Business Dictionary – E

Earnest Money

    Money paid in good faith as a deposit, usually for a property, to show that the buyer is serious about doing business with the vendor.


    An arrangement in which an extra future conditional payment is made to the seller of a business in addition to the original price, based upon certain criteria being met.

Easterlin Paradox

    A theory that beyond satisfaction of basic needs, increasing wealth of a country does not produce increasing happiness, suggested by US professor of economics Richard Easterlin based on his research published in 1974.

Easy Monetary Policy

    A policy which enables the public to borrow money easily, at low interest rates, in order to expand the economy by investing the money in business activities.


    Using mathematics and statistics to study the economy.

Economic Life

    The period of time during which an asset, e.g. property, vehicle, machinery, etc., is expected to be usable, including repairs and maintenance, before a replacement is required.

Economic Theory of the Firm

    Idea that firm’s responsibility is to serve stockholders the theory that the only duty that a company has to those external to it is financial. The economic theory of the firm holds that stockholders should be the prime beneficiaries of an organization’s activities. The theory is associated with top-down leadership and cost cutting through rationalization and downsizing. With immediate stock price dominating management activities, the economic theory of the firm has been criticized as being too short-term, as opposed to the longer-term thinking behind stakeholder theory.

Economic Union

    Also known as a Common Market. An agreement between a group of countries which allows the free flow of goods, services, labour, etc., between the member countries and usually has a common currency.

Economies Of Scale

    In manufacturing, the more units being made the cheaper each unit costs to produce.

Economy Drive

    Effort to save money or materials a concerted effort to save money or materials, as by reducing expenditures or avoiding waste.


    Electronic currency. Used on the Internet for making and receiving payments. Companies which provide this service include Paypal and E-Gold.


    Being able to communicate and/or conduct business using the internet.


    For example. Abbreviated phrase, which comes from the Latin "exempli gratia".


    Believing that everyone is equal and should all have the same rights and opportunities in life.


    Freelance working using the Internet to sell services or goods anywhere in the world.

Elected Officers

    Officials chosen in election officials such as directors or union representatives who are chosen by a vote of the members or stockholders of an organization and who hold a decision making position on a committee or board.

Electronic Cottage

    A home which has the necessary electronic equipment, such as telephone, computer, etc., from which to run a business.

Electronic Data Exchange

    A means of exchanging documents between businesses using electronic equipment such as computers.

Electronic Purse

    A type of microchipped smartcard which stores small amounts of money to enable payment for purchases, especially on the Internet, instead of having to use cash.


    Government order stopping trade with foreign country a government order that stops a type of trade, such as exports to, or imports from, a specific country.


    Dishonestly appropriate goods or money from one’s employer for personal gain; steal from one’s employer, typically by electronic administrative methods, thus abusing a position of trust or responsibility.


    Total wages, benefits or compensation paid to someone for the job they do or the office they hold.


    Used in e-mails, internet chat rooms and text messages, symbols which represent facial expressions, e.g. :-) = smile.

Emotional Capital

    Emotional experiences, values and beliefs of a company’s employees that make good working relationships and a successful.

Emotional Intelligence

    The ability or skill of a person to understand and control their emotions, and to understand and assess and respond appropriately to the feelings and situations of others. Commonly abbreviated to EQ (Emotional Quotient, alluding to the concept of IQ – Intelligence Quotient), Emotional Intelligence theory seeks to enable a sophisticated practical appreciation and application of the concept of intelligence, especially in work, management, leadership and human relationships.


    Information derived from experience, observation or experiment rather than from theory or subjective opinion. From Greek – empeiros, meaning skilled – in turn from peira, meaning trial or experiment.


    Possession of useful skills the potential for obtaining and keeping fulfilling work through the development of skills that re transferable from one employer to another. Employability is affected by market demand for a particular set of skills and by personal circumstances. Employees may take responsibility for developing their own employability through learning and training, or, as part of the psychological contract, employers may assist their employees in enhancing their employability. An important factor in employability is the concept of learning throughout life.

Employee Buyout

    A transaction in which employees purchase all or most of a company’s shares, thereby gaining control of the company.

Employee Ownership

    A business model and constitutional framework in which staff hold significant or majority shares of a company, thereby ensuring higher levels of loyalty and commitment, and fairness in the way that business performance relates to employee reward. The John Lewis Partnership is one of the prime and most successful examples of the concept.

Employee Participation

    Inclusion of employees in decision making the involvement of employees in decision making. Employee participation can take either a representational or direct form. Representation takes place through bodies such as consultative committees. Direct participation can be achieved through communication methods such as letters, employee attitude surveys, and team briefing, or through initiatives such as self-managed teams and suggestion programs.

