Chapter 1

1. A need is a good or service essential for living.

2. A want is a good or service which people would like to have, but which is not essential
for living. People’s wants are unlimited.

3. The economic problem – there exist unlimited wants but limited resources to produce the
goods and services to satisfy those wants. This creates scarcity.

4. Factors of production are those resources needed to produce goods or services. There
are four factors of production and they are in limited supply. (LLCE- Land,Labour,
Capital, enterprise)

5. Scarcity is the lack of sufficient products to fulfil the total wants of the population.

6. Opportunity cost is the next best alternative given up by choosing another item.

7. Specialisation occurs when people and businesses concentrate on what they are best
at.

8. Division of labour is when the production process is split up into different tasks and each
worker performs one of these tasks. It is a form of specialisation.

9. Businesses combine factors of production to make products (goods and services) which
satisfy people’s wants.

10. Added value is the difference between the selling price of a product and the cost of
bought-in materials and components.

Chapter 2
1. The primary sector of industry extracts and uses the natural resources of Earth to
produce raw materials used by other businesses.

2. The secondary sector of industry manufactures goods using the raw materials provided
by the primary sector.

3. The tertiary sector of industry provides services to consumers and the other sectors of
industry.

4. Deindustrialization occurs when there is a decline in the importance of the secondary,

manufacturing sector of industry in a country.

5. A mixed economy has both a private sector and a public (state) sector.
 6. Capital is the money invested into a business by the owners.

Chapter 3
1. Entrepreneur is a person who organises, operates and takes the risk for a new business
venture.

2. A business plan is a document containing the business objectives and important details
about the operations, finance and owners of the new business.

3. Capital employed is the total value of capital used in the business.

4. Internal growth occurs when a business expands its existing operations.

5. External growth is when a business takes over or merges with another business. It is
often called integration as one business is integrated into another one.

6. A takeover or acquisition is when one business buys out the owners of another
business, which then becomes part of the ‘predator’ business (the business which has
taken it over).

7. A merger is when the owners of two businesses agree to join their businesses together
to make one business.

8. Horizontal integration is when one business merges with or takes over another one in
the same industry at the same stage of production.

9. Vertical integration is when one business merges with or takes over another one in the
same industry but at a different stage of production. Vertical integration can be forward
or backward.

10. Conglomerate integration is when one business merges with or takes over a business in
a completely different industry. This is also known as diversification.

Chapter 4

1. Sole trader is a business owned by one person.

2. Limited liability means that the liability of shareholders in a company is limited to only the
amount they invested.

3. Unlimited liability means that the owners of a business can be held responsible for the
debts of the business they own. Their liability is not limited to the investment they made
in the business.
4. Partnership is a form of business in which two or more people agree to jointly own a
business.

5. A partnership agreement is the written and legal agreement between business partners.
It is not essential for partners to have such an agreement but it is always recommended.

6. An unincorporated business is one that does not have a separate legal identity. Sole
traders and partnerships are unincorporated businesses.

7. Incorporated businesses are companies that have separate legal status from their
owners.

8. Shareholders are the owners of a limited company. They buy shares which represent
part-ownership of the company.

9. Private limited companies are businesses owned by shareholders but they cannot sell
shares to the public.

10. Public limited companies are businesses owned by shareholders but they can sell
shares to the public and their shares are tradable on the Stock Exchange.

11. An Annual General Meeting is a legal requirement for all companies. Shareholders may
attend and vote on who they want to be on the Board of Directors for the coming year.

12. Dividends are payments made to shareholders from the profits (after tax) of a company.
They are the return to shareholders for investing in the company.

13. A franchise is a business based upon the use of the brand names, promotional logos
and trading methods of an existing successful business. The franchisee buys the license
to operate this business from the franchisor.

14. A joint venture is where two or more businesses start a new project together, sharing
capital, risks and profits.

15. A public corporation is a business in the public sector that is owned and controlled by the
state (government).

Chapter 5
1. Business objectives are the aims or targets that a business works towards.

2. Profit is the total income of a business (revenue) less total costs.

 3. Market share is the percentage of total market sales held by one brand or
business.

4. A social enterprise has social objectives as well as an aim to make a profit to

reinvest back into the business.

5. A stakeholder is any person or group with a direct interest in the performance

and activities of a business.
Chapter 6
1. Motivation is the reason why employees want to work hard and work effectively for the
business.

