Edexcel GCSE Business Studies

section 1-5


Unit 1: marketing and market research

  • Building a business requires marketing, this means thinking through every aspect of what customers really want and why and then providing the right balance between product, price, promotion and place.
  • In some cases all four might be equally important but more commonly companies learn that one is more important than the others.
  • Learning where to focus your marketing effort is crucial. it depends hugely on market research. Market research involves each company getting the information it needs about its own particular market.
  • Primary research asks customers direct questions about their opinions or buying habits.
  • Secondary research uncovers facts that some else has already found out.


  • Questionnaire, assesses potential demand for a product/service - advantages: can identify its target customers helping with promotion and establish the likely selling price and sales level. Disadvantages: time consuming and expensive, questions can be biased giving misleading results.
  • Focus Group, this allows for more in-depth answers than a questionnaire and allows for open questions. Advantages: Insight into customer perceptions and behavior helping a firm decide on branding and advertising images. Disadvantages: time consuming and expensive, interviewer can sometimes effect the results.
  • Product testing, new products are tested on the public before they are launched. Advantages: very useful to get consumer feedback prior to a product launch showing likely demand and price customers are willing to pay. Disadvantages: time consuming and expensive, people aren't always honest.


  • Mintel Report, the marketing intelligence reports are put together on more than 600 subjects. Advantages: already been carried out so quicker and cheaper than primary. Disadvantages: report costs £600 and it won't have local information or have data specific for your product.
  • Web Research, searches can help identify competitors. Advantages: cheap and easy to carry out. Disadvantages: not reliable maybe not valid.


  • What do they really think (deep down)? This usually involves trying to get inside the head of consumers. - in-depth research using focus groups or depth interviews. It is used to find out consumers behavior and attitudes.


  • This uses questionnaires to ask enough people to find out what percentage of people think what. - this deals with large quantities of data allowing statistical analysis of results.
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Unit 2: Product trial and repeat purchase

  • Product trial = getting people to buy it for the first time.
  • Repeat purchase = moving customers on from trial to buying it again and again.

Product Trial:

Getting people to buy a product for the first time can be hard when:

  • buyers are locked into existing brand loyalties
  • buyers are locked in by earlier decisions e.g. too expensive
  • your new business has not yet established a reputation/ brand image so there is no reason for people to risk their money with you.

This must be achieved by huge advertising spending, building up a clear brand image and persuading people that it must be good. Or product trial must be started on a small scale and steadily built up by word of mouth and recommendation. 

Repeat Purchase: 

this is vital for a businesses success launching a new product is far too expensive to make a profit if people buy once and never again. To achieve high repeat purchase:

  • The product/ service must be at least as good as the customer expected - preferably much better .
  • The brand image must match the customers image of him or herself.
  • The product must seem value for money .
  • Once a product has become established as a reliable brand managers can look to expand their product range knowing they have loyal customers who would be willing to try something new.
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Unit 3: Product life cycle

Product life cycle is used to examine existing positions of its products and services, only by looking at how its products are doing will it be able to decide what to do nest. All new products have an expected life cycle. A products life cycle is the amount of time a business expects the product to sell.

  • Stage 1: Introduction: spend a lot of time and money researching the product and its market. It will be tested before it is launched. There are no sales yet. They will be preparing an advertising campaign. Costs are high. When the product is launched the sales will be low with small scale distribution. Advertising will be informative to make people aware the product exists. 
  • Stage 2: Growth: becomes known and has a wider distribution network. Continue advertising but less frequent customer awareness increases. Profits start to rise. 
  • Stage 3: Maturity: lots of copy-cat items are launched sales flatten out and cash flow improves. Adverting is persuasive and is a reminder. Increase promotion to keep its market share, profits are still good and the product is in a highly competitive market.
  • Stage 4: Decline: Product sales and profit begin to fall. The product is no longer offering what customers want or new technology used by other products have made it out of date. Eventually it is withdrawn and sold at a reduced price. 

Very few products follow the cycle exactly. Businesses can take actions to prolong each stage such as heavy brand advertising to try to stop decline. Some go straight from introduction to decline. It is important so that they can plan the correct marketing strategy for the product. 

