Cambridge IGCSE® and O Level Business Studies Fifth Edition PDF

Dynamic Learning is an online subscription solution that supports teachers and students with high quality content and unique tools. Dynamic Learning incorporates elements that all work together to give you the ultimate classroom and homework resource. Online Teacher’s Guides include a host of info...

Dynamic Learning is an online subscription solution that supports teachers and students with high quality content and unique tools. Dynamic Learning incorporates elements that all work together to give you the ultimate classroom and homework resource. Online Teacher’s Guides include a host of informative and practical teaching resources, such as: Lesson planning support via editable schemes of work Teaching materials, for example worksheets or glossaries Answers, extra teaching notes and/or exam-style questions Cambridge IGCSE® and O Level Business Studies Fifth edition is available as a Whiteboard eTextbook which is an online interactive version of the printed textbook that enables teachers to: Display interactive pages to their class Add notes and highlight areas Add double-page spreads into lesson plans Additionally the Student eTextbook of Cambridge IGCSE® and O Level Business Studies Fifth edition is a downloadable version of the printed textbook that teachers can assign to students so they can: Download and view on any device or browser Add, edit and synchronise notes across two devices Access their personal copy on the move To find out more and sign up for free trials visit: www.hoddereducation.com/dynamiclearning  Cambridge IGCSE® and O Level Business Studies Fifth edition Karen Borrington Peter Stimpson i 421233_FM_IGCSE_O_Lev_BS_5e_i-viii.indd 1 16/02/18 1:59 PM All exam-style questions and sample answers in this title were written by the author(s). In examinations, the way marks are awarded may be different. All trademarks and brands mentioned in this book are protected by their respective trademarks and are acknowledged. Every effort has been made to trace all copyright holders, but if any have been inadvertently overlooked the publishers will be pleased to make the necessary arrangements at the first opportunity. Although every effort has been made to ensure that website addresses are correct at time of going to press, Hodder Education cannot be held responsible for the content of any website mentioned in this book. It is sometimes possible to find a relocated web page by typing in the address of the home page for a website in the URL window of your browser. Hachette UK’s policy is to use papers that are natural, renewable and recyclable products and made from wood grown in sustainable forests. The logging and manufacturing processes are expected to conform to the environmental regulations of the country of origin. Orders: please contact Bookpoint Ltd, 130 Park Drive, Milton Park, Abingdon, Oxon OX14 4SE. Telephone: (44) 01235 827720. Fax: (44) 01235 400401. Email [email protected] Lines are open from 9 a.m. to 5 p.m., Monday to Saturday, with a 24-hour message answering service. You can also order through our website: www.hoddereducation.com IGCSE® is a registered trademark © Karen Borrington and Peter Stimpson 2018 First published in 1999 by Hodder Education An Hachette UK Company Carmelite House, 50 Victoria Embankment, London EC4Y 0DZ Second edition published 2002 Third edition published 2006 Fourth edition published 2013 This fifth edition published 2018 Impression number 5 4 3 2 1 Year 2022 2021 2020 2019 2018 All rights reserved. Apart from any use permitted under UK copyright law, no part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, or held within any information storage and retrieval system, without permission in writing from the publisher or under licence from the Copyright Licensing Agency Limited. Further details of such licences (for reprographic reproduction) may be obtained from the Copyright Licensing Agency Limited, www.cla.co.uk. Cover photo © Shutterstock/Lesia_G Third edition typeset in ITC Officina Sans 11.5/13 pts. by Aptara Inc. Illustrations by Oxford Designers and Illustrators Ltd and Aptara Inc. Printed and bound in Slovenia A catalogue record for this title is available from the British Library ISBN 978 1 5104 2123 3 Contents Introduction iv How to use this book iv Exam preparation and technique vi SECTION 1 Understanding business activity 1 Business activity 2 2 Classification of businesses 11 3 Enterprise, business growth and size 19 4 Types of business organisation 35 5 Business objectives and stakeholder objectives 51 Case study 61 SECTION 2 People in business 6 Motivating employees 63 7 Organisation and management 76 8 Recruitment, selection and training of employees 92 9 Internal and external communication 114 Case study 129 SECTION 3 Marketing 10 Marketing, competition and the customer 132 11 Market research 143 12 The marketing mix: product 158 13 The marketing mix: price 170 14 The marketing mix: place 178 15 The marketing mix: promotion 185 16 Technology and the marketing mix 197 17 Marketing strategy 203 Case study 212 SECTION 4 Operations management 18 Production of goods and services 214 19 Costs, scale of production and break-even analysis 228 20 Achieving quality production 241 21 Location decisions 248 Case study 262 SECTION 5 Financial information and financial decisions 22 Business finance: needs and sources 265 23 Cash flow forecasting