CAIE AS Level Business - Flashcards

Vocabulary flashcards summarizing key concepts from the CAIE AS Level Business syllabus (2023-2025).

Factors of Production

The resources used to produce goods and services: land, labour, capital, and enterprise.

Land

All natural resources used in production. Return for land is rent.

Labour

Both manual and skilled work. Return for labour is salary or wages.

Capital

Finance needed to set up and run a business and man-made goods used in production. Return for capital is interest.

Enterprise

The driving force that arranges all other factors of production and takes the risk of the new business venture. Return for enterprise is profit.

Added Value

Selling price minus cost price. It's the increase in worth that a business creates.

Opportunity Cost

The benefit of the next most desired option, which is given up when making a choice.

Working Capital

The capital needed to run the day-to-day business. Current Assets - Current Liabilities.

Intrapreneur

Someone who acts like an entrepreneur within a larger company.

Local Business

A business that provides goods and services to the local population.

National Business

A business that provides goods and services to the domestic market.

Multinational Business

A business that has operations in more than one country.

Primary Sector

Businesses involved in extracting raw materials, e.g., fishing, mining.

Secondary Sector

Businesses involved in manufacturing and processing products, e.g., car manufacturing, clothes-making.

Tertiary Sector

Businesses that provide services to consumers and other businesses, e.g., banking, transportation.

Quaternary Sector

Businesses providing information services, e.g., computing, web design, R&D.

Industrialisation

The rise in importance of the secondary sector in an economy.

De-industrialisation

The decline in importance of the secondary sector in an economy.

Free Market Economy

An economy with only the private sector and no government intervention.

Mixed Economy

An economy with both private and public sectors. Governments and individuals make decisions together.

Command Economy

An economy that has only the public sector.

Sole Trader

A business owned and controlled by one person.

Partnership

A business owned by a group of individuals.

Limited Liability

Shareholders only lose the amount invested if the business fails.

Private Limited Company

A business owned by shareholders who are friends and family.

Public Limited Company

A business that has the legal right to sell shares to the public.

Cooperative

Organizations owned by their members where all members have a say in important matters and equally share profits.

Joint Venture

When two or more businesses agree to join for one project.

Franchise

A business which uses the name, logo, trading methods of an existing successful business under a legal agreement.

Public Corporation

A business in the public sector is managed with social objectives rather than profit.

Social Enterprise

A business that directly produce goods and services, has social aims and ethical ways of producing them, and seeks to achieve social, economical, and environmental objectives.

Market Capitalization

Current share price multiplied by the total number of shares issued.

Market Share

Total sales of business/total sales in industry multiplied by 100.

Horizontal Integration

Merger or takeover with a business in the same industry at the same stage of production.

Vertical Integration

Merger or takeover with a business in the same industry as a customer (forward) or supplier (backward) of the existing business.

Conglomerate Integration

Merger or takeover with a business in a different industry.

Mission statement

A statement of a business’s core aims, phrased in a way to motivate employees and to stimulate interests by outside groups.

SMART criteria

Specific, Measurable, Achievable, Realistic and Relevant, Time-Specific.

Stakeholders

People or groups of people that are affected by, and therefore have an interest in the activities of a business.

Human Resource Management (HRM)

The process of recruiting, training, managing, and rewarding employees.

Job Description

Document that provides a complete picture of what the job will entail, its roles, rights and responsibilities.

Job Specification

Analysis of the type of qualities, skills, and characteristics needed by any person appointed to a job.

Labour Turnover

The rate at which employees leave the organization.

Trade Union

A workers' organization that protect the rights of the employees, negotiates on wages and work conditions, and supports their members in disputes

Motivation

The desire of workers to do a job quickly and efficiently.

Hygiene Factors

Factors such as salary, working conditions, supervision, social relations which do not motivate employees, but their absence DEMOTIVATES them.

Motivators

achievement, recognition, work itself, responsibility, and advancement which MOTIVATE employees.

Marketing

The management process responsible for identifying, anticipating and satisfying consumers’ requirements profitably.

Mass Marketing

Selling the same/standardised products to the whole market.

Niche Marketing

Identifying and exploiting a small segment of a larger market.

Market Segmentation

Identifying different consumer groups within a market.

Market Orientation

An outward-looking approach that makes product decisions based on consumer demand, learned via market research.

Product Orientation

An inward-looking approach which focuses solely on developing a superior/innovative product that can be made. Firms will try to sell them, hoping the innovation will attract customers

Market Size

The total value/quantity of sales of all the firms within a market in a given time period.

Market Share

The percentage of the total market sales a business earns relative to its competitors.

Customer Relation Marketing (CRM)

Usage of marketing activities to create and build good customer relationships so that the loyalty of existing customers must be maintained.

Primary Research

First-hand data collected for a specific research purpose.

Secondary Research

Collection of data from second-hand sources.

Marketing Mix

The 4Ps: Product, Price, Place, Promotion.

Unique Selling Point (USP)

Features that differentiate a product from its competitors.

Product Positioning

Analysing a product’s relationship with other competitor products in the market.

Product Life Cycle (PLC)

The stages a product goes through from its development to its decline.

Boston Matrix Analysis

A method of analysing the product portfolio of a business in terms of market share and market growth.

Penetration Pricing

Selling at a low price to attract more customers.

Price Skimming

Setting a high price to differentiate it from competitors.

Promotion Mix

The combination of all promotion techniques used (advertising, direct selling, sales promotion).

Advertising

Communicating information about the product through various media.

Public Relations (PR)

Activities used to gain free publicity provided by the media.

Branding

A distinguishing name given to a product.

Supply Chain

All the intermediaries involved in getting the product to the end consumer.

Supply chain management

he management of the flow of goods and services and includes all processes that transform raw materials into final products.

E-commerce

Selling and marketing activities that uses the internet, email and mobile communications to encourage direct sales via electronic commerce.

Maximum capacity

Refers to the total possible level of output that can be undertaken by a business in a given time period.

Capacity utilisation

the proportion of maximum output capacity currently being achieved.

Operations planning

Matching supply and demand in the operations function.

Just in time (JIT)

An inventory control system which avoids the need to hold inventories, and they arrive just as and when required

Just-in-Case (JIC)

Inventory management system that targets to lower the risk of running out of inventory to the minimum by holding high buffer inventory levels.

Microfinance

Involves selling financial services to poor, low-income customers or small businesses who do not get finance from banks

Crowd-funding

Crowdfunding websites allow entrepreneurs to promote their business and encourage individuals to each invest a small amount

Bad debt

Unpaid customers’ bill that is highly unlikely to ever be paid.

Insolvency

when a business is unable to pay its short-term debt

Variable Costs

Costs that vary directly with the level of output.

Fixed Costs

Costs which do not change with output in the short run.

Budget

To plan future activities by establishing performance targets, most importantly financial ones.

Adverse Variance

Change from the budget that leads to lower than targeted profit.

Favourable variance

Change from the budget that leads to higher than targeted profit.