Business studies

IGCSE Business Studies Student CD-ROM Section 6 – Word search answers P S X T I UWT L Y X Y T QWK X Q C T P DQ L AV L L Q ZW J S P P H J Y B F RMDO K X L VU C X OO R B F D C A P O A B OOMR P K A C F Z HO X J UOV X P VDGV P CQ I R Z E J B J NDKD R P CA S CDXA B LMZUGOP E SW Z R G H T Y P L Z Y U I Z DWD O Z U Q P E L S I N C OM EWU Q Y F C Y Z I N O C O PMO F E NV I R ONME N TME L I BMS I NT E R E S T RAT E KXN L A A T G R OWT H K B M J WV I T A S U T L L O I N C OME T A X B S E G F K T I I D Z B B E D A B EMN T R Z T F M I O S GQOT Z KOP I KHNUZ Z A E ONAKDE L F Y J P F GANB THBN NN T N T E B C ND I M L C LWK G V J G A I T K F O E Q S O I TWC VQ K X E Y L O Y C TM L C F TMN C Y N R V X X RHNE T R B A P Y X F G L ZDOVUZ T Y X EWZ L QH E E T H I C S P VW L © Cambridge University Press 2014  IGCSE Business Studies Section 6 – Word search answers 3

IGCSE Business Studies Student CD-ROM Section 1 – Mind maps 1  Business activity Purpose of business activity Purpose of business activity Meet needs of Combine factors of Add value customers at a production profit Needs of consumers Needs of consumers Water Food Clothing Shelter Factors of production Factors of production Land − natural Labour − people Capital − tools, Enterprise resources available to machinery and work equipment © Cambridge University Press 2014  IGCSE Business Studies Section 1 – Mind maps 1

IGCSE Business Studies Student CD-ROM 2  Classification of businesses Business activities classified by sector Classification of business activity by sector Primary sector − Secondary sector − Tertiary sector − extracts or harvests turns natural provides services to natural resources resources into finished businesses and goods consumers Businesses in a mixed economy Mixed economy − economies with both private and public sectors Private sector − Public sector − businesses owned and organisations owned by run by private individuals the state and run by government Unincorporated Incorporated (unlimited liability) − sole (limited liability) − private traders and partnerships and public limited companies Private sector organisations Private sector organisations Sole trader Partnership Private limited Public limited Franchises Joint ventures Social company company enterprises © Cambridge University Press 2014  IGCSE Business Studies Section 1 – Mind maps 2

IGCSE Business Studies Student CD-ROM 3  Enterprise, business growth and size Characteristics of entrepreneurs Skills of an entrepreneur Innovative Self-motivated Self-confident Multi-skilled Strong Results driven Risk-taker Good at leadership networking qualities Contents of a business plan Contents of a business plan Outline of Details of business Potential market Objectives of the Financial business proposal opportunity business forecasts – sales, revenue, profit and cash-flow forecasts Measuring business size Measuring business size Capital employed Number of Value of Market share employees output Ways businesses grow Forms of business growth Internal growth Vertical External integration growth Horizontal integration Conglomerate integration Backward vertical Forward vertical integration integration © Cambridge University Press 2014  IGCSE Business Studies Section 1 – Mind maps 3

IGCSE Business Studies Student CD-ROM 4  Types of business organisation Business organisations in the private sector Private sector business organisations Sole trader Partnerships Limited companies Franchises Joint ventures Social enterprise Private Public limited limited company company © Cambridge University Press 2014  IGCSE Business Studies Section 1 – Mind maps 4

IGCSE Business Studies Student CD-ROM 5  Business objectives and stakeholder objectives Business objectives Business objectives Survival Profit Growth Market share Corporate social responsibility SMART objectives SMART objectives Specific Measurable Achievable and Realistic and Time-specific agreed relevant Business stakeholders Main business stakeholders Internal External Lenders Owners/ Managers Employees Customers Suppliers Local Government shareholders community © Cambridge University Press 2014  IGCSE Business Studies Section 1 – Mind maps 5

IGCSE Business Studies Student CD-ROM Section 2 – Mind maps 6  Motivating workers Benefits of a well-motivated workforce Benefits of a well- motivated workforce Lower Lower labour More Better quality Improved absenteeism turnover competitive goods and productivity services Key motivational theories Motivation theories Taylor Maslow Herzberg Economic man Hierarchy of needs Two-factor theory Money is the main Physiological needs Hygiene factors: motivator Safety needs Social needs Wage/salary Esteem needs Working with others Self-actualisation Supervison Working condition Company policies Motivators: Responsibility Advancement Achievement Recognition of achievement The work itself © Cambridge University Press 2014  IGCSE Business Studies Section 2 – Mind maps 1

