IGCSE Business & O Level

Last Updated: May 2026. Prepares for IGCSE Business (0264) Exams from 2027 Onward

Table of contents

Assessment

Paper 1: 1 hour 30 minutes. Short Answer and Data Response (50%). 80 marks 

Paper 2: 1 hour 30 minutes. Case Study (50%). 80 marks

Compliment

All testimonials are shared with permission. Names and identifying details have been removed to protect student privacy. Results may vary 

Chapter 1 Business activity and economic sectors

Chapter 3 Enterprise, business growth and size

Entrepreneur is a person who organises, operates and takes the risk for a new business venture. The entreperneur also claims the rewards

Reason new businesses fail: 

• lack of finance and resources, 

• poor planning 

• inadequate research 

• lack the experience and decision-making skills

A takeover or acquisition is when one business buys out the owners of another business, which then becomes part of the ‘predator’ business (the business which has taken it over).

Chapter 4 Types of business organisation

Explain two advantages and two disadvantages of a business being a private limited company. 

Advantages include:

• Has a separate legal identity – company can be sued but not usually the owners

• Can sell shares to family and friends to raise capital – larger amounts of capital may be raised than if a sole trader / partnership

• Limited liability – owners will not lose personal possessions if business is unable to pay its debts

• Cannot be taken over without the consent of the shareholders

• Provides continuity on the death of the owner

Disadvantages include:

• Accounts are not private – competitors may access the accounts

• Cannot sell shares to the public / shares cannot be sold on the stock exchange - not easy to transfer shares so family and friends may be less willing to buy shares

• Legal formalities required to operate the company – need to have accounts audited and registered with government which takes time and increases costs

• Legal formalities setting up the company – has to complete paperwork to register the company which takes time and money / may take more time for owner than setting up as a sole trader/partnership

Advantage To the franchisor

• The franchisee buys a licence from the franchisor to use the brand name

• Expansion of the franchised business is much faster than if the franchisor had to finance all new outlets

• The management of the outlets is the responsibility of the franchisee

• All products sold must be obtained from the franchisor

Disadvantage To the franchisor

• Poor management of one franchised outlet could lead to a bad reputation for the whole business

• The franchisee keeps profits from the outlet

Chapter 5 Business objectives and stakeholder objectives

Objectives for businesses:

• business survival

• profit

• returns to shareholders

• growth of the business

• market share

• service to the community.

Chapter 6 Motivating employees

Job rotation involves workers swapping around and doing each specific task for only a limited time and then changing around again.

Financial Motivation

• wage

• salary

• bonus

• commission

• profit sharing

Non-Financial Motivation

• job satisfaction

• job rotation

• job enrichment

• Teamworking

• Training

• Opportunities for promotion

• Job enlargement 

• Praise (This is FREE)

• Recognition 

• Delegation 

Maslow

• self-actualisation

• esteem needs

• social needs

• safety/security needs

• physiological needs

Herzberg

• Motivators

  • achievement

  • recognition

  • personal growth/development

  • advancement/promotion

  • work itself

• ‘Hygiene’ (or ‘maintenance’) factors

• status

• security

• work conditions

• company policies and administration

• relationship with supervisor

• relationship with subordinates

• salary

Chapter 8 Recruitment, selection and training of employees

~ External recruitment

~ Training

Advantage of off-the-job training

•  A broad range of skills can be taught 

• The training may take place in the evening and outside of work time so will not interfere with normal work of the trainee 

• Output of work will be lost while training – only payment for the course is required 

• A wider variety of skills may be taught by experts in the new technology 

• Up-to-date knowledge and skills may be taught 

• May not have anyone in the business who can teach the new skills as the technology is new to internal employees 

Disadvantage of off-the-job training

• Costs are higher than on-the-job training 

• Wages are paid but no output of work from the trainee 

• Additional qualifications may make it easier for trainee to leave for another job 

Chapter 10 Marketing, competition and the customer

Benefits to a business of using market segmentation. 

