NCEA Level 2 Business Studies key terms

The money left over when total revenue is greater than total costs over a period. It rewards owners for risk and is a key measure of business success.

The total money received from selling goods or services before any costs are deducted. Calculated as price multiplied by quantity sold.

All expenses a business incurs to produce and sell its goods or services. Split into fixed costs, which do not change with output, and variable costs, which do.

Expenses that stay the same regardless of how much a business produces or sells, such as rent, insurance, and salaried wages. They must be paid even at zero output.

Expenses that rise or fall directly with the level of output, such as raw materials and piece-rate wages. More units produced means higher total variable costs.

The level of sales at which total revenue equals total costs, so the business makes neither profit nor loss. It shows the minimum output needed before earning profit.

The desire to make a financial gain that drives many people to start and grow businesses. It influences decisions about what to produce, how to price, and where to operate.

A specific goal a business sets and works towards, such as increasing market share, improving customer satisfaction, or reducing waste. Objectives guide planning and give a way to measure success.

A written document setting out a business idea, its objectives, target market, operations, and financial forecasts. Used to guide the owner and to persuade lenders or investors to provide finance.

A person who identifies an opportunity, takes on financial risk, and organises resources to start and run a business. They combine land, labour, and capital to create goods or services.

Any individual or group affected by or interested in what a business does, such as owners, employees, customers, suppliers, and the local community. Different stakeholders often have conflicting interests.

A person or organisation that owns shares in a company, giving them part-ownership and a claim on profits paid as dividends. Shareholders usually want rising share value and returns.

A portion of a company's profit paid out to shareholders, usually per share. The board decides how much to distribute and how much profit to keep in the business.

A business owned and run by one person, who keeps all profits but has unlimited personal liability for debts. Simple and cheap to set up, but harder to raise large amounts of capital.

A business owned by two or more people who share profits, risks, and decision-making under a partnership agreement. Partners generally have unlimited liability unless structured as a limited partnership.

A separate legal entity owned by shareholders and managed by directors. It can own property, sign contracts, and sue or be sued in its own name, and shareholders have limited liability.

A legal protection meaning owners can lose only the money they invested, not their personal assets, if the business fails. It encourages investment by reducing risk for shareholders.

A situation where the owner is personally responsible for all business debts, so personal assets such as a house may be sold to pay creditors. Common in sole traders and ordinary partnerships.

The process of gathering and analysing information about customers, competitors, and the market to support business decisions. Can be primary, collected first-hand, or secondary, using existing data.

New data collected directly for a specific purpose, for example through surveys, interviews, or observation. It is current and tailored but often costly and time-consuming.

Using data that already exists, such as government statistics, industry reports, or competitor websites. It is usually cheaper and faster than primary research but may be outdated or not specific enough.

A research method that asks a sample of people a set of questions to collect opinions or buying behaviour. Well-worded, unbiased questions and a representative sample improve reliability.

A smaller group selected from a larger population to represent it in research. A biased or too-small sample can make findings misleading, so selection method matters.

The specific group of customers a business aims its products and marketing at. Defined by characteristics such as age, income, location, or lifestyle.

Dividing a broad market into smaller groups of buyers with similar needs or characteristics so products and marketing can be tailored to each group. Common bases include demographic, geographic, and behavioural.

The combination of product, price, place, and promotion, often called the four Ps, that a business uses to reach its target market. The elements should work together consistently.

The stages a product passes through: development, introduction, growth, maturity, and decline. Sales and profits change at each stage, so marketing and pricing strategies should adapt.

The methods a business uses to communicate with customers and persuade them to buy, such as advertising, sales promotions, public relations, and social media. Choice depends on budget and target audience.

The approach a business takes to setting prices, for example cost-plus, penetration, skimming, or competitive pricing. Price affects sales volume, profit margin, and how customers perceive quality.

The management of people within a business, covering recruitment, training, motivation, performance, and employment relationships. Effective HRM aims to get the best from staff while meeting legal obligations.

The process of attracting and selecting suitable people to fill positions in a business. It includes job analysis, advertising the vacancy, shortlisting, and interviewing candidates.

A document outlining the duties, responsibilities, working conditions, and reporting lines of a position. It helps recruit the right person and sets clear expectations for the employee.

Planned activities that develop an employee's skills and knowledge, either on the job or off the job. It improves performance and motivation but costs time and money.

The internal and external factors that drive employees to work hard and achieve business goals. Influenced by pay, recognition, working conditions, and opportunities for advancement.

New Zealand legislation that sets the framework for good faith bargaining, union rights, and personal grievances between employers and employees. It shapes how businesses handle disputes and collective negotiations.

A business's voluntary commitment to act ethically towards society and the environment, beyond legal minimums. Examples include reducing waste, fair sourcing, and community support.

Operating so that a business meets present needs without harming the ability of future generations to meet theirs. Involves environmental, social, and economic considerations in decisions.

The principles of right and wrong that guide business behaviour, such as honesty in advertising, fair treatment of workers, and avoiding conflicts of interest. Ethical choices can affect reputation and customer trust.