IGCSE Business Studies Student CD-ROM Methods of motivation – financial rewards Hourly wage rate Earnings based on hours worked not on output Salary Fixed amount earned per Financial rewards Piece-rate/commission year not based on hours Bonus schemes worked or output Fringe benefits Earnings based on the Profit-sharing number produced or number sold Additional amount paid for reaching production target Includes company cars, staff discounts and pension schemes Workers receive a share of the yearly profit Methods of motivation – non-financial rewards Workers switch to different tasks to increase variety Job rotation Increasing or widening tasks to Job enlargement increase variety Non-financial rewards Job enrichment Organising tasks so workers Quality circles are able to use their full abilities Team-working Groups of workers meet on a Delegation regular basis to discuss work- related problems Organising production so groups of workers complete the whole unit of work Passing authority to lower level workers to complete tasks © Cambridge University Press 2014  IGCSE Business Studies Section 2 – Mind maps 2

IGCSE Business Studies Student CD-ROM 7  Organisation and management Features of an organisational structure Features of an organisational structure Hierarchy Chain of command Span of control Delegation The number of levels in The route through The number of Passing authority to an organisational which authority is subordinates reporting lower level workers to structure passed down in an to each complete tasks organisation manager/supervisor Main functions of management Functions of management Planning Organising Commanding Coordinating Controlling Leadership styles Leadership styles Autocratic Leader takes all Democratic the decisions Laissez-faire Workers take part in decision-making Workers take most of the decsions Benefits of being a trade union member Benefits to employees of trade union membership Negotiate with Help to resolve Provide legal advice Provision of other employers to improve conflict in the and support to benefits such as members insurance schemes pay and working workplace and pension schemes conditions © Cambridge University Press 2014  IGCSE Business Studies Section 2 – Mind maps 3

IGCSE Business Studies Student CD-ROM 8  Recruitment, selection and training of workers Methods of recruitment Methods of recruitment Internal Benefits • Quicker External • Cheaper Limitations • Can motivate workers Benefits • New recruit already knows Limitations and is known to the business • Better candidate might have been available from outside • Might create conflict among workers who also wanted the job • Does not bring in new ideas • There will still be a vacancy to fill • Wider choice of applicants • Brings in new ideas • Avoids upsetting workers by not promoting someone internally • Takes longer to fill the vacancy • More expensive • New worker will need induction training Methods of training Methods of training Induction On-the-job Off-the-job Helps new workers Watching or following an Training takes place away become familiar with experienced worker in from the workplace, for the workplace example at a specialist their workplace training centre or college © Cambridge University Press 2014  IGCSE Business Studies Section 2 – Mind maps 4

IGCSE Business Studies Student CD-ROM Reasons for terminating employment Reasons for terminating employment Resignation by the worker Retirement of Redundancy Dismissal the worker Worker decides to leave Worker reaches retirement Worker’s job is no longer Employer dismisses worker their job voluntarily age needed for reasons of incompetence or for poor conduct (e.g. often late/ignores safety procedures) Legal controls over employment issues A legally binding written agreement between the employer and employee Contract of employment Discrimination laws It is illegal to discriminate against someone on grounds of age, gender, disability, race, colour or religion Employment legal controls Health and safety Protects workers from injury or physical discomfort Minimum wage Employers cannot exploit workers by paying very low wages Unfair dismissal An employer cannot dismiss a worker without good reason © Cambridge University Press 2014  IGCSE Business Studies Section 2 – Mind maps 5

IGCSE Business Studies Student CD-ROM 9  Internal and external communication Benefits of effective communication Benefits of effective communication Reduces risk of Faster decision- Quicker response Improves worker Improves Improves customer mistakes making to market changes motivation and coordination relationships morale between departments Methods of communication Oral • Face-to-face conversation Written • Interviews Communication methods Electronic • Meetings Visual • Telephone • Letters • Memorandums • Noticeboards • Meeting agenda and minutes • Job descriptions • Purchase order and invoices • Reports • Company magazine • Email • Fax • Text messaging • Video-conferencing • Social media • Bar charts • Graphs • Photographs • Videos • Presentations © Cambridge University Press 2014  IGCSE Business Studies Section 2 – Mind maps 6

