Glossary

Every term, in one place

The same 82 definitions the lessons link to inline, wherever a sentence uses them — gathered here so a definition is never more than one page away.

A

added valueadding value: The difference between a product's selling price and the cost of the bought-in inputs used to make it — confirmed directly in a real mark scheme as 'the increase in value a business creates when producing a product/service... the difference between the price of product and the cost of the inputs involved in providing it.' The financial measure of how much a business's own differentiation is actually worth to customers; a stronger brand widens this gap purely from the price side, since production cost is unchanged.
autocratic leadership: A leadership style in which the leader makes decisions alone and tells the team what to do, with little or no consultation.

B

B2Bbusiness-to-business: A transaction between two businesses, typically a small number of high-value, technically-evaluated purchases decided by a small group of specialists over an extended period — a fundamentally different buying process from B2C, which shapes which marketing-mix emphasis actually works.
B2Cbusiness-to-consumer: A transaction between a business and an individual consumer, typically high-volume, lower-value and faster-decided than a B2B purchase, and more influenced by price, habit and mass-market promotion.
brand: The name, symbol or design that makes one business's version of a product identifiable and distinguishable from close substitutes — part of why two functionally similar products can sell at very different prices.
business riskrisk (business): An outcome whose probability can be estimated from evidence or past experience — a business can plan for it (insurance, buffers, forecasting) precisely because there's a historical pattern to estimate from. Distinct from uncertainty, which has no comparable evidence to draw a probability from at all.
business uncertaintyuncertainty (business): An outcome with no comparable historical evidence to estimate its probability from — a genuinely novel event a business cannot plan for with the same tools (insurance, forecasting) it uses for measurable risk, because there's no precedent to draw a plan from.

C

centralised structurecentralisation, centralization: A structure where major decisions are made by senior management at the top of the business, with limited authority delegated downward — a different dimension of design from span of control or hierarchy height, even though the three often move together in practice.
chain of command: The formal line of authority running from the most senior manager down through every intermediate layer to the most junior employee — the concrete path an instruction, or information travelling the other way, actually has to pass through.
collective bargainingcollective negotiation: Pay and conditions negotiated by a group of employees, often via a trade union, acting as one unit — raises workers' bargaining power because the employer can no longer simply replace one dissenting worker without effectively confronting the whole group.
competitive advantage: A real, defensible edge over rivals — lower costs than any competitor can match, or a genuinely differentiated product customers will pay more for — that lets a business outperform others selling into the same market. The result of successful product differentiation, not a separate, unrelated achievement.
consultation: Asking staff for their input before a decision is made, without necessarily handing over the decision itself — the leader can still decide unilaterally after listening.
customer loyalty: A customer's tendency to keep buying from the same business rather than switching to a competitor — a retention goal, not an acquisition one. Businesses build it through schemes (points, subscriptions, personalised offers) that reward existing customers for staying, a confirmed, recurring point of exam confusion with attracting new customers instead.

D

decentralised structuredecentralisation, decentralization: A structure where decision-making authority is delegated down to managers or staff closer to the point of the decision, such as individual store managers, rather than reserved for senior management at the top.
delegation: Passing a specific decision or task down to an employee along with real authority over it — a one-off transfer, distinct from empowerment's ongoing authority.
demand curveindividual demand curve, market demand curve: The graphical relationship between the price of a good and the quantity of it demanded, holding every other determinant of demand constant — downward sloping because of diminishing marginal utility, and the single curve that a movement moves along or a shift moves entirely.
democratic leadership: A leadership style in which the leader actively involves the team in making the decision itself, not just in hearing the reasoning afterward.
design mix: The trade-off between three elements of a physical product's specification — function (does it work), aesthetics (how it looks and feels) and cost of manufacture (what it costs the firm to make) — competing for a single fixed unit-cost budget. Cost of manufacture is not the same variable as price, a confirmed, recurring exam confusion.
dismissaldismissed, terminated: Employer-initiated termination of an individual employee's contract for a reason tied to that person — conduct, performance or capability — while the role itself continues to exist for someone else. Distinct from redundancy, where the role itself disappears.

E

empowerment: Giving staff ongoing authority to make decisions within their own area of work, rather than a single delegated task — the broadest of the three related non-financial methods.
entrepreneur: Someone who identifies an unmet need, assembles the resources to act on it, and bears the personal financial risk of setting up and running a business as a result. The spec splits their role across a business's life into five distinct sub-jobs (creating/setting up, running/expanding, intrapreneurship, navigating barriers, anticipating risk and uncertainty) rather than one continuous activity.
extension strategyextension strategies: A deliberate change to one element of the marketing mix — a product update, a new promotional angle, a new distribution channel, a price change — intended to push a maturing product's sales back into growth before it enters decline, rather than accepting decline as inevitable.
external shockexternal shocks: A sudden, unpredictable event originating outside the normal working of a market — a pandemic, natural disaster, or geopolitical crisis — capable of shifting demand, supply, or both, sharply and with little warning. Listed on the spec as a factor that can shift either curve, not just one.

