iGCSE Business Units 1-6

Specialisation

when people and businesses concentrate on what they are best at.

Opportunity cost

the next best alternative given up by choosing another item.

(factor of production) Enterprise

the skill, and risk-taking ability of the person who brings the factors of production together to produce a good or a service. For example, the owner of a business. These people are called entrepreneurs.

(factor of production) Capital

the finance, machinery and equipment needed for the manufacture of goods.

(factor of production) Labour

the term used to describe the number of people available to make products.

(factor of production) Land

the term used to cover all of the natural resources provided by nature and includes fields, forests, oil, gas, metals and other resources.

Want

A want is a good or service which people would like to have, but which is not essential for living. People's wants are unlimited.

Disadvantages of division of labour and job specialization

•Workers can become bored doing just one job-efficiency might fall

Why specialisation is common

•Specialized machinery and technology are widely available

Need

A need is a good or service essential for living.

Factors of production

Factors of production are those resources needed to produce goods or services. There are four factors of production and they are in limited supply.

Division of labour

Division of labour is when the production process is split up into different tasks and each worker performs one of these tasks. It is a form of specialisation.

Economic problem

There exist unlimited wants but limited resources to produce the goods and services to satisfy those wants, this creates scarcity.

Scarcity

Scarcity is the lack of sufficient products to fulfill the total wants of the population.

Business

An organisation which produces goods and services.

Advantages of division of labour and job specialization

•Workers are trained in one task and specialize in this-Increases efficiency

Objective of the whole community

-Jobs for working population

Different types of objectives

-Survival

Objectives for owner

-Growth of the business so their investment is worth more

Maslow (content theories)

-There is a hierarchy of needs

Mixed economy

A mixed economy has both a private sector and a public sector.

Benefits of being an entrepreneur

-Independence: able to choose how to use time and money

Profit sharing

Profit sharing is a system whereby a proportion of the company's profits is paid out to employees.

Primary sector

The primary sector of industry extracts and uses the natural resources of the earth to produce raw materials used by other businesses

Disadvantages of industrialization

•More people move to the city which causes housing and social problems

Business objectives

Business objectives are the aims or targets that a business works towards. SMART- specific, measurable, agreed upon, realistic, time oriented.

Advantages of short chain of commands

-communication is quicker and more accurate

Fringe benefits

Fringe benefits are non-financial rewards given to employees, e.g. car, house, health care, children's education is paid for, etc.

Autonomous work groups or team working

This is where a group of workers is given responsibility for a particular process, product or development. They can decide as a group how to complete the tasks or organize the jobs. This creates a feeling of control and the employees feel more committed which increases job satisfaction

Stakeholder

A stakeholder is any person or group with a direct interest in the performance and activities of a business.

Added value

Added value is the difference between the selling price of a product and the cost of bought in materials and components.

Objective for managers

- High salaries for their important work

Industrialization

The growing importance of the secondary sector in developing countries

Advantages of de-industrialization

•Income and living standards of the citizens increase

Why people work

-Money: to pay for necessities and some luxuries

Privatisation

When governments sell public sector businesses to private sector businesses

Share ownership

Share ownership is where shares in the company are given to employees so that they become part owners in the company.

Salary

A salary is payment for work, usually paid monthly.

Advantages of an organization chart

-Shows how everyone is related in a business

Job enlargement

Job enlargement is where extra tasks of a similar level of work are added to a worker's job description. This should not add to the amount of work the employee has to do but it should add more variety

Market share

Market share is the proportion of total market sales achieved by one business.

Tertiary sector

The tertiary sector of industry provides services to consumers and the other sectors of industry.

Motivation

Motivation is the reason why employees want to work hard and work effectively for the business.

Objective for consumers

-Safe and reliable products

Wage

A wage is payment for work, usually paid weekly.

Disadvantages of de-industrialization

•Increase in competition for businesses

Job rotation

Job rotation involves workers swapping round and doing each specific task for only a limited time and then changing round again. This causes there to be more variety to the work and allows managers to move employees around if someone is sick, however it doesn't make the tasks more interesting.

Qualities of an entrepreneur

-Hard working- Have to work long hours and have few vacation days

Performance-related pay

Performance-related pay is pay which is related to the effectiveness of the employee where their output can easily be measured.

