Cambridge IGCSE Business Studies

Cambridge IGCSE Business Studies
Estudia en línea en https://quizlet.com/_4e5zf5
1. A Need: A good or service essential for living.

2. A want: A good or service that people would like to have, but which is not
essential for living.
3. Economic problem: Unlimited wants but limited resources - this creates scarci-
ty.
4. Scarcity: Lack of sufficient products to satisfy total wants of population.
5. Opportunity Costs: The next best item given up by choosing another.
6. Factors of production: Resources needed to produce goods and services -
land, labour, capital and enterprise
7. Business: An organisation that combines factors of production to make goods
and services to satisfy people's wants and needs.
8. Specialisation: People and business concentrate on what they are best at.
9. Division of labour: Production is split into seperate tasks each worker specialis-
es in one task
10. Added Value: The difference between a product's selling price and the cost of
bought in materials.
11. Primary sector: Businesses that extract and use natural resources to produce
raw materials.
12. Secondary sector: Businesses that manufactures goods using raw materials
provided by primary sector.
13. Tertiary sector: Businesses that provide services to consumers and other
firms.
14. Deindustrialisation: Decline in the importance of secondary, manufacturing
industry.
15. Mixed economy: This has both private sector businesses and public sector
businesses.
16. Private sector: Businesses owned by people, not the goverment/state.
17. Public sector: Businesses owned by goverment/state.
18. Privatisation: The sale of public sector business to private sector.
19. Entrepreneur: Someone who organises, operates and takes the risk for a new
business venture.
20. Business plan: The objectives and details of the operations, finance and
owners of a new business.
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21. Capital employed: The total value of capital used in a business.

22. Internal Growth: The business expands its existing operations.
23. External Growth: The business expands by merging with or taking over anoth-
er business.
24. Takeover: A business buys out the owners of another business.
25. Merger: The owners of businesses agree to join their firms together to form
one business.
26. Horizontal integration: The business integrates with another in the same
industry at the same stage of production.
27. Vertical integration: The business integrates with another in the same indus-
try but at a different stage of production - towards suppliers is backward vertical
integration and towards the market/customer is forward vertical integration.
28. Conglomerate integration: The business integrates with another but in a
different industry.
29. Soletrader: The business is owned by one person.
30. Partnership: The business is jointly owned by two or more people.
31. Limited liability: The liability of owners/shareholders is limited to the amount
invested. Personal posessions are not at risk.
32. Incorporated business: A business with seperate legal identity from its own-
ers.
33. Unincorporated business: A business without seperate legal identity from its
owners.
34. Private limited company: A business owned by shareholders but it cannot sell
shares to the public.
35. Public limited company: A business owned by shareholders but it can sell
shares to the public and its shares are tradable on Stock Exchange.
36. Shareholders: The owners of a limited company.
37. Dividends: Payments made to shareholders from profits (after tax) of a com-
pany.
38. Franchise: A business that uses, under license, the brand name, logo and
trading methods of an existing business. The franchisor sells the license; the
franchisee buys the licence.
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39. Joint venture: Two or more businesses start a new project together sharing
capital, risks and profits.
40. Public corporation: The business, in the public sector that is owned and
controlled by the state/goverment.
41. Business Objectives: The aims or targets that a business work towards.
42. Profit: Total income/ revenue of a business less total costs.
43. Market share: The proportion (%) of total market sales held by one brand or
business = (sales of business / total market sales) * 100
44. Social enterprise: An organisation with profit, environmental and social objec-
tives.
45. Stakeholder: Any person or group with a direct interest in the performance and
activities of a business.
46. Motivation: Workers want to work hard and effectively for their employer.
47. Wage: Payment for work, usually paid weekly.
48. Time rate: Wage based on number of hours worked.
49. Piece rate: Wage based on number of unit of output produced.
50. Salary: Payment for work, usually paid monthly.
51. Commission: Payment based of number of units sold.
52. Profit Sharing: Payment to employees based on a share of the profits of the
business.
53. Bonus: Additional payment to workers, above the basic wage/ salary, as a
reward for good work.
54. Performance-related play: Pay is related to the performance of an employee.
55. Share ownership scheme: Giving employees share in a company to encour-
age sense of belonging and ownership.
56. Appraisal: Assesing the effectiveness of employees (important for perfor-
mance-related pay).
57. Fringe benefits: Non-financial rewards
58. Job satisfaction: Enjoyment employees can derive from work if they feel they
have done good/rewarding job.
59. Job rotation: Workers are asked to switch different tasks with other workers
(but at the same level of responsibility).
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60. Job enlargement: Tasks of a similar level of difficulty/responsibility are added
to a worker's jov description.
