IGCSE Keywords

Business Activity

Needs	Goods or services we need to survive
Opportunity Cost	the potential benefits a business misses out on when choosing one alternative over another.
Purpose of Business Activity	Business satisfies peoples (consumers) wants.
Scarcity	Not enough resources, goods or services to provide for peoples’ (consumers) unlimited wants.
Specialisation	People in business focus on what they do best.
Value Added	Selling price – cost of bought-in materials.
Wants	Good or service people want but aren’t essential for survival.
Primary Sector	Using natural resources to make raw materials for business
Private Sector	Part of the economy owned and controlled by private individuals
Secondary Sector	Manufacturing goods from raw materials.
Tertiary Sector	A business that provides services to consumers and other businesses.
Business Plan	A document setting out a businesses objectives and how it will achieve them.
Entrepreneur	Someone who invests capital, takes a risk and starts up and operates a new business venture.
External Growth	Business expansion, taking over or merging with another business.
Grant	Capital given by a government to a business to assist with start-up costs, innovation or business growth.
Internal Growth	Business expansion without taking over or merging with another business (organic growth).
Franchise	Buying the license to use another companies logo and sell their products.
Incorporated Business	Business is a separate legal entity – separation between owners and the company.
Joint Venture	Two companies share capital and expertise on a project. They share risks and profits.
Limited Liability	Owners responsibility for company debts restricted to what they have invested in the business.
Partnership	Two or more people join to set up a business. Shared decision making, capital invested and risk.
Private Limited Company	Incorporated business with shares sold to friends and family. Limited liability.
Public Corporation	Government-owned organisation set up to provide service to the public
Public Limited Company	Incorporated business with shares sold to the general public, limited liability.
Public Sector	Part of the economy owned and controlled by the government.
Sole Trader	A business owned by one person who is responsible for all decisions, capital invested and risk.
Unincorporated Business	No separation between the company and the owners in law.
Business Objectives	Aims or targets a business sets out to achieve.
External Stakeholders	Individual or group outside the business impacted by the business activity (owners/shareholders, managers, employees).
Internal Stakeholders	Individual or group inside the business impacted by the business activity (owners/shareholders, managers, employees).
Social Enterprise	A private enterprise which uses profits to pursue environmental or social objectives.
Unlimited Liability	Owners personal assets may be taken to pay for debts of the company.

People in Business

Bonus	An extra reward given to employees for reaching a certain target.
Commission	Salespeople are given a % of the selling price if they make a sale.
Herzberg’s Hygiene Factors	Basic employee needs which must be fulfilled before employees can be motivated
Job enrichment	Employees are given additional responsibility in their day to day tasks, which often involves more training or development.
Job rotation	Employees switch simple tasks for a short time.
Labour turnover	The number of employees leaving a business in a year and is calculated as a share of the total workforce.
Maslow’s hierarchy of needs	Ranks human needs in order from survival needs to self-actualisation.
Motivation	Motivation is the reason why employees work hard and effectively for a business.
Opportunities for promotion	Rewarding employees with positions of higher status or responsibility in the business.
Profit Sharing	Employees get rewarded with a  % of the firm’s profits annually
Salary	Fixed payment usually paid monthly
Taylor’s Motivational Theory	Viewed workers as machines, the more you pay they harder they will work.
Team working	Groups of employees are given responsibility for a specific project, department or unit of work.
Wages	Payment for work usually paid weekly.
Autocratic Leadership	The leader makes all decisions, one-way communication.
Chain of command	The path through which authority is passed down through an organisation.
Delegation	Passing responsibility to subordinates to complete tasks.
Democratic leadership	Leader 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 control	No of subordinates who report to each manager/supervisor
Functions of management	Planning, commanding, controlling, organising and co-ordinating.
Discrimination	Treating an employee differently because of age, ethnicity, gender or disability.
Dismissal	End of employment due to underperformance or breaking company regulations.
External recruitment	Hiring an employee for a post not currently employed by the business.
Healthy and safety	Responsibility to ensure the workplace is safe and no accidents occur.
Induction training	Training to familiarise new employees with the workplace, co-workers and procedures.
Internal recruitment	Hiring an employee for a post currently employed by the business in another post.
Job Advertisement	Tells potential applicants about the job, what the requirements are and how to apply.
Job description	Duties and responsibilities of a position.
Legal minimum wage	Government sets the minimum pay rate for workers within a country.
Off the job training	Training off-site at a college or specialist training location.
On the job training	Training at the workplace under the direction of an experienced employee.
Recruitment and Selection	Finding  and choosing the correct candidate for the vacant job post.
Short-listing	Choosing the most suitable candidates to invite to interview.
Trade Union	An organisation of employees who aim to improve the pay and conditions of their members
Training	Improving the knowledge and skills of employees so they perform their jobs more effectively.
Unfair dismissal	Ending a work contract without proper or legal justification.
Interview	Employers ask potential employees questions to decide if they are suitable for the job.
Redundancy	Losing 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 barriers	Anything that prevents receiving and understanding messages.

