IGCSE CAIE Business Studies

Needs

Essential things required for survival like shelter, food, and water, always in demand with many competitors and customers.

Wants

Desirable items not essential for survival, easier to have a unique product, usually more expensive, and easier to enter the market.

Scarcity

Lack of sufficient resources to fulfill total wants, leading to choices and opportunity costs.

Opportunity Cost

The loss of the next best alternative when making a decision, representing what is given up.

Specialisation

Focusing on what one does best to use resources effectively, leading to efficiency and increased output.

Business Objective

Targets or aims a business works towards, such as increasing production or profit.

Added Value

The difference between the selling price and the cost of inputs, achieved through methods like service, design, branding, quality, and convenience.

Stages/Chain of Production

Primary Sector (extracts raw materials), Secondary Sector (manufactures goods), Tertiary Sector (provides services).

Sectoral Change

Shifts in the sector of operation as economies grow, with higher added value and profits in subsequent sectors.

Primary Sector Employment

In the least developed nations, a high proportion of the workforce is engaged in the primary sector due to lower education rates and lack of infrastructure for manufacturing or services.

Emerging Economies

Improved technology in emerging economies leads to less labor needed in the primary sector, with a shift towards manufacturing and businesses relocating for lower wages.

Developed Economies

Developed nations focus on services, especially the quaternary sector, by investing in advanced education and skills training to support industry growth.

Public Sector Firms

Entities owned by the government, providing services like transport, healthcare, and utilities, aiming to serve the community, protect industries, and ensure national security.

Private Sector Firms

Businesses owned by individuals or firms, focusing on profit maximization, often more efficient than the public sector with various ownership structures.

Entrepreneurship

Entrepreneurship involves organizing resources, making business decisions, and taking risks for new ventures, requiring skills like communication, problem-solving, and characteristics such as risk-taking and creativity.

Business Plans

Documents outlining business objectives, operations, and financial forecasts, aiding in reducing risks, raising finance, and providing clear goals for the business.

Measuring Business Size

Methods include the size of the workforce, value of capital employed, sales, and output, each with limitations in accurately measuring business size and growth.

Market Share

Percentage of total market revenue that a single firm has

Product Diversification

Firm is able to increase the number of products it offers

Organic (Internal) Growth

Business expands its existing, often paid for by the profits of the business

Inorganic (External) Growth

Growth that is driven by internal expansion using reinvested profits or loans

Vertical Integration

When one firm merges or takes over a firm in the same industry but at a different stage of production

Horizontal Integration

When one firm merges or takes over another firm in the same industry at the same stage of production

Conglomerate Integration

When one firm merges or takes over another firm in a completely different industry, also known as diversification

Unlimited Liability

Owners are fully responsible for all debts owed by the business

Limited Liability

Owners (shareholders) of private limited companies and public limited companies can only lose the original amount they invested in the business if it fails

Sole Trader

A business that has a single owner (although they may still hire employees)

Public Limited Company (PLC)

An incorporated, limited type of business organization that allows shares to be sold to the public through the stock market.

Annual General Meeting (AGM)

An annual meeting between directors and shareholders of a company to vote on major company decisions and inform them about company performance.

Sleeping/Silent Partner

A partner that only provides money and receives profit returns but isn't involved with management.

Limited Liability Partnership (LLP)

Some/all partners have limited liability, but they also have to retain an automatic management responsibility.

Sole Proprietor

Owner of a Sole Trader business.

Franchising

Involves a business buying the rights to operate an existing successful business model in exchange for an initial lump sum plus ongoing royalties.

Royalties

Legally binding payments made to an individual or company for the ongoing use of their franchise model.

Franchisor

The company that allows the distribution of its goods and services.

Franchisee

The business organization that buys the rights to use the company's brand name.

Joint Venture

A medium- to long-term agreement for two or more separate businesses to join together to achieve a defined business outcome.

Sales Revenue

The income generated from sales, ensuring it exceeds business costs.

Overhead

Business expenses like rent or salaries not directly linked to product output.

Market Segment

Groups of consumers with similar characteristics.

Market Share

The percentage of total market revenue a business achieves.

Social Enterprise Objectives

Social entrepreneurs focus on social, environmental, ethical, and financial goals.

Private Sector Objectives

Profit maximization, growth, shareholder returns, market share, and survival.

Stakeholders

Individuals or groups affecting or affected by business actions.