61. Job enrichment: Adding tasks that are more challenging, more skillful and
more responsible.
62. Organisational Structure: The levels of management and divisions of respon-
sibility in an organisation.
63. Chain of command: The route taken by instructions passed down from upper
to lower management.
64. Level of hierarchy: A level of management where people have the same level
of responsibility.
65. Span of Control: The number of employees working directly under a manager.
66. Line Managers: Have direct responsibility over people below them in the
hierarchy of an organisation.
67. Staff managers: Specialists who provide support, information and assistance
to line managers.
68. Delegation: Giving subordinates the ability to perform particular tasks.
69. Autocratic Leadership: Where the manager is in charge of the business,
takes all decisions and expects orders to be followed.
70. Democratic Leadership: All employees are involved in the decision making
process.
71. Laissez-faire Leadership: Makes broad objectives known to employees who
are then left to make own decisions and organize their own work.
72. Trade Union: A group of workers who join together to protect their interests.
73. Recruitment: Identifying need for new employees and encouraging people to
apply for a vacancy.
74. Job Description: Responsibilities and duties to be carried out by the job
holder.
75. Job Specification: The requirements,qualifications, experience and charac-
teristics of people needed to fill a job vacancy.
76. Internal Recruitment: The vacancy is filled by someone who is an existing
employee of the organisation.
77. External Recruitment: The vacancy is filled by someone who is not an existing
employee of the organisation.
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78. Part-time employment: Jobs with less hours than a full working week.
79. Full-time employment: Jobs with a full working week. Full time employees will
usually work 35 hours or more a week.
80. On-the-job training: Training at the place of work - watching and being in-
structed by experienced workers.
81. Off-the-job training: Training away from place of work.
82. Induction training: Training for new employees explaining the business struc-
ture, activities and procedures.
83. Redundancy: Employees are no longer required - the job no longer exists.
84. Workforce Planning: Establishing the size and skills of the workforce needed
by a business for the future.
85. Dismissal: An employee's employment contract is terminated and they must
leave the business.
86. Communication: Sending a message from sender to receiver who under-
stands it.
87. Message: Information or instructions sent from sender to receiver.
88. Internal Communication: Between members of the same organisation.
89. External Communication: Between the organisation and another organisa-
tion.
90. Sender/transmitter: The person sending the message.
91. Receiver: The person who receives the message.
92. Feedback: Reply from receiver to sender to confirm message received/under-
stood.
93. Method of communication: How the message is communicated
94. One-way communication: Message send without the receiver required or
expected to give feedback.
95. Two-way communication: Gives feedback to received message - there may
be discussion about it.
96. Formal Communication: Messages sent through established channels.
97. Informal Communication: Messages sent casually, not through established
channels.
98. Communication Barriers: Factors that stop effective communication.
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99. Marketing: Identifying and meeting the needs of customers.
100. Market Share: The proportion (%) of total market sales held by one brand or
business
101. Customer Loyalty: The willingness of customers to continue to buy the same
product from the business.
102. Customer Relationships: Communication with customers to encourage
them to become loyal to the business and its products.
103. Mass Market: Where there is a large number of sales of a product.
104. Niche Market: A small specialized segment of a large market.
105. Market Segment: Identifiable sub-group of a whole market in which con-
sumers have similar characteristics or preferences.
106. Market Research: Gathering, analyzing and interpreting information about a
market.
107. Market orientated: Carrying out market research to find out consumer wants
before developing and producing a product.
108. Product orientated business: Business that focuses on the product itself,
not the market for it.
109. Primary Research: Collection of original data also known as field research.
110. Secondary Research: Information that has already been collected but is
available for use by others (desk research).
111. Sample: Group of people selected to respond to a research survey.
112. Random Sample: Everyone has an equal chance of being selected for the
sample.
113. Quota Sample: Sample is selected on a particular bases.
114. Focus Group: A group, representative of the target market, which provides
market research information - often during a discussion.
115. Marketing Mix: All the activities that go into marketing a good or service:
product, price, promotion and place.
116. Unique Selling Point (USP): The special feature of a product that differenti-
ates it from the products of competitors.
117. Brand Name: The unique name of a product that distinguishes it from other
brands.
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118. Brand Image: The identity of a product that consumers can recognize and
which gives it a "personality" distinct from other products.
119. Packaging: The physical container or wrapping used for a product.
120. Product Life Cycle: The stages the sales of a product pass through from
introduction, growth, maturity to decline.
121. Extension strategy: A way of keeping a product at the maturity stage of the
life cycle and extending the cycle.
122. Cost-plus pricing: Unit of cost of the product plus a profit mark-up.
123. Competitive pricing: The price is the same as or just below the price of
competitors' products to try to capture more of the market.