• Able to tailor goods to specific needs of segment/know what to produce

• Identify gaps in the market

• To help decide best place to sell

• Research is simpler

• Help focus spending/make best use of resources

• Help target promotion/advertising

• Help set prices

• Help increase sales/revenue

Why consumer spending patterns for a product might change:

•  Changes in consumer tastes and fashions – increased/decreased demand for the products

•  Products no longer meet customer needs – choose to buy alternative products instead

•  Changes in incomes – now/no longer able to afford better quality products

•  The price of a product changes – higher prices usually lead to lower sales

•  Changes in the prices of competitors’ products – if competitors’ products are cheaper then customers will buy from them instead

•  Spending on advertising and promotional activities – if effective then is likely to result in sales increasing for the successfully advertised product

•  Changes in the population/age structure of the population – an increase in the number of older people in the population will increase demand for products that are popular with them

•  New technology means new products become available – this will increase demand for these products/demand for old technology products decreases

Chapter 12 The marketing mix: product

How stages of the product life cycle influence marketing decisions for pricing?

• During introductory stage the business may set a low price to attract customers to their hand cream

• At growth stage prices may be lowered due to increased competition 

• At maturity stage price is likely to be similar to competitors to retain market share [an] for the branded products

• During decline stage discounts might be offered to maintain sales/ sell of remaining inventory 

• Skimming pricing can be used at the introductory stage to recover development costs [an] of new packaging [app]

• Penetration pricing in some market segments

• Cost plus pricing 

• Competitive pricing 

• Promotional pricing

Chapter 13 The marketing mix: price

Cost-plus pricing is the cost of manufacturing the product plus a profit mark-up.

~Price elasticity of demand

Price elastic demand is where consumers are very sensitive to changes in price. 

Price inelastic demand is where consumers are not sensitive to changes in price.

Chapter 19 Costs, scale of production and break-even analysis

Limitations of using break-even analysis:

• Assumes no inventories

• ‘Straight line’ assumptions about costs and revenue

• Fixed costs are not always constant

• Assumes all products are actually sold / it is only an estimate/forecast

• Only focuses on break-even when there are many other factors to consider when running a business

• Assumes single product

• Hard to split costs between fixed and variable

• May be hard to split fixed costs if produce several products

Chapter 20 Achieving quality production

Quality assurance: 

• Checking for quality (standards) throughout production process / checking quality at every stage 

• A method of improving quality by trying to prevent mistakes happening in the production process 

Chapter 21 Location decisions

https://www.iso.org/home.html

Chapter 22 Business finance: needs and sources

Chapter 23 Cash flow forecasting and working capital

Profit =  Revenue – Cost of goods sold 

Ways cash-flow problems could be overcome.

• Increase access to short-term source of funds – short-term bank loan /overdraft – will inject cash into the business / provide funds when there is a liquidity problem 

• Delay payment to suppliers –  cash outflow decreases – less working capital required so eases cash flow problem

• To ask customers to pay promptly – cash flows into the business more quickly – may have time to receive revenue from sales before payment for raw materials is necessary

• Delay or cancel purchases of capital equipment - reduces cash outflow in the short-term

• Example of how to increase cash inflows such as increase price of product

• Example of how to reduce cash outflows such as find cheaper supplier of raw materials

Chapter 24 Income statements

Net profit (also known as 'profit') is calculated by deducting all expenses and overheads of the business from gross profit.

Chapter 26 Analysis of Account

Profitability Ratio

• Gross profit margin/ratio/percentage

• Profit margin/ratio/percentage

• Return on capital employed/ROCE

Chapter 27 Economic issues

Inflation is the increase in the average price level of goods and services over time. 

Example of inflation: 

Let’s say you enjoy a scoop of ice cream that used to cost $2. Now, when you go to the ice cream shop, the same scoop costs $3. You need more money to buy the same ice cream because of inflation.

Central Banks play a vital role in maintaining stability in the financial system. Additionally, the policy tools at their disposal help to meet Government economic objectives & create economic growth.

• Implementation of monetary policy

• Banker to the government: The Government sets the annual budget but it is the Central Bank that manages the tax receipts & payments. In 2022 there were 5.7 million public sector workers in the UK who had to be paid by the Central Bank each month

• Banker to the banks – lender of last resort: Commercial banks are able to borrow from the Central Bank when they run into short-term liquidity issues. Without this help, they might go bankrupt leading to instability in the financial system - & a potential loss of savings for many households

• Regulation of the banking industry: the high level of asymmetric information in financial markets requires that commercial banks are regulated in order to protect consumers

Chapter 28 Environmental and ethical issues

• Pay fair wages ...

• Ensure fair working conditions for employees ...

• Pay suppliers on time when buying ... 

• Pay fair price to suppliers 

• Charge customers fair prices / not fix prices with competitors

• Source environmentally friendly materials / less pollution / not dump waste / use renewable energy 

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