F

flat structureflat organisational structure: An organisational structure with few hierarchy levels, produced by a wide span of control at each level — fewer layers of management between top and bottom for a given total workforce.
flexible workforceflexible working, workforce flexibility: A workforce whose size, skills or working pattern can be adjusted to match fluctuations in demand — achieved through multi-skilling, part-time and temporary staff, zero-hours contracts, flexible hours and home working, or outsourcing, each solving a genuinely different demand-matching problem.

H

Hawthorne studiesHawthorne effect, Hawthorne experiments: A series of experiments at Western Electric's Hawthorne plant (1924-1932) that set out to test whether lighting levels affected output, but found output rose under both brighter AND dimmer lighting — because workers were responding to being observed and consulted, not to the physical condition being tested. The founding evidence behind human relations theory.
Herzberg's two-factor theorytwo-factor theory: Herzberg's finding, from interviewing workers about their best and worst moments at work, that job satisfaction and dissatisfaction come from two separate sets of causes: hygiene factors, whose absence causes dissatisfaction but whose presence doesn't motivate, and motivators, which are the only factors that genuinely raise satisfaction.
hierarchy (organisational)organisational hierarchy, hierarchy levels: The number of distinct layers of authority between the most junior employee and the most senior — directly determined by the total workforce size divided repeatedly by the span of control at each level.
human relations theoryMayo's human relations theory: Mayo's conclusion from the Hawthorne studies that workers respond to social factors — being consulted, feeling valued, belonging to a group — as well as to pay, directly challenging scientific management's assumption that pay is the whole story.
hygiene factorhygiene factors: In Herzberg's two-factor theory, a factor (pay, working conditions, company policy, job security, supervision) whose inadequacy causes dissatisfaction, but whose improvement only returns a worker to neutral — it cannot, on its own, increase motivation above that.

I

income elasticity of demandYED: How responsive quantity demanded is to a change in consumer income: %ΔQd ÷ %ΔY. Positive marks a normal good (necessity if between 0 and 1, luxury/superior if above 1); negative marks an inferior good, where quantity demanded falls as income rises.
individual bargainingindividual approach (employee relations): Pay and conditions negotiated one employee at a time, directly between that employee and the employer — leaves each worker's bargaining power limited to their own individual outside options.

J

job enlargement: A non-financial method adding a wider range of tasks at the same level of skill and responsibility (horizontal loading) — distinct from job enrichment, which specifically increases responsibility.
job enrichment: A non-financial method adding more demanding, higher-responsibility tasks to a role (vertical loading) — distinct from job enlargement, which adds tasks at the same level of responsibility.
job rotation: A non-financial method moving a worker between different existing tasks or roles on a planned, periodic schedule, to break up the monotony of doing one task indefinitely.

L

laissez-faire leadership: A leadership style in which the leader sets only broad goals and leaves most operational decisions to the team or individual — the least directive style, dependent on a skilled, self-motivated workforce.

M

market equilibriumequilibrium price, equilibrium quantity, market clearing price: The price and quantity at which the demand curve and supply curve intersect — the only point where the quantity buyers plan to buy exactly equals the quantity sellers plan to sell, so there's no built-in pressure for price to move further. Every other price leaves either a surplus or a shortage pushing price back toward it.
market orientation: A business philosophy that researches what customers say they want first, and only then designs a product to meet that identified need. Reduces the risk of a rejected product, at the cost of only ever being able to act on demand customers can already articulate.
market segmentation: Dividing a market into groups of customers who share characteristics relevant to how they buy, so a business can target its product, price and marketing at a specific group rather than everyone at once. Only reduces marketing costs if the segments genuinely behave differently as customers, not merely look different on paper.
market shareshare of the market: The percentage of total sales in a market held by one business, calculated as (a business's sales ÷ total market sales) × 100 — a share OF THE MARKET, never a raw sales or revenue figure. Confirmed directly in a real mark scheme ('does not relate to the amount of sales a business has... it reflects the percentage of sales compared to other businesses') and independently confirmed twice more (June 2023, June 2024) as one of this paper's most reliably-tested traps, both for defining it as revenue and for dropping the % sign on the calculation.
market size: The total value or volume of sales made by every business in a market over a given period — describes the whole market, not any one firm's position inside it. A market growing in size doesn't change any individual firm's market share unless that firm's own sales grow faster or slower than the market as a whole.
marketing mixthe 4Ps: The four controllable decisions a firm makes to take an already-designed product to market: product, price, place and promotion. A different concept from the design mix, even though the two sit next to each other in the spec and are a confirmed, recurring exam confusion.
Maslow's hierarchy of needshierarchy of needs, Maslow's hierarchy: Maslow's model of five tiers of human need — physiological, safety, social, esteem, self-actualisation — in which a tier only starts motivating behaviour once every tier below it is substantially satisfied.
mass marketmass markets: A market — or a strategy targeting one — serving a very large customer base with a broadly standardised product, competing chiefly on price and availability. Relies on the low unit costs that come from producing, and therefore selling, at very high volume; contrasted with a niche market's small, specific customer group.
matrix structurematrix organisation: An organisational structure where employees report to two lines of authority at once — typically a functional manager and a project or product manager — rather than a single line manager up a conventional hierarchy.
motivatormotivators, Herzberg's motivators: In Herzberg's two-factor theory, a factor (achievement, recognition, the work itself, responsibility, advancement) whose presence genuinely raises job satisfaction — distinct from a hygiene factor, which can only prevent dissatisfaction.
multi-skillingmultiskilling, cross-training: Training employees to perform more than one role or task so the same workforce can be redeployed across different jobs as demand shifts, rather than the business needing a separate specialist for every task.