Employee Self Service

    An Internet based system which enables an employee to access their personal records and payroll details, so they can change their own bank account details, contact details, etc.

Employee Share Scheme

    A plan to give, or encourage employees to buy, a stake in the company that employs them by awarding free or discounted stock. Such plans may be available to some or all employees, and plans approved by HM Revenue & Customs enjoy tax advantages. Types of plan include employee share ownership plans, stock options, Save as You Earn, and employee share ownership trusts. Among the potential benefits are improved employee commitment and productivity, but the success of a plan may depend on linking it to employee performance and the performance of the price of stock.

Employee Stock Option

    Allows specified employees the right to purchase shares in the company at a fixed price.


    Conferring authority on employees the redistribution of power and decision-making responsibilities, usually to employees, where such authority was previously a management prerogative. Empowerment is based on the recognition that employee abilities are frequently underused, and that, given the chance, most employees can contribute more. Empowered workplaces are characterized by managers who focus on energizing, supporting, and coaching their staff in a blame-free environment of trust.


    Convert data into code which cannot be easily understood by people who have no authorisation to view it.


    Putting information in code for transmission over Internet a means of encoding information, especially financial data, so that it can be transmitted over the Internet without being read by unauthorized parties.

    Within an Internet security system, a secure server uses encryption when transferring or receiving data from the Web. Credit card information, for example, that could be targeted by a hacker, is encrypted by the server, turning it into special code that will then be decrypted only when it is safely within the server environment. Once the information has been acted on, it is either deleted or stored in encrypted form.

Engagement Letter

    Letter formalizing business relationship between professional and client a letter, usually required by professional standards, sent by a professional such as an accountant to a client, setting out the work the accountant is to do and further administrative matters such as any limit on the accountant’s liability.


    1. General Management

    Bold undertaking a venture characterized by innovation, creativity, dynamism, and risk. An enterprise can consist of one project, or may refer to an entire organization. It usually requires several of the following attributes: flexibility, initiative, problem-solving ability, independence, and imagination. Enterprises flourish in the environment of delayered, nonhierarchical organizations but can be stifled by bureaucracy.

    2. Business

    Firm a commercial business or company.

Enterprise Application Integration

    Software technology that links computer programs, data bases, etc., within an organisation, so that information can be shared.


    Assumption of deserving reward the expectation that an organization or individual will make large profits regardless of their contribution to the economy or company.

Entrepot Port

    International port dealing in re-exports a town with a large international commercial port dealing in re-exports.


    An ambitious person who starts new business ventures in order to make a lot of money, often taking financial risks.


    The measure of the level of disorder in a closed but changing system, a system in which energy can only be transferred in one direction from an ordered state to a disordered state. Higher the entropy, higher the disorder and lower the availability of the system’s energy to do useful work. Although the concept of entropy originated in thermodynamics (as the 2nd law) and statistical mechanics, it has found applications in a myriad of subjects such as communications, economics, information science and technology, linguistics, and music. In day-to-day life it manifests in the state of chaos in a household or office when effort is not made to keep things in order.


    A person’s name or another sort of name which is used as the name or title or brand for something such as a business or brand or book or other product or concept. The word ‘eponymous’ also describes any name which features in a concept/book/etc and is actually the name of the concept/book/etc. For example, a story written about a man called John, which is called ‘John’ or ‘John’s Adventures’, or ‘A Story of John’, etc., could be described as ‘eponymously titled’, and the character John could be referred to as the ‘eponymous character’.

    Many eponymous names have become very well-known and entered language to the extent that the origins of the word are not widely appreciated, or largely forgotten altogether. There are thousands of famous eponyms (eponymous names) in business and life in general. Here are a few varied examples, starting with some very big examples of words which have acquired generic descriptive meanings far beyond their original eponyms:

    Biro – in many parts of the world this means generally any ballpoint pen, in addition to being the Biro brand of ballpoint pen. Biro is named eponymously after its Hungarian inventor László Bíró, 1899-1985.

    Levi jeans are named after Levi Strauss, the US businessman who co-registered the original riveted design and begain producing the eponymous working jeans in the late 1800s.

    William H Hoover and son, Herbert W Hoover, Sr., bought a patent for a vaccuum cleaner in the early 1900s. They built a very big household equipment business, and the word ‘hoover’ became a way to clean the floor. Few people consider the word’s origins.

    Jacuzzi, the brand, and the general reference to a bubbling hot tub, is named after seven Jacuzzi brothers, Italian US immigrants whose business developed in the early 1900s from aeronautics, though water pumps, to whirlpool bathtubs.

