CAIE AS Level Business - Definitions PDF

ZNOTES.ORG UPDATED TO 2023-2025 SYLLABUS CAIE AS LEVEL BUSINESS SUMMARIZED NOTES ON THE THEORY SYLLABUS Prepared for rue for personal use only. CAIE AS LEVEL BUSINESS 1. Definitions 1.1. Enterprise: Consumer goods – the physical and tangible goods...

ZNOTES.ORG UPDATED TO 2023-2025 SYLLABUS CAIE AS LEVEL BUSINESS SUMMARIZED NOTES ON THE THEORY SYLLABUS Prepared for rue for personal use only. CAIE AS LEVEL BUSINESS 1. Definitions 1.1. Enterprise: Consumer goods – the physical and tangible goods sold to the general public – include durable consumer goods like cars and washing machines and non-durable goods like food, drinks and sweets that can be used only once. Consumer services – the non-tangible products sold to the general public. It includes hotel accommodation, insurance services and train journeys. Consumer – Individual who buys goods and services for their own use. Customer – Individual, group of individuals or an organisation who purchase goods and services from a business. Factor of Production – Resources required by business to commence production of goods and services. Capital goods – the physical goods the industry uses to aid in producing other goods and services, such as machines and commercial vehicles. Adding value – increasing the difference between the cost of purchasing bought-in materials and the price the finished goods are sold for. Added value – the difference between the costs of purchasing bought-in materials and the price the finished goods are sold for. Opportunity cost – the benefit of the next most desired option given up. Entrepreneur – someone who takes the financial risk of starting and managing a new venture. Enterprise – Action of showing initiatives to take risk to start up a business. Branding – Process of differentiating or making a product unique relative to competitors by developing a symbol, name, image or trademark etc. Multinational Business (MNC) – A business firm that has its head office in one nation, but with operating branches, factories in other countries. Intrapreneur – Employee of the business who takes direct responsibility for turning an innovative idea into a profitable product or business venture. Business Plan – Written documents that describes a business, its objectives, strategies, financial forecast and the market it operates in. WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by rue at Marina International School on 15/12/24. CAIE AS LEVEL BUSINESS 1.2. Business Structure: 1.3. Size of Business: WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by rue at Marina International School on 15/12/24. CAIE AS LEVEL BUSINESS Stakeholders – Individuals or groups who can be 1.4. Business Objective: affected by, and have an interest in, any action taken by an organisation. Business Objectives – A stated measurable target of the External Stakeholders – Individuals or groups who are business written in its business plan that it hopes to separate from the business but are affected by or achieve. interested in its operations. Corporate Social Responsibility (CSR) – When Internal Stakeholders – Individuals or groups who work businesses take interest of the society in consideration, within the business, or own it, and are affected by the and by taking accountability for the impact of their operations of the business. decisions and activities on various stakeholders as well Trade Union – Organisations of working people with the as the environment. objective of improving the pay and working conditions of Pressure Group – An association created by group of its members and providing them with support and legal individuals with a common interest or goal, thus putting services. pressure on corporations and government to change Stakeholder Concept – The view that businesses and specific policies so that their aim is achieved. It is usually their managers have responsibilities to a wide range of for betterment of society. groups, not just shareholders. Also known as stakeholder SMART Objectives – Aims that are specific, measurable, theory. achievable, realistic and time-limited. Annual (Company) Report – Document containing details of a firm's activities over a year, including its 1.6. Human Resource Management financial accounts. (HRM): Business Strategy – Long-term plan consisting steps of action of a business, tailored to achieve a specific objective. Tactic – Short-term plan of action which is a part of the overall strategy to achieve its main aim. Target – Short-term objective of the corporation that must be completed in order to achieve their overall objective. Ethical Code (Code of Conduct) – Document detailing company's rules and guidelines on employee behaviour that must be followed by all the workers. 