Cambridge IGCSE Business 0264

Learn 200 Cambridge IGCSE Business words for explaining decisions, using case evidence and making a recommendation. Each entry gives a plain-English definition and an example.

For 2027–2029, Cambridge IGCSE Business 0264 has two 90-minute papers worth 80 marks and 50% each. Paper 1 is Short Answer and Data Response. Paper 2 is Case Study. Each paper has four compulsory questions.

200 words and examples
Exam requirements and worked examples
Fencing Method
Practice exercises

200 essay vocabulary words and examples

Customers, costs and small-business decisions

entrepreneur — a person who organises a venture and takes on its risk. the entrepreneur tests demand before committing to a lease.
sole trader — an individual who owns and runs an unincorporated business. a sole trader can make decisions quickly.
limited liability — a limit on owners’ personal financial responsibility for business debts. limited liability can affect an owner’s choice of business structure.
market segment — a group of customers with shared characteristics or needs. the shop targets a market segment that values convenience.
primary research — information collected directly for a particular purpose. the owner uses primary research to test interest in delivery.
secondary research — information already collected for another purpose. published local population figures are secondary research.
marketing mix — the combination of product, price, place and promotion decisions. adjust the marketing mix to suit the target customer.
distribution channel — the route through which a product reaches customers. direct online sales change the distribution channel.
promotion — communication intended to inform or persuade customers. compare the cost and reach of two forms of promotion.
fixed cost — a cost that stays unchanged as output varies within a relevant range and period. rent can be a fixed cost for a small bakery.
variable cost — a cost that changes as output changes. ingredients are a variable cost when more loaves are baked.
revenue — income earned from selling goods or services before costs are deducted. a higher price can reduce revenue if too many customers leave.
contribution per unit — selling price per unit minus variable cost per unit. each item contributes toward fixed costs and profit.
break-even output — the output level where total revenue equals total cost. compare expected orders with break-even output.
cash inflow — money entering a business during a period. card payments provide a cash inflow when they are received.
cash outflow — money paid by a business during a period. equipment purchases can create a large cash outflow.
trade credit — an arrangement allowing a business to buy now and pay a supplier later. trade credit can delay a cash outflow.
stock turnover — the rate at which a business sells or uses and replaces its inventory. slow stock turnover may tie up cash.
customer loyalty — a tendency for customers to keep choosing a business or brand. reliable service can encourage customer loyalty.
quality assurance — planned procedures designed to maintain standards and prevent faults. staff training can support quality assurance.

Business decisions in the new AQA specification

purpose — the reason a business exists. connect the decision to the business’s stated purpose.
objective — a result the organisation aims to achieve. state a measurable objective before judging an option.
intrapreneurship — entrepreneurial activity inside an existing organisation. intrapreneurship can help a team test a new service.
innovation — introducing a new or improved product, process or approach. process innovation may reduce the time needed to fill orders.
market orientation — organising decisions around customer needs and market information. market orientation may influence product design.
product orientation — prioritising the product’s features or technical quality in business decisions. product orientation can focus investment on performance.
market mapping — plotting competing products against chosen attributes. market mapping can show how price and perceived quality differ.
value proposition — the benefits an offering promises to a target customer. explain why the value proposition suits the segment.
price elasticity of demand — percentage change in quantity demanded divided by percentage change in price. explain what the elasticity estimate implies for revenue.
sales volume — the number of units sold. sales volume can rise even if sales revenue falls.
cash-flow forecast — an estimate of future cash receipts, payments and balances. use the forecast to identify when extra financing may be needed.
margin of safety — the amount by which sales exceed break-even sales. a narrow margin of safety increases exposure to a fall in demand.
span of control — the number of people who report directly to a manager. a wider span may reduce time for individual supervision.
capacity constraint — a resource limit that prevents output from rising further. identify whether labour or equipment is the capacity constraint.
stockout — an occasion when required inventory is unavailable. the cost of a stockout can include missed sales.
buffer stock — inventory held to absorb uncertainty in supply or demand. buffer stock can protect service reliability while tying up cash.
quality control — checking output against standards to identify defects. quality control can reveal a fault before dispatch.
implementation — putting a chosen decision into practice. assess whether training time will slow implementation.
strategic fit — the degree to which a decision suits the organisation and its environment. test the strategic fit of entering a new market.
scenario — a coherent set of assumptions about possible future conditions. compare the results under a lower-demand scenario.

