IGCSE Business - Full revision

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1. Accountants: Accountants are the professionally qualified people who have responsibility for keeping accurate accounts and for
producing the final accounts.
2. Accounts: Accounts are the financial records of a firm's transactions.
3. Added value: Added value is the difference between the selling price of a product and the cost of bought in materials and
components.
4. Advantage of delegating: For manager:
-Managers can Not do everything themselves
-Managers are less likely to make mistakes
-Managers can measure the success of their staff more easily
For subordinate:
-The work becomes more interesting
-The employees feel more important and trusted
-The employees get training and can make progress in the organisation
5. Advantages of an organization chart: -Shows how everyone is related in a business
-Everyone can see their position and who they are accountable to and who they have authority over
-It shows the links and relations between the different departments of the organizations
-Gives people sense of belonging
6. Advantages of de-industrialization: •Income and living standards of the citizens increase
7. Advantages of division of labour and job specialization: •Workers are trained in one task and specialize in this-Increases efficiency
•Less time is wasted moving from one workbench to another
•Employment increases
•Lower costs
•Increased production
8. Advantages of industrialization: •National output increases which increases average living standard
•Increasing output can result in lower imports and higher exports
•Employment increases
•Tax money increases
•Value is added to the country's raw materials
9. Advantages of short chain of commands: -communication is quicker and more accurate
-Top managers are more in touch with the people bellow them
-Spans of control will be wider. This means that each manager will have to manage more people
This is good because:
-It will encourage managers to delegate more
-There will be less direct control over workers which will make the workers feel more trusted. They will be able to take more decisions
by themselves. This increases job satisfaction
10. Agent: Agent is an independent person or business that is appointed to deal with the sales and the distribution of a product or range
of products.
11. Annual general meeting (agm): An 'agm' is a legal requirement for all companies. Shareholders may attend and vote on who they want
to be on the Board of Directors for the coming year.
12. Appraisal: An appraisal is a method of assessing the effectiveness of an employee.
13. Assets: Assets are those items of value which are owned by the business. They may be fixed (non-current) assets or short-term
(current) assets.
14. Autocratic leadership: Autocratic leadership is where the manager expects to be in charge of the business and to have their orders
followed.
15. Autonomous work groups or team working: This is where a group of workers is given responsibility for a particular process, product
or development. They can decide as a group how to complete the tasks or organize the jobs. This creates a feeling of control and the
employees feel more committed which increases job satisfaction
16. Average cost per unit: Average cost per unit is the total cost of production divided by the total output.
17. Balance of payments: Balance of payments records the difference between a country's exports and imports.
18. Balance sheet: Balance sheet shows the value of a business's assets and liabilities at a particular time.
19. Batch production: Batch production is where a quantity of one product is made, then a quantity of another item will be produced.
20. Benefits of being an entrepreneur: -Independence- able to choose how to use time and money
-Able to put ideas into practice
-May become famous and successful if business grows
-May be profitable and the income might be higher than working as an employee for another business
-Able to make use of personal interests and skills
21. Benefits of business objectives: -They give workers and managers a clear target to work towards
-Making decisions will be easier since they will focus on "will it help us achieve our objectives"
-Helps unite entire business under one goal
-Can compare how business has performed compared to its objectives
22. Benefits of conglomerate integration: -Diversification spreading the risk taken by the
business
-Transfer of ideas between the different
sections of the business
23. Benefits of horizontal integration: -Internal economies of scale
-Cost savings from rationalisation
-Potential to secure revenue "synergies"
-Wider range of products - (diversification)
-Reduces competition by removing rivals
-Increases market share and pricing power
-Can make the entry barriers higher for new rivals
24. Benefits of vertical integration: -Control of the supply chain - this helps to reduce
costs and improve the quality of inputs into the
production process
-Improved access to key raw materials perhaps at
the expense of rival businesses
-Better control over retail distribution channels
-Removing suppliers, information and retailers from competitors which helps to make a market less contestable
25. Bonus: A bonus is an additional amount of payment above basic pay as a reward for good work.
26. Brand image: Brand image is an image or identity given to a product which gives it a personality of its own and distinguishes it from its
competitors brands.
27. Brand loyalty: Brand loyalty is when consumers keep buying the same brand again and again instead of choosing a competitor's
brand.
28. Brand name: Brand name is the unique name of a product that distinguishes it from other brands.
29. Break-even charts: Break-even charts are graphs which show how costs and revenues of a business change with sales. They show the
level of sales the business must make in order to break even.
30. Break-even level of output: Break-even level of output is the quantity that must be produced/sold for total revenue to equal total
costs.
