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Business Notes Igcse
Business Notes Igcse
Business Notes Igcse
Wants: goods or services that people would like to have. But are not
People’s wants are unlimited (you will always want something), but the
Scarcity: there are not enough products to fulfill the wants of the
population
As there are limited resources, people are always forced to make a choice.
opportunity cost
at.
Division of labour is when production is split into different tasks and each
Advantages Disadvantages
A business also employs people as workers and pays them wages to allow
Added Value
Added value is the difference between the selling price and the cost of
It is NOT the profit because added value does not include the price to pay
o Increase the selling price of the product while keeping the total cost
o Improve packaging
Decrease the total cost of materials while keeping the selling price of the
Classification of Businesses
Businesses can be put into three sectors:
manufacturer
Mixed Economy
Has both a private sector and a public sector.
make their own decisions on what and how to produce. The main
service to customers.
sector.
Privatisation may occur as the private sector is more efficient and
competitive and will be able to make good quality goods, leading to higher
profits.
But private sector does not have social objectives, making their products
unaffordable.
Characteristics of entrepreneurs:
o Hard working
o Risk Takers
o Creative
o Effective Communicators
o Optimistic
o Self-confident
o Innovative
o Independent.
Advantages Disadvantages
Independent, able to
entrepreneurs will have to put their own
choose how to use time
money into the business.
and money
Advantages Disadvantages
Able to make use of Lost income from not being employee for
personal interests and skills another business (Opportunity cost)
Investors
Government
Competitors
Workers
Bank
Business Plans
A business plan contains business objectives, important details about the
o It helps gain finance. banks will ask for a business plan before
start-ups:
universities
Business Size
There are several different measurements of business size and they all
have limitations:
Measurements Limitations
The total value of capital (money) some companies may use cheap
invested into the business (capital labor giving high output with low-
employed) cost equipment
No way of measuring the size is considered correct as each method gives
different answers. Businesses choose the method they think is the best.
o Higher profits
o External Growth
External Growth is when the business takes over or merges with another
business.
and backwards)
company
successful
landlords, etc.
finance
Sole Trader
A business owned by just one person. It’s the smallest type of business.
Advantages Disadvantages
Easy to set up, do not require a lot Capital is usually provided by owner,
of money to set up hard to get capital to expand firm
They are their own boss, has the They have unlimited liability
freedom to choose their own (responsible for any debts of the
holidays, work hours, prices, who business, bank can take away
to employ possessions to pay back)
Partnerships
A business in which 2 to 20 people agree to own it. Usually small
legal complications
form a company
Advantages Disadvantages
let known
Private Limited Company (LTD)
An LTD is different from the other because it can sell shares and it is
an incorporated business.
Advantages Disadvantages
sell shares)
Joint Venture
A joint venture is when two or more businesses start a project together
Advantages Disadvantages
Franchise
A franchise is an agreement of a business based upon an existing
brand/business
o Advertising
o Legal advice
o Employee training
o Financial advice
business to fail
Liability – how much the shareholders of a company are liable for the
all the debts of the business (not just their investment) (Sole trader
& partnerships)
Public Sector
The public sector includes every business owned by the government.
Advantages Disadvantages
Business Objectives
Business objectives are aims or targets a business works towards
of products if necessary
share price
customers
Stakeholder objectives
A stakeholder is any person with a direct interest in the performance of a
business
workers)
government, banks)
the business
status/power
For example: customers want cheap products but workers want higher
salaries.