IGCSE BUSINESS STUDIES

Daw Than Than Soe

What’s your name and your ambition?
Why do you like to choose Business Studies?
WHAT IS IGCSE BUSINESS?
• Its study combines elements of accountancy, finance, marketing,
organizational studies, human resource management, and operations
• The IGCSE Business curriculum is relatively easy to understand.
• Study the course of two years (year 10 & 11)
• concepts ranging from marketing to finance and leadership, and
• It is a great foundation for IB or A-Level Business or Economics
Subject Build Up

• The basics of simple business concepts and applying these to case

studies and business models in class,
• Analyzing certain strategies used in business and the effects these
have.
• Changes to syllabus code Changes to syllabus content
• The syllabus name has been changed
• There is a new syllabus code 0264.
 Assessment objectives
The wording of the assessment objectives have been updated.
The newly worded assessment objectives test the same knowledge and skills as in
the previous syllabus.
• The weightings for the assessment have changed. The weighting of AO2
Application has increased.
The weightings for AO1 Knowledge and understanding, AO3 Analysis and AO4
Evaluation have decreased.
Paper 1
• Each question now has four parts instead of five. The breakdown of marks has
changed.
Paper 2
• All part (a) questions are now applied questions.
• The wording of the Paper 2 marks scheme has changed.
Overall, the marking criteria remains largely the same
A good fit for people who:

• enjoy learning about finance, business and marketing

• enjoy psychology ( guess what- business is all about psychology)
• are good at thinking logically and don't mind memorizing a lot of key
vocabulary and business terms
• are concise writers that can formulate logical, evidence-based
arguments easily
• are good at math
• don't mind theory-heavy content
• are looking to pursue business in the future
Maybe not consider taking Business if you
• dislike theory-heavy content
• dislike math or finances
• are bad at analyzing information or dislike making evaluations based
on evidence
• get bored easily in class
• are not self-motivated to memorize a lot of vocabulary
• are being forced by your parents and would rather take something
else tthat would make more sense for your academic strengths
• prefer taking a more coursework-intensive course
 Assessment objectives
AO1 Knowledge and AO2 Application
understanding • Apply knowledge and
• Demonstrate knowledge and understanding of business
understanding of business concepts, terms and theories to a
concepts, terms and theories. given business.
• Use business terminology
AO3 Analysis AO4 Evaluation
• Select, organise and interpret • Make justified decisions, reach
business data and information in conclusions and make
written, numerical and graphical recommendations based on
forms. • Analyse business evidence.
information.
There are 6 sections in IGCSE Business (CIE)

1) Understanding business activity

2) People in business
3) Marketing
4) Operations management
5) Financial information and financial decisions
6) External influences on business activity
Section 1-Understanding business activity
Section 2- People in business
Section 3- Marketing
Section4- Operations management
Section 5- Financial information and financial decisions
Section 6- External influences on business activity
Section-1) Understanding business activity
• Chapters
1) Business activity
2) Economic sectors
3) Enterprise, business growth and size
4) Types of business organization
5) Business objectives and stakeholder objectives
Business in context
• 1 They produce different types of renewable energy and make
machines that can turn sea water into drinking water.
• 2 Low cost – so affordable to people; easy to carry – so can be used in
places where people are and could help more people; uses less fossil
fuels – less pollution created.
IGCSE Business Studies
1.1.1 The Purpose and Nature of Business Activity
• ‘What makes a successful business?’.
What is Business Activity?
• Business activity is to provide consumers with goods
and services that meet our needs and wants.
• Need- a good or service which is essential for living
(Food and water, shelter, clothes)
• Want- a good or service which people would like to
have and not essential for living ( people’s wants are
unlimited)
( cars, mobiles, luxury house)
Needs or Wants
• Customers or Consumers
• Customers- buy the goods or services
• Consumers- the people who use them
Factors of production
• Resources are needed to make goods and services.
• A business will use a combination of resources produce these goods and services
• The resources are known as factors of production:
• Land- all the natural resources, including renewable and non-renewable, that can
be obtained from the land or sea.
• Labour- the skills and number of people who help provide goods and services
• Capital- the human-made resources and finance that are used to produce goods
and services
• Enterprise- the ability and willingness to take risks to bring together and organize
the other three factors of production to produce goods and services.
 The Four Factors of Production?
(resources)
• CAPITAL – Money, machinery,
• ENTERPRISE – Entrepreneurship( people prepared to
take risk of setting up business)
• LAND – Raw Materials(mineral, ores, fields, oil and forest)
• LABOUR – Workers( the number of people available to
work)
• The resources needed by a business to produce goods
and services.
Do you know who they are?