1.5. Stakeholders in a Business: WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by rue at Marina International School on 15/12/24. CAIE AS LEVEL BUSINESS 1.7. Motivation: 1.8. Management: Motivation – The internal and external factors that Manager – The person responsible for setting goals, stimulate the desire in workers to stay interested in and organizing resources, and motivating workers to achieve committed to doing a job well. business objectives. Self-Actualisation – A sense of self-fulfillment achieved Management – The coordination and organization of through learning and accomplishments. activities to accomplish the business's defined goals. Job Enrichment – Using the full capabilities of workers Autocratic Management – A style where one manager by giving them more challenging and fulfilling tasks. makes all decisions with little to no input from others. Piece Rate – Payment to a worker for each unit Paternalistic Management – A style where the produced. manager assumes they know what is best for the Time-Based Wage Rate – Payment made to a worker for organization, similar to a parental figure. each period of time worked. Laissez-Faire Management – A style where most Salary – Annual income, typically paid monthly. business decisions are left to the workforce. Commission – Payment to a salesperson for each sale Democratic Management – A style that encourages made. workers to actively participate in decision-making. Bonus – An additional payment on top of the agreed Theory X – The belief that some managers hold, thinking wage or salary. employees are lazy, need constant supervision, and are Performance-Related Pay – A bonus scheme that motivated by fear. rewards employees for above-average work Theory Y – The belief that some managers hold, thinking performance. employees are self-motivated, enjoy their work, and are Profit Sharing – A bonus given to employees based on willing to take on extra responsibilities. company profits, usually as a proportion of their salary. Share-Ownership Scheme – A program that gives 1.9. Nature of Marketing: employees shares in the company or allows them to buy shares at a discount. Fringe Benefits – Additional perks given by an employer, separate from regular pay. Job Rotation – A system where employees switch between different jobs. Job Enlargement – Expanding a job by broadening or deepening the tasks undertaken. Job Redesign – Restructuring a job to make it more interesting, satisfying, and challenging. Development – Gaining new or advanced skills and knowledge, with opportunities to apply them. Employee Participation – Actively involving employees in decision-making within the company. Teamworking – Organizing production so groups of workers complete entire units of work together. Empowerment – Providing employees with the skills, resources, authority, and opportunities to make decisions and be responsible for their work. Quality Circle (QC) – A voluntary group of workers who meet regularly to discuss and solve work-related problems. WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by rue at Marina International School on 15/12/24. CAIE AS LEVEL BUSINESS Marketing Mix – The four key decisions—product, price, 1.10. Market Research: promotion, and place—that ensure effective marketing of a product. Market Research – The process of gathering, recording, Product – Goods or services created during the and analyzing information about customers, production process and sold to meet customer needs. competitors, and the market. Goods – Physical products like cars or soap bars. Primary Research – Collecting original, first-hand data Services – Non-physical products that fulfill customer directly related to the business’s needs. needs, like teaching, plumbing, or banking. Secondary Research – Using existing data that was Brand – A unique name, symbol, or trademark that collected for a different purpose. distinguishes a product from its competitors. Qualitative Data – Non-numerical data that gives insight Intangible Attributes – Qualities of a product that are into the motivations and behaviors of consumers. based on customer opinions and are difficult to measure Quantitative Data – Numerical data from research that or compare. can be analyzed statistically. Tangible Attributes – Measurable features of a product Sampling – Selecting a group of respondents from a that can easily be compared with others. larger population for research purposes. Unique Selling Point (USP) – A distinctive feature of a Sample – A selected group of people participating in product that sets it apart from competitors. market research, representing the broader target Product Differentiation – The unique qualities of a market. product that make it stand out from competitors. Sampling Bias – When the chosen sample doesn’t Product Positioning – How consumers perceive a accurately represent the entire population, giving some product compared to its competitors. people a higher chance of being selected. Product Portfolio Analysis – Reviewing a business’s Arithmetic Mean – The average value calculated by range of products to decide how best to allocate adding up all the data points and dividing by the number resources. of points. Product Life Cycle – The stages of a product's sales from Mode – The value that appears most frequently in a data launch to withdrawal from the market. set. Consumer Durable – A product designed for reuse with Median – The middle value in an ordered set of data, a long lifespan, like a car or washing machine. dividing it into two equal halves. Extension Strategy – A plan to extend the maturity Range – The difference between the highest and lowest phase of a product’s life before launching a new one. values in a data set. Boston Matrix – A tool for analyzing a company’s Coding – The process of labelling and organising product range in terms of market share and growth. qualitative data to identify the main themes and the links between