UNIT 14 SOME BUSINESS TERMS – I

Structure

14.0 Objectives
14.1 Introduction
14.2 Business Terms

14.3 Let Us Sum Up

14.4 Key Words
14.5 Answers to Check Your Progress
14.6 Terminal Questions

14.0 OBJECTIVES

After studying this unit, you should be able to

• state the meanings of acquisition and affiliate marketing;

• explain what is meant by balance sheet, brand and business plan;
• describe the objectives of digital India;
• explain the difference between economic growth and economic development;
• describe the meaning of globalisation;
• state the importance of human resources and
• explain the meaning of incubation.

14.1 INTRODUCTION

In business writings and speaking, often such words are used which are not often covered by
standard English. These words and phrases have acquired a status of “office jargon” in the
business world. In this era of information technology, many new words and phrases have
been added to this list and it is expected that while working in business environment, one
should be familiar with this terminology and try to use the same in right perspective.
Furthermore in recent years, the words such as Digital India and demonetisation have become
in the Indian context. In this age of entrepreneurship and start-ups, the word ‘Incubation’ has
acquired much importance. In this unit, the meaning and relevance of a few of such words
and phrases will be described.

14.2 BUSINESS TERMS

Although there is a long list of the words that are commonly used in the business world, a

few selected words/phrases are given here along with the contexts when they are used.

1. Accounts

The term account has many connotations depending on the context. In business, it refers to a
record-keeping or ledger activity. It has many different applications in the financial industry.
In banking, an account refers to an arrangement of a customer's financial assets and holds
them on behalf of the customer at his or her discretion.

In a business organization, "Account" refers to a statement summarizing the record of

transactions in the form of credits, debits, accruals, and adjustments that have occurred and
have an effect on an asset, equity, liability, or past, present or future revenue. It can also refer
to a brokerage account, which holds customer assets at a licensed brokerage firm. In this type
of account, an investor deposits money or other assets and the broker places trades on behalf
of the client. Businesses are obligated to produce an annual set of accounts. If they are listed
on the stock exchange, they must also show half-year profits (information regarding profits
six months into the financial year).

2. Accounts Payable

When a business enterprise purchases goods on credit which needs to be paid back in a short
period of time, it is known as Accounts Payable. It is treated as a liability and comes under
the head ‘current liabilities’. Accounts Payable is a short-term debt payment which needs to
be paid to avoid default.

3. Accounts Receivable

This is just opposite to accounts payable. Accounts receivable is any money the customers
owe to a business enterprise for the goods or services they purchased from it in the past. This
money is typically collected after a few weeks, and is recorded as an asset on the company’s
balance sheet.

4. Annual Equivalent Rate (AER)

A quote of what interest paid on savings and investments would be. It is calculated by adding
each interest payment to the original deposit, then working out the next interest payment,
compounding the interest.

The formula for AER is:

(1 + i/n)n - 1

Where:

i = the stated annual interest rate

n = the number of compounding periods in one year

5. Annual Percentage Rate (APR)

An annual percentage rate (APR) is the interest rate the borrower has to pay to the lender,
such as the bank or the financial institution. APR is also the annual rate of interest paid on
investments without accounting for the compounding of interest within that year.
6. Acquisition

When a company purchases most or all of another company's shares to gain control of the
latter, it is termed as acquisition. Although merger and acquisition of large companies is
heard often as it makes news, in reality, mergers and acquisitions occur more regularly
between small- to medium-size firms than between large companies. Recently, Reliance
Industries Ltd. (RIL) acquired Future group’s retail business (Figure 14.1).

Reliance acquires Future Group's retail business

The acquisition including Reliance taking over all debts, liabilities, retail stores and a minority
stake in its consumer business, with an investment of about Rs 27,513 crores, involves merger of
five Future Group's listed entities including Future Retail, Future Lifestyle and Future Consumer
- into Future Enterprises (FEL), which currently houses the group’s retail back-end
infrastructure.

Source: The Economic Times

Figure 14.1: Acquisition of Future Group’s Retail Business by RIL.

7. Affiliate marketing
Affiliate marketing is a business strategy to increase sales. In this strategy, a company allows
to advertise its products by websites which are often frequented by the same customers,
known as “affiliates”. In lieu of the orders received through the website, the online advertiser
receives commission from the company. These days, various channels such as Youtube does
affiliate marketing. The whole sequence of affiliate marketing is shown in Figure 14.2.