    Thermos/Dewar (vacuum) flask - alternatively named after James Dewar its 1892 inventor, and the German company Thermos, which exploited Dewar’s failure to patent his innovation and first produced the product commercially.

    Dunlop and Goodyear – industrial brand names, especially tyres/tires named after the founders/inventors of original pneumatic tyre/tire technologies and companies.

    The Victorian age is (obviously, but often disregarded) an eponymously named era, after Queen Victoria.

    Homer’s ancient Greek classic The Odyssey (and therefore the modern word odessey too) is named after the main character, Odysseus.

    The Heimlich manoeuvre abdominal thrusts emergency first-aid treatment is named after its conceiver Henry Heimlich.

    Yale University, Connecticut, US, is named after Elihu Yale, an early-18th century English businessman philanthropist benefactor.

    Earl Grey tea is named after Charles Grey, 2nd Earl Grey, Viscount Howick, British Prime Minister 1830-1834.

    The Pavlova fruit-meringue dessert is named after Russian ballerina Anna Pavlova, 1881–1931, for whom Australia and New Zealand claim to have devised the pudding when she visited on tour.

    Beef Wellington is named after Arthur Wellesley, 1st Duke of Wellington (1769–1852).

    The American Bell Telephone Company (which became American Telephone & Telegraph Company, AT&T) was named after Alexander Graham Bell, 1847-1922, Scottish/British/US/Canadian scientist and inventor (of the first viable telephone, amongst other things).

    The giant Casio corporation was established in 1946 by Japanese engineer Tadao Kashio. (Casio’s second product was a calculator; the first was a finger ring to enable cigarettes to be smoked to the stub.)

    Dolby/Dolby Surround audio systems are named after US engineer Ray Dolby, b.1933, inventor of the Dolby noise reduction system.

    In ice-skating, the jumps called Axel, Lutz and Salchow are named after figure skaters Axel Paulsen (Norway), Alois Lutz (Austria), and Ulrich Salchow (Sweden).


    Electronic procurement. Businesses using the internet to purchase from, or sell goods and services to, other businesses.

Equilibrium Price

    The price at which the demand of a particular product or service is equal to the quantity supplied.

Equity Accounting

    When a company records, in its financial records, profits which can be claimed from an affiliated company which they part own.


    Study of efficient working environments the study of workplace design and the physical and psychological impact it has on workers. Ergonomics is about the fit between people, their work activities, equipment, work systems, and environment to ensure that workplaces are safe, comfortable, efficient, and that productivity is not compromised. Ergonomics may examine the design and layout of buildings, machines, and equipment, as well as aspects such as lighting, temperature, ventilation, noise, color, and texture. Ergonomic principles also apply to working methods such as systems and procedures, and the allocation and scheduling of work.

ERP (Enterprise Resource Planning)

    ERP systems integrate internal and external management of information across an entire organization—embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application. The purpose of ERP is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.

Escalator Clause

    Contract clause permitting price increases a clause in a contract that allows for regular price increases for a product or service to cover projected cost increases.

Escape Clause

    A condition in a contract which allows the contract to be broken in particular circumstances.


    Safe keeping by third party of valuable item an agreement between two parties that holds that something such as a good, document, or amount of money should be held for safe keeping by a third party until specific conditions are fulfilled.

Essential Industry

    Industry necessary to nation’s economy an industry regarded as crucial to a country’s economy and often supported financially by a government by way of tariff protection and tax breaks.


    An retailer who uses the internet to sell goods and/or services to the public.


    Technology, invented by The Xerox Corporation, which connects computers in a local area network (LAN).


    Equitable, fair, and just dealing with people that, although pragmatically flexible according to the situation and times, conforms to self-imposed high standards of public conduct. Once practically interchangeable with ‘moral,’ this term has acquired quasi-legal connotations and has moved closer to ‘legitimate’ following the recent (second half of the 20th century) schism between private morality and public morality.


    The replacement of a strong/offensive word or phrase with an alternative word or phrase considered to be milder/inoffensive. Euphemisms are used widely and very wrongly by politicians and business people attempting to avoid responsibility and personal acknowledgment of mistakes, bad decisions and unjustifiable actions, etc. Euphemisms in such situations are part of ‘spin’, or spinning a story.


    Also known as the Eurozone. All the countries in the EU (European Union) that use the Euro as currency.

European Union

    EU. Previously called the European Community. An international, economical and political organisation which brought the nations of Europe together so that people, goods, money, services, etc., can move freely between member nations.

Exchange Rate Exposure

    When a business risks losing money because of the need to change one currency for another of lower value.