Business performance and strategic choices

organic growth — expansion through a firm’s own operations. opening an additional branch is one form of organic growth.
takeover — acquisition of control of another business. a takeover may add distribution capacity quickly.
integration — combining activities or businesses, such as different stages of supply. vertical integration can change control over inputs.
synergy — a gain expected from combining activities beyond what they deliver separately. test whether savings justify the claimed synergy.
competitive positioning — the place a business aims to occupy relative to rivals. consistent service can support premium positioning.
market share — the proportion of total market sales captured by a business. state whether market share uses units or revenue.
price elasticity — the responsiveness of quantity demanded to a change in price, measured proportionally. use price elasticity to assess the likely sales effect of a price rise.
forecast — an estimate of a future outcome based on data and assumptions. a sales forecast depends on repeat purchases.
sensitivity analysis — a test of how an outcome changes when an assumption varies. test the effect of higher labour costs on the projection.
labour productivity — output produced per unit of labour input. compare output per paid hour across the two sites.
capacity utilisation — actual output as a percentage of available production capacity. low utilisation can leave fixed resources idle.
unit cost — average cost per unit of output. spread fixed costs across more units to lower unit cost, other things equal.
operating profit — profit from operations before interest and tax. compare operating profit with cash generated from operations.
gearing — a measure of reliance on debt in a business’s capital structure. high gearing can increase exposure to interest costs.
liquidity — ability to meet short-term obligations. delayed receipts may put liquidity under pressure.
opportunity cost — the value of the next best option forgone. the investment’s opportunity cost may be a delayed warehouse upgrade.
decision tree — a diagram showing options, possible outcomes and their probabilities and values. check the assumptions before comparing expected values.
diseconomies of scale — increases in average cost that can arise as production scale grows. coordination problems can create diseconomies of scale.
retrenchment — deliberate reduction of activities to improve viability or focus. retrenchment may release cash while reducing market coverage.
contingency plan — a plan prepared for a possible disruption or alternative outcome. a contingency plan identifies a backup supplier.

Finance, operations and business performance

measure — an action taken to address a problem. introduce a temporary measure.
cash flow — movement of cash into and out of a business over time. forecast cash flow before committing to expansion.
working capital — current assets minus current liabilities. inventory and receivables tie up working capital.
gross profit — sales revenue minus cost of sales. lower unit production costs may improve gross profit.
profit margin — a chosen profit measure expressed as a share of sales revenue. state which profit margin the data show.
contribution — revenue minus variable costs, expressed per unit or in total. higher unit contribution helps cover fixed costs.
break-even — the point where total revenue equals total costs. compare forecast demand with break-even output.
deadweight loss — a loss of total surplus relative to an efficient allocation. identify the deadweight loss from underproduction.
capacity utilization — actual output as a proportion of available capacity. low capacity utilization can leave costly machinery idle.
bottleneck — a constraint that limits throughput. packing speed is the bottleneck on the production line.
economies of scale — reductions in average cost associated with increasing scale. bulk purchasing may create economies of scale.
price ceiling — a legal maximum price. a binding price ceiling can create excess demand.
outcome — the result of an action or process. improve learning outcomes.
outsourcing — contracting an activity to an outside provider. outsourcing can reduce fixed commitments while weakening direct control.
inventory — materials or goods held for production or sale. extra inventory can cushion a supplier delay.
lead time — elapsed time from initiating a process or order to its completion or delivery. a long lead time can make a stockout harder to resolve.
benchmarking — comparing practices or performance with a reference point. benchmarking can reveal a gap in delivery reliability.
variance — a difference between an actual and planned figure in budgeting. investigate the unfavorable cost variance.
payback period — time required for cash inflows to recover an initial outlay. a short payback period may matter when cash is tight.
funding — money made available for a purpose. secure funding for a trial.

