BUSINESS DEFINITION OF CHAPTER 1-26

IGCSE BUSINESS Chapter 1-26 definitions 2024 MAY/JUNE

Economic Problem

Unlimited wants cannot be met because there are limited factors of production.This creates scarcity.

Consumer Goods

products which are sold to the final consumer

Consumer Services

non- tangible products such as; insurance services, and transport etc.

Mixed Economy

An economy where resources are owned and controlled by both Private and Public Sector

Capital Goods

Physical goods, such as Machinery & delivery vehicles, used by other businesses to help produce other goods & services.

Added value

It is the difference between the selling price of a product & the cost of materials bought

Increase Added valve

Increase selling price but keep the cost of materials same

Adding Value

Selling product or service at higher price based on the image of the product

Public Sector

The part of economy owned and controlled by government

Entrepreneur

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

Capital employed

is the total value of capital used in the business

Business Activity

The process of producing or supplying goods & service to satisfy consumer demand.

Need

A good or service essential for living.

Want

A good or service which people would like, but is not essential for living.

Factors Of Productions

The resources needed to produce goods & service i.e., land, labour, capital and enterprise and they are in limited supply.

Land

All natural resources available under, on, and over the surface of the earth, such as minerals, water, and sunlight.

Labour

is the number of people available to work.

Capital

is machinery, equipment & finance needed for production of goods & service

Enterprise

is people prepared to take risks of setting up the business - they are also known as entrepreneurs.

Scarcity .

There are not enough goods and Services to meet the wants of population

Opportunity cost

The next best alternative given up by choosing another

Specialization

People and businesses concentrate best at on what they are best at

Division of labour

Production is divided into separate tasks and each employee does just one of those tasks.

Primary Sector

Industrial sector which involves in the extraction and supplying natural resources

Secondary Sector

Industrial sector which involves in converting natural resources into finished goods.

Tertiary Sector

Industrial sector which involves in providing services.

Chain of production

The production, and supply of goods and services through primary,secondary, and tertiary sectors to the final consumer.

Private Sector

The part of economy owned and controlled by private individuals and companies for profit

Capital

is the money invested into the business by the owners

De -industrialization

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

Industrialization

the growing importance of secondary sector

Business Plan

is a detailed document that includes the business objectives,aims & important details about the operations.

Revenue

It is the amount a business receive from the sales of it's products

Internal Growth

occurs when a business expands its existing operations

External Growth

is when a business takes over with another business.

Horizontal Integration

is when one business merges with another one in the same industry at the same stage of production

Vertical integration

is when one business merges with another one in the same industry but at a different stage of production. …….. integration can be forward or backward.

Conglomerate integration

is when one business merges with another one with completely different industries

Chapter 4

Types of business organization.

Sole trader

is a business owned by one person

Limited liability

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

Unlimited liability

means that the owners of a business can be held responsible for the debts of the business they own. Their liability is not limited to the investment they made in the business

Partnership

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

Unincorporated business

a business that does not have a separate legal identity.

incorporated businesses

are companies that have separate legal status fromm their owners

Shareholders

a person who owns shares in a limited company

Private limited companies

are businesses owned by shareholders but they cannot sell shares to the public.

public limited companies

are businesses owned by shareholders but they can sell shares to the public and their shares are tradable on the Stock Exchange

Dividends

are payments made to shareholders from the profits of a company. They are the returns to shareholders for investing in the company.

A Franchise

is a business based upon the use of the brand names,logos and trading methods of an existing successful business.

A Joint Venture

where two or more businesses start a new project together,sharing capital, risks and profits

A Public Corporation

a business in the public sector that is owned and controlled by the government

Start-up capital

The finance needed when first setting up a business

Collaterals

are non-current assets offered as security against borrowing

Chapter 5

Business Objectives and Stakeholders objectives

Business objectives

the aims that a business works towards

Profit

is total income of a business minus total costs

Market share

is the percentage of total market sales held by one brand or business

Social Enterprise

a business with social objectives that reinvests most of its profit back into the business

Stakeholder

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

Corporate Social Responsibility (CSR)

Business taking responsibility for the Impact their activities might have on the society

Pressure Groups

A group of like-minded people that puts pressure on businesses and governments to change their policies

Piece rate

A payment to employees for the amounts of output theu produce

commission

A payment to sales staff for the amount they sell

the theory of economic man

The view that humans are only motivated by money

Non financial rewards

Methods used to motivate employees that do not involve giving financial rewards

Motivation

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

Wage

A payment for work usually paid weekly

Time rate

The amount paid to employees for how many hours worked

Salary

A payment for work, usually paid monthly

bonus

An additional payment above basic pay as a reward for the good work

Profit sharing

an additional payment to workers based on the profits of the business

job satisfaction

An enjoyment deprived from feeling that you have done a good job

Job rotation

Workers swapping jobs and doing a specific task for a limited time and switching to another job again

Job enrichment

Involves adding tasks in the existing job that require more responsibility

Job enlargement

Adding tasks of different nature to increase variety on job

Team working

Involves working in groups and allocating specific tasks and responsibilities to them

Training

The process of improving workers skills

Job promotion

The advancement of an employee in an organisation

Delegation

Giving subordinate the authority to perform a particular task

Labour productivity

The measure of the efficiency of employees by calculating the output per employee

Absenteeism

When the employee skips work without a good reason

Labour turnover

The rate at which employees start leaving the business

Hyngeine factors

The factors that must be present in a work place to prevent job disatisfaction

Motivators

The factors that influence employees to increase their efforts for the business

Fringe benefits

Non cash rewards used to retain and recruit employees

Quality circles

Groups of employees who regularly meet to discuss work related problems

Chain of command

the structure in an organization which allows instructions to be passed down from senior management to lower levels of management

The span of control

the number of subordinates working directly under a manager

Line managers

have direct responsibility for people below them in the organisational hierarchy

Staff managers

are specialists who provide support, information and assistance to line manager

Recruitment

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

Job Analysis

identifies and records the responsibilities and tasks relating to a job

Job description

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

Workforce planning

establishing the workforce needed by the business for the expected future in terms of the number and skills of employees required

Functional department

deals with the main activities of business meaning Finance, Marketing, Operations, HR, and R&D.

Decentralized Organization

Organization where the decision-making powers are passed down the organization to lower levels

A message

the information or instructions being passed by the sender to the receiver

the transamitter

The transmitter of the message is the person starting off the process by sending the message

The medium of communication

the method used to send a message for example verbal,oral,electronic and visual communication