IGCSE Keywords

Business Activity

NeedsGoods or services we need to survive
Opportunity Costthe potential benefits a business misses out on when choosing one alternative over another.
Purpose of Business ActivityBusiness satisfies peoples (consumers) wants.
ScarcityNot enough resources, goods or services to provide for peoples’ (consumers) unlimited wants.
SpecialisationPeople in business focus on what they do best.
Value AddedSelling price – cost of bought-in materials.
WantsGood or service people want but aren’t essential for survival.
Primary SectorUsing natural resources to make raw materials for business
Private SectorPart of the economy owned and controlled by private individuals
Secondary SectorManufacturing goods from raw materials.
Tertiary SectorA business that provides services to consumers and other businesses.
Business PlanA document setting out a businesses objectives and how it will achieve them.
EntrepreneurSomeone who invests capital, takes a risk and starts up and operates a new business venture.
External GrowthBusiness expansion, taking over or merging with another business.
GrantCapital given by a government to a business to assist with start-up costs, innovation or business growth.
Internal GrowthBusiness expansion without taking over or merging with another business (organic growth).
FranchiseBuying the license to use another companies logo and sell their products.
Incorporated BusinessBusiness is a separate legal entity – separation between owners and the company.
Joint VentureTwo companies share capital and expertise on a project. They share risks and profits.
Limited LiabilityOwners responsibility for company debts restricted to what they have invested in the business.
PartnershipTwo or more people join to set up a business. Shared decision making, capital invested and risk.
Private Limited CompanyIncorporated business with shares sold to friends and family. Limited liability.
Public CorporationGovernment-owned organisation set up to provide service to the public
Public Limited CompanyIncorporated business with shares sold to the general public, limited liability.
Public SectorPart of the economy owned and controlled by the government.
Sole TraderA business owned by one person who is responsible for all decisions, capital invested and risk.
Unincorporated BusinessNo separation between the company and the owners in law.
Business ObjectivesAims or targets a business sets out to achieve.
External StakeholdersIndividual or group outside the business impacted by the business activity (owners/shareholders, managers, employees).
Internal StakeholdersIndividual or group inside the business impacted by the business activity (owners/shareholders, managers, employees).
Social EnterpriseA private enterprise which uses profits to pursue environmental or social objectives.
Unlimited LiabilityOwners personal assets may be taken to pay for debts of the company.

People in Business

BonusAn extra reward given to employees for reaching a certain target.
CommissionSalespeople are given a % of the selling price if they make a sale.
Herzberg’s Hygiene FactorsBasic employee needs which must be fulfilled before employees can be motivated
Job enrichmentEmployees are given additional responsibility in their day to day tasks, which often involves more training or development.
Job rotationEmployees switch simple tasks for a short time.
Labour turnoverThe number of employees leaving a business in a year and is calculated as a share of the total workforce.
Maslow’s hierarchy of needsRanks human needs in order from survival needs to self-actualisation.
MotivationMotivation is the reason why employees work hard and effectively for a business.
Opportunities for promotionRewarding employees with positions of higher status or responsibility in the business.
Profit SharingEmployees get rewarded with a  % of the firm’s profits annually
SalaryFixed payment usually paid monthly 
Taylor’s Motivational TheoryViewed workers as machines, the more you pay they harder they will work.
Team workingGroups of employees are given responsibility for a specific project, department or unit of work.
WagesPayment for work usually paid weekly.
Autocratic LeadershipThe leader makes all decisions, one-way communication.
Chain of commandThe path through which authority is passed down through an organisation.
DelegationPassing responsibility to subordinates to complete tasks.
Democratic leadershipLeader consults with employees before making a decision, two-way communication.
Lassez-Faire Leadership A “hand’s off” approach to leadership where most decisions and responsibility are delegated to employees.
Span of controlNo of subordinates who report to each manager/supervisor
Functions of managementPlanning, commanding, controlling, organising and co-ordinating.
DiscriminationTreating an employee differently because of age, ethnicity, gender or disability.
DismissalEnd of employment due to underperformance or breaking company regulations.
External recruitmentHiring an employee for a post not currently employed by the business.
Healthy and safetyResponsibility to ensure the workplace is safe and no accidents occur.
Induction trainingTraining to familiarise new employees with the workplace, co-workers and procedures.
Internal recruitmentHiring an employee for a post currently employed by the business in another post.
Job AdvertisementTells potential applicants about the job, what the requirements are and how to apply.
Job descriptionDuties and responsibilities of a position.
Legal minimum wageGovernment sets the minimum pay rate for workers within a country.
Off the job trainingTraining off-site at a college or specialist training location.
On the job trainingTraining at the workplace under the direction of an experienced employee.
Recruitment and SelectionFinding  and choosing the correct candidate for the vacant job post.
Short-listingChoosing the most suitable candidates to invite to interview.
Trade UnionAn organisation of employees who aim to improve the pay and conditions of their members
TrainingImproving the knowledge and skills of employees so they perform their jobs more effectively.
Unfair dismissalEnding a work contract without proper or legal justification.
InterviewEmployers ask potential employees questions to decide if they are suitable for the job.
RedundancyLosing employment as the position  no longer exists, for example after a factory is closed
Communication (effective)The message is passed to intended recipients and understood with feedback to confirm understanding.
Communication barriersAnything that prevents receiving and understanding messages. 