Source: Monster Insights

Figure 14.2: Illustration of ‘Affiliate Marketing’

8. Balance Sheet

A Balance Sheet of a company is a financial statement that includes assets, liabilities, equity
capital, total debt, etc. at a point of time (usually at the end of the financial year). In the
balance sheet, assets are given on one side (left side) and liabilities on the other side (right
side). It reflects the true picture of the financial status of the company and both heads (assets
and liabilities) should tally, i.e.
Assets = Liabilities + Equity

Balance sheet is just like a snapshot of the financial position of a company at a specified time,
which may be after every quarter, six months or one year.

Assets are typically organised under two heads: liquid assets that are cash or can be
converted easily into cash and non-liquid assets that cannot be converted quickly into cash,
such as land, buildings and machinery. The list of assets may include intangible assets, i.e.
the assets which are difficult to value. Some examples of intangible assets are franchise
agreements, copyrights and patents. There are some set rules to evaluate these types of
assets.

Liabilities are the funds that the company owes to different agencies. Liabilities are of two
types: current and long-term liabilities. Current liabilities are those which are due within one
year and include wages, pension plan contributions, medical plan contributions, utilities,
building and equipment rents, payments to vendors (supplier invoices), income tax
deductions, sales tax on goods and service tax charged on purchase, interest, maturity debt,
etc.

Long-term liabilities include the payments to be made after one year. These include long-
term debt, such as interest and principal on bonds, and any pension fund liabilities and
deferred tax liabilities.

Equity and Earnings: Equity is also known as shareholder’s equity; these are funds
available after subtracting liabilities from assets. Retained earnings are earnings retained by
the company – that is not paid to the shareholders as dividends. Retained earnings are used
for reinvestment in the company.

A Sample Balance Sheet

Company Name : ___________________________

Balance Sheet as on : ___________________________

Assets (Rs.) Liabilities (Rs.)

Current Assets Current Liabilities
Cash in Bank 10,35,000.00 Accounts Payable 2,10,000.00
Cash in Hand 10,000.00 Wages Payable 5,15,000.00
Net Cash 10,45,000.00 Utilities 75,000.00
Inventory 25,05,000.00 Income Tax Payable 5,10,000.00
Accounts Receivable 10,200.00 Customers Deposits 45,000.00
Prepaid Insurance 15,400.00 Pension Payable 40,000.00
Total Current Assets 46,20,600.00 Nagar Nigam Dues Payable 10,000.00
Fixed Assets Medical Payable 15,000.00
Land 45,50,000.00 Sales Tax Payable 21,000.00
Buildings 1,10,50,000.00 Total Current Liabilities 14,41,000.00
Less Depreciation 1,50,000.00 Long-Term Loans 60,10,000.00
Net land and Building 1,54,50,000.00 Mortgage 1,15,25,000.00
Machinery 5,10,000.00 Total Liabilities 1,89,76,000.00
Less Depreciation 50,000.00
Net Machinery 4,60,000.00 Owner’s Equity
Common-Stock 8,20,600.00
Owner-Draws 1,10,000.00
Retained Earnings 6,24,000.00
Total Owners Equity 15,54,600.00

Total Assets 2,05,30,600.00 Liabilities and Equity 2,05,30,600.00

9. Brand

A Brand is the identity of a specific product, service or business. A brand can take many
forms, including a name, sign, symbol, colour combination or slogan. For example in 1960s
brand name “Dalda” became so popular that all solid fats prepared from vegetable oils were
called Dalda. Some other examples of brand are: Airtel, Jio, Revlon, Monte Carlo, Parker,
Colgate etc. A legally protected brand name is called a trademark.

A brand associated with a product or service has certain qualities or characteristics that make
it special or unique. A brand is therefore one of the most valuable elements in an advertising
theme, as it is considered to be associated with certain qualities. A brand which is widely
known in the marketplace acquires the status of brand recognition. When brand recognition
builds up to a point where a brand enjoys a critical mass of positive sentiment in the market
place, it is said to have achieved brand franchise.

