Page 46 - Cambridge IGCSE Business Studies
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Cambridge IGCSE Business Studies Section 1 Understanding business activity
Revision checklist Exam practice questions
● An entrepreneur is someone who has an idea 1 Grace has always been interested in owning her own
for a business and is prepared to take the business. Even when she was still at school she was
risk of setting up the business using their always looking at ways of making money – baking cakes,
own money. making sweets which she sold to her friends and one
● A business plan provides purpose and time even organising a dance competition. Her drive and
direction for the business by clearly setting determination to succeed at whatever she does in life have
out the objectives and financial forecasts
often enabled her to achieve success where others might
and the resources needed to achieve these.
easily have failed.
● Capital employed, number of employees,
She has a new idea for a disposable seat. At a recent
value of output and market share are all
methods that can be used to measure outdoor music concert she realised that many people
business size. wanted to sit down between acts, but this was not possible
because the ground was damp and people did not want to
● Although some businesses might remain
small, others will choose to grow using get dirt or grass stains on their clothes. The seat is made of
internal or external methods. cardboard so it is lightweight, easy to carry and assemble.
Once fi nished with it can be recycled.
● There are many reasons why businesses,
especially new businesses, fail. The most a Grace’s new business activity will be part of the
common reason for business failure is poor
secondary sector. Identify the other two sectors of
financial management.
business activity. [2]
b What is meant by ‘entrepreneur’? [2]
44 c Identify and explain two characteristics you think
Grace has that make her a good entrepreneur. [4]
d Identify and explain two benefi ts to Grace of
preparing a business plan. [6]
e Which two factors do you think are most likely to
affect the success of Grace’s business proposal?
Justify your answer. [6]
2 Leroy and Lance are farmers. In addition to the owners,
the business employs three other workers. They sell their
produce – vegetables, eggs and milk – to businesses in
the tertiary sector.
Leroy is keen to grow the business through forward vertical
integration, but Lance is not so sure about Leroy’s plan for growth.
a Identify two ways of measuring the size of Leroy and
Lance’s business. [2]
b What is meant by ‘tertiary sector’? [2]
c Explain how the business might achieve growth
through forward vertical integration. [4]
d Identify and explain two problems the business might
experience if it decides to set growth as an objective. [6]
e Do you think Lance is right to be concerned about
Leroy’s plan for growth? Justify your answer. [6]
Total available marks 40
