Activity 1: Let's Get Started! (Warm-up)
- Why do you think having a good grasp of business vocabulary is important for your career development?
- Can you recall any business terms you've encountered recently that you found confusing or weren't entirely sure about their meaning?
- In what kind of business situations (e.g., meetings, presentations, reading reports) do you believe precise vocabulary is most crucial? Why?
Activity 2: New Words (Vocabulary)
Let's explore some essential terms and phrases used frequently in the business world. Understanding these will help you discuss and comprehend business operations more effectively.
1. Revenue (noun): The total amount of money a company receives from its business activities, usually from the sale of goods and services, during a specific period.
Example: The tech company's annual revenue increased by 15% last year due to strong sales of its new software.
2. Expenditure (noun): The total amount of money that a company spends in order to operate, such as paying for salaries, rent, materials, and other costs.
Example: The company is trying to reduce its overall expenditure by negotiating better deals with suppliers.
3. Profit (noun): The financial gain when a company's revenue is greater than its expenditure. It's the money left over after all costs have been paid.
Example: After a successful quarter, the small business reported a significant profit, which they plan to reinvest.
4. Asset (noun): Anything of value owned by a company that can be used to produce income or that has monetary value. Examples include cash, buildings, machinery, and patents.
Example: The company's most valuable asset is its portfolio of innovative patents.
5. Liability (noun): A company's debts or financial obligations that arise during business operations. These are amounts owed to others, such as loans, accounts payable, or deferred revenues.
Example: The business took out a loan to purchase new equipment, which increased its short-term liability.
6. Stakeholder (noun): Any person, group, or organization that has an interest or concern in a company's operations, performance, or success. This can include employees, customers, investors, suppliers, and the community.
Example: The CEO emphasized that the new company policy was designed to benefit all stakeholders, not just the shareholders.
7. Return on Investment (ROI) (phrase): A performance measure used to evaluate the efficiency or profitability of an investment. It is calculated by dividing the net profit of an investment by its initial cost.
Example: The marketing campaign generated a high Return on Investment (ROI) by significantly boosting sales with minimal spending.
8. Market Share (noun/phrase): The portion or percentage of total sales in a specific industry or market that a particular company or product controls.
Example: The company aims to increase its market share in Asia by launching new products tailored to local preferences.
Activity 3: Reading - Company Performance Review
Read the following passage about a company called GreenTech Solutions. Pay attention to how the vocabulary words from Activity 2 are used.
GreenTech Solutions, an innovative company specializing in eco-friendly packaging, recently announced its annual performance results. The company's Revenue experienced a substantial increase this year, reaching $500,000, primarily driven by the successful launch of a new biodegradable product line. Although Expenditure rose as GreenTech invested in advanced manufacturing equipment, this new machinery is now a valuable Asset, significantly enhancing their production capabilities. Despite these investments, the company proudly reported a healthy Profit of $100,000.
GreenTech's management team continues to carefully manage its main financial Liability, a long-term loan for expansion, ensuring all payments are current. They emphasize that the company's achievements are not solely due to financial performance but also to cultivating strong relationships with every Stakeholder, from their dedicated workforce to local community suppliers. A recent online marketing initiative showed an impressive Return on Investment (ROI), contributing directly to an expansion of their Market Share in the competitive sustainable packaging industry. Looking ahead, GreenTech Solutions is optimistic about its growth prospects and its ongoing commitment to positive environmental contributions.
Comprehension Questions:
After reading the passage, answer the following questions:
- What was the primary reason for the increase in GreenTech Solutions' revenue this year?
- How did the investment in new manufacturing equipment affect GreenTech's expenditure, and what benefit does this equipment (as an asset) provide?
- Besides financial success, what does GreenTech's management believe is important for the company's achievements, and how do they handle their main liability?
- What were the two main positive outcomes of GreenTech's recent online marketing initiative mentioned in the text?
Activity 4: Role Play - Discussing Business Concepts
Read the following dialogue with a partner. One person can be Ms. Evans, and the other can be Carlos. Pay attention to how they use the business vocabulary.