As a brand is associated with certain attractive quality or characteristics, branded products or

services command higher prices than the similar unbranded products or services.

A global brand is one which is perceived to reflect the same set values around the world.
Some global brands include Apple, Coca-Cola, McDonald’s, MasterCard, Sony, etc. Global
brands are used to sell the same product across multiple markets. On the other hand, local
brand is one sold and marketed in a relatively small and restricted geographical area.
Examples of local brands in India are: Nandini brand milk in Karnataka, Array Milk in
Maharashtra, Saras Milk in Rajasthan.

10. Business Plan

A business plan is a written document that outlines the goals of the company for the next four
to five years and the strategies to be adopted for achieving these goals. It is based on the
target markets, possible clientele, selling points, economic conditions, etc. Business plan
may also include strengths, weaknesses, opportunities and threats (SWOT).

Business plans are necessary for seeking loans from banks and other funding agencies and for
attracting potential investors. The company may revisit its business plan periodically to
assess its achievements and failures, and if necessary, to adopt new strategies and directions.
Although business plan is a must for a start-up, the established business enterprises also need
it to remain goal-oriented. Although it may be good to incorporate as much detail as possible
in the business plan, it is better to keep it concise for a quick reference.

Key elements of a Business Plan

Some of the common points in a business plan are:

Executive Summary: It includes a brief statement about the mission of the company, its
location, operation and leadership.

Product and Services: In this section, details of the products and services to be offered by
the company are given. It may include scale of production, manufacturing technology,
pricing and lifespan of the products and special offers, if any.

Financial Planning: In this section, company’s plans to raise capital from different sources
are given. It includes financial statements, balance sheets and other financial information for
already-established businesses. New enterprises give details of the target sources and
investors.

Market Analysis: This section incorporates details of the target markets and other
competitive products already in the market.

Marketing strategy: In relation to the market analysis, what strategies company will adopt
to be successful in competition to the other products are detailed in this section. The pricing
and special offers to attract the customers are discussed here.

Budget: It takes into account different costs related to development, staffing, manufacturing,
publicity and marketing.

Thus a Business Plan of a company:

• is a written document outlining its goals and strategies.

• outlines its long-term or short-term plans of business.
• includes executive summary, details of the products and services, financial planning,
market analysis, marketing strategy and budget.

11. Capital

Capital is a critical component for running a business and for financing its future growth. It is
derived from the business operations or be raised from debt or equity financing. In a broader
sense, capital is anything that confers value or benefit to its owner, such as a factory and its
machinery, intellectual property like patents, or the financial assets of a business or an
individual. While money itself may be construed as capital, it is more often associated with
cash that is being put to work for productive or investment purposes.

When budgeting, businesses of all kinds typically focus on three types of capital: working
capital, equity capital, and debt capital. A business in the financial industry identifies trading
capital as a fourth component.

12. Demonetisation

Demonetisation can be defined as the act of stripping a currency unit of its status as legal
tender. The prevailing form or forms of money is pulled out from circulation and is replaced
with new notes or coins. Sometimes, a country completely replaces the old currency with new
currency. For example, the “Euro” came into existence on 1 January 1999 when all European
states except the UK and Denmark agreed to it. Initially, the currency was launched virtually
in 1999 and in 2002, notes and coins began to circulate. It rapidly took over from the former
national currencies and slowly expanded behind the rest of the EU. The Government of India
announced the demonetisation of all ₹500 and ₹1,000 banknotes on 8 November 2016 issued
new ₹500 and ₹2,000 banknotes in exchange for the demonetised banknotes.

Source: SlideShare

13. Digital India

Digital India is a flagship programme of the Government of India with a vision to transform
India into a digitally empowered society and knowledge economy. The objective of the
Digital India Group is to come out with innovative ideas and practical solutions to transform
our nation into a thriving economy and to create opportunities for all citizens by harnessing
digital technologies. It endeavours to empower every citizen with access to digital services,
knowledge and information. This Group will come up with policies and best practices from
around the world to make this vision of a digital India a reality.

Source: MyGov Blog

Check Your Progress A

1. What do you mean by acquisition?

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2. What is demonetisation? Give two examples.
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3. List three objectives of ‘Digital India’.

