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Complete

Business Studies
for Cambridge IGCSE & O Level
Brian Titley
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for the modern Business Studies classroom
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for your students
Current teaching the most modern data
and statistics
Global outlook international case studies
your students can relate to
Flexible approach with free student CD-ROM
Focus on revision support is integrated
for complete preparation
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can focus on the subject matter

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Complet
coverage e
of t
most rec he
ent
Cambrid
ge IGCSE
and O Le
vel
syllabus
es

A comprehensive and thorough approach which

will challenge your students and get the best results

1.1.1

1.1 Business activity

1.1.1 Business activity as a means of adding value

and meeting customer needs

1.1.2 Classification of local and national firms into

primary, secondary and tertiary sectors

1.1.3 Business growth and measurement of size

1.1.4 Key features of a national economy
1.2 The organization

1.2.1 Business objectives and their importance

1.2.2 Stakeholders and their differing objectives

1.2.3 Aims of private and public sector enterprises

1.3 The changing business
environment

1.3.1 Government influence over decision making

by using economic policy measures
1.3.2 Impact of technology on business

1.3.3 Business reaction to market changes

1.4 Economic environment

Fundamental
ideas are outlined
at the start of each
chapter, preparing
students for the
unit ahead

Resources, or factors of production, are used to make goods and services.

Resources are scarce. There are not enough to produce everything we need
and want. We must choose between alternative uses of resources.
Resources include land (natural resources), labour (human effort), capital
(man-made resources) and enterprise (the knowledge and skills people need
to own and run business organizations).
Resources are inputs to productive activity and products (goods and
services) are outputs from productive activity.
Business activity adds value to resources by using them to produce goods
and services that are more desirable to consumers.
Firms owned by private individuals are private enterprises. Most firms aim
to make a profit but some, like charities, engage in non-profit making
activities.
Some business organizations are owned and controlled by government
authorities. These are public enterprises. Many provide public services.

Consumers people and organizations

who are willing and able to buy goods
and services.

Opportunity cost the benefit lost by

not consuming or producing the next best
alternative product.

1.4.5 Exchange rates and how changes in them

affect business

Consumption the using up of goods

and services to satisfy consumer needs
and wants.

Wages and salaries payments made by

firms to employees to use their labour for
productive activity.

Suggestions for coursework

Examination questions

Production using resources to make

goods and services to satisfy consumer
needs and wants.

Customers consumers who buy goods

or services from business organizations.

1.4.3 Problems entering new markets abroad

1.4.4 Competition and business

Factors of production productive

resources used to make goods and
services.
Firms organizations that produce goods
and services.

vi

Key PoINTs

Business involves organizing and combining resources into firms to produce

goods and services to satisfy needs and wants of consumers.

1.4.1 Mixed and market economies

1.4.2 International trade (access to markets and
tariffs)

Assessment exercises

Business activity as a means of adding

value and meeting customer needs

Entrepreneur a person with the knowhow and willingness to take the risks and
decisions necessary to set up and run a
business.

Modern and
highly visual design makes
the content more accessible
to students, increasing
motivation and enthusiasm

Business buzzwords

Tricky vocabulary is
clearly defined in advance,
helping language-learners to
focus on the subject material

Revenue proceeds from the sale of

goods and services to customers.
Profit a surplus of revenue over costs of
production.
Value added the difference between
the price of a product and the cost of
the natural and man-made materials,
components and resources used to make it.

Business and the environment in which it operates

Help stu
de
learn ho nts
w they
learn b
More exe est.
rcises an
d
revision
notes are
included
on a free
CD-ROM
for extra
flexibilit
y.

Important
keywords are
highlighted,
with a glossary
to ensure
concepts
are fully
understood

Business activity

A truly global approach

filled with international
case studies and
examples makes the
book relevant to students
internationally
ACTIVITY 2.1

Businesses are organized according to how they are

owned, controlled and financed

From the article identify and list the main features, advantages and disadvantages of a sole trader business.

From the last section you will recall there are a number of different types of
business organization in the private sector of an economy. They vary
according to:

who owns
the business

how it is
controlled

how it is
financed

the owners
liability to repay
business debts.

The sole trader

The sole trader is the oldest and most popular type of
business organization
A sole trader or sole proprietership is a business organization
owned and contolled by one person. They may employ other
people to work in the business, but it will only ever have one
owner.

Most businesses are sole traders. It is the oldest and most common
form of business organization in the world. Many small businesses
run local shops or provide personal services such as hairdressing,
plumbing, building and vehicle repairs. Many of todays largest
corporations started out as sole traders many years ago.
Most sole traders finance their business from their personal
savings, borrowing from friends and family or from a bank loan.
However, banks are often unwilling to lend to sole traders because
they are considered risky enterprises. They can face considerable
competition from larger businesses and other small businesses, and many close
down within their first few years of operation.
Modern technology has reduced the cost of starting up a new
small business. Many sole traders can operate their businesses
from home thanks to the Internet and mobile communications
which allows them to keep in contact with customers and
suppliers. However, in the event of business failure the sole trader will be
liable for all the business debts.