31. Break-even point: The break-even point is the level of sales at which total costs equal total revenue.
32. Buffer inventory level: Buffer inventory level is the inventory held to deal with uncertainty in customer demand and deliveries of
supplies.
33. Business: An organisation which produces goods and services.
34. Business objectives: Business objectives are the aims or targets that a business works towards. SMART- specific, measurable, agreed
upon, realistic, time oriented.
35. Business plan: A business plan is a document containing the business objectives and important details about the operations, finance
and owners of the new business.
36. Business size: #of employees: This method is easy to calculate and compare with other businesses.
Limitations:
-Some firms use productions methods which use very little labour and give a high output, this is true for capital intensive companies
which use a lot of machinery.
-Also should 2 part-time employees be considered one employee or two
37. Capital employed: Capital employed is the total value of capital used in the business.
38. Capital employed: Capital employed is shareholders' equity plus non-current liabilities and is the long-term and permanent capital
invested in a business.
39. Capital expenditure: Capital expenditure is money spent on fixed assets which will last for more than one year.
40. Cash flow: Cash flow of a business is the cash inflows and outflows over a period of time.
41. Cash flow cycle: Cash flow cycle shows the stages between paying out cash for labour, materials, etc. and receiving cash from the
sale of goods.
42. Cash flow forecast: Cash flow forecast is an estimate of future cash inflows and outflows of a business, usually on a month-by-month
basis. This then shows the expected cash balance at the end of each month.
43. Cash inflows: Cash inflows are the sums of money received by a business during a period of time.
44. Cash outflows: Cash outflows are the sums of money paid out by a business during a period of time.
45. Chain of command: Chain of command is the structure in an organisation which allows instructions to be passed down from senior
management to lower levels of management.
46. CHAPTER 1 - BUSINESS ACTIVITY: ...
47. CHAPTER 2 - CLASSIFICATION OF BUSINESS: ...
48. CHAPTER 3 - ENTERPRISE, BUSINESS GROWTH AND SIZE: ...
49. CHAPTER 4 - TYPES OF BUSINESS ORGANISATIONS: ...
50. CHAPTER 5 - BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES.: ...
51. CHAPTER 6 - MOTIVATING WORKERS.: ...
52. CHAPTER 7 - ORGANISATION AND MANAGEMENT.: ...
53. CHAPTER 8 - RECRUITMENT, SELECTION AND TRAINING OF WORKERS.: ...
54. CHAPTER 9 - INTERNAL AND EXTERNAL COMMUNICATION.: ...
55. CHAPTER 10 - MARKETING, COMPETITION AND THE CUSTOMER.: ...
56. CHAPTER 11 - MARKET RESEARCH.: ...
57. CHAPTER 12 - MARKETING MIX: PRICE.: ...
58. CHAPTER 12 - MARKETING MIX: PRODUCT.: ...
59. CHAPTER 14 - MARKETING MIX: PROMOTION.: ...
60. CHAPTER 15 - MARKETING MIX: PLACE.: ...
61. CHAPTER 16 - MARKETING STRATEGY.: ...
62. CHAPTER 17 - PRODUCTION OF GOODS AND SERVICES.: ...
63. CHAPTER 18 - COSTS, SCALE OF PRODUCTION AND BREAK-EVEN ANALYSIS.: ...
64. CHAPTER 19 - ACHIEVING QUALITY PRODUCTION.: ...
65. CHAPTER 20 - LOCATION DECISIONS.: ...
66. CHAPTER 21 - BUSINESS FINANCE: NEEDS AND SOURCES.: ...
67. CHAPTER 22 - CASH FLOW FORECASTING AND WORKING CAPITAL.: ...
68. CHAPTER 23 - INCOME STATEMENTS.: ...
69. CHAPTER 24 - BALANCE SHEETS.: ...
70. CHAPTER 25 - ANALYSIS OF ACCOUNTS.: ...
71. CHAPTER 26 - GOVERNMENT ECONOMIC OBJECTIVES AND POLICIES.: ...
72. CHAPTER 27 - ENVIRONMENTAL AND ETHICAL ISSUES.: ...
73. CHAPTER 28 - BUSINESS AND THE INTERNATIONAL ECONOMY.: ...
74. Closed shop: Closed shop is when all employees must be a member of the same trade union.
75. Closing cash (or bank) balance: Closing cash is the amount of cash held by the business at the end of each month. This becomes next
month's opening cash balance.
76. Commanding(HR): Command is concerned with guiding, leading and
supervising people, not just
telling them what to do.
77. Commission: Commission is payment relating to the number of sales made .
78. Communication: Communication is the transferring of a message from the sender to the receiver, who understands the message.
79. Communication barriers: Communication barriers are factors that stop effective communication of messages.
80. Competitive pricing: Competitive pricing is when the product is priced in line with or just below competitor's prices to try to capture
more of the market.
