Botswana BGCSE Business Studies cheat sheet

Business activity combines factors of production: land, labour, capital and enterprise, to produce goods and services that satisfy needs and wants.

Needs are essential for survival (food, shelter, water); wants are desires that are not essential and are unlimited.

The three sectors of production are primary (extraction, e.g. mining, farming), secondary (manufacturing, e.g. food processing) and tertiary (services, e.g. retail, banking).

Specialisation means a worker, firm or country concentrates on one task or product; division of labour splits production into separate tasks to raise output per worker.

Adding value = selling price of output minus cost of bought-in inputs; value can be added by branding, processing, convenience and service.

Opportunity cost is the value of the next best alternative forgone whenever a choice is made about scarce resources.

The chain of production links primary, secondary and tertiary activity; a product may pass through all three before reaching the consumer.

Businesses create employment, generate tax revenue, earn foreign exchange and improve living standards, but may cause pollution or resource depletion.

Sole trader: one owner, unlimited liability, no separate legal identity, full control and all profit, financed mainly by personal savings and retained profit.

Partnership: 2 or more owners sharing capital and profit under a partnership agreement; unlimited liability unless a limited liability partnership is registered.

Private company (Pty Ltd): shares sold privately with restrictions; public company (Ltd): shares offered to the public and listed on a stock exchange.

Cooperative: owned and democratically controlled by members who share profits or benefits; common forms are producer, consumer and credit cooperatives.

Public corporation: state-owned, funded by government, set up by statute to provide essential services; objectives may include social goals rather than profit.

Franchise: franchisee pays an initial fee and royalties to use the franchisor's brand, systems and training, keeping the remaining profit.

Internal growth comes from more sales, new products or branches; external growth (integration) comes from merger or takeover, horizontal, vertical or conglomerate.

Diseconomies of scale are rising average costs as a firm grows too large, caused by poor communication, slow decisions and lower staff motivation.

Organisational structures: tall (many levels, narrow span) versus flat (few levels, wide span); span of control is the number of subordinates per manager.

Common objectives: profit maximisation, sales growth, market share, survival, social and environmental goals, and shareholder value.

SMART objectives are specific, measurable, achievable, relevant and time-bound; they guide decisions and allow performance to be measured.

Stakeholders include owners/shareholders, employees, customers, suppliers, lenders, government, local community and pressure groups.

Stakeholder conflict arises when objectives clash, e.g. higher wages for staff versus higher dividends for shareholders.

Aims are long-term general intentions; objectives are specific targets; strategies are the plans used to achieve them.

The external environment includes economic, legal, social, technological, environmental and competitive (PESTLE) influences beyond the firm's control.

The business cycle has boom, recession, slump and recovery phases; demand, employment and profits vary with the phase.

Ethical behaviour means acting morally beyond legal minimums; a social enterprise trades to achieve social aims and reinvests most surplus.

Market research types: primary (field, collected first-hand) and secondary (desk, existing data); methods include surveys, interviews, observation and focus groups.

Sampling: random, stratified, quota and convenience; a larger, representative sample gives more reliable results but costs more.

Market segmentation divides a market by age, gender, income, location or lifestyle; a niche is a small specialised segment.

Marketing mix (4Ps): Product, Price, Place, Promotion; extended to 7Ps with People, Process and Physical evidence for services.

Product life cycle stages: development, introduction, growth, maturity, decline; extension strategies include rebranding, new packaging and new markets.

Pricing methods: cost-plus, penetration (low launch price), skimming (high launch price), competitive, promotional and price discrimination.

Distribution channels: producer to consumer (direct), via retailer, via wholesaler and retailer; choice depends on product type, cost and control required.

Promotion mix: advertising (informative/persuasive), sales promotion, personal selling, public relations and sponsorship; the medium depends on target audience and budget.

Branding builds recognition and loyalty and can support premium pricing; a brand is a name, symbol or design identifying a product.

Job production: one-off, customised output (e.g. a tailored garment); batch production: groups of identical items; flow/mass production: continuous standardised output.

