IGCSE Business Studies Keywords
Learning the keywords, key terms and key concepts is critical to securing the knowledge to succeed in IGCSE Business Studies. We've got it covered here.
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.
Remember, knowledge is just one component of your final IGCSE grade – for further support check out IGCSE Exam Technique and IGCSE Past Paper Solutions
Unit 1 Business Activity
Business Objectives | Aims or targets a business sets out to achieve. |
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. |
External Stakeholders | Individual or group outside the business impacted by the business activity (owners/shareholders, managers, employees). |
Franchise | Buying the license to use another companies logo and sell their products. |
Grant | Capital given by a government to a business to assist with start up costs, innovation or business growth. |
Incorporated Business | Business is a separate legal entity – separation between owners and the company. |
Internal Growth | Business expansion without taking over or merging with another business (organic growth). |
Internal Stakeholders | Individual or group inside the business impacted by the business activity (owners/shareholders, managers, employees). |
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. |
Needs | Goods or services we need to survive |
Opportunity Cost | the potential benefits a business misses out on when choosing one alternative over another. |
Partnership | Two or more people join to set up a business. Shared decision making, capital invested and risk. |
Primary Sector | Using natural resources to make raw materials for business |
Private Limited Company | Incorporated business with shares sold to friends and family. Limited liability. |
Private Sector | Part of the economy owned and controlled by private individuals |
Public Corporation | Government owned organisation set up to provide service to the public |
Public Limited Company | Incorporated business with shares sold to general public, limited liability. |
Public Sector | Part of the economy owned and controlled by the government. |
Purpose of Business Activity | Business satisfies peoples (consumers) wants. |
Scarcity | Not enough resources,goods or services to provide for peoples’ (consumers) unlimited wants. |
Secondary Sector | Manufacturing goods from raw materials. |
Social Enterprise | Private enterprise which uses profits to persue environmental or social objectives. |
Sole Trader | A business owned by one person who is responsible for all decisions, capital invested and risk. |
Specialisation | People in business focus on what they do best. |
Business that provide services to consumers and other businesses. | |
Unincorporated Business | No separation between the company and the owners in law. |
Unlimited Liability | Owners personal assets may be taken to pay for debts of the company. |
Value Added | Selling price – cost of bought in materials. |
Wants | Good or service people want but aren’t essential for survival. |
Unit 2 People in Business
Autocratic Leadership | Leader makes all decisions, one-way communication. |
Bonus | 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. |
Commission | Salespeople are given a % of the selling price if they make a sale. |
Communication (effective) | Message is passed to intended recipients and understood with feedback to confirm understanding. |
Communication barriers | Anything that prevents receiving and understanding messages. |
Delegation | Passing responsibility to subordinates to complete tasks. |
Democratic leadership | Leader consults with employees before making decision, two way communication. |
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. |
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 |
Induction training | Training to familairise 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. |
Interview | Employers ask potential employees questions to decide if they are suitable for the job. |
Job Advertisment | Tells potential applicants about the job, what the requirements are and how to apply. |
Job description | Duties and responsibilities of a position. |
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 productivity | Labour productivity is calculated by output per worker divided by the total number of workers |
Labour turnover | The amount of employees leaving a business in a year and is calculated as a share of the total workforce. |
Lassez-Faire Leadership | 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 | 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. |
Profit Sharing | Employees get rewarded with a % of the firms profits annually |
Recruitment and Selection | Finding and choosing the correct candidate for the vacant job post. |
Redundancy | Losing employment as the postion no longer exists, for example after a factory is closed |
Salary | Fixed payment usually paid monthly |
Short-listing | 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. |
Team working | Groups of employees are given responsibility for a specific project, department or unit of work. |
Trade Union | 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. |
Wages | Payment for work, usually paid weekly. |
Unit 3 Marketing
Advertising | Influencing the buying behaviour of consumers with a persuasive selling message about products. |
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. |
Competitive pricing | 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. |
Customer loyalty | Consumers who make repeated purchases of a specific product or brand. |
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. |
Focus groups | A small group of potential consumers discuss a product or service led by a market researcher. |
Licensing | An agreement in which one company gives another company permission to manufacture its product for a payment. |
Market | Where businesses sell, and consumers buy. |
Market orientated | Products or services developed in reponse to market research data. |
Market research | Collecting and analysing data about customers, competitors and the market for a product or service. |
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. |
Marketing Mix | Four marketing decisions required for the successful marketing of a product or service (4p’s or 4c’s). |
Marketing Strategy | Plan to achieve marketing targets with set resources. |
Mass marketing | Selling the same product to a whole market. |
Niche marketing | Developing product for a small market segment. |
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 impacted by a change in price. |
Price skimming | Setting a high price for a new unique product which has no direct competitor in the market. |
Primary research | First hand data collected specifically for a business needs. |
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. |
Product oriented | A business decides what to produce then finds buyers for the product. |
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. |
Sampling | Taking a representative sample from the target market to complete market research. |
Secondary 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. |
Sponsorship | A business pays to have it’s name linked to an event or sporting team. |
Target Market | All potential consumers who have an interest in buying a product and the money to do so. |
Unit 4 Operations Management
Average costs | Cost of producing a single unit of output. |
Batch production | Producing goods in batches where all products must pass through one stage of production before moving onto the next. |
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 average price of production increasing as output increases. |
Economies of scale | Factors that result in average price of production decreasing as output increases. |
Efficiency | Making the best possible use of resources. Maximising outputs from inputs. |
Fixed costs | Costs that don’t change with output. |
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. |
Margin of safety | Difference between the current level of output and break even point. |
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. |
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. |
Total Costs | Fixed costs plus variable costs. |
Variable costs | Costs that change with output. |
Unit 5 Financial Information and Decisions
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). |
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 a large number of people, usually via the Internet. |
Current Assets | Items of value that the business won’t keep for longer than a year, like cash or inventory |
Debt Finance | Borrowing money from a bank which must be re paid 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. |
Liabilities | Debts owed by the business, for example bank loans. |
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. |
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. |
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. |
Profit | Sales revenue minus total costs of making a product/service |
Retained Profit | 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. |
Trade Credit | Delaying payment to suppliers for an agreed time period. |
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) |
Unit 6 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. |
Business ethics | “Doing the right thing”. Basing business decisions on what is morally right. |
Currency appreciation | Value of a currency rises |
Currency depreciation | Value of a currency falls |
Economy | Economy is everything which is produced and consumed within a country. |
Exchange rate | The price of one currency for another, for example 1 euro = $2 |
External benefits | The positive impact of business activity which don’t benefit the business but the rest of society. |
external costs | The costs of business activity which aren’t paid by the business but by society. |
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. |
Interest Rates | 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 |
Pressure Groups | Group that tries to influence business or consumer activity in the interest of a particular cause. |
Quotas | A limit on imports. |
Recession | Economy is decreasing in size. |
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. |
Tariffs | A tax on imports. |