IGCSE Business Studies Student CD-ROM Communication barriers Problems with the communication channel • Wrong medium used Barriers to effective communication Problems between sender and • Language is too complex receiver • Message is too long • Channel of communication is too long • Lack of trust and respect • Demotivated workers don’t listen properly • Workers do not pass on the message Problems with the physical • Too much noise when message is environment being sent and received • The sender and receiver are a long distance from each other Problems of ineffective communication Problems caused by poor communication Tasks not completed Damage to Fall in morale and Greater risk of Poor sales Poor recruitment or not completed business’s reputation motivation accidents and selection of correctly workers © Cambridge University Press 2014  IGCSE Business Studies Section 2 – Mind maps 7

IGCSE Business Studies Student CD-ROM Section 3 – Mind maps 10  Marketing, competition and the customer Why consumer spending patterns change Changes in the product’s price Changes in the price of competitor’s products Why consumer spending Changes in consumer patterns may change income Changes in tastes and fashion Changes in population size and structure Changes in advertising and promotional spending © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Mind maps 1

IGCSE Business Studies Student CD-ROM How markets are segmented Methods of market segementation Geographic Demographic Psychographic Different regions Age Lifestyles within the same Gender Income Personalities country Values and Different regions attitudes of the world Different countries of the world Social class Family size Ethnic background © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Mind maps 2

IGCSE Business Studies Student CD-ROM 11  Market research Sources of market research data Sources of market research data Primary (field) Secondary (desk) research research Focus groups Test market Observation Consumer Internet surveys Government Interviews publications Postal surveys Business records Online surveys Newspapers and magazines Library resources Market research agencies © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Mind maps 3

IGCSE Business Studies Student CD-ROM Benefits and limitations of market research Primary Benefits Up-to-date Market research Limitations Collected for the specific Secondary Benefits needs of the business Limitations Not available to competitors Time-consuming to collect Expensive to collect Risk of inaccurate data or bias Cheap to collect Easier and quicker to obtain than primary data May be out-of-date Not collected for the specific needs of the business Available to other businesses Methods of sampling Simple random Every member of the population has an equal chance of being selected Systematic random Every nth member of the population is Stratified selected Methods of sampling Population is divided into groups with specific characteristics and then a sample is randomly selected Quota The population is divided into groups and a specific number is selected at random from each group in the same proportion as they appear in the whole population © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Mind maps 4

IGCSE Business Studies Student CD-ROM 12  Marketing mix: product and price The marketing mix Marketing mix Marketing decisions for the effective marketing of a product Product Price Promotion Place Develop a new Skimming pricing Advertising Channels of product Penetration pricing Sales promotion distribution Change an existing ‘Direct sales’ product for a new Producer to consumer market Producer to retailer Competitive pricing Personal selling to consumer Promotional pricing Direct mail Producer to wholesaler to retailer Cost-plus pricing Sponsorship to consumer Producer to agent to wholesaler to retailer to consumer The product life cycle Introduction Find new markets for the Growth product Stages of the product life Maturity cycle Decline Find new uses for the product Extension strategies Change product or its packaging to improve its appeal Increased advertising or other promotional activities © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Mind maps 5

IGCSE Business Studies Student CD-ROM Pricing methods Skimming Penetration Use for new/unique products which are very different from anything else on the market Methods of pricing Competitive Use for new products which are to Promotional compete with similar products already Cost-plus established in the market Price elasticity of demand Used for new products launched by a business with an already strong brand image, or for existing products which were launched using skimming or penetration pricing Used to create brand awareness or attract customers Often used by retailers to set the final price of the product to consumers Price elasticity of demand Measures the effect on the demand for a product of a change in its price Elastic Inelastic The percentage change in The percentage change in demand is greater than demand is less than the the percentage change in percentage change in price price Reduce price to increase Increase price to increase sales revenue sales revenue © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Mind maps 6

IGCSE Business Studies Student CD-ROM 13  Marketing mix: place and promotion Channels of distribution Producer Direct sales Retailer Wholesaler Agent Final Final Retailer Wholesaler consumer consumer Final Retailer consumer Final consumer Methods of promotion Newspapers/magazines Methods of promotion Advertising Radio/television (paid-for communication) Internet/social media Money-off vouchers Personal selling (use of trained sales staff to Competitions communicate directly with customers) Loyalty reward schemes Point of sales displays Sales promotion (incentives to encourage short-term increase in sales or repeat purchases) Direct mail (posting leaflets and other printed material to customers) Sponsorship (company pays to have its name directly linked to an event) © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Mind maps 7