2. A wage is payment for work, usually paid weekly.

3. Time rate is the amount paid to an employee for one hour of work.

4. Piece rate is an amount paid for each unit of output.

5. A salary is payment for work, usually paid monthly.

6. A bonus is an additional amount of payment above basic pay as a reward for good work.

7. Commission is payment relating to the number of sales made.

8. Profit sharing is a system whereby a proportion of the company’s profits is paid out to
employees.

9. Job satisfaction is the enjoyment derived from feeling that you have done a good job.

10. Job rotation involves workers swapping around and doing each specific task for only a
limited time and then changing around again.

11. Job enrichment involves looking at jobs and adding tasks that require more skill and/or
responsibility.

12. Team Working involves using groups of workers and allocating specific tasks and
responsibilities to them.

13. Training is the process of improving a worker’s skills.

14. Promotion is the advancement of an employee in an organisation, for example, to a

higher job/managerial level

Chapter 7
1. Organisational structure refers to the levels of management and division of
responsibilities within an organisation.

2. Organisational chart refers to a diagram that outlines the internal management

structure.

3. Hierarchy refers to the levels of management in any organisation, from the

highest to the lowest. A level of hierarchy refers to managers/supervisors/other
employees who are given a similar level of responsibility in an organisation.

4. Chain of command is the structure in an organisation which allows instructions to

be passed down from senior management to lower levels of management.

5. The span of control is the number of subordinates working directly under a

manager.

6. Directors are senior managers who lead a particular department or division of a

business.

7. Line managers have direct responsibility for people below them in the hierarchy
of an organisation.

8. Supervisors are junior managers who have direct control over the employees
below them in the organisational structure.

9. Staff managers are specialists who provide support, information and assistance
to line managers.

10. Delegation means giving a subordinate the authority to perform particular tasks.

11. Leadership styles are the different approaches to dealing with people and making
decisions when in a position of authority – autocratic, democratic or laissez-faire.

12. Autocratic leadership is where the manager expects to be in charge of the

business and to have their orders followed.

13. Democratic leadership gets other employees involved in the decision-making

process.

14. Laissez-faire leadership makes the broad objectives of the business known to
employees, but then they are left to make their own decisions and organise their
own work.
 15. A trade union is a group of employees who have joined together to ensure their
interests are protected.

16. A closed shop is when all employees must be a member of the same trade union
Chapter 8
1. Recruitment is the process of identifying that the business needs to employ
someone up to the point at which applications have arrived at the business.

2. Employee selection is the process of evaluating candidates for a specific job and
selecting an individual for employment based on the needs of the organisation.

3. A job analysis identifies and records the responsibilities and tasks relating to a
job.

4. A job description outlines the responsibilities and duties to be carried out by

someone employed to do a specific job.

5. A job specification is a document which outlines the requirements, qualifications,

expertise, physical characteristics, etc., for a specified job.

6. Internal recruitment is when a vacancy is filled by someone who is an existing

employee of the business.

7. External recruitment is when a vacancy is filled by someone who is not an

existing employee and will be new to the business.

8. Part-time employment is often considered to be between 1 and 30– 35 hours a

week.

9. Full-time employees will usually work 35 hours or more a week.

10. Induction training is an introduction given to a new employee, explaining the

business’s activities, customs and procedures and introducing them to their
fellow workers.

11. On-the-job training occurs by watching a more experienced worker doing the job.

12. Off-the-job training involves being trained away from the workplace, usually by
specialist trainers.

13. Workforce planning is establishing the workforce needed by the business for the
foreseeable future in terms of the number and skills of employees required.
 14. Dismissal is when employment is ended against the will of the employee, usually
for not working in accordance with the employment contract.

15. Redundancy is when an employee is no longer needed and so loses their job. It
is not due to any aspect of their work being unsatisfactory.

16. A contract of employment is a legal agreement between an employer and

employee, listing the rights and responsibilities of workers.

17. An industrial tribunal is a type of law court (or in some countries, a legal meeting)
that makes judgments on disagreements between companies and their
employees, for example, workers’ complaints of unfair dismissal or discrimination
at work.

18. An ethical decision is a decision taken by a manager or a company because of

the moral code observed by the firm.
Chapter 9
1. Communication is the transferring of a message from the sender to the receiver, who
understands the message.

2. A message is the information or instructions being passed by the sender to the receiver.

3. Internal communication is between members of the same organisation.

4. External communication is between the organisation and other organisations or

individuals.

5. The transmitter or sender of the message is the person starting off the process by
sending the message.

6. The medium of communication is the method used to send a message, for example, a
letter is a method of written communication and a meeting is a method of verbal
communication.

7. The receiver is the person who receives the message.

8. Feedback is the reply from the receiver which shows whether the message has arrived,
been understood and, if necessary, acted upon.

