MATSEC SEC Business Studies key terms

The process of combining inputs such as labour, capital and raw materials to produce goods or services that satisfy people's wants, usually in exchange for revenue.

The resources used to make goods and provide services: land, labour, capital and enterprise. Their availability and cost influence what a business can produce and how efficiently.

The value of the next best alternative given up when a choice is made. For a business, it is the benefit lost from the option not chosen with limited money, time or space.

The situation where resources are limited while wants are unlimited, so choices must be made. Scarcity forces businesses and consumers to decide how resources are allocated.

The part of the economy that extracts or harvests natural resources, for example farming, fishing, quarrying and mining. Its output often supplies raw materials to other sectors.

The part of the economy that processes raw materials into finished or semi-finished goods, such as manufacturing, construction and food processing. It adds value by transforming materials.

The part of the economy that provides services rather than goods, including retail, banking, tourism, transport and education. In many developed economies it employs the largest share of workers.

Organisations owned and controlled by government, such as state schools, hospitals and public transport. They aim to provide services rather than to maximise profit for owners.

Businesses owned by individuals or shareholders rather than the state. They usually aim to make a profit, though they may also pursue social or charitable objectives.

A business owned and run by one person. The owner keeps all profits and makes all decisions, but has unlimited liability for the business's debts.

A business owned by two or more people who share capital, profits, losses and decision-making, usually governed by a partnership agreement. Partners typically have unlimited liability unless registered as a limited partnership.

A legal protection meaning owners can lose only the money they invested in the company, not their personal assets, if the business fails. It encourages investment but usually requires formal registration.

A legal position where the owner is personally responsible for all business debts and may have to sell personal assets to pay them. It applies to sole traders and ordinary partners.

A person or institution that owns shares in a company, giving them a share of ownership, a vote at general meetings and a right to a dividend if one is paid.

Any individual or group affected by or interested in a business's activities, such as owners, employees, customers, suppliers, lenders, local residents and government. Their interests can conflict.

An organised group that campaigns to influence business or government behaviour on issues such as the environment, animal welfare or consumer rights. It can damage reputation or prompt changed practices.

A business's voluntary commitment to act ethically towards society and the environment beyond legal minimum requirements, for example by reducing waste or supporting local communities.

The systematic collection and analysis of information about customers, competitors and markets to support marketing decisions. It may use primary data gathered first-hand or secondary data already published.

Dividing a market into groups of buyers with similar characteristics or needs, such as by age, income, location or lifestyle, so that marketing can be targeted more effectively.

The specific group of customers a business chooses to aim its product and marketing at. A clear target market helps a firm focus resources and design an appropriate marketing mix.

The combination of controllable elements a business uses to influence demand, commonly summarised as product, price, place and promotion. The elements should be consistent with each other and the target market.

The stages a product passes through from development and introduction to growth, maturity and decline. It helps managers plan pricing, promotion and product replacement decisions.

Creating a distinct name, symbol or identity for a product or business so customers recognise and trust it. Strong branding can support higher prices and repeat purchases.

The level of output or sales at which total revenue equals total costs, so neither profit nor loss is made. It can be calculated by dividing fixed costs by contribution per unit.

A cost that does not change with the level of output in the short term, such as rent, insurance or managers' salaries. Fixed costs must be paid even when sales fall.

A cost that rises or falls directly with the quantity produced or sold, such as raw materials or packaging. Total variable cost equals variable cost per unit multiplied by output.

The movement of money into and out of a business over a period. A cash flow forecast predicts receipts and payments to help a firm avoid running short of liquid funds.

The money available for day-to-day operations, calculated as current assets minus current liabilities. Sufficient working capital lets a business pay suppliers and wages on time.

Assets expected to be converted into cash within a year, such as stock, trade receivables and cash at bank. They are important for assessing a firm's short-term financial strength.

Debts due to be paid within a year, such as trade payables, overdrafts and short-term loans. They are deducted from current assets when calculating working capital.

Revenue minus the cost of goods sold. It measures the profit made from trading before other expenses such as rent, marketing and administration are deducted.

Gross profit minus all other operating expenses, interest and tax. It shows the final profit attributable to the owners and is a key measure of overall profitability.

A financial statement showing a firm's revenue, costs and profit or loss over a period, usually a year. It helps stakeholders judge profitability and compare performance over time.

A financial statement listing a firm's assets, liabilities and owners' equity at a particular date. It shows what the business owns, owes and is worth at that moment.

A payment made to shareholders out of a company's profits, usually expressed as an amount per share. It rewards investment but reduces the profit retained in the business.

The process of identifying a vacancy and attracting suitable applicants, for example through advertising, agencies or word of mouth. It precedes selection, when the best candidate is chosen.

A document setting out the duties, responsibilities and conditions of a post. It helps applicants understand the role and provides a basis for recruitment and appraisal.

A profile of the qualifications, skills, experience and personal qualities needed to do a job well. It is used to shortlist applicants and design interview questions.

The process of choosing the most suitable applicant for a vacancy, using methods such as application forms, interviews, tests and references. It follows recruitment and aims to reduce hiring mistakes.

The internal or external forces that drive an employee to work hard and persist towards goals. Pay, job design, recognition and working conditions can all influence it.

Increasing the depth of a job by giving employees more responsibility, variety and autonomy, often including planning and checking their own work. It aims to raise motivation and job satisfaction.

Planned activities that develop employees' skills and knowledge. Induction training settles new staff, while on-the-job and off-the-job training improve competence and can raise productivity.

An organisation of workers that represents their interests in negotiations with employers over pay, conditions and treatment. It may also provide legal advice and support during disputes.

Cost advantages gained as a business grows, such as bulk buying discounts or spreading fixed costs over more units. They lower average cost per unit and can improve competitiveness.

Rising average costs that can occur when a business becomes too large, for example through poor communication, slower decisions or lower staff morale. They can offset earlier cost savings.

An increase in a firm's size, output or market share, achieved organically by expanding its own operations or externally through mergers and takeovers. Growth can bring scale benefits but also management challenges.

A written document setting out a business idea, its objectives, target market, marketing and operations plans and financial forecasts. It helps raise finance and guides decision-making.