81. Conglomerate integration: Conglomerate integration is when one firm merges with or takes over a firm in a completely different
industry, this is also known as diversification.
82. Consumer boycott: Consumer boycott is when consumers decide not to buy products from businesses that do not act in a socially
responsible way.
83. Contract of employment: A contract of employment is a legal agreement between employer and employee listing the rights and
responsibilities of the workers.
84. Contribution: Contribution of a product is its selling price - its variable cost.
85. Controlling(HR): -Managers have to measure and evaluate the work of all people and groups in order to make sure objectives are met.
-With out control the team will lack a sense of direction which will lead to: Low profit, wastage of effort, low output and sales, loss of
control of employees.
86. Coordinating(HR): Manager has to bring together the different departments and people and make sure they communicate properly.
87. Cost of goods sold: Cost of goods sold is the cost of producing or buying in the goods actually sold by the business during a time
period.
88. Cost-plus pricing: Cost-plus pricing is the cost of manufacturing the product plus a profit mark-up.
89. Currency appreciation: Currency appreciation occurs when the value of a currency rises - it buys more of another currency than
before.
90. Currency depreciation: Currency depreciation occurs when the value of a currency falls - it buys less of another currency.
91. Current assets: Current assets are owned by a business and used within one year.
92. Current liabilities: Current liabilities are short-term debts owed by the business.
93. De-industrialisation: De-industrialisation occurs when there is a decline in the importance of the secondary, manufacturing sector of
industry in a country.
94. Delegating: To give authority to a subordinate to preform a task, however the manager is still responsible for the task
95. Democratic leadership: Democratic leadership gets other employees involved in the decision-making process.
96. Depreciation: Depreciation is the fall in the value of a fixed asset over time.
97. Different types of objectives: -Survival
-Profit
-Growth
-Returns to shareholders
-Market share
-Service to the community
98. Direct taxes: Direct taxes are paid directly from incomes.
99. Disadvantages of being an entrepreneur: -Risk-the business might fail
-Capital- have to put own money into business and might have to find other sources of money
-Lack of knowledge and experience in starting and operating a business
-Opportunity cost- lost income from not being employed in another business
100. Disadvantages of de-industrialization: •Increase in competition for businesses
•Structural unemployment- some people don't have the skills to work in the tertiary sector so the become unemployed
101. Disadvantages of division of labour and job specialization: •Workers can become bored doing just one job-efficiency might fall
•If a worker is absent no one else can do the job- production might be stopped
•Products become standardized
•Small businesses can't compete
102. Disadvantages of industrialization: •More people move to the city which causes housing and social problems
•Expansion on manufacturing may make it difficult for businesses to recruit and maintain staff
•Business import costs will increase
•Pollution from factories add to the countries environmental problems
•multinational companies will comparative with the small businesses
103. Diseconomies of scale: Diseconomies of scale are the factors that lead to an increase in average costs as a business grows beyond a
certain size.
104. Disposable income: Disposable income is the level of income a taxpayer has after paying income tax.
105. Distribution channel: Distribution channel is the means by which a product is passed from the place of production to the customer or
retailer.
106. Dividends: Dividends are payments made to shareholders from the profits (after tax) of a company. They are the return to shareholders
for investing in the company.
107. Division of labour: Division of labour is when the production process is split up into different tasks and each worker performs one of
these tasks. It is a form of specialisation.
108. E-commerce: E-commerce is the buying and selling of goods and services using computer systems linked to the internet,
109. Economic growth: Economic growth is when a country's gross domestic product increases - more goods and services are produced
than in the previous year.
110. Economic problem: There exist unlimited wants but limited resources to produce the goods and services to satisfy those wants, this
creates scarcity.
111. Economies of scale: Economies of scale are the factors that lead to a reduction in average costs as a business increases in size.
112. Entrepreneur: An entrepreneur is a person who organises, operates and takes the risk for a new business venture.
113. Environment: Environment is our natural world.
114. Ethical decision: Ethical decision is a decision taken by a manager or a company because of the moral code observed by the firm.
115. Ethical decisions: Ethical decisions are based on a moral code.
116. Exchange rate: Exchange rate is the price of one currency in terms of another.
117. Exchange rate appreciation: Exchange rate appreciation is the rise in the value of a currency compared to other currencies.
118. Exchange rate depreciation: Exchange rate depreciation is the fall in the value of a currency compared with other currencies.
119. Exports: Exports are goods and services sold from one country to other countries.
120. External benefits: External benefits are the gains to the rest of society, other than the business, resulting from business activity.
121. External communication: External communication is between the organisation and other organisations or individuals.
122. External costs: External costs are costs paid for by the rest for society, other than the business, resulting from business activity.
