*Disclaimer: this list of key terms was created based on personal experience as an entrepreneur and business educator, and it’s not approved yet by exam boards.
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The balance sheet shows the company's assets, liabilities, and how much the company is worth at a point in time.
Batch production it's a method of production of goods made in groups followed by another one.
Bonus is money paid on top of the wage/ salary when the worker/ team/ organisation achieve a specific business target.
Brand image is visual elements of the product that helps the customers to identify it and increase business reputation.
The brand name is a unique name used for the product, which is different from the competitors.
The Break-even chart shows the evolution of sales revenue and costs related to different levels of production
Break-even output shows the production level where we have an equilibrium, Total cost = Sales Revenue, profit is zero.
Buffer inventory level is the stock required to ensure continuity of production.
A business is a social unit of people which satisfy the needs and wants of customers/ consumers.
The business cycle alternates different GDP levels over time, Recession, Slump, Growth, Boom.
Business objectives are organisational targets required to be accomplished to achieve the aim of the company.
A business plan is a written document that describes your business objectives, structure, operation and finance.
The capital employed shows how much money is invested for the long term in a business
Capital expenditure is the amount of money used to buy fixed assets (machinery, land, building)
Cash flows are money that are coming in and going out of the company.
The cash flow cycle is the path from spending money on raw material to selling the final product.
Cash flow forecasts are documents that show expected cash flow over a period.
Cash inflow is the money coming into the business from customers, creditors.
Cash outflow is the money going out from the company to pay employees, creditors.
The chain of command is the path of the information n that moves from top management to line staff.
The commanding function is the support provided by managers/ supervisors to the workers by leading and motivating them toward accomplishing the goal on time.
The commission is a financial benefit given to an employee based on the number of units sold.
Communication is the exchanging data/ information by speaking, writing or provide visual input.
Competitive pricing it's a pricing strategy where we establish the price close to competition, usually slightly lower.
Consumer boycott happens when the customers decide not to buy a specific product(s) because the producers are not acting socially responsible, e.g. test on animals.
Contribution per unit is calculated by subtracting Variable costs per unit from Selling price (SP-Vc).
Controlling is a management function that measures the employees' effectiveness and efficiency against the targets or aims established.
Coordinating is a management function that makes the employees work as a team to accomplish the objective
Cost of goods sold are direct costs to make and sell the products, e.g. raw materials, wages
Cost-plus pricing it's a pricing strategy that establishes the price starting from unit cost and adding the profit per unit (50$ costs +50% mark up=> Selling price 75$)
Current assets are items that the company own, use and consume in the short term, e.g. inventories
Current liabilities are the money that the company needs to give in short-term, less than a year, e.g. suppliers
Customer loyalty is the customer who desires to buy the same product.
Customer relationship is the interaction with the customer which leads to customer loyalty.
Deindustrialisation is a stage in the development of humankind where there is a decrease in the importance of the secondary sector (production), favoring the tertiary sector (services).
Delegation is the process to entrust the authority for a task to a subordinate.
Democratic leadership it's a participative leadership style; the manager has control over main decisions, and employees are involved in the decision process.
Depreciation is the value of non-current assets (also known as fixed assets) that change over the year due to usage or obsolescence.
Direct taxes are taxes paid by the individuals (income tax) and organisation (tax on profit) directly to the government.
Diseconomy of scale occurs when the company grow, and the average costs increase due to some costs per unit increase (e.g. transportation) or miscommunication.
Employee dismissal is the termination of employment against the employee's will, e.g., the worker broke the company policies.
Disposable income is the money left to the consumer after taxes were paid.
The distribution channel is the product's path to the consumer (direct or through intermediates).
The dividend is a part of the company profit given to the owner as a reward for investing.
Division of labour is the allocation and specialisation of workers according to stages of the production process.
e-commerce means buying and selling over the internet.
The economic boom is a stage or economic cycle where the GDP increase rapidly.
Economic growth is when more products are made and sold than previously, leading to an increase in GDP.
The economic problem means that there is a scarcity of resources available compared with the cumulated needs and wanted of the population.
Economies of scale are when the company grow; the average costs decreased due to the reduction of some costs per unit (e.g. discounts received for raw materials)
An entrepreneur is a person who is willing to take risks and benefits of starting a new business.
