NCEA Level 3 Business Studies key terms

A way of judging business success by three separate results: financial profit, social effects on people and communities, and environmental impact. A firm reporting all three accepts that profit alone does not show whether it is doing well overall.

Running a business so that it can keep operating long term without using up resources or causing harm that undermines future operations. It balances economic viability with environmental limits and social expectations, and is often assessed through the triple bottom line.

A business voluntarily taking responsibility for the social and environmental consequences of its activities, beyond legal minimums. Examples include ethical sourcing, community sponsorship and reducing waste. CSR can build reputation and customer loyalty but adds costs that must be justified.

Any individual or group affected by, or able to affect, a business's decisions and outcomes. Includes owners, employees, customers, suppliers, lenders, local communities and government. Stakeholder analysis identifies whose interests conflict and how much power each party holds.

A person or organisation that owns shares in a company, giving them a claim on profits (dividends) and a vote at meetings. Shareholders typically prioritise returns and share value, which can conflict with other stakeholders' interests such as employee welfare or environmental protection.

Choosing between options by weighing moral principles such as fairness, honesty and harm avoidance, not just profit. In business this covers issues like pricing, advertising truthfulness, treatment of workers and environmental choices, and often requires balancing competing stakeholder claims.

A written set of rules stating how staff and representatives are expected to behave, covering areas like conflicts of interest, gifts, harassment and confidentiality. It gives employees guidance and gives the firm a basis for discipline and reputational protection.

A specific, measurable target a business sets to guide decisions and measure progress, such as a profit margin, market share or growth rate. Objectives translate an organisation's mission into practical goals that managers can plan, resource and review.

A goal framed to be Specific, Measurable, Achievable, Relevant and Time-bound. This structure forces precision, so that progress can be tracked and success or failure judged objectively rather than by vague impressions.

A short public statement of an organisation's purpose and core values, explaining why it exists and whom it serves. It guides strategy and culture but is not measurable, so it must be supported by concrete objectives and performance indicators.

A long-term plan for how a business will compete and achieve its objectives, covering choices about markets, products, resources and capabilities. Good strategy matches internal strengths to external opportunities and is adjusted as conditions change.

A planning tool that lists a business's internal Strengths and Weaknesses alongside external Opportunities and Threats. It helps match capabilities to the environment, though it is descriptive unless followed by action to build on strengths and address weaknesses.

A framework for scanning external forces: Political, Economic, Social, Technological, Legal and Environmental. It identifies changes outside the business's control that may create opportunities or threats, informing strategy and risk planning.

An attribute that lets a business outperform rivals, such as lower costs, superior quality, brand strength, location or unique technology. Advantages are usually temporary, so firms must keep investing to sustain them against imitation and changing customer preferences.

Making a product or service distinct from competitors' offerings through design, quality, features, service or branding, so customers will pay more or stay loyal. It supports premium pricing but requires ongoing investment to maintain the distinction.

Dividing a broad market into groups of buyers with similar needs, characteristics or behaviour, then targeting the most attractive groups with a tailored offer. Segmentation improves marketing efficiency but raises complexity and can narrow the customer base.

The specific group of customers a business aims to serve with a product or marketing campaign, chosen after segmentation. A clear target market shapes pricing, promotion, distribution and product design, improving the fit between offer and customer needs.

The set of controllable marketing decisions commonly summarised as product, price, place and promotion (extended with people, process and physical evidence for services). The elements must be consistent with each other and with the chosen target market.

The approach used to set prices, such as cost-plus, penetration, skimming, competitive or value-based pricing. The choice affects sales volume, profit margin, perceived quality and how quickly a product gains market acceptance.

The extra value a recognised brand name adds to a product, letting the firm charge more or win trust faster than an unbranded equivalent. It is built through consistent quality and promotion, and can be damaged quickly by poor conduct or recalls.

Calculating the sales volume at which total revenue equals total costs, so profit is zero. Break-even quantity equals fixed costs divided by contribution per unit. It shows the minimum activity needed and how changes in price or costs shift that threshold.

The amount each unit sold contributes toward covering fixed costs and then generating profit, calculated as selling price minus variable cost per unit. A higher contribution margin means each sale helps profit more and lowers the break-even volume.

A cost that does not change with the level of output in the short term, such as rent, insurance or salaried management. Fixed costs must be covered regardless of sales volume, so they raise risk when demand falls.

A cost that rises or falls roughly in proportion to output or sales, such as raw materials, packaging or sales commissions. Variable costs per unit are usually stable, making them central to contribution and break-even calculations.

The gap between current or expected sales and the break-even sales level, expressed in units or as a percentage. A small margin means profit is fragile and a modest sales decline could push the business into loss.

The extent to which a business's cost structure relies on fixed rather than variable costs. High operating leverage magnifies profit when sales rise but deepens losses when sales fall, so it is a key driver of business risk.

A projection of cash coming in and going out over future periods, showing the expected closing cash balance each period. It identifies timing gaps where cash runs short, allowing the business to arrange finance or delay payments in advance.

The money tied up in day-to-day operations, calculated as current assets minus current liabilities. Adequate working capital lets a business pay suppliers and wages on time; too much means funds are idle rather than invested productively.

A business's ability to meet short-term obligations as they fall due, by holding cash or assets that convert quickly to cash. Poor liquidity can force insolvency even when the business is profitable on paper, because profit and cash timing differ.

Current assets divided by current liabilities, indicating whether short-term assets cover short-term debts. A result near 2 suggests comfortable liquidity; a result below 1 signals possible difficulty paying obligations on time, though norms vary by industry.

A financial plan setting expected income and spending for a period, used to allocate resources and later compare actual results against plan. Variances reveal where control is needed and inform revised forecasts and decisions.

Comparing actual financial results with budgeted figures to find and explain differences. Favourable and unfavourable variances are investigated so managers can correct problems, revise plans or recognise better-than-expected performance.

A measurable value used to track progress toward a critical objective, such as sales growth, customer retention, defect rate or staff turnover. Good KPIs are specific and linked to strategy, so they guide action rather than merely describe activity.

Managing people so the organisation gets the skills and effort it needs, covering recruitment, training, performance, pay and workplace relations. Effective HRM improves productivity and retention, while poor practice raises turnover, disputes and legal risk.

The internal drive that makes workers put effort into their tasks. Businesses influence it through pay, recognition, autonomy, teamwork and career paths; higher motivation typically lifts productivity, quality and retention and reduces absenteeism.

A structured review of an employee's work against agreed expectations, usually involving feedback, ratings and development goals. Done well it guides training and pay decisions; done poorly it damages trust and can create bias or legal complaints.

The rate at which employees leave and are replaced over a period. High turnover raises recruitment and training costs and can signal low morale or poor management, while very low turnover may indicate stagnation or a lack of fresh skills.

The framework of law, bargaining and workplace practice governing the relationship between employers and employees, including collective bargaining, good-faith obligations and personal grievances. Poor relations raise dispute costs and disrupt operations.

Identifying potential threats to a business, assessing their likelihood and impact, and taking steps to avoid, reduce, transfer or accept them. It protects value and supports better decisions under uncertainty.

Spreading activities across different products, markets or investments to reduce dependence on any single source of income. It lowers risk through variety but can stretch management attention and dilute expertise.