IGCSE key vocab 1-4 Business

Scarcity

The fundamental economic problem where unlimited human wants exceed finite available resources.

Opportunity cost

The value or benefit of the next best alternative sacrificed when making an economic decision.

Land (Factor of Production)

All natural resources provided by the environment that are utilized in production, including agricultural fields, crude oil, and mineral deposits.

Labour (Factor of Production)

The aggregate physical and intellectual effort provided by human workers to create goods and services.

Capital (Factor of Production)

Human-made assets and equipment, such as machinery, factory buildings, and tools, employed to manufacture other goods.

Enterprise (Factor of Production)

The organizing skill and willingness to take financial risks demonstrated by an entrepreneur in combining productive inputs.

Primary sector

The initial stage of business activity focused on extracting and harvesting natural resources directly from the earth.

Secondary sector

The branch of economic activity that manufactures, processes, and constructs physical goods using raw materials.

Tertiary sector

The segment of the economy dedicated to offering commercial, professional, and personal services to consumers and businesses.

De-industrialisation

The ongoing economic transformation in developed nations characterized by the contraction of manufacturing and the expansion of the service industry.

Added value

The difference between the final selling price of an item and the direct cost of the bought-in materials required to produce it.

Sole trader

An unincorporated business entity owned and run by a single person who retains all control and assumes total personal debt liability.

Partnership

An unincorporated commercial structure established by 2 to 20 co-owners who share operational responsibilities, profits, and unlimited personal debt liability.

Unlimited liability

A legal condition where owners are directly responsible for all organizational debts, placing their private possessions and personal wealth at risk.

Private limited company (Ltd)

An incorporated commercial entity whose shares are sold privately to selected investors rather than on an open exchange, providing limited liability protection.

Public limited company (Plc)

A large incorporated enterprise with limited liability that sells shares to the general public on an open stock market, enabling massive capital accumulation.

Limited liability

A legal status guaranteeing that shareholders can lose only the financial sum they personally invested in the business if the firm collapses.

Franchise

A legal agreement where an independent operator purchases the right to trade and use the intellectual property of a recognized corporate brand.

Joint venture

A strategic collaboration in which two or more separate businesses pool capital and share operational risks to complete a defined project.

Business plan

A formal blueprint laying out commercial objectives, functional strategies, and projected cash flows to reduce operational risk and obtain commercial funding.

Accepted metrics of business size

Standard syllabus criteria evaluating scale via employee headcount, total value of output, or overall market share, excluding profit and share price.

Taylor's motivation theory

A classic approach stating that workers are driven almost exclusively by financial remuneration, recommending pay-by-results and piece-rate systems.

Maslow's Hierarchy of Needs

A five-level framework asserting that employee motivation moves sequentially from physiological basics through safety, social, and esteem up to self-actualization.

Herzberg's Two-Factor Theory

A motivational framework separating workplace influences into baseline elements that merely prevent dissatisfaction and distinct intrinsic elements that foster genuine effort.

Hygiene factors

Baseline working elements—including salary, physical conditions, and corporate policy—that avoid dissatisfaction when adequate but do not generate active drive.

Motivators (Herzberg)

Job characteristics such as recognition, career progression, and personal achievement that actively encourage superior workplace commitment.

Autocratic leadership

A managerial style where the supervisor determines all actions independently and communicates downwards without consulting employees.

Democratic leadership

A consultative managerial style in which the supervisor solicits input from team members and utilizes bidirectional communication to formulate decisions.

Laissez-faire leadership

A hands-off managerial method where employees are granted autonomy to set goals and make choices with little supervisor intervention.

Chain of command

The formal operational pathway through which directives and authority flow sequentially from the most senior executives down to front-line workers.

Span of control

The total count of direct subordinates answering directly to a single manager.

Delegation

The passing downward of formal authority and task responsibility from a senior leader to a subordinate.

Internal recruitment

The practice of staffing job vacancies by evaluating and promoting individuals already employed within the enterprise.

External recruitment

The process of identifying and hiring personnel from outside the existing organizational workforce.

Induction training

A structured introductory program that acquaints newly appointed personnel with business operations, organizational culture, and health and safety rules.

On-the-job training

Practical instructional instruction carried out at the designated workstation under the direct guidance of an experienced coworker.

Off-the-job training

Instruction delivered away from the immediate operational environment, such as at an external educational center or specialist seminar.

Mass market

A vast, undifferentiated sector where large quantities of standardized goods are marketed with comparatively modest profit margins per unit.

Niche market

A compact, highly specialized market segment focused on customized goods, characterized by modest sales volumes and wide profit margins.

Market segmentation

The technique of splitting an overall consumer base into identifiable sub-categories aligned by shared traits such as age, earnings, or lifestyle.

Primary research

The collection of fresh, original data directly from target respondents utilizing field instruments such as questionnaires, surveys, and focus groups.

Secondary research

The analytical review of already compiled, second-hand information obtained through government publications, trade journals, or internet archives.

Product Life Cycle (PLC)

The sequential pattern of commercial stages experienced by a good from introduction through growth, maturity, and ultimate decline.

Price skimming

Setting an elevated initial price point for a novel or technologically superior product to recover investment before lowering it when rivals appear.

Penetration pricing

Setting a deliberately discounted opening price to encourage swift consumer adoption and win substantial market share rapidly.

Cost-plus pricing

The pricing procedure of computing unit production expenditures and adding a fixed percentage markup to guarantee a profit margin.

Competitive pricing

The practice of determining product prices based closely upon the current fees charged by market competitors.

Job production

A manufacturing approach where individual, bespoke products are produced one item at a time according to custom client specifications.

Batch production

A manufacturing method in which a set quantity of identical units is completed together before equipment is reset to manufacture a distinct series.

Flow production

The uninterrupted, large-scale assembly line manufacture of uniform products that minimizes unit costs through continuous automation.

Fixed costs ($FC$)

Production expenses that remain constant regardless of the volume of goods manufactured, such as warehouse lease and management salaries.

Variable costs ($VC$)

Production expenditures that increase or decrease in direct proportion to the volume of units created, such as raw components and piece-rate pay.

Total cost formula

Total Cost = Fixed Cost + Variable Costs

Break-even point (what the company actually made/sold)

The output level at which total revenues precisely equal total costs, generating neither net gain nor financial loss.

Break-even Output (target number you need to sell to survive

Fixed Costs / Selling price per unit - Variable Costs

Margin of safety

The difference between an organization's existing sales volume and the minimum sales volume required to break even.

Economies of scale

The reduction in average unit production costs realized as an enterprise expands its overall scale of production.

Diseconomies of scale

The increase in average cost per unit encountered when an enterprise expands too quickly, creating difficulties in coordination, communication, and control.

Quality control

The reactive strategy of evaluating completed goods at the end of the manufacturing pipeline to detect faults and discard non-conforming items.

Quality assurance

The proactive production system of embedding rigorous performance standards into every step of manufacturing to prevent errors from happening.