IGCSE Business Studies Student CD-ROM Opportunities and threats of e-commerce for business Increased market The use of the internet and Opportunities for businesses Reduces staffing and other technologies used by premises costs business to market and sell Can provided more goods and services information through website to consumers to customers E-commerce Threats for businesses Increased competition Consumers less likely to buy products from businesses they don’t know © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Mind maps 8

IGCSE Business Studies Student CD-ROM 14  Marketing strategy Protect consumers from dangerous or faulty goods Legal controls on marketing Prevent businesses from using misleading advertisements Protects consumers from being exploited in industries where there is little or no competition Problems of entering foreign markets Problems faced when entering new markets Lack of knowledge Differences in legal Differences in Economic differences Social differences about the market controls to language or culture Differences in the age protect consumers structure of the population. The business does not Countries have their Some words do not Differences in know the market and own laws to protect translate into other consumers’ The different role of consumers often do average income women and the not know the business consumers languages. and control business between importance of family Colours, numbers and countries activities symbols mean different things in different cultures © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Mind maps 9

IGCSE Business Studies Student CD-ROM Section 4 – Mind maps 15  Production of goods and services Methods to improve labour productivity Labour productivity is a measure of Provide training to improve workers’ the efficiency of workers (how many skills units of output each worker produces Improve worker motivation in a given time period) Introduce more Methods to improve labour automation/technology productivity Improve the quality of management decsions Business costs of holding inventories Purchase or rent of storage space − warehouse Costs of damage to, or theft of, inventories The stock of raw materials, Costs of holding inventories Insurance costs work-in-progress and finished Costs of not holding Inventories become goods held by a business inventories out-of-date or obsolete Inventories Handling costs of moving inventories into and out of storage • Opportunity costs • Inventories tie-up cash which could be put to better use • Too many inventories might worsen liquidity and cause cash-flow problems © Cambridge University Press 2014  IGCSE Business Studies Section 4 – Mind maps 1

IGCSE Business Studies Student CD-ROM Main methods of production Methods of production Job production Batch production Flow production Items produced one Items produced in The continuous at a time batches, each batch production of a large completes production quantity of identical one stage at a time items © Cambridge University Press 2014  IGCSE Business Studies Section 4 – Mind maps 2

IGCSE Business Studies Student CD-ROM Technology and the production process Advantages Increases Disadvantages productivity For business Advantages Reduces unit For consumers Disadvantages costs New technology Advantages Improves quality in the Disadvantages Often very production expensive to process purchase For workers Needs to be updated as new technologies are developed May increase training costs Lower prices Better quality products with more features Products become out- dated more quickly Can be more expensive to repair if they develop a fault Work is easier and simple boring tasks are completed by machines Businesses using the latest technology are often more successful so provide greater job security More capital intensive − reduces the need for workers resulting in redundancy Work becomes less interesting and requires less skill which can demotivate workers © Cambridge University Press 2014  IGCSE Business Studies Section 4 – Mind maps 3

IGCSE Business Studies Student CD-ROM 16  Costs, scale of production and break-even analysis Classifications of costs Classification of costs Fixed costs Variable costs Total costs Average costs Do not change with output Change with output – if All of the costs involved in The costs of producing output increases by 50% producing and bringing a one unit of output (the then so do variable costs product to market (fixed total costs divided by total costs + variable costs) output) For example, factory rent For example, raw and salaries materials and components Economies of scale Purchasing economies Bulk-buying discounts Reduction in average Financial economies • Larger businesses often find it easier to costs as a business Technical economies obtain finance from lenders or investors Managerial economies grows in size Marketing economies • Money is usually borrowed at a lower rate of interest than borrowing by smaller firms Economies of scale • Change production method from job to batch, or from batch to flow • Can purchase larger and more technologically advanced equipment Employ specialist managers for finance, operations, human resources, marketing and research and development Marketing costs do not increase at the same rate as output; for example output might increase by 40% but costs of marketing the extra output only increases by 10% © Cambridge University Press 2014  IGCSE Business Studies Section 4 – Mind maps 4

