IGCSE Business Studies - Vocabulary Flashcards

Needs

Goods or services that are essential for survival.

Wants

Goods or services customers desire but are not essential for survival.

Economic Problem

Unlimited wants but limited resources to satisfy the wants.

Scarcity

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

Factors of production

Resources needed to produce goods and services: Land, Labour, Capital, and Enterprise.

Land

Any natural resource used in production.

Labour

Mental and physical efforts of employees.

Capital

Finance, machinery and equipment needed for the manufacture of goods.

Enterprise

Individual or individuals who manage/coordinate the three other factors, make decisions and take risks.

Opportunity Cost

The next best alternative is given up by choosing another item.

Specialisation

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

Division of labour

When production is split into different tasks, and each worker performs one of these tasks; it is a form of specialisation.

Business Activity

Businesses combine scarce factors of production to produce goods or services to satisfy people’s needs and wants.

Added Value

The difference between the cost of purchasing bought-in material and the price of the finished goods.

Primary sector

Industry extracts and uses the earth's natural resources to produce raw materials for other businesses.

Secondary sector

Industry manufactures goods using the raw materials provided by the primary sector.

Tertiary sector

Industry provides services to consumers and other industry sectors.

De-industrialisation

When there is a decline in the importance of the secondary sector.

Mixed Economy

Has both a private sector and a public sector.

Private Sector

Businesses NOT owned by the government will decide what and how to produce; the main aim is to make profits.

Public Sector

Owned by the government; the government will decide what and how to produce; the main aim is to provide a service to customers.

Privatisation

Selling a public sector business to the private sector.

Entrepreneur

A person who organises, operates and takes risk to make the business better.

Business Plan

A document containing the business objectives and essential details about operations, finance and owners of the new business.

Capital Employed

The total value of capital used in the business.

Internal Growth

When the business expands its existing operations by purchasing additional equipment, increasing the size of its premises and hiring more labour if needed.

External Growth

When the business takes over or merges with another business.

Takeover

When one business buys out the owners of another business, which then becomes part of the ‘predator’ business.

Merger

When two owners of a business agree to join their businesses together.

Horizontal Integration

The same industry and stage of production firms merge or take over.

Vertical Integration

When one business merges or takes over another business in the same industry but at different stages of production.

Forward integration

When merging/takeover is done with the next stage of production.

Backward integration

When merging/takeover is done with the previous production stage.

Conglomerate Merger

A firm merging/taking over another firm in a different industry.

Unincorporated Business

A business that does not possess a separate legal identity from its owner.

Unlimited liability

The owner can be held responsible for the business's debts.

Incorporated Business

Business with a separate legal identity.

Limited liability

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

Sole Trader

A business owned and controlled by one person- the owner, who is the sole proprietor. It is a form of an unincorporated business.

Partnerships

A form of business in which two or more people agree to own a business jointly. It can be set up by creating a partnership deal. It’s a form of unincorporated business.

Deal of partnership

The written and legal agreement between business partners. It is not essential but is recommended

Private Limited Company

Business owned by shareholders but cannot sell shares to the public.

Shareholders

Owners of a limited company who buy shares represent part-ownership of the company.

Articles of Association

Contains the rules for managing the company.

Memorandum of Association

Contains vital information about the company and the directors.

Public Limited Company

Businesses owned and controlled by the shareholders, but they sell to the public, and their shares are tradeable on the stock exchange.

Annual General Meeting

A yearly meeting where shareholders may attend to vote for a Board of Directors for the upcoming year.

Dividends

Payments made to shareholders from the profit of a company. They are the return for investing in the company.

Franchise

An agreement of a business based upon an existing brand/business.

Franchisee

The company that received permission to conduct business using the company’s name and brand.

Franchisor

The company that allows another company to conduct business using the company’s name and brand.

Joint Venture

Is when two or more businesses join together to create a new business.

Public Corporations

A business in the public sector owned and controlled by the state of government.

Business Objectives

Are aims or targets a business works towards.

Social Enterprise

An enterprise with social objectives and aims to make a profit to reinvest in the business.

Stakeholder

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

Motivation

Factors that influence the workers' behaviour towards achieving business goals.

Absenteeism

Workers’ non-attendance at work without a good reason.

Labour turnover

The rate at which workers leave the business.

Labour productivity

A measure of the efficiency of workers by calculating the output per worker.

Theory of economic man

The theory that humans are only motivated by money, in which Taylor believed that money was the only motivational factor.

Hygiene Factors

The factors that must be present in the workplace to prevent job dissatisfaction.

Job dissatisfaction

How unhappy and discontent a person is with their job.

Job Rotation

increasing variety in the workplace by allowing workers to switch from one task to another.

Job satisfaction

how content and happy a person is with their job

Job Enlargement

increasing or widening tasks to increase the variety of workers.

Job Enrichment

organising work so workers are encouraged to use their full ability. This increases job satisfaction.

Job redesign

increasing the variety or difficulty of tasks to discuss more exciting and challenging work for workers.

Quality circles

a group of workers who meet regularly lower down in the organisation.

Team working

organising production so that groups of workers complete the whole unit of work.

Delegation

passing responsibility for performing a task to workers lower down in the organisation.

Centralised Organisation

one where all the important decision-making power is held at the head office/the centre and then passed down to lower levels.

Organisational Structure

levels of management and division of responsibilities within a company.

Organisational Charts

refers to diagrams that outline the internal management structure.

Hierarchy

refers to the levels of management in any organisation.

Levels of Hierarchy:

management/supervisors/other employees who are given a similar level of responsibility in an organisation.

Chain of Command

The structure in an organisation allows instructions to be passed down from senior management to subordinates.

The Span of Control

The number of subordinates working directly under a manager.

Subordinate

an employee below another employee in the organisation’s hierarchy.

Tall Structure

the longer the chain of command is, the ‘taller‘ the organisational structure and the ‘narrower‘ the span of control.

Flat Structure

when a chain of command is short, the organisation will have a ‘wider’ span of control, thus making it a ‘flat‘ structure.

Delayering

reducing the size of the hierarchy by removing one or more levels, often the middle management.

Decentralised Organisation

one where decisions are made based on local needs.

Leadership Styles

The different approaches to dealing with people and making decisions when in a position of authority.

Autocratic Leadership

where the manager expects to be in charge of the business and to have their orders followed.

Democratic Leadership

gets other employees involved in the decision-making.

Laissez-Faire Leadership

makes the broad objectives known to employees, but then they are left to make decisions and organise their work.

Trade Unions

A group of employees who have joined to protect their interests

Recruitment

is the process of identifying that the business needs to employ someone up to the point at which applications have arrived.

Employee Selection

is the process of evaluating candidates for a specific job and selecting an individual based on the organisation's needs.

Job analysis

it identifies and records the responsibilities and tasks relating to a job

Job Specification

outlines the responsibilities and duties to be carried out by someone employed to do a specific job.

Job description

a document that outlines the tasks and responsibilities that will need to be carried out as part of the specific job.

Person Specification

outlines the required skills, qualifications, personal qualities, etc., for a specific job.

Internal Recruitment

is when a vacancy is filled by someone who is an existing employee of the business

External Recruitment

when any suitable applicant outside the business fills a vacancy

Part-time Employees

work for less than 35 hours a week.

Full-time Employees

work for more than 35 hours a week

Induction Training

an introduction given to an employee, explaining the business’s activities, customs, and procedures and introducing them to their fellow workers.

On-the-job Training

Occurs by watching a more experienced worker doing their job.