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4. What is affiliate marketing?
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5. Which of the following statements are True or False ?
(i) Acquisition is done of only larger companies.
(ii) Affiliate marketing is done to increase sales.
 (iii) Information Technology will play a major role in achieving the goals of Digital
India.
(iv) Coca-cola is a local brand.
(v) Business plan is made to achieve certain goals in the next 4-5 years.

14. Disinvestment

Disinvestment may be defined as the action of an organization or government selling or

liquidating an asset or subsidiary. If the sale of the asset is not included, disinvestment refers
to capital expenditure (CapEx) reductions, which leads to re-allocation of resources to more
productive areas within an organization or government-funded project.

The Government of India set up a Department of Disinvestment in December, 1999 and was
later renamed as Ministry of Disinvestment from September, 2001. From May, 2004, the
Department of Disinvestment became one of the Departments under the Ministry of Finance.
Every year, the Finance Minister sets a target of disinvestment in his/her budget speech.
However, the target of disinvestment could not be achieved in any financial year due to many
reasons, such as offers made by the government being not attractive, unrealistic valuation
process, strong opposition from the employees and trade unions, etc.

Some of the companies which witnessed a strategic sale included:

• Bharat Aluminium Co.Ltd.

• CMC Ltd.
• Hindustan Zinc Ltd.
• Hotel Corp.of India Ltd. (3 Properties: Centaur Hotel, Juhu Beach, Centaur Hotel,
Airport, Mumbai and Indo Hokke Hotels Ltd.,Rajgir)
• HTL Ltd.
• IBP Co.Ltd.
• I. T. D. C. Ltd. (18 Hotel Properties)
• Indian Petrochemicals Corp. Ltd.
• JESSOP & Co. Ltd.
• Lagan Jute Machinery Co. Ltd.
• The Maruti Suzuki India Ltd.
• Modern Food Industries (India) Ltd.
• Paradeep Phosphates Ltd.
• Tata Communications Ltd.

The Finance Minister in her budget presentation, set a disinvestment target of Rs 1.75
lakh crore for 2021-22. The targeted and receipts of disinvestment by the Government of
India from 2010-11 to 2019-20 are shown in Figure 14.3.
 Source: Tavaga

Figure 14.3: The targeted and receipts of disinvestment by the Government of India
from 2010-11 to 2019-20.

15. Economic Development

Economic development as defined by Wikipedia is “the process by which a nation improves

the economic, political, and social well-being of its people.” It is often confused with
‘Economic Growth’, but both are different. Economic Growth is the positive change in the
real output of the country in a particular span of time. It is a measurable quantity in terms of
actual economic output — things like gross domestic product (GDP). It is a pure numbers
game. But, economic development has much broader connotations, such as social welfare,
childhood education, healthcare, or in a nutshell, the overall standard of living.

16. Economic Reforms

The word “Economic Reforms” became popular in 1991 when the Narasimha Rao
Government, in India introduced fundamental changes in the Indian economy by liberalising
it resulting in faster rate of economic growth. It included technology up-gradation, industrial
licensing, removal of restrictions on the private sector, foreign investments and foreign trade.
This was termed as ‘the end of the license raj’. The reforms intended at bringing in larger
cooperation of the private sector in the growth method of the Indian economy. The essential
features of the economic reforms are – Liberalization, Privatization and Globalization,
commonly known as LPG. Since then, the process of economic growth continues.

17. Employee Empowerment

Employee empowerment is a management strategy to motivate the employees by allowing

them to make independent decisions and act on them. According to, Newstrom and Davis
(1986) “empowerment is any process that provides greater authority through the sharing of
relevant information and the provision of control over factors affecting job performance.”
Employee empowerment helps employees do a better job in the moment while growing into a
more productive member of the organization.
The empowerment includes

• giving employees a voice by regularly soliciting and acting on their feedback,

• providing opportunities for the employees to grow through more autonomy
• giving additional responsibilities or even an entirely new role.
• increasing their engagement and confidence in their own abilities, and
• providing employees with the tools, training, and authority they need to excel.

18. Employee Engagement

It is closely related to the employee empowerment. Employee engagement may be defined as

the emotional connection of the employees towards the work they do, their teams, and their
organization. Kahn (1990) described “employee engagement as the harnessing of people’s
selves to their work, such that they fully invest their physical, cognitive, and emotional
resources in their work roles. He suggested meaningfulness, safety, and availability as
essential conditions and important indicators of engagement”.