Business decisions, performance and strategy

price floor — a legal minimum price. a binding price floor can create excess supply.
tradable permit — an authorisation that can be exchanged and allows a specified activity. tradable permits place a price on emissions.
margin — a measure of profit or contribution relative to sales, depending on the measure. compare operating profit margins.
internalise — bring an external cost or benefit into a decision-maker’s incentives. a charge may internalise an external cost.
excludability — the ability to prevent people from using a good. excludability affects how a service can be financed.
rivalry — the extent to which one person’s use reduces what others can use. rivalry increases when a road is congested.
free rider — someone who benefits without contributing to the cost. a free rider may still benefit from street lighting.
moral hazard — a change in behaviour after protection alters the cost of taking risks. insurance can create moral hazard.
utilisation — the proportion of available capacity being used. capacity utilisation may rise with demand.
adverse selection — a distortion in who participates when one side has hidden information. adverse selection can change the mix of people insured.
sunk cost — a cost already incurred that cannot be recovered. sunk costs may deter market entry.
normal profit — the minimum return needed to keep resources in their present use. normal profit is included in economic cost.
segmentation — dividing a market into groups with shared characteristics. segmentation can help target promotion.
positioning — the intended place of a product or brand in customers’ minds. premium positioning depends on perceived value.
differentiation — creating or communicating differences from competitors. differentiation can reduce direct price competition.
retention — keeping customers or employees over time. training may improve employee retention.
delegation — assigning responsibility and appropriate authority to another person. delegation can speed local decisions.
diversification — entering new product and market areas in the Ansoff framework. diversification increases the demands on management.
supernormal profit — profit above normal profit. barriers can help sustain supernormal profit.
contingency — an alternative arrangement prepared for a possible disruption. a contingency plan covers supplier delays.

Taking a position

claim — a statement you want the reader to accept. make a claim.
stance — your position on a question. take a clear stance.
thesis — the central position or interpretation your response develops. support the thesis.
premise — an idea the argument starts from. question the premise.
assumption — something treated as true without being established. test the assumption.
assert — state a position firmly. assert that access matters.
argue — give reasons in support of a position. argue for a trial.
maintain — continue to hold or defend a view. maintain that the policy is fair.
contend — put forward a position that can be challenged. contend that the proposal is workable.
justify — give sufficient reasons for a decision or judgement. justify the expense.
advocate — publicly support an action or change. advocate for reform.
defend — answer criticism of a view or choice. defend a decision.
qualify — limit a statement so it applies only where warranted. qualify the conclusion.
concede — acknowledge a valid point made by the other side. concede that costs may rise.
rebut — answer an opposing claim with reasoning or evidence. rebut the objection.
counterargument — a reasoned objection to a position. address a counterargument.
reservation — a concern that makes agreement incomplete. express a reservation.
distinguish — show what makes two things different. distinguish cost from value.
criteria — standards used to judge something. agree on the criteria.
verdict — a final judgement reached after consideration. reach a verdict.

Using evidence and reasoning

evidence — information that helps establish a claim. draw on evidence.
example — a specific case that makes a general point clearer. give a concrete example.
illustrate — make an idea clearer through a case or detail. illustrate the difficulty.
demonstrate — show how or why something is true. demonstrate a connection.
substantiate — support a claim with convincing information. substantiate the allegation.
corroborate — provide independent support for an existing account. corroborate the witness’s account.
infer — draw a conclusion from available clues. infer a motive from the wording.
imply — suggest a meaning without saying it directly. imply that change is possible.
interpret — explain what something means in context. interpret a figure in context.
analyse — examine how parts work together. analyse the writer’s choices.
evaluate — judge the strength, quality or value of something. evaluate the proposal.
plausible — reasonable enough to believe given what is known. a plausible explanation.
credible — worthy of belief or trust. a credible source.
relevant — directly connected to the issue being considered. relevant to the question.
sufficient — enough for the purpose or conclusion at hand. sufficient for a limited trial.
representative — typical enough to reflect a larger group. a representative sample.
anecdote — a brief account of a particular incident. open with an anecdote.
limitation — something that restricts what a method or claim can establish. acknowledge a limitation.
contradict — state or show something incompatible with another claim. contradict the earlier finding.
synthesise — combine ideas from separate sources into a new account. synthesise competing accounts.