123. External finance: External finance is obtained from sources outside of and separate from the business.
124. External growth: External growth is when a business takes over or merges with another business.
125. External recruitment: External recruitment is when a vacancy is filled by someone who is not an existing employee and will be new
to the business.
126. (factor of production) Capital: Capital is the finance, machinery and equipment needed for the manufacture of goods.
127. (factor of production) Enterprise: Enterprise is the skill, and risk-taking ability of the person who brings the factors of production
together to produce a good or a service. For example, the owner of a business. These people are called entrepreneurs.
128. (factor of production) Labour: Labour is the term used to describe the number of people available to make products.
129. (factor of production) Land: Land is the term used to cover all of the natural resources provided by nature and includes fields, forests,
oil, gas, metals and other resources.
130. Factors of production: Factors of production are those resources needed to produce goods or services. There are four factors of
production and they are in limited supply.
131. Feedback: Feedback is the reply from the receiver which shows whether the message has arrived, been understood and , if necessary,
acted upon.
132. Final accounts: Final accounts are produced at the end of the financial year and give details of the profit or loss made over the year
and the worth of the business.
133. Fiscal policy: Fiscal policy is any change by the government in tax rates or public-spending.
134. Fixed costs: Fixed costs are costs which do not vary with the number of items sold or produced. They have to be paid whether the
business is making any sales or not.
135. Flow production: Flow production is where large quantities of a product are produced in a continuous process. It is sometimes
referred to as mass production.
136. Focus group: Focus group is a group of people who are representative of the target market.
137. Formal communication: Formal communication is when messages are sent through established channels using professional language.
138. Franchise: A franchise is a business based upon the use of the brand names, promotional logos and trading methods of an existing
successful business. The franchisee buys the license to operate this business from the franchisor.
139. Free trade agreements: Free trade agreements exist when countries agree to trade imports/exports with no barriers such as tariffs and
quotas.
140. Fringe benefits: Fringe benefits are non-financial rewards given to employees, e.g. car, house, health care, children's education is paid
for, etc.
141. Full-time: Full time employees will usually work 35 hours or more a week.
142. F.W. Taylor (content theories): -People worked for only one reason; money
-Managers role was to maximize efficiency
-Motivation was either incentive or threat
-Devise equipment and methods to improve
productivity
-Pay scheme to reward workers that achieved
targets, and penalties for those that did not, e.g.
differential piece-rate.
-It was all about control
143. Globalisation: Globalisation is the term widely used to describe increases in worldwide trade and movement of people and capital
between countries.
144. Gross Domestic Product (GDP): GDP is the total value of output of goods and services in a country in one year.
145. Gross profit: Gross profit is made when sales revenue is greater than the cost of goods sold.
146. Herzberg (content theories): -His focus was job satisfaction
-Hygiene factors were identified as factors that can lead to workers being dissatisfied.
-Motivators are factors, which help employees to gain job satisfaction, such as recognition of the job they are doing.
147. Horizontal integration: Horizontal integration is when one firm merges with or takes over another one in the same industry at the
same stage of production.
148. How does a business plan help an entrepreneur: -Help them stay on strategy
-Objectives will be clear
- Helps have a good idea about cost and revenue
-Helps with keeping track of what customers they are aiming at
-Helps with hiring people and buying machinery
-Encourages banks to give them loans
149. How do governments help business: -Business idea and help- Governments organize advice and support sessions offered by
experienced people
-Finance- Loan money to businesses at small interest rates
-Labour- Gives businesses money to train employees
Research- Encourage universities to make their research facilities available to new businesses
150. How to increase added value: -Increase selling price but keep the costs the same, to do this you need to have a good image of your
product
-Reduce cost but keep selling price the same, this might decrease the quality
151. Illiquid: Illiquid means that assets are not easily convertible into cash.
152. Import quota: Import quota is a physical limit to the quantity of a product that can be imported.
153. Imports: Imports are goods and services bought in by one country from other countries.
154. Import tariff: Import tariff is a tax on an imported product.
155. Income statement: Income statement is a document that records the income of a business and all costs incurred to earn that income
over a period of time (for example one year). It is also known as profit and loss account.
156. Incorporated business: Incorporated businesses are companies that have separate legal status from their owners.
157. Indirect taxes: Indirect taxes are added to the prices of goods and taxpayers pay the tax as they purchase the goods.
158. Induction training: Induction training is an introduction given to a new employee, explaining the firm's activities, customs and
procedures and introducing them to their fellow workers.
159. Industrialization: The growing importance of the secondary sector in developing countries
160. Industrial tribunal: An industrial tribunal is a legal meeting which considers workers complaints of unfair dismissal or discrimination at
work.
