GCSE Business Studies Key Terms

Key TermDefinition
Added ValueThe increased worth a business creates for a product.
Repeat PurchaseWhere customers stay loyal to a business’s product/service. 
ChoiceGiving customers options and increasing the chance that the product will satisfy more than one customer.
ConvenienceMaking life easier for customers.
Customer needsThe product/service must have to suit the needs of a customer.
Customer wantsWhat a customer desires to have in a product/service
Primary researchResearch conducted first-hand e.g. surveys, questionnaires
Secondary researchWhen a company uses research already carried out for general purposes e.g. census
Qualitative DataIn-depth research into the opinions and views of a small group of potential or actual customers to provide an insight into why customers buy what they buy
Quantitative DataFactual research among a large enough sample of people toprovide statistically reliable results.
Business EnterpriseThe ability to identify opportunities and take advantage of them
Market SegmentationInvolves dividing an entire market into smaller customer groups. A business can segment its market based on its distinguishable characteristics or demographics including: Location, Income, Lifestyle, Age
CompetitorsBusinesses that sell the same type of products in the same market.
Business AimsThe goals a business wants to achieve (S.M.A.R.T)
SWOTStrengths, Weaknesses, Opportunities and Threats.
RevenueTotal income earned within a set period. Revenue = Quantity x Price
Fixed CostsCosts that do not vary with output. Stays the same. E.g. rent, salaries, insurance, loans.
Variable CostsCosts that depend on the output e.g. raw materials, wages, packaging.Total Variable Costs = Cost per unit x Quantity
Total CostsTotal costs = Fixed Costs + Variable Costs
ProfitThe difference between revenue and costs.Profit = Revenue – Total Costs 
InterestWhen a business borrows money and is charged extra by the lender.Interest = Amount borrowed x Interest rate/ 100
Break-even chartsThese help businesses identify how many products they need to sell to  reach a point when total revenue equals total costs
Margin of safetyThe extent to which actual or projected sales exceed the break-even point.
CashThe money immediately available to a business at any time.
Cash flowThe inflow and outflow of money into and out of a business in a given period.Net Cash Flow = Cash Inflow – Cash Outflow
Sources of financeThe money the business needs to set up. Can come from: personal savings, selling assets, reinvesting profits, overdrafts, venture capital, trade credit, hire purchase, loan capital, share capital, crowdfunding, leasing.
OverdraftA credit limit is available when a bank account falls below zero. (short term)
Venture capitalCapital is provided by private investors. (long term)
Trade creditA period of credit is provided by investors (short term)
Hire purchasesPurchases are paid for in installments (long term)
Loan CapitalA lump sum is borrowed and repaid in installments (long term)
Share CapitalA limited company can sell shared in the business (long term)
CrowdfundingA venture is funded by a large group of people donating money (long term)
LeasingA business pays to borrow equipment (long term)
LocationWhere a business decides to set up. Many factors influence this including: raw materials, labour, market location and competition.
E-commerceAn online business
Sole TradersOwned and controlled by one person who is responsible for making all the business decisions.
Limited LiabilityOwners are not personally responsible for business debts.
Unlimited LiabilityYour personal assets are at risk.
PartnershipsOwned and controlled by two or more people. Responsibility is shared between them.
Limited CompaniesOwned by two or more shareholders. Two main types: Private Limited Companies(Ltd) and Public Limited Companies (PLC)
Private Limited CompaniesShares are sold privately (not to the public) but only if all shareholders agree. Shareholders have limited liability so they can’t come after assets. Can be expensive.
Public Limited CompaniesShares are sold on the stock market to the general public. Shareholders have limited liability. A minimum of £50,000 is needed.
Marketing MixThe combination of key elements in a marketing strategy including the 4Ps: Product, Price, Promotion and Place.
Business PlanIt shows what a business aims to achieve and how it will achieve it.
StakeholdersGroups of people who are affected by the actions of a business.
Consumer Rights Act 2015Gives consumers the right to a refund, repair or replacement if goods fail to meet certain standards.
Health and Safety ActProtect employees and customers from injury or illness in the workplace.
Equality Act 2010It is illegal to discriminate against anyone based on age, sex, religion, sexual orientation or disability.
WagesBusinesses have to pay at least the national minimum wage to employees. If less, they can face prosecution and fines.

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