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Complete
Business Studies
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Brian Titley
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Complet
coverage e
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A comprehensive and thorough approach which ent
Cambrid
ge IGCSE
and O Le
will challenge your students and get the best results syllabus
vel
es

1 Business and the 1.1 Business activity


environment in 1.1.1 Business activity as a means of adding
value and meeting customer needs
which it operates
{ Business involves organizing and combining resources into firms to produce Key PoINTs
goods and services to satisfy needs and wants of consumers.
{ Resources, or factors of production, are used to make goods and services.
Fundamental
1.1 Business activity 1.1.1 Business activity as a means of adding value
and meeting customer needs { Resources are scarce. There are not enough to produce everything we need
and want. We must choose between alternative uses of resources.
ideas are outlined
1.1.2 Classification of local and national firms into
primary, secondary and tertiary sectors { Resources include land (natural resources), labour (human effort), capital at the start of each
(man-made resources) and enterprise (the knowledge and skills people need
1.1.3 Business growth and measurement of size
1.1.4 Key features of a national economy
to own and run business organizations). chapter, preparing
Resources are inputs to productive activity and products (goods and
students for the
{

1.2 The organization 1.2.1 Business objectives and their importance services) are outputs from productive activity.
1.2.2 Stakeholders and their differing objectives Business activity adds value to resources by using them to produce goods
unit ahead
{

1.2.3 Aims of private and public sector enterprises and services that are more desirable to consumers.

1.3 The changing business 1.3.1 Government influence over decision making
{ Firms owned by private individuals are private enterprises. Most firms aim
environment by using economic policy measures to make a profit but some, like charities, engage in non-profit making
activities.
1.3.2 Impact of technology on business
{ Some business organizations are owned and controlled by government
1.3.3 Business reaction to market changes authorities. These are public enterprises. Many provide public services.
1.4 Economic environment 1.4.1 Mixed and market economies
1.4.2 International trade (access to markets and
tariffs) Consumers – people and organizations Opportunity cost – the benefit lost by Business buzzwords
1.4.3 Problems entering new markets abroad who are willing and able to buy goods not consuming or producing the next best
and services. alternative product.
1.4.4 Competition and business
Consumption – the using up of goods Wages and salaries – payments made by
1.4.5 Exchange rates and how changes in them and services to satisfy consumer needs firms to employees to use their labour for
affect business and wants. productive activity.
Tricky vocabulary is
Assessment exercises • Suggestions for coursework Production – using resources to make Customers – consumers who buy goods
• Examination questions goods and services to satisfy consumer
needs and wants.
or services from business organizations.
clearly defined in advance,
Revenue – proceeds from the sale of
Factors of production – productive
resources used to make goods and
goods and services to customers. helping language-learners to
Profit – a surplus of revenue over costs of
services.
Firms – organizations that produce goods
production. focus on the subject material
Value added – the difference between
and services.
the price of a product and the cost of
Entrepreneur – a person with the know- the natural and man-made materials,
how and willingness to take the risks and components and resources used to make it.

Modern and decisions necessary to set up and run a


business.

vi highly visual design makes


Business and the environment in which it operates Business activity 1

the content more accessible


to students, increasing
motivation and enthusiasm
A truly global approach Case studies depict
filled with international scenarios students
case studies and can relate to, bridging
examples makes the the gap between the
Help stu book relevant to students theory and the real
de
learn ho nts internationally world
w they Important
learn b
More exe est.
keywords are Understanding business organization ACTIVITY 2.1

rcises an highlighted, Businesses are organized according to how they are From the article identify and list the main features, advantages and disadvantages of a sole trader business.

d
owned, controlled and financed
revision with a glossary
notes are
From the last section you will recall there are a number of different types of

to ensure
business organization in the private sector of an economy. They vary
Pop in for something
included according to:

Bitesize
on a free concepts
CD-ROM
for extra
Customers of Bitesize, the new sandwich and coffee bar in
are fully the town, can look forward to good food and a personal,

flexibilit
friendly service, according to owner Saabira Rahman.
understood who owns how it is how it is the owners’ She was busy preparing fresh sandwiches, snacks and lots