161. Inflation: Inflation is the increase in the average price level of goods and services over time.
162. Informal communication: Informal communication is when information is sent and received casually with the use of everyday
language.
163. Informative advertising: Informative advertising is where the emphasis of advertising or sales promotion is to give full information
about the product.
164. Integration: Integration is when one firm is integrated into another one.
165. Internal communication: Internal communication is between members of the same organisation.
166. Internal finance: Internal finance is obtained from within the business itself.
167. Internal growth: Internal growth occurs when a business expands its existing operations, e.g creating a new product or expanding to
another market(location)
168. Internal recruitment: Internal recruitment is when a vacancy is filled by someone who is an existing employee of the business.
169. Job analysis: A job analysis identifies and records the responsibilities and tasks relating to a job.
170. Job description: A job description outlines the responsibilities and duties to be carried out by someone employed to do a specific
job.
171. Job enlargement: Job enlargement is where extra tasks of a similar level of work are added to a worker's job description. This should
not add to the amount of work the employee has to do but it should add more variety
172. Job enrichment: Job enrichment involves looking at jobs and adding tasks that require more skill and/or responsibility. Additional
training may be necessary to enable the employee to take on extra tasks. If managers can design jobs so that they provide scope for
fulfilling higher human needs , workers will often become more committed because they gain more satisfaction from their jobs
173. Job production: Job production is where a single product is made at a time.
174. Job rotation: Job rotation involves workers swapping round and doing each specific task for only a limited time and then changing
round again. This causes there to be more variety to the work and allows managers to move employees around if someone is sick,
however it doesn't make the tasks more interesting.
175. Job satisfaction: Job satisfaction is the enjoyment derived from a feeling that you have done a good job.
176. Job specification: A job specification is a document which outlines the requirements, qualifications, expertise, physical characteristics,
etc. for a specified job.
177. Joint venture: A joint venture is when two or more businesses agree to start a new project together, sharing the capital, the risks and
the profits.
178. Just-in-time (JIT): Just-in-time (JIT) is a production method that involves reducing or virtually eliminating the need to hold inventories
of raw materials or unsold inventories of the finished product. Supplies arrive just at the time they are needed.
179. Kaizen: Kaizen is a Japanese term meaning 'continuous improvement' through the elimination of waste.
180. Laissez-faire: Laissez-faire leadership makes the broad objectives of the business known to employees, but then they are left to make
their own decisions and organise their own work.
181. Leadership styles: Leadership styles are the different approaches to dealing with people when in a position of authority - autocratic,
laissez-faire or democratic.
182. Lean production: Lean production is a term for those techniques used by businesses to cut down on waste and therefore increase
efficiency, for example, by reducing the time it takes for a product to be developed and become available for sale.
183. Liabilities: Liabilities are the debts owed by the business.
184. Liability: The state of being responsible for something, especially by law.
185. Limited liability: Limited liability means that the liability of shareholders in a company is only limited to the amount they invested.
186. Line managers: Line managers have direct responsibility over people below them in the hierarchy of an organisation.
187. Liquidity: Liquidity is the ability of a business to pay back its short-term debts.
188. Location: Location is the place where a firm decides to site its operations. Location decisions can have a big impact on costs and
revenues. A business needs to decide on the best location taking into account some factors.
189. Manager: A person who has control, responsibility, or
direction of a structure of subordinates in a business.
190. Marketing budget: Marketing budget is a financial plan for the marketing of a product or product range for some specified period of
time. It specifies how much money is available to market the product or range, so that the marketing department know how much they
may spend.
191. Marketing mix: Marketing mix is a term which is used to describe all the activities which go into marketing a product or service. These
activities are often summarized as the four P's - product, price, place, and promotion.
192. Marketing strategy: Marketing strategy is a plan to combine the right combination of the four elements of the marketing mix for a
product or service to achieve a particular marketing objective(s).
193. Market-orientated: Market-orientated business is one which carries out market research to find out consumer wants before a product
is developed and produced.
194. Market research: Market research is the process of gathering, analyzing and interpreting information about a market.
195. Market segment: Market segment is an identifiable sub-group of a whole market in which consumers have similar characteristics or
preferences.
196. Market share: Market share is the percentage of total market sales held by one brand or business.
197. Market share: Market share is the proportion of total market sales achieved by one business.
198. Maslow (content theories): -There is a hierarchy of needs
199. Mass market: Mass market is where there is a very large number of sales of a product.
200. Medium of communication: The medium of communication is the method used to send a message, for example, a letter is a method
of written communication and a meeting is a method of verbal communication.
201. Merger: A merger is when the owners of two businesses agree to join their firms together to make one businesses.
202. Message: The message is the information or instructions being passed by the sender to the receiver.
203. Micro finance: Micro finance is providing financial services (including small loans) to poor people not served by traditional banks.