Some product will have extension strategies to start to increase sales again.by

  • Finding new uses for the product.
  • Develop a wider range of products.
  • Change the appearance, format or packaging.
  • Encourage use of the product on more occasions.
  • Adapt the product.
  • Reduce the price.

Cash flow is the term used for the money going into and out of the business and is affected by the different stages. Introduction = high outflow and no inflow, growth it improves and maturity cash flow is positive. 

Businesses try to have a range of products at different stages of their life cycles so that all the products do not reach the decline stage at the same time. They try to make sure they always have products at the mature,growth and introduction stages resulting in positive cash flow. 

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unit 4: boston matrix

Product portfolio: the range of products a business sells which vary in popularity. The managers need to decide which to concentrate their effort on. A tool that is used to compare their products and work out how they are doing is the boston matrix. 

  • The boston matrix allows businesses to measure the extent to which an individual product is succeeding in its market. It looks at the success of a brand in terms of market share and growth.
  • Businesses need a variety of products to be available at one time to ensure they are not only making profits but have a good profit for the future.
  • The boston matrix helps decision making. The analysis looks at the postion of these products or services. 
  • DOGS: low market share and growth they could have been one of the other before becoming a dog. Sometimes used for their small profits but have no real future.
  • PROBLEM CHILDREN: low market share in a high-growth market. need lots of money spent on them to become stars. they have a lot of potential a company needs to decide whether to let them flop or not.
  • RISING STARS: high market and growth share produce a lot of sales but need a lot of money spent as the market is growing. Stars are destined to become the cash cows of the future.
  • CASH COWS: high market share in a low growth market. Their profits could be used to help fund problem children and stars. They are the best.

Businesses often assume they will make more profit if the market share is high but this is not always the case.

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Unit 5: Branding and differentiation

Companies bombarded consumers with advertising and promotion that have made us remember its logo. We are then convinced about the quality of the companies products and image. Existing custoemrs trust a strong brand such as apple as they know what to expect. The logo on a product is an important part of a product.

  • Branding gives an identity to a product. Producers hope that consumers become loyal to their brand. 
  • Brands give potential customers a firm idea of what they're buying before they buy it making the purchasing decision easier.
  • Branding is establishing an identity for your product that distinguishes it from the competition. 
  • Successful branding adds value to an item and can assure brand loyalty. Brand loyalty exists when consumers buy your product on a regular basis.
  • Family Branding: products are distinguished under a company heading e.g. apples product mix are all distinguished under the apple banner.
  • Line branding: products are distinguished from other producers' products, Wrigley.
  • Some retailers use own-label brands their name rather than the manufacturers usually cheaper than normal brands. 
  • Some brands become so strong that they are global brands.

Advantages of strong brands are:

  • Encourages customer loyalty leading to repeat purchases.
  • Able to charge higher prices.
  • retailers want to stock their brands 


  • high costing promotion to gain recognition
  • constant promotion is necessary
  • a single bad event can effect the whole range
  • brand names need to be protected

Product differentiation - the process of making a product seem distinct from its competitors. They feel there is a good range of products to choose from. they can differentiate by:

  • logo
  • name
  • quality
  • content
  • packaging
  • design

Unique selling point is when it has an important feature that other products don't have.

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Unit 6: Building a successful marketing mix

The marketing mix has four elements- product, price, promotion place.

  • The right product/service that customers like and want to buy 
  • at the right price - communicating the right image, not so low as to seem cheap nor too high to seem value for money.
  • Promoted using the right medium
  • available in the right place.


  • No one is sure what is the best product.
  • They need to keep in close touch with customers to find out what they want so  they can provide the right product or service to match the customers' needs


  • the right price is needed to make sure they are getting value for money.
  • Price-makers have a strong brand name and such a good product they can set their own price.
  • Price-takes follower the price set by the price-maker.


  • They key to successful promotion is that it should not only build sales but build brand images, tactics such as god ofs can cheapen the image of a brand.