Employees who feel connected to their organization work harder, stay longer, and motivate
others to do the same. It affects just about every important aspect of the organization,
including profitability, revenue, customer experience, employee turnover, and much more. A
study showed that 92% of the business executives believe that engaged employees perform
better, boosting the success of their teams and the outcomes of their organizations.

19. Feedback

Feedback is another jargon word commonly used in business and other organizations.
Feedback is the process of sending the report about the effect of any action taken in the
context of various activities of an organization. Thus feedback can be defined as the “return
of information provided following an activity or process”. For example, if a company
launches a new product, the marketing personnel will assess the response of the customers, its
performance vis-a-vis similar products already present in the market and will send their
feedback to the management, which will evaluate it and plan a new line of action, if
necessary. Thus, feedback is a two way process and is an integral part of a business
enterprise.

To obtain feedback is a continuous process, and if done in the right manner with sincere
motives, it leads to improvement in the performance. In fact, feedback is ubiquitous. It is the
lifeline of an organization.

Feedback may be ‘a positive feedback’ or ‘a constructive feedback’.

A positive feedback is ‘praise’ and is used as motivator. If someone has done good work, the
manager can tell him about the positive feedback received for his work. Thus, positive
feedback is sometimes called ‘motivational feedback’ or ‘reinforcement feedback’, because it
is used to encourage a person to adhere to his line and action to a particular assignment.

Constructive feedback on the other hand may have criticism for their present approach, but at
the same time may give suggestions how to improve/correct it. Thus message is constructive
and helps the person to improve. As constructive feedback helps the person follow a better
approach, it is also known as ‘formative feedback’, ‘developmental feedback’ or
‘redirection’.

20. Finance

Finance can be defined as the management of money. The activities such as saving, investing,
borrowing, lending, budgeting, and forecasting, etc. come under finance. There are three
main sources of finance: (1) personal, (2) corporate, and (3) public/government.

Some examples of the common financial activities are given below:

• Investing personal savings in stocks, bonds, etc.

• Depositing personal savings in a high-interest savings account.
• Raising capital from institutional investors by issuing bonds on behalf of a public
company
• Giving loans by banks to individuals to buy a house and mortgaging the same.
• Preparing budget and financial model for a corporation.

21. Forecast

All are familiar with weather forecast, which predicts the possible weather in the coming
days. In the business world, business forecast is equally or rather more important, which
predicts the likely scenario of sales and other aspects in a particular field of business. The
time frame of business forecast is much longer than the weather forecast extending from a
season to several years. The business forecast includes estimated sales, profit or loss and
cash flow.

Thus, business forecasting may be defined as an act of predicting the future trends of sales,
economic conditions, profits, losses, etc. for a business.

Leo Barnes remarked, “Business forecasting in the calculation of reasonable

probabilities about the future, based on the analysis of all the latest relevant
information by tested and logically sound statistical economic techniques, as
interpreted, modified and applied in terms of an executive’s personal judgement and
social knowledge of his own business and his own industry or trade”.

According to John G. Glover, “Business forecasting is the research procedure to

discover those economic, social and financial influences governing business activity, so
as to predict or estimate current and future trends or forces which may have a bearing
or company policies or future financial, production and marketing operations”.

Business forecasting is used for:

• Long-term planning
• Budget making
• Inventory planning
• Marketing (pricing, consumer behaviour, life cycle management)
 • Operations and supply chain

Business Forecasting Techniques

They are of two types:

1. Qualitative forecasting: It is based on opinions and guesses of the persons involved in

marketing.
2. Quantitative forecasting: This technique is more scientific and reliable. It is based on
past data which is analysed on the basis of statistical models.