BrandA name image or logo which distinguishes a product or service from competitors.
Brand imageThe general impression that a brand presents to consumers.
Building customer relationshipsBuilding strong relationships to ensure customer loyalty.
Customer loyaltyConsumers who make repeated purchases of a specific product or brand.
MarketWhere businesses sell, and consumers buy.
Market orientatedProducts or services developed in response to market research data.
Market segmentationSplitting a market into smaller parts based on consumer characteristics.
Market ShareRevenue of a business as a % of the total market revenue.
Marketing The process a business undertakes to promote the buying or selling of a product or service. 
Mass marketingSelling the same product to a whole market.
Niche marketingDeveloping product for a small market segment.
Product orientedA business decides what to produce, then finds buyers for the product.
 Target MarketAll potential consumers who have an interest in buying a product and the money to do so.
Cost plus pricingAdding a fixed price to the cost of making or buying a product.
Focus groupsA small group of potential consumers discuss a product or service led by a market researcher.
Market researchCollecting and analysing data about customers, competitors and the market for a product or service.
Primary researchFirst-hand data collected specifically for a business needs.
SamplingTaking a representative sample from the target market to complete market research.
Secondary researchCollection of data from second hand resources.
AdvertisingInfluencing the buying behaviour of consumers with a persuasive selling message about products.
Competitive pricingSetting a price close to competitors’ products in the same market.
Distribution channelsThe path a product takes from producer to consumer.
E-commerceSelling products and services over the internet.
Extension strategiesStrategies to lengthen the maturity stage of a product.
Marketing MixFour marketing decisions required for the successful marketing of a product or service (4p’s or 4c’s).
PackagingThe wrapping material around a consumer item that serves to contain, identify, describe, protect, display, promote and otherwise make the product marketable and keep it clean.
Penetration pricingSetting a low price to attract consumers to buy a new product.
Personal Selling Salesperson aims to convince the customer in buy a product. 
Price elasticityHow much demand is affected by a change in price.
Price skimmingSetting a high price for a new unique product which has no direct competitor in the market.
Product developmentThe creation of products with new or different characteristics that offer new or additional benefits to the customer.
Product life cyclePattern of sales from introduction to withdrawl from the market.
Promotional pricingReducing the price of a product or services in short-term to attract more customers & increase the sales volume.
Sales PromotionIncentives used to encourage short-term increases in sales or repeat purchases.
Social media marketingUsing social media websites and social networks to market a company’s products and services.
SponsorshipA business pays to have its name linked to an event or sporting team.
LicensingAn agreement in which one company gives another company permission to manufacture its product for a payment.
Marketing StrategyPlan to achieve marketing targets with set resources.


