O–Level

Business Studies Notes

Article # 121

Features:
 Sufficient for excelling at both Paper 1 and Paper 2.
 Complete course outline, paper pattern with concerned percentages
 Concise yet comprehensive enough to be used as a quick revision guide.
 Important topics discussed in greater detail to cater syllabus requirements.

Author:

Shahraiz Chishti
Learning Alliance, Lahore Alma, G.H.A
 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in
any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written
permission of the Publisher.

Title Business Studies O-Level Notes

Author Shahraiz Chishti
Cell: +92 321 5555731

Published by Read & Write Publications

Printed by
Composing Department
Graphics Department
Legal Advisor
Sadaat Printers, Urdu Bazar, Lahore.
Sharjeel Khan, Salman Buksh, Hayat, Shahab, Waqas, Adnan, M. Awais
Rashid Mehmood, Raja Naveed Mumtaz , Sheraz
Mian Tariq Ahmad (Advocate Supreme Court)
Room No. 10, 11, 12 Al-Majeed Centre
1-Mozang Road, Lahore.
Tel: 042-37236145, Fax: 042-37241367

Edition: 2017 – 18 Edition

Price

For Books Order Call Or SMS: 0336-5314141

DISTRIBUTORS
LAHORE KARACHI
 READ & WRITE SALE POINT  BURHANI BOOK CENTRE
Shop No. 25 -28 Lower Ground Floor, Shop # 6 Hashmi Trust Building Rotson Road
Haadia Haleema Centre, Ghazni Street, New Urdu Bazar Karachi
Urdu Bazar, Lahore. Ph: 042 -35714038 Tel 021 32212640

 MARYAM ACADEMY
Tayyab Ali Building, Urdu Bazar,
Karachi.
Tel: 021 32214243 , 021 32634243
RAWALPINDI / ISLAMABAD
 ABDUL RAHMAN BOOKS
Abdul Rahman Plaza, College Road,
Rawalpindi.
Tel: 051-5551226, +92-315-5618976
 Preface
The book has been written for students of IGCSE/ O levels Business Studies. The
book covers the whole syllabus and is written in a concise manner. The book can be
used as a primary text for covering the syllabus and at the same time can be used as
revision text as it is written in a concise manner.

The language used is simplistic so that students of all backgrounds/language ability

can engage with the content of the book. Exam questions are not present in this
book so it is highly suggested that students solve Past Papers to understand the
paper pattern.

About the Author

The Author Mr Shahraiz Javed Chishti completed his MBA/BBA in Marketing and
media with minor in social sciences from LSE and did his O levels from Aitchison
College Lahore.

The author has been a renowned teacher of O/A Levels Business, Commerce and
Social Sciences. He has not only been a teacher but a debates coach as well. He has
coached parliamentary debates and Model United Nations to multiple schools and
was also the Co-Coach for the Pakistan team that went to the World Schools
debating championship held at Stuttgart Germany. In his university he himself was
an excellent public speaker who represented Pakistan in multiple competitions held
in Germany, Malaysia, India, Macau, Thailand and Philippines.
 1

CONTENTS
CONTENTS .................................................................................................................... 1
ACKNOWLEDGEMENTS ............................................................................................... 6
Syllabus ......................................................................................................................... 6
Paper Pattern................................................................................................................. 7
Ch: 1 & 2 Business Activity and Types of Businesses............................................... 9
Needs ...............................................................................................................................9
Wants ...............................................................................................................................9
Factors of productions:......................................................................................................9
The economic problem:.....................................................................................................9
Opportunity cost: ...............................................................................................................9
Specialization ....................................................................................................................9
Goods vs. Services .........................................................................................................10
Private sector activities ...................................................................................................10
Public ownership .............................................................................................................10
Privatization: ...................................................................................................................10
Ch: 3 Enterprise, Business Growth and Sales .......................................................... 12
Enterprise and Entrepreneurship Entrepreneur ...............................................................12
Characteristic of successful entrepreneurs......................................................................12
Why should governments support business startups ......................................................12
Value of sales .................................................................................................................13
Which method should you choose?.................................................................................13
Ch: 4 Types of Business Organizations .................................................................... 16
Private Sector .................................................................................................................16
Partnership .....................................................................................................................16
Private Limited Companies .............................................................................................17
Public Limited Companies ...............................................................................................17
Co-operatives .................................................................................................................18
Close Corporations: ........................................................................................................18
Joint ventures .................................................................................................................19
Franchising .....................................................................................................................19
Public Sector ...................................................................................................................19
Municipal enterprises ......................................................................................................20
Ch: 5 Business Objectives and Stakeholders Objectives ........................................ 22
Business objectives ........................................................................................................22
Stakeholder Groups ........................................................................................................23
Ch: 6 Motivation Theories .......................................................................................... 25
 2