124. Psychological pricing: The pricing is set to match the consumers' expecta-
tions and perceptions of the product.
125. Price skimming: The price is set high for a new product on the market.
126. Penetration Pricing: The price is set lower then competitor's prices to enter
a new market and gain market share.
127. Price elasticity: A measure of the responsiveness of demand following a
price change.
128. Price elastic demand: Demand changes by greater proportion than price
change.
129. Price inelastic demand: Demand changes by a smaller proportion to price
change.
130. Promotion: Marketing activities that aim to raise customer awareness of a
product or brand, generating sales and helping to create brand loyalty.
131. Advertising: Paid-for communication with customers: informative, persua-
sive - creating an image that increases customer desire for it.
132. Sales promotion: Incentives such as special offers or rewards to achieve a
short-term increase in sales.
133. Target Market: The consumer groups that are the potential buyers of a
product.
134. Marketing Budget: The financial plan for the marketing of a product over a
specific time period - includes the amount to be spent on promotion.
135. e-commerce: Buying and selling of goods and services using computers
linked to the internet.
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136. Distribution Channel: The means by which a product is passed from the
place of production to the customer.
137. Agent: Appointed to deal with the distribution of products - often in another
country.
138. Marketing Strategy: A plan with appropriate marketing mix for a product to
achieve a marketing objective.
139. Productivity: Output measured against inputs used to create it. Productivity
= output per time period / number of employees
140. Inventory: Materials, work in progress or completed goods held by a busi-
ness which are or will be ready for sale.
141. Buffer Inventory Level: Inventory held to deal with unexpected changes
142. Lean Production: Cutting out waste and inefficiency in the production
process.
143. Kaizen: Continuous improvement through the elimination of waste.
144. Just-in-time: Reducing or eliminating the need to hold inventories of materi-
als and finished goods.
145. Job production: A single product is made at a time.
146. Batch production: A quantity of one product is made, then a quantity of
another item will be produced.
147. Flow production: Large quantities of a product are produced in a continuous
process.
148. Fixed costs: Costs that do not vary with the number of items produced (in
the short run)
149. Variable costs: Costs that vary directly with the number of items sold or
produced.
150. Total costs: Fixed plus variable costs.
151. Average costs: Total costs divided by number of units sold/produced, also
cost per unit.
152. Economies of scale: Factors that lead to a reduction in average cost as a
business increase in size.
153. Diseconomies of scale: Factors that lead to an increase in average costs as
business increases in size.
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154. Break-even output: The quantity that mist be sold for total costs to equal total
revenue.
155. Break-even chart: Graphs that show how costs and revenue of a product
change at different output levels.
156. Contribution: Selling price minus variable cost per unit.
157. Quality: A good or service which meets customer expectations.
158. Quality control: Checking at the end of the production process to see if the
good or service is of the correct quality before a customer receives it.
159. Quality Assurance: Checking the standard of the good or service throughout
the production process to ensure there are no errors or defects.
160. Total Quality Management (TQM): The continuous improvement of goods
and services and processes by focusing on quality at each stage of production.
161. Infrastructure: The basic physical systems of a business or nation.
162. External economies of scale: Cost benefits to a business resulting from
locating in a region with other businesses or organisations operating in the same
industry.
163. Start-up capital: The finance required by a new business to pay for the
essential fixed assets and current assets so that it can start trading.
164. Working Capital: Capital available to a business in the short term to pay for
day-to-day expenses.
165. Capital expenditure: The money spent on non-current assets lasting more
than one year.
166. Revenue expenditure: Money spent on day-to-day expenses
167. Internal Finance: Finance from within the business itself.
168. External Finance: Finance from sources outside of and separate from the
business.
169. Micro-finance: This provides financial services to poor people who cannot
use traditional banks.
170. Short-term source of finance: Finance that must be paid back within a year.
171. Long-term source of finance: Funding obtained for a time frame exceeding
one year in duration.
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172. Cash Flow forecasts: Estimate of future cash inflows and outflows of a
business, usually on a monthly basis. This shows the expected cash balance at
the end of each month.
173. Cash inflows: Sum of money received by a business during a period of time.
174. Cash outflows: Sum of money paid out by a business during a period of time.
175. Cash Flow Cycle: Shows the stages between paying out cash for labour,
materials and receiving cash from the sale of goods.
176. Opening bank balance: Amount of cash held by the business at the start of
the month.
177. Net Cash Flow: Difference, each month, between the inflows and the out-
flows.
178. Closing back balance: Amount of cash held by the business at the end of
each month. This becomes the opening cash balance for the next month.
179. Accounts: Financial records of a business's transactions.
180. Accountants: Professionally qualified people who have responsibility for
keeping accurate accounts and for producing final accounts.
