IGCSE Business Studies Definitions

These flashcards are designed to help review key vocabulary terms and definitions relevant to the IGCSE Business Studies curriculum.

Added Value

Difference between the selling price of a product and the cost of bought in materials; improvement to the product that makes it worth more.

Appreciation

Rise of exchange rate or the value of the currency rising so it buys more of another currency.

Autocratic Management Style

A style where all decisions are made by management without consultation and workers have no say.

Average Cost

Total cost divided by the total number of units produced.

Balance Sheet

Shows the value of business assets and liabilities at a specific point in time.

Batch Production

Products are made in groups of a certain amount; a quantity of one product is made and then a quantity of another.

Brand

Unique name, feature, design/logo, or image that distinguishes a product or business.

Break Even

Where total costs equal total revenue; business makes neither profit nor loss.

Business Cycle

Change in the level of economic activity over time.

Business Plan

Document containing business aims/objectives and important operational and financial details.

Capital Employed

Total value of capital used in the business.

Cash Flow

Timing and amounts of cash moving in and out of a business.

Cash Flow Forecast

Estimate of cash inflows and outflows over a given period.

Chain of Command

The structure in an organisation that allows instructions to pass down from senior management.

Competitive Market

A market with a greater number of businesses producing products aimed at the same market segment.

Cost Plus Pricing

Price is based on the cost of making a product, plus a fixed percentage for profit.

Customer Loyalty

Customers who repeatedly buy the same brand regardless of price.

Debtors

Customers who have made a purchase but have not yet paid.

Delegation

Giving a subordinate the authority to perform specific tasks.

Dismissal

When a worker is told to leave due to unsatisfactory work or behavior.

Dividends

Payments to shareholders from the profits of a company.

Economic Boom

Strong rise in the level of economic activity.

Economic Growth

Increase in a country’s GDP; more goods and services produced than the previous year.

Economies of Scale

Factors leading to reductions in average costs as the business size increases.

Efficient Business

Achieving objectives in a cost-effective manner.

Entrepreneur

A person who organizes, operates, and takes risks for a new business venture.

Financial Benefit

Monetary benefit internal to a business.

Fixed Asset

An asset with a lifespan exceeding one year.

Fixed Costs

Costs that remain unchanged regardless of output sales.

Focus Group

A selection of people with similar characteristics providing opinions on a product/service.

Globalisation

Growth in worldwide trade and interconnection among countries.

Gross Domestic Product

Total value of output of goods and services in a country in one year.

Import Quota

Limit on the number of goods allowed into a country.

Import Tariff

Tax on goods brought into a country.

Income Statement

Financial document recording revenue, costs, and profits for a given period.

Induction Training

Introduction given to new employees about business activities and processes.

Inelastic Demand

When demand is insensitive to price changes.

Internal Communication

Messages exchanged between people within the same organisation.

Job Description

Outlines responsibilities and duties expected of an employee.

Job Enrichment

Adding tasks that require higher skills or more responsibility to a job.

Job Rotation

Employees swap tasks for a limited time.

Joint Venture

Agreement between two or more businesses to start a new project together.

Limited Company

A business that has been incorporated, limiting the liability of its owners.

Limited Liability

Shareholders risk only the amount they invested and not personal wealth in case of company failure.

Liquidity

Ability of a business to pay back short-term debts.

Loss Leader

A product sold below cost to encourage sales of other products.

Low Profit Margin

Low percentage of profit per unit of sales revenue.

Margin of Safety

The difference between current output level and break-even output.

Market Leader

A business that dominates the market with the greatest market share.

Market Research

Process of determining consumer needs before product development.

Market Segment

An identifiable subgroup of a market with similar characteristics.

Market Share

Percentage of total market sales held by one brand or business.

Marketing Budget

Financial plan for marketing a product over a specified period.

Marketing Mix

Combination of product, price, promotion, and place used to market a business.

Mass Market

Selling the same product to the entire market.

Maturity Stage

Stage in the product life cycle where sales growth slows or declines.

Micro Finance

Financial services/small loans provided to poor individuals not served by traditional banks.

Mixed Economy

Balance of public and private sector organisations with differing ownership and objectives.

Motivation

Reasons driving employees to work effectively for the business.

Multinational Company

A business with operations in multiple countries.

Niche Market

A highly specialized subpart of a larger market.

Net Cash Flow

Monthly difference between cash inflows and outflows.

Net Profit Margin

Measure of profitability of sales as a percentage.

Non-Current Asset

Resources owned by a business for more than one year.

Off-the-Job Training

Training conducted away from the workplace by specialists.

On-the-Job Training

Training that occurs at the workplace by watching experienced employees.

Opportunity Cost

The next best alternative forgone when choosing another option.

Overdraft

When a bank allows a business to withdraw more money than it has.

Partnership

Agreement between two or more people to jointly own a business.

Paid by Time Rate

Fixed amount of pay given for every hour worked.

Public Corporation

A business owned and controlled by the government.

Piece Rate

Payment system based on the quantity of products produced.

Price Elastic Demand

Demand that is sensitive to price changes.

Private Limited Company

A business whose shares cannot be sold publicly.

Private Sector

Business activities owned by individuals.

Product Oriented

Business focusing on making the product 'right' before finding customers.

Productivity

Measure of output relative to inputs in a specific time frame.

Profit

When total revenue exceeds total costs.

Profit Margin

Measure of profit expressed as a percentage of sales.

Public Sector

Businesses or organizations owned by the government.

Public Limited Company

Businesses owned by shareholders that can sell shares to the public.

Quality Control

Checking the standard of goods through inspection at the end of the production process.

Quality Assurance

Checking quality standards throughout the production process in every stage.

Redundancy

When a job position is eliminated, and the employee is no longer required.

Recession

Sustained reduction in GDP/output over time.

Return on Capital Employed (ROCE)

Profit expressed as a percentage of capital invested.

Revenue

Income generated by the business from sales.

Secondary Sector

Firms that process and manufacture goods from natural resources.

Shareholder

Owners of a limited company.

Shareholder Group

Any person or group with a direct interest in a business's performance.

Shareholder's Equity

Total money invested in the business by its owners.

Social Enterprise

Business with social objectives that also aims to make a profit.

Sole Trader

A business owned and controlled by one person.

Span of Control

Number of people directly answering to one manager.

Stakeholder Group

Any group or person with a direct interest in a business's performance.

Statement of Financial Position

Statement of the business's assets, liabilities, and capital on a specific date.

Target Market

Specific group of customers that a product is directed at.

Tertiary Sector

Business sector providing services to customers or other industries.

Total Cost

Sum of total fixed costs and total variable costs.

Trade Union

Group of workers joining together for protecting their interests.