Motivation

Inner drive leading to action and goal achievement.

Maslow's Hierarchy of Needs

Five tiers of human needs influencing motivation and behavior.

Absenteeism

Employees taking sick leaves due to lack of motivation.

Full Potential

Feeling that you have done a good job and achieving your maximum capabilities.

Taylor’s Scientific Management Theory

Developed by Frederick Taylor, focuses on breaking down complex tasks, standardizing work processes, and providing clear instructions to achieve efficiency.

Herzberg’s Motivation Theory

Suggests hygiene factors and motivators influence employee motivation and job satisfaction.

Financial Methods of Motivation

Incentives like wages, salaries, commission, profit-sharing, bonuses, performance-related pay, and fringe benefits to motivate employees financially.

Non Financial Methods of Motivation

Incentives like job enrichment, job rotation, job enlargement, teamwork, training, promotion opportunities, and autonomy to motivate employees non-financially.

Span of Control

The number of employees that a manager or supervisor can effectively manage

Tall Organisational Structure

A structure with multiple levels of management, a long chain of command, and a narrow span of control

Short Organisational Structure

A structure with fewer layers of management, a short chain of command, and a wide span of control

Subordinates

Employees who work directly under a manager in an organizational chart

Delayering

Removing layers from the hierarchy to flatten the organizational structure, improve communication, and save costs

Delegation

The process of giving responsibility and authority to subordinates by managers

Autocratic Leadership

Leadership style where the leader holds absolute power, makes decisions without input, and expects strict obedience

Democratic Leadership

Leadership style involving employees in decision-making, encouraging discussion, and teamwork

Laissez-Faire Leadership

Leadership style where leaders provide minimal guidance, allowing employees autonomy in decision-making

Trade Union

An organization representing workers' interests in negotiations with management, aiming to protect and advance members' rights.

Trade Unions

Organizations that represent workers in negotiations with employers to improve working conditions, benefits, and training.

Job Description

Outlines the duties, responsibilities, and requirements of a specific job, including hours, location, and managerial responsibilities.

Person Specification

Details the qualifications, skills, and personal attributes required from a candidate for a specific job.

External Recruitment

Involves appointing employees from outside the business, requiring job analysis, job description, and job specification.

Internal Recruitment

Involves promoting or redeploying existing employees, saving on training costs and encouraging employee development.

Full-time Employment

Contracts where employees work 35+ hours a week, fostering loyalty but potentially leading to overstaffing during slow periods.

Part-time Employment

Contracts for 1-30 hours a week, offering flexibility but may pose challenges in communication and promotion opportunities.

Induction Training

Introduces new employees to the organization, its culture, and job roles to improve understanding and productivity.

On-The-Job Training

Employees learn new skills while working, tailored to their job roles, but may lead to disruptions and bad habits.

Off-The-Job Training

Training away from the workplace, providing fresh ideas and expert knowledge, but can be costly and impact productivity.

Downsizing

Reducing the size of the workforce due to reasons like automation or less demand, requiring careful planning and decisions on dismissals or redundancies.

Redundancy

When a business no longer needs an employee and dismisses them, often with compensation, due to reasons like falling sales or economic recession, regardless of the employee's fault.

Equal Employment Opportunities

Laws ensuring fair job advertising and treatment of all applicants, regardless of race, gender, religion, age, etc., to avoid fines and prosecution for discriminatory practices.

Legal Minimum Wage

Governments set a minimum wage above market rates to prevent employers from paying below that rate, with variations by age in some countries.

Unfair Discrimination

Prohibits discrimination based on age, color, race, nationality, ethnic origin, disabilities, or gender in various aspects of employment.

Employment Contracts

Legal agreements between employers and employees outlining terms and conditions, providing clarity, security, and grounds for legal action if breached.

Unfair Dismissal

When a worker is dismissed unfairly, they can appeal to an industrial tribunal for resolution, especially in cases like joining a trade union or pregnancy.

Health and Safety at Work Act

Mandates employers to provide safe premises, machinery, working conditions, safety equipment, hygiene, suitable temperatures, and breaks for employees.

Internal Communication

Exchange of messages within an organization.

External Communication

Exchange of messages between an organization and external entities like customers, suppliers, or investors.

Communication Barriers

Factors hindering effective communication, including sender issues, medium problems, and receiver challenges, with solutions to overcome them.