N

niche marketniche markets: A small, specific group of customers with a particular need a mass-market product doesn't meet — or a strategy targeting one with a differentiated product, competing on distinctiveness or premium value rather than the low-cost, high-volume advantage a mass-market strategy relies on. Usually fewer direct competitors and room to charge a premium price, at the cost of a genuinely smaller pool of customers to sell to.

O

outsourcing (staffing)outsourcing: Paying an external, specialist business to carry out a function (e.g. IT support, payroll) instead of employing staff to do it in-house — trades the fixed cost and management responsibility of direct employment for a variable, contracted fee to an outside provider.

P

part-time contractpart-time work, part-time employee: An employment contract for a fixed, contracted number of hours per week that is fewer than a full-time role — distinct from a zero-hours contract (no hours guaranteed at all) and from temporary work (defined by duration, not hours).
paternalistic leadership: A leadership style in which the leader retains the final decision but explains their reasoning and genuinely considers staff welfare — consultation happens, but it's advisory rather than binding.
performance-related payPRP: A financial method tying pay progression to an individual's assessed performance against set targets or an appraisal — broader than piecework, which pays strictly per unit produced.
piecework: A financial method paying a fixed amount per unit produced — the most direct application of scientific management's assumption that output and pay should be mechanically linked.
predatory pricing: Pricing below cost specifically to force an existing rival out of the market — distinct from limit pricing, which targets a potential entrant that hasn't arrived yet rather than a rival that's already competing.
price elasticity of demandPED, price elasticity: How responsive quantity demanded is to a change in a good's own price: %ΔQd ÷ %ΔP. Negative for any normal downward-sloping demand curve — elastic below −1, unit elastic at exactly −1, inelastic between −1 and 0 — and it changes continuously along a single straight-line demand curve; it isn't fixed for a good.
primary market researchprimary research: New data collected first-hand, specifically for a business's own current question — answers exactly what was asked, at the cost of time and money to collect. Contrasted with secondary market research, which reuses data someone else already collected for a different purpose.
product differentiationdifferentiated product, differentiation: Making a firm's output a distinct, not perfectly substitutable, alternative to its rivals' — the single assumption separating monopolistic competition from perfect competition. Spec-named as three types: physical (real feature differences), marketing (advertising, branding, packaging), and distribution (shop, online, telephone).
product life cyclePLC, product life-cycle: The pattern by which a product's sales tend to rise then fall across stages — development, introduction, growth, maturity/saturation, decline — driven mechanically by how much of the finite addressable market has already adopted it. Extension strategies aim to delay the decline stage by changing an element of the marketing mix.
product orientation: A business philosophy that develops a product first — based on what the business is good at making, or a new idea it believes in — and only afterward looks for customers to sell it to. Carries more risk of rejection than market orientation, but is the only route to a product customers didn't know to ask for.
product trialproduct trials: Giving a not-yet-finished or not-yet-launched product to real consumers to use, to find out whether it works and whether they like it — happens BEFORE a product is finished, unlike test marketing, which trials the launch of a finished product.
profit maximisationprofit maximization, profit-maximising, profit maximiser: Producing at the output where marginal revenue equals marginal cost (MR = MC) — the output that makes the gap between total revenue and total cost as large as possible. The default assumption in economic models, and the objective the mark scheme expects unless a question gives you a specific reason to expect otherwise.
profit satisficing: An entrepreneur's deliberate choice to earn a level of profit that's good enough to support the life they want, knowingly forgoing further profit to protect something else they value more (time, effort, risk exposure). Distinct from WEC13's managerial 'satisficing': there is no principal-agent gap here, since the entrepreneur owns and runs the business — the trade-off is the owner's own, not a symptom of someone else's misaligned incentive.
profit shareprofit-sharing: A financial method distributing a portion of the whole company's profit among staff, usually as a flat or role-weighted amount rather than tied to individual output — its motivational effect depends on whether a worker can see a real link between their own effort and a company-wide figure.

