IGCSE Business Studies Complete Vocabulary Review

Vocabulary flashcards covering core business concepts, definitions, ratios, and processes from Units 1-6 of the IGCSE Business Studies course notes by Mr. Assem El Nady.

Need

Something necessary for life, such as food, water, and shelter.

Want

Something desired to improve the quality of life, such as mobile phones and cars.

Factors of Production

The resources needed to start a business: Land (natural resources), Labor (workers), Capital (money and man-made resources), and Enterprise (initiative and risk-taking).

Entrepreneur

A person who takes the initiative, skills, and risk to combine the factors of production to start a business.

Scarcity (The Economic Problem)

The situation where human wants and needs are unlimited, but resources are limited, resulting in insufficient products to satisfy all needs.

Opportunity Cost

The sacrifice that happens when choosing one option over another; the next best alternative given up.

Productivity

The rate at which units of output are produced.

Efficiency

Producing maximum output using the least amount of resources by saving money, time, and raw materials.

Specialization (Division of Labor)

Splitting up production so that each worker focuses on doing a specific task.

Stakeholder

Any individual or group who is involved in, has an interest in, or is affected by a business.

Sole Trader

A small business owned and controlled by one person.

Unlimited Liability

A legal condition where business owners are personally responsible with their own wealth to pay off the debts of the business if it fails.

Partnership

A business owned and controlled by a group of 2 or more people (usually up to 20) who share capital, profits, and responsibilities.

Limited Liability

A legal condition where owners or shareholders are only responsible for the amount they invested in the business, which is the maximum they can lose if the business fails.

Dividend

A payment made to shareholders from the profit of a company after tax as a return on their investment.

Private Limited Company (ltd)

A business owned by shareholders and managed by a Board of Directors, where shares are sold privately to family and friends and cannot be sold on the stock exchange to the public.

Public Limited Company (plc)

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

Joint Venture

An agreement between two or more businesses to start and work on a project together.

Franchise

A contract that allows a business (franchisee) to use the brand name, logo, and ideas of another established business (franchisor).

Social Enterprise

A business that aims to achieve social and environmental objectives alongside financial profit, which is reinvested back into the business.

Globalization

The increase in world trade and movement of products, capital, and people between countries.

Multinational Business

A business that has investments, factories, branches, or offices in two or more countries.

Import Tariff

A tax placed on imported goods when they enter a country to protect local businesses or raise government revenue.

Import Quota

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

Exchange Rate Depreciation

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

Primary Sector

Businesses that extract natural resources from the earth (e.g., farming, fishing, forestry, and mining).

Secondary Sector

Businesses that manufacture and process raw materials provided by the primary sector into finished or semi-finished goods.

Tertiary Sector

Businesses that provide services to final consumers or to other business sectors (e.g., banking, tourism, retail).

Industrialization

The process of growing the secondary manufacturing sector relative to the primary sector in an economy.

Deindustrialization

The decline in the relative importance of the secondary manufacturing sector and an increase in the tertiary service sector in developed economies.

Inflation

The general rise in the average price level of goods and services in an economy over time.

Gross Domestic Product (GDP)

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

Business Cycle

The regular pattern of periodic fluctuations in GDP growth rate over time, encompassing Boom, Recession, Slump, and Recovery.

Fiscal Policy

Government economic policy that uses changes in taxation and public spending to influence the economy.

Monetary Policy

Government policy that uses changes in interest rates to influence economic activity and demand.

Monopoly

A market structure dominated by a single seller that faces no competition and offers a product with no close substitutes.

External Cost

The negative side-effects paid for by society rather than the business as a result of a business decision (e.g., pollution, congestion).

External Benefit

The positive impact on society resulting from a business decision (e.g., local job creation, improved infrastructure).

Horizontal Integration

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

Forward Vertical Integration

When a business merges with or takes over another firm in the same industry at a later stage of production (closer to the consumer).

Backward Vertical Integration

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

Economies of Scale

The reduction in average cost per unit resulting from an increase in the scale or output of a business.

Diseconomies of Scale

The factors that cause average cost per unit to rise when a business grows beyond a certain optimum size.

Span of Control

The number of subordinates working directly under a specific manager.

Chain of Command

The structure through which authority, orders, and communication are passed down through the levels of hierarchy in an organization.

Delegation

Passing authority down to a subordinate to perform a specific task or responsibility.

Democratic Leadership

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

Autocratic Leadership

A leadership style where managers make all decisions independently without consulting subordinates.

Laissez-Faire Leadership

A leadership style where managers set broad guidelines and leave subordinates free to organize their own work and make decisions.

Maslow's Hierarchy of Needs

A motivation theory that classifies human needs into five levels: Physiological, Safety, Social, Esteem, and Self-Actualization.

Hygiene Factors

External job factors (e.g., pay, job security, working conditions) identified by Herzberg that prevent dissatisfaction but do not directly motivate.

Motivators

Internal job factors (e.g., achievement, recognition, responsibility) identified by Herzberg that give workers job satisfaction and motivation.

