Page 365 - Cambridge IGCSE Business Studies

Glossary

Cost of sales the cost of purchasing the goods used to make the Diseconomies of scale factors that cause average costs to rise as
products sold. the scale of operations increases.

Cost-plus pricing setting price by adding a fixed amount to the Dismissal termination by the employer because the worker
cost of making or buying the product. has broken company rules or is not performing work to the
Credit sales goods sold to customers who will pay for these at required standard.
an agreed date in the future. Disposable income the amount of income left for individuals

Current assets resources that the business owns and after taxes have been paid.
expects to convert into cash before the date of the next Dividend a payment, out of profits, to shareholders as reward

balance sheet. for their investment.
Current liabilities debts of the business which it expects to pay Division of labour production is divided into separate tasks
before the date of the next balance sheet. and each worker does just one of those tasks.
Current ratio ratio between current assets and current Domestic market the market for goods and services in the
liabilities. business’s own country.
Customer an individual or business that buys goods and E-commerce the use of the internet and other technologies
services from a business. used by businesses to market and sell goods and services to
Customer base the group of customers a business sells its customers.
products to. Economic problem unlimited wants cannot be met because

Customer relationship marketing (CRM) using marketing there are limited factors of production. This creates scarcity.
activities to establish, maintain and improve relationships Economies of scale the reduction in average costs as a result of
with customers to build customer loyalty. increasing the scale of operations.
Debenture bonds issued by companies to raise long-term Eff ective communication information passed between two or

finance usually at a fixed rate of interest. more people or groups, with feedback to confirm that the

Debt-factoring selling accounts receivables to improve business message has been received and understood.
liquidity. Entrepreneur an individual who takes the financial risk of 363

Decentralised organisation one where the decision-making starting and managing a new business.
powers are passed down the organisation to lower levels. Equity fi nance permanent finance provided by the owners of a

Delayering reducing the size of the hierarchy by removing one limited company.

or more levels – most often middle management. Exchange rate the rate at which one country’s currency can be
Delegation passing responsibility to perform tasks to workers exchanged for that of another.
lower down in the organisation. Expenses day-to-day operating expenses of a business.
Demand the quantity of goods and services consumers are Extension strategies marketing activities to extend the
willing and able to buy.
maturity stage of a product.
Democratic leadership a leadership style where workers take
External recruitment filling a vacant post with somebody not

part in decision-making. already employed in the business.
Demographic segmentation dividing consumers in the market

Externality the effect of business activities on unrelated
by factors such as age, gender, income, ethnic background
parties.
and social class.
Factors of production the resources needed to produce goods
Depreciation a currency is said to depreciate if the value of the
and services – land, labour, capital and enterprise.
currency goes down with respect to another.
Feedback the receiver’s response to a message.
Direct mail also known as ‘mailshots’, printed materials which
Financial rewards cash and non-cash rewards paid to workers
are sent directly to the addresses of customers.
which are often used to motivate workers to increase their

Direct selling the product is sold by the producer directly to the
eff orts.

final consumer without the need for any middlemen.
Fixed costs costs that do not change with output.
Direct tax the tax charged on personal income or tax on the
Flow production the production of very large quantities of

profit made by a business.
identical goods using a continuously moving process.
Directors appointed or elected members of the Board of
Four Cs marketing decisions that put the customer fi rst and
Directors of a company who have the responsibility for
help to build and improve customer relationships.
determining and implementing the company’s policy. Some
directors might also have a management role, for example a Four Ps the right product at the right price with the right
Marketing Director. promotion in the right place.