Motivation .......................................................................................................................25
Motivation Theories .........................................................................................................25
F.W. Taylor .....................................................................................................................25
Maslow ...........................................................................................................................25
Herzberg .........................................................................................................................26
McGregor ........................................................................................................................26
Why do people work?......................................................................................................26
Wages ............................................................................................................................27
Motivating factors - non-financial motivators ...................................................................28
Job satisfaction: ..............................................................................................................28
Job rotation: ....................................................................................................................28
Job enlargement: ............................................................................................................28
Job enrichment: ..............................................................................................................29
Autonomous work groups or team-working: ....................................................................29
Leadership ......................................................................................................................29
Formal and informal groups ............................................................................................30
Formal groups in business ..............................................................................................30
Informal groups in business ............................................................................................30
Ch: 7 Organizational Structure .................................................................................. 32
Delegation.......................................................................................................................32
Functional departments...................................................................................................34
Decentralisation ..............................................................................................................35
Role of Managers............................................................................................................35
Trade Unions ..................................................................................................................35
Ch: 8 Recruitment, Training and Human Resources ................................................ 38
Recruitment and selection ...............................................................................................38
Job Analysis and Description: .........................................................................................38
Job specification .............................................................................................................39
Advertising the vacancy ..................................................................................................39
Internal recruitment .........................................................................................................39
External recruitment ........................................................................................................39
Job advertisement...........................................................................................................40
Applications forms and CVs/résumés..............................................................................40
Interviews........................................................................................................................40
Rejecting unsuccessful applicants...................................................................................41
Workforce planning .........................................................................................................42
Dismissal and Redundancy .............................................................................................42
Ch: 9 Communication in Business ............................................................................ 44
 3

Formal Communication ...................................................................................................44

Informal Communication .................................................................................................44
Methods ..........................................................................................................................44
Motivation and Communication .......................................................................................45
Effective communication .................................................................................................45
Barriers to Successful Communication ............................................................................45
How to Improve Communication .....................................................................................45
Grapevine .......................................................................................................................46
Direction of communication .............................................................................................46
Ch: 10 Marketing ......................................................................................................... 48
What is marketing? .........................................................................................................48
Product-orientated and market-orientated businesses ....................................................48
What is marketing ...........................................................................................................48
The Marketing department ..............................................................................................48
The objectives of marketing ............................................................................................48
SWOT analysis ...............................................................................................................48
Market segments ............................................................................................................49
The marketing mix ..........................................................................................................49
Four C’s: .........................................................................................................................49
Ch: 11 Market Research ............................................................................................. 51
Why is market research needed? ....................................................................................51
Primary research.............................................................................................................51
Ch: 12 Marketing Mix Product .................................................................................... 56
Product ...........................................................................................................................56
Types and classification ..................................................................................................56
Development phase ........................................................................................................56
Ch: 13 Pricing Strategies ............................................................................................ 59
Price Elasticity of Demand ..............................................................................................59
Cost-plus Pricing Strategy ...............................................................................................60
Ch: 14 Promotions ...................................................................................................... 62
Promotion .......................................................................................................................62
Legal and other constraints 
 ..........................................................................................62
Internet ...........................................................................................................................63
Ch: 15 Place ................................................................................................................ 65
Channel of Distribution ....................................................................................................65
Agents ............................................................................................................................65
Retailer 
.........................................................................................................................65
 4

Ch: 16 Marketing Strategy .......................................................................................... 68

