IGCSE Businesses Studies Revision Notes

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    IGCSE businesses Studies Revision


Page 1 – Glossary

Page 2 – Basics; Business growth

Page 3 – Comparing business size; Impact of technology

Page 4-5 – Government influence 

Page 6 – Business structure; Multinationals

Page 7 – Organisational structure; Communication

Page 8 – Financing business activity

Page 9 – Marketing

Page 10 – Market research

Page 11 – Product; Price 

Page 12 – Place; Promotion

Page 13 – Production; Economies of scale; Quality control

Page 14 – Business costs

Page 15 – Budgeting; Cash flow; Profit and Loss accounts

Page 16 – Balance sheet; Analysis of business accounts

Page 17 – Location; Government influence on location

Page 18 – Human resources; Recruitment; Job description; Job specification

Page 19 – Internal & external recruitment

Page 20 – Government legislation; Designing job advertisement; Application forms; CV

Page 21 – Training

Page 22 – Advantages & disadvantages of training; Workforce planning; Dismissal & Redundancy

Page 23 –  Trade Unions; Facts; Advantages to employees

Page 24 –  Advantages to employers of single-union agreement

Page 25 –

Page 26 –

  1. The economic problem

Businesses combine factors of production to make products (goods and services) which satisfy people’s wants.

Need – A good or service essential for living

Want – A good or service which people desire, but isn’t essential.

Economic problem – Results from there being not enough resources to satisfy everybody’s wants

Scarcity – Results from the economic problem

Factors of production – The resources needed to produce a good or service:
Land: All natural resources needed; oil, gas, metals, water etc.
Labour: The human workforce

            Capital: The financial investments
Enterprise: The skill and risk-taking ability of the person who brings the factors of                               production together to produce a good or service

Opportunity cost – The next best alternative given up by choosing another item.

Division of labour – Specialisation; Splitting the production process up into different tasks where                        each worker performs only one specific task. Aids efficiency.

Business objectives – The aims or targets that a business works towards:
Increased profit
                            Increase added value
                            Expand the business
                            Achieve business survival
                            Provide a service to the community

Added value – The difference between the selling and manufacturing price of a product

Stakeholder – Any person or group with a direct interest in the performance and activities of a                            business, e.g. owners, workers, managers, consumers, government, community

  1. Business growth

Internal growth – Occurs when a business expands its existing operations

External growth – Integration; When a business takes over or merges with another  business

Horizontal intergration – Merging or taking over another business in the same stage of production

Vertical integration – Merging or taking over another business in another stage of production

Conglomerate integration – Diversification; When a firm merges or takes over a business in a                                        different industry

Comparing business size is useful to:

Banks / Creditors

The common methods to compare business size are:

By number of workers employed
Value of output
Capital employed

  1. Impact of technology

Effect of new technology on products:

New products
New markets
Increased competition

Effect on production processes:

More competitive methods
Increased efficiency
Faster production

Advantages of technological change:

  • New products encourage consumers to buy more often to replace old products
  • A business can obtain a huge competitive edge by releasing a new idea, e.g. iPhone
  • High-tech production methods increase production efficiency and lower average costs
  • Fewer workers needed – less wages paid
  • E-commerce opens up great possibilities for businesses
  • New production methods can be adapted very quickly, thus increasing business flexibility

Disadvantages of technological change:

  • Research and development is often very expensive and not guaranteed to succeed
  • Businesses that don’t implement updated technology might go out of business, lose jobs
  • New production methods with computers & robots are too expensive for some businesses
  • Workers will need retraining, reluctance to do so might lead to a fall in motivation
  • Depending on Internet and e-commerce too much can take away personal contact with customers, thus distancing you from customers as some people prefer the old approach

Government influence

Growth – GDP rising, unemployment decreasing, high                                                 
                 living standards, businesses doing good

Boom – Caused by too much spending, high inflation,
              businesses uncertain about future

Recession – Caused by too little spending, GDP falls,
                     unemployment increases, businesses lose
                     demand and profits

Slump – Bottom and worst part of a recession,
              unemployment very high, prices falling,
              many businesses failing

Government economic objectives:

Low inflation
Low unemployment
Balance of payments
Economic growth

The main economic policies to achieve the objectives are:

  • Fiscal policy
  • Monetary policy and interest rates
  • Supply side policies

Fiscal policy – Any change by the government in tax rates or public sector spending

Monetary policy – A change in interest rates by the government or central bank.

Supply side policies – Used by government to improve the efficient supply of goods and services

Direct taxes – Paid directly from incomes, like income tax and profits tax (tulumaks)

Indirect taxes – Paid through the purchase of goods or services, like VAT (Value added tax)

Disposable income – The level of income a taxpayer has left after paying income tax

Import tariffs – Taxes on imported products

Import quota – Physical limit to the quantity of a product that can be imported

Appreciation – Exchange rate increases, importing cheaper, exports expensive

Depreciation – Exchange rate decreases, importing expensive, exports cheaper

Higher interest rates in a country would encourage foreign banks and individuals to deposit their capital into that country as they would be able to earn higher rates of interest on their capital. This would appreciate that country’s currency. This in turn would make imports seem cheaper and exports more expensive, so some businesses might experience a fall in demand.

Supply side policies:

Privatisation – to improve business efficiency
Improving training and education – Governments try to increase the skill of their people
Increase competition in industries – Done by reducing government control or monopolies.

  1.  Business structure, organisation and control

Limited liability – The owners of a company can’t be held responsible for the debts of their company

There are 5 main forms of business organization in the private sector:

Sole traders
Private limited companies
Public limited companies

To make a limited company, you need:

Articles of Association – Information about management, rules, rights and duties of managers etc.
Memorandum of Association-
Information about directors, where-abouts, objectives, share-capital

Public limited companies must inform their shareholders. They do this by:
Annual General Meeting (AGM)

Annual General Meeting – A legal requirement for public companies. All shareholders may attend,                              next year’s Board of Directors is voted, annual report given, financial data                               provided

Dividends – Payments made to shareholders from the profits of a company after paying corporation                tax. They are the return to the shareholders for investing in the company.

Join now!

Joint ventures – When two or more businesses agree to start a new project together, sharing the                 capital, the risks and the profits. Many European companies have set up joint                          ventures in China with Chinese businesses, As the local managers will have good                 knowledge of market needs and consumer tastes.

Franchise – A business based upon the use of the brand names, promotional logos and trading                           methods of an existing successful business. The franchisee buys the licence to operate               this business from the franchisor.


Multinational businesses are those with production ...

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