Business & ManagementCambridge IGCSE

Business Studies definitions

Business studies, often simply called business, is a field of study that deals with the principles of business, management, and economics. It combines elements of accountancy, finance, marketing, organizational studies, human resource management, and operations. In essence, business studies provides a general overview of various aspects related to running a business.......
Business Studies definitions
  1. Need: A good or service essential for living.
  2. Want: A good or service which people willl like to have but not which is essential for living.
  3. Economic Problem: There exist unlimited want but limited resources to produce them to satisfy those wants.
  4. Factors of production: Are those resources needed to produce goods or services. These are four factors of production and they are in limited supply.
  5. Scarcity: The lack of sufficient products to fulfill the total wants of the population.
  6. Opportunity cost: The next best alternative given up by choosing another item.
  7. Specialization: It occurs when people and businesses concentrate on what they are best at.
  8. Division of labour: When the production process is split in to different tasks and each worker performs one of these tasks.
  9. Businesses: Combine factors of production to make products which satisfy peoples wants.
  10. Added value: The difference b/w the selling price of a product and the cost of bought in materials and components.
  11. Primary sector: The industry extracts and uses the natural resources of the earth to produce raw materials used by other businesses.
  12. Secondary sector: Industry manufactures goods using the raw materials provided by the primary sector
  13. Tertiary sector: Industry provides services to consumers and the other sectors of industry.
  14. De-industrialisation: It occurs when there is a decline in the importance of the secondary, manufacturing sector of industry in a country.
  15. Mixed economy: It has both a private sector and public sector.
  16. Capital: The money invested into a business by the owners.
  17. Entrepreneur: A person who organises, operates and takes the risk for a new business venture.
  18. Business plan: A document containing the business objectives and important details about the operations, finance and owners of the new business.
  19. Capital employed: The total value of capital used in the business.
  20. Internal growth: Occurs when a business expands its existing operations.
  21. External growth: When a business takes over or merges with another business. Also, called integration.
  22. Merger: When the owners of two businesses agree to join their firms together to make one business.
  1. Takeover: When one business buys out the owners of another business.
  2. Horizontal integration: When one firm merges with or takes over another one in the same industry at the same stage of production.
  3. Vertical integration: When one firm merges with or takes over another one in the same industry but at a different stage of production.
  4. Conglomerate integration: When one firm merges with or takes over a firm in a completely different industry. Also known as diversification.
  5. Sole Trader: A business owned by one person.
  6. Limited liability: The liability of shareholders in a company is only limited to the amount they invested.
  7. Unlimited liability: The owners of a business can be held responsible for the debts of a business they own.
  8. Partnership: A form of business in which two or more people agree to jointly own a business.
  9. Partnership agreement: The written and legal agreement b/w business partners.
  10. Unincorporated business: One that does not have a separate legal identity.
  11. Incorporated businesses: Companies that have separate legal status from their owners.
  12. Shareholders: The owners of a limited company.
  13. Annual general meeting: A legal requirement for all companies.
  14. Dividends: Payments made to shareholders from the profits of a company.
  15. Franchise: A business based upon the use of the brand names, promotional logos and trading methods of an existing successful business.
  16. Business objectives: The aims or targets that a business works towards.
  17. Profit: Total sales revenue less total costs.
  18. Market share: The proportion of total market sales achieved by one business.
  19. Social enterprise: Social objectives as well as an aim to make a profit to reinvest back into the business.
  20. Stakeholder: Any person or group with a direct interest in business.
  21. Motivation: The reason why employees want to work hard and effectively for a business.
  22. Wage: Payment for work, usually paid weekly.
  23. Salary: Payment for work, usually paid monthly.
  24. Commission: Payment relating to the number of sales made.
  25. Profit sharing: A system whereby a proportion of the companys profits is paid out to employees.
  26. Bonus: Additional amount of payment above basic pay as a reward for good work.
  27. Share ownership: Where shares in the company are given to employees so that they become part owners in the company.
  28. Job satisfaction: The enjoyment derived from feeling that you have done a good job.
  29. Job rotation: Involves workers swapping round and doing each specific task for only a limited time and then changing round again.
  1. Job enlargement: Where extra tasks of a similar level of work are added to a workers job description.
  2. Job enrichment: Involves looking at jobs and adding tasks that require more skill and/or responsibility.
  3. Organizational Structure: refers to the level of management and division of responsibilities within an organization.
  4. Chain of Command: it is the structure in an organization which allows instructions to be passed down from senior management to lower levels of management.
  5. Span of Control: number of subordinates working directly under a manager.
  6. Leadership styles: the different approaches to dealing with people when in a position of authority.
  7. Autocratic leadership style: The manager is in charge.
  8. democratic leadership style: Get employees involved in the decision-making process.
  9. Laissez–faire: Make their own decision and organize their own work.
  10. Trade union: is a group of workers who have joined together to ensure that their interests are protected.
  11. Recruitment: the process from identifying that the business needs to employee someone up to the point at which applications have arrived at the business.
  12. Job analysis: identifies and records the responsibilities and tasks relating to a job.
  13. Job description: outlines the responsibilities and duties to be carried out by someone employed to do a specific job.
  14. Job specification: a document which outlines the requirements, qualifications, expertise, characteristics.
  15. Internal recruitment: is when a vacancy is filled by someone who is existing employee of the business.
  16. External recruitment: when a vacancy is filled by someone who is not an existing employee and will be new to the business.
  17. Part-time: employment often considered to be for 1-35 hours in a week
  18. Full-time: employees will usually work 35+ a week.
  19. Induction training: an introduction given to a new employee, explaining what the business is about
  20. On-the-job training: occurs by watching a more experienced worker doing the job.
  21. Off-the-job training: involves being trained away from the workplace, usually by specialist trainers.
  22. Redundancy: when an employee is no longer needed and so loses their job.
  23. Internal communication: is between members of the same organization.
  24. External communication: is between the organization and other organizations or individuals.
  25. Market share: the percentage of total market sales held by one brand or business.
  26. Mass market: where there is a very large number of sales of a product.
  27. Niche market: a small usually specialised, segment of a much larger market
  28. market segment: an identifiable sub- group of a whole market in which consumers have similar characteristics or preferences.
  1. product-oriented business: a business whose main focus of activity is on the product itself.
  2. market-oriented business: a business which carries out market research to find out consumer wants before a product is developed and produced.
  3. market research: the process of gathering, analysing and interpreting information about a market.
  4. primary research: the collection and collation of original data.
  5. secondary research: information that has already been collected and is available for use by others.
  6. a quota sample: is when people are selected on the basis of certain characteristics for market research.
  7. a focus group: a group of people who are a representative of the target market.
  8. the marketing mix: a term used to describe all the activities which go into marketing a product or service. The four Ps- product, price, place and promotion.
  9. USP (Unique selling point): the special feature of a product that differentiates it from the products of competitors.
  10. the brand name: the unique name of a product that distinguishes it from other brand.
  11. brand loyalty: is when consumers keep buying the same brand again and again instead of choosing a competitor’s brand.
  12. brand image: an image or identity given to a product which makes it unique from its competitors’ brands.
  13. cost –plus pricing: is the cost of manufacturing the product plus a profit mark-up.

