You are on page 1of 4

www.fetsystem.com [IGCSE BUSINESS STUDIES SECTION 1.

1 REVISION NOTES

Purpose of business activity


To make profit
To grow
To satisfy the needs and wants of people
To provide employment
To survive

Concept of adding value


Value added is the difference between the sale price of a product and the cost of materials
Adding value is to make a product or service more attractive for the consumer so that he/she is ready to
pay a higher price.
Examples:
 Decoration
 Packing
 Extra features

Needs, wants and scarcity


Need is a good or service essential for survival
Want is a good or service not essential for survival
Scarcity is when there are finite resources and infinite needs and wants

Objectives of non-profit organization


To provide services to members
Not to distribute profit among members
Providing employment
Operating for the welfare of members
Examples:
 Schools
 Hospitals

Objectives of private enterprise


To earn high profit
To maximize the wealth of shareholders
Growth
To fulfill needs and wants of the people
Examples:
 Multinational companies
 Big corporations

Objectives of public enterprise


To create employment
To operate even if no profit is generated
To provide certain products or services such as:
Electricity
Transport

Page
www.fetsystem.com [IGCSE BUSINESS STUDIES SECTION 1.1 REVISION NOTES

3 sectors in Business activity


Primary sector
Secondary sector
Tertiary sector

Primary sector
Primary sector involves changing natural resources into primary products
The primary sector of the economy extracts or harvests products from the earth
Examples:
 Fishing, Mining
 Farming, Forestry

Secondary sector
Secondary sector converts the primary goods into manufactured goods
The secondary sector of the economy manufactures finished goods.
Examples:
 Construction
 Textile production
 Processing

Tertiary sector
Tertiary sector is the service industry.
This sector makes the lives of people much easier by providing services
Examples:
 Banking
 Hair cutting
 Teaching

Different methods of measuring size of business units


Number of employees
Capital employed
Profit
Value of output and sales

Problems associated with each method

Number of employees
A capital intensive firm will employ less employees, but achieve high output and sales because the work
will be done by the machines
Capital employed
A labor intensive firm might not invest in machinery and employ more employees but still achieve high
output and sales

Page
www.fetsystem.com [IGCSE BUSINESS STUDIES SECTION 1.1 REVISION NOTES

Problems associated with each method

Profit
Very large firms do not make high profits because of various factors which include (government policies,
bad governance)
Value of output and sales
A firm might be selling expensive products which achieves high output and sales

Different ways by which business can grow


Internal growth
Growth achieved by retained profits
External growth
Mergers
Horizontal merger
Vertical merger
Conglomerate merger

Why businesses want to grow


Growth
Higher profits
Economies of scale
Respect in the business community
Fulfill shareholders desires

Problems connected with growth


Administrative problems
More capital needed
Loss of control
Slow decision making

Key features of own economy


Key points to be mentioned:
Pollution and global warming
Sustainable development
Impact on business upon depletion of natural resources
Structure and importance of different sectors
Illustrate the changes

Page
www.fetsystem.com [IGCSE BUSINESS STUDIES SECTION 1.1 REVISION NOTES

THESE ARE THE REVISION NOTES FOR ONE OF THE SECTIONS OF IGCSE
BUSINESS STUDIES SYLLABUS FOR THE REMAINING NOTES LOG ON TO

www.fetsystem.com
 REVISION NOTES
 QUESTION BANKS
 FORUMS
 QUIZZES
 CHAT ROOMS
 MOCK EXAMS
 DISCUSSION BOARD

IGCSE, O LEVEL, A LEVEL, CAT, ACCA, IELTS, HIGH


SCHOOL SUBJECTS AND COLLEGE SUBJECTS
 NOC GRANTED BY THE UNIVERSITY OF CAMBRIDGE, ACCA AND IELTS
 USERS IN 190 COUNTRIES
 ALL RESOURCES ARE ORIGNAL WORK PRODUCED BY A TEAM OF PROFESSIONAL
EDUCATORS
 NO SIGN UP NO FEES EVERYTHING IS ABSOLUTELY FREE!

www.fetsystem.com

Page

You might also like