  • How to get the producer to the customer.
  • The easiest way today is to sell directly via the internet but many people also still love going shopping. 

Launching new products are difficult because people get used to what they buy. 

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Unit 7: Introduction to Meeting Customer Needs

1. keeping close to the customer,

  • a full range of stock
  • short queues at the checkout
  • a clearly laid-out store
  • friendly, helpful staff.

2. Being efficient and reliable:

  • customers want their needs met consistently.
  • Success relies on careful planning and an eye for detail.

3. Providing great design:

  • customers value great design of good value.
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Unit 8: Design and R & D

When the research leads to the discovery of a new product, a patent can be registered this provides the inventor with up to 20 years before anyone else is allowed to copy the idea.

  • Economic manufacture: making sure that the design allows the product to be made cost effectively.
  • Function: the design must make sure that the product works well and works every-time. 
  • Aesthetics: how well the product appeals to the senses. it may work well but be inexpensive making it look and feel cheap.

Product differentiation means making your product stand out from competition. Making people see it as really different and distinctive.

High differentiation is important because customers can become loyal to something that they see as different and unique. 

Design plays a crucial part in the process so it is recognizable, a well-designed product will stand out from the crowd so the user is proud.

Every business needs to think about how to do things better and to make better things. This can be done by scientific research and development .

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Unit 9: Managing stock

As consumers we are hugely demanding and quite intolerant. We expect to find every product we are looking for in stock when we want it. Retailers have to find a balance between too little stock and too much. 

Stocks levels are based on: 

  • the level of demand for the product, if its popular plenty will need to be kept in stock.
  • A decision on the right level of buffer stock. This is the minimum amount of stock the manager thinks should be held at all times.
  • A decision on how often to order from the supplier.


  • Buffer stocks help ensure that customers always find what they want on the shelf.
  • This is delivering more frequently but in smaller quantities. Therefor there is less need for a big storage room so there is no buffer stock.
  • It gives more sale space.
  • Fresher stocks
  • Less capital is tied up.
  • But there is a greater risk of running out of stock.
  • Lose out on bulk-buying discounts.
  • Any mistake could cause them to be out of stock = poor service. 
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Unit 10: Managing Quality

Quality is the ultimate test of a business organisation. Practices are put in place such as: 

  • Factory inspectors at the end of a production line who check say every fifth product if several fail than they might decide to check the whole days output and any faults are corrected.
  • A 100% inspection system checking every item.
  • A feedback system for customers checking the final experience.

Quality Culture: 

  • Quality is fundamental to everyone's attitude to work. You want the staff to really help. 
  • Business culture means the general attitudes and behaviours among staff within a workplace. 
  • Successful businesses ensure that a quality culture develops among staff. This would come from pride in the business and what it does for its customers.
  • To develop a quality culture new staff must learn from the start about the high standards expected from everyone. These standards must be set everyday by the manager so nobody doubts them. 

Quality Assurance: 

  • this attempts to build quality into the system rather than at the end. 
  • Therefore every member of staff has quality responsibilities. 
  • The hope is that over time making individuals responsible for quality will ensure better results. 
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Unit 11: Cost-effective operations

To keep costs to the minimum, careful ordering of materials and other supplies is very important. Every business will be trying to buy at the lowest price

Far more important is good management of labour costs, Labour costs per hour vary dramatically in different parts of the world. For companies to keep employing workers in britain they must find a way to get value out of the high wages being paid. This could come about if british workers have skills that cannot be found anywhere else or if they are highly productive. 

  • Productivity is efficiency usually measured as output per person. High productivity enables labour costs to spread across lots of output.
  • To increase productivity companies can invest in up to date to help workers work faster or replace them with automated equipment or robots.
  • Encouraging workers to work more enthusiastically and therefore harder .
  • Encouraging staff to work smarter to come up with new ways to do things more effectively.

If high productivity keeps costs per unit down a firm can compete. 

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Unit 12: effective customer service

To be effective customer service must be:

  • rooted in a clear understanding of what customers really care about.
  • practical and cost-effective enough to ensure that it can be kept going regularly.
  • based on a genuine wish to help, rather than the attempt to seem helpful.
  • offered at the right time in the right way at the right place.

efficient service:

  • gets products to you exactly when you want them
  • in good condition
  • but if there is something wrong it will be sorted as soon as possible in the right spirit.

