It shows who reports to whom. For example, it shows the CEO reports to the board of directors and not the other way around. The chain of command is important to maintain clear lines of authority and responsibility.
Is the proper etiquette in writing and dealing with emails. This phrase, along with “buzzword”, are probably the newest business phrases.
“SPAN OF CONTROL”
Is sometimes also called span of management. It refers to how many subordinates report to a supervisor within the organizational hierarchy. The more people report to one manager the larger the span of control.
Experts suggest that, on average, one manager’s span of control cannot be larger than six to eight people. However, in practice, span of control is affected by many factors. Such factors include personality of the manager and workers, type of work to be supervised and whether the tasks that need to be supervised are similar or different, the health state of the manager and competency level of the supervisor and subordinates.
Span of control is also affected by geographical location of the subordinates. If all subordinates are in the same area than it is easier to supervise them compared to a situation when subordinates are dispersed over different geographical locations.
Over the last few years spans of control in organizations were increasing largely due to developments in information technology and the flattening of organizational structure.
The concept of span of control is especially important for small businesses. Many entrepreneurs allow too wide a span of control by trying to supervise too many employees. This takes away their time that could have been spent on growing the business. As a result, too wide a span of control in a small business may slow down the growth of the business.
Occurs when certain departments/groups of individuals within the business do not want to share knowledge or information with other areas of the business and other individuals. Such mindset leads to inefficiency and creates risks for the business.
Is the informal and unsupervised communication within an organization. It allows to rapidly disseminate information throughout the organization.
Is a term developed by Michael Porter of the Harvard Business School and refers to advantage enjoyed by a company which results in the company with a competitive advantage being able to earn above-average returns compared to the rest of the industry.
Competitive advantage can be divided into comparative advantage and differential advantage. Comparative advantage refers to cost advantage. Enterprises which enjoy comparative advantage can produce a product or service at a lower price than its competitors. This allows the enterprise to charge lower prices or to enjoy a higher profit margin. Differential advantage means a product or service of the enterprise with differential advantage is different from products and services of competitors.
Sustainable competitive advantage refers to a type of competitive advantage which is too costly or too difficult for competitors to imitate. The more sustainable the competitive advantage the more difficult it is for competitors to emulate it. However, competitors will eventually find the way to reduce the effect or to completely neutralize the competitive advantage. Therefore, it is crucial for businesses to constantly search for new ways to obtain a competitive advantage over competitors.
“WHEN YOU FAIL TO PLAN, YOU PLAN TO FAIL”
Means not planning is really the process of setting yourself up to fail.
“A BIRD IN THE HAND IS WORTH TWO IN THE BUSH”
Means it is better to appreciate and work with what you definitely own or have, then to hope for something bigger and better that you do not have and may never obtain.
“RISK AND REWARD GO HAND IN HAND”
Means the when you take on risk; you have the potential to generate greater rewards. The two cannot be separated and opposite is also true; not taking on risk means you have a lower chance of generating returns.
“PRACTICE MAKES PERFECT”
Means the more you practice doing something the better you will be at it. If you continue this, then at some point you will be perfect at this task
“NEVER BUY A CAR THAT WAS PRODUCED ON A FRIDAY OR MONDAY”
Means that employees do not do their best work on these two days. I have only heard this business phrase 4 times in my whole life, but it did appear during an important meeting, so I thought it wise to include it.
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