Component 1 Business as level Eduqas

Revenue

The income generated by a business from its trading activities — calculated as price multiplied by quantity sold.

Fixed Costs

Costs that do not vary with output in the short run — such as rent, salaries and insurance.

Variable Costs

Costs that vary directly with output — such as raw materials and direct labour.

Total Costs

Fixed costs plus variable costs at a given level of output.

Gross Profit

Revenue minus cost of sales — before deducting operating expenses.

Net Profit

Gross profit minus all operating expenses — the profit available to the owner after all costs.

Profit Margin

Profit expressed as a percentage of revenue — measures how efficiently a business converts sales into profit.

Gross Profit Margin

Gross profit divided by revenue multiplied by 100.

Net Profit Margin

Net profit divided by revenue multiplied by 100.

Break-Even Point

The level of output at which total revenue equals total costs — neither profit nor loss is made.

Break-Even Output

Fixed costs divided by the contribution per unit.

Contribution

Selling price minus variable cost per unit — the amount each unit contributes toward fixed costs and profit

Margin of Safety

The difference between actual output and break-even output — the amount by which sales can fall before a loss is made

Cash Flow Forecast

A financial document predicting the expected inflows and outflows of cash over a future period.

Net Cash Flow

Total cash inflows minus total cash outflows in a given period.

Opening Balance

The amount of cash held at the beginning of a period.

Closing Balance

The amount of cash held at the end of a period — opening balance plus net cash flow.

Liquidity

The ability of a business to meet its short-term financial obligations using available cash or assets easily converted to cash.

Insolvency

When a business is unable to pay its debts as they fall due.

Variance

The difference between budgeted and actual figures — adverse if worse than expected, favourable if better.

Sources of Finance

The means by which a business raises money — internal (retained profit, sale of assets) or external (loans, share issue).

Internal Finance

Funding generated from within the business — such as retained profit and working capital management

External Finance

Funding raised from outside the business — such as bank loans, overdrafts and share issues.

Retained Profit

Profit kept within the business after tax and dividends — reinvested for future growth.

Venture Capital

Finance provided by specialist investors to high-risk, high-growth businesses in exchange for equity.

Crowdfunding

Raising small amounts of finance from a large number of people — typically through online platforms.

Trade Credit

An arrangement allowing a business to buy goods and pay for them at a later date.

Marketing

The process of identifying, anticipating and satisfying customer needs profitably.

Marketing Mix

The combination of factors used by a business to market its product — traditionally the 4Ps: Product, Price, Place and Promotion.

Promotion

The methods used to communicate the existence and benefits of a product to customers.

USP (Unique Selling Point)

The distinctive feature of a product that differentiates it from competitors and gives customers a reason to buy.

Product Life Cycle

The stages a product passes through from launch to withdrawal — introduction, growth, maturity and decline.

Extension Strategy

An action taken to prolong the maturity stage of the product life cycle — such as rebranding, new packaging or entering new markets.

Boston Matrix

A portfolio analysis tool classifying products by market share and market growth rate into four categories — stars, cash cows, question marks and dogs.

Price Skimming

Setting a high initial price for a new product to maximise revenue from early adopters before lowering it.

Penetration Pricing

Setting a low initial price to gain market share quickly before raising prices.

Cost-Plus Pricing

Adding a fixed percentage profit margin to the cost of production to set the selling price.

Promotional Pricing

Temporarily reducing prices to boost sales — such as buy one get one free offers.

Psychological Pricing

Setting prices that appear more attractive to consumers

Public Relations (PR)

Managing the reputation of a business through media coverage and community engagement.

E-Commerce

The buying and selling of goods and services over the internet.

Niche Market

A small, specialised segment of a larger market with specific needs.

Mass Market

A large, undifferentiated market where products are aimed at the broadest possible range of consumers.

Market Research

The process of gathering, analysing and interpreting information about a market, including customers, competitors and the overall environment.

Primary Research

The collection of new, first-hand data specifically for the current research purpose — also called field research.

Secondary Research

The use of existing data collected for another purpose — also called desk research.

Qualitative Research

Research that explores opinions, attitudes and motivations in depth — through interviews and focus groups.

Quantitative Research

Research that collects numerical data that can be statistically analysed — through surveys and questionnaires.

Market Segmentation

Dividing a market into distinct groups of consumers with similar needs, characteristics or behaviours.

Sampling

The process of selecting a representative group from the target population for research purposes.

Random Sampling

Every member of the target population has an equal chance of being selected.

Quota Sampling

The population is divided into segments and a fixed number of respondents are selected from each.

Target Market

The specific group of consumers at whom a product or marketing campaign is aimed.

Correlation

A statistical relationship between two variables in market research data — does not necessarily imply causation.

Sole Trader

A business owned and operated by one person who has unlimited liability for all debts.

Private Limited Company (Ltd)

A business incorporated as a separate legal entity with limited liability — shares can only be sold privately with shareholder agreement.

Public Limited Company (PLC)

A company that can sell shares to the general public through the stock exchange — must have a minimum share capital.

Limited Liability

Where the financial liability of shareholders is limited to the amount they invested — personal assets are protected.

Unlimited Liability

Where the owner is personally responsible for all business debts — personal assets can be seized to pay creditors.

Incorporation

The legal process of forming a company as a separate legal entity distinct from its owners.

Memorandum of Association

A legal document required to set up a company, stating its name, registered address and objectives.

Articles of Association

A legal document outlining the internal rules and procedures of a company.

Franchise

A business arrangement where a franchisor grants a franchisee the right to operate under its brand and business model in exchange for fees and royalties.

Social Enterprise

A business that prioritises social, environmental or community objectives alongside or above profit generation

Cooperative

A business owned and democratically controlled by its members — who share profits and decision making equally.

Business Objective

A specific, measurable goal that a business aims to achieve within a given timeframe.

Profit Maximisation

The objective of achieving the greatest possible difference between total revenue and total costs.

Sales Maximisation

The objective of achieving the highest possible level of sales revenue regardless of profit.

Market Share

The proportion of total market sales accounted for by one firm — expressed as a percentage.

Corporate Social Responsibility

The commitment of a business to behave ethically and contribute positively to society and the environment beyond its legal obligations.

Mission Statement

A brief statement summarising the overall purpose and values of a business.

SMART Objectives

Objectives that are Specific, Measurable, Achievable, Realistic and Time-bound.

Short-termism

A focus on achieving immediate results at the expense of long-term performance and sustainability.

Business Activity

The process of producing goods or providing services to satisfy consumer needs and wants in order to generate profit or achieve other objectives.

Entrepreneur

An individual who takes the risk of setting up and running a business, combining factors of production in pursuit of profit.

Enterprise

The willingness to take risks and show initiative in organising resources to start and run a business.

Added Value

The difference between the selling price of a product and the cost of inputs used to produce it — created through branding, design, quality and convenience.

primary sector

Economic activity involving the extraction of natural resources — such as farming, mining and fishing.

Secondary Sector

Economic activity involving the transformation of raw materials into finished goods — manufacturing and construction.

Tertiary Sector

Economic activity involving the provision of services — such as retail, finance and hospitality.

Quaternary Sector

Economic activity involving knowledge-based services — such as IT, research and development and consultancy.

Opportunity Cost

The value of the next best alternative foregone when a business decision is made.

Stakeholder

Any individual or group with an interest in the activities and performance of a business — including shareholders, employees, customers and the community.

Shareholder

An individual or institution that owns shares in a limited company and is entitled to a proportion of profits as dividends.