Legal constraints on marketing .......................................................................................69
Ch: 17 Production ....................................................................................................... 71
Operations department: ..................................................................................................71
Stock control and inventory control .................................................................................72
Lean Production Techniques...........................................................................................72
Kaien ..............................................................................................................................73
TECHNOLOGY IN BUSINESS .......................................................................................73
Ch: 18 Break Even and Business Costs .................................................................... 76
Costs ..............................................................................................................................76
Break Even Analysis .......................................................................................................76
Ch: 19 Quality .............................................................................................................. 80
What is quality.................................................................................................................80
Quality Control ................................................................................................................80
Quality Assurance ...........................................................................................................80
TQM (Total quality management) ....................................................................................80
Ch: 20 Factors Affecting Location ............................................................................. 82
Factors affecting the location of a manufacturing business .............................................82
Factors affecting the location of a retailing business .......................................................82
Factors that influence a business to relocate either at home or abroad ...........................83
Factors affecting the location of a service sector business ..............................................83
Roles of legal control.......................................................................................................84
Ch: 21 Financing Activities ........................................................................................ 86
Working Capital...............................................................................................................86
External Sources of Finance ...........................................................................................86
Other Sources of Finance
 .............................................................................................87
Factors Influencing Choices of Finance ..........................................................................87
Ch: 22 Cash Flow ........................................................................................................ 90
Cash Flow Statement ......................................................................................................90
Limitations of Cash Flow .................................................................................................90
Causes of Cash-Flow Problems ......................................................................................90
Increase cash inflows
 ....................................................................................................91
Ch: 23 & 24 Income Statement and Balance Sheet................................................... 93
Income Statement ...........................................................................................................93
Assets .............................................................................................................................93
Trade Receivables (Debtors) ..........................................................................................93
Accounts/Trade Payable (Creditors) ...............................................................................94
 5

Goodwill ..........................................................................................................................94
Ch: 25 Ratio Analysis ................................................................................................. 96
Profitability ......................................................................................................................96
Liquidity...........................................................................................................................96
Ch: 26 Government and Economic Influences on Business ................................... 98
Government economic objectives: ..................................................................................98
Low inflation: ...................................................................................................................98
Low levels of unemployment: ..........................................................................................98
Economic growth ............................................................................................................99
Balance of payments.......................................................................................................99
Fiscal Policy .................................................................................................................. 103
Monetary policy ............................................................................................................. 104
Ch: 27 Environment and Ethics ............................................................................... 106
Externalities .................................................................................................................. 106
Ch: 28 Business in the International Economy....................................................... 109
Globalization ................................................................................................................. 109
Points for globalization .................................................................................................. 109
Multinational company .................................................................................................. 109
References ................................................................................................................ 111
 6

ACKNOWLEDGEMENTS
Knowledge is not created it is discovered. In this journey of discovery many individuals
guide and help you. Therefore I would like to thank my family and friends who have
provided constant support.
My teachers and colleagues have greatly augmented my skills
skills as a person and a writer
and I would like to show my gratitude by thanking them.

Syllabus
 7

Paper Pattern
O-Level Business Studies Notes 8 Business activity and types of businesses
Read & Write Publications

Syllabus 2017 – 2019

O-LEVEL –
–
Needs
Wants
– Factors of productions

Business –
–
The economic problem
Opportunity cost
– Specialization
Studies – Goods vs. Services
– Private sector activities
– Public ownership
– Privatization

Business
Activity and
Types of
Businesses

Shahraiz Chishti
MBA

Cell: 0321 5555731

O-Level Business Studies Notes 9 Business activity and types of businesses
Read & Write Publications

Ch: 1 & 2 Business Activity and Types of Businesses

Needs
– Essential goods or services necessary for living.
– Satisfy the basic things for life.

Wants
– Non-essential goods and services that people would like to have.
– Interests & Tastes

Factors of productions:
There are four factors of production (Inputs for a business).
Land:
All natural resources provided for the business plus the physical land the business is located on.
Either rent is paid on land or land is purchased.
Labor:
The people that work for the business on a wage or salary.
Capital:
All investment and finance for machinery.
Enterprise:
All people that have skills & have risk-taking ability and combine other factors of production to
produce good or service. They benefit if a profit is made by the business.

The economic problem:

Limited resources and unlimited wants, which gives birth to scarcity and opportunity cost.