them. 1.12. Marketing Mix – Price: 1.11. Marketing Mix – Product: WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by rue at Marina International School on 15/12/24. CAIE AS LEVEL BUSINESS Mark-Up Pricing – Adding a fixed profit margin to the Channel of Distribution – The network of cost of a product to set its price. intermediaries that a product goes through from the Cost-Plus Pricing – Setting a price by calculating the unit producer to the final consumer. cost and adding a set profit margin. Online Marketing (E-commerce) – Using the internet, Contribution-Cost Pricing – Pricing based on variable email, and mobile communications for selling and costs to contribute to fixed costs and profit. marketing products directly through electronic Competitive Pricing – Setting prices based on what commerce. competitors are charging. Digital Distribution – The delivery of digital media Price Discrimination – Charging different prices to content such as music, videos, software, and games over different customer groups for the same product or the internet. service. Physical Distribution – The processes involved in Dynamic Pricing – Adjusting prices based on demand moving finished products efficiently from the production and customers’ willingness to pay. facility to the consumer. Penetration Pricing – Setting a low price to encourage Integrated Marketing Mix – Ensuring that all marketing high sales volume. decisions and strategies align with one another to deliver Price/Market Skimming – Charging a high price for a a clear and consistent message to consumers about the new product with low price sensitivity due to uniqueness. product. Psychological Pricing – Setting prices to align with customers’ perceived value of a product. 1.15. Nature of Operation: 1.13. Marketing Mix – Promotion: Promotion – The use of various methods like advertising, sales promotions, personal selling, direct mail, trade fairs, sponsorships, and public relations to inform and persuade consumers to make a purchase. Advertising – Paid communication using platforms such as TV, newspapers, and cinemas to inform and convince customers. Direct Promotion – A variety of promotional efforts targeting specific consumers directly, often referred to as direct marketing. Sales Promotion – Offering special deals and incentives to consumers or retailers to boost short-term sales and encourage repeat purchases. Promotion Mix – The blend of promotional strategies a company uses to market its products. Digital Promotion – Marketing and promoting products using digital platforms, primarily on the internet but also via mobile devices. E-commerce – Conducting transactions for buying and selling goods and services through online platforms. 1.14. Marketing Mix – Place: WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by rue at Marina International School on 15/12/24. CAIE AS LEVEL BUSINESS Intellectual Capital – The intangible assets of a Inventory – Materials and goods that a business keeps business, including human capital (skilled employees), on hand to enable production and meet customer structural capital (information systems and databases), demand. and relational capital (strong relationships with suppliers Inventory Management – The process of managing the and customers). ordering, storage, and use of a company's inventory. Transformational Process – Activities that convert Economic Order Quantity – The most cost-effective inputs into outputs, adding value during the process to quantity of stock to reorder, balancing delivery and produce goods or services for customers. storage costs. Productivity – The measure of output generated from a Buffer Inventory – The minimum amount of stock that given set of inputs, such as output per worker over a must be kept to ensure uninterrupted production in case specific time period. of supply delays or sudden increases in demand. Level of Production – The total number of units Re-order Quantity – The number of units ordered every produced within a certain time frame. time a new stock order is placed. Production – The process of turning inputs, like raw Lead Time – The duration between placing an order for materials and labor, into finished products or services. supplies and receiving the delivery. Efficiency – The ability to produce outputs at the highest Re-order Level – The inventory level at which a new ratio of output to input. order is triggered to avoid running out of stock. Effectiveness – Achieving business goals by utilizing Supply Chain – The interconnected system of inputs in a way that meets customer needs and business businesses and activities involved in the production and objectives. distribution of a product, from raw materials to the final Sustainability of Operations – Maintaining business delivery to the customer. practices over the long term by ensuring environmental Supply Chain Management – Managing the entire protection and preserving the quality of life for future process from sourcing raw materials to delivering the generations. finished product, aiming to minimize costs while Labour Intensive – A production process that requires a improving customer service. high amount of labor compared to the use of capital Just-in-Time (JIT) Inventory Management – A strategy equipment. that avoids holding stock by ensuring materials arrive Capital Intensive – A production process