All the keywords and definitions listed in the Cambridge International IGCSE Business Studies syllabus, to support your exam revision and guide you to success.
Keywords are organised by unit. After learning each keyword, test your knowledge and see how many you can remember. Review the keywords that need further work.
Unit 1 Business Activity
Aims or targets a business sets out to achieve.
A document setting out a businesses objectives and how it will achieve them.
Someone who invests capital, takes a risk and starts up and operates a new business venture.
Business expansion, taking over or merging with another business.
Individual or group outside the business impacted by the business activity (owners/shareholders, managers, employees).
Buying the license to use another companies logo and sell their products.
Capital given by a government to a business to assist with start up costs, innovation or business growth.
Business is a separate legal entity – separation between owners and the company.
Business expansion without taking over or merging with another business (organic growth).
Individual or group inside the business impacted by the business activity (owners/shareholders, managers, employees).
Two companies share capital and expertise on a project. They share risks and profits.
Owners responsibility for company debts restricted to what they have invested in the business.
Goods or services we need to survive
the potential benefits a business misses out on when choosing one alternative over another.
Two or more people join to set up a business. Shared decision making, capital invested and risk.
Using natural resources to make raw materials for business
Private Limited Company
Incorporated business with shares sold to friends and family. Limited liability.
Part of the economy owned and controlled by private individuals
Government owned organisation set up to provide service to the public
Public Limited Company
Incorporated business with shares sold to general public, limited liability.
Part of the economy owned and controlled by the government.
Purpose of Business Activity
Business satisfies peoples (consumers) wants.
Not enough resources,goods or services to provide for peoples’ (consumers) unlimited wants.
Manufacturing goods from raw materials.
Private enterprise which uses profits to persue environmental or social objectives.
A business owned by one person who is responsible for all decisions, capital invested and risk.
People in business focus on what they do best.
Business that provide services to consumers and other businesses.
No separation between the company and the owners in law.
Owners personal assets may be taken to pay for debts of the company.
Selling price – cost of bought in materials.
Good or service people want but aren’t essential for survival.
Unit 2 People in Business
Leader makes all decisions, one-way communication.
An extra reward given to employees for reaching a certain target.
Chain of command
The path through which authority is passed down through an organisation.
Salespeople are given a % of the selling price if they make a sale.
Message is passed to intended recipients and understood with feedback to confirm understanding.
Anything that prevents receiving and understanding messages.
Passing responsibility to subordinates to complete tasks.
Leader consults with employees before making decision, two way communication.
Treating an employee differently because of age, ethnicity, gender or disability.
End of employment due to underperformance or breaking company regulations.
Hiring an employee for a post not currently employed by the business.
Functions of management
Planning, commanding, controlling, organising and co-ordinating.
Healthy and safety
Responsibility to ensure workplace is safe and no accidents occur.
Herzberg’s Hygiene Factors
Basic employee needs which must be fulfilled before employees can be motivated
Training to familairise new employees with the workplace, co workers and procedures.
Hiring an employee for a post currently employed by the business in another post.
Employers ask potential employees questions to decide if they are suitable for the job.
Tells potential applicants about the job, what the requirements are and how to apply.
Duties and responsibilities of a position.
Employees are given additional responsibility in their day to day tasks, which often involves more training or development.
Employees switch simple tasks for a short time.
Labour productivity is calculated by output per worker divided by the total number of workers
The amount of employees leaving a business in a year and is calculated as a share of the total workforce.
A “hand’s off” approach to leadership where most decisions and responsibility are delegated to employees.
Legal minimum wage
Government sets the minimum pay rate for workers within a country.
Maslow’s hierarchy of needs
Ranks human needs in order from survival needs to self actualisation.
Motivation is the reason why employees work hard and effectively for a business.
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.
Opportunities for promotion
Rewarding employees with positions of higher status or responsibility in the business.
Employees get rewarded with a % of the firms profits annually
Recruitment and Selection
Finding and choosing the correct candidate for the vacant job post.
Losing employment as the postion no longer exists, for example after a factory is closed
Fixed payment usually paid monthly
Choosing the most suitable candidates to invite to interview.
Span of control
No of subordinates who report to each manager/supervisor
Taylor’s Motivational Theory
Viewed workers as machines, the more you pay they harder they will work.
Groups of employees are given responsibility for a specific project, department or unit of work.
Organisation of employees who aim to improve the pay and conditions of their members
Improving the knowledge and skills of employees so they perform their jobs more effectively.
Ending a work contract without proper or legal justification.
Payment for work, usually paid weekly.
Unit 3 Marketing
Influencing the buying behaviour of consumers with a persuasive selling message about products.
A name image or logo which distinguishes a product or service from competitors.
The general impression that a brand presents to consumers.
Building customer relationships
Building strong relationships to ensure customer loyalty.
Setting a price close to competitors products in the same market.
