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O Level Business Studies Notes PDF
O Level Business Studies Notes PDF
Features:
Sufficient for excelling at both Paper 1 and Paper 2.
Complete course outline, paper pattern with concerned percentages
Concise yet comprehensive enough to be used as a quick revision guide.
Important topics discussed in greater detail to cater syllabus requirements.
Author:
Shahraiz Chishti
Learning Alliance, Lahore Alma, G.H.A
GREEN HALL
For Books Order: 0336-531-4141
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in
any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written
permission of the Publisher.
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Preface
The book has been written for students of IGCSE/ O levels Business Studies. The
book covers the whole syllabus and is written in a concise manner. The book can be
used as a primary text for covering the syllabus and at the same time can be used as
revision text as it is written in a concise manner.
The author has been a renowned teacher of O/A Levels Business, Commerce and
Social Sciences. He has not only been a teacher but a debates coach as well. He has
coached parliamentary debates and Model United Nations to multiple schools and
was also the Co-Coach for the Pakistan team that went to the World Schools
debating championship held at Stuttgart Germany. In his university he himself was
an excellent public speaker who represented Pakistan in multiple competitions held
in Germany, Malaysia, India, Macau, Thailand and Philippines.
1
CONTENTS
CONTENTS .................................................................................................................... 1
ACKNOWLEDGEMENTS ............................................................................................... 6
Syllabus ......................................................................................................................... 6
Paper Pattern................................................................................................................. 7
Ch: 1 & 2 Business Activity and Types of Businesses............................................... 9
Needs ...............................................................................................................................9
Wants ...............................................................................................................................9
Factors of productions:......................................................................................................9
The economic problem:.....................................................................................................9
Opportunity cost: ...............................................................................................................9
Specialization ....................................................................................................................9
Goods vs. Services .........................................................................................................10
Private sector activities ...................................................................................................10
Public ownership .............................................................................................................10
Privatization: ...................................................................................................................10
Ch: 3 Enterprise, Business Growth and Sales .......................................................... 12
Enterprise and Entrepreneurship Entrepreneur ...............................................................12
Characteristic of successful entrepreneurs......................................................................12
Why should governments support business startups ......................................................12
Value of sales .................................................................................................................13
Which method should you choose?.................................................................................13
Ch: 4 Types of Business Organizations .................................................................... 16
Private Sector .................................................................................................................16
Partnership .....................................................................................................................16
Private Limited Companies .............................................................................................17
Public Limited Companies ...............................................................................................17
Co-operatives .................................................................................................................18
Close Corporations: ........................................................................................................18
Joint ventures .................................................................................................................19
Franchising .....................................................................................................................19
Public Sector ...................................................................................................................19
Municipal enterprises ......................................................................................................20
Ch: 5 Business Objectives and Stakeholders Objectives ........................................ 22
Business objectives ........................................................................................................22
Stakeholder Groups ........................................................................................................23
Ch: 6 Motivation Theories .......................................................................................... 25
2
Motivation .......................................................................................................................25
Motivation Theories .........................................................................................................25
F.W. Taylor .....................................................................................................................25
Maslow ...........................................................................................................................25
Herzberg .........................................................................................................................26
McGregor ........................................................................................................................26
Why do people work?......................................................................................................26
Wages ............................................................................................................................27
Motivating factors - non-financial motivators ...................................................................28
Job satisfaction: ..............................................................................................................28
Job rotation: ....................................................................................................................28
Job enlargement: ............................................................................................................28
Job enrichment: ..............................................................................................................29
Autonomous work groups or team-working: ....................................................................29
Leadership ......................................................................................................................29
Formal and informal groups ............................................................................................30
Formal groups in business ..............................................................................................30
Informal groups in business ............................................................................................30
Ch: 7 Organizational Structure .................................................................................. 32
Delegation.......................................................................................................................32
Functional departments...................................................................................................34
Decentralisation ..............................................................................................................35
Role of Managers............................................................................................................35
Trade Unions ..................................................................................................................35
Ch: 8 Recruitment, Training and Human Resources ................................................ 38
Recruitment and selection ...............................................................................................38
Job Analysis and Description: .........................................................................................38
Job specification .............................................................................................................39
Advertising the vacancy ..................................................................................................39
Internal recruitment .........................................................................................................39
External recruitment ........................................................................................................39
Job advertisement...........................................................................................................40
Applications forms and CVs/résumés..............................................................................40
Interviews........................................................................................................................40
Rejecting unsuccessful applicants...................................................................................41
Workforce planning .........................................................................................................42
Dismissal and Redundancy .............................................................................................42
Ch: 9 Communication in Business ............................................................................ 44
3
Goodwill ..........................................................................................................................94
Ch: 25 Ratio Analysis ................................................................................................. 96
Profitability ......................................................................................................................96
Liquidity...........................................................................................................................96
Ch: 26 Government and Economic Influences on Business ................................... 98
Government economic objectives: ..................................................................................98
Low inflation: ...................................................................................................................98
Low levels of unemployment: ..........................................................................................98
Economic growth ............................................................................................................99
Balance of payments.......................................................................................................99
Fiscal Policy .................................................................................................................. 103
Monetary policy ............................................................................................................. 104
Ch: 27 Environment and Ethics ............................................................................... 106
Externalities .................................................................................................................. 106
Ch: 28 Business in the International Economy....................................................... 109
Globalization ................................................................................................................. 109
Points for globalization .................................................................................................. 109
Multinational company .................................................................................................. 109
References ................................................................................................................ 111
6
ACKNOWLEDGEMENTS
Knowledge is not created it is discovered. In this journey of discovery many individuals
guide and help you. Therefore I would like to thank my family and friends who have
provided constant support.