Connecting ideas

whereas — introduces a clause that contrasts with another. whereas the first option costs less.
although — introduces a fact that qualifies the main statement. although demand may rise.
however — signals a contrast or change in direction. however, costs remain uncertain.
nevertheless — signals that a point still holds despite a difficulty. nevertheless, the trial could go ahead.
conversely — introduces a contrasting relationship in the reverse direction. conversely, lower demand can free capacity.
similarly — points out a meaningful likeness. similarly, smaller groups need space.
likewise — shows that a similar point applies elsewhere. likewise, evening users need lighting.
consequently — introduces a result of what came before. consequently, the queue grew.
therefore — introduces a conclusion or result that follows. therefore, a trial is justified.
furthermore — adds a supporting point. furthermore, the existing room is free.
specifically — narrows the discussion to a precise detail. specifically, the plan would add two sessions.
instead — signals a replacement or different choice. instead, use the current building.
alternatively — introduces another option. alternatively, change the timetable.
otherwise — indicates what happens under different conditions. book early, otherwise places may fill.
provided — introduces a condition when used with a following clause. provided that staffing is adequate.
despite — introduces something that fails to prevent the main outcome. despite the delay.
unlike — marks a difference between two things. unlike the previous scheme.
respectively — matches items with values in the same stated order. costs were $5 and $8, respectively.
overall — signals a judgement about the whole picture. overall, the benefits are modest.
ultimately — identifies what matters after other factors are considered. ultimately, the decision depends on demand.

Explaining cause and effect

cause — produce or bring about an outcome. cause avoidable delays.
contribute — play a part in bringing about an outcome. contribute to overcrowding.
trigger — set a process or reaction in motion. trigger a review.
accelerate — make a process happen faster. accelerate the transition.
intensify — make something stronger or more severe. intensify competition.
exacerbate — make an existing problem worse. exacerbate existing inequalities.
mitigate — reduce the severity or harmful effect of something. mitigate the harm.
prevent — stop something from happening. prevent further damage.
deter — discourage someone from taking an action. deter people from taking risks.
enable — make an action possible. enable students to attend.
facilitate — make an action or process easier. facilitate access to training.
reinforce — strengthen an effect, belief or behaviour. reinforce an existing pattern.
undermine — weaken something, often gradually. undermine public trust.
sustain — keep something going over time. sustain the improvement.
displace — push something or someone out of an existing place or role. displace smaller operators.
redistribute — change how something is shared. redistribute public funds.
consequence — an outcome that follows an action or event. an unintended consequence.
mechanism — the process through which an effect occurs. identify the mechanism.
correlation — a pattern in which two things vary together. observe a correlation.
constraint — a condition that limits what can be done. work within a budget constraint.

Comparing options and weighing costs

benefit — a useful or favourable effect. a long-term benefit.
drawback — a feature that makes an option less attractive. a potential drawback.
monopsony — a market with a single buyer, or dominant buyer power in relevant usage. a firm with monopsony power can influence wages.
priority — something that deserves attention before competing needs. give priority to public health.
alternative — another way of achieving a goal. offer an alternative to driving.
feasible — possible to carry out with the available resources. a feasible timetable.
viable — capable of working successfully over time. a viable business model.
practical — suited to what can actually be done. a practical solution.
effective — able to produce the intended result. an effective response to congestion.
efficient — able to achieve a result with relatively little waste. efficient use of limited funds.
affordable — within the means of the people expected to pay. affordable childcare.
accessible — easy or possible for the intended users to reach or use. accessible public transport.
equitable — fair in light of differing needs and barriers. equitable access to training.
proportionate — appropriate in scale to the problem. a proportionate penalty.
substantial — large enough to matter. a substantial reduction in waste.
governance — how institutions make and carry out decisions. local governance shapes enforcement.
outweigh — be more important than something on the other side. the benefits outweigh the costs.
offset — counterbalance part or all of an effect. offset part of the expense.
allocate — assign money, time or resources to a purpose. allocate funds to local schools.
compromise — an arrangement that meets competing needs only in part. reach a workable compromise.

Exam requirements and worked examples

Where extended writing appears

Cambridge introduced code 0264 for first assessment in 2027. Paper 1 mixes short answers and structured responses using stimuli such as graphs or tables. Paper 2 uses a case insert and appendices, so read the question alongside the information it refers to. Prepare extended responses as part of the structured papers and let the command and marks guide the amount you write.