Q

qualitative researchqualitative data: Market research data collecting consumers' opinions and beliefs, not numbers — distinct from quantitative research (numerical, measurable data). A confirmed, repeated real error is reading 'qualitative' as meaning data about quality rather than data about opinions.

R

redundancymade redundant, redundant: Termination of employment because the role itself is no longer needed by the business, for any occupant, for a structural or business reason — not because of anything the individual employee did. The test that separates it from dismissal.

S

sampling methodsrandom sampling, quota sampling, stratified sampling: How a business chooses which people to survey when it can't ask everyone: random sampling gives every person an equal chance of selection; stratified sampling splits the population into subgroups and samples randomly within each, proportional to their real size; quota sampling sets a target number per subgroup but fills it with whoever the interviewer happens to approach, not a random draw.
satisficing: Aiming for a good-enough outcome across several objectives at once (adequate profit, adequate growth, keeping stakeholders content) rather than maximising any single one. Associated with Cyert & March and Herbert Simon's bounded-rationality work — a real, examinable alternative to the maximisation models.
scientific managementTaylorism, Taylor's scientific management: Taylor's early-20th-century view that workers are motivated by pay alone ('economic man'): management's job is to find the single most efficient way to do a task through time-and-motion study, then pay strictly by output (piecework) so a worker's own self-interest drives them toward the business's desired output.
secondary market researchsecondary research: Data that already exists, originally collected by someone else for a different purpose, that a business reuses for its own decision — fast and often free, at the cost of never being designed around this specific business's exact question.
shift of the demand curvedemand shift, shift in demand: The entire demand curve moving to a new position because of a change in something other than the good's own price — substitutes/complements, real income, tastes, population size/age distribution, or advertising. A rightward shift means more is demanded at every price, not just at one.
shift of the supply curvesupply shift, shift in supply: The entire supply curve moving to a new position because of a change in something other than the good's own price — costs of production, technology, indirect taxes, subsidies, or an external shock. A rightward shift means more is supplied at every price, not just at one.
social entrepreneurship: A business structured so that addressing a social or environmental problem is its actual purpose, with any profit generated treated as a means to that end rather than the end itself — a genuinely different structure from a conventional business that happens to also do some good.
span of controlmanagement span: The number of subordinates one manager directly supervises. A wider span means fewer managers, and therefore fewer hierarchy levels, are needed to supervise the same total workforce — the mechanism linking span of control to whether a structure is tall or flat.
staff as a coststaff as an expense: A staffing philosophy that treats wages and related spending purely as an expense to be minimised, with no offsetting future return counted, predicting tighter headcount, lower training spend and higher reliance on flexible or temporary labour.
staff as an assetstaff as a resource: A staffing philosophy that treats employees as an investment expected to generate a return — through productivity, skill and loyalty — that exceeds what is spent on them, predicting higher training spend, career development and retention effort.
stakeholder: Any individual or group affected by, or able to affect, a firm's decisions — employees, customers, suppliers, the local community, government and pressure groups, as well as shareholders. Every shareholder is a stakeholder, but not every stakeholder is a shareholder.
subsidygovernment subsidy, producer subsidy: A per-unit payment from government to producers, lowering the effective cost of supplying each unit — the mirror image of a specific tax, shifting supply down/right and splitting its benefit between consumers and producers by the identical elasticity rule that governs tax incidence.
supply curvemarket supply curve: The graphical relationship between the price of a good and the quantity of it firms are willing and able to supply, holding every other determinant of supply constant — upward sloping because a higher price makes producing (or diverting capacity toward) that good more worthwhile.

T

tall structuretall organisational structure: An organisational structure with many hierarchy levels, produced by a narrow span of control at each level — more layers of management between top and bottom for a given total workforce.
temporary contracttemporary work, temporary staff: An employment contract with a fixed end date or limited duration, e.g. to cover a project or a busy season — the defining feature is duration, not hours, which is what separates it from part-time or zero-hours contracts.
test marketing: Selling a finished, real product at full price in one limited geographic area, to see how it actually performs commercially before a full launch. A confirmed, repeated exam confusion treats this as identical to a product trial — it isn't: test marketing tests the LAUNCH, not the product itself.

Z

zero-hours contractzero hours contract, zero-hour contract: An employment contract that guarantees no minimum number of hours — the employee is offered, and paid for, only the specific shifts the employer actually needs, which distinguishes it from a part-time contract's fixed, if reduced, hours.