Public sector

Government owned and controlled businesses and organisations. Services provided are free and are paid for by taxes.

Chain of command

Chain of command is the structure in an organisation which allows instructions to be passed down from senior management to lower levels of management.

Objective for banks

-Business to pay back money lent with interest

Disadvantages of being an entrepreneur

-Risk-the business might fail

Herzberg (content theories)

-His focus was job satisfaction

Objectives for workers

-Regular payment

Roles of a manager

-Planning

Objectives of social enterprises

Social: to provide jobs and support for the disadvantaged groups in society

De-industrialisation

De-industrialisation occurs when there is a decline in the importance of the secondary, manufacturing sector of industry in a country.

Bonus

A bonus is an additional amount of payment above basic pay as a reward for good work.

Benefits of business objectives

-They give workers and managers a clear target to work towards

Private sector

Businesses not owned by the government. Services are charged and paid for by the customer

Secondary sector

The secondary sector of industry manufactures goods using raw materials provided by the primary sector.

Organisational structure

Organisational structure refers to the levels of management and division of responsibilities within an organisation.

Stakeholder groups

-Owners

Job satisfaction

Job satisfaction is the enjoyment derived from a feeling that you have done a good job.

Advantages of industrialization

•National output increases which increases average living standard

F.W. Taylor (content theories)

-People worked for only one reason; money

Manager

A person who has control, responsibility, or

Why does de-industrialization happen

-Sources of primary products become depleted

Objective for Government

-Business to be successful, will pay taxes, employ workers and increase country output

How to increase added value

-Increase selling price but keep the costs the same, to do this you need to have a good image of your product

Span of control

The span of control is the number of subordinates working directly under a management.

Entrepreneur

An entrepreneur is a person who organises, operates and takes the risk for a new business venture.

Commission

Commission is payment relating to the number of sales made .

Job enrichment

Job enrichment involves looking at jobs and adding tasks that require more skill and/or responsibility. Additional training may be necessary to enable the employee to take on extra tasks. If managers can design jobs so that they provide scope for fulfilling higher human needs , workers will often become more committed because they gain more satisfaction from their jobs

Appraisal

An appraisal is a method of assessing the effectiveness of an employee.

Why is it important to have good managers

-To motivate employees

Commanding(HR)

Command is concerned with guiding, leading and

Job specification

A job specification is a document which outlines the requirements, qualifications, expertise, physical characteristics, etc. for a specified job.

Job analysis

A job analysis identifies and records the responsibilities and tasks relating to a job.

Planning(HR)

-It involves setting aims and targets which gives direction or purpose to the area and

Delegating

To give authority to a subordinate to preform a task, however the manager is still responsible for the task

Democratic leadership

Democratic leadership gets other employees involved in the decision-making process.

Controlling(HR)

-Managers have to measure and evaluate the work of all people and groups in order to make sure objectives are met.

Leadership styles

Leadership styles are the different approaches to dealing with people when in a position of authority - autocratic, laissez-faire or democratic.

Closed shop

Closed shop is when all employees must be a member of the same trade union.

Trade union

A trade union is a group of workers who have joined together to ensure their interests are protected.

Staff managers

Staff managers are specialists who provide support, information and assistance to line managers.

Laissez-faire

Laissez-faire leadership makes the broad objectives of the business known to employees, but then they are left to make their own decisions and organise their own work.

Coordinating(HR)

Manager has to bring together the different departments and people and make sure they communicate properly.

Line managers

Line managers have direct responsibility over people below them in the hierarchy of an organisation.

Job description

A job description outlines the responsibilities and duties to be carried out by someone employed to do a specific job.

Recruitment

Recruitment is the process from identifying that the business needs to employ someone up to the point at which applications have arrived at the business.

Organizing(HR)

-The manager must organize people and resources effectively to achieve tasks.

Advantage of delegating

For manager:

Autocratic leadership

Autocratic leadership is where the manager expects to be in charge of the business and to have their orders followed.

How does a business plan help an entrepreneur

-Help them stay on strategy

Value of capital employed

The total capital invested into the business.

Business plan

A business plan is a document containing the business objectives and important details about the operations, finance and owners of the new business.

External growth

External growth is when a business takes over or merges with another business.