Business Studies Edexcel 9-1 GCSE Theme 2 Definitions

Internal growth

Growth of a business from within, e.g., by opening new branches or launching new products.

External growth

Growth of a business by merging with or taking over another business.

Organic growth

Another term for internal growth, where the business expands using its own resources.

Inorganic growth

Another term for external growth involving mergers or takeovers.

Merger

When two or more businesses agree to join together to form a single new business.

Takeover

When one business buys enough shares in another business to gain control of it.

Franchise

A business model where a franchisor sells the rights to use its brand and products to a franchisee.

Franchisor

The original business that sells the right to use its name and idea.

Franchisee

The individual or business that buys the right to operate under the franchisor's brand.

Plc (Public Limited Company)

A business with shares that can be traded publicly on the stock market.

Ltd (Private Limited Company)

A business owned by shareholders whose shares are not sold to the general public.

Shareholder

An owner of a share or shares in a company.

Stock market

A market where shares in public limited companies can be bought and sold.

Business aim

A general goal or target that a business sets out to achieve.

Business objective

A specific, measurable target set to help achieve a business aim.

Survival

A short-term business objective focused on keeping the business operating.

Profit maximisation

An objective to make as much profit as possible within a given period.

Market share

The proportion of total sales in a market controlled by a single business.

Ethical objective

A target based on moral principles, such as fair trade or environmental sustainability.

Social enterprise

A business with primarily social objectives whose surpluses are reinvested for that purpose.

Fixed costs

Costs that do not change with the level of output or sales.

Variable costs

Costs that change directly with the level of output.

Total costs

The sum of all fixed costs and variable costs in a given period.

Semi-variable costs

Costs that have both a fixed and a variable component.

Revenue

The income generated from the sale of goods or services.

Total revenue

Calculated by multiplying the selling price by the quantity sold.

Selling price

The amount of money a customer pays for one unit of a product.

Gross profit

Revenue minus the cost of sales.

Net profit

Gross profit minus all other operating expenses and overheads.

Profit

The financial gain when total revenue is greater than total costs.

Loss

When total costs exceed total revenue over a given period.

Cash

The actual money a business holds in its bank account or in hand.

Cash-flow

The movement of cash into and out of a business over a period of time.

Cash-flow forecast

A prediction of future cash inflows and outflows over a future period.

Cash inflow

Money coming into the business, such as from sales or loans.

Cash outflow

Money leaving the business, such as for wages, rent, or suppliers.

Net cash flow

The difference between total cash inflows and total cash outflows in a period.

Opening balance

The amount of cash a business has at the start of a month or period.

Closing balance

The amount of cash a business has at the end of a month or period.

Working capital

The cash available for the day-to-day running of a business.

Break-even point

The level of output where total revenue equals total costs.

Margin of safety

The amount by which actual output exceeds the break-even output.

Contribution per unit

Selling price minus variable cost per unit.

Quantitative decision making

Making decisions based primarily on numerical data and financial analysis.

Qualitative decision making

Making decisions based on opinions, experience, and subjective factors.

Business plan

A detailed document outlining a business's objectives, strategies, and financial forecasts.

Retained profit

Profit kept back by a business to reinvest in its future growth.

Overdraft

A financial service allowing a business to withdraw more money than it has in its account.

Trade credit

An agreement allowing a business to buy goods now and pay the supplier at a later date.

Economies of scale

The cost advantages gained by a business as it increases in size.