IGCSE Business Studies Student CD-ROM Diseconomies of scale Diseconomies of scale The business becomes too large and average costs rise Poor communication Poor motivation of workers Poor control Chain of command becomes Managers lose day-to-day Managers find it more difficult to longer and messages take longer contact with workers and this control and coordinate many leads to worker demotivation departments, products or to get from sender to receiver production units, especially if and might get misunderstood they are located in different geographical areas © Cambridge University Press 2014  IGCSE Business Studies Section 4 – Mind maps 5

IGCSE Business Studies Student CD-ROM 17  Achieving quality production Importance of quality to businesses Why quality is important Develop strong Keep existing Can charge Reduces waste, Easier to get Quality products brand customers and premium customer complaints wholesalers and usually have a longer image attract new ones prices and returns and so retailers to stock the product life cycle reduces costs product © Cambridge University Press 2014  IGCSE Business Studies Section 4 – Mind maps 6

IGCSE Business Studies Student CD-ROM 18  Location decisions Factors influencing location and relocation decisions Cost of site Price of land to buy or rent Cost and availability of Average weekly wage, suitable workers skill level of workers Quantitative factors Transport costs How close is the site to suppliers? Factors influencing location How easy is it for customers to and relocation decisions access the site? Qualitative factors Market potential How close is the market? What is the size of the market? Government incentives Are there any grants or other help from government? Size of site Large enough for current and Legal controls future needs Infrastructure Ethical issues Planning rules and restrictions on location in certain areas will vary from country to country How good are transport links and facilities such as water and power? How might relocation affect existing workers − will they be made redundant? © Cambridge University Press 2014  IGCSE Business Studies Section 4 – Mind maps 7

IGCSE Business Studies Student CD-ROM Reasons for locating operations to another country Benefits Lower labour costs Locating production in Access to global markets another country To avoid legal barriers and Limitations import tariffs Incentives offered by foreign governments to locate in their country Might locate closer to the market which reduces transport costs Communication problems Cultural differences Quality issues Ethical concerns © Cambridge University Press 2014  IGCSE Business Studies Section 4 – Mind maps 8

IGCSE Business Studies Student CD-ROM Section 5 – Mind maps 19  Business finance: needs and sources Why businesses need finance Why businesses need finance Start-up capital To pay day-to-day To replace worn out To invest in new To finance To finance research business expenses or obsolete technologies expansion plans and development into new products non-current assets such as machinery Sources of finance Owner’s savings Sole traders and Retained profit partnerships Internal Sale of non-current Sources of finance Profit left after paying assets taxes and dividends External Unwanted non-current Using some of the © Cambridge University Press 2014  IGCSE Business Studies working capital assets Sale and lease back of Short term non-current assets Long term Cash balances Reducing inventories 1 Reducing trade receivables Overdraft Trade credit Debt factoring Bank loan Hire purchase Leasing Mortgage Debenture Share issue Section 5 – Mind maps

IGCSE Business Studies Student CD-ROM 20  Cash-flow forecasting and working capital Financing a short-term cash shortage Financing short-term cash shortages Offer discounts to Negotiate longer Delay purchase of Use a different source Overdraft encourage credit credit terms with non-current assets of finance for the customers to pay purchase of non- suppliers current assets more quickly © Cambridge University Press 2014  IGCSE Business Studies Section 5 – Mind maps 2

IGCSE Business Studies Student CD-ROM 21  Income statements The importance of profit to private sector businesses The importance of profit to a business Profit is the difference between revenue from sales and the total costs of making and marketing sales Measures the success To finance the purchase To attract investors to Measures the Used in making of a business of non-current assets provide additional performance decisions about and business finance to finance of managers whether or not to expansion expansion continue producing a product The usefulness of profit data to stakeholders Stakeholders are any group Owners/shareholders A return for risking their that has an interest in the Employees investment in the business activities of a business Lenders Government May achieve higher wages Usefulness of profit data Suppliers Improves job security to stakeholders Managers Will receive interest payments and repayment of amount borrowed when it becomes due Receive taxes on profits Will receive payment for goods supplied when due Increased profits suggest a business which is selling more and making more so will need more supplies of raw materials Compare performance of the business with previous years or with competitors Retained profits are an important source of finance for a business © Cambridge University Press 2014  IGCSE Business Studies Section 5 – Mind maps 3

