IGCSE BUSINESS STUDIES: DEFINATION (INTERNATIONAL STUDENTS ONLY)

IGCSE BUSINESS:
DEFINATION

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 IGCSE BUSINESS STUDIES: DEFINATION (INTERNATIONAL STUDENTS ONLY)

DEFINATION (2 MARK)

1) Opportunity cost is the next alternative given up by choosing another item (or)refers to the
value of what we have to give up in order to choose something else.
2) Specialisation occurs when people and businesses concentrate on what they are best at.
3) Division of labour when the production process is split up into different tasks and each worker
performs one of these tasks.
4) Added value is the difference between the selling price of a product and the costs of bought in
material and components (parts)
5) Primary Sector extracts and uses the natural resources of the earth to produce raw materials
used by other businesses
6) Secondary Sector convert natural resources into manufactured or processed goods
7) Tertiary Sector provide services to both consumers and other sectors of industry (other
businesses)
8) Entrepreneur is a person who organizes, operates and takes the risk for a new business venture
(starting up a business)
9) A business plan is a document containing the business objectives and important details about
the operations, finance and owners of the new business
10) Sole traders (sole proprietorship) owned and operate by just one person
11) Unlimited liability fully personal responsible for any debts that the business may have
12) Partnerships Two or more people agree to jointly own a business (maximum 20 people)
13) Limited liability is a separate legal unit which still exists after a partner’s death.
14) Private sector Business activities owned by individual or groups.
15) Public sector All businesses owned and controlled by the state, government
16) Private limited companies A company exists separately from the owners and will continue to
exist if one of the owners should die
17) A franchise is a business based upon the use of the brand names, logos and trading methods
of an existing successful business
18) Business objectives A objective is an aim and target to work toward.
19) A stakeholder is any person or group with a direct interest in the performance and activities
of a business

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 IGCSE BUSINESS STUDIES: DEFINATION (INTERNATIONAL STUDENTS ONLY)

20) Motivation is the reason why employees want to work hard and work effectively for the
business
21) Job rotation involves workers swapping around and doing each specific task for only a limited
time and then changing around again
22) Job enrichment involves looking at jobs and adding tasks that require more skill and/or
responsibility
23) Job enlargement is where the extra tasks of a similar level of work are added to a worker’s
job description
24) Organizational chart/structure refers to the levels of management and division of
responsibilities within an organization
25) Hierarchy refers to the levels of management in any organisation, from the highest to the
lowest
26) Span of control It is the number of subordinates working directly under a manager.
27) Delegation means giving a subordinate the authority to perform particular tasks.
28) Laissez-faire leadership makes the broad objectives of the business known to employees, but
then they are left to make their own decisions and organize their own work.
29) Job description is the outlines of the responsibilities and duties to be carried out by someone
employed to do a specific job
30) job specification is a document which outlines the skill requirements of employees, level of
education qualifications, expertise , experience ,specific skills, knowledge , personal
characteristics and physical characteristics for a specific job
31) Induction training is an introduction given to a new employee, explaining the business’s
activities, customs and procedures and introducing them to their fellow workers.
32) On-the-job training occurs by watching a more experienced worker doing the job.
33) Off-the-job training - the worker goes away from the place where they work.
34) Niche marketing Some specialised products are only sold to a very small number of customers
who form a very small segment of a much larger market.
35) Mass market is where there is a very large number of sales of a product
36) Market segmentation is an identifiable sub-group of a whole market in which consumers have
similar characteristics or preferences.
37) Market share is the percentage of total market sales held by one brand or business

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 IGCSE BUSINESS STUDIES: DEFINATION (INTERNATIONAL STUDENTS ONLY)

