98 of the Business glossary’s terms, each with the part of the syllabus where you first meet it.
An AO4 command term asking for a numerical answer with the relevant stages of the working shown.
The maximum output a business can produce in a given period with its existing resources, such as its premises, machinery and workforce.
The percentage of a business's productive capacity that is actually being used in a period: actual output divided by productive capacity, multiplied by 100.
A factor of production consisting of man-made resources, such as machinery, tools, vehicles and buildings, used to produce other goods and services; its reward is interest.
The total long-term finance invested in a business, equal to its non-current liabilities plus equity.
Spending on non-current assets, such as buildings, machinery and vehicles, that will be used in the business for more than one year.
The output produced per unit of capital input, such as per machine, per machine hour or per dollar of capital, in a given period.
Describes production that uses a high proportion of machinery and equipment relative to labour, so that capital costs make up a large share of total costs.
A written account of a real or fictional organisation and the issues it faces, used as the context for exam questions, especially the unseen case in Paper 1.
The money a business holds in notes and coins and in its bank accounts at a given date; the most liquid current asset.
A product with a high relative market share in a slow-growing market, which generates more cash than it needs and so funds other products in the portfolio.
The movement of money into and out of a business over a given period of time.
A statement of the expected cash inflows and cash outflows of a business, month by month, over a future period, showing the net cash flow and closing balance of each month.
Money received by a business in a period, for example from cash sales, payments by debtors, loans, owners' capital or the sale of assets.
Money paid out by a business in a period, for example for stock, wages, rent, interest, tax, loan repayments or the purchase of non-current assets.
A relationship in which a change in one variable directly brings about a change in another; correlation between two variables does not by itself show causation.
A mark that a manufacturer places on a product to show that it meets the European Union's safety, health and environmental protection requirements, needed for many products to be sold in the European Economic Area.
An organisational structure in which most decision-making authority is kept by senior managers at the top of the hierarchy or at head office.
The formal line of authority through which instructions pass down an organisation, and information and accountability pass up, from the top to the bottom of the hierarchy.
The stages a product passes through, from the extraction of raw materials in the primary sector through processing in the secondary sector to sale in the tertiary sector, with value added at each stage.
A point in a decision tree, drawn as a circle, from which two or more possible outcomes follow that are outside the decision maker's control, each with a probability.
A key concept: the process by which businesses respond to a dynamic environment of new competitors, technology, consumer tastes and regulation by adapting their objectives, strategies and operations.
A person or group, from inside or outside an organisation, responsible for leading, supporting and communicating a change.
The planning, introduction and support of changes in an organisation, such as to its structure, technology, processes or culture, so that they achieve their aims with as little disruption and resistance as possible.
The time during which machinery is stopped and reset to switch production from one product or batch to another, so that no output is made.
A non-profit organisation registered as existing for purposes that benefit the public, which usually gives it tax advantages in exchange for strict rules on how it uses its funds.
A way of creating value and earning revenue that keeps products, components and materials in use for longer and recovers their value, reducing the use of new resources and the creation of waste.
An economic system in which products, components and materials are kept in use for as long as possible and at their highest value, through reuse, repair, remanufacturing and recycling, so that waste is designed out.
A circular business model in which a business replaces new, finite raw materials with renewable, bio-based or recovered materials as the inputs to its products.
A short reference in the body of a text, such as the author and year or a supporting document number, that links an idea or piece of data to its full entry in the bibliography.
A question that offers respondents a fixed set of possible answers, such as yes/no, multiple choice or a rating scale, so that results are easy to count and compare.
The amount of cash a business holds at the end of a period, found by adding the period's net cash flow to its opening balance.
The delivery of computing services, such as data storage, processing power and software, over the internet from remote data centres owned by a provider, usually paid for according to use.
A sampling method in which the population is divided into areas or groups, some of these clusters are chosen at random, and people are sampled only within the chosen clusters.
A document that sets out the ethical principles and rules of behaviour that an organisation expects its employees and managers to follow.
An asset that a borrower pledges to a lender as security for a loan, which the lender can take and sell if the loan is not repaid.
The process of negotiation between an employer or employer association and trade unions or employee representatives to agree pay, working conditions and other terms of employment for a group of employees.
A word or phrase at the start of an exam question, such as define, explain or evaluate, that tells the student what kind of answer is wanted and how deep it must go.
An AO2 command term asking for a judgment based on a given statement or on the result of a calculation.
A payment to an employee, usually a percentage of the value of the sales they make, paid in addition to or instead of a basic salary.
The transfer of information, ideas or instructions from a sender to a receiver through a medium, so that the message is received and understood as intended.
The stages through which a message passes: a sender encodes it, sends it through a medium to a receiver who decodes it, and feedback returns, with noise able to interfere at every stage.
An AO3 command term asking for both the similarities and the differences between two or more items, referring to each of them throughout.
An advantage over rivals that allows a business to earn higher profits than the industry average, by offering lower costs or greater value that customers are willing to pay for.
Setting a price based on the prices charged by competitors for similar products, at the same level or slightly above or below them.
The combined market share of a stated number of the largest businesses in a market, such as the three-firm concentration ratio, used to measure market concentration.
A method of resolving a dispute in which an independent third party helps the employer and employees, or their representatives, to communicate and reach their own voluntary agreement.
A merger or acquisition between businesses in unrelated industries, usually to spread risk across different markets.
An AO4 command term asking for information to be displayed in a diagrammatic or logical form, such as a break-even chart or an organisation chart.
