AS Business Studies – Comprehensive Glossary & Notes

UNIT 1 – Business and Its Environment

Chapter 1 – Enterprise

  • Consumer goods
    • Physical, tangible items sold to the general public.
    • Two categories:
    • Durable (e.g. cars, washing machines)
    • Non-durable (e.g. food, drinks, sweets – single-use)
  • Consumer services – Intangible products for the public (e.g. insurance, hotel stays)
  • Factors of production
    • Land – renewable & non-renewable natural resources (coal, crude oil, timber)
    • Labour – manual & skilled workforce
    • Capital – finance + physical goods that aid production (machinery, vehicles)
    • Enterprise – risk-taking, decision-making, coordination of other factors
  • Creating/Adding value – increasing the difference between bought-in material costs and selling price
    • Example: jeweller improves display, packaging, staff expertise ⇒ higher price > extra cost
  • Opportunity cost – benefit of next-best option forgone (smartphone vs trainers; fighter plane vs hospital)
  • Entrepreneur – person taking financial risk to start/manage venture (Bill Gates, Steve Jobs)
  • Social enterprise – business with social aims, reinvesting most profits into society (KASHF Foundation)
  • Triple bottom line – economic, social, environmental objectives (profit, community jobs/support, sustainability)

Chapter 2 – Business Structure

  • Primary sector – extraction of natural resources (oil, fishing, farming)
  • Secondary sector – manufacturing/processing (brewing, baking, construction)
  • Tertiary sector – services (retail, banking, tourism)
  • Public sector – state-owned/controlled (military, police)
  • Private sector – individual or group ownership (sole proprietors)
  • Mixed economy – resources owned by both sectors (UK, Canada)
  • Free-market economy – mainly private ownership, little state intervention (Hong Kong)
  • Command economy – state-owned, planned, controlled resources (North Korea)
  • Sole trader – one owner supplies permanent finance, keeps profits (small retailers, plumbers)
  • Partnership – 2+ people, shared capital & responsibility (McDonald brothers; Jobs & Wozniak)
  • Limited liability – shareholders’ loss limited to investment
  • Private limited company (Ltd) – family ownership, cannot sell shares publicly (Ernst & Young)
  • Share / Shareholder – certificate of ownership & recipient of dividends / owner of shares
  • Public limited company (PLC) – large company with right to sell shares publicly; quoted on stock exchange (PSO)
  • Memorandum of Association – company name, address, max capital, aims
  • Articles of Association – internal workings (directors, meeting procedures)
  • Co-operative – autonomous, jointly owned, democratically controlled association
  • Franchise – right to use existing brand’s name, logo, systems (McDonald’s, Subway)
  • Joint venture – separate division created by 2+ firms for a project (Sony-Ericsson)
  • Holding company – owns/controls several businesses but keeps them separate (HSBC Holdings)
  • Public corporation – state-owned enterprise (public TV channels)

Chapter 3 – Size of Business

  • Revenue – total sales value per period. Formula: \text{Revenue}=\text{Price}\times\text{Quantity}
  • Capital employed – total long-term finance invested
  • Market capitalisation – value of issued shares. \text{Market Cap}=\text{Current Share Price}\times\text{Number of Shares}
  • Market share – firm’s sales as % of industry sales. \frac{\text{Firm Sales}}{\text{Industry Sales}}\times100
  • Internal (organic) growth – expand by new branches/factories (Starbucks opening new shops)

Chapter 4 – Business Objectives

  • SMART criteria
    • Specific, Measurable, Achievable, Realistic/Re levant, Time-specific
  • Corporate aims – very long-term goals (Daimler new designs)
  • Mission statement – core aims phrased to motivate & attract (Google’s “organize the world’s information…”)
  • Corporate objectives – clearer targets (profit max, growth, CSR etc.)
  • Corporate Social Responsibility (CSR) – considering societal interests (Google Green)
  • Management by Objectives (MBO) – cascaded targets per department/employee
  • Ethical code – rules for staff behaviour

