Business Studies - IGCSE

• Needs


  We cannot live without these.
• Wants


  They benefit us but are not necessary to live.
• Scarcity


  Lack of sufficient resources.
• Needs (example)


  Water, food, housing.
• Wants (example)


  Soft drinks, chocolate, furniture.
• Opportunity Cost


  The next best alternative.
• Factors of Production

  Resources needed to produce goods and services.
• Factors of Production (List)

  Land.

  Labour.

  Capital.

  Enterprise.
• Land

  All natural resources.
• Land (examples)

  Coal, oil, gas.
• Labour


  The number of people hired.
• Capital


  Finance and machinery.
• Entrepreneur


  Someone who organises, operates and takes risks in a new business venture.
• Enterprise


  Skill/risk-taking ability of entrepreneurs.
• Added Value


  The difference between selling price and cost of materials.
• How to Add Value

  Increase selling price and reduce cost of materials.
• Justification of Added Value

  The product must be more desirable.
• Sectors of Production

  The three stages a product passes through before reaching the consumer.
• Primary Sector


  Extracts, uses and sells raw materials.
• Secondary Sector


  Manufactures goods using raw materials.
• Tertiary Sector


  Sells products and provides services to consumers.
• Primary Sector (example)


  Woodcutter
• Secondary Sector (example)

  Furniture maker
• Tertiary Sector (example)

  Retailer
• Chain of Production

  A product passes through the primary, secondary and tertiary sectors.
• Specialisation


  When a business concentrates on a particular industry or part of that industry.
• Specialisation (example)


  Ford only makes cars.
• Division of Labour


  Production is divided into different tasks and each worker performers specific tasks.
• Division of Labour (example)

  Ford worker that fits headlights.
• Difference between Specialisation and DoL

  Specialisation is usually on a company-wide level.

  DoL deals with specific tasks.
• Mixed Economy

  Has both a private and public sector.
• Public Sector


  Businesses owned by the government.
• Private Sector


  Businesses owned by private individuals.
• Public Sector (objective)


  To provide needs to the people of a country.
• Private Sector (objective)


  To sell goods/services for profit.
• Privatisation


  Governments sell public sector firms to private individuals.
• Nationalisation


  Governments take control of privately run businesses.
• Entrepreneur (benefits)

  Independence, put ideas into practice, higher income.
• Entrepreneur (disadvantages)

  Risk, loss of capital, lack of knowledge, opportunity cost.
• Characteristics of Successful Entrepreneurs

  Creative, optimistic, independent, innovative.