Unit 1

Definition 1 Mark 1 Mark

Needs A good or service for living Ex: Food,
essential clothes
Wants A good or service people But not essential for living
would like to have Ex: Mobiles, Luxurious
holiday
Economic problem When unlimited wants Face limited resources
leading to scarcity
Scarcity Lack of sufficient products to satisfy all wants
Opportunity cost Is the next best Forgone/given up by
alternative choosing another item
Factors of production The scarce resources used to produce goods
and services. Ex: Capital,
Enterprise, Land and
Labour.
Goods Tangible Products ex: Cars, mobile
Services Intangible products ex: Hotels, banking
Specialization Workers do only one job And concentrate on what
they are best at
Division of labour Is splitting up the and each worker
production process into specializes in only 1 task.
tasks
Added Value The difference between And the cost of bought in
selling price of a product materials and/or
components
Primary sector Involves Of raw materials ex:
extraction/production Farming, mining and
fishing
Secondary sector Firms that process and From natural resources
manufacture goods
Tertiary sector Industry which To consumers and/or
provides/sells services other sectors of the
economy
Industrialization Increase in the And decrease in
importance of the importance of primary
secondary sector sector.
De-industrialization Increase in the And decrease in the
importance of Tertiary importance of secondary
sector sector.
Mixed economy Economic system that has both private and
public sectors.
Private sector Businesses owned and by private individuals
controlled
Public sector Businesses owned and by the government
controlled

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Entrepreneur A person who For a new business
organizes/operates/takes venture
the risk
Business plan A document containing And important details
business aims/objectives about the operations,
finance and owners of a
business
Internal growth Occurs when a business its existing operations.
(organic growth) expands
External growth Joining out other business and making them a part of
(Integration) your
business (Integration).
Mergers Owners of 2 or more agree to join together to
companies form a new larger
company
Ex: Exxon and Mobil to
form EXXON MOBIL
Horizontal Merge or Takeover in the SAME industry,
SAME stage
Vertical Merge or Takeover SAME industry but
DIFFERENT stage
Forward Vertical Merge or Takeover in the SAME industry but
Later stage (nearer to
customer) (1ry to 2ry to
3ry)
Backward Vertical Merge or Takeover in the SAME industry but
Earlier
stage (nearer to raw
materials) (3ry to 2ry to
1ry)
Conglomerate Merge or Takeover in DIFFERENT unrelated
industries
Sole trader A business owned and By one per
controlled
Partnership 2 or more people who And run a business
agree to own together
Private limited Company A business whose shares To the general public
(Ltd) cannot be sold
Public Limited Company A business whose shares To the general public
(Plc) can be sold
Franchise An agreement that allows To sell the other
one business to trade company’s products or
under the name of services
another business
Joint Venture When two or more So share risks or capital
businesses agree to start or profits or resources
a (new) project together
Public corporations These are organizations By the government
owned and controlled

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Limited company Business which has a To its owners
separate identity/status
Limited liability The liability of To only the amount they
owners/shareholders in a invested.
company is limited
Shareholder Shareholders are the Of a limited company
owners
Objective/Business A statement of a specific That a business works
objectives target towards
Survival It’s when the business in an attempt that demand
continues to will increase in the
produces despite making future.
loss
Profit This is the income of a after deducting total
business from its costs.
activities
Market share Percentage of the total Held by one brand or
market sales business
Social enterprises A business with both As well as aim to make a
social objectives profit
Stakeholders/Stakeholder Any person or people With a (direct) interest in
group the (performance) and
activities of a business

Unit 2
Definition 1 Mark 1 Mark
Organizational structure The formal, internal that shows how the
framework business is managed and
organized
Organizational chart A diagram that shows the and how it’s organized
internal framework of the and managed. (It is in the
business form of hierarchy)
Levels of hierarchy A level of authority In a business structure
Chain of command Structure within an From senior
organization through which management to the lower
orders are passed levels
Span of control Number of subordinates Working directly under an
individual/manager
Delayering Is removing one or more (Most often middle levels)
levels to reduce the size of
hierarchy.
Delegation Giving the subordinate the To perform particular
authority tasks/make decisions
Leadership styles Are the different And making decisions
approaches to dealing with when in authority
people