Piece Rate

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

Job Enrichment

Adding higher-level, more challenging tasks to a job to develop employee skills and provide a sense of achievement.

Job Rotation

Swapping workers between different tasks of equal difficulty to reduce boredom and provide variety.

Labor Turnover

The proportion of employees who leave a business during a year, calculated as $\frac{\text{Number of staff leaving}}{\text{Total number of staff}} \times 100$.

Redundancy

When an employee's position is no longer needed by the business, resulting in the termination of their contract with a financial payout.

Job Description

A document outlining the tasks, duties, responsibilities, and key features of a specific job.

Job Specification

A document listing the qualifications, skills, experience, and personal characteristics required by an applicant to perform a job.

Induction Training

Training given to newly hired employees to introduce them to the business layout, colleagues, managers, processes, and safety rules.

On-the-Job Training

Training conducted at the workplace where an employee watches and learns directly from an experienced colleague.

Off-the-Job Training

Training conducted away from the immediate workplace, such as at a specialist training center or college.

Trade Union

An organization formed by workers to protect and promote their rights, wages, working conditions, and security.

Marketing

Identifying, anticipating, and satisfying customer needs profitably by creating the right product at the right price, place, and time.

Mass Marketing

Selling standardized products to the whole market without segmenting customer groups.

Market Segmentation

Dividing a broad market into distinct groups of consumers who share similar needs, traits, or characteristics.

Niche Marketing

Identifying and targeting a small, specialized segment of a larger market with specific tailored products.

Market Share

The total sales revenue of a single business expressed as a percentage of total sales revenue in the entire market.

Primary Research

The collection of new, first-hand data directly from consumers for a specific purpose.

Secondary Research

Gathering data that has already been collected by third parties or previous studies for a different purpose.

Brand Image

The identity, impression, or set of beliefs that consumers hold in their minds regarding a specific brand.

Product Life Cycle

The stages a product goes through over time from its initial research and launch to its growth, maturity, and ultimate decline.

Added Value

The difference between the cost of bought-in raw materials and the final selling price of the finished product.

Unique Selling Point (USP)

A distinctive feature or benefit of a product that sets it apart from all competing products.

Cost-Plus Pricing

A pricing strategy where a fixed percentage mark-up is added to the unit cost of producing a product.

Penetration Pricing

Setting a low initial price for a new product to attract large numbers of customers quickly and gain market share.

Price Skimming

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

Above the Line Promotion

Paid advertising in mass media outlets (e.g., television, radio, newspapers) to reach a broad target audience.

Below the Line Promotion

Short-term promotional incentives aimed directly at consumers (e.g., coupons, free samples, BOGOF, point-of-sale displays).

Channel of Distribution

The chain or pathway through which a product travels from the manufacturer to the ultimate consumer.

Startup Capital

The initial money needed by an entrepreneur to establish a business, rent premises, and buy non-current assets.

Working Capital

Finance required to pay for day-to-day operational expenses (e.g., wages, raw materials), calculated as Current Assets minus Current Liabilities.

Cash Flow Forecast

An estimate or projection of a business's expected future cash inflows and cash outflows month by month.

Income Statement

A financial document summarizing a business's sales revenue, cost of sales, overhead expenses, and profit over a trading period.

Statement of Financial Position

A financial report displaying the total net assets, liabilities, and owner's capital of a business at a specific date.

Return on Capital Employed (ROCE)

A profitability ratio calculating how efficiently capital is used to generate operating profit: $\text{ROCE} = \frac{\text{Net Profit}}{\text{Capital Employed}} \times 100$.

Current Ratio

A liquidity ratio measuring a firm's ability to cover short-term debts with current assets: $\text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}}$.

Acid Test Ratio

A strict liquidity ratio evaluating a business's ability to meet short-term liabilities without selling inventory: $\text{Acid Test Ratio} = \frac{\text{Current Assets} - \text{Inventories}}{\text{Current Liabilities}}$.

Breakeven Point

The exact level of output where total sales revenue equals total costs ($\text{Total Revenue} = \text{Total Costs}$), resulting in zero profit and zero loss.

Job Production

A production method where a single, unique product is made at one time specifically according to customer requirements.

Batch Production

A production method where a set quantity of identical items are made together in a group before switching to a different batch.

Flow Production

The continuous mass production of standardized goods along an assembly line using capital-intensive machinery.

Lean Production

An operational philosophy focused on eliminating all forms of waste in the production process to improve efficiency.

Just in Time (JIT)

An inventory management method where raw materials arrive exactly when required in production, keeping stock-holding costs to a minimum.

Quality Control

A traditional, product-oriented approach where inspectors check finished products at the end of the production line to reject defectives.

Quality Assurance

A process-oriented quality system where standards are maintained and verified at every stage of production to prevent defects from occurring.

Total Quality Management (TQM)

An organization-wide culture where every employee is continuously focused on quality and customer satisfaction at every stage of work.

Business Plan

A formal written document detailing a business's goals, market research, financial forecasts, and operational strategies.