  1. competitive pricing: is when the product is priced in line with or just below competitors’ prices to try to capture more of the market.
  2. penetration pricing: is when the price is set lower than the competitors’ prices in order to be able to enter a new market.
  3. promotional skimming: is when a product is sold at a very low price for a short period of time.
  4. price skimming: is where a high price is set for a new product on the market.
  5. lean production: Cuts down on waste and therefore increase efficiency,
  6. kaizen: a Japanese term meaning continuous improvement through the elimination of waste.
  7. just–in-time: a production method that involves eliminating the to hold inventories of raw materials
  8. flow production: large quantities of a product are produced in a continuous process.
  9. batch production: where a quantity of one product is made, then a quantity of another item will be produced.
  10. fixed costs: costs which do not vary with the number of items sold or produced.
  11. variable costs: are costs which vary directly with the number of items sold or produced.
  12. economies of scale: the factors that lead to a reduction in average cost as a business increases in size.
  13. diseconomies of scale: the factors that lead to an increase in average costs as a business grows beyond a size.
  14. revenue: Total revenue = quantity sold x price.
  15. break-even point: is the level of sales at which total costs = total revenue.
  16. quality control: the checking for quality at the end of the production process
  17. quality assurance: checking for the quality standards throughout the production process
  18. total quality management: the continuous improvement of products and processes by focusing on quality at each stage of production.
  19. working capital: is the finance needed by a business to pay its day to day costs.
  20. start-up capital: the finance needed by a new business to pay for current assets.
  21. internal finance: is obtained from within the business.
  22. external finance: is obtained from sources outside
  23. micro-finance: is providing financial services to poor people.
  24. cash inflow: they are the sums of money received by a business during a period of time.
  25. cash outflow: the sums of money paid out by a business during a period of time.
  26. profit: Total sales revenue – Total costs
  27. net cash flow: it is the difference between inflows and outflows.
  28. an income statement: a document that contains income, costs of a period of time
  29. gross profit: Gross profit = sales revenue – cost of goods sold
  30. net profit: the profit made by a business after all costs have been deducted from sales revenue.
  31. retained profit: is the net profit reinvested back into a company, after deducting tax and payments to owners.
  1. Balance sheet: shows the value of a business’s assets and liabilities.
  2. Asset: those items of value which are owned by the business.
  3. liabilities: are debts owed by the business.
  4. non-current assets: items owned by the business for more than one year.
  5. current assets: owned by a business and used within one year.
  6. non-current liabilities: are long term debts owed by the business.
  7. current liabilities: are short term debts owed by the business.
  8. liquidity: is the ability of a business to pay back its short term debts.
  9. capital employed: is shareholders’ equity plus non current liabilities and is the total long term and permanent capital invested in a business.
  10. inflation: increase in the average price level of goods and services over time.
  11. unemployment: when people who are willing and able to work cannot find a job.
  12. economic growth: when a country’s gross domestic product increases – more goods and services are produced than in the previous year.
  13. gross domestic product: the total value of output of goods and services in a country.
  14. fiscal policy: any change by the government in tax rates or public sector spending.
  15. direct taxes: are paid directly from incomes.
  16. indirect tax: are added to the prices of goods and taxpayers pay the tax as they purchase the goods
  17. import tariff: a tax on an imported product.
  18. import quota: a physical limit to the quantity of a product that can be imported.
  19. monetary policy: a change in interest rates by the government or central bank
  20. exchange rate appreciation: the rise in the value of a currency compared to other currencies.
  21. private costs: are the cost paid by business.
  22. private benefits: are gains to a business.
  23. external costs: costs paid for by the rest of the society other than the business, as a result of business activity.
  24. external benefits: are the gains to the rest of society, other than the business, resulting from business activity.
  25. Pressure group: made up of people who want to change business decisions and they take action.
  26. globalization: describe increases in worldwide trade and movement of people and capital between countries.
  27. multinational businesses: are those with factories, production or service operations in more than one country.
  28. currency appreciation: occurs when the value of currency rises
  29. currency depreciation: occurs when the value of a currency falls

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