The term environment is defined as the surroundings, land, plants, animals, air, water
An ethical business is an organisation that is doing the right thing.
The exchange rate is how much local money (£) you need to buy another currency (e.g. $), 1 £=1,28 $
Exchange rate appreciation is when with local money (£) you buy more money from another country, e.g. yesterday 1 £=1,28 $, today 1 £=1,32 $
Exchange rate depreciation is when with local money (£) you buy less money from another country, e.g. yesterday 1 £=1,28 $, today 1 £=1,20 $
Exports are goods and services sold outside, to a different country
Extension strategy is ways to maintain the product in the maturity stage for more extended periods by adding new features or selling into foreign markets.
External benefits are gained by society due to company activity, e.g. jobs created, more taxes collected by the government
External communication is the exchange of information between the company and other external stakeholders (suppliers, customers), banks, government, community
External costs are costs paid by society due to company activity; e.g. pollution with PETs
External economies of scale are costs reductions generated by locating in the same area with other companies from the same industry.
External finance it's a source of money outside the organisation ( from bank, shareholders) used to finance the business.
External growth it's an expansion made through buying (take over) or Association (merger, joint venture).
External recruitment happens when a company hire a person from outside, e.g., from another company.
Factors of production are mixed of inputs necessary to produce a good or deliver a service: land, labour, capital and entrepreneur.
Feedback is the answer received from the receiver..
Financial accounts are accounts made at the end of the year, like Income statement and balance sheet.
Fixed costs are area type of costs that do not vary with the level of output.
Flow production is a continuous process of manufacturing goods for mass marketing.
A focus group is a representative sample of customer-selected for open discussions, usually about a new product.
Formal communication is an interchange of information through official channels ( e.g., meetings, emails) using a business language.
Fringe benefits are another non-financial reward besides salary/ wage. E.g., company car.
Full-time Employees are the employees hired to carry typically 35-40 h per week.
Gross domestic product is the level of the national output of a country.
Gross profit is calculated as a difference between sales revenue and the cost of goods sold.
A horizontal takeover happens when a business buys another business in the same industry at the same production level (manufacturer of cars buys another manufacture of cars).
Illiquidity happen when assets cannot be sold due to price or demand issues.
Import quota are trade restriction regarding the number of goods imported.
Import tariff are taxes imposed on goods and services brought from another country.
Imports are goods and services bought from outside, from a different country
An income statement is an account that shows if the company made a profit/ loss for that year by recording revenues and business costs.
An incorporated business is a business that has a separate legal identity from its owners, e.g., PLC, Ltd.
Induction training is the introductory training for new hires to explain the business's standards, procedures, and policies.
Industrialisation is the increase in th1e importance of the secondary sector.
Inflation means that price levels increase over time.
Informal communication is the interchanges of information typically used in personal conversations.
Infrastructures are physical and organisational structures and facilities, e.g. communication, utilities, transportation.
Internal communication is the exchange of information inside the company, e.g., employees, managers.
Internal finance is money within the organisation used to finance the business (retain profit, disposable assets)
Internal growth is also known as organic growth, means the development of current operations. E.g. Open another shop.
Internal recruitment occurs when they hire a person from within the company.
Intrapreneurs are employees who act as an entrepreneur inside a large company.
Inventory is stock held by the company as raw materials, unfinished and finished products.
Job (person) specification is the description of the ideal candidate regarding qualifications, skills, experience and knowledge.
Job analysis defines the job role (job description) and characteristics of the new employee (person specification).
Job Description is a list of tasks, or functions, roles and responsibilities of a position.
Job enrichment is a technique used to improve motivation by adding more challenging and complex tasks to the job description.
Job production is the method of producing personalised goods or services to every customer; one product is made at a time.
Job rotation is a method used to increase motivation by switching actual repetitive task with a different task at the same level of complexity.
Job satisfaction is the level of fulfilment an employee has from doing the job.
Just in time means producing goods and services on demand with little or no inventory.
Kaizen is a lean production method to eliminate waste continuously.
Laissez-faire leadership is a consultative leadership style; employees work independently, takes their own decisions and include the manager only when assistance is required.
Lean production techniques improve the level of output by organising production and eliminating waste.
Liabilities are the money that a company owes to creditors.