22. Globalisation

The growing interdependence of different countries’ economies and other aspects brought
about by cross-border trade in goods and services, technology, and flow of investment,
people, and information is termed ‘Globalisation’. The tremendous advancement made in the
field of Information Technology (IT) has been the most important contributor to the process
of globalisation. The CEO of a multinational company can video chat with the employees
world over. Now firms in the developed countries establish their manufacturing units in the
developing countries to save labour and logistic costs.
Some of the key points of globalisation are as follows:

• A company can sell its products, technology and services across nations.
• Corporate companies can attract investment from individuals and institutions from
across the world.
• Jobs are created in the developing countries as multinational companies establish their
manufacturing facilities in these countries.
• Globalisation has pushed up tourism.
• Due to globalisation, an economic downturn in one country can be felt across the
world.
• Globalisation is responsible for the Covid-19 pandemic.

23. Gross Domestic Product

Gross domestic product (GDP) is the final value of the goods and services produced within
the geographic boundaries of a country during a specified period of time, normally a year.
GDP growth rate is an important indicator of the economic performance of a country. In
India, contributions to GDP are mainly divided into 3 broad sectors – agriculture and allied
services, industry and service sector. The GDP growth rate of India from 2018-19 to 2020-21
is shown in Figure 14.4.
 Figure 14.4: The GDP growth rate of India from 2018-19 to 2020-21.

24. Human Resources

Human Resources (HR) is the department of the company that deals with the matters relating
to its employees. The term “Human Resources” was first coined in the 1960s when the
importance of labour in an organization and matters related to their selection, training,
welfare and motivation was realized. In fact, it is the resource that is present in the
knowledge skills and abilities of humans. In contrast to other resources, human resource
improves with age and experience. Thus, it is the most crucial productive resource in an
organization.

Human Resource management deals with the following aspects in an organization:

• Recruitment of staff
• Training and orientation
• Labour and management relations
• Welfare and benefits of staff
• Development of organization

Human resource management is responsible for developing a strategic and comprehensive

approach towards managing people and maintaining a productive and harmonious work
environment. For achieving these objectives HR department has to arrange training and
orientation programme on the one hand and organize social and healthcare events on the
other hand. It has to ensure strategic utilization of human resource and make efforts that
these activities have a positive effect on the business of the company.

25. Incubation
According to the UK Business Incubation (UKBI), “Incubation is a unique and highly
flexible combination of business development processes, infrastructure and people, designed
to nurture and grow new and small businesses by supporting them through early stages of
development and change”.

The National Business Incubation Association (NBAI) stipulates that “business incubation is
a business support process that accelerates the successful development of start-up and
fledgling companies by providing entrepreneurs with an array of targeted resources and
services. These services are usually developed or orchestrated by incubator management and
offered both in the business incubator and through its network of contacts. A business incuba-
tor‘s main goal is to produce successful firms that will leave the program financially viable
and freestanding. These incubator graduates have the potential to create jobs, revitalize
neighbourhoods, commercialize new technologies, and strengthen local and national
economies”.

In these days of start-ups and entrepreneurship, business incubation has acquired much
importance. A business incubator makes available a range of services to its clients that are
designed to help them launch well managed businesses. This mix of services is generally
drawn from: administrative services, business advice services, technical services, finance
raising, and networking opportunities. The government also plays an important role in
business incubation by sanctioning low interest loans, tax holidays and other incentives to the
start-ups.

Check Your Progress B

1. What is meant by disinvestment?

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2. Explain the term “Human Resources”.
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3. List three advantages of globalisation.
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4. Define GDP.
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5. Which of the following statements are True or False ?
i) Economic growth and economic development are the same thing.
ii) The word “Economic Reforms” became popular in 1991
iii) Globalisation has created jobs in the developing countries.
iv) Business forecast is for a long time.
v) GDP growth rate in India in 2020-21 was very good.
14.3 LET US SUM UP