that relies just as needed for production and that finished goods heavily on machinery and equipment rather than labor are made to order. input. Just-in-Case (JIC) Inventory Management – A strategy Job Production – The creation of a unique product that that reduces the risk of stock shortages by maintaining is specifically designed to meet an individual customer's higher levels of buffer inventory. needs. Batch Production – Producing a set of identical items in 1.17. Capacity Utilisation and groups, where each product passes through stages of production simultaneously. Outsourcing: Flow Production –Continuous production where products are made in an ongoing process without interruption. Mass Customisation – The use of advanced, flexible technology in production lines to create personalized products according to individual customer preferences. 1.16. Inventory Management: WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by rue at Marina International School on 15/12/24. CAIE AS LEVEL BUSINESS Maximum (Full) Capacity – The highest level of output a business can consistently achieve over time. 1.19. Forecast and Management of Capacity Utilisation – The percentage of the maximum Cashflow: output capacity that is currently being used. Outsourcing – Hiring another business to handle part of Cash Flow – The net balance of cash moving into and out the production process instead of doing it in-house with of a business. the company's employees. Insolvent – When a business cannot meet its short-term Excess Capacity – It occurs when current output levels debts. are lower than the business's full production capacity, Cash Flow Forecast – An estimate of future cash inflows also called spare capacity. and outflows. Rationalisation – The process of cutting capacity by Cash Inflow – Money in form of note received by a shutting down factories or production units. business. Capacity Shortage – When the demand for a company's Cash Outflow – Money in form of cash spent by a products surpasses its production capacity. business. Business Process Outsourcing (BPO) – A type of Net Cash Flow – The difference between cash inflows outsourcing where specialized contractors manage and outflows over a given period. specific business functions like human resources or Opening Cash Balance – The amount of cash a business finance. holds at the beginning of a period. Closing Cash Balance – The amount of cash held at the 1.18. Business Finances: end of a period, which becomes the opening balance for the next period. Credit Control – Monitoring customer debts to ensure they are paid within the agreed time frame. Bad Debt – Unpaid bills that are unlikely to be collected. Overtrading – Expanding a business too quickly without sufficient finance, leading to cash flow problems. 1.20. Cost: WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by rue at Marina International School on 15/12/24. CAIE AS LEVEL BUSINESS Cost Centre – A department or section of a business that Budgeting – Planning future financial activities by setting incurs costs but does not generate revenue. performance targets. Direct Costs – Costs directly linked to the production of Budget Holder – The individual responsible for setting goods and services. and managing a budget. Indirect Costs – Costs that cannot be directly allocated Variance Analysis – The process of comparing actual to a specific unit of production. results to the budgeted figures and analyzing the Fixed Costs – Costs that remain unchanged regardless of differences. output in the short term. Delegated Budgets – Budgets for which junior Variable Costs – Costs that vary depending on the level managers are given responsibility for setting and of output. achieving targets. Total Cost – The sum of fixed and variable costs. Incremental Budgeting – A budgeting method that uses Profit Centre – A division of a business to which both the previous year's budget as a starting point, with revenues and costs are assigned, allowing profit adjustments for the current year. calculation. Zero Budgeting – A budgeting method where every Average Cost – The total cost divided by the number of expense must be justified, and no funds are allocated units produced. automatically. Full Costing – A costing method that assigns all direct Favourable Variance – A change from the budget that and indirect costs to products or divisions. results in higher-than-expected profit. Contribution Per Unit – The price of a product minus its Flexible Budgeting – A budgeting approach that allows variable costs. for cost adjustments if sales or output levels change. Break-even Point – The output level at which total Adverse Variance – A change from the budget that revenue equals total costs, resulting in neither profit nor results in lower-than-expected profit. loss. Break-even Analysis – The process of calculating the break-even point using cost and revenue data. Margin of Safety – The difference between actual output and the break-even output level. 1.21. Budgeting: WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised for personal use only by rue at Marina International School on 15/12/24. CAIE AS Level Business © ZNotes Education Ltd. & ZNotes Foundation 2024. All rights reserved. This version was created by rue on Sun Dec 15 2024 for strictly personal use only. 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