• Steve Jobs (founder of apple)

• Mark Zuckerberg ( facebook founder)
• Bill Gate (founder of Microsoft corporation)
• Jack Ma (founder of Alibaba group)
Musk is the founder, chairman,
CEO and chief technology
officer of SpaceX, angel
investor, CEO and product
architect of Tesla, Inc., owner,
chairman and CTO
Case study 1.1
• 1 Processes or cooks beans, which it sells to other businesses, but
also provides marketplace for small scale farmers to sell their grain.
• 2 Land – the beans;
• Labour – 66 employees;
• Capital – factory/building where work takes place, machinery which
turns sorghum into flour, ovens which cook the beans, finance to buy
the land and machinery;
• Enterprise – possibly Rose as she is the Managing Director
 Activity 1.4
• 1 Land, labour, capital and enterprise
• 2 Land – natural resources such as wheat for flour, eggs, sugar
cane/beets for sugar or any other ingredient to be used in cakes;
Labour – the number of people available to work for Fatima’s business;
Capital – machinery such as ovens, mixing machinery, equipment and f
inance needed to make cakes;
• Enterprise – Fatima is prepared to take risks to set up her business
 What is Business?
• Business is an organization that produces goods and services.

• Goods – physical products (mobile phone, packet of crisps or a pair of

shoes)
• Services – non-physical products ( banking, car cleaning, health care
and education)
Types of goods and services
• Consumer goods- which are sold to the final consumer (eg- food,
table,..)
• Durable consumer goods- can be use over and over again. (eg-
Television, computer, car,…)
• Non-durable consumer goods- can only be used once. (eg- food and
drink)
• Consumer services- non tangible products. (eg- insurance, banking)
• Capital goods- physical goods such as machinery and delivery
vehicles, used by other businesses to help produce other goods and
services.
What is added value?
• The difference between the selling price and the cost of bought-in
materials
How to improve added-value/ways of added
valued
• Make raw materials into finished good
• Branding
• Packaging
• Add extra feature to product
• Improve customer service
• Value added products are raw agricultural products that have been
modified or enhanced to have a higher market value and/or a longer
shelf life.
• Some examples include fruits made into pies or jams, meats made
into jerky, and tomatoes and peppers made into salsa.
Added Value
• How can I add value to the following?
Activity 1.5
1. Unique design, as adding new features could make the product
stand out against competitors – so people would be willing to pay a
higher price to obtain the phone;
2. branding – so customers perceive the product to be worth more;
good customer service: so customers know that if there is a
problem there is help available and may think it is better value for
money.
Case study 1.2
• 1 Allows the products to be different from competitors – as using only
natural or renewable materials – this can provide a competitive
advantage – so able to charge a higher price.
• 2 Use high-quality materials, use colourful and/or distinctive
packaging, create a brand name for its product, use promotion or
advertising to remind customers that it is a brand that can be trusted
 Opportunity cost
• What is opportunity cost?
• The next best alternative given up by choosing a different option
• When making decisions, the business person will consider what else they could
do with the same resources of factors of production and the value of the option
they do not choose is known as the opportunity cost
• The basic economic problem is that there are not enough resources to make all
the goods and services necessary to meet the needs and unlimited wants of
everyone
• This scarcity of resources means choices must be made because resources used
for on purpose cannot be used for another purpose
• When option is chosen, something will have to be given up doing it.
• Every decision involves making choices.
Opportunity Cost

• Opportunity cost is the next best alternative given up by choosing

another item.
• The benefit that could have been gained from an alternative use of
the same resource.
Example of opportunity cost

• For individual – Holiday or a car?

