recommend and justify who to employ in a given situation

IGCSE Business Studies – Comprehensive Revision Notes

How to use these notes

• Read each unit’s Learning Objective to see what you must know.
• Study the Key Concepts and use the tables/diagrams to visualise ideas.
• After each unit, check the Skill‑Focus Box to see which Assessment Objectives (AO1‑AO4) are being exercised.
• Use the Case‑Study & Checklist at the end of the “People in Business” unit for exam‑style practice.

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1. Understanding Business Activity

Learning Objective

Explain the purpose of businesses, classify different types, describe how they are organised and measured, and evaluate the influence of stakeholders and objectives.

Key Concepts

• Needs vs. wants – the driver of demand.
• Primary, secondary and tertiary sectors – where value is added.
• Types of business organisation – sole trader, partnership, private limited company (Ltd), public limited company (PLC), co‑operative.
• Size of business – measured by turnover, number of employees, market share.
• Business objectives – profit maximisation, growth, survival, market share, corporate social responsibility (CSR).
• Stakeholders – owners, employees, customers, suppliers, community, government; potential conflicts of interest.
• Business plans – purpose, components (executive summary, market analysis, financial forecasts).

Skill‑Focus (AO1‑AO4)

• AO1 – Define primary, secondary and tertiary sectors.
• AO2 – Explain why a business might choose a partnership over a sole trader.
• AO3 – Analyse how conflicting stakeholder interests can affect a decision to expand.
• AO4 – Evaluate the advantages and disadvantages of a PLC for raising finance.

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2. People in Business

Learning Objective

Recommend and justify who to employ in a given situation by applying appropriate recruitment and selection techniques, and evaluate how motivation, leadership and trade‑union relations affect organisational performance.

2.1 Motivation & Management

• Motivation theories – Maslow’s hierarchy of needs, Herzberg’s two‑factor theory, Taylor’s scientific management, and contemporary intrinsic/extrinsic reward models.
• Financial incentives – wages, bonuses, commission, profit‑sharing.
• Non‑financial incentives – recognition, career development, flexible working, job enrichment.
• Management functions – planning, organising, leading, controlling.
• Leadership styles – autocratic, democratic, laissez‑faire, transformational.

2.2 Trade Unions & Employment Law (International perspective)

• Trade‑union role – collective bargaining, industrial action, representation.
• Legal controls (global overview)
  • Equality and anti‑discrimination legislation – e.g., UK Equality Act 2010, US Equal Employment Opportunity Act, EU Directive 2000/78/EC.
  • Employment contracts – written terms, minimum wage (national or international standards), working‑time regulations.
  • Health & safety – International Labour Organization (ILO) conventions, national health‑and‑safety acts.
  • Data protection – GDPR (EU), UK Data Protection Act 2018, and comparable privacy laws in other jurisdictions.
  • Unfair dismissal & redundancy rights – typical provisions in most developed economies.

2.3 Recruiting and Selecting Employees

Recruitment vs. Selection

• Recruitment – attracting a pool of suitable candidates.
• Selection – choosing the most suitable candidate from that pool.

Recruitment Process – Stages (with rationale)

1. Job analysis & person specification – defines duties, responsibilities, skills and qualifications; ensures the vacancy is lawful and targeted.
2. Choose recruitment method(s) – internal, external, agency, online, campus, employee‑referral, etc.
3. Advertise the vacancy – publish job description and person specification.
4. Receive and short‑list applications – use CVs or application forms to filter out unsuitable candidates.
5. Selection testing – aptitude, psychometric, product‑knowledge or situational judgement tests.
6. Interview(s) – structured, behavioural or situational; scored against a rubric.
7. Assessment centre (if used) – group exercises, role‑plays, in‑basket tasks, presentations.
8. Reference and background checks – verify employment history and any legal restrictions.
9. Decision & job offer – select the best candidate, make an offer and agree contractual terms.

