Summary IGCSE Business Studies Mastery: Ace Your Exam with Our Premium Notes!
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Course
Maths, science, business studi
Institution
Fourth Year / 10th Grade
Master your IGCSE Business Studies with our concise and comprehensive notes! Packed with essential concepts and exam-focused content, our notes are your key to acing the exam. Designed to streamline your study process, our short and sweet notes deliver maximum impact in minimal time. Get ready to...
● Business Studies: The study of economics and management.
● Economic Problem:
● Needs: Essential for living (e.g., water, food, shelter).
● Wants: Desires, not essential for survival (e.g., cars, movies).
● Scarcity: Unlimited wants, limited resources.
● Opportunity Cost: The next best alternative given up when a choice is made due to
scarcity.
● Concentrating on tasks individuals or organizations excel in.
● Advantages:
● Increased efficiency.
● Time and energy savings.
● Quick labor training.
● Skill development.
● Disadvantages:
● Monotony for workers.
● Higher labor turnover.
● Over-dependency on specialized workers.
Purpose of Business Activity:
● Businesses use factors of production to create goods and services to satisfy human
wants and needs.
● Businesses address the problem of scarcity by producing and selling desired products.
,Added Value:
● Added Value: The difference between the cost of materials and the selling price of a
product.
● It represents the value added to raw materials by transforming them into finished
products.
● Increasing added value:
● Reducing production costs.
● Raising prices.
● Practical ways to add value:
● Branding.
● Adding special features.
● Providing premium services.
Example of Adding Value to a Jewelry Store:
● Design attractive packaging for jewelry items.
● Create an appealing shop window display.
● Employ well-dressed and knowledgeable shop assistants to enhance customer
experience.
,Finance:
● Definition: Finance refers to the money required in a business for various purposes such
as setting up the business, expanding it, and covering day-to-day running expenses.
Start-up Capital:
● Definition: Initial capital used to buy fixed and current assets before a business starts
trading.
Working Capital:
● Definition: Finance needed to pay day-to-day running expenses.
Capital Expenditure:
● Definition: Money spent on long-term assets like vehicles, machinery, and buildings.
Revenue Expenditure:
● Definition: Money spent on short-term expenses like wages and rent.
Sources of Finance:
Internal Finance:
● Retained Profit:
● Definition: Profits kept in the business after owner payouts, reinvested in
the business.
● Sale of Existing Assets:
● Definition: Selling unused buildings or equipment for funds.
● Sale of Inventories:
● Definition: Selling finished goods or unused inventory components.
● Owner’s Savings:
● Definition: Direct investment from the owner’s savings.
External Finance:
● Issue of Shares:
● Definition: Limited companies selling shares to raise capital.
● Bank Loans:
● Definition: Money borrowed from banks, repaid with interest.
● Debenture Issues:
● Definition: Long-term loan certificates issued by companies, repaid with
interest.
, ● Debt Factoring:
● Definition: Specialist agents collecting debts from debtors for immediate
cash.
● Grants and Subsidies:
● Definition: Funds given by government agencies or external sources
without repayment.
● Micro-finance:
● Definition: Small sums provided to financially-lacking individuals in
underdeveloped countries.
● Crowdfunding:
● Definition: Raising capital by gathering small funds from a large pool of
people.
Short-term Finance:
● Overdrafts:
● Definition: Bank allows spending more than the account balance, with interest on
the overdrafted amount.
● Trade Credits:
● Definition: Delaying supplier payments to improve cash position.
● Debt Factoring:
● Definition: Specialist agents collecting debts from debtors for immediate cash.
Long-term Finance:
● Loans:
● Definition: Money borrowed from banks or private individuals, repaid with
interest.
● Debentures:
● Definition: Long-term loan certificates issued by companies, repaid with interest.
● Issue of Shares:
● Definition: Limited companies selling shares to raise long-term capital.
● Hire Purchase:
● Definition: Buying assets in monthly installments with interest charges.
● Leasing:
● Definition: Using an asset without purchasing, making monthly payments to the
owner.
Factors Affecting Choice of Finance:
● Purpose:
● Choose finance based on whether it’s for fixed assets or day-to-day expenses.
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