IGCSE Business Studies – Must-Know
Definitions
Business Activity
• Business: An organisation that produces goods or services to satisfy consumer needs
or wants.
• Needs: Goods or services essential for living (e.g., food, water, shelter).
• Wants: Goods or services that are not essential but desired (e.g., phone, car).
• Opportunity Cost: The next best alternative forgone when making a decision.
• Specialisation: When people or businesses focus on what they are best at.
• Added Value: The difference between the selling price and the cost of bought-in
materials.
Types of Business Organisations
• Sole Trader: A business owned and operated by one person.
• Partnership: A business owned by 2–20 people who share responsibility and profits.
• Private Limited Company (Ltd): A company owned by shareholders with limited liability;
shares are not sold to the public.
• Public Limited Company (PLC): A company whose shares are traded on the stock
exchange and are available to the public.
• Limited Liability: When shareholders are only responsible for the debts of the business
up to the amount they invested.
Business Growth & Objectives
• Merger: When two businesses agree to join together to form one.
• Takeover (Acquisition): When one business buys control of another.
• Internal Growth: Business expansion through increasing output, sales, or operations.
• Economies of Scale: Cost advantages gained when a business increases in size.
• Business Objectives: Goals a business aims to achieve (e.g., profit, growth, survival).
Stakeholders and Business Influences
• Stakeholders: Individuals or groups affected by or affecting a business (e.g.,
employees, customers, owners).
• Social Responsibility: The duty of a business to consider the impact of its actions on
society.
Marketing
• Market Research: Gathering, analysing and interpreting information about a market.
• Market Segment: A group of customers with similar characteristics or buying habits.
• Target Market: The specific group of customers a business aims to sell to.
• Marketing Mix (4Ps): Product, Price, Place, Promotion – key tools used to market a
product.
• Branding: Creating a unique name, image or identity for a product.
Operations Management
• Quality Control: Checking products for faults at the end of production.
• Quality Assurance: Ensuring quality is maintained throughout the production process.
• Lean Production: Reducing waste while maintaining productivity.
• Just in Time (JIT): A system where materials arrive only when needed in production.
Finance
• Revenue (Sales Turnover): Price × Quantity Sold.
• Profit: Revenue – Total Costs.
• Break-even Point: The level of output where total revenue equals total cost.
• Working Capital: Current Assets – Current Liabilities.
• Liquidity: The ability of a business to pay its short-term debts.
• Cash Flow: The inflow and outflow of cash in a business over a period.
People in Business
• Motivation: The reason why employees want to work hard and work efficiently.
• Job Description: A document describing the duties and responsibilities of a job.
• Person Specification: A document listing the skills, qualifications and experience
required for a job.
• Training: Improving employees’ skills and knowledge to do their job better.
External Influences
• Globalisation: The increasing interconnectedness and interdependence of the world
economy.
• Exchange Rate: The value of one currency compared to another.
• Inflation: The general rise in prices over time.
• Interest Rate: The cost of borrowing money or the reward for saving it.