The individual chooses to buy the holidays, so the car becomes the
opportunity cost.
• For the business – Machine A or Machine B?
The company decides to buy Machine A, so Machine B becomes the
opportunity cost.
• For the government – New road or new school?
The government chooses to build the road, so the school becomes the
opportunity cost.
Business in action
• Less transport links between the North of England and London could
mean more journeys, which could increase congestion and pollution.
Summary
• Business activity is about providing goods and services that meet needs
and wants
• A business will use a combination of resources- the factors of production-
to produce goods and services
• A business try to sell its good at a higher price than the cost of the
materials used to make it. By widening the gap between selling price and
cost of bough-in materials added value will increases
• There are limited resources available to make goods and services, so
choices must be made
• The value of the option given up doing something else is known as the
opportunity cost
Chapter- 1 practice question
• a The next best alternative given up, or forgone, by choosing a different
option [2]. [Total: 2]
• b Land [1], labour [1], capital [1], enterprise [1]; 1 mark each [Total: 4]
• c. Land [1] as she needs natural materials such as wood [1] to make the
products [1];
• labour [1] – as someone will be needed to make products [1] otherwise
there would be no toys to sell [1]; brother who sells the products [1] in
market stall [1];
• capital [1] – as she needs funds to be able to buy the equipment or
resources to make the products [1] such as finance to pay the local supplier
[1];
• enterprise [1] – Maria, as she is taking the risk to set up the business [1]
using all her savings [1]. [Total: 6]
• d. Unique design [1] could make this start up stand out against competitors [1] – so
people willing to pay higher price [1]
• Branding [1] so people perceive the product to be worth more [1]
• Good customer service [1] – to people buying goods from the market stall [1] so they
know that if there is a problem there is help available [1]
• Convenience [1] – produce ready-made sets of toys [1] so customers do not waste time
selecting products [1]
• Evaluation depends on points discussed.
• For example:
Unique design [1] could make this start up stand out against competitors [1]. She could
offer good customer service [1] so if there is a problem with the toys [1]
• customers know that there is help available [1]. A unique design is most important
because people will head to the stall if they cannot buy the products elsewhere [1] so this
could not only increase prices but help attract more customers [1],
whereas good customer service may not matter if the product is not what they want [1].
[Total: 8]
Practice question 2
• a The resources needed to produce goods and services – land, labour,
capital and enterprise [2]. [Total: 2]
• b Ways might include: •
• Unique design [1] could make the pottery stand out against competitors
[1]
• Branding [1] which is helpful when selling to the hotels [1]
• Good customer service [1] so customers know that if there is a problem
there is help available from the 50 employees [1]
• Convenience [1] by producing ready made sets of pottery [1]. [Total: 4]
• c Ways might include:
• Unique design [1] could make the pottery stand out against
competitors [1] – so people are willing to pay a higher price [1]
• Branding [1] so people perceive the product to be worth more [1]
• Good customer service [1] – to the hotels so customers know that if
there is a problem there is help available from the 50 employees [1], so
they may think what is being sold is better value for money [1]
• Convenience [1] – produce ready-made sets of pottery [1] so
customers do not have to waste time selecting products [1]. [Total: 6]
• d Factors might include:
• Land [1] as the business needs raw materials such as clay [1] to make the products [1]
• Labour [1] as the business needs employees such as the 50 skilled workers [1] to make
the products [1]
• Capital [1] as the business needs finance to buy the factory [1] otherwise there is
nowhere to operate [1]; and also need machinery such as the kiln [1] otherwise cannot
properly make the products [1]
• Enterprise [1] – someone must take the risk to start the business [1]
Evaluation depends on points discussed.
For example,
Land [1]: as we need raw materials such as clay [1] to make the products [1].
Another factor is enterprise [1]: someone must take the risk to start the business [1].
I think enterprise is more important because without the enterprise, there is no need to
worry about buying land, because there is no business [1]. [Total: 8]
 Work book (Activity 1.1)
• 1 Two needs might include:
• Clothing to keep a person warm.
• Clothing to protect a person when they are skiing.
• 2 The two wants are:
• People who buy ski clothing such as a ski jacket for use when they are skiing.
• People who buy ski clothing for general leisure use.
• 3 Two reasons for Creations’ decrease in sales:
• The country’s economy could be in recession which leads to falling
household incomes and this leaves consumers with less money to buy things
they want (rather than things they need) such as Creations’ skiwear
products and leads to a fall in its sales.
• There could be a new competitor in the skiwear market that Creations’
customers are attracted to as this new competitor could be satisfying more
of the customers wants, and this leads to a fall in its sales for the public
limited company.
Evaluation awarded for a justified decision as to the most important reason
why Creation’s sales have decreased.
Activity 1.2
Activity 1.3
1 Opportunity cost is the next best alternative given up by choosing a
different option.
• 2 The labour resource Faster Gym use is reception staff and trainers in the
gym.
• The capital resource is the building that houses the gym and gym
equipment.
• 3 Two reasons Faster Gym’s membership might have grown by 10% each
year:
• The services offered by the gym have improved, with new classes and
equipment that attract new users.
• Changes in consumer preferences in society whereby more people want to
be gym members. This could be people being more concerned about their
health and fitness
• 4. These are some reasons why Faster Gym should open a new gym:
• There is demand for the new gym as new memberships have been growing by
10% each year, which could increase the business revenues.
• The new gym could help to improve the competitiveness of the business
against other gyms in the local area.
The new gym would be more accessible to users in the market who live near the
new location, which would lead to an increase in potential customers.
• The new gym could also spread Faster Gym’s risk across different locations,
which would increase the security of the business.
However, the new gym costs $1.5 million and these are funds that could be used
to improve existing gym facilities.
Evaluation awarded for a justified decision as to whether the advantages to
Faster Gym of opening a new gym are greater than the disadvantages.