IGCSE Business Studies Student CD-ROM 22  Balance sheets Main parts of a balance sheet Assets – items that are Non-current assets Land, buildings, machinery, owned by a business Current assets motor vehicles Current liabilities Main features of a balance Inventories, trade sheet receivables, cash and bank Liabilities – items that are Non-current liabilities balances owed by a business Trade payables, overdraft, Owner’s equity taxation, dividends Long-term borrowing Money invested by owners/shareholders plus retained profits © Cambridge University Press 2014  IGCSE Business Studies Section 5 – Mind maps 4

IGCSE Business Studies Student CD-ROM 23  Analysis of accounts Interpreting financial statements Gross profit margin (gross profit/revenue) × 100% Measuring business Net profit margin performance (profit/revenue) × 100% Analysing financial Return on capital employed (profit/capital employed) statements Current ratio × 100% Acid test ratio Measuring business Current assets / current liquidity liabilities (current assets − inventories) / current liabilities © Cambridge University Press 2014  IGCSE Business Studies Section 5 – Mind maps 5

IGCSE Business Studies Student CD-ROM Section 6 – Mind maps 24  Government economic objectives and policies Economic objectives Economic objectives Economic Low Low inflation Healthy balance growth unemployment of payments Economic policies Economic policies Fiscal Monetary Government Government Interest rates income (taxation) spending Direct taxation Indirect taxation Income tax Corporation tax VAT © Cambridge University Press 2014  IGCSE Business Studies Section 6 – Mind maps 1

IGCSE Business Studies Student CD-ROM 25  Environmental and ethical issues Impact of business activity on the environment Impact of business activity on the environment Positive Negative externalities externalities Social benefits Social costs Methods used by pressure groups Methods used by pressure groups Demonstrations Boycotts Petitions Lobbying Increasing awareness of issue through website and media © Cambridge University Press 2014  IGCSE Business Studies Section 6 – Mind maps 2

IGCSE Business Studies Student CD-ROM Ethical issues faced by businesses Finance Failing to tell customer about Marketing extra cost Ethical issues faced by Insider trading businesses False advertising Human Providing resources unsafe Operations products Not disclosing risks associated with product or service Unequal pay Child labour Sweatshops Discrimination of employees Dumping Illegal waste disposal Exceeding pollution limits © Cambridge University Press 2014  IGCSE Business Studies Section 6 – Mind maps 3

IGCSE Business Studies Student CD-ROM 26  Business and the international economy Characteristics of globalisation Characteristics of globalisation Process by which countries are connected with each other because of the trade of goods and services Growth in international Dependency on global Greater movement of Company operating in Brands recognised trade economy products, services, more than one country worldwide money and people Benefits to a business of becoming a multinational company Easier access to raw materials Lower cost of labour Economies of scale Benefits of Access to bigger becoming a MNC markets Lower production costs Spreads risk Premium pricing © Cambridge University Press 2014  IGCSE Business Studies Section 6 – Mind maps 4

IGCSE Business Studies Student CD-ROM Impact on businesses of changes in the exchange rate Appreciation of Depreciation of exchange rate exchange rate Imports Imports become become cheaper more expensive Exports become Exports become more expensive cheaper overseas overseas Effect of multinationals on the host country Effect of MNCs on host country Positive Negative Improves Environmental infrastructure damage Generates income Exploitation of in form of tax labour Increases Increased employment competition for local companies Improves country’s Social impact reputation Exploitation of Increased choice natural resources of goods and services © Cambridge University Press 2014  IGCSE Business Studies Section 6 – Mind maps 5

IGCSE Business Studies Student CD-ROM Section 1 – Multiple choice 1 The purpose of business activity is: A to increase sales B to produce products to satisfy customer needs C to reward shareholders D to provide employment. 2 Which of the following is not a consumer need? A Water B Housing C Clothing D Holidays 3 One of the benefits of specialisation is: A increased sales B increased output C increased variety of tasks for workers D increased costs of production. 4 Added value is: A the difference between revenue and total costs B the difference between output and sales C the difference between costs of raw materials and selling price D the difference between making a profit or making a loss. 5 Which of the following is not an example of primary sector business activity? A Forestry B Fishing C Oil refining D Mining for gold 6 Tertiary sector business activity is: A providing services to consumers only B turning raw materials into finished goods C the extraction of natural resources D providing services to consumers and businesses. © Cambridge University Press 2014  IGCSE Business Studies Section 1 – Multiple choice 1