204. Mixed economy: A mixed economy has both a private sector and a public sector.
205. Monetary policy: Monetary policy is a change in interest rates by the government or central bank.
206. Motivation: Motivation is the reason why employees want to work hard and work effectively for the business.
207. Multinational businesses: Multinational businesses are those with factories, production or service operations in more than one country.
208. Need: A need is a good or service essential for living.
209. Net cash flow: Net cash flow is the difference, each month, between inflows and outflows.
210. Net profit: Net profit is the profit made by a business after all costs have been deducted from sales revenue. It is calculated by
subtracting overhead costs from gross profits.
211. Niche market: Niche market is a small, usually specialized, segment of a much larger market.
212. Non-current assets: Non-current assets are items owned by the business for more than one year.
213. Non-current liabilities: Non-current liabilities are long-term debts owed by the business.
214. Objective for banks: -Business to pay back money lent with interest
215. Objective for consumers: -Safe and reliable products
-Value for money
-Well-designed product of good quality
-Reliability of service and maintenance
216. Objective for Government: -Business to be successful, will pay taxes, employ workers and increase country output
-Business to follow laws
217. Objective for managers: - High salaries for their important work
- Job security
-Growth of business so they can have more status and power
218. Objective of the whole community: -Jobs for working population
-Product that does not damage the environment
-Safe products that are socially responsible
219. Objectives for owner: -Growth of the business so their investment is worth more
-Want a share of the profit made by company
220. Objectives for workers: -Regular payment
-Contract of employment
-Job security
-Job that gives satisfaction and provides motivation
221. Objectives of social enterprises: Social: to provide jobs and support for the disadvantaged groups in society
Environmental: to protect the environment
Financial: to make a profit to reinvest back into the business.
222. Off-the-job training: Off-the-job training involves being trained away from the workplace, usually by specialist trainers.
223. One-way communication: One way communication involves a message which does not require a response.
224. On-the-job training: On-the-job training occurs by watching a more experienced worker doing the job.
225. Opening cash (or bank) balance: Opening cash is the amount of cash held by the business at the start of the month.
226. Opportunity cost: Opportunity cost is the next best alternative given up by choosing another item.
227. Organisational structure: Organisational structure refers to the levels of management and division of responsibilities within an
organisation.
228. Organizing(HR): -The manager must organize people and resources effectively to achieve tasks.
-The manager must delegate to others within his/her structure making sure they all have their resources to be able to achieve their
tasks
successfully.
229. Packaging: Packaging is the physical container or wrapping for a product. It is also used for promotion and selling appeal.
230. Partnership: Partnership is a form of business in which two or more people agree to jointly own a business.
231. Partnership agreement: A partnership agreement is the written and legal agreement between business partners. Not essential to have
it but always recommended.
232. Part-time: Part-time employment is often considered to be between 1 and 30-35 hours a week.
233. Penetration pricing: Penetration pricing is when the price is set lower than the competitor's pricing in order to be able to enter a new
market.
234. Performance-related pay: Performance-related pay is pay which is related to the effectiveness of the employee where their output
can easily be measured.
235. Persuasive advertising: Persuasive advertising is advertising or promotion which is trying to persuade the consumer that they really
need the product and should buy it.
236. Planning(HR): -It involves setting aims and targets which gives direction or purpose to the area and
workers with clear plan tasks, times and schedules.
-The manager must also plan the resources which will be needed to achieve the targets.
237. Pressure group: Pressure group is made up of people who want to change business (or government) decisions and they take action
such as organizing consumer boycotts.
238. Price elasticity: Price elasticity is a measure of the responsiveness of demand to a change in price.
239. Price skimming: Price skimming is where a high price is set for a new product on the market.
240. Primary research: Primary research is the collection and collation of original data via direct contact with potential or existing
customers.
241. Primary sector: The primary sector of industry extracts and uses the natural resources of the earth to produce raw materials used by
other businesses
242. Private benefits: Private benefits of an activity are the gains to a business.
243. Private costs: Private costs of activity are the costs paid for by the business.
244. Private sector: Businesses not owned by the government. Services are charged and paid for by the customer
245. Privatisation: When governments sell public sector businesses to private sector businesses
246. Problems of business growth and how to overcome them: -Larger business is harder to control- Operate business in small units
-Poor communication- Operate business in small units or use newest IT technology
-Expansion is expensive so business will be short in finance- Expand slowly and ensure sufficient long-term finance is available
-Integrating with a business is hard- Introducing different styles of management requires good communication with the workforce, they
need to understand why it is happening
247. Productivity: Productivity is the output measured against the inputs used to create it.
248. Product life cycle: Product life cycle describes the stages a product will pass through from its introduction, through its growth until it
is mature and then finally its decline.