Recruitment Methods – Comparison

Method	Source	Typical Cost	Time to Fill	Advantages	Disadvantages
Internal promotion	Current employees	Low (no advertising)	Very short	Motivates staff; lower training costs; known performance	Limited fresh ideas; possible resentment among peers
Employee referrals	Employees’ personal networks	Low–moderate (referral bonus)	Short	High reliability; faster recruitment; cultural fit	May reduce diversity; risk of nepotism
Advertising (newspaper, online job boards, social media)	General public	Moderate–high (ad placement fees)	Medium	Broad reach; can target specific demographics; builds employer brand	Large number of unsuitable applications; cost
Recruitment agencies	Specialist external providers	High (percentage of salary)	Short–medium	Expert screening; saves time; access to passive candidates	Agency fees; less control over process; possible cultural mismatch
Campus recruitment	Recent graduates, interns	Low–moderate (career‑fair fees, university liaison)	Medium	Access to emerging talent; long‑term employer brand	Limited experience; may need more training

Selection Tools

• Application forms / CVs – collect standardised data for short‑listing.
• Written or computer‑based tests – assess aptitude, numeracy, verbal reasoning or product knowledge.
• Structured interviews – behavioural (past experience) or situational (future actions) questions, scored against a rubric.
• Assessment centres – group exercises, role‑plays, in‑basket tasks, presentations; ideal for managerial or customer‑facing roles.
• Reference checks – confirm employment history, performance and any disciplinary issues.

Part‑time vs. Full‑time Employment – Comparison

Aspect	Part‑time	Full‑time
Typical weekly hours	< 30 hrs	35–40 hrs (or more)
Pay	Pro‑rated hourly rate	Fixed salary or full‑week hourly rate
Benefits (pension, holiday, etc.)	Often reduced or optional	Full statutory benefits
Training & development	May be limited due to fewer hours	More extensive programmes
Flexibility	High – useful for peak periods	Lower – set schedule
Impact on culture	Diverse perspectives but possibly less integrated	Stronger sense of belonging and cohesion

Case Study: Selecting a Sales Assistant for “TechGear Ltd.”

Situation

TechGear Ltd. is opening a flagship store and needs a full‑time sales assistant. The role requires strong product knowledge, excellent communication, and the ability to work flexible hours (including evenings and weekends).

Step 1 – Job Analysis & Person Specification

• Essential qualifications: GCSEs (including English and Maths).
• Experience: Minimum 1 year retail experience; preferably in electronics.
• Skills: Proven ability to meet sales targets; confident verbal communication; basic IT literacy.
• Availability: Willingness to work evenings and weekends.
• Personal attributes: Friendly, proactive, able to work under pressure.

Step 2 – Recruitment Method Chosen

TechGear combines internal promotion (to reward a current part‑time employee) with an online job‑board advertisement to attract fresh talent.

Step 3 – Selection Tools Used

1. Application form – includes specific questions on sales experience and availability.
2. Product‑knowledge test – 10 multiple‑choice questions on TechGear’s flagship products.
3. Structured interview – behavioural and situational questions; each answer scored 0–5.
4. Assessment centre activity (role‑play) – candidates simulate a sales conversation with a “difficult” customer.

Sample Interview Question & Marking Rubric

Question: “A customer is unhappy because the tablet they bought is not working as expected. Explain how you would handle the situation.”

Mark	Criteria
5	Demonstrates empathy, follows company returns policy, offers a solution (replacement or repair), upsells a complementary accessory, and confirms customer satisfaction.
3‑4	Shows empathy and offers a reasonable solution but omits one element (e.g., no upsell or incomplete policy reference).
1‑2	Limited empathy, vague solution, or fails to reference policy.
0	No relevant response.

Step 4 – Evaluation of Candidates

Candidate	Qualifications & Experience	Test Score (/10)	Interview Rating (/5)	Assessment‑centre Rating (/5)	Overall Suitability
Alice (internal)	GCSEs + 1 yr part‑time retail (TechGear)	7	4	3	Good – already knows store processes but lower product knowledge.
Ben (external)	GCSEs + 2 yr electronics retail (competitor)	9	5	5	Excellent – highest scores across all tools and relevant experience.
Clara (external)	GCSEs only, no retail experience	5	3	2	Weak – lacks essential experience and lower competency scores.