Batch productionProducing goods in batches where all products must pass through one stage of production before moving onto the next.
EfficiencyMaking the best possible use of resources. Maximising outputs from inputs. 
Flow productionConstantly producing large quantities of identical goods.
InventoryStock of work in progress, raw materials, and finished products held by a business.
Job productionProducing a unique product, one at a time.
Just in time (inventory management), Inventory management method where supplies arrive  exactly when needed in the production process.
KaizenConstantly introducing small  changes in a business in order to improve quality and/or efficiency.
Labour productivityHow efficiently workers produce output, calculated by output/no of workers.
Lean ProductionProduction of goods and services with maximum efficiency and minimum waste.
Operations managementThe process of production of goods and services.
ProductionThe process of converting inputs like (raw materials and components) into finished products.
ProductivityMeasure of efficiency calculated by dividing outputs by inputs.
Average costsCost of producing a single unit of output.
Break evenAchieving quality production by designing every process to get the product ‘right first time’ and preventing mistakes.
Diseconomies of scaleFactors that result in the average price of production increasing as output increases.
Economies of scaleFactors that result in the average price of production decreasing as output increases.
Fixed costsCosts that don’t change with output.
Margin of safetyDifference between the current level of output and break-even point.
Total CostsFixed costs plus variable costs.
Variable costsCosts that change with output.
Quality assuranceAchieving  quality production by designing every process to get the product ‘right first time’ and preventing mistakes.
Quality controlChecking quality through inspection at the end of the production process.

Financial Information and Decisions

Debt FinanceBorrowing money from a bank which must be repaid with interest.
Equity FinanceSelling shares in the business to raise finance rather than borrowing.
Internal Sources of Finance Finance sourced from inside the business, for example, owner’s funds, sale of assets and retained profit.
LoanBank lends a fixed amount for an agreed time period, which must be repaid with interest.
Long term financeFinance required for periods usually longer than one year.
Micro Finance Lending small amounts of finance small business people to those who can’t access finance from another source.
OverdraftBanks allow businesses to take additional money out of their account up to a certain limit.
Owners savings Using owners’ own savings to finance the business.
Sale of assetsSelling equipment /machinery/inventory to raise finance for a business.
Short-term FinanceFinance required for short periods usually less than one year.
Start Up CapitalMoney required to set up a business and keep the business operating until the business breaks even.
Trade CreditDelaying payment to suppliers for an agreed time period.
Cash flowCash flow in and out of the business over a period of time.
Cash flow forecastEstimate of future cash inflows and outflows usually calculated month by month to ensure there is enough cash to pay short-term debts.
Cash InflowCash going into a business.
Cash outflow Cash going out of the business.
Crowd FundingRaising finance by raising small amounts of money from many people, usually via the Internet.
Net cash flowCash inflows – cash outflows
Trade receivablesSales made by a business, but still awaiting payment (current asset).
Working Capital Capital available to a business day to day to pay short-term debts. (Current Assets – current liabilities)
ProfitSales revenue minus total costs of making a product/service
Retained Profit Reinvesting profits back into the business.
Account PayableUnpaid bills or payment owed by a business which must be paid (current liability).
AssetsItems of value owned by the business like buildings, vehicles, equipment, machinery.
Capital EmployedMoney invested in a business (buildings, machinery).
Current AssetsItems of value that the business won’t keep for longer than a year, like cash or inventory
LiabilitiesDebts owed by the business, for example, bank loans.
Non current assetsItems of value the business will keep longer than one year, for example land, buildings, equipment and vehicles.
Non-current liabilitiesDebts which will last longer than one year, like a long-term loan for new production machinery.

External Influences on Business Activity

Business cycleThe business cycle tracks the size of the economy as it increases and decreases and goes through four phases – growth, boom decline and slump.
EconomyEverything which is produced and consumed within a country.
Globalisation Increased interconnectedness and worldwide movement of goods, services, capital and people.
Government Spending Government investment on infrastructure or spending on welfare payments.
Gross Domestic ProductGross Domestic Product measures the size of the economy. Calculated by adding up the value of all the goods and services produced in one country in on year.
InflationPrices and salaries rise so the value of money – what you can  buy – decreases.
Quotas A limit on imports.
Recession Economy is decreasing in size.
Business ethics “Doing the right thing”. Basing business decisions on what is morally right.
External benefits The positive impact of business activity which doesn’t benefit the business but positively affects the rest of society.
External costsThe costs of business activity which aren’t paid by the business but by society. 
Multinational corporations (MNC) Businesses that sell goods/services or have production in more than one country.
Pressure Groups  Group that tries to influence business or consumer activity in the interest of a particular cause.
Repatriating profits Taking profits earned in a foreign market and transferring to the home country of the business.
Sustainable development Achieving development (growth) without negatively impacting the environment.
Currency appreciation Value of a currency rises .
Currency depreciation Value of a currency falls.
Exchange rateThe price of one currency for another, for example 1 euro = $2.
Interest Rates The cost of borrowing money. Lower interest rates means higher spending and greater economic activity.
Tariffs A tax on imports.
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