Limited liability means that owners have their responsibility limited to the capital invested in the business. Valid for Private and Public Limited Companies (Ltd, PLC).
A line manager is a manager who has at least one employee under the direct supervision (e.g. training manager)
Liquidity is the ease of obtaining cash to cover short-term debts.
Long-term sources of finance are the sources of finance required to protect noncurrent assets.
A manager is a person who is in charge of organising and coordinating a team to achieve a business objective.
Market research is the process of identifying customer needs.
A market segment is a portion of the market that can have specific characteristics ( gender, income, location).
Market share is the percentage of total sales of a company in the total sales of all companies in the same industry.
Market-oriented means developing and producing a new product without doing market research before.
Marketing is the business process starting from identifying customers needs up to satisfy them.
The marketing budget is the financial plan which includes the money to be spent on marketing and sales revenue expected.
The Marketing mix combines the 4P (Product, Price, Place, Promotion) how you communicate and sell the right product at the best price in the correct location.
Marketing strategy shows how the company achieves the marketing objective using the marketing mix.
The mass market is a market that requires a large number of products with little or no personalisation.
A merger is an agreement between two companies to become one.
A message is a piece of information passed from sender to receiver.
A method of communication is a way the message is passed from sender to receiver, e.g., speaking, writing
Microcredit is a Small loan used to help people with no or very low income.
A mixed economy is an economy where businesses belong to the private and public sectors.
The government or the central bank establishes monetary policy to influence consumer spending using interest rates or another financial tool.
Motivation is the reason that makes the employee work more and better.
Nationalization happens when ownership and control of the business are transferred from the private to the public sector.
A need is a product essential for personal life, e.g., water, oxygen, food
Net profit is calculated as a difference between sales revenue and total costs.
The niche market represents a small market that requires high customization.
Non-current assets are items that the company own, use, and consume long-term, e.g. Buildings, machinery.
The non-current liabilities are money that the company needs to give in more than one year, e.g. long-term bank loan.
Of-the-job training is the process of developing new competencies for the employee in a formal environment (e.g., classroom) by specialised trainers.
On-the-job training is the process of developing new competencies for an employee at the place of work by observing and being instructed by the experienced workers.
One way communication happens when there is only an information transfer from sender to receiver, there is no feedback.
Opportunity cost is the benefit lost from using product B when you choose product A.
Organisational structure shows how the tasks and responsibilities are split at different levels of the company to achieve the business aim.
Organising means allocating resources within the team necessary to achieve the business target.
Packaging is the physical materials that protect the content, inform the customers about the product and create brand awareness.
Part-time Employees when people are employed to carry fewer hours per week than a full-time job (e.g 4hours/day).
A partnership is a legal form of organisation where two or more partners personally share responsibility.
Penetration pricing means setting a price lower than the competition to enter a new market.
Performance-related pay is a payment system for the employee based partially or wholly on achievements of specific business goals.
Wage by piece rates is weekly payments based on the number of products made.
Planning is a process of setting targets, aims for the business.
Pressure groups are organisations that have a social objective and protect the environment or other sensitive groups.
A product has a Price elastic demand when the percentage market demand variation is greater than price change.
Price elasticity represents the market demand reaction to the price change.
A product has price inelastic demand when the percentage market demand variation is lower than price change.
Price skimming is a pricing strategy when we charge a higher price than the competition. The strategy is used for new revolutionary products.
Primary research is first-hand data research.
The primary sector is the economic sector that extracts and uses raw materials, e.g., mining, farming.
Private benefits are gains that the company has, e.g. sales revenue.
Private costs are payments made by the company, e.g. cost with labour, land.
A private limited company is a limited organisation where owners cannot sell shares on the stock exchange.
The private sector is the business organisation owned and controlled by individuals rather than the state.
Privatisation is the process of changing ownership and control of the business. It is transferred from the public to the private sector.
Product life cycles are the stages that sales revenue changes over a period: induction, growth, maturity, and decline.
A product-oriented strategy is the business approach where the business runs market research before developing and producing a new product.
Productivity is the output level, e.g. no. of units in the period over inputs, e.g. no of employees.
The profit is the positive difference between revenue (mainly sales revenue) and total costs.
Profit-sharing is money paid to an employee based on the profit made by the company.