Recommendation & Justification

TechGear should offer the position to Ben. He exceeds the essential criteria, achieves the highest scores in product‑knowledge, interview and assessment‑centre, and brings proven experience in a similar electronics retail environment. Selecting Ben aligns with the company’s objective of rapid sales growth, introduces fresh ideas, and satisfies all legal and ethical standards (non‑discriminatory process, secure data handling, fair assessment).

Skill‑Focus (AO1‑AO4)

• AO1 – Define “person specification” and “assessment centre”.
• AO2 – Explain why a structured interview is more reliable than an informal chat.
• AO3 – Analyse the impact of using an internal promotion versus an external hire on team morale.
• AO4 – Evaluate the advantages and disadvantages of using an online job‑board for this vacancy.

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3. Marketing

Learning Objective

Analyse how businesses develop and implement marketing strategies, and evaluate the effectiveness of the marketing mix, market research and ethical considerations.

Key Concepts

• Marketing mix (4 Ps) – Product, Price, Place, Promotion.
• Product life‑cycle (PLC) – introduction, growth, maturity, decline.
• Market research methods – primary (surveys, focus groups) and secondary (published data).
• Segmentation, targeting and positioning (STP) – demographic, geographic, psychographic, behavioural criteria.
• Pricing strategies – cost‑plus, penetration, skimming, psychological pricing.
• Distribution channels – direct, indirect, intensive, selective, exclusive.
• Promotional tools – advertising, sales promotion, public relations, personal selling, direct marketing, digital marketing.
• Legal & ethical issues – misleading advertising, consumer protection, data‑privacy in digital marketing.
• International marketing – export, licensing, franchising, joint ventures, cultural adaptation.

Example: Pricing Decision for a New Smartphone

1. Calculate unit cost: £200.
2. Add desired profit margin (30 %): £200 × 1.30 = £260.
3. Consider market positioning – if targeting early adopters, apply a skimming price of £350.
4. Check competitor prices – adjust if necessary to remain competitive.

Skill‑Focus (AO1‑AO4)

• AO1 – List the four elements of the marketing mix.
• AO2 – Explain how market segmentation can improve sales of a sports‑wear brand.
• AO3 – Analyse the effect of a price‑skimming strategy on a product’s PLC.
• AO4 – Evaluate the ethical implications of using personal data for targeted online ads.

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4. Operations Management

Learning Objective

Explain how businesses plan, produce and deliver goods and services, and assess the impact of production methods, costs, quality control and location decisions.

Key Concepts

• Production methods – job, batch, flow (mass) production; advantages & disadvantages.
• Productivity – output per hour / per employee; ways to improve (training, technology).
• Costs – fixed, variable, total, average, marginal; economies of scale vs. diseconomies.
• Break‑even analysis – calculation, chart interpretation, sensitivity to price or cost changes.
• Quality management – quality control (inspection) vs. quality assurance (process‑based); total quality management (TQM).
• Location factors – transport, labour, market access, government incentives, environmental impact.
• Lean production & Just‑in‑Time (JIT) – waste reduction, inventory minimisation.

Break‑Even Example

Fixed costs = £50,000; variable cost per unit = £20; selling price per unit = £35.

• Contribution per unit = £35 – £20 = £15.
• Break‑even volume = £50,000 ÷ £15 ≈ 3,334 units.

Skill‑Focus (AO1‑AO4)

• AO1 – Define “fixed cost” and “variable cost”.
• AO2 – Explain why a bakery would use batch production rather than flow production.
• AO3 – Analyse how an increase in raw‑material price would affect the break‑even point.
• AO4 – Evaluate the benefits and risks of locating a factory near a major port.

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5. Financial Information & Decisions

Learning Objective

Interpret basic financial statements, calculate key ratios and use financial information to make short‑ and long‑term business decisions.

Key Concepts

• Sources of finance – internal (retained earnings, sale of assets) and external (bank loan, overdraft, equity, leasing, venture capital).
• Cash‑flow forecast – projected inflows and outflows over a period; importance for liquidity.
• Income statement (profit & loss account) – revenue, cost of sales, gross profit, operating expenses, net profit.
• Balance sheet – assets (current & non‑current), liabilities (current & non‑current), owners’ equity.
• Profitability ratios – gross profit margin, net profit margin, return on capital employed (ROCE).
• Liquidity ratios – current ratio, quick ratio.
• Break‑even & contribution analysis – link to finance decisions.
• Investment appraisal (basic) – payback period, simple ROI.

