Cambridge IGCSE Business Studies 0450 (2026) Vocabulary

Comprehensive vocabulary flashcards covering the key terms, economic concepts, and financial ratios found in the Cambridge IGCSE Business Studies 0450 syllabus for the 2026 exam cycle.

Syllabus 0450

The official Cambridge IGCSE Business Studies syllabus identifier for exams in the June, November, and March (India-only) series for the year $2026$.

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Opportunity Cost

The business concept describing the cost of the next best alternative that is foregone when making a choice between competing needs and wants.

Specialisation

The process where individuals or businesses focus on a specific task or production process to increase efficiency in business activity.

Added Value

The difference between the cost of purchasing raw materials and the price the finished goods are sold for; it can be increased by improving product features or branding.

Primary Sector

The part of the economy involved in the extraction of natural resources, used as a basis for business classification.

Secondary Sector

The part of the economy involved in manufacturing and processing raw materials into finished goods.

Tertiary Sector

The economic sector that provides services to consumers and other businesses.

Entrepreneur

An individual who organises and operates a business, taking on financial risks in the hope of profit.

Capital Employed

A method of measuring business size based on the total value of long-term finance invested in the business, excluding profit.

Unincorporated Business

A business that does not have a separate legal identity from its owners, such as sole traders and partnerships.

Limited Liability

A legal structure where the financial liability of business owners is restricted to the amount they invested in the company (e.g., private and public limited companies).

Social Enterprise

A business with mainly social objectives that reinvests most of its profits into benefiting society rather than being driven solely by profit-making.

Stakeholders

Internal and external groups, such as owners, employees, consumers, and government, who have an interest in a business's objectives and activities.

Labour Productivity

A measure of efficiency in the workforce, reflecting the output produced per worker in a given time period.

Maslow’s Hierarchy

A motivational theory that categorizes human needs into a hierarchy that people seek to satisfy in a specific order.

Job Enrichment

A non-financial method of motivation that involves making a job more challenging and rewarding by giving workers more responsibility.

Span of Control

The number of subordinates working directly under a manager in a hierarchical structure.

Chain of Command

The route through which authority and information are passed down from the top of an organization to the bottom.

Autocratic Leadership

A leadership style where the manager makes all decisions alone without consulting employees.

Laissez-faire Leadership

A leadership style where managers give employees a high degree of freedom to make their own decisions and complete their work.

Redundancy

The termination of employment because the job role is no longer required by the business, as opposed to dismissal for misconduct.

Niche Marketing

A marketing strategy focused on a small, specialized segment of a larger market.

Market Segmentation

The process of dividing a market into distinct groups of consumers with similar characteristics, such as age, location, or gender.

Marketing Mix (Four Ps)

The combination of Product, Price, Place, and Promotion used by a business to influence consumer decisions.

E-commerce

The use of the internet and social media networks to promote and sell goods and services to consumers.

Lean Production

A production approach focused on reducing waste and improving efficiency through methods like Kaizen and just-in-time inventory control.

Break-even Output

The level of output at which total revenue equals total costs and the business makes neither a profit nor a loss.

Margin of Safety

The difference between the actual or expected level of output and the break-even level of output.

Quality Assurance

A system where standards are set and checked at every stage of production to ensure the final product is free of defects.

Gross Profit Margin

A profitability ratio used to analyse financial performance, calculated as $\frac{\text{gross profit}}{\text{revenue}} \times 100$.

Acid Test Ratio

A liquidity ratio that measures a business’s ability to meet immediate liabilities without selling inventories.

Gross Domestic Product (GDP)

The total value of all goods and services produced within a country in a year, used as an indicator of economic growth.

Externalities

The impact of business activity on the environment and society, which can reflect both external costs (e.g., pollution) and external benefits.

Multinational Company (MNC)

A business that operates in more than one country, with production facilities outside its home nation.

Command Word: Justify

An examination instruction requiring the candidate to support a case or decision with evidence or an argument.