Good service may cost the customer extra but this is fine as long as it represents good value for money.

Good customer service must relate to what customers want and what they are willing to pay for. 

Bad customer service risks losing a customer, word of mouth is always an important factor and bad news spreads quickly.

Staff need to be trained not only to provide a good service but also how to cope when things go wrong.

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Unit 13: Consumer Protection

When starting a business you have to let the inland revenue know and then you can turn it into a meaningful long-term investment. 

  • If a business is in a monopoly position it has no competition and therefore becomes sloppy.
  • A large business in a competitive allows its ethical standards to slip.
  • Individual business owners get greedy and are unable to resist an opportunity to make big profits in the short term.


  • This is the act that gives you the right to take back a faulty item and get your money back 
  • Good must be fit for the purpose for which they are sold.
  • Relevant aspects of 'fit for purpose' include freedom from defects, the appearance, finish, durability and safety.
  • They buyer has a right to get their money back or could choose to have it repaired at the seller's expense.
  • The person responsible for correcting any problem is the seller not the manufacturer.


  • insists that all advertising, pack labels and public statements made by firms must be demonstrably true. 
  • It is an offence for a trader to use false or misleading statements. 
  • it an offence to misleadingly label goods or services.
  • the act carries criminal penalties and can therefore lead to a jail sentence.
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Unit 15: How to improve profit

  • by reducing costs
  • increasing revenue
  • expanding


  • If costs are reduced profits should increase. this cane be done by,
  • Reduce workforce, lose some workers and divide the work out between the remaining staff.
  • Reduce the number of managers and cut a management layout out of the organisation.
  • Automate some jobs and replace people with machines.
  • Contract-out the work: rather than having your own you could use a service as it if often cheaper to have a contract with something such as a computer service.
  • Cut wages: this would have a devastating effect on staff and all the high quality ones would look for new jobs and could damage levels of customer service.
  • Reducing the workforce can be expensive to automate jobs also involves huge capital and redundancies are hugely expensive.


  • Raise prices: but this will depend on competitors this should only be done if the level of demand is not affected.
  • Increase sales: by advertising making people aware and having sales promotions such as bogofs, attracting new markets, reduced prices.
  • introduce new products to gain a competitive edge.



  • This is expanding the same business by selling in a wider range of places.


  • This is taking over another business to expand.
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Unit 16: break-even

  • The break-even point is the level of sales at which total costs = total revenue. At this point the firm is making neither a profit or loss. All output below this point is at a loss. All output above this point is at a profit.
  • Margin of safety is the amount sales can fall before the firms profit is wiped out.
  • you need to know the variable costs, fixed costs, revenue, maximum output of the business.
  • Total costs = fixed costs + variable costs.
  • Variable costs = variable costs per unit x quantity sold.
  • Revenue = total selling price x quantity sold.

Break even charts helps the business answer questions and can be shown visually making it easier to help make business decisions.

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Unit 17: Financing growth


  • PROFIT: Using profit means no interest will have to be paid but shareholders with get a smaller dividend and may be opposed to the expansion plans.
  • SALE OF ASSETS: Smaller firms may rent premises and lease equipment instead but this could cost firms more in the long time.
  • PERSONAL FUNDS: Do not have to pay interest.


  • SHARE CAPITAL:A limited company can sell more shares to raise finance for growth. The drawback is the original owner may lose control. 
  • DEBT: a bank loan is probably the most common way a firm will finance expansion planes but this comes with interest.
  • FLOTATION ON THE STOCK EXCHANGE: by going public and selling shares but could be bought by a rival.

Minimizing risk: the worst type of inflow is an overdraft because if something goes wrong the bank cane demand to be repaid within 24  hours. The best is share capital because this never has to be repaid. If a shareholder wants their money back they will have to sell it to another buyer. 

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Unit 18: Organisational Structure

An organisation chart is a diagram showing the structure of a business.