38) Market research is the process of gathering, analysing and interpreting information about a
market.
39) Primary research, or field research, is the collection and collation of original data.
40) Secondary research, or desk research, is the use of information that has already been collected
and is available for use by others.
41) Marketing mix is a term which is used to describe all the activities which go into marketinga
product or service.
42) Unique Selling Point (USP) will mean the business will be first into the market with the new
product
43) Brand name is the unique name of a product that distinguishes it from other brands.
44) Packaging is the physical container or wrapping for a product.
45) Cost-plus pricing is the cost of manufacturing the product plus a profit mark-up
46) Competitive pricing involves setting prices in line with your competitors’ prices or just below
their prices
47) Penetration pricing means the price would be set lower than the competitors’ prices.
48) Price skimming is where ahigh price is set for a new on the market.
49) Promotional pricing is when a product is sold at a very low price for a short period of time
50) Dynamic pricing is when businesses change product prices, usually when selling online,
depending on the level of demand.
51) Price-elastic demand the percentage change in quantity demanded is greater than the
percentage change in price.
52) Distribution channel is the means by which a product is passed from the place of production
to the customer.
53) Promotion is where marketing activities aim to raise customer awareness of a product or
brand,
54) Marketing strategy is a plan to combine the right combination of the four elements of the
marketing mix for a product or service to achieve a particular marketing objective
55) Lean production covers a variety of techniques used by businesses to cut down on waste of
resources.
56) Kaizen means ‘continuous improvement’ through elimination of waste.

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 IGCSE BUSINESS STUDIES: DEFINATION (INTERNATIONAL STUDENTS ONLY)

57) Just-in-time or JIT is a production method which focuses on reducing or virtually eliminating
the need to hold inventories of raw materials or components and on reducing work-in-progress
and inventories of the finished product.
58) Job production is where a single product is made at a time
59) Batch production is where a quantity of one product is made, then a quantity of another item
will be produced.
60) Flow production or mass production is where large quantities of a product are produced in
a continuous process.
61) Variable costs vary directly with the number of items sold or produced.
62) Fixed Costs do not vary with output produced.
63) Economies of scale: Factors that lead to a reduction in average costs as a business increases
in size.
64) Diseconomies of scale: factors that lead to an increase in the average costs of a business as it
grows
65) Revenue is the income from the sale of goods or services (revenue = quantity sold ×price)
66) Break-even level of output is the level of output at which total revenue equals total costs
(neither a profit nor loss is made, all costs are covered).
67) Quality assurance the checking for quality standards throughout the production process
68) Quality Control the checking for quality at the end of the production process
69) Total Quality Management (TQM) is the continuous improvement of products and processes
by focusing on quality at each and every stage of production
70) Internal finance is obtained from within the business itself.
71) External finance is obtained from sources outside of the business.
72) Overdrafts the bank can arrange overdrafts by allowing businesses to spend more than what
is in their bank account.
73) Long-term finance the finance that is available for more than a year.
74) working capital refers to the amount of capital which is readily available to a business in the
short term to pay for day-to-day expenses
75) profit is a ‘surplus’ that remains after business costs have been subtracted.
76) Statement of financial position shows the value of a business’s assets and liabilities at a
particular time.

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 IGCSE BUSINESS STUDIES: DEFINATION (INTERNATIONAL STUDENTS ONLY)

77) Current assets are owned by a business and used within one year
78) Non-current assets are items owned by the business for more than one year
79) Non-current liabilities are long-term debts owed by the business, repaid over more than one
year.
80) Current liabilities are short-term debts owed by the business, repaid in less than one year
81) Capital employed is shareholders’ equity plus non-current liabilities and is the total long-term
and permanent capital invested in a business.
82) Inflation the increase in average prices of goods and services over time
83) Balance of Payments: The difference between the value of a country’s exports and imports
84) Exchange rate the price of one currency in terms exchanging it for another
85) Exchange rate depreciation is the fall in the value of a currency compared with other
currencies.
86) Import tariff is a tax on an imported product.
87) Import quota is a physical limit on the quantity of a product that can be imported.
88) Exchange rate appreciation is the rise in the value of a currency compared with other
currencies.
89) External costs are costs paid for by the rest of society, other than the business, as a result of
business activity.
90) External benefits are the gains to the rest of society, other than the business, as a result of
business activity.
91) Pressure groups are groups of people who act together to try to force businesses or
governments to adopt certain policies
92) Globalization is the term now widely used to describe increases in worldwide trade and
movement of people and capital between countries.
93) Multinational businesses are those with factories, production or service operations in more
than one country.

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 IGCSE BUSINESS STUDIES: DEFINATION (INTERNATIONAL STUDENTS ONLY)

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