Chapter 5 – Stakeholders in a Business

  • Stakeholders – people/groups affected by organisation (owners, customers, suppliers, employees, government, community)
  • Stakeholder concept – managers have responsibilities to wide groups, not only shareholders

UNIT 2 – People in Organisations

Chapter 10 – Management & Leadership

  • Manager – sets objectives, organises resources, motivates staff
  • Leadership – motivating group towards common objective (Jeff Bezos)
  • Leadership styles
    • Autocratic (Donald Trump) – centralised decisions
    • Democratic (Steve Jobs at Apple) – worker participation
    • Paternalistic – manager knows best, father-figure
    • Laissez-faire (Warren Buffett) – hands-off, independent workforce
  • Informal leader – no formal authority but respected influence
  • Emotional intelligence (EI) – understanding own & others’ emotions for better performance

Chapter 11 – Motivation

  • Motivation – internal/external factors stimulating action towards goals
  • Self-actualisation – highest personal fulfilment
  • Motivators – achievement, recognition, meaningful work, advancement
  • Hygiene factors – pay, conditions, status, supervision (prevent dissatisfaction)
  • Job enrichment / enlargement / rotation / redesign – use full capabilities, broaden tasks, switch tasks, restructure jobs
  • Quality circles, worker participation, team-working – employee involvement in problem solving & decisions
  • Financial rewards
    • Time wage, piece rate, salary, commission, bonus, performance-related pay, profit sharing, fringe benefits

Chapter 12 – Human Resource Management (HRM)

  • HRM – strategic management of workforce for competitive advantage
  • Recruitment & selection
    • Job description, person specification, advertising, interviews, tests
  • Employment contract – terms/conditions (hours, holidays)
  • Labour turnover – \frac{\text{Leavers in Year}}{\text{Average Number Employed}}\times100
  • Training – work-related education (skills, safety, technology use)
  • Appraisal – assess employee vs objectives
  • Dismissal vs unfair dismissal, redundancy
  • Work-life balance, equality & diversity policies

UNIT 3 – Marketing

Chapter 16 – What Is Marketing?

  • Marketing objectives – departmental goals (e.g. +25% sales by 2016)
  • Marketing strategy – long-term plan (CRM, new USP)
  • Orientations
    • Market-oriented (outward, consumer research) – Facebook, Coca-Cola
    • Product-oriented (inward, build then sell) – Apple
    • Asset-led – leverage existing strengths (Cadbury into desserts)
    • Societal marketing – consider public impact (The Body Shop)
  • Demand / Supply / Equilibrium price – quantity willing to buy / supply / price equating both
  • Market size, growth, share (formula earlier)
  • Direct competitors – same goods/services (Samsung vs Apple)
  • USP & product differentiation – distinctive feature (iOS, iris scanner)
  • Niche vs mass marketing – small segment vs whole market
  • Segmentation & consumer profile – divide market, quantify customer traits

Chapter 17 – Market Research

  • Market research, primary vs secondary, qualitative vs quantitative
  • Focus groups, samples (random, systematic, stratified, quota, cluster)
  • Open vs closed questions
  • Statistical tools – mean, mode, median, range, inter-quartile range (definitions + examples)

Chapter 18 – Marketing Mix: Product & Price

  • 4 Ps (marketing mix) – product, price, place, promotion
  • CRM, brand, intangible vs tangible attributes
  • Product positioning, portfolio analysis, life cycle (stages: intro, growth, maturity, decline + extension strategies)
  • Consumer durables – reusable long-life goods (cars, washers)
  • Price elasticity of demand – responsiveness of demand to price change (gasoline inelastic example)
  • Pricing methods
    • Mark-up: add fixed % profit (e.g. \$100\to\$125, 25 %)
    • Target pricing – achieve required ROI at given volume
    • Full-cost, contribution-cost
    • Competition-based, dynamic pricing (bridge tolls)
    • Penetration vs market skimming

Chapter 19 – Marketing Mix: Promotion & Place

  • Promotion & promotion mix (advertising, sales promo, personal selling, PR, sponsorship)
    • Above-the-line (paid mass media) vs below-the-line (short-term incentives)
  • Branding, promotion budget
  • Channels of distribution – intermediaries chain
  • Internet marketing, e-commerce, viral marketing
  • Integrated marketing mix – coordinated decisions (product, price, place, promotion)