and working capital 281 24 Income statements 293 25 Statement of financial position 303 26 Analysis of accounts 311 Case study 323 SECTION 6 External influences on business issues 27 Economic issues 326 28 Environmental and ethical issues 340 29 Business and the international economy 351 Case study 362 Index 364 Acknowledgements 368 Introduction This book has been written for all students of Cambridge IGCSE® and O Level Business Studies. It carefully and precisely follows the syllabus from Cambridge Assessment International Education. It provides the detail and guidance that are needed to support you throughout the course and help you to prepare for your examinations. It will also prove to be of great use to anyone who wants to learn more about the key concepts of business. This book will prove to be valuable to students of Business Studies whether you are: » studying the subject for the first time through your school or college and need a comprehensive and clearly written textbook » revising the subject before your examinations and need a study guide to help you with key definitions, techniques and examination advice » learning the subject on your own through distance or open learning and need a complete programme of supportive questions, activities and suggested answers to these. Building on the successful formula of the previous four editions, this fifth edition updates all existing chapters including removing material which is no longer in the syllabus and adds new subject material with additional chapters and new features. How to use this book To make your study of Business Studies as rewarding and successful as possible, this Cambridge International endorsed textbook offers the following important features: Learning objectives Each chapter starts with an outline of the subject material to be covered and ends with a checklist to confirm what you should have learned and understood. Organisation The content is in the same order as the syllabus: chapter titles and chapter section headings match those of the Cambridge IGCSE and O Level Business Studies syllabuses. Approach The subject material is written in an informative yet lively way that allows for complete understanding of each topic to be gained.   ity 1 Business activ Government Business Individual Machine B New road or new school? International business in Definitions to learn focus Machine A or Definitions of the key words you need to Holiday or car? Case studies of businesses from know are given, with terms highlighted in the text. t chooses The governmen so the around the world and discussion points decides to build the road the The company A, so chooses to to buy Machine es the school becom es The individual so the car buy the holida y, Machine B becom opportunity cost opportunity opportunity cost becomes the cost ▲ Examples of opportunity cost to help cement understanding. problem The economic REVIS ION SUMMARY Capital Enterprise 7 Labour Land How technology influences the marketing mix Limited resour ces Organisation International business in focus an d managemen Yeo’s t EM ECONOMIC PROBL This chapter will explain: H how to draw, inter H simple hierarchic pret and understand simp al structures le organisatio Unlimited wants of command : span of contr nal charts ol, levels of hiera H the roles rchy, chain and respo other employees nsibilities of directors, mana in an organisatio gers, Scarcity H the role and functions n, and inter-relati supervisors and coordinating, of manageme onships betw H the impo commanding nt – and controlling plann ing, organising een them ry Yeo’s is a food business which was set up in 1900 in China, originally as a rtance of deleg , Choice is necessa ation small shop making soy sauce. It moved to Singapore in the 1930s and started H features of the main leade ; trust versus control laissez-faire rship styles – unity cost expanding. The business now makes a variety of food and cooking products autocratic, demo Leads to opport H how to recom cratic and including curry sauces, pastes, noodles and drinks. Today the company sells mend and justif across the world including Singapore, Malaysia, Indonesia, Hong Kong, China, circumstance y an appropriat e leadership H what a trade style in a given Canada and the USA. union is and the effects of empl The Directors of Yeo’s want to expand sales in the European market. It oyees being union members. 4 conducted ‘sampling tours’ throughout major UK, French and German What is organi Chinese supermarkets to raise awareness of its products. The company did Definitions to sational struct not introduce the full range of its products into the European market. Organisation learn al struct Organisational responsibilities structure refers to the levels of ure? Discussion points refers to the levels ure within an organ mana management of form of an organ isation. This struct gement and division of and division isational chart ure is often prese l Why do you think Yeo’s conducted ‘sampling tours’ across European countries? of responsibiliti with several level nted in the es within an s of hierarchy. organisation. Why did Yeo’s not introduce the full range of its products into the European Case study l Organisation market? al chart refers to a diagram Revision summary that outlines l What possible problems do you think Yeo’s might have had in entering the the internal manag The Cosy Corne structure. ement r Convenience European market? trader busine Store is owned ss. Bill has no Hierarchy refers to the works alone in employees. He and managed by Bill Murra the works a long y. It is a sole levels of manag ement in busy convenience business he has to do all day – 12 hours , usually. As he any organisation store. Here is the jobs which from the a list of just six are involved in highest to the Ordering new of his tasks: running a lowest. A stock Serving custom Revision summaries in the form of level of hierar ers chy refers Going to the to managers/su bank to pay in pervisors/ shop is closed cash – he does other employees this on Wednesday Revision checklist are given a simila who r Arranging shelf displa ys afternoons when the of responsibility level Keeping all helpful ‘spider diagrams’ that highlight in an the paperwork In this chapter you have learned: organisation. time up to date, for example, to make Contacting sure suppliers the local newsp are paid on ✔ how businesses can use the internet and social media sites for promotion aper to arran ge an advertisem about e-commerce and its advantages and disadvantages ent for the shop. key topics and issues. ✔ ✔ about the threats and opportunities e-commerce offers to businesses and consumers. Activity 7.1 Read the case study to run Cosy Corne above. List three other r efficiently. tasks that you think Bill has to do in order Revision checklist 76 201 This checklist lists the key concepts and topics you have covered in the chapter Activity and the key points you’ll need to know Numerous activities support your for an exam. learning and check your progress at each important stage of every chapter. Study tips Key info Tips to help you make key points when Key info boxes provide further answering questions. explanation of the key concepts you need to know with real world examples. 7 Organis atiOn and ma nageme nt s activit y swer and 1 Busines : Short an Organis e questions Understanding business activity: end-of-section case study ation ch arts Exam-styl se She wants to Advantag on data resp ngs. » The cha es of an organisa Understanding business activity: ness using her savi hes designe r but her own busi She is a very good clot offered to help tion cha s to start up rt employee shows how eve rt end-of-section case study en. have 1 Gowri plan ion clothes for wom together. Two frien she can cut lengths ds with me s are aware of rybody is linked produce fash like stitching clothes ic cutter – k at A new business but which one? erial or fabr Aditi is quic ssa wh Every ges and instru ich communic together in the she does not is an experienced mat very little wastage. a identify individual ctions. can see ation cha nnel is organisat Gowri. Abh fabric for clothes with who the the ir used to ion. All Derek’s job is to repair motorcycles. He works for a large of materia l or. Employee y own reach the motorcycle sales business that sells new and second- ic together her new It sho s can see are accountable position in the m hand motorcycles. Derek’s uncle died earlier this year sewing fabr iness’. Gow ri will need for who the to and organi on that ws organisat the links and rel y should tak who they hav sation. They can and left him $10 000. He has always wanted to work for a Define ‘bus factors of producti have from her e author two Gowri may » Everyo ion. ne is in ationship e ord between ers from. ity over. himself and now he has some money to start his own b Identify costs that a depart different business. He could do this by opening his own business business. opportunity of ment and departme or buying a franchise. two possible own business. ri’s business c Outline to Gow this giv es them nts within Derek is going to choose between opening his own shop decision to start her disadvantage the e and one hes Case st a sense of belong selling motorcycle clothes or buying a franchise from a one advantag ur in making clothes. all of the clot udy ing. big motorcycle clothes retail business. To open his own d Explain of labo will be able to sell motorcycle clothes shop will take a lot of effort to find a using divi sion ri’s business Bill Mu rra you thin k that Gow r answ er. loys thre e Some of y’s business suitable location with the shop fittings needed. Buying a e Do you s. He emp had exp es? Justify d and cake put the openin them manag g ed anded rapidly franchise for a clothes shop will be expensive. However, that it mak He makes breathe bread and cakes, Mohammed Study tips other towhours were len the shop bec. Mo ause Bill re employee the franchise company will help Derek with a lot of the ed own s a bakery. dou gh for e cust ome rs. Make sur compan ns. It becam gthened. Eve s had bee start-up problems such as finding a suitable shop. 2 Mohamm help him mix the cakes, and serv His custome rs Key info e clear ntu spent workers who , bake the bread and of his business is low. the same bread e you can y status to Bill tha ally, Bill dec more time on n app suitabl one of e organi choose the dire (see Chapte t his bus ided to office wo ointed. d tins e’ for a par sat a needed cto r 4). ope rk. Sho nd the worl dough into ‘added valu ‘We can buy ticular ion chart a clear rs of the com A business frie iness needed n four furthe p Appendix 1: Letter to bank manager Children arou more mini ed that the his prices. busine ss. drew up str the cha ucture. After pany. As the nd agreed the adv r antage stores in with are playing than there has calculat n he tries to increase him.