Cost plus pricing
Adding a fixed price to the cost of making or buying a product.
Consumers who make repeated purchases of a specific product or brand.
The path a product takes from producer to consumer.
Selling products and services over the internet.
Strategies to lengthen the maturity stage of a product.
A small group of potential consumers discuss a product or service led by a market researcher.
An agreement in which one company gives another company permission to manufacture its product for a payment.
Where businesses sell, and consumers buy.
Products or services developed in reponse to market research data.
Collecting and analysing data about customers, competitors and the market for a product or service.
Splitting a market into smaller parts based on consumer characteristics.
Revenue of a business as a % of the total market revenue.
The process a business undertakes to promote the buying or selling of a product or service.
Four marketing decisions required for the successful marketing of a product or service (4p’s or 4c’s).
Plan to achieve marketing targets with set resources.
Selling the same product to a whole market.
Developing product for a small market segment.
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.
Setting a low price to attract consumers to buy a new product.
Salesperson aims to convince the customer in buy a product.
How much demand is impacted by a change in price.
Setting a high price for a new unique product which has no direct competitor in the market.
First hand data collected specifically for a business needs.
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.
A business decides what to produce then finds buyers for the product.
Reducing the price of a product or services in short term to attract more customers & increase the sales volume.
Incentives used to encourage short term increases in sales or repeat purchases.
Taking a representative sample from the target market to complete market research.
Collection of data from second hand resources.
Social media marketing
The use of social media websites and social networks to market a company’s products and services.
A business pays to have it’s name linked to an event or sporting team.
All potential consumers who have an interest in buying a product and the money to do so.
Unit 4 Operations Management
Cost of producing a single unit of output.
Producing goods in batches where all products must pass through one stage of production before moving onto the next.
Achieving quality production by designing every process to get the product ‘right first time’ and preventing mistakes.
Diseconomies of scale
Factors that result in average price of production increasing as output increases.
Economies of scale
Factors that result in average price of production decreasing as output increases.
Making the best possible use of resources. Maximising outputs from inputs.
Costs that don’t change with output.
Constantly producing large quantities of identical goods.
Stock of work in progress, raw materials, and finished products held by a business.
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.
Constantly introducing small changes in a business in order to improve quality and/or efficiency.
How efficiently workers produce output, calculated by output/no of workers.
Production of goods and services with maximum efficiency and minimum waste.
Margin of safety
Difference between the current level of output and break even point.
The process of production of goods and services.
The process of converting inputs like (raw materials and components) into finished products.
Measure of efficiency calculated by dividing outputs by inputs.
Achieving quality production by designing every process to get the product ‘right first time’ and preventing mistakes.
Checking quality through inspection at the end of the production process.
Fixed costs plus variable costs.
Costs that change with output.
Unit 5 Financial Information and Decisions
Unpaid bills or payment owed by a business which must be paid (current liability).
items of value owned by the business like buildings, vehicles, equipment, machinery.
Money invested in a business (buildings, machinery).
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 going into a business.
Cash going out of the business.
Raising finance by raising small amounts of money from a large number of people, usually via the Internet.
Items of value that the business won’t keep for longer than a year, like cash or inventory
Borrowing money from a bank which must be re paid with interest.
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.
Debts owed by the business, for example bank loans.
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.
Lending small amounts of finance small business people to those who can’t access finance from another source.
Net cash flow
Cash inflows – cash outflows
Net Cash Flow
Cash inflows – cash outflows
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.
Banks allow businesses to take additional money out of their account up to a certain limit.
Using owners own savings to finance the business.
Sales revenue minus total costs of making a product/service
Reinvesting profits back into 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 starts to break even.
Delaying payment to suppliers for an agreed time period.
Sales made by a business, but still awaiting payment (current asset).
Capital available to a business day to day to pay short term debts. (Current Assets – current liabilities)
Unit 6 External Influences on Business Activity
The business cycle tracks the size of the economy as it increases and decreases and goes through four phases – growth, boom decline and slump.
“Doing the right thing”. Basing business decisions on what is morally right.
Value of a currency rises
Value of a currency falls
Economy is everything which is produced and consumed within a country.
The price of one currency for another, for example 1 euro = $2
The positive impact of business activity which don’t benefit the business but the rest of society.
The costs of business activity which aren’t paid by the business but by society.
Increased interconnectedness and worldwide movement of goods, services, capital and people
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.
Prices and salaries rise so the value of money – what you can buy – decreases.
The cost of borrowing money. Lower interest rates means higher spending and greater economic activity
Multinational corporations (MNC)
Businesses that sell goods/services or have production in more than one country
Group that tries to influence business or consumer activity in the interest of a particular cause.
A limit on imports.
Economy is decreasing in size.
Taking profits earned in a foreign market and transferring to the home country of the business.
Achieving development (growth) without negatively impacting the environment.
A tax on imports.