Exclusion Clause

    Clause listing items not covered by agreement a clause in an insurance policy or warranty that states which items or events are not included in the cover provided.

Execution Risk

    The risk that a company’s plans, or a project, will fail because of changes being made, e.g. entering a new market, bad management, etc.


    1. Person in senior management an employee in a position of senior responsibility in an organization. An executive is involved in planning, strategy, policy making, and line management.

    2. Any person with responsible job a person with a significant role in an organization or project, for example, a manager, consultant, executive officer, or agent.

Executive Chairman

    Organization’s highest executive the most senior executive in an organization when the roles of chair and chief executive are combined, and the executive chairman has some control over daily operations.

Executive Director

    Also called Internal Director. A person who usually works as a full-time senior employee for a company, and is responsible for the day to day running of the business, and is often a member of the company’s board of directors.

Executive Officer

    Person in senior management an employee in a position of senior responsibility in an organization. An executive officer is involved in planning, strategy, policy making, and line management.

Executive Summary

    Statement outlining main points of business plan a concise summary at the beginning of a business plan of the objectives, products and/or services, marketing plans, operations, etc. of the proposed business, designed to attract investors.

Ex Gratia

    Something given or carried out as a favour or gift, rather than as a legal duty.

Ex-Gratia Payment

    Exceptional extra payment a one-time extra payment in addition to normal pay, made out of gratitude or courtesy, or in recognition of a special contribution.

Exit Strategy

    Also called Harvest Strategy. A plan by an investor to dispose of an investment, such as shares in a company, to make a profit, or a business owner to dispose of their company, e.g., by selling the business, floating it on the stock market, ceasing to trade, handing it over to another family member, etc.

Ex Officio

    Someone who has a right to be included because of their job or position, e.g. to sit on a committee. (Latin – by virtue of office or position)

Expectancy Theory

    A theory of motivation developed by Canadian Victor Vroom, Yale professor of management and psychology, established in his 1964 book, Work and Motivation, which essentially states that motivation necessarily comprises and is determined by three elements of belief:

    1.Effort will produce success.
    2.Success will produce reward.
    3.These outcomes will be personally satisfying.

Experience Curve

    In business, when costs fall and production increases as a result of increase in workers skills and lower material costs.

Expert System

    A computer software system which can provide expert knowledge for a specific problem when users ask a series of questions.

Export Credit

    A loan taken out by an importer with a bank in an exporters country, so that the importer can buy foreign goods and pay for them at a later date.

Export Factoring

    A facility offered by banks to exporters. The bank is responsible for collecting payments for exported goods, so that the exporter can borrow money from the bank before the goods have been paid for by the customers.

Ex Stock

    Goods which are available for immediate delivery because the supplier has them in stock.

Extension Strategy

    A marketing strategy to stop a product going into decline by making small changes to it, reaching new customers or finding new uses for it, e.g. a drink which was sold as an aid to those recovering from illness is now sold as a sports drink.

External Competitiveness

    Being able to sell goods and services to customers in foreign countries at a competitive price.

External Debt

    Also known as Foreign Debt. Money that is owed by the government, organisations or individuals to creditors in other countries.

External Equity

    A situation in which an organisation’s employees receive similar pay for the same type of work as employees in other organisations, i.e., pay which is equal to market rates.

External Growth

    Growth as result of joining with another firm business growth as a result of a merger, a takeover, or through a partnership with another organization.


    A private computer network to which a company’s customers and suppliers can link and communicate using the Internet.

Extraordinary General Meeting

    Ggeneral meeting other than regular annual meeting any general meeting of an organization other than the annual meeting. Directors can usually call an extraordinary general meeting at their discretion, as can company members who either hold not less than 10% of the paid-up voting shares, or who represent not less than 10% of the voting rights. Directors are obliged to call an EGM if there is a substantial loss of capital. Fourteen days’ written notice must be given, or 21 days’ written notice if a special resolution is to be proposed. Only special business can be transacted at the meeting, the general nature of which must be specified in the convening notice.


    The estimation or determination of what will happen in the future by extending (extrapolating) known information or data. The verb usage ‘extrapolate’ is common and means using mathematics or other logical process to extend a proven trend or set of data. ‘What if?..’ scenarios and business modelling generally involves some sort of extrapolation. It’s a way of predicting something by assuming a historical pattern will continue into the future.

Ex Works

    Goods which are delivered to the purchaser at the plant or place where they are manufactured. The purchaser then pays for transporting and insuring the goods from that point.


    Advertising term. A name given to the number of people who visit a website advertisement, which can be counted by the number of click-throughs.


    An electronic magazine which is published on the internet, or delivered by e-mail.