IGCSE Business Studies Vocabulary

Comprehensive key terms and vocabulary flashcards covering IGCSE Business Studies Units 1 through 6 from Mr. Assem El Nady's notes.

Land

All natural resources used in production.

Labor

Efforts contributed by workers to produce goods and services.

Capital

Money invested in the business to acquire equipment and resources.

Enterprise

The skills and ability to combine all the factors of production together for production.

Entrepreneur

A person who takes the risk and has the skills to combine factors of production together to establish a business.

Scarcity

The condition where human wants and needs are unlimited but resources are limited, meaning there are not enough products to satisfy all needs.

Opportunity Cost

The next best alternative that was given up when making a choice.

Sales (Revenue)

The total money received by a business when it sells its products, calculated as $\text{Price} \times \text{Quantity sold}$.

Productivity

The rate at which units are produced relative to inputs.

Efficiency

Producing goods or services using the least amount of resources by saving money, time, and raw materials.

Specialization

Splitting up production for each worker to do a specific task, also known as division of labor.

Stakeholders

Anyone who is involved, has an interest in, or is affected by a business, such as customers, owners, workers, and managers.

Sole Trader

A small business owned and operated by one person.

Partnership

A business owned and managed by a group of 2 to 20 people where they share capital, profits, and responsibility.

Private Limited Company (LTD)

A business owned by shareholders and managed by a Board of Directors, where shares are traded privately to family and friends.

Public Limited Company (PLC)

A business owned by shareholders and managed by an elected Board of Directors, where shares can be traded to the public via the stock exchange market.

Joint Venture

An arrangement where 2 or more businesses agree to start new projects together.

Franchisee

A business based on the use of brand names, logos, and trading methods of another existing successful business.

Franchisor

A business that sells its name, logo, and trading methods to another business to operate using it.

Globalization

The trend towards the world becoming one large market due to increased international trade and competition.

Multinational Business

A business that has investments such as branches, offices, or factories in more than one country.

International Business

A business that has no investment outside its home country, but sells products in more than one country.

Social Enterprise

A business that has social objectives and reinvests its profits to benefit society rather than maximizing owner profits.

Exchange Rate Appreciation

An increase in the value of a country's currency in terms of another currency.

Exchange Rate Depreciation

A decrease in the value of a country's currency in terms of another currency.

Public Sector

Businesses that are owned and controlled by the government rather than individuals.

Private Sector

Businesses that are owned and managed by private individuals rather than the government.

Primary Sector

Businesses that extract natural resources from the earth.

Secondary Sector

Businesses that transform raw materials into manufactured goods.

Tertiary Sector

Businesses that provide services to consumers and other sectors of industry.

Industrialization

The process of increasing the importance of the secondary sector in developing economies.

Deindustrialization

The process in developed economies where a country decreases its secondary sector and focuses more on the tertiary sector.

Import Tariff

A tax placed on the value of imported goods.

Import Quota

A physical limit on the quantity of a product that can be imported into a country over a specific time period.

Inflation

The persistent increase in the average price level of goods and services over time in an economy.

Rate of Unemployment

The metric that measures the proportion of a country's workforce that are actively seeking work but not employed.

Gross Domestic Product (GDP)

The total market value of output of goods and services produced in a country in one year.

Sustainable Development

Development that meets the needs of the present without compromising or depleting natural resources for future generations.

Balance of Payments

An account recording the value of trade in products between one country and the rest of the world.

Business Cycle

The general pattern of periodic growth and decline in GDP over time, consisting of boom, recession, slump, and recovery.

Fiscal Policy

Changes in government taxes and public expenditure to achieve economic objectives.

Monetary Policy

Changes in interest rates by the central government or bank to influence economic activity.

Supply Side Policy

Government policies aimed at increasing the efficiency and productivity of businesses to make domestic products more competitive.

Legal Minimum Wage

A minimum illegal threshold below which employers cannot pay their workers.

Monopoly

A market structure dominated by a single seller who faces no direct competition and provides a product with no close substitutes.

External Cost

Negative impacts or costs paid by society as a result of a business decision, such as pollution or noise.

External Benefit

Positive outcomes enjoyed by society as a result of business activity, such as job creation or improved infrastructure.

Horizontal Integration

When one business merges with or takes over another business operating in the same industry at the exact same stage of production.

Forward Vertical Integration

When a business integrates with another company in the same industry but at a later stage of production, closer to the consumer.