The person who uses or consumes a good or service, who may or may not be the customer who paid for it.
A cooperative owned by its customers, who receive a share of the surplus, usually in proportion to how much they buy.
A description of the typical customer in a target market, covering characteristics such as age, gender, income, location, lifestyle, interests and buying habits.
The process of preparing in advance for unexpected events that could disrupt a business, by identifying possible risks and deciding how the business would respond to each one.
A legal agreement between an employer and an employee setting out the terms and conditions of the job, such as duties, hours, pay, holidays and the notice period.
In Handy's shamrock organisation, the outside individuals and firms contracted to carry out specialist or non-core work, paid for results rather than time.
The difference between sales revenue and variable costs, which is used first to pay a business's fixed costs and then provides its profit.
A costing method that charges only variable costs to products and treats fixed costs as a total for the business, so that products and decisions are judged by their contribution.
The selling price of one unit minus its variable cost per unit; the amount each unit sold adds towards fixed costs and then profit.
Setting a price that covers the variable cost per unit and makes a contribution towards fixed costs and profit, without each price having to cover full average cost.
A sampling method in which the researcher selects the people who are easiest and quickest to reach, such as passers-by or friends, without trying to represent the population.
A business owned and democratically controlled by its members (its workers, customers or suppliers), who usually have one vote each and share the surplus according to their use of the business.
A legal right that protects the owner of an original creative work, such as writing, music, film, software or art, from having it copied or used without permission for a set period.
The extent to which two variables are related, so that a change in one is associated with a change in the other; it can be positive, negative or absent, and strong or weak.
A number between −1 and +1 (Pearson’s r) that measures the direction and strength of the linear relationship between two variables; values near ±1 show a strong relationship and values near 0 a weak one.
A department, section, product, location or activity of a business to which costs can be directly attributed, but which does not earn revenue of its own.
A generic strategy in which a business aims to have the lowest costs in serving a narrow segment of a market.
A generic strategy in which a business aims to have the lowest costs in a broad market, so that it can earn above-average profits at prices similar to or below rivals'.
The direct cost of producing or buying the goods a business sold during an accounting period, calculated as opening stock plus purchases minus closing stock.
The total cost of buying a given quantity of a product or component from an external supplier: the price per unit multiplied by the quantity.
The total cost of producing a given quantity of a product or component in-house: total fixed costs plus average variable cost multiplied by the quantity.
A pricing method that sets the price by adding a percentage mark-up to the average cost of producing each unit: price = unit cost × (1 + mark-up %).
An approach to design and manufacturing in which products are designed so that all their materials can be safely returned to nature or recovered and reused at the same quality, creating no waste.
The use of accounting methods, estimates and judgments that may be legal but are chosen to make a business's financial performance or position look better than it really is.
A key concept: generating new ideas, or seeing existing ideas from new perspectives, in products, processes and problem-solving.
An efficiency ratio that measures the average number of days a business takes to pay its suppliers: creditors divided by cost of sales, multiplied by 365.
Suppliers and other organisations to which a business owes money for goods or services bought on credit; trade creditors are shown as a current liability.
An unexpected event or situation that threatens to cause serious harm to a business, its stakeholders or the public, and that needs an urgent response.
The steps an organisation takes to respond to a crisis once it has happened, to limit harm to people, operations, finances and reputation and return to normal as quickly as possible.
An activity on the critical path, with zero total float, so that any delay to it delays the completion of the whole project.
The essential physical and digital systems, such as energy, communications, data centres and payment networks, whose disruption would seriously harm the economy, public safety or the functioning of society.
The sequence of activities through a network that takes the longest time, which sets the project's minimum duration; any delay to an activity on it delays the whole project.
A project planning technique that uses a network diagram of activities, durations and dependencies to find the minimum time needed to complete a project and the activities that cannot be delayed.
Raising finance from a large number of people, each contributing a relatively small amount, usually through an online platform, in return for a reward, shares, interest or nothing.
A systematic assessment of an organisation’s culture, including its values, norms, behaviours, leadership style and reward systems, used to identify cultural differences and plan change.
The process by which local cultures, tastes and traditions become more alike across countries as global brands and media from multinational companies spread.
The ability of a person or organisation to understand people from different cultures and to adapt behaviour, communication and decisions so as to work effectively with them.
A conflict that arises when groups with different values, beliefs and ways of working must work together, for example after a merger or acquisition, during rapid growth or under a new leader.
The running total of a project's net cash flows from year 0 onwards, showing at each point how much of the initial cost has been repaid.
Assets a business expects to turn into cash or use up within one year, mainly cash, debtors and stock.
Debts a business must pay within one year, such as bank overdrafts, trade creditors and short-term loans.
A liquidity ratio that divides current assets by current liabilities, showing whether a business has enough short-term assets to cover its short-term debts.
A person or organisation that buys a good or service from a business; the customer is not always the person who uses it.
A marketing scheme that rewards customers for repeat purchases, through points, discounts, member prices or other benefits, to encourage loyalty and to collect data on their buying behaviour.
Criminal activity carried out using computers, networks or the internet, or directed at them, such as hacking, data theft, phishing, fraud and ransomware attacks.
The technologies, processes and practices that protect computers, networks, programs and data from attack, damage or unauthorised access, including staff training and access controls.
A movement of data above or below the trend linked to the business cycle of booms and recessions, usually lasting several years and less regular than seasonal variation.