CAIE IGCSE Business Studies Vocabulary Review

Comprehensive vocabulary list covering Chapter 1 through Chapter 6 of the CAIE IGCSE Business Studies syllabus, including business activity, management, marketing, operations, finance, and external influences.

Needs

Goods or services that are essential for survival.

Wants

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

Economic Problem

The situation of having unlimited wants but limited resources to satisfy them.

Scarcity

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

Land

Any natural resource used in the production of goods and services.

Labour

The mental and physical efforts of employees used in production.

Capital

The finance, machinery, and equipment needed for the manufacture of goods.

Enterprise

Individual/s who manage and coordinate the other factors of production, make decisions, and take risks.

Opportunity Cost

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

Specialisation

When people and businesses focus on the tasks or products they are best at.

Division of labour

When production is split into different tasks and each worker performs one of those specific tasks.

Added Value

The difference between the cost of purchasing bought-in material and the price of the finished goods; calculated as $\text{Added Value} = ext{selling price} - ext{total cost}$.

Primary Sector

Industry that extracts and uses the earth's natural resources to produce raw materials.

Secondary Sector

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

Tertiary sector

Industry that provides services to consumers and other industry sectors.

De-industrialisation

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

Mixed Economy

An economy that has both a private sector and a public sector.

Private Sector

Businesses not owned by the government whose main aim is typically to make profits.

Public Sector

Businesses owned by the government whose main aim is to provide a service to customers.

Privatisation

The process of selling a public sector business to the private sector.

Entrepreneur

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

Business Plan

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

Capital Employed

The total value of capital used in a business.

Internal Growth

When a business expands its existing operations.

External Growth

When a 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

When firms in the same industry and at the same stage of production merge or take over each other.

Vertical Integration

When one business merges with or takes over another business in the same industry but at a different stage of production (can be forward or backward).

Conglomerate Merger

A firm merging or taking over another firm in a different industry, also known as diversification.

Unincorporated Business

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

Unlimited liability

When the owner can be held responsible for the business's debts with their personal possessions.

Incorporated Business

A business with its own separate legal identity, such as private or public limited companies.

Limited liability

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

Sole Trader

A business owned and controlled by one person who is the sole proprietor.

Partnership

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

Private Limited Company (LTD)

A business owned by shareholders that cannot sell shares to the public.

Public Limited Company (PLC)

A business owned and controlled by shareholders whose shares are tradable on the stock exchange.

Dividends

Payments made to shareholders from the profit of a company as a return for their investment.

Franchise

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

Joint Venture

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

Stakeholder

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

Market Share

The total percentage of total market sales held by one brand or business, calculated as $\frac{ ext{Company Sales}}{ ext{Total Market Sales}} \times 100$.

Motivation

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

F.W. Taylor's Theory

The scientific management theory that suggests humans are only motivated by money (Economic Man).

Herzberg's Two-Factor Theory

A theory dividing motivation into hygiene factors (prevent dissatisfaction) and motivators (increase effort).

Job Enrichment

Organising work so workers are encouraged to use their full ability, increasing job satisfaction.

Chain of command

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

Span of control

The number of subordinates working directly under a manager.

Delayering

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

Autocratic Leadership

A style where the manager expects to be in charge and have their orders followed without employee input.

Democratic Leadership

A style that gets other employees involved in the decision-making process.

Laissez-Faire Leadership

A style where broad objectives are known, but employees are left to make decisions and organise their work.

Trade Union

A group of employees who have joined together to protect their interests, such as pay and working conditions.

Recruitment

The process of identifying that a business needs to employ someone up to the point of receiving applications.

Job description

A document that outlines the responsibilities and duties to be carried out by a person in a specific job.

Job specification

A document that outlines the requirements, qualifications, and personal characteristics needed for a job.

Induction Training

Introduction training given to an employee to explain business activities, procedures, and introduce fellow workers.

Redundancy

When an employee is no longer needed and loses their job, not due to unsatisfactory work.

Marketing

Identifying and satisfying customer needs profitably.

Mass Market

A market with a vast number of sales of a standardized product type.

Niche Market

A small, usually specialized segment of a mass market.

Primary Research

Gathering original data by directly contacting existing or potential customers.

Secondary Research

Gathering information that has already been collected and is available to others.

Marketing Mix

The combination of Product, Price, Place, and Promotion used to market a good or service.

Unique Selling Point (USP)

A special feature of a product that differentiates it from its competitors' products.

Product Life Cycle (PLC)

The stages a product passes through: Development, Introduction, Growth, Maturity, Saturation, and Decline.

Price Skimming

Setting a high price for a new, unique product or invention upon its market launch.

Penetration Pricing

Setting a price lower than competitors' prices to enter a new market and build market share quickly.

Price Elasticity of Demand (PED)

A measure of how responsive the demand for a product is to a change in its price.

Lean Production

Techniques used to cut down on waste and raise efficiency in the production process.

Kaizen

A Japanese term meaning continuous improvement, focusing on eliminating waste.

Just-in-time inventory (JIT)

A production method that reduces or eliminates the need to hold inventories of raw materials or finished products.

Fixed Costs

Costs that do not change with the level of output in the short run, also known as overheads.

Variable Costs

Costs that vary directly with the level of output.

Average Cost

The total cost of production divided by the total output; calculated as $\frac{ ext{Total Cost}}{ ext{Total Output}}$; also referred to as unit cost.

Economies of Scale

Factors that reduce average costs as a business grows in size.

Break-Even Level of Output

The quantity that must be produced and sold for total revenue to equal total costs.

Quality Control

Checking for quality at the end of the production process.

Quality Assurance

Checking for quality standards throughout the entire production process.

Total Quality Management (TQM)

The continuous improvement of products and processes by focusing on quality at every single stage of production.

Capital Expenditure

Money spent by a business on non-current assets like buildings or machinery.

Revenue Expenditure

Money spent on day-to-day, recurring expenses such as wages or raw materials.

Cash Flow

The cash inflows (money received) and outflows (money paid) of a business over a period of time.

Income Statement

A financial statement recording the income of a business and all costs incurred to earn that income over a period of time.

Gross Profit

The profit made when revenue is greater than the cost of sales, calculated as $\text{Revenue} - ext{Cost of Sales}$.

Net Profit

The profit made after deducting all costs (overheads) from gross profit.

Statement of Financial Position

A document showing the value of a business's assets and liabilities at a specific point in time.

Liquidity

The ability of a business to pay back its short-term debts.

Gross Domestic Product (GDP)

The total value of the output of goods and services in a country in one year.

Inflation

The increase in the average prices of goods and services over time.

Fiscal Policy

Government decisions regarding tax rates and public sector spending.

Monetary Policy

Government and central bank decisions regarding interest rates.

Globalisation

The process by which the world is becoming more interconnected, leading to increased trade and movement of people.

Exchange Rate

The price of one currency in terms of another currency.