Productivity = output per unit of input (e.g. units per worker per period); raising productivity lowers unit cost.

Capacity utilisation (%) = (actual output ÷ maximum possible output) × 100; low utilisation means wasted fixed costs.

Stock/inventory control: buffer stock is the minimum held to cover demand variation; reorder level triggers a new order; lead time is the delivery delay.

Just-in-time (JIT) production holds minimal stock, reducing storage costs but requiring reliable suppliers.

Quality control inspects finished output; quality assurance builds quality into the process; total quality management involves all staff.

Lean production reduces waste (muda) through JIT, kaizen (continuous improvement) and standardisation.

Location factors: proximity to raw materials or market, labour supply, transport links, power and government incentives.

Break-even output = fixed costs ÷ (selling price per unit − variable cost per unit); margin of safety = actual sales − break-even sales.

Internal sources of finance: retained profit, sale of assets, owner's capital; external: bank loan, overdraft, trade credit, share issue, debenture, leasing, hire purchase.

Short-term finance (overdraft, trade credit) covers working capital; long-term finance (loan, share capital, debenture) funds fixed assets.

Cash flow forecast records inflows and outflows; net cash flow = inflows − outflows; closing balance = opening balance + net cash flow.

Profit is revenue minus total costs; cash flow is the movement of money. A profitable firm can still fail from a cash shortage.

Income statement (trading and profit and loss): gross profit = revenue − cost of sales; profit for the year = gross profit − expenses.

Statement of financial position (balance sheet): assets = liabilities + equity; assets are non-current or current; liabilities are current or non-current.

Gross profit margin = (gross profit ÷ revenue) × 100; net profit margin = (net profit ÷ revenue) × 100.

Return on capital employed (ROCE) = (net profit ÷ capital employed) × 100; current ratio = current assets ÷ current liabilities.

Depreciation spreads the cost of a non-current asset over its useful life; it is a non-cash expense.

Recruitment: job analysis produces a job description (duties) and person specification (qualities); internal recruitment is cheaper and motivating, external brings new ideas.

Selection methods: application forms, CVs, interviews, tests, references; the most reliable combine several methods.

Training types: induction (orientation), on-the-job (in-house, cheap) and off-the-job (external, broader but costly).

Maslow's hierarchy: physiological, safety, social, esteem, self-actualisation; lower needs are satisfied before higher needs motivate.

Herzberg: hygiene factors (pay, conditions) prevent dissatisfaction; motivators (achievement, recognition, responsibility) create satisfaction.

Taylor's scientific management links pay to output; Mayo's Hawthorne studies show social factors and attention affect productivity.

Financial motivators: salary, wages, piece rate, commission, bonus, profit sharing; non-financial: job rotation, enlargement, enrichment, teamwork, praise.

Labour turnover (%) = (number of leavers ÷ average number employed) × 100; high turnover raises recruitment and training costs.

Employment law covers contracts, minimum wage, health and safety, unfair dismissal and equal opportunity; dismissal must follow fair procedure.

Economic influences: inflation raises costs and reduces purchasing power; interest rates affect borrowing costs; exchange rates affect import and export prices.

Fiscal policy uses government taxation and spending; monetary policy uses interest rates and money supply, usually set by a central bank.

Legal influences: consumer protection, competition law, employment law, health and safety, environmental regulation and company registration rules.

Ethical and environmental influences: fair trade, sustainable sourcing, waste reduction, carbon footprint; unethical practice risks reputation and boycotts.

Technology influences: e-commerce, mobile money, online banking and automation lower transaction costs but require investment and skills.

Globalisation increases competition and market access; multinationals bring capital and jobs but may repatriate profits.

Government support for business includes loans, grants, training and infrastructure; taxation and licences are obligations.

A business must comply with registration (e.g. with the relevant authority), tax registration and sector licensing before trading.

An entrepreneur identifies an opportunity, takes risk, organises factors of production and innovates to create a venture.

A business plan contains: the business idea, objectives, market