Edexcel International AS & A Level Business: every topic, by paper

What is an entrepreneur?

Someone who takes the risk of starting and running a business to make a profit, combining the factors of production.

What is the difference between the primary, secondary and tertiary sectors?

Primary extracts natural resources; secondary manufactures goods; tertiary provides services.

What is added value?

The difference between the selling price of a product and the cost of the bought-in materials used to make it.

What is marketing?

Identifying, anticipating and satisfying customer needs profitably.

What is the difference between market orientation and product orientation?

Market-oriented firms design products based on customer research; product-oriented firms focus on making the product and then try to sell it.

What is market share?

A firm's sales as a percentage of total market sales.

What are the 4Ps of the marketing mix?

Product, price, place and promotion.

What are the extra 3Ps for services?

People, process and physical evidence.

What are the stages of the product life cycle?

Development, introduction, growth, maturity and decline.

What is human resource management (HRM)?

Managing people in an organisation: planning, recruiting, training, rewarding and supporting the workforce.

What is workforce planning?

Analysing the current workforce and forecasting the number and skills of staff needed in future.

What is the difference between internal and external recruitment?

Internal recruitment fills a vacancy from existing staff; external recruitment brings in someone from outside.

What is motivation?

The internal and external factors that stimulate people to work towards goals.

What did F.W. Taylor believe motivates workers?

Money: workers are motivated by pay, so piece-rate pay and close supervision raise productivity (scientific management).

What did Elton Mayo's Hawthorne studies find?

Workers are motivated by social factors, attention and teamwork, not just pay.

What is an organisational chart?

A diagram showing the structure of an organisation, the roles in it and the lines of authority.

What is the span of control?

The number of subordinates who report directly to one manager.

What is the chain of command?

The line of authority from the top of an organisation to the bottom.

What is the difference between fixed and variable costs?

Fixed costs do not change with output (e.g. rent); variable costs change directly with output (e.g. raw materials).

What is contribution per unit?

Selling price per unit minus variable cost per unit.

How is the break-even output calculated?

Fixed costs ÷ contribution per unit.

What does the income statement show?

A business's revenue, costs and profit over a period of time.

What does the statement of financial position show?

A business's assets, liabilities and equity at a particular date.

How is gross profit calculated?

Revenue − cost of sales.

What is operations management?

Managing the process of turning inputs into outputs of goods or services efficiently.

What is the difference between job, batch and flow production?

Job: one-off products to order; batch: groups of identical products; flow: continuous mass production.

What is capacity utilisation?

Actual output as a percentage of maximum possible output.

What is inflation?

A sustained rise in the general price level over time.

How does a rise in interest rates affect businesses?

Borrowing costs rise and consumers spend less, especially on goods bought on credit, so sales may fall.

What is the business cycle?

Fluctuations in economic activity over time: boom, downturn (recession), slump and recovery.

What is a stakeholder?

Any individual or group with an interest in, or affected by, a business's activities.

What is the difference between internal and external stakeholders?

Internal stakeholders are within the business (owners, employees, managers); external ones are outside it (customers, suppliers, community, government).

What is a mission statement?

A brief statement of a business's core purpose and values.

What is investment appraisal?

Using techniques to judge whether an investment is financially worthwhile.

What is the payback period?

The time it takes for the net cash flows from an investment to repay the initial cost.

An investment costs $50,000 and returns $20,000 a year. What is the payback period?

50,000 ÷ 20,000 = 2.5 years (2 years 6 months).

What is business strategy?

A long-term plan for how a business will achieve its objectives.

What is SWOT analysis?

An analysis of internal Strengths and Weaknesses and external Opportunities and Threats.

What is PEST (or PESTLE) analysis?

Analysis of external Political, Economic, Social, Technological (plus Legal and Environmental) factors.

What is inflation?

A sustained rise in the general price level over time.

How does a rise in interest rates affect businesses?

Borrowing costs rise and consumers spend less, especially on goods bought on credit, so sales may fall.

What is the business cycle?

Fluctuations in economic activity over time: boom, downturn (recession), slump and recovery.