Backward Vertical Integration

When a company merges with or takes over another company in the same industry at an earlier stage of production, closer to raw materials.

Conglomerate Integration

When a business merges with or takes over another company operating in a completely unrelated industry.

Economies of Scale

The reduction in average cost per unit as a business expands its scale of production and overall output.

Diseconomies of Scale

An increase in unit costs that occurs when a business expands beyond an optimal size.

Chain of Command

The direct line or path through which authority and orders are passed down from top management to lower operational levels.

Span of Control

The number of subordinate staff members working directly under and reporting to a specific manager.

Centralized Management Structure

An organizational structure where all major decision-making power remains concentrated at top management level.

Decentralized Management Structure

An organizational structure where decision-making responsibility is passed down to lower levels of management.

Delegation

Passing authority down from a manager to a subordinate to perform specific tasks or responsibilities.

Democratic Leadership

A leadership style where managers consult employees and consider their opinions before arriving at decisions.

Autocratic Leadership

A leadership style where the manager retains full control, issues direct orders, and makes decisions independently without employee input.

Laissez-Faire Leadership

A leadership style where managers give minimal direction and allow subordinates autonomy to manage their work.

Piece Rate

A wage payment system where workers are paid a fixed amount for each unit of output produced.

Time Rate

A payment system calculated according to the total number of hours an employee works.

Job Rotation

Swapping workers between different tasks of a similar difficulty level to reduce monotony and broaden experience.

Job Enlargement

Adding extra tasks of a similar level of responsibility to an existing role.

Job Enrichment

Organizing work to include higher levels of responsibility, decision-making, and complexity to provide a sense of achievement.

Induction Training

An introductory training process designed to familiarize new employees with company policies, colleagues, and facilities.

On-the-Job Training

Training conducted within the workplace where employees learn by observing and working alongside experienced staff.

Off-the-Job Training

Training delivered away from the normal work environment, such as at specialized external training centers or colleges.

Trade Union

An organization formed by workers to represent their interests and negotiate better wages, safety, and working conditions.

Mass Marketing

Designing and selling a single standardized product aimed at the total target market without segmenting.

Market Segmentation

Dividing an entire market into distinct sub-groups of consumers who exhibit similar needs and purchasing behaviors.

Niche Market

A specialized, small market segment tailored to fit specific customer desires and preferences.

Market Share

The percentage of total sales within a given market generated by a specific company, calculated as $\left(\frac{\text{Business Sales}}{\text{Total Market Sales}}\right) \times 100$.

Product Orientation

An approach where a business focuses primarily on product design, quality, and technical features rather than market research.

Market Orientation

An approach where a business carries out market research to identify customer needs before developing products.

Product Life Cycle

The stages a product passes through from initial development to launch, growth, maturity, and eventual decline.

Cost-Plus Pricing

A pricing strategy where a fixed profit percentage (markup) is added directly to the total cost of producing the item.

Penetration Pricing

Setting a low initial price when entering a competitive market to gain market share quickly.

Price Skimming

Setting a high initial price for a novel or high-tech product before competitors enter the market.

Competitive Pricing

Setting product prices close to or at the same level as competing products in the market.

Working Capital

The finance needed to satisfy short-term daily operational costs, calculated as $\text{Current Assets} - \text{Current Liabilities}$.

Retained Profit

The proportion of net profit reinvested back into the business after distributing dividends to owners.

Factoring of Debts

Selling trade debt receivables to a specialist agency at a discount to obtain immediate liquid cash.

Breakeven Point

The output level where total sales revenue exactly covers total costs, resulting in zero profit and zero loss.

Job Production

Manufacturing customized, individual products specifically tailored to a single customer's requirements.

Batch Production

Manufacturing products in identical groups or sets, passing together through each operational stage.

Flow Production

Continuous, large-scale assembly-line manufacturing of standardized products.

Just-In-Time (JIT)

A lean production stock management system where components arrive precisely as needed in the production sequence, minimizing stockholding costs.

Kaizen

A Japanese philosophy of continuous manufacturing improvement based on ongoing worker suggestions to eliminate waste.

Quality Control

Inspecting completed output at final stages of production and removing defective products before sale.

Quality Assurance

A system of checking quality standards at every single operational stage to prevent defects from occurring.

Total Quality Management (TQM)

An organization-wide approach to quality where every employee is made responsible for quality standards and continuous operational improvement.