y. the business controlled financed liability to repay


business debts.
of delicious pastries for local shoppers and office workers
when we popped in to sample her menu. We asked her
In this section we will look at each type of business organization in these why she had decided to open her own business.
terms.
‘I ENJOY cooking but had been unemployed for Instead Saabira had to use all her savings to buy
some time,’ Saabira explained. equipment and pay the deposit on her shop premises.
The sole trader ‘By running
yub otmy sgnown
ivas business
reh lla esIuam ot densured
ah aribaaajobS daetsnI ‘Monthly emosbills
rof for
deyo ingredients,
lpmenu neeelectricity
b dah tub andgnikmy ooc yojne I‘
but I get
.seto
sim beermy
p poown
hs rboss
eh noand tisokeep
ped eall
ht the
yapprofits
dna tneI mpiumobile
qe phone are also high,’ she said. .de‘Inmust
ialpxeearn
aribataaS ’,emit
The sole trader is the oldest and most popular type of make. Not that
ym dnaI have
yticirmade
tcele ,sany
tneiyet,’
dergshe
ni rolaughed.
f sllib ylh‘ItnoM‘least $400boinj arevenue
derusneach
e ma month
I ssenisjust
ub ntowobreak
ym gneven.
innur yB‘
business organization have to twork
a nraevery
e tsumhourI‘ .dIiacan
s ehto run
s ’,h gihthe
oslbusiness,
a era enohp eliboI’d m love Itosttake
fiorpaefew
ht lladays
peekoffdnbut
a ssIowouldn’t
b nwo ymmake eb ot teg I tub
A sole trader or sole proprietership is a business organization whether .it
neisvebuying
kaerb o ingredients,
t tsuj htnom cooking
hcae euandnever ni 004$ tsaany el money.’
I‘ .dehgual ehs ’,tey yna edam evah I taht toN .ekam
owned and contolled by one person. They may employ other preparing efood,
kam serving,
t’ndluowcleaning
I tub ffoandsyadeven
wefkeeping
a ekat ot evol d’I‘Then of,sscourse,
enisub if
ehthe
t nubusiness
r ot nac Ifails
ruoIhwill
yrevhave
e krotow ot evah
people to work in the business, but it will only ever have one the accounts. If I had the time and money I would ’.yenom yrepay
na any business dnadebts
gnikoeven
oc ,stifneitidmeans
ergni gselling
niyub smyi ti rehtehw
owner. hire someot employees
evah lliw I to sliahelp
f sseme!’
nisub eht fi ,esruoc fo nehT‘possessions gnito
pedo
ek nso!
eveButdnaI plan
gninato elcmake
,gnivthe
res ,business
doof gniraperp
Starting your own business can be an expensive
ym gnilles snaem ti fi neve stbed ssenisub yna yaper a success and so far, so good!’
dluow I yenom dna emit eht dah I fI .stnuocca eht
Most businesses are sole traders. It is the oldest and most common and risky
ssebusiness
nisub ehtasekSaabira
am ot nfound
alp I tuout.
B !o‘Banks
s od ot snoissessopBitesize can also provide’!sandwiches em pleh ot sand eeyopastries
lpme emos erih
form of business organization in the world. Many small businesses wouldn’t lend me any money. They ’!doosaid
g os there
,raf oswasdnatoosseccusfor
a businessevifunctions
snepxe naand eb nparties.
ac ssenisub nwo ruoy gnitratS
run local shops or provide personal services such as hairdressing, much competition
seirtsap dnand a sehmy ciwbusiness
dnas edicould
vorp obe slaatnarisk.’
c ezisetiB sknaB‘ .tuo dnuof aribaaS sa ssenisub yksir dna
plumbing, building and vehicle repairs. Many of today’s largest

ion
.seitrap dna snoitcnuf ssenisub rof oot saw ereht dias yehT .yenom yna em dnel t’ndluow

Make revis e.
corporations started out as sole traders many years ago.
’.ksir ta eb dluoc ssenisub ym dna noititepmoc hcum
Most sole traders finance their business from their personal Advantages of a sole trader Disadvantages of a sole trader
savings, borrowing from friends and family or from a bank loan.

ctiv
+ Businesses operating as sole traders - The owner has full responsibility

more effe are


However, banks are often unwilling to lend to sole traders because are easy to set up. There are usually for running the business from day
they are considered risky enterprises. They can face considerable few legal requirements involved in to day. This may mean working
competition from larger businesses and other small businesses, and many close

ips
business registration. very long hours and going without

Revision t long
down within their first few years of operation. holidays.
+ These businesses can often be set up
Modern technology has reduced the cost of starting up a new with little capital. - The business may lose revenues and

d ,a
small business. Many sole traders can operate their businesses profits if the owner is off sick or

integrate
+ The owner is his or her own boss and
from home thanks to the Internet and mobile communications has full control over the business. on holiday and cannot manage the

l answers
which allows them to keep in contact with customers and business.
+ The owner receives all profits after
suppliers. However, in the event of business failure the sole trader will be

with mode trate


tax and therefore has an incentive to - The owner has unlimited liability to
liable for all the business debts. repay any business debts.
work hard.
- Sole traders often lack capital to buy

to demons y
+ Personal contact with customers can
increase customers’ loyalty. new equipment or to expand.
+ Separate accounts are not required - Sole traders often lack all the skills

lit
exam-qua
for the business. they need to run their businesses
successfully.

.
respo s e
7
s
6 Business structure, organization and control Ownership and internal organization

n
Concepts are fully explored and broken
down into manageable segments which are easier for students to absorb
K37673

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