Sample Income Statement (£)

Sales revenue	150,000
Cost of sales	90,000
Gross profit	60,000
Administrative expenses	20,000
Selling & distribution expenses	10,000
Operating profit	30,000
Interest expense	5,000
Net profit before tax	25,000
Tax (20 %)	5,000
Net profit after tax	20,000

Key Ratio Calculations

• Gross profit margin = (Gross profit ÷ Sales) × 100 = (60,000 ÷ 150,000) × 100 = 40 %.
• Current ratio = Current assets ÷ Current liabilities (example: £80,000 ÷ £40,000 = 2.0).

Skill‑Focus (AO1‑AO4)

• AO1 – Identify the three main sections of a balance sheet.
• AO2 – Explain how a cash‑flow forecast can prevent a cash shortage.
• AO3 – Analyse the effect of a 10 % rise in sales price on net profit, assuming costs stay constant.
• AO4 – Evaluate whether a business should finance new equipment by a bank loan or by issuing new shares.

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6. External Influences on Business

Learning Objective

Assess how economic, political, social, technological, environmental and legal factors affect business decisions and performance.

Key Concepts

• Economic cycle – expansion, peak, recession, trough; impact on consumer spending and investment.
• Fiscal policy – government spending and taxation; how it influences demand.
• Monetary policy – interest rates and money supply; effect on borrowing costs.
• Globalisation – trade blocs, tariffs, exchange rates, offshoring.
• Environmental & ethical issues – sustainability, carbon footprint, corporate social responsibility (CSR), green marketing.
• Legal controls (broad) – competition law, consumer protection, health & safety, employment legislation (as outlined in Unit 2).
• Technological change – automation, e‑commerce, digital transformation, impact on productivity and employment.

Exchange‑Rate Example

UK‑based company imports components costing €50,000. Spot rate = £0.85/€. Total cost in £ = €50,000 × 0.85 = £42,500. If the pound weakens to £0.80/€, the cost rises to £40,000 → £2,500 increase, affecting profit margins.

Skill‑Focus (AO1‑AO4)

• AO1 – Define “exchange rate”.
• AO2 – Explain how a rise in interest rates can reduce consumer borrowing.
• AO3 – Analyse the likely impact of stricter environmental legislation on a manufacturing firm.
• AO4 – Evaluate the advantages and disadvantages of expanding into an emerging market.

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7. Summary Checklist for Recommending a Candidate (People in Business)

• Has the candidate met all **essential** qualifications and experience in the person specification?
• Do test scores, interview and assessment‑centre ratings demonstrate the required competence?
• Is the candidate’s availability compatible with the role’s schedule (including evenings/weekends if required)?
• Does the choice support organisational goals (e.g., sales targets, brand image, culture)?
• Are all **legal and ethical** controls satisfied – non‑discrimination, data protection, minimum‑wage compliance, health & safety?
• Will the appointment positively affect team dynamics and organisational culture?
• Is the recruitment method aligned with the company’s employer‑brand strategy and budget?

8. Exam‑Style Practice Questions (All Units)

1. People in Business – “Explain two advantages and two disadvantages of using an assessment centre for selecting a manager.” (AO2)
2. Marketing – “A company wants to increase market share for its existing product. Using the marketing mix, suggest two strategies it could adopt.” (AO3)
3. Operations – “Calculate the break‑even point for a business with fixed costs £120,000, a selling price of £30 per unit and a variable cost of £18 per unit.” (AO2)
4. Finance – “Interpret the following ratio: Current ratio = 1.5. What does this indicate about the business’s short‑term liquidity?” (AO3)
5. External Influences – “Evaluate the impact of a 5 % increase in VAT on a retail business’s pricing strategy.” (AO4)

9. Suggested Diagram

Flowchart of the Recruitment & Selection Process – from Job Analysis → Person Specification → Recruitment Method → Advertising → Short‑listing → Testing → Interview → Assessment Centre → Reference Checks → Decision & Offer.
Include a small “Legal Check‑point” icon at each stage to remind you of equality, data‑protection and health‑&‑safety considerations.

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End of Notes