249. Product-orientated: Product-orientated business is one whose main focus of activity is on the product itself.
250. Profit: Profit is the surplus after total costs have been subtracted from sales revenue.
251. Profit sharing: Profit sharing is a system whereby a proportion of the company's profits is paid out to employees.
252. Promotional pricing: Promotional pricing is when a product is sold at a very low price for a short period of time.
253. Protectionism: Protectionism is when a government protects domestic firms from foreign competition using tariffs and quotas.
254. Public corporations: These are businesses that are fully owned by the government. But they are managed by a board of directors who
are made clear what the purpose of the business is.
255. Public sector: Government owned and controlled businesses and organisations. Services provided are free and are paid for by taxes.
256. Qualities of an entrepreneur: -Hard working- Have to work long hours and have few vacation days
-Risk taker- Making decisions to produce goods or services that people might buy is potentially risky
-Creative- A new business needs new ideas about products , services and ways to attract customers, in order to make it different from
other companies
-Optimistic- Looking forward to the future is essential, if you think you will fail you will fail
-Self-confident- Necessary to convince to convince banks, other lenders and customers that your business will be successful
-Innovative- Being able to put new ideas into practice in interesting and different ways is important
- Independent- Will often have to work on their own before they can hire other people, have to be able to be motivated and be able
to work by their self
-Effective communicator- Talking clearly and confidently to banks, other lenders, customers and government agencies about the new
business will raise the profile of the new business
257. Quality: Quality means to produce a good or a service which meets customer expectations.
258. Quality control: Quality control is the checking for quality at the end of the production process, whether it is the production of a
product or service.
259. Questionnaire: Questionnaire is a set of questions to be answered as a means of collecting data for market research.
260. Quota sample: Quota sample is when people are selected on the basis of certain characteristics (such as age, gender or income) as a
source of information for market research.
261. Random sample: Random sample is when people are selected at random as a source of information for market research.
262. Real income: Real income is the value of income, and it falls when prices rise faster than money income.
263. Receiver: Receiver is the person who receives the message.
264. Recession: Recession is a period of falling GDP.
265. Recruitment: Recruitment is the process from identifying that the business needs to employ someone up to the point at which
applications have arrived at the business.
266. Redundancy: Redundancy is when an employee is no longer needed and so loses their job. It is not due to any aspect of their work
being unsatisfactory.
267. Retained profit: Retained profit is the net profit reinvested back into a company, after deducting tax and payments to owners, such as
dividends.
268. Revenue: Revenue of a business is the income during a period of time from the sale of goods or services.
269. Revenue expenditure: Revenue expenditure is money spent on day-to-day expenses which do not involve the purchase of a long-
term asset, for example wages or rent.
270. Roles of a manager: -Planning
-Organizing
-Coordinating
-Commanding
-Controlling
-Delegating
271. Salary: A salary is payment for work, usually paid monthly.
272. Sales promotion: Sales promotion are incentives such as special offers or special deals aimed at consumers to achieve short-term
increases in sales.
273. Sales revenue: Sales revenue is the income to a business during a period of time from the sale of goods or services.
274. Sample: Sample is the group of people who are selected to respond to a market research exercise, such as a questionnaire.
275. Scarcity: Scarcity is the lack of sufficient products to fulfill the total wants of the population.
276. Secondary research: Secondary research is information that has already been collected and is available for use by others.
277. Secondary sector: The secondary sector of industry manufactures goods using raw materials provided by the primary sector.
278. Sender: Sender of the message is the person starting off the process by sending the message.
279. Shareholders: Shareholders are the owners of a limited company. They buy shares which represent part ownership of a company.
280. Share ownership: Share ownership is where shares in the company are given to employees so that they become part owners in the
company.
281. Social benefits: private benefits + external benefits
282. Social costs: private costs + external costs
283. Social responsibility: Social responsibility is when a business decision benefits stakeholders other than shareholders.
284. Sole trader: Sole trader is a business owned by one person.
285. Span of control: The span of control is the number of subordinates working directly under a management.
286. Specialisation: Specialisation occurs when people and businesses concentrate on what they are best at.
287. Staff managers: Staff managers are specialists who provide support, information and assistance to line managers.
288. Stakeholder: A stakeholder is any person or group with a direct interest in the performance and activities of a business.
289. Stakeholder groups: -Owners
-Consumers
-Workers
-Government
-Managers
-Banks
-The entire community
290. Start-up capital: Start-up capital is the finance needed by a new business to pay for essential fixed and current assets before it can
begin trading.
291. Sustainable development: Sustainable development is development which does not put at risk the living standard of future
generations.