IGCSE Business Studies Student CD-ROM  7 Developing economies will usually have: A a small primary sector B a large tertiary sector C a large primary sector D no secondary sector.  8 Which of the following is not a private sector form of organisation? A Sole trader B Public limited company C Franchise D Public corporation  9 The best description of an entrepreneur is someone who: A starts a business and always earns a lot of money B has an idea for a business and does not take risks C starts a business and is prepared to take financial risks D takes financial risks and always earns high profits. 10 A business plan might be used to: A mislead people into investing in a business B show how much profit a business might make C provide competitors with information about a business D identify why a business is making losses. 11 Governments can support business start-ups by: A increasing taxes B increasing regulations C increasing grants D increasing interest rates. 12 Which of the following is not a method for measuring business size? A Value of output B Number of employees C Capital employed D Profit 13 Which statement best describes conglomerate integration? A A frozen food manufacturer buying a poultry farm. B An ice-cream producer opening its own ice-cream shop. C The merger of two taxi firms. D The owners of an airline buying a music company. © Cambridge University Press 2014  IGCSE Business Studies Section 1 – Multiple choice 2

IGCSE Business Studies Student CD-ROM 14 Which statement is an example of forward vertical integration? A A frozen food manufacturer buying a poultry farm. B An ice-cream producer opening its own ice-cream shop. C The merger of two taxi firms. D The owners of an airline buying a music company. 15 Which statement is an example of horizontal integration? A A frozen food manufacturer buying a poultry farm. B An ice-cream producer opening their own ice-cream shop. C The merger of two taxi firms. D The owners of an airline buying a music company. 16 Which of the following might be a reason for a business remaining small? A The market is large and still growing. B The owner of the business is very ambitious. C Competition is low. D The owner wants to keep control of the business. 17 Which of the following is most likely to lead to business failure? A There is a high demand from consumers for the product. B The entrepreneur is very motivated. C The economy goes into recession. D The owner has good management skills. 18 Which of the following statements describes an unincorporated business? A A public sector organisation B A public limited company C A franchise set up as a private limited company D A partnership 19 Which of the following is not an objective of a sole trader? A Profit B Survival C Limited liability D Market share 20 Which of the following is not an external business stakeholder? A Government B Employees C Suppliers D Customers © Cambridge University Press 2014  IGCSE Business Studies Section 1 – Multiple choice 3

IGCSE Business Studies Student CD-ROM Section 2 – Multiple choice 1 Which of the following is not a need as identified by Maslow? A Hygiene B Esteem C Self-actualisation D Social 2 According to Taylor, which of the following is most likely to motivate a worker? A Promotion B Fringe benefits C Bonus D Team-working 3 Which of the following is a motivator according to Herzberg? A Safe working environment B Responsibility C Good wage D Company policy 4 Which of the following is not a benefit of having a well-motivated workforce? A Improved productivity B Low rate of absenteeism C Low labour turnover D Increased absenteeism 5 Which of the following is a financial method of motivation? A Job rotation B Delegation C Fringe benefit D Quality circles 6 Which of the following describes the number of levels in an organisational structure? A Span of control B Chain of command C Hierarchy D Delegation © Cambridge University Press 2014  IGCSE Business Studies Section 2 – Multiple choice 1

IGCSE Business Studies Student CD-ROM  7 When authority is passed down the chain of command this is known as: A delegation B span of control C hierarchy D centralisation.  8 Which of the following is not a role of management? A Planning B Controlling C Organising D Creativity  9 Which of the following is a feature of an autocratic leadership style? A Communication is two-way. B Workers are involved in decision-making. C Communication is one-way. D There is little input from the leader. 10 Negotiations between a trade union and employer are known as: A collective decision-making B collective responsibility C collective agreement D collective bargaining. 11 An advantage of external recruitment is: A it is less costly than internal recruitment B the best person is recruited C there will be a wider choice of applicants D it motivates existing workers. 12 The candidates selected for interview from all of the applicants are known as a: A person specification B panel C short-list D job description. 13 Which of the following is a disadvantage of off-the-job training? A It is less expensive than other types of training. B It improves workers’ skills. C It is more expensive than other types of training. D It is only used to train managers. © Cambridge University Press 2014  IGCSE Business Studies Section 2 – Multiple choice 2