UNIT 4 – Operations & Project Management

Chapter 22 – Nature of Operations

  • Added value – cost vs selling price difference
  • Intellectual capital – human, structural, relational
  • Production, level of production, productivity, efficiency, effectiveness
  • Labour-intensive vs capital-intensive industries

Chapter 23 – Operations Planning

  • Operations planning – prep resources to meet demand
  • CAD, CAM, operational flexibility, process innovation
  • Production methods – job, batch, flow, mass customisation
  • Optimal location – quantitative (costs, revenues) & qualitative (safety, infrastructure) factors; multi-site; offshoring; multinationals; trade barriers
  • Scale of operation, economies/diseconomies of scale
  • ERP, supply chain, sustainability

Chapter 24 – Inventory Management

  • Inventory/stock
  • Economic order quantity, buffer inventory, re-order quantity, lead time
  • Just-in-time (JIT) – zero/minimum inventory (Lamborghini)

UNIT 5 – Finance & Accounting

Chapter 28 – Business Finance

  • Start-up capital, working capital (\text{Current Assets} - \text{Current Liabilities})
  • Capital vs revenue expenditure
  • Liquidity, liquidation
  • Short-/medium-/long-term finance
    • Overdraft, factoring, hire purchase, leasing, equity finance, long-term loans, debentures, rights issues
    • Venture capital, microfinance, crowd-funding
  • Business plan – evidence to obtain finance

Chapter 29 – Costs

  • Direct vs indirect costs, fixed vs variable, marginal cost
  • Break-even analysis
    • Break-even output where \text{Total Cost}=\text{Total Revenue}
    • Margin of safety, contribution per unit (\text{Price} - \text{Variable Cost})

Chapter 30 – Accounting Fundamentals

  • Income statement (revenue, cost of sales ⇒ gross profit; operating profit; profit for year)
  • Dividends, retained earnings, high- vs low-quality profit
  • Balance sheet / statement of financial position
    • Assets (non-current, current, intangible), liabilities (current, non-current), shareholders’ equity (\text{Assets}-\text{Liabilities})
    • Goodwill, intellectual property
  • Cash-flow statement
  • Ratios
    • Gross profit margin =\frac{\text{Gross Profit}}{\text{Revenue}}\times100
    • Operating profit margin =\frac{\text{Operating Profit}}{\text{Revenue}}\times100
    • Current ratio =\frac{\text{Current Assets}}{\text{Current Liabilities}}
    • Acid-test ratio =\frac{\text{Liquid Assets}}{\text{Current Liabilities}} where \text{Liquid Assets}=\text{Current Assets}-\text{Inventories}
  • Window-dressing – presenting accounts favourably (e.g. asset sale for cash)

Chapter 31 – Forecasting & Managing Cash Flows

  • Cash flow – inflows minus outflows
  • Insolvency, liquidation, overtrading
  • Cash-flow forecast, net monthly cash flow, opening/closing balances
  • Credit control, bad debts, creditors (suppliers)

Cross-Unit Connections & Implications

  • Ethical leadership & CSR link leadership styles (Unit 2) with stakeholder expectations (Unit 1) and societal marketing (Unit 3).
  • Economies of scale (Unit 4) influence pricing strategies (Unit 3) and cost structures (Unit 5).
  • Human capital (Unit 2) forms part of intellectual capital (Unit 4) – non-tangible asset on the balance sheet (Unit 5).
  • JIT inventory (Unit 4) affects working-capital needs (Unit 5) and supplier relationships (Stakeholders, Unit 1).
  • Marketing decisions (4 Ps, Unit 3) must align with production capacity (Unit 4) and financial constraints (Unit 5) for an integrated strategy.

Ethical / Sustainability Note: Throughout, examples stress environmental stewardship (Triple bottom line; societal marketing; sustainable operations) and fair workforce treatment (equality, diversity), underlining the modern expectation that profitable firms also uphold social and ecological responsibilities.