181. Final Accounts: Produced at the end of the financial year and give details of
the profit or loss made over the year and how much the business is worth.
182. Income Statement: A document that records the income of a business and all
costs incurred to earn that income over a period of time. It will show if the business
has made a profit or loss.
183. Gross Profit: Sales revenue minus the cost of sales.
184. Sales revenue: Income to a business during a period of time from the sales
of goods or services.
185. Cost of goods sold: The direct cost of producing or buying in the goods
actually sole by the business during a time period.
186. Trading account: This show how the gross profit is calculated.
187. Net profit: Profit made after all costs have been deducted from sales revenue.
It is calculated by gross profit minus expenses. Now referred to as 'profit'.
188. Depreciation: The fall in value of a fixed asset over time.
189. Retained profit: Net profit reinvested into a company after deducting tax and
payments to owners.
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190. Balance sheet: Shows the value of a business's assets and liabilities at a
particular point in time. Sometimes referred to as "Statement of financial position".
191. Assets: These are items of value owned by the business.
192. Current Liabilities: Short-term debts owned by the business.
193. Non-current liabilities: Long-term debts owned by the business.
194. Current assets: Items of value owned by the business used within one year.
195. Non-current assets: Items owned by the business for more than one year.
196. Liquidity: The ability of a business to pay back it's short term debts.
197. Illiquid: Assets are not easily convertible into cash.
198. Capital Employed: This is the shareholder's equity plus non-current liabilities
and is the long term and permanent capital invested in a business.
199. Business Cycle: The four stages en economy goes through over a period of
time, as an economy does not grow at a steady rate.
200. Inflation: Increase in the average price level of goods and services over time.
201. Unemployment: This exists when people who are willing and able to work
cannot find a job.
202. Gross Domestic Product (GDP): The total value of output of goods and
services in a country in one year.
203. Economic Growth: A country's GDP increases
204. Balance of payments: This records the difference between a country's ex-
ports and imports.
205. Real Income: The value of income or what the income will buy - it falls if prices
rises faster than money income.
206. Recession: A period of falling GDP.
207. Exports: Goods and services sold from one country to other countries.
208. Imports: Goods and services bought in by one country from other countries.
209. Exchange rate: The price of one currency in terms of another.
210. Exchange rate appreciation: A rise in the value of a currency compared to
other currencies.
211. Exchange rate depreciaton: A fall in the value of a currency compared to
other currencies.
212. Monetary Policy: A change interest rates by the government or central bank.
11 / 13
213. Supply-side policies: Policies to increase the competitiveness of industries
in an economy against those from other countries. Policies to make the economy
more efficient.
214. Fiscal policy: Any change by the government in tax rates or public sector
spending.
215. Direct taxes: Paid directly form incomes
216. Indirect taxes: This is added to the prices of goods and taxpayers pay the
tax as they purchase the goods.
217. Disposable Income: Level of income left after a taxpayer has paid income
tax and any other taxes on income plus money benefits from the government.
218. Import tariff: Tax on an imported product.
219. Import Quota: A physical limit to the quantity of a product that can be
imported.
220. Social Responsibility: When a business decision benefits stakeholders oth-
er than shareholders.
221. Environment: The natural world
222. Private costs: Costs paid for by the business from an activity.
223. Private benefits: Gains to a business from an activity.
224. External Costs: Paid for by the rest of society, other than the business as a
result of business activity.
225. External Benefits: Gains to the rest of the society, other than the business
resulting from a business activity.
226. Social Costs: External Costs + Private Costs
227. Social Benefits: External Benefits + Private Benefits
228. Sustainable Enviroment: Development that does not put at risk the living
standards of future generations.
229. Sustainable production methods: Methods that cause minimum damage to
the environment.
230. Pressure Groups: A group made of people who want to change business
decision, they take action such as organizing consumer boycotts.
231. Consumer Boycotts: Deciding not to buy from businesses that do not act in
a socially responsible way.
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232. Ethical Decisions: Decisions based on a moral code. Sometimes referred to
as "doing the right thing".
233. Globalisation: Increases in worldwide trade and movement of poeple and
capital between countries.
234. Free trade agreement: Exists when countries agree to trade imports/exports
with no barriers such as tariffs and quotas.
235. Protectionism: When a government protects domestic business from foreign
competition.
236. Multinational Business: Business with factories, production or service op-
erations in more than one country.
237. Common currency: When a group of countries agree to use the same
currency.
238. Economic Union: Agreements between countries to trade freely with each
other and have common economic institutions.
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Estudia en línea en https://quizlet.com/_4e5zf5

1. A Need: A good or service essential for living.

21. Capital employed: The total value of capital used in a business.

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