Opportunity cost:
The next best alternative forgone.
The aim of a business in the private sector is to survive by making a profit. This may be a sole
trader working alone, like a newsagent, or thousands of shareholders in a large Public Limited
Company.
Businesses gain a larger market-share [percentage of your company sales / industry sales] by
increasing the sales of their products against competitors. This may involve reducing prices.
Customer loyalty and repeat sales are essential. Customers returning to buy the product from
the same business], businesses need to be reliable and provide a quality service to their
customers.

Specialization
In pre Industrial societies there was no specialization (one person doing one job). Now majority
of businesses use specialization and division of labor.
O-Level Business Studies Notes 10 Business activity and types of businesses
Read & Write Publications

Advantages Disadvantages
Specialized task training Bored workers
Increases efficiency Possible drops in efficiency
Increases output Production stopped due to absence
Save time
Goods vs. Services
Goods (Shampoo, soap, laptops etc.) are tangible and services (hair dressing) are intangible.
Added value: Price – cost of materials.
Can be increased by a price increase which leads to less customers buying the product or by a
decrease in cost of materials which can decrease quality.
Private sector activities
The activities of industry can be divided into stages - primary, secondary and tertiary production.
These stages form the chain of production and provide consumers with the finished goods.
Primary production
This involves acquiring raw materials. For example, metals and coal have to be mined; oil drilled
from the ground; rubber tapped from trees; foodstuffs farmed, and fish trawled. This is
sometimes known as extractive production.
Secondary production
Is the manufacturing and assembly process. This involves converting raw materials into
components, assembling the product, e.g. building houses, bridges and roads.
Tertiary production
This refers to the commercial services that support the production and distribution process, e.g.
transport, advertising, warehousing and retail, insurance, teaching and health care.
Public ownership
Business that are owned by the government are public sector businesses. Examples of this in
Pakistan are WAPDA.

Advantages Disadvantages
Government provides services that may be There is no profit motive so efficiency
loss-making services as the main aim of the may fall.
government is to provide a service rather than
make a profit.
Privatization:
When a government owned business is sold of to the private sector. The benefit of this is that
efficiency may increase but usually at the cost of job losses and closing of loss making services
that may have been essential.
There are three types of economies
Command, free market and mixed economy.
O-Level Business Studies Notes 11 Enterprise, Business Growth and Sales
Read & Write Publications

Syllabus 2017 – 2019

O-LEVEL –
–
Enterprise and Entrepreneurship
Characteristic of successful
entrepreneurs

Business – Why should governments support

business startups
– Value of sales
Studies – Which method should you choose?

Enterprise,
Business
Growth and
Sales

Shahraiz Chishti
MBA

Cell: 0321 5555731

O-Level Business Studies Notes 12 Enterprise, Business Growth and Sales
Read & Write Publications