9. One-way communication involves a message which does not call for or require a
response.

10. Two-way communication is when the receiver gives a response to the message and
there is a discussion about it.
 11. Formal communication is when messages are sent through established channels using
professional language.

12. Informal communication is when information is sent and received casually using
everyday language.

● Communication barriers are factors that stop effective communication of messages.

Chapter 10
1. Marketing is identifying customer wants and satisfying them profitably.

2. A customer is a person, business or other organisation which buys goods or services

from a business.

3. Customer loyalty is when existing customers continually buy products from the same
business.

4. Customer relationships is communicating with customers to encourage them to become

loyal to the business and its products.

5. Market share is the percentage of total market sales held by one brand or business.

6. A consumer buys goods or services for personal use – not to re-sell.

7. Mass market is where there is a very large number of sales of a product.

8. A niche market is a small, usually specialised, segment of a much larger market.

9. Market segment is an identifiable subgroup of a whole market in which consumers have

similar characteristics or preferences.
Chapter 11
1. Market research is the process of gathering, analysing and interpreting information
about a market.

2. A product-oriented business is one whose main focus of activity is on the product itself.
3. A market-orientated business is one which carries out market research to find out
consumer wants before a product is developed and produced.

4. A marketing budget is a financial plan for the marketing of a product or product range for
some specified period of time. It specifies how much money is available to market the
product or range, so that the Marketing department knows how much it may spend.

5. Primary research is the collection and collation of original data via direct contact with
potential or existing customers. (Also called field research.)
 6. Secondary research uses information that has already been collected and is available
for use by others. (Also called desk research.)

7. A questionnaire is a set of questions to be answered as a means of collecting data for

market research.

8. Online surveys require the target sample to answer a series of questions over the
internet.

9. Interviews involve asking individuals a series of questions, often face-to-face or over the
phone.

10. A focus group is a group of people who are representative of the target market.

11. A sample is the group of people who are selected to respond to a market research
exercise, such as a questionnaire.

12. A random sample is when people are selected at random as a source of information for
market research.

13. A quota sample is when people are selected on the basis of certain characteristics (such
as age, gender or income) as a source of information for market research.
Chapter 12
1. The marketing mix is a term which is used to describe all the activities which go into
marketing a product or service. These activities are often summarised as the four Ps –
product, price, place and promotion.

2. The USP is the special feature of a product that differentiates it from the products of
competitors.

3. The brand name is the unique name of a product that distinguishes it from other brands.

4. Brand loyalty is when consumers keep buying the same brand again and again instead
of choosing a competitor’s brand.
5. Brand image is an image or identity given to a product which gives it a personality of its
own and distinguishes it from its competitors’ brands.

6. Packaging is the physical container or wrapping for a product. It is also used for
promotion and selling appeal.

7. The product life cycle describes the stages a product will pass through from its
introduction, through its growth until it is mature, and then finally its decline.
 8. Extension strategy is a way of keeping a product at the maturity stage of the life cycle
and extending the cycle.

STUDY CHAPTER 13 AND COME BACK

TO PRODUCT LIFECYCLE To UPDATE
INFO
Chapter 13
1. Cost-plus pricing is the cost of manufacturing the product plus a profit mark-up.

2. Competitive pricing is when the product is priced in line with or just below competitors’
prices to try to capture more of the market.

3. Penetration pricing is when the price is set lower than the competitors’ prices in order to
be able to enter a new market.

4. Price skimming is where a high price is set for a new product on the market.

5. Promotional pricing is when a product is sold at a very low price for a short period of
time.

6. Dynamic pricing is when businesses change product prices, usually when selling online,
depending on the level of demand.

7. Price elastic demand is where consumers are very sensitive to changes in price.

8. Price inelastic demand is where consumers are not sensitive to changes in price.

Chapter 14
1. A distribution channel is the means by which a product is passed from the place of
production to the customer.

2. An agent is an independent person or business that is appointed to deal with the sales
and distribution of a product or range of products.

Chapter 15
 1. Promotion is where marketing activities aim to raise customer awareness of a product or
brand, generating sales and helping to create brand loyalty.

2. Advertising paid for communication with potential customers about a product to

encourage them to buy it.

3. Informative advertising is where the emphasis of advertising or sales promotion is to give

full information about the product.

4. Persuasive advertising is advertising or promotion which is trying to persuade the

consumer that they really need the product and should buy it.

5. The target audience refers to people who are potential buyers of a product or service.

6. Sales promotions are incentives such as special offers or special deals aimed at
consumers to achieve short-term increases in sales.

7. A marketing budget is a financial plan for the marketing of a product or product range for
a specified period of time.

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