  • The purpose of an organisation chart is to show the hierarchy, chain of command and span of control within an organisation.
  • Hierarchy refers to the levels of responsibility and authority and is usually shown in vertical layers. The further up the hierarchy someone is the more important they tend to be and the more power they have.
  • Chain of command refers to the route by which decisions are passed between the different levels in an organisation and the type of structure. Normally decisions are passed down the chain of command and issues/problems are passed up.  
  • Span of control: refers to how many other people someone is responsible A subordinate is a person who is directly responsible to a person of higher authority. 
  • Almost everyone in an organisation is a subordinate. Span of control is the number of subordinates that a person has direct authority over.



  • communication should be better because the chain of command shows a clear line for messages.
  • Lots of promotion opportunities.
  • it is easy to maintain standards across an organisation since authority is strictly passed down the line.
  • It is easier to check everybody's work because there are managers and supervisors at each level.


  • the system is rigid and inflexible
  • peoples position in the management structure shows their level of responsibility and authority and this is often seen as a status symbol with clear divisions between managers and the workers.
  • there can be too many layers of management and this will create a long chain of command.
  • a long chain of command will mean it take decisions a long time to reach workers at the bottom of the hierarchy.

In a flat organisation each manager has a wider span of control. People on lower levels have more responsibility therefore managers need to have confidence in their staff and happy delegating work to their subordinates.


  • fewer managers needed saving money
  • managers give more responsibility to the workers.
  • more responsibility leads to more job satisfaction for the workers
  • there is faster and more efficient communication
  • it can lead to greater job satisfaction.


  • Each manager is responsible for more people
  • managers have to rely on subordinates much more to work efficiently and safely.
  • managers may lose control or subordinates.
  • it can lead to over work and stress
  • there are fewer promotion opportunities.


  • an organisation in which most decisions are made at head office.
  • Local branch managers have little decision-making power they are strictly controlled by head office and follow instructions they are given and have no control over finance
  • ADVANTAGES: decisions can be taken with an overview of the whole company, central managers are able to make sure policies and decisions are followed
  • decision making and communication can be quick.
  • DISADVANTAGES: reduces delegation which may lessen a companies ability to respond rapidly to a changing market.
  • Business opportunities may be lost, job satisfaction may be lost.


an organisation which allows staff to make decisions at a local level

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unit 19: Motivation

well motivated workers = higher productivity = increased output = higher profits

  • 1. physiological needs, basic needs- food, shelter and clothing. These can be met by financial means giving the person the ability to feed clothe and house their family.
  • Safety,security, order: according to maslow people need to feel safe. They need to be sure that they are secure in their jobs and are guaranteed so they can carry on meeting their basic needs and plan for the future. A business can fulfill this need by organising pension schemes.
  • 3. Social needs: People strive for a sense of belonging they want to feel part of a group or team. Businesses can attempt to satisfy this need by organising social events or clubs. Some firms organise social outings or family days for their employees. or using team-building exercise. 
  • 4. Esteem, status: to feel respected and have a sense of status therefore important to recognise their employees achievements and give them the chance of promotion. Some jobs attract high status in society while others are thought as a low status 
  • 5. Self-actualisation: This is the highest need that Maslow identifies. It is the satisfaction to be gained from challenging yourself to achieve more than you thought possible. It comes when you learn more about yourself therefore can see yourself growing up into a new you. Workers might get this from trying something scary and new. Self-actualisation can come from both within and outside work.


  • time rate: this means that workers are paid for the amount of time taken to complete the job.
  • Piece rate: workers are paid for how many items they finish. It is used to encourage workers to work faster in order to earn more money.
  • Commission: commonly used in sales the sales person is offered a basic wage plus commission- a percentage of every item sold after the basic wage has been calculated. 
  • Performance-related pay: this is linked to the achieving of targets, if a worker exceeds the target an extra bonus is earned.
  • Perks or fringe benefits: one of the most common ways of motivating salaried staff. These are extras other than money that the person may have in addition to their pay. E.g.  health insurance schemes, subsidised travel or accommodation, company cars and store discounts. It is often cheaper for the employer to provide goods rather than the money to buy them with. A good perk will make an employee reluctant to leave the business.