Both papers assess knowledge, application, analysis and evaluation. A definition shows knowledge. Using a relevant case detail helps with application. Explaining the sequence from decision to effect shows analysis. Weighing the likely effects and choosing a course of action with reasons demonstrates evaluation when the question requires it.

Official specifications and sources

Worked recommendation for a small bakery

Imagine a bakery selling boxed lunches for $8 each. Ingredients and packaging cost $5 per box. Unit contribution is $3. A delivery arrangement would add $90 in fixed costs per week and $1 in variable costs per delivered box. At the same price, each additional delivered box contributes $2 toward those new fixed costs. If the orders are all genuinely additional and these are the only extra costs, 45 additional boxes would cover the extra fixed costs.

Compare that figure with expected demand and spare production capacity. If 45 orders are unlikely, the proposed delivery route may add costs without generating enough contribution. If demand is strong but the kitchen is already busy, some new orders may displace higher-contribution sales. That changes the calculation. Explain which orders are additional before using the threshold as evidence.

A qualified recommendation could be to run a short trial in one area if spare capacity exists and orders can be recorded separately. Track delivered sales, contribution and missed or delayed orders. If the trial produces demand near the threshold but slows counter service, the next step may be to adjust delivery times before expanding.

Fencing Method for a business word

Start with Delivery may affect costs. Add detail. The arrangement adds $90 in fixed weekly costs. Refine the tone. Extra sales need to generate enough contribution to cover the new commitment. Add the mechanism. At $2 contribution per extra box, 45 additional boxes cover $90 if the assumptions hold. Transfer the logic to a repair shop considering an extra service.

Try the same pattern with market segment. Name the customers, one need they share and the change the business is considering. Explain how a feature of the offer meets that need. Then state what the business could measure to check whether its judgement was right.

Use case details to explain consequences

Choose a fact about the firm, a figure and a constraint. The fact might be a delivery radius, the figure the number of orders and the constraint the hours available for production. Give each detail a role in the answer. If a fact could be replaced by the name of any business, connect it to an actual decision from the case.

When practising, write two consequences for the same option. One could be a financial effect, such as lower unit contribution. The other could be an effect on customers, such as better access to the service. Compare both using the objective given in the question and say why one matters more in the circumstances.

Distinguish profit from cash

A sale made on credit may contribute to profit before cash arrives. If the firm pays suppliers first, it needs funds to cover the gap. An answer about expansion can therefore show that the activity looks profitable while explaining how late customer payments could make it hard to finance in the short run.

Draw a weekly timeline with the dates of purchases, sales and receipts. Mark the point at which cash is most stretched. Then compare a change in payment terms with a change in price. Those choices affect different parts of the case and may solve different problems. State the problem you are solving before recommending an option.

Practise a short and a long response on the same topic

For a short definition, write the core meaning of fixed cost in one sentence. For an explanation, name a cost and show why it stays the same over the relevant output range. For a decision question, compare how changing that cost affects break-even and cash. The extra writing should add reasoning, evidence or evaluation rather than repeat the definition.

Finish a longer practice answer by writing one condition that could reverse the decision. If the condition is sales volume, say which direction volume must move and why. If it is operational capacity, identify the process that becomes constrained. This gives the recommendation a clear reason and a limit.

Frequently asked questions

Do I choose between papers? Both are compulsory. Should I include a definition in every answer? Use one when it clarifies the concept or the question asks for it. Can a recommendation be conditional? Yes. State the option, the condition and the case fact that makes it important.

Write a recommendation the business can act on

Write the option in one sentence, then state its strongest reason and the main risk. Give both a reference to the case. In the bakery example, spare kitchen capacity could make a short trial feasible, while a low contribution per delivery would make it hard to cover weekly costs. Include one measure the manager could review after the trial. A decision supported by evidence is stronger when the reader can see what would count as success.

If the figures are uncertain, keep the uncertainty visible. State which assumption is most important and what further information the owner should collect. Compare the trial with keeping the existing service as the baseline.

Top 200 Vocabulary Word List for Cambridge IGCSE Business (0264) | Essay Writing