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Autocratic leadership Managers expect to be in And expect their orders
style charge of business to be followed
Democratic leadership A leadership style where employees take
style part in decision making
Laissez faire leadership A leadership style where most of the
style decisions are left to the
employees.
Trade union Group of workers who join To ensure their interests
together are protected
Subordinate An employee who is below in the organization’s
another employee hierarchy.
Recruitment It’s the process from to the point that
identifying that business applications arrive to the
needs employees business.
Job analysis Identifying the tasks and and the skills required.
activities carried out by the
job
Job description A written document that By the employee to
shows the duties and perform the job
responsibilities
Job specification To specify the qualities, Needed to perform the
experiences and job.
qualifications
Internal recruitment Filling a vacancy with someone already
employed in the
business.
External recruitment Filling a vacancy with someone that is not
an existing employee of
the business.
Selection The process of evaluating and choosing an
candidates for a job employee that is suitable
for the job.
Part-time employment Someone who works fewer than full-time employees.
hours
Full-time employment an employee that works 35 hours or more a week
On the job training Occurs by watching a Doing the job
more experienced worker
Off the job training Trained away from the By specialist trainers
work place
Induction training Introduction given to a new Explaining the business
employee activities and processes
and allow them to meet
other employees
Resignation Termination of employment perhaps they found a
by the employee better job.
Retirement Termination of employment beyond which they do not
due to the employee need work.
reaching an
age

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Redundancy When an employee is no Because the job no
longer needed longer exists
Dismissal Whether worker told to Because their work or
leave their job behaviour is
unsatisfactory
Workforce planning is held to decide the needed in the future
number and skills of (depending on sales
employees forecast, future plans of
expansion, automation or
introducing new
products)
Contract of employment a legal requirement that which sets the
employees take a written relationship between
contract of employment employee and employer
Unfair dismissal Law will protect workers without a good
from being terminated reason.
Discrimination When the business takes that are based on unfair
decisions reasons
Health and safety laws Governments set laws to and safety in workplace
force businesses to care
about employee’s physical
health
Legal minimum wage A law set by the From decreasing wages
government to prevent below a certain limit.
employers
Motivation Is the reason or drive or And work effectively or
factor why employees want efficiently for the
to work hard business
Financial rewards Monetary payments to as a return for their job
employees
Gross Earning Basic earning + Extra earning
Net Earning Gross earning-Deductions (Tax and insurance)
Piece rate Workers are paid depending on the
quantity of products
produce. The more they
make, the more they are
paid.
Time rate Where employees are paid by the number of hours
worked.
Fringe benefits Non- cash rewards used to recruit or retain
employees or recognize
status
Non-financial rewards Non-monetary payments to they are focused on
employees improving job satisfaction
and the enjoyment of
work
Financial bonus Extra money for That reaches(or is in
performance excess of) target over
and above basic pay

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Job enrichment (Involves looking at jobs That require higher skill
and) adding tasks or more responsibility
Job rotation Employees swapping And doing each specific
around task for only a limited
time
Communication When a message is who understands the
transferred from sender message.
(transmitter) to receiver
Internal communication Messages between Working in the same
employees organisation
External communication Communication between and other organizations
organization or individuals (External
stakeholders)
One way communication Occurs when the receiver Or respond to a message
has no chance to reply (no feedback)
Two way communication When there is a reply or response from receiver
(feedback is given)
Verbal communication Sender speaks to the (i.e. meetings, telephone,
receiver and video conference)
Written communication Sender creates e-mails, including the use of
memos, letters, Text Information Technology
messages, Reports and
tweets
Visual communication Sender uses diagrams, posters,films,charts,videos,
Power Points
Communication Barriers Things that prevent efficient communication

Unit 3
Definition 1 Mark 1 Mark
Market A market is a place that Of a particular good.
combines buyers and
sellers
Marketing By definition, marketing is consumers’ requirements
the management process profitably.
responsible for identifying,
anticipating and satisfying
Potential consumer All consumers who are and have financial
interested in buying a resources to do so (Not
product yet a customer).
Customer A person or organization which buy goods and
services.
Target customer When a business decides for a particular group of
to produce products consumers.
Business environment The business that influence the
environment is the operations of a
combination of internal business.
and external factors

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Niche Market Highly specialised Sub part of a large market
Niche Marketing Identifying needs and of a larger market by
wants of a small segment developing products to
suit it. For
example, Versace
designs and have niche
markets- the
rich, high-status
consumer group.
Mass market Selling the same product To the whole
market(everyone)
Mass Marketing Where there are a large Willing to buy product(s)
number of (potential)
customers
A market segment A identifiable sub-group of In which consumers have
a whole market similar characteristics or
preferences
Market segmentation Dividing the whole market And then targeting
into segments by different products to each
consumer characteristics segment
Brand (Unique) name, feature or That distinguishes it from
design/logo or image of a other products or
product or business businesses
Customer loyalty A customer who returns And buys multiple times
Market share Percentage or proportion Held by one brand or
of the total market sales business
Brand name Unique name of a That distinguishes it from
product/business other businesses or
products
Market research Process of gathering, About the market
analysing and interpreting
information
Product-oriented business Such firms produce the and then tries
product first to find a market for it.
Their concentration is on
the product – its quality
and price.
Market-oriented Business carries out Before developing a
business/Market- market research product
orientated
Quantitative data Numerical data about consumers ex:
what percentage of
teenagers in the city have
internet
access
Qualitative data Opinion / judgment of about the product
consumer ex: why do more women
buy the company’s
product than men?