My teachers and colleagues have greatly augmented my skills
skills as a person and a writer
and I would like to show my gratitude by thanking them.
Syllabus
7
Paper Pattern
O-Level Business Studies Notes 8 Business activity and types of businesses
O-LEVEL –
–
Needs
Wants
– Factors of productions
Business –
–
The economic problem
Opportunity cost
– Specialization
Studies – Goods vs. Services
– Private sector activities
– Public ownership
– Privatization
Business
Activity and
Types of
Businesses
Shahraiz Chishti
MBA
Wants
– Non-essential goods and services that people would like to have.
– Interests & Tastes
Factors of productions:
There are four factors of production (Inputs for a business).
Land:
All natural resources provided for the business plus the physical land the business is located on.
Either rent is paid on land or land is purchased.
Labor:
The people that work for the business on a wage or salary.
Capital:
All investment and finance for machinery.
Enterprise:
All people that have skills & have risk-taking ability and combine other factors of production to
produce good or service. They benefit if a profit is made by the business.
Opportunity cost:
The next best alternative forgone.
The aim of a business in the private sector is to survive by making a profit. This may be a sole
trader working alone, like a newsagent, or thousands of shareholders in a large Public Limited
Company.
Businesses gain a larger market-share [percentage of your company sales / industry sales] by
increasing the sales of their products against competitors. This may involve reducing prices.
Customer loyalty and repeat sales are essential. Customers returning to buy the product from
the same business], businesses need to be reliable and provide a quality service to their
customers.
Specialization
In pre Industrial societies there was no specialization (one person doing one job). Now majority
of businesses use specialization and division of labor.
O-Level Business Studies Notes 10 Business activity and types of businesses
Advantages Disadvantages
Specialized task training Bored workers
Increases efficiency Possible drops in efficiency
Increases output Production stopped due to absence
Save time
Goods vs. Services
Goods (Shampoo, soap, laptops etc.) are tangible and services (hair dressing) are intangible.
Added value: Price – cost of materials.
Can be increased by a price increase which leads to less customers buying the product or by a
decrease in cost of materials which can decrease quality.
Private sector activities
The activities of industry can be divided into stages - primary, secondary and tertiary production.
These stages form the chain of production and provide consumers with the finished goods.
Primary production
This involves acquiring raw materials. For example, metals and coal have to be mined; oil drilled
from the ground; rubber tapped from trees; foodstuffs farmed, and fish trawled. This is
sometimes known as extractive production.
Secondary production
Is the manufacturing and assembly process. This involves converting raw materials into
components, assembling the product, e.g. building houses, bridges and roads.
Tertiary production
This refers to the commercial services that support the production and distribution process, e.g.
transport, advertising, warehousing and retail, insurance, teaching and health care.
Public ownership
Business that are owned by the government are public sector businesses. Examples of this in
Pakistan are WAPDA.
Advantages Disadvantages
Government provides services that may be There is no profit motive so efficiency
loss-making services as the main aim of the may fall.
government is to provide a service rather than
make a profit.
Privatization:
When a government owned business is sold of to the private sector. The benefit of this is that
efficiency may increase but usually at the cost of job losses and closing of loss making services
that may have been essential.
There are three types of economies
Command, free market and mixed economy.