All of Business CIE igcse definitions

Need

A good or service that is essential for living.

Want

A good or service that people would like to have but is not necessary for living.

Economic problem

There are unlimited wants but limited resources to produce the goods and services to satisfy wants.

Factors of production

Resources needed to produce goods and services; includes land, labour, capital, and enterprise.

Scarcity

The lack of sufficient products to fulfil the total wants of the population.

Opportunity Cost

The next best alternative given up by choosing another item.

Specialization

When people and businesses concentrate on what they are best at.

Division of labour

When the production process is split up into different tasks and each worker performs one of these tasks.

Business

Combines factors of production to make products (goods and services) which satisfy people's wants.

Added Value

The difference between the selling price of a product and the cost of bought-in materials and components.

Primary Sector

Extracts and uses natural resources to produce raw materials used by other businesses.

Secondary Sector

Manufactures goods using raw materials provided by the Primary Sector.

Tertiary Sector

Provides services to customers and other sectors of industry.

De-industrialization

A decline in the importance of the secondary, manufacturing sector of industry in a country.

Mixed Economy

Has both a private sector and a public sector.

Private Sector

Businesses not owned by government; aim to run profitably.

Public Sector

Government-owned, controlled businesses and organizations.

Capital

Money invested into business by owners.

Entrepreneur

A person who organizes, operates and takes the risk for a new business venture.

Business Plan

Document containing the business objectives and important details about operations, finance and ownership.

Capital Employed

Total value of capital used in the business.

Internal Growth

When a business expands its existing operations.

External Growth

When a business takes over or merges with another business.

Integrations/Merger

When two businesses agree to join their firms together to make one business.

Takeover/Acquisition

One business buys out the owners of another business which then becomes part of the 'predator' business.

Horizontal Integration

When one company merges with or takes over another in the same industry and stage of production.

Vertical Integration

When one company merges with or takes over another at a different stage of production.

Conglomerate Integration/Diversification

When one company merges with or takes over another in a completely different industry.

Sole Trader

Business owned by one person and has unlimited liability.

Limited Liability

The liability of shareholders in a company is only limited to the amount they invested.

Unlimited Liability

The owners of a business can be held responsible for the debts of the business.

Partnership

A form of business in which two or more people agree to jointly own a business.

Partnership Agreement

The written legal agreement between partners.

Unincorporated Business

Business that does not have a separate legal entity.

Incorporated Business

Companies that have a separate legal status from their owners.

Private Limited Company (LTD)

An incorporated business owned by shareholders whose shares can’t be sold to the general public.

Public Limited Company (PLC)

Business owned by shareholders but can sell shares to the public.

Shareholders

Owners of a limited company who buy shares representing part ownership.

Annual General Meeting

A legal requirement for all companies where shareholders vote on the Board of Directors.

Dividend

Payments made to shareholders from the profit of a company.

Franchise

Business based upon the use of brand names and trading methods of an existing business.

Business Objective

Aims and targets that a business works towards.

Profit

Total income (sales revenue) minus total costs.

Market share

Proportion of total market sales achieved by one business.

Social Enterprise

Has social objectives as well as an aim to make profit.

Stakeholder

A person or group with a direct interest in the performance and activities of a business.

Motivation

The reason why employees want to work hard and effectively for the business.

Wage

Payment for work, usually paid weekly.

Salary

Payment for work, usually paid monthly.

Commission

Payment relating to the number of sales made.

Profit sharing

Proportion of company’s profits paid to employees.

Bonus

Additional payment above basic pay as reward for good work.

Performance-related pay

Pay related to effectiveness of employee output.

Share ownership

Shares of a company given to employees so they become part owners.

Time Rate

The amount paid to an employee for one hour of work.

Piece Rate

Amount paid for each unit of output.

Teamworking

Involves using groups of employees and allocating specific tasks.

Training

The process of improving an employee’s skills.

Promotion

The advancement of employees in an organisation.

Appraisal

Method of assessing the effectiveness of employees.

Fringe benefits

Non-financial rewards given to employees.

Job satisfaction

Enjoyment derived from feeling that you have done a good job.

Job rotation

Workers swap tasks for a specific time.

Job enlargement

Extra tasks of similar level are added to a worker’s job description.

Job enrichment

Adding tasks that require more skill and/or responsibility.

Organizational structure

Refers to levels of management and division of responsibilities.

Organisation chart

A diagram that outlines the internal management structure.

Hierarchy

Levels of management from highest to lowest.

Chain of command

Structure which allows instructions to be passed down.

Span of control

Number of subordinates directly under a manager.

Directors

Senior managers leading a department or division.

Line managers

Have direct responsibility over people below them.

Supervisors

Junior managers controlling employees below them.

Staff managers

Specialists providing support to line managers.

Delegation

Giving subordinates authority to perform tasks.

Leadership styles

Different approaches to dealing with people in authority.

Autocratic leadership

Manager expects to be in charge and to have orders followed.

Democratic leadership

Gets employees involved in decision making.

Laissez-faire leadership

Makes objectives known; workers organize their own work.

Trade union

Group of workers ensuring their interests are protected.

Closed shop

All members must be members of the same trade union.

Recruitment

Process from identifying the need to employ someone.

Employee Selection

Process of evaluating candidates for a job.

Job analysis

Identifies and records job responsibilities.

Job description

Outlines responsibilities and duties for a specific job.

Job specification

Outlines requirements for a specified job.

Internal recruitment

Filling vacancy with an existing employee.

External recruitment

Filling vacancy with someone who is not an existing employee.

Part-time

Employment between 1 and 35 hours per week.

Full-time

Employment for 35 or more hours per week.

Induction training

Introduction to new employees on firm’s activities.

On-the-job training

Training by watching experienced workers.

Off-the-job training

Training outside the workplace, by specialists.

Workforce planning

Establishing the number and skills of workforce needed.

Redundancy

Employee is no longer needed; job loss not due to work.

Dismissal

When employment ends against employee's will.

Ethical decision

Decision taken based on the moral code of the firm.

Industrial tribunal

Legal meeting considering workers’ complaints.

Contract of employment

Legal agreement listing duties and responsibilities.

Communication

Transferring a message from sender to receiver.