IGCSE Business Studies — Concepts, Ownership and People

A business exists to produce goods or services that people want, at a price above the cost of providing them; the marks in this section turn on three distinctions that candidates routinely collapse. First, PROFIT is revenue minus costs, whereas VALUE is what a business is worth — so ADDING VALUE means increasing the difference between the selling price and the cost of the inputs, which is why a café that sells a ₦400 drink made from ₦80 of ingredients adds value, and why branding, design, convenience and service are named as methods. Second, a NEED against a WANT and a LAUNCH against a start-up: a launch is one product's introduction. Third, size is measured four ways — number of employees, output, revenue and market share — and they can disagree, which is the whole point of the 'a small business can have high revenue' questions; the advantages of smallness are personal service, flexibility and low overheads, its disadvantages are lack of economies of scale, harder finance and dependence on the owner. Ownership determines what the business can do. A SOLE TRADER is one owner with unlimited liability, who keeps the profit and decides alone — quick to set up, total control, but the whole risk is personal and capital is limited to savings and trust. A PARTNERSHIP (2-20 people, usually) shares capital, skills and workload under a deed of partnership, and offers customers continuity from more than one name, but disputes can paralyse decisions, each partner can bind the others, and liability remains unlimited unless a limited-liability partnership is used. A PRIVATE LIMITED COMPANY (Ltd) has limited liability and a separate legal personality, shares sold only by agreement and not on a market, and the ability to retain profits for growth — paid for with public filing, cost and slower transfer of ownership. A PUBLIC LIMITED COMPANY can raise capital on a stock exchange and enjoys the same limited liability, at the price of heavy disclosure, the possibility of a takeover, and pressure for short-term results. The public-sector bodies (corporations, agencies, local-government departments) exist to deliver services where profit is not the test, and their objectives are therefore written in terms of coverage and quality; social enterprises and cooperatives sit between, owned by members or for a stated social purpose, with surpluses reinvested. Multinationals bring the trade-off between capital, jobs and tax base that the development chapters keep returning to. Human resource management is examinable as a chain, not a list: the business needs a number and type of worker (labour demand), so it plans vacancies, recruits (internal: advertising to staff, promotion, a shorter and cheaper process that motivates; external: the wider market, new skills, but cost, induction and risk of a poor fit), selects, then retains. Motivation theories appear only as applied: Taylor's differential piece rate and financial reward, Maslow's hierarchy as a claim that unmet lower needs dominate behaviour, Herzberg's hygiene factors (pay, conditions, security) that prevent dissatisfaction without motivating, and the motivators (achievement, recognition, responsibility) that do. Practical application carries the marks: job rotation (variety, cross-training, but relearning time), job enlargement (more tasks of the same level, quickly stale), job enrichment (more responsibility and control, needing capable staff and trust), teamwork with its autonomy and peer pressure, and participation through suggestion schemes and consultation, which raises commitment and slows decisions. The pay-and-contract layer must be stated plainly: wages and salaries, commission, fringe benefits, and the non-financial rewards, against labour turnover as the measurable symptom of failure; recruitment and selection costs, training types (on-the-job cheap and productive, off-the-job formal but expensive), and productivity as output per worker per period, computed once and used to argue whether a pay rise is affordable.