292. Sustainable production methods: Sustainable production methods are those that do minimum damage to the environment.
293. Takeover: A takeover is when one business buys out the owners of another business.
294. Target audience: Target audience refers to people who are potential buyers of a product or service.
295. Tertiary sector: The tertiary sector of industry provides services to consumers and the other sectors of industry.
296. Total costs: Total costs are fixed and variable costs combined.
297. Total quality management (TQM): TQM is the continuous improvement of products and processes by focusing on quality at each
stage of production.
298. Trade union: A trade union is a group of workers who have joined together to ensure their interests are protected.
299. Trading account: Trading account shows how the gross profit of a business is calculated.
300. Two-way communication: Two-way communication is when the receiver gives a response to the message and there is a discussion
about it.
301. Unemployment: Unemployment exists when people who are willing and able to work cannot find a job.
302. Unincorporated business: An unincorporated business is one that does not have a separate legal identity. Sole traders and
partnerships are unincorporated businesses.
303. Unlimited liability: Unlimited liability means that the owners of a business can be held responsible for the debts of the business they
own. Their liability is not limited to the investment they made in the business.
304. USP: USP is the special feature of a product that differentiates it from the products of competitors.
305. Value: How much something is worth.
306. Value of capital employed: The total capital invested into the business.
Limitations:
-Some companies might employ a very little amount of capital but might have a large number of employees.
307. Value of output: Common way to compare business in the same industry(especially secondary sector)
Limitations:
-A high value of output does not mean that a business is large when using other methods, e.g a business employing very few people
might produce very few very expensive products each year might have a higher value of output then a business which produces
cheap products but has a large amount of employees
-Also the value of output might be different than value of sales of some products aren't sold
308. Value of sales: Common way to compare the size of retailers, usually selling the similar kind of product
Limitations:
- It could be misleading to use this to measure when comparing the size of businesses who sell different products
309. Variable costs: Variable costs are costs which vary directly with the number of items sold or produced.
310. Vertical integration: Vertical integration is when one firm merges with or takes over another one in the same industry but at a different
stage of production, it can be forward (higher stage of production) or backward (lower stage of production).
311. Wage: A wage is payment for work, usually paid weekly.
312. Want: A want is a good or service which people would like to have, but which is not essential for living. People's wants are unlimited.
313. Ways to measure business size: -# of employees
-Value of output
-Value of sales
-Value of capital employed
314. Why does de-industrialization happen: -Sources of primary products become depleted
-Most developed countries can't compete in manufacturing against newly industrialized countries
-As the country's total wealth increases and living standards rise, more people spend more money on travel and restaurants than on
manufactured products
315. Why do governments support business startups: -Reduce unemployment- New businesses will often create jobs
-Increase competition- New businesses give customers more choice and compete with already established businesses
-Increase output- The economy benefits from being increased output of goods and products
-Benefit society-Entrepreneurs may create social enterprises
-Can grow further- May help some small firms grow to become very large and important in the future
316. Why do owners want their business to grow: -Possibility of higher profit for owner
-Higher status and prestige given to owners and managers, managers of bigger firms are usually paid more
-Lower average cost( Economies of sale)
-Larger market share- this gives the business more influence when dealing with suppliers and distributors
317. Why do some businesses stay small: -The type of industry the business operates in- Firms in industries that offer specialised products
or personal services. It would be difficult for them to do this if they expanded
-Market size- if the market size is small than a business which operates in that market is likely to remain small
-The owner's preference- Owner might want to avoid the stress and worry of running a large company
318. Why is it important to have good managers: -To motivate employees
-To give guidance and advice to employees they manage
-To inspire employees to achieve more than they thought thy possibly could
-To keep costs under control
-To increase profitability of business
319. Why people work: -Money: to pay for necessities and some luxuries
-Security: A sense of security I.e. knowing that your job and pay are safe - you are not likely to lose your job
-Social needs: feeling part of a group or organization, meeting people, making friends at work
-Esteem needs (self-importance): feeling important, feeling that the job you do is important
-Job satisfaction: enjoyment is derived from feeling that you have done a good job
320. Why some businesses fail: -Poor management
-Failure to plan for change
-Poor financial management
-Over-expansion
-Risks of new business startups
321. Why specialisation is common: •Specialized machinery and technology are widely available
•Increasing competition means businesses have to have low cost
•Higher living standards can result from being specialized
322. Workforce planning: Workforce planning is establishing the workforce needed by the business for the foreseeable future in terms of
the number and skills of employees required.
323. Working capital: Working capital is the finance needed by a business to pay its day-to-day costs.
324. Working capital: Working capital is the capital available to a business in the short-term to pay for day-to-day expenses.