Promotion is the communication activities with the customer to achieve marketing objectives (e.g., sales, brand, and company awareness).
Psychological pricing is the strategy price that creates a smaller impression than it is, e.g. 0,99
The public limited company are a limited organisation where owners can sell shares on the stock exchange.
The public sector is business organisations owned and controlled by the state rather than individuals.
A qualitative product is a product that satisfies customer needs and wants.
Quality assurance is a method where Quality standards are established at the production level, and products are checked against them.
Quality control is a method quality inspectors check only the final products.
A random sample method of research where the group from the total population is chosen by chance.
Real income represents the buying power of an individual or business after taking into consideration inflation.
The receiver in the communication process is the person who gets and accept the message from the sender.
A recession is when fewer products are made and sold, leading to a drop in GDP for more than three months.
Recruitment is the process of identifying a vacancy and attracting suitable candidates for the job.
Redundancy is the termination of employment because the job is no longer required.
Retained profits are money left in the company after tax on profit, and dividends were subtracted. It is an internal source of finance.
Revenue expenditure is the amount of money used to pay current assets ( inventory, wages, utilities).
Salary is the monthly payment for the work of an employee.
Sales promotions are short-t.erm price discounts and prizes to increase sales.
Sales revenue equals Quantity sold multiplied by Selling price.
A sample is a selected group from the total population to do the research.
Scarcity is the deficiency, lack of resources compared with the demand.
Secondary research is second-hand data, research made by someone else.
The secondary sector is the economic sector that produces goods, e.g., cars, perfume, bread
The sender is the person who initiates de communication by sending the message.
A shared ownership scheme is a way to motivate employees by giving them a part of the company ( shares).
Shareholders are Owners (individuals and organisations) of a limited company
Short term finance is the source of finance required to cover current assets. (e.g. overdraft)
Slump a period in a business cycle where GDP is maintained at a low level or slightly going down.
Social benefits equal Private costs plus External benefits.
Social costs equal Private costs plus External costs.
Social Enterprise is a type of organisation that has as main targets: social, environmental and profit; profit is used only to be reinvested and support the first two objectives.
Social responsibility happens when the company also has a social objective, e.g. protect the environment, reduce unemployment.
A sole trader organisation is a person who owns and run a business for themselves and takes responsibility for its success or failure.
Specialisation happens when a worker does mainly activities where is more efficient.
The staff manager is a specialised manager that provides assistance and support to line managers.
Stakeholders are individuals, groups, organisations and institutions which have a direct interest in the performance of the business.
Start-up capital is the amount of cash or assets needed to start a new business.
Sustainable development happens when companies use natural resources in a way that gives us a better future.
Sustainable production method means the usage of production methods that reduce or eliminate waste.
Takeover happens when a business buys and control another company.
A target market is a group in the total market with the highest potential to become your customers.
The tertiary sector is the economic sector that provides services, e.g., insurance, hotels.
The balance of imports and exports is the difference between money coming in and money going out of the country over a period of time.
The levels of hierarchy are Layers of the organisational structure. On each layer, employees have the same level of responsibility.
The span of control represents the number of employees under direct supervision from the manager/ supervisor.
Time rate payment is the Wage paid based on the number of hours worked by the employee.
Total costs are total fixed Costs plus total variable costs.
Total quality management is a management approach where employees, customers and suppliers are involved in a continuous process of improving quality.
A trade union is an association of workers that protects the member's rights.
Two-way communication happens when there is an exchange of information between sender and receiver.
Unemployment is the people that are able, willing but not finding a job.
Unincorporated business is a business that has the same legal identity as its owners, e.g.,
Unique selling points are one or more features of a product that differentiates from others and create a competitive advantage.
Unlimited liability means that owners are responsible for capital invested and also personal possessions.
Variable costs are costs that change proportionally with the level of production.
A Vertical takeover is a business that buys another company in the same industry at a different production level.
Wage is a Weekly payment for the work of an employee.
A Want is a product that a person would like to have, not critical to life, e.g., ice cream, shoe polish, bag.
Workforce planning ensures that the number of workers with the required skills for the business.
Working capital is the capital required to pay daily expenses. It can be calculated by subtracting current liabilities (creditors) from existing assets ( cash, inventory and debtors).