Carlos: Ms. Evans, I was reviewing the GreenTech Solutions case study from Activity 3. It mentioned they increased their profit. Does that simply mean they earned more money overall?
Ms. Evans: Hi Carlos! That's a good question. While related, profit isn't just the total money earned. It's specifically the amount left after all expenditure, like costs for materials and salaries, is subtracted from the total revenue or income.
Carlos: Ah, I see. So, higher revenue doesn't always guarantee a higher profit if expenditure also goes up significantly. What about when they mentioned pleasing every stakeholder? Who exactly does that include?
Ms. Evans: Precisely regarding profit. And yes, a stakeholder is anyone with an interest in the company – not just investors or owners, but also employees, customers, suppliers, and even the local community. It’s about considering diverse interests.
Carlos: That makes sense; it's a broader perspective. The case study also mentioned a good Return on Investment from their marketing. How is that usually understood or measured?
Ms. Evans: Generally, Return on Investment, or ROI, is a performance measure to see how beneficial or profitable a particular investment was. You compare the net gain from the investment against its initial cost. A high ROI indicates the investment was efficient.
Carlos: So, for instance, if GreenTech spent $1,000 on that marketing campaign and it directly generated $5,000 in new profit, that would be a strong ROI?
Ms. Evans: Exactly, Carlos. That would represent a 400% ROI, which is generally considered very good. It shows their marketing expenditure was a wise decision to potentially boost their overall revenue and, ultimately, their profit margin.
Carlos: This is much clearer now. So, understanding these specific terms really helps in analyzing a company’s performance and strategy more deeply, doesn't it?
Ms. Evans: You've got it. These vocabulary terms are fundamental building blocks for understanding and participating in business discussions and interpreting reports. Keep practicing using them!
Discuss Together:
After reading or performing the dialogue, discuss the following with a partner:
- Why is it important for a company, like GreenTech Solutions, to consider more than just its profit when making business decisions? Think about the different types of stakeholders Ms. Evans mentioned.
Activity 5: Let's Practice - Bakery Business Analysis
Objective: Practice using the new business vocabulary in a conversational context.
Scenario: Ms. Evans is discussing a hypothetical new bakery with Carlos, and Carlos needs to use the correct business terms to describe its situation. Fill in the blanks in Carlos's lines.
Ms. Evans: Alright Carlos, let's imagine you're analyzing a new small bakery. They've just finished their first year of operations.
Carlos: Okay, Ms. Evans, I'm ready to try.
Ms. Evans: Good. So, if the bakery earned $50,000 from selling cakes, bread, and pastries throughout the year, what would we call that total $50,000 inflow?
Carlos: That total amount they earned from sales would be their .
Ms. Evans: Exactly. Now, during that year, they also had various costs: ingredients, shop rent, electricity, and a part-time employee's wages, all totaling $30,000. What's that $30,000 called?
Carlos: Those combined costs of running the business would be their total .
Ms. Evans: Correct again. So, if their earnings were $50,000 and their operational costs were $30,000, what important financial figure can we determine from these two numbers?
Carlos: From that, we can calculate their , which in this case would be $20,000.
Ms. Evans: Excellent. Now, let's say the bakery also bought a new, high-quality baking oven for $5,000. They expect this oven to last for many years and help them produce more goods. What does this oven represent for the business?
Carlos: The new oven, since it’s a valuable item they own and use for production, is an for the bakery.
Ms. Evans: Perfect. Let's also imagine they are ambitious and want to attract more customers, specifically those who currently buy from other established bakeries in the town. If they succeed, what are they trying to increase?
Carlos: In that situation, they would be aiming to grow their in the local area.
Ms. Evans: Very good. And one last point: if they took out a small bank loan specifically to purchase that new oven, what does that loan represent on their financial statements until it's fully paid off?
Carlos: That outstanding loan would be recorded as a for the business.
Try to fill in the blanks with the correct words or phrases from Activity 2.
Answer Key (Activity 5)
Suggested Answers:
- Revenue
- Expenditure
- Profit
- Asset
- Market Share
- Liability