Business Studies Key Terms and Definitions

A lot of the key terms that you may need in a GCSE business exam. I don't think this is all of them from the course, but most of them are here.

Hope this helps :)

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  • Created by: Rhiannon
  • Created on: 01-04-12 11:41
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Key Terms and Definitions
Receivership ­ When a firm is unable to pay its debts, the courts have power to appoint a receiver
(often a firm of accountants) to sell the business assets to repay a proportion of the debts
Administration ­ Firms are often given a three month period under the management of the
potential receivers to find a way that the firm can survive. Normally a buyer is sought, who will invest
in the company and introduce new management
Productivity ­ the measure of output per worker or machine in a given time
Competitiveness - the strength of a firm's position in the market measured by market share and
Level of demand - the amount of spending that takes place in the economy
Level of economic activity - the amount of buying and selling that goes on during a period of time -
rises and falls depending on the amount of buying and selling that takes place in an economy
Economic growth is an increase in the total output of the country. It represents an increase in
economic activity
Economies of scale ­ the factors which cause the average cost of producing something to fall as
output rises
Bulk-buying (commercial) economies ­ occur when businesses can gain discounts on large orders
from suppliers
Technical economies of scale ­ reductions in average cost of production due to the use of more
advanced machinery
Market power ­ a measure of the influence of a business over consumers and suppliers
Diseconomies of scale ­ the factors which cause average costs of production to increase as output
increases e.g. lack of flexibility, communication and co-ordination
Monopoly ­ a business which has a market share of 25% and can therefore influence the market. In a
pure sense a monopoly exists when there is only one seller
Externalities - the effects of an economic decision on individuals and groups outside, who are not
directly involved in the decision
Negative externalities ­ costs arising from business activity, which are paid by people or
organisations outside the firm ­ not necessarily financial costs
e.g. traffic congestion, litter, using up non-renewable resources, pollution, etc.
Positive externalities ­ benefits arising from business activity which are experienced by
people or organisations outside the firm ­ the firm receives no payment for the benefits
e.g. jobs created, house prices rise, more trade for local businesses, regeneration, etc.

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Third party ­ a group or an individual that is not directly involved in a decision/action
Government objectives - the objective of any political party, once in power is to stay there
Inflation is a sustained rise in the average level of prices in the economy, which is measured by the
percentage change in consumer price index (CPI)
Internal growth ­ occurs when a business increases in size by selling more of its goods/services
without taking over or merging with other businesses
External growth ­…read more

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Stakeholders - all of the individuals and groups which have a "stake" in a company, including all those
who have an interest in the performance of the organisation
Internal stakeholders ­ directly connected to the firm e.g. shareholders, owners,
employees and managers
External stakeholders ­ indirectly affected by the decisions made by the firm e.g.
customers, suppliers, providers of finance, government, community and pressure groups
Market - any place or process which brings buyers and sellers together to exchange goods and
services e.g.…read more

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