GCE A/L Business Studies key terms

The value of the next best alternative given up when a choice is made. A firm using funds for one project loses the return it could have earned elsewhere.

The condition where resources such as land, labour, capital and enterprise are limited relative to unlimited wants, forcing individuals and businesses to make choices.

The inputs used to create goods and services: land, labour, capital and enterprise. Their quantity, quality and cost shape what a business can produce.

Any individual or group affected by or interested in a business's activities, such as owners, employees, customers, suppliers, lenders, the local community and government.

A person or institution that owns shares in a company, giving rights to a share of profits and a vote at general meetings, and an interest in rising share value.

A legal protection meaning owners of a company can lose only the capital they invested, not their personal assets, if the business cannot pay its debts.

A business owned and controlled by one person, who keeps all profits but bears unlimited liability for debts and often raises capital from personal savings or loans.

A business formed by two or more owners who share capital, profits, workload and decision-making under an agreed deed, usually with unlimited liability unless registered as a limited liability partnership.

An arrangement where a franchisee pays fees and royalties to a franchisor for the right to trade under an established brand and use its proven systems and support.

A written document setting out a venture's aims, market analysis, marketing and operations plans, management team and financial forecasts, used to guide the owner and attract finance.

A business whose main purpose is to address a social or environmental problem, reinvesting most surplus into its mission rather than maximising returns for owners.

A business's voluntary commitment to act ethically towards employees, customers, communities and the environment beyond the minimum required by law.

Goals stated as specific, measurable, achievable, relevant and time-bound, so progress can be tracked and staff know exactly what success looks like.

A short public declaration of an organisation's overall purpose and values, intended to guide decisions and motivate employees rather than set measurable targets.

Dividing a broad market into groups of buyers with similar needs or characteristics, such as age, income or lifestyle, so marketing can be tailored to each group.

The specific group of customers a business chooses to serve with its offer, selected because it is large enough, reachable and profitable to address.

The coordinated set of controllable elements, commonly product, price, place and promotion, that a firm adjusts to meet the needs of its chosen target market.

Creating a distinctive name, design and image that customers associate with particular qualities, helping a product stand out and support a higher price.

A measure of how much quantity demanded responds to a change in price. Demand is elastic when buyers are price-sensitive and inelastic when they are not.

The level of output or sales at which total revenue equals total cost, so the business makes neither profit nor loss.

The amount left from selling price after variable cost per unit, which goes towards covering fixed costs and then generating profit.

A cost that does not change with the level of output in the short run, such as rent or insurance, so it must be paid even when production is low.

A cost that rises directly as output increases, such as raw materials or piece-rate wages, because more units require more inputs.

A table predicting money expected to flow in and out of a business over future periods, showing likely cash balances and timing of shortfalls.

A financial plan setting out expected income and spending for a department or activity over a period, used for control by comparing actual results with the plan.

Comparing actual financial results with budgeted figures and investigating the size and cause of differences, so corrective action can be taken.

A structured review of an employee's performance and development against agreed targets, usually held periodically between the employee and their manager.

The internal and external forces that drive an employee to work hard and persist towards organisational goals, influenced by pay, recognition, responsibility and working conditions.

The number of subordinates directly accountable to one manager. A wide span creates a flatter structure; a narrow span gives closer supervision.

The way a business divides tasks, groups them into departments and sets reporting lines and authority, shaping how decisions and information flow.

Output produced per unit of input, such as output per worker hour. Rising productivity lowers average costs and improves competitiveness.

Reductions in average cost per unit as a business grows larger, arising from bulk buying, specialisation, better machinery or spreading fixed costs.

Inspecting output, often at the end of production, to remove defective items and ensure goods meet set standards before reaching customers.

Building quality into every stage of production through agreed procedures and standards, aiming to prevent defects rather than detect them afterwards.

A stock system where materials arrive shortly before they are needed in production, reducing stockholding costs but requiring reliable suppliers and accurate demand forecasts.

The money available for day-to-day operations, calculated as current assets minus current liabilities, needed to pay wages, suppliers and other short-term obligations.

A long-term plan for how a business will compete and achieve its goals, choosing which markets to enter, how to position itself and what resources to commit.

A structured review of a business's internal strengths and weaknesses and external opportunities and threats, used to inform strategy and decisions.

Opposition from employees or other groups to a proposed change, often caused by fear of job loss, unfamiliarity, lost status or poor communication about reasons.

A legally enforceable agreement formed by offer, acceptance, consideration and intention to create legal relations, giving parties rights and remedies if breached.