Cambridge International AS & A Level Business 9609 | Complete Glossary | 2026-2027
A good A physical product
A service An intangible item
A product More general term which includes goods and services
Gross Domestic Product (GDP) Measures the total value of the production of an economy (that's all a country's
businesses) over a period of time, normally one year.
Mission statement Sets out a business's overall purpose to direct and stimulate the entire organisation
Objectives Medium- to long-term goals established to coordinate the business
Cash flow The amount of money moving into and out of a business over a period of time
Diversification Objective where a firm produces an increased range of unrelated goods and
services
Stakeholders Individuals or groups (such as employees, customers and local residents) who have
an interest in a business
Revenues Earnings or income generated by a firm as a result of its trading activities
Profit The surplus of total revenue over total cost for a business over a trading period
Fixed costs Costs that do not alter when the business alters its level of output. Examples
include rent and rates.
Variable costs Alter directly with the business's level of output, e.g. fuel costs
Total costs Fixed costs and variable costs added together
Average costs Total costs of production divided by the level of production or output to give the cost
of a single unit of output
,Cambridge International AS & A Level Business 9609 | Complete Glossary | 2026-2027
Sole trader A business that is owned and managed by one person but it may employ other
people
Unlimited liability Occurs when an individual or group of individuals is responsible for all the actions of
their business. With sole traders, there is no distinction in law between the individual
and the business so they could lose their personal assets if the business has
financial problems
Company A business organisation that has its own legal identity and that has limited liability
Incorporation The process of establishing a business as a separate legal identity that allows it to
benefit from limited liability
Shareholder Investor in and one of the owners of a company
Limited liability In the event of financial difficulties, the personal belongings of shareholders are safe
Dividends A share in the profit of a company that are distributed to the holders of certain types
of company shares
Market capitalisation Total value of the issued shares of a public limited company
Takeover or acquisition Occurs when one company acquires control of another by buying more than 50% of
its share capital
Privatisation The process under which the state sells businesses that it has previously owned
and managed to private individuals and businesses.
Market conditions Refers to number of features of a market such as the level of sales, the rate at
which they are changing and the number and strength of competitors
Demand A term used by economists to indicate the amount of a particular good or service
that consumers or organisations want, and can afford, to buy at given prices. It
shows the level of sales that businesses can expect.
Interest rates The price of borrowed money
Fair trade A social movement that exists to promote improved trading terms and living
conditions for producers of products in less-developed countries
Sustainable production Occurs when the supply of a product does not impose costs on future generations
by for example, depleting non-renewable resources
, Cambridge International AS & A Level Business 9609 | Complete Glossary | 2026-2027
Leadership Involves ruling, guiding and inspiring other people within the organization in pursuit
of agreed objectives
Management Involves planning, organising, directing and controlling all or part of a business
Authority The power or ability to carry through an action
Delegation Passing authority down the organization hierarchy.
Empowerment Giving subordinates power or control over their working lives
Decentralisation Passing authority from the centre of an organization to those working elsewhere in
the business
Autocratic leadership A leadership style where information and decision making is controlled by the
leader. It involves one-way communication, minimal delegation and tight control
Democratic leadership A leadership style where decision-making and information is shared within the
business. It involves delegation, active two-way discussion and empowerment
Laissez-Faire leadership A leadership style where subordinates are given very high levels of authority and
empowerment without input by the leader.
Style versatility The ability to adopt different leadership styles depending on the situation
Risk The chance of incurring misfortune or loss
Uncertainty A situation in which there is a lack of knowledge and events, outcomes or
consequences are unpredictable
Opportunity Cost The next best alternative which is given up when a decision is made
Sunk costs Costs which cannot be recovered is the business were to abort the plans
Tactical decisions Decisions which are short term and based on an individual aspect of the business.
They are often made by middle management
A good A physical product
A service An intangible item
A product More general term which includes goods and services
Gross Domestic Product (GDP) Measures the total value of the production of an economy (that's all a country's
businesses) over a period of time, normally one year.
Mission statement Sets out a business's overall purpose to direct and stimulate the entire organisation
Objectives Medium- to long-term goals established to coordinate the business
Cash flow The amount of money moving into and out of a business over a period of time
Diversification Objective where a firm produces an increased range of unrelated goods and
services
Stakeholders Individuals or groups (such as employees, customers and local residents) who have
an interest in a business
Revenues Earnings or income generated by a firm as a result of its trading activities
Profit The surplus of total revenue over total cost for a business over a trading period
Fixed costs Costs that do not alter when the business alters its level of output. Examples
include rent and rates.
Variable costs Alter directly with the business's level of output, e.g. fuel costs
Total costs Fixed costs and variable costs added together
Average costs Total costs of production divided by the level of production or output to give the cost
of a single unit of output
,Cambridge International AS & A Level Business 9609 | Complete Glossary | 2026-2027
Sole trader A business that is owned and managed by one person but it may employ other
people
Unlimited liability Occurs when an individual or group of individuals is responsible for all the actions of
their business. With sole traders, there is no distinction in law between the individual
and the business so they could lose their personal assets if the business has
financial problems
Company A business organisation that has its own legal identity and that has limited liability
Incorporation The process of establishing a business as a separate legal identity that allows it to
benefit from limited liability
Shareholder Investor in and one of the owners of a company
Limited liability In the event of financial difficulties, the personal belongings of shareholders are safe
Dividends A share in the profit of a company that are distributed to the holders of certain types
of company shares
Market capitalisation Total value of the issued shares of a public limited company
Takeover or acquisition Occurs when one company acquires control of another by buying more than 50% of
its share capital
Privatisation The process under which the state sells businesses that it has previously owned
and managed to private individuals and businesses.
Market conditions Refers to number of features of a market such as the level of sales, the rate at
which they are changing and the number and strength of competitors
Demand A term used by economists to indicate the amount of a particular good or service
that consumers or organisations want, and can afford, to buy at given prices. It
shows the level of sales that businesses can expect.
Interest rates The price of borrowed money
Fair trade A social movement that exists to promote improved trading terms and living
conditions for producers of products in less-developed countries
Sustainable production Occurs when the supply of a product does not impose costs on future generations
by for example, depleting non-renewable resources
, Cambridge International AS & A Level Business 9609 | Complete Glossary | 2026-2027
Leadership Involves ruling, guiding and inspiring other people within the organization in pursuit
of agreed objectives
Management Involves planning, organising, directing and controlling all or part of a business
Authority The power or ability to carry through an action
Delegation Passing authority down the organization hierarchy.
Empowerment Giving subordinates power or control over their working lives
Decentralisation Passing authority from the centre of an organization to those working elsewhere in
the business
Autocratic leadership A leadership style where information and decision making is controlled by the
leader. It involves one-way communication, minimal delegation and tight control
Democratic leadership A leadership style where decision-making and information is shared within the
business. It involves delegation, active two-way discussion and empowerment
Laissez-Faire leadership A leadership style where subordinates are given very high levels of authority and
empowerment without input by the leader.
Style versatility The ability to adopt different leadership styles depending on the situation
Risk The chance of incurring misfortune or loss
Uncertainty A situation in which there is a lack of knowledge and events, outcomes or
consequences are unpredictable
Opportunity Cost The next best alternative which is given up when a decision is made
Sunk costs Costs which cannot be recovered is the business were to abort the plans
Tactical decisions Decisions which are short term and based on an individual aspect of the business.
They are often made by middle management