Ch: 3 Enterprise, Business Growth and Sales

Enterprise and Entrepreneurship
Entrepreneur
A person who organizes, operates and takes the risk for a new business venture.
Advantages Disadvantages
– Independence – Risk of failure
– Work on own ideas – Own capital at risk
– Fame and success when business grows – Lack of knowledge and experience in
– More profitable starting and operating a business
– Make use of personal interests and skills – Inconsistent monthly income
Entrepreneur
– Richard Branson – UK- Virgin group of companies
– Mark Zuckerberg – US- Facebook
Characteristic of successful entrepreneurs
– Hardworking
– Risk taker
– Creative
– Optimistic
– Self-confident
– Innovative
– Independent-before hiring others
– Effective communicator-Banks etc.
Why should governments support business startups
– New businesses will create jobs that will help reduce employment.
– New businesses will give consumers more options and increase competition with
already established businesses.
– New businesses will help the economy benefit from the increased output of products.
– New businesses may grow to become very large and important businesses in the future.
– What Support Governments Give To Start-up Businesses
– Business ideas and help – by organizing advice and support sessions offered by
experienced business people.
– Premises – with “enterprise zone” which provide low-cost premises to start-up
businesses
– Finance – loans at low interest rates.
– Labor – Grants to train employees and help increases their productivity.
– Research – Encourage universities to make their research facilities available to new
business enterpreneurs.
Business plan
It is a document containing the business objectives and important details about the operations,
finance and owners of the new business.
Elements:
– Type of business organisation
– Business objectives
– Goods/Services
– Target market
– Human resources plan
– Location of business
O-Level Business Studies Notes 13 Enterprise, Business Growth and Sales
Read & Write Publications
– Production details and business costs
– Forecast profit
– Cash flow
– Finance
– A bank will certainly ask an entrepreneur for a business plan before agreeing to a loan
overdraft to help finance the new business
Comparing Business Size
Who is interested in comparing business size?
– No. of employees
– Value of Output & Sales
– Capital Employed
Number of employees
– Simplest
– Easy to understand
Issues:
– Capital Intensive Firms: Automated Factories are highly automated (capitalized)
businesses that require fewer employees
High Output Levels
– Capital Equipment is expensive to produce high levels of output.
– Labor Intensive Firms
– Lots of manual labor required and require many employees
– MORE EMPLOYEES DOES NOT NECESSARILY MEAN MORE OUTPUT!
Value of sales
Sales Turnover
Effective in comparing company’s in the same industry
Used to calculate market share
Issues
Not suitable for comparing with different industries
Example
“High value” production such as jewelry
“Low value” production such as cleaning services
Capital employed
Issues as some companies are labor intensive rather than capital intensive.
Profit
Profit = Revenue – Total Costs
Not an accurate way of comparing business size
Used to measure efficiency (the degree to which something is done well or without wasted
energy or effort) compared with sales
PROFIT depends on efficiency and the skills of managers as well.
Which method should you choose?
NO “BEST” MEASURE
– Depend on what needs to be established / compared
Absolute Measure of Size
– Use 2 or more should be used
Growth
Benefits
– Profits
O-Level Business Studies Notes 14 Enterprise, Business Growth and Sales
Read & Write Publications
– Status
– Salaries
– Economies of Scale
– Market Share
– Brands
– Note: only achievable if consumers are satisfied
sat
– How do businesses grow?
Internal Growth
– Expansion of Business
– New branches
– New shops
– New Factories
This method is considered Quite Slow
External Growth
Mergers
– Two or more companies agreeing to become one united company
Takeovers
– Purchase of a controlling share (>50%) in another business
Buyout
– The purchase of one firm by another
Horizontal integration
– Buying of firms that are in the same industry & same stage of production
– Example: Walkers Crisps takes over Golden Wonder
Vertical integration
– One ne business integrates with another business at a different stage in the chain of
production
Forward
– One business takes over another business that comes after it in the chain
of production
– E.g. if a potato farm takes over Walkers Crisps
Backward
– One
ne business
business takes over another business that comes before it in the
chain of production
– E.g. if a Walkers Crisps takes over the potato farm
Conglomerate Integration
– one big business integrates with another smaller business in a completely
different market
– Example: Walkers Crisps takes over Next
 Your feedback is important to us
please give your reviews about this book by filling this form and sending us by whatsapp
Book in which this card was found Article No.

Note: Please mark with aor X

Are you satisfied by Paper, Printing & Binding quality of this book.

Are you satisfied by contents of this book.

Will you recommend this book to others.

Have you found any Mistakes in this book (if any).

Page Nos / Questions Nos where you found Mistakes

Remarks:

Note: Please give your details if you want to be added in our Loyalty discount schemes
Name Facebook Id:

Address

City Country

E-mail: Whatsapp Phone No:

Please send your feedback at +92-321-1100570, E-mail:readandwriteoffice@gmail.com

PLEASE FILL AND SEND WHATSAPP PHOTO OF THIS CARD TO RECEIVE

OUR LATEST CATALOG AND PROMOTIONAL ITEMS FREE OF CHARGE
Book in which this card was found Article No.

Check here to receive our catalog. To Send you wholesale information

Name Shop/School Name:

Address

Facebook Id: City Country

E-mail: Whatsapp Phone No:

Please check area(s) of interest to receive related announcements:

O-Level Checkpoint Primary Topical Past Papers Revision Notes Series
IGCSE Checkpoint Secondary Topical Workbooks Sciences Subjects
A-Level Kangaroo Contest Text book Series Business Subjects

Subjects: Article Nos: , , ,

Please send a catalog to my friend:
Name Company
Address Phone/Whatsapp
City Country
You can place your Order at +92-321-1100570, Website: www.readnwrite.org
E-mail:readandwriteoffice@gmail.com
E-commerce: www.Yayvo.com/read & write publications