In business writings and speaking, often such words are used that do not find place in
standard English. These words have acquired the status of “office jargon” in the business
world. When a company purchases most or all of another company's shares to gain control of
the latter, it is termed as acquisition. Affiliate marketing is a business strategy to increase
sales. In this strategy, a company allows to advertise its products by websites which are often
frequented by the same customers, known as “affiliates”. In lieu of the orders received
through the website, the online advertiser receives commission from the company. A
Balance Sheet of a company is a financial statement that includes assets, liabilities, equity
capital, total debt, etc. at a point of time. A Brand is the identity of a specific product, service
or business. A brand can take many forms, including a name, sign, symbol, colour
combination or slogan. A business plan is a written document that outlines the goals of the
company for the next four to five years and the strategies to be adopted for achieving these
goals. It is based on the target markets, possible clientele, selling points, economic
conditions, etc. Business plan may also include strengths, weaknesses, opportunities and
threats (SWOT).
Demonetization can be defined as the act of stripping a currency unit of its status as legal
tender. The prevailing form or forms of money is pulled out from circulation and is replaced
with new notes or coins. Digital India is a flagship programme of the Government of India
with a vision to transform India into a digitally empowered society and knowledge economy.
The objective of the Digital India Group is to come out with innovative ideas and practical
solutions to transform our nation into a thriving economy and to create opportunities for all
citizens by harnessing digital technologies. Disinvestment may be defined as the action of an
organization or government selling or liquidating an asset or subsidiary. Business forecast is
used to predict the likely scenario of sales and other aspects in a particular field of business.
It includes estimated sales, profit or loss and cash-flow. It may be a long-time forecast or a
short-time forecast. Business plan is a written document that outlines goals of the company
for the next four to five years and the strategies to be adopted for achieving these goals. It is
based on the target markets, possible clientele, selling points, economic conditions, etc.
Balance sheet of a company is a financial statement that includes assets, liabilities, equity
capital, total debt, etc. at a point of time (usually at the end of the financial year). In the
balance sheet, assets are equal to the sum of liabilities and equity. Economic development as
defined by Wikipedia is “the process by which a nation improves the economic, political, and
social well-being of its people.” It is often confused with ‘Economic Growth’, but both are
different. The word “Economic Reforms” became popular in 1991 when the Narasimha Rao
Government in India introduced fundamental changes in the Indian economy by liberalising it
resulting in faster rate of economic growth. Employees empowerment and employees
engagement are two important management strategies to instil a sense of belonging in the
employees towards the organization, which results in enhanced profits and other benefits.
Feedback is the process of sending the report about the effect of any action taken in the
context of various activities of an organization. Finance can be defined as the management of
money. The activities such as saving, investing, borrowing, lending, budgeting, and
forecasting, etc. come under finance. Business forecasting may be defined as an act of
predicting the future trends of sales, economic conditions, profits, losses, etc. for a business.

The growing interdependence of different countries’ economies and other aspects brought
about by cross-border trade in goods and services, technology, and flow of investment,
people, and information is termed ‘Globalisation’. Gross domestic product (GDP) is the final
value of the goods and services produced within the geographic boundaries of a country
during a specified period of time, normally a year. GDP growth rate is an important indicator
of the economic performance of a country. Human resources is the department of the
company that deals with the matters relating to its employees. It deals with the recruitment,
training, welfare, relationship between labour and management and development of the
organization. Incubation is a unique and highly flexible combination of business development
processes, infrastructure and people, designed to nurture and grow new and small businesses
by supporting them through early stages of development and change.

14.4 KEY WORDS

Goal- oriented: Working to achieve the planned objectives.

Hierarchy: A system of persons ranked one above another.

Infancy: Early stage of development.

Intangible Assets: The assets which cannot be prescribed by the sense of touch.

Inventory planning: To plan stocks of goods.

Liabilities: These are the funds that the company owes to different agencies.

Marketing operation: Activity in the market including advertising, publicising,

popularizing, distributing and pushing sales of a product.

Marketing strategy: To plan how to launch a product in the market and popularise it.

Stripping a currency unit: Banning its circulation.

Trademark: A legally protected brand of a company.

Welfare schemes: Schemes such as healthcare, pension, provident fund, subsidy for
employee’s children education, bonus, etc.

14.5 ANSWERS TO CHECK YOUR PROGRESS

A 5 (i) False, (ii) True, (iii) True, (iv) False, (v) True
B 5 (i) False, (ii) True, (iii) True, (iv) True, (v) False

14.6 TERMINAL QUESTIONS

1. Giving suitable examples, discuss the characteristic features of affiliate marketing?
2. What is Digital India? Discuss its goals.
3. What is meant by business plan? Describe its key elements.
4. What is balance sheet? Explain its different components with the help of a suitable
example.
5. Describe various functions of human resource department in a company. How does it
create an harmonious working environment?
6. What is meant by incubation? Giving suitable examples, highlight its importance in
start-up.
7. What is brand? How does it help in business?