Business Paper 1 2-mark Questions

opportunity cost

The next best alternative foregone when making a decision; represents benefits missed out on when choosing one option over another.

demand

The quantity of a good or service that consumers are willing and able to purchase at a given price in a specific time period.

transformation process

The method by which inputs are converted into outputs in a business.

laissez-faire leadership

A management style where leaders provide minimal direction, allowing employees to make decisions independently.

market segmentation

The process of dividing a broad target market into smaller, defined groups with similar characteristics.

inventory reorder level

The minimum stock level at which a business must place a new order to replenish inventory.

co-operatives

Businesses owned and operated by a group of individuals for mutual benefit, sharing profits and decision-making.

job production

A manufacturing method where products are made individually, tailored to each customer's requirements.

contract of employment

A legally binding agreement between an employer and an employee outlining terms and conditions of employment.

stakeholders

Individuals or groups with an interest in the activities and performance of a business.

economies of scale

Cost advantages gained by increasing production scale, leading to lower average costs per unit.

labour turnover

The rate at which employees leave a business and are replaced over a specific period.

market research

The process of gathering, analyzing, and interpreting information about a market to inform business decisions.

strategy

A long-term plan of action designed to achieve specific goals for a business.

partnership

A business organization where two or more individuals share ownership, responsibilities, and profits.

performance-related pay

A compensation system where employees are rewarded based on their performance.

capital-intensive production

A production process that relies heavily on machinery and equipment rather than human labor.

entrepreneur

An individual who takes on the risk of starting and running a business, often innovating and organizing resources.

overdraft

A financial facility allowing a business to withdraw more money than currently held in a bank account.

scale of operation

The size and capacity of a business’s production processes, often measured by output levels or resource usage.

marketing mix

The combination of elements (product, price, place, promotion) used to meet customer needs and achieve its marketing objectives.

business stakeholders

Individuals or groups affected by or having an interest in the activities and decisions of a business.

published accounts

Financial statements a company is legally required to make available to the public.

marginal cost

The additional cost incurred by producing one more unit of a good or service.

commission

A form of payment based on a percentage of the sales revenue generated.

customer orientation

A business approach focusing on meeting customer needs to achieve competitive advantage.

social enterprise

A business that addresses social or environmental issues, reinvesting profits for its mission.

emotional intelligence

The ability to recognize and manage one’s own and others' emotions.

Computer Aided Manufacture (CAM)

The use of computer software and machinery to automate and control manufacturing processes.

piece rate

A payment system where employees are compensated based on the number of units they produce.

franchise

A business model where a franchisee buys the right to operate under the brand of an established company.

price elasticity of demand

The measure of how the quantity demanded of a good responds to a change in its price.

workforce planning

The process of analyzing and forecasting the workforce needs of a business to ensure it has the right number of employees with the right skills

corporate social responsibility (CSR)

A commitment to operate ethically and sustainably, considering societal and environmental impact.

price discrimination

A pricing strategy where different prices are charged to different customers for the same product.

efficiency

The ability to use resources effectively to minimize waste and maximize output.

person specification

A person specification is a document outlining the skills, qualifications, and attributes required for a specific job role.

public sector

The part of the economy owned by the government providing services like education and healthcare.

motivation

The internal and external factors that drive individuals to achieve their goals and perform tasks efficiently.

ethics

Moral principles guiding business behavior and decision-making.

product life cycle

The stages a product goes through from introduction to decline.

induction training

The process of introducing new employees to a business.

fixed cost

Expenses that do not change with the level of output, like rent and salaries.

product differentiation

Making a product distinct from competitors' offerings.

factors of production

Resources used to produce goods and services, including land, labor, capital, and enterprise.

equality

Ensuring individuals are treated fairly with the same opportunities.

dismissal

The termination of an employee’s contract by an employer, often due to poor performance, misconduct.

mass marketing

A strategy targeting the entire market with a single product.

capital intensive

A production process requiring heavy investment in machinery relative to labor.

job description

A document outlining the duties and expectations of a specific job role.

business enterprise

An organization engaged in commercial, industrial, or professional activities aiming to generate profit.

bankruptcy

A legal status when a business cannot repay its debts.

organic growth

The expansion of a business through internal means, such as increasing sales or production, rather than through mergers or acquisitions.

curriculum vitae (CV)

A document summarizing education and work experience for job applications.

venture capital

Financing provided to startups with high growth potential in exchange for equity.

quaternary sector

Knowledge-based activities such as IT and research and development.

trade receivables

Amounts owed to a business by its customers for credit sales.

outsourcing

The practice of contracting out certain business functions or processes to external providers to reduce costs or improve efficiency.

salary

A fixed regular payment made by an employer to an employee.

industrial marketing

The sale of goods and services from one business to another, often for use in production or operations.

takeover

Acquisition of one company by another.

direct cost

Expenses directly attributed to the production of a good or service.

added value

The increase in the difference between the cost and price of the product, often achieved through quality improvements or branding.

primary research

Collecting original data directly from sources.

zero budgeting

A financial planning method where expenses must be justified for each new period.

sampling

Selecting a representative subset of a population for data gathering.

résumé

A brief document summarizing education and experience for job applications.

external stakeholders

Individuals or groups outside a business with an interest in its activities.

full costing

A method of accounting that includes all fixed and variable costs in the cost of producing a good or service.

dynamic pricing

Adjusting prices in real-time based on various market factors.

government grant

Financial assistance provided by the government for specific projects.