Edexcel International GCSE Business: every topic, by paper

What is the purpose of business activity?

To combine resources (land, labour, capital and enterprise) to produce goods and services that satisfy customers' needs and wants.

What is the difference between a need and a want?

A need is essential for survival (food, water, shelter); a want is something people desire but can live without.

What is the basic economic problem?

Wants are unlimited but the resources to satisfy them are limited, so choices must be made.

What is a sole trader?

A business owned and controlled by one person, who may employ others.

What is unlimited liability?

The owner is personally responsible for all the business's debts, so personal possessions can be taken to pay them.

What is limited liability?

Shareholders can only lose the money they invested in the company, not their personal possessions.

What is a business objective?

A target or goal a business aims to achieve, such as survival, growth or profit.

Why is survival often the main objective of a new business?

New firms face high costs and few customers, so staying in business is the first priority.

Name five common business objectives.

Survival, profit, growth, market share and customer satisfaction.

Name three ways to measure the size of a business.

Number of employees, value of sales (revenue), capital employed, and market share.

Why is profit not a good measure of business size?

A large firm can make a small profit or a loss, and a small firm can be very profitable.

What is internal (organic) growth?

Growth by expanding the business's own activities, such as opening new branches or selling new products.

What is economic growth?

An increase in the output of goods and services in an economy (a rise in real GDP).

What is a recession?

A period when an economy's output falls (GDP falls for two quarters in a row), usually with rising unemployment.

How does a recession affect most businesses?

Incomes and spending fall, so sales and profits fall, and some firms cut jobs or close.

What is motivation at work?

The reasons that make workers want to work hard and well.

Give three benefits of a motivated workforce.

Higher productivity, lower labour turnover and absence, and better quality and customer service.

What is labour turnover?

The rate at which employees leave a business and have to be replaced.

What is an organisation chart?

A diagram showing the structure of a business: the roles, levels, lines of authority and who reports to whom.

What is a hierarchy?

The levels of authority in an organisation, from the most senior to the most junior.

What is the chain of command?

The route through which instructions pass down, and information passes up, the hierarchy.

What is recruitment?

The process of identifying the need for a new employee and attracting suitable applicants.

What is a job description?

A document describing the job title, duties, responsibilities and conditions of a job.

What is a person specification?

A document describing the qualifications, skills, experience and qualities needed by the person who will do the job.

What are fixed costs?

Costs that do not change with the level of output, such as rent and managers' salaries.

What are variable costs?

Costs that change directly with the level of output, such as raw materials.

How is total cost calculated?

Total cost = fixed costs + total variable costs.

Why do businesses need finance?

To start up, buy fixed assets, pay day-to-day running costs (working capital) and expand.

What is the difference between internal and external sources of finance?

Internal finance comes from within the business (retained profit, selling assets); external finance comes from outside (loans, shares, overdrafts).

What is retained profit?

Profit kept in the business after tax and dividends, used to finance investment.

What is an income statement?

A financial statement showing a business's revenue, costs and profit or loss over a period, usually one year.

How is gross profit calculated?

Gross profit = revenue − cost of sales.

How is net profit (profit for the year) calculated?

Net profit = gross profit − expenses (overheads), and in some statements also interest and tax.

What is a market?

Where buyers and sellers come together to exchange goods and services.

What is market research?

Collecting and analysing information about customers, competitors and market trends.

What is primary research?

Collecting new, first-hand data for a specific purpose, for example through surveys or interviews.

What are the four Ps of the marketing mix?

Product, price, place and promotion.

What is a brand?

A name, symbol or design that identifies a product and makes it different from competitors' products.

What is the product life cycle?

The stages a product goes through: development, introduction, growth, maturity and decline.

What is production?

The process of turning inputs (resources) into outputs (goods or services).

What is productivity?

Output per worker (or per unit of input) over a period of time.

How is labour productivity calculated?

Total output ÷ number of workers, over a given period.