Case studies depict

scenarios students
can relate to, bridging
the gap between the
theory and the real
world

Understanding business organization

In this section we will look at each type of business organization in these

terms.

ion
Make revis e.
ctiv
more effe are
ips
Revision t long
,a
d
integrate
l answers
with mode trate
to demons y
lit
exam-qua
.
e
s
n
respo s

Business structure, organization and control

Pop in for something

Bitesize
Customers of Bitesize, the new sandwich and coffee bar in
the town, can look forward to good food and a personal,
friendly service, according to owner Saabira Rahman.
She was busy preparing fresh sandwiches, snacks and lots
of delicious pastries for local shoppers and office workers
when we popped in to sample her menu. We asked her
why she had decided to open her own business.
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.
By running
ingredients,
yub otmy
sgnown
ivas business
reh lla esIuam
ot densured
ah aribaaajob
S daetsnI Monthly
emosbills
rof for
deyo
lpmenu neeelectricity
b dah tub and
gnikmy
ooc yojne I
but I get
beermy
phone are also high, she said.
.seto
sim
p poown
hs rboss
eh noand
tisokeep
ped eall
ht the
yapprofits
dna tneI mpiumobile
qe
.deInmust
ialpxeearn
aribat
aaS ,emit
make. Not
that
ym
dnaI have
yticirmade
tcele ,sany
tneiyet,
dergshe
ni rolaughed.
f sllib ylhItnoMleast $400boinj arevenue
derusneach
e ma month
I ssenisjust
ub nto
wobreak
ym gneven.
innur yB
have to twork
run
offdnbut
fiorpaefew
ht lladays
peek
a ssIowouldnt
b nwo ymmake
eb ot teg I tub
a nraevery
e tsumhour
I .dIiacan
s ehto
s ,h
gihthe
oslbusiness,
a era enohp eliboId
m love Itosttake
whether .it
ingredients,
cooking
neisvebuying
kaerb o
t tsuj htnom
hcae euand
never ni 004$ tsaany
el money.
I .dehgual ehs ,tey yna edam evah I taht toN .ekam
preparing efood,
kam serving,
tndluowcleaning
I tub ffoand
syadeven
wefkeeping
a ekat ot evol dIThen of,sscourse,
enisub if
ehthe
t nubusiness
r ot nac Ifails
ruoIhwill
yrevhave
e kroto
w ot evah
the accounts. If I had the time and money I would
.yenom yrepay
na any business
dnadebts
gnikoeven
oc ,stifneitidmeans
ergni gselling
niyub smy
i ti rehtehw
hire some
ot employees
evah lliw I to
sliahelp
f sseme!
nisub eht fi ,esruoc fo nehTpossessions
gnito
pedo
ek nso!
eveBut
dnaI plan
gninato
elcmake
,gnivthe
res ,business
doof gniraperp
Starting
your
own
business
can
be
an
expensive
a
success
and
so
far,
so
good!
ym gnilles snaem ti fi neve stbed ssenisub yna yaper
dluow I yenom dna emit eht dah I fI .stnuocca eht
and risky
ssebusiness
nisub ehtasekSaabira
am ot nfound
alp I tuout.
B !oBanks
s od ot snoissessopBitesize can also provide!sandwiches
em pleh ot sand
eeyopastries
lpme emos erih
wouldnt lend me any money. They
!doosaid
g os there
,raf oswas
dnatoo
sseccusfor
a business
evifunctions
snepxe naand
eb nparties.
ac ssenisub nwo ruoy gnitratS
much competition
sknaB .tuo dnuof aribaaS sa ssenisub yksir dna
seirtsap dnand
a sehmy
ciwbusiness
dnas edicould
vorp obe
slaatnarisk.
c ezisetiB
.seitrap dna snoitcnuf ssenisub rof

oot saw ereht dias yehT .yenom yna em dnel tndluow

.ksir ta eb dluoc ssenisub ym dna noititepmoc hcum

Advantages of a sole trader

Disadvantages of a sole trader

+ Businesses operating as sole traders

are easy to set up. There are usually
few legal requirements involved in
business registration.
+ These businesses can often be set up
with little capital.
+ The owner is his or her own boss and
has full control over the business.
+ The owner receives all profits after
tax and therefore has an incentive to
work hard.
+ Personal contact with customers can
increase customers loyalty.
+ Separate accounts are not required
for the business.

- The owner has full responsibility

for running the business from day
to day. This may mean working
very long hours and going without
holidays.
- The business may lose revenues and
profits if the owner is off sick or
on holiday and cannot manage the
business.
- The owner has unlimited liability to
repay any business debts.
- Sole traders often lack capital to buy
new equipment or to expand.
- Sole traders often lack all the skills
they need to run their businesses
successfully.
Ownership and internal organization

Concepts are fully explored and broken

down into manageable segments which are easier for students to absorb

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K37673

1.1 Business activity

Business and the

environment in
which it operates