Advantages of a motivated workforce:

  • better productivity
  • better quality
  • lower levels of absenteeism
  • lower levels of staff turnover
  • lower training and recruitment costs.
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Unit 20: Communication

Communication means passing information between people. Good communication is the one ingredient which is essential for a business to become a success. They encourage two way communication.

One-way communication is when the receiver of a message has no chance to reply or respond to the message. The receiver does not get the opportunity to contribute to the conversation to ask questions or provide feedback.

Two-way communication is where there is an opportunity for the receiver to give a reply or response. This could be a discussion or confirmation that the message has been received and understood. This should lead to better and clearer information. advantages are:

  • tasks get done efffectively and efficiently with fewer mistakes
  • it creates good employee relations workers should feel valued and listened to by the firm. 


  • the person sending the communication might not explain themselves properly 
  • the receiver of information may not understand the message due to the technical language or jargon used
  • the receiver may not hear or receive the message in the first place, problem with the medium.
  • the message got distorted in its transmission.


  • clear and easily understood
  • accurate
  • complete
  • appropriate
  • via the right medium
  • with a chance for feedback


  • provide and collect information about the business
  • Give instructions
  • ensure all workers are working towards the same goal


  • Misunderstandings then bad decisions could be made.
  • Time wasted or money wasted.
  • Costs increasing: 
  • Inefficiency
  • Low levels of motivation
  • Profits lost
  • Disputes
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Unit 21: Remuneration

Wages are usually paid to shop-floor manual workers. They are normally paid weekly, sometimes in cash and sometimes into a bank account.

Salaries are usually paid to managers and office workers, they are usually stated at so much a year altough are usually paid monthly. Salaries are paid into bank accounts rather than in cash. 


  • TIME RATES:workers are paid according to the time worked. Time rate is often used in jobs that it is hard to measure output. Time rate means everyone is paid the same whether they have worked hard and fast or not.
  • PIECE RATES: This means getting paid a certain amount for every unit of output or piece made. the more you make the more you get paid. this means workers work harder it is a fairer system than flat or time rate pay because hard workers are paid more than lazy ones. people can work at their own pace if they want to. 
  • This may result in poor quality work. Firms have to spend more on quality control. Workers may also lose money since they are not paid for work that is rejected or has to be corrected.
  • PAYMENT BY RESULTS: the more workers on a piecework produce the more they get paid. This is a method of payment by results that are often paid in addition to workers who receive wages or salaries. Commisision sales people may be paid a percentage or the value of sales.
  • BONUSES: these are extra payments over and above the basic wage or salary. They are often paid as a reward for reaching a target.
  • Performance-related pay: this is a payment for reaching an agreed target.
  • Share option schemes some firms also allow their workers to have shares in the business.
  • FRINGE BENEFITS: There are benefits other than money paid in addition to wages or salaries.
  • If sales are highly seasonal they might want to employ freelance or temporary workers. 
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Unit 22: Ethics in business

Being legal means operating within the law, being ethical means doing what is right. Ethical behaviour covers every aspect of business, including who a business buys supplies from, how it treats its employees, how it acts towards its competitors, the impact it has on the environment and the impact it has on its local community.

  • Being ethical may mean being less profitable
  • Some claim Good consumer image = high sales and profits = high ethical standards = good consumer image etc.
  • A pressure group can be described as an organised group that seeks to influence government policy, legislation and business behaviour. If a business behaves in a way that a pressure group disagrees with the media may turn against the company. Pressure groups can embarrass companies and damage their image. 
  • When products display the fairtrade mark it means that it meets international fairtrade standards and disadvantaged producer in the developing world are getting a better deal. These include the farmers receiving a minimum price that covers the cost of sustainable production and fair working conditions for estate workers. Producers also receive the fairtrade premimum an additional sum to invest in social, environmental or economic development projects.
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Natasha Naeem


Very useful. Hope you do well on the exam.



really good, helps with my last minute revision!



anyway to scroll down the cards?

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