Marketing

Brand	A name image or logo which distinguishes a product or service from competitors.
Brand image	The general impression that a brand presents to consumers.
Building customer relationships	Building strong relationships to ensure customer loyalty.
Customer loyalty	Consumers who make repeated purchases of a specific product or brand.
Market	Where businesses sell, and consumers buy.
Market orientated	Products or services developed in response to market research data.
Market segmentation	Splitting a market into smaller parts based on consumer characteristics.
Market Share	Revenue 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 marketing	Selling the same product to a whole market.
Niche marketing	Developing product for a small market segment.
Product oriented	A business decides what to produce, then finds buyers for the product.
Target Market	All potential consumers who have an interest in buying a product and the money to do so.
Cost plus pricing	Adding a fixed price to the cost of making or buying a product.
Focus groups	A small group of potential consumers discuss a product or service led by a market researcher.
Market research	Collecting and analysing data about customers, competitors and the market for a product or service.
Primary research	First-hand data collected specifically for a business needs.
Sampling	Taking a representative sample from the target market to complete market research.
Secondary research	Collection of data from second hand resources.
Advertising	Influencing the buying behaviour of consumers with a persuasive selling message about products.
Competitive pricing	Setting a price close to competitors’ products in the same market.
Distribution channels	The path a product takes from producer to consumer.
E-commerce	Selling products and services over the internet.
Extension strategies	Strategies to lengthen the maturity stage of a product.
Marketing Mix	Four marketing decisions required for the successful marketing of a product or service (4p’s or 4c’s).
Packaging	The 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 pricing	Setting a low price to attract consumers to buy a new product.
Personal Selling	Salesperson aims to convince the customer in buy a product.
Price elasticity	How much demand is affected by a change in price.
Price skimming	Setting a high price for a new unique product which has no direct competitor in the market.
Product development	The creation of products with new or different characteristics that offer new or additional benefits to the customer.
Product life cycle	Pattern of sales from introduction to withdrawl from the market.
Promotional pricing	Reducing the price of a product or services in short-term to attract more customers & increase the sales volume.
Sales Promotion	Incentives used to encourage short-term increases in sales or repeat purchases.
Social media marketing	Using social media websites and social networks to market a company’s products and services.
Sponsorship	A business pays to have its name linked to an event or sporting team.
Licensing	An agreement in which one company gives another company permission to manufacture its product for a payment.
Marketing Strategy	Plan to achieve marketing targets with set resources.

Operations

Batch production	Producing goods in batches where all products must pass through one stage of production before moving onto the next.
Efficiency	Making the best possible use of resources. Maximising outputs from inputs.
Flow production	Constantly producing large quantities of identical goods.
Inventory	Stock of work in progress, raw materials, and finished products held by a business.
Job production	Producing 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.
Kaizen	Constantly introducing small  changes in a business in order to improve quality and/or efficiency.
Labour productivity	How efficiently workers produce output, calculated by output/no of workers.
Lean Production	Production of goods and services with maximum efficiency and minimum waste.
Operations management	The process of production of goods and services.
Production	The process of converting inputs like (raw materials and components) into finished products.
Productivity	Measure of efficiency calculated by dividing outputs by inputs.
Average costs	Cost of producing a single unit of output.
Break even	Achieving quality production by designing every process to get the product ‘right first time’ and preventing mistakes.
Diseconomies of scale	Factors that result in the average price of production increasing as output increases.
Economies of scale	Factors that result in the average price of production decreasing as output increases.
Fixed costs	Costs that don’t change with output.
Margin of safety	Difference between the current level of output and break-even point.
Total Costs	Fixed costs plus variable costs.
Variable costs	Costs that change with output.
Quality assurance	Achieving  quality production by designing every process to get the product ‘right first time’ and preventing mistakes.
Quality control	Checking quality through inspection at the end of the production process.

Financial Information and Decisions

Debt Finance	Borrowing money from a bank which must be repaid with interest.
Equity Finance	Selling 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.
Loan	Bank lends a fixed amount for an agreed time period, which must be repaid with interest.
Long term finance	Finance 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.
Overdraft	Banks 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 assets	Selling equipment /machinery/inventory to raise finance for a business.
Short-term Finance	Finance required for short periods usually less than one year.
Start Up Capital	Money required to set up a business and keep the business operating until the business breaks even.
Trade Credit	Delaying payment to suppliers for an agreed time period.
Cash flow	Cash flow in and out of the business over a period of time.
Cash flow forecast	Estimate of future cash inflows and outflows usually calculated month by month to ensure there is enough cash to pay short-term debts.
Cash Inflow	Cash going into a business.
Cash outflow	Cash going out of the business.
Crowd Funding	Raising finance by raising small amounts of money from many people, usually via the Internet.
Net cash flow	Cash inflows – cash outflows
Trade receivables	Sales 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)
Profit	Sales revenue minus total costs of making a product/service
Retained Profit	Reinvesting profits back into the business.
Account Payable	Unpaid bills or payment owed by a business which must be paid (current liability).
Assets	Items of value owned by the business like buildings, vehicles, equipment, machinery.
Capital Employed	Money invested in a business (buildings, machinery).
Current Assets	Items of value that the business won’t keep for longer than a year, like cash or inventory
Liabilities	Debts owed by the business, for example, bank loans.
Non current assets	Items of value the business will keep longer than one year, for example land, buildings, equipment and vehicles.
Non-current liabilities	Debts which will last longer than one year, like a long-term loan for new production machinery.

External Influences on Business Activity

Business cycle	The business cycle tracks the size of the economy as it increases and decreases and goes through four phases – growth, boom decline and slump.
Economy	Everything 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 Product	Gross 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.
Inflation	Prices 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 costs	The 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 rate	The 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.