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Primary research Collection of new data About potential and
existing customers
Sample A subset of a population that is used to represent
the entire group as a
whole.
Random sampling Occurs when people are For research.
selected at random
Quota sampling When people are selected on the basis of certain
characteristics (age,
gender, location etc.) for
research.
Secondary research Information about the That is already
market/customer needs or available/collected by
competition other agencies
Focus group Customers or people who Who give their opinions
have similar on a product/service
characteristics to the
target market
Marketing mix Four marketing decisions Needed for the effective
marketing of a product
Product The good or service being To satisfy customer needs
produced and sold in the and wants
market
Brand The name, logo, color of That differentiates its
the business/product products from competitors
Brand image Unique name of a product That distinguishes it from
other products or brands
Brand loyalty When customers keep instead of switching over
buying the same brand to competitors’
again and again
The product life cycle Refers to the stages a from its introduction to its
product sales goes Decline
through
Price The amount of money Or consumer are willing to
producers are willing to buy for the product.
sell
Price skimming Setting a high price for a that is unique or very
new product different from other
products on the market.
Penetration pricing Price is set lower than In order to be able to
competitor’s prices enter a new
market/launch a new
product
Competitive pricing Setting a price similar or which are already
just below to that of available in the market
competitor’s products
Cost plus pricing The price is based on the And the addition of a fixed
cost of making a product percentage for profit

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Promotional pricing Setting the price of a few to attract customers into
products at below cost for the shop in the hope that
a certain period of time they will buy other
products as well.
Dynamic pricing Where prices are at time of purchase.
determined according to
demand and supply
Price Elasticity of demand Refers to the For it to changes in its
responsiveness of the price.
quantity demanded
Elastic demand Demand responds more To a change in price
than proportionately
Inelastic demand Low response of demand to change in price
(customers are not very
sensitive to price)
Price elastic Percentage change in The % change in price
product demanded is
greater than
Wholesaler Someone(or organization) And then breaks into bulk
that buys and stores large deliveries to supply
quantities of several retailers with smaller
producers’ goods quantities
Promotion The marketing activities to inform and persuade
used to communicate with them to buy a business’s
customers and potential products.
customers
Advertising Paid-for communication about a product to
with potential customers encourage them to buy it.
Informative advertising Advertising focuses on about the product. EX:
giving information Price, uses of product and
where to buy it
Persuasive advertising Advertising trying to and should buy it and
persuade the consumer it’s better than
that they really need the competitor’s products.
product
Sales promotion A promotion that is not But uses incentives to
paid for communication encourage consumers to
buy.
Personal selling When sales staff to achieve a sale and
communicate directly with form a long-term
consumer relationship between the
firm and consumer.
Direct mail Also known as mailshots, which are sent directly to
printed materials like the addresses of
flyers, newsletters and customers.
brochures
Sponsorship Payment by a business to associated with a
have its name or products particular event.

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The marketing budget An estimated projection of To promote a business’
costs needed products or services
E-commerce The use of internet and And sell goods to
other technologies to customers
market
Marketing strategy A marketing strategy is a to achieve a particular
plan to combine the right marketing objective.
combination of the four
elements of the marketing
mix for a product
Licensing A business in one country to produce its branded
permits a firm in a foreign product “under license”
country

Unit 4
Definition 1 Mark 1 Mark
Production Is the process by which to make goods
the a firm combines and services (output) to
scarce resources of land, satisfy consumer wants.
labour and capital (Inputs)
Productivity A measure of the output In relation to its inputs
of a business
Inventory The amount of raw Intended for sale
materials, work in
progress and finished
goods held by a business
Lean production Refers to the various and increase efficiency /
techniques a firm can productivity.
adopt to reduce wastage
Kaizen It’s a Japanese term It aims to increase
meaning ‘continuous efficiency and reduce
improvement’. wastage by
Just in time This technique eliminates by ensuring that supplies
the need to hold any kind arrive just in time they are
of inventory needed for production.
Job production Where a single product Is made at a time
Batch production Products are made in Followed by another
groups/blocks block/group
Flow production Where large quantities of Are produced in a
a product continuous process
Costs Fixed costs + variable costs
Fixed costs Costs that do not change With output/sales/level of
activity
Variable costs Costs that change With the level of output
produced/sales made
Total costs Sum of (total) fixed cost Plus (total) variable costs

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Average total cost Total cost divided by The total number of units
produced
Revenue Income/money made by From the sale of goods or
the business services OR Quantity sold
x price per unit [2]
Average revenue per unit = Total revenue/n of units=Selling price per unit
Profit The amount of money From the revenue
that a business makes
once costs have been
subtracted
Break- even point Level of output Where total costs equal
total revenue
Economies of scale Factors that lead to lower As a business increases
average costs in size
Diseconomies of scale The increase in the as the business increase
Average unit cost production.
Margin of safety Difference between And break-even output
current level of output
Quality control Checking of goods At the end of the
production process
Quality assurance Checking for quality Throughout production
standards process OR every stage

Unit 5
Definition 1 Mark 1 Mark
Finance The money required in the business.
Revenue expenditure Money spent on day to day expenses
as wages, rent.
Capital expenditure Money spent on non-current assets
which will last for more
than 1 year such as
buildings, machines and
vehicles.
Micro-finance (Micro Provides financial To poor people not served
loans) services including small by traditional banks
loans
Crowd-funding Asking a large number of To raise finance for a
people each for a small project
amount of money
Overdraft Loan repayable Within 12 months
Cash Liquid asset that is for spending on goods
immediately available and services.
Cash flow Difference (each month) between the cash inflows and
cash outflows
Cash inflows The sums of money over a period of time.
received by the business

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Cash outflows The sums of money paid over a period of time.
out by the business
Cash flow forecast An estimate of cash Of a business (usually on
inflows and outflows a month by month basis)
Working capital How much liquid assets a To pay its day to day
business has costs/ Current assets-
current liabilities (2)
Opening balance Amount of cash held by a At the start of the
business month/trading period
Cost of sales Money spent on Sold by the business
producing or buying in the
goods
Balance sheet Shows value of business At a particular point in
assets and liabilities time
Non-current asset Resources owned by the For more than one year
business to use
Non-current liabilities Debts/loan repayable In more than one year’s
time
Trade receivables Amount of money Owed by customers
for(goods bought on
credit terms)
Return on capital ROCE means the profit of As % of capital invested
employed the business expressed in the business OR
(Profit/capital employed x
100) (2)
Liquidity Ability of a business to Its short-term OR day to
pay back day debts

Unit 6
Definition 1 mark 1 mark
Inflation The increase in average over time.
prices of goods and
services
Unemployment When people want to But cannot find a job
work
Balance of payments This records the difference between a country’s
exports and imports
Economic growth When a country’s GDP Than in the previous year
increases/ more goods
and services are
produced
Growth When GDP is rising
Economic boom Period of time When GDP rising rapidly
Recession A sustained (over a period of time) reduction in GDP/
output
Slump Prolonged recession (very serious problem)

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Fiscal Policy Using taxes and to influence the demand
government spending conditions in the
economy.
Direct tax Taxes paid directly from incomes of
individuals and
businesses.
Income tax Paid from an individual’s income.
Corporation tax Tax paid on a company’s profits
Indirect tax Are added to the prices of and it is paid while
goods and services purchasing the good or
service.
Value added tax (sales These are added to the price of goods and services.
tax)
Import tariffs/custom duty A tax on imported goods and services.
Monetary policy Using interest rates (as to influence the demand
well as money supply and conditions in the
the exchange rate) economy.
Interest rate is the cost of borrowing money
Supply side policies These are policies by the to encourage the efficient
government supply and production in
the country.
Business cycle Changes in level of Over time
economic growth
Gross domestic product The total value of output Of goods and services in
a country (in one year OR
at a given point in time)
Private Costs Costs paid for by the for an activity
business
Private Benefits Gains for the business resulting from an activity.
External Costs Impact paid for by the rest As a result of business
of society actions
External Benefits Gains enjoyed by the rest as a result of a business
of the society activity.
Social Costs = Private Costs + External Costs
Social Benefits = Private Benefits + External Benefits
Sustainable development Development that does of future generations.
not put at risk the living
standards
Pressure groups People who have a Who take action to
common interest change OR influence
business (or government)
decisions
Ethical decisions Decisions based on a It means ‘doing the right
moral code. thing’.
Import quota Quota refers to a limit on That are allowed into a
the flow of goods country
Ethical business An organization that takes Based on a moral code
decisions

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Externalities Third party effects arising For which no appropriate
from production or compensation is paid
consumption of goods
and services
Globalization The growth in worldwide trade
Protectionism Refers to when using trade barriers such
governments protect as tariffs and quotas; i.e.
domestic firms from the opposite of free trade.
foreign competition
Import tariff/Tariffs Tax on goods Bought into a country
Multinational businesses A business with factories, In more than one country
production or service
operations
Exchange Rate Is the value of a currency in comparison with
another currency.
Appreciation It’s the increase in the In comparison to another
value of a currency currency
Depreciation It’s the decrease in the In comparison to another
value of a currency currency

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