IGCSE Business Studies Student CD-ROM 14 The best description of ‘redundancy’ is: A a worker is dismissed for disciplinary reasons B a worker is not motivated at work C a worker must learn new skills D a worker’s job is no longer required. 15 Which of the following is not a legal control over the employment of workers? A Contract of employment B Discrimination C Maximum legal wage D Health and safety 16 Effective communication requires: A speaking clearly B written record C feedback D technology. 17 Which of the following is a method of visual communication? A Memorandum B Charts C Text messaging D Email 18 An advantage of email is: A you do not have a record of the message B it is slower than most other methods of communication C you can send the same message to many people at the same time D it is difficult to receive feedback. 19 Oral communication is less effective if: A the receiver sends feedback B the message is short and simple C the message contains complex information D the sender speaks the same language as the receiver. 20 Which of the following is not a barrier to effective communication? A Noise B Long channel of communication C The receiver is demotivated D There is trust and respect between sender and receiver © Cambridge University Press 2014  IGCSE Business Studies Section 2 – Multiple choice 3

IGCSE Business Studies Student CD-ROM Section 3 – Multiple choice 1 Which of the following might cause a change in customer spending patterns? A An increase in the production of goods and services. B The introduction of a new product to the market. C An increase in consumer income. D A change of government. 2 Some markets have become more competitive because: A some businesses have left the market B the market is dominated by a few large firms C consumers have more money to spend D a reduction in the barriers to trade. 3 Which of the following is the best example of an industrial good? A A new computer-controlled machine B A television C A bottle of fizzy drink D A newspaper 4 A benefit of niche marketing is: A there are many consumers B consumers have low incomes C profits per unit sold are often very high D the product can be sold to different types of consumer. 5 Which of the following is not a method for segmenting a market? A Dividing the market according to gender B Dividing the market according to lifestyle C Dividing the market according to price D Dividing the market according to consumer income 6 Primary research is: A less expensive than secondary research B the best method of researching the market C less time-consuming to collect than secondary research D usually more accurate than secondary research. © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Multiple choice 1

IGCSE Business Studies Student CD-ROM  7 Which of the following is not a source of secondary data? A Internet B Company records C Focus panel D Government statistics  8 Market research data might not be accurate because: A questionnaires are used B interviewees always answer truthfully C interviewers are not properly trained D too many people are asked to take part in the survey.  9 Which of the following describes systematic random sampling? A The target market is divided into groups and a selected sample is chosen at random from each group. B Every member of the target market has an equal chance of being selected. C The target market is divided into groups and a fixed number is selected from each group. D Every nth member of the target market is selected. 10 Which of the following statements best describes the marketing mix? A It combines all the elements that are important in marketing. B It will guarantee the success of a product. C It is for decisions that a business must take to market a product effectively. D It is not important for the marketing of industrial goods. 11 A product which has a price elasticity of demand of –1.4 is said to be: A too expensive B price elastic C price inelastic D a necessity. 12 Wholesalers and retailers are examples of: A middlemen B consumers C producers D agents. © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Multiple choice 2

IGCSE Business Studies Student CD-ROM 13 Which of the following is the correct order for a product’s life cycle? A Decline, growth, maturity, introduction. B Introduction, maturity, growth, decline. C Growth, maturity, introduction, decline. D Introduction, growth, maturity, decline. 14 The main purpose of an extension strategy is: A to keep a product in its growth stage for as long as possible B to prevent a product from entering the maturity stage for as long as possible C to extend the maturity stage of a product D to slow down the decline of a product. 15 Which of the following is not an aim of promotion? A To attract the attention of consumers B To create a brand image C To improve the quality of a product D To encourage retailers to stock the product 16 A good example of promotion is: A sponsorship B skimming pricing C direct sales D value added. 17 A benefit to producers of e-commerce is: A more firms are able to enter the industry B people prefer to buy products using the internet C competition will decrease prices D they can market their product to more consumers. 18 A business’s promotional activities are most influenced by: A the quality of its products B the size of the marketing budget C the number of consumers in the market D market segmentation. © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Multiple choice 3

IGCSE Business Studies Student CD-ROM 19 Which of the following is an example of legal controls on marketing strategy? A Businesses must be market orientated. B Advertising must not be used to persuade consumers to buy products they don’t need. C The government encourages competition in markets. D Businesses must not agree with each other to set the same price for a product. 20 Which of the following is sometimes a problem of entering foreign markets? A The firm has carried out market research. B There is competition in the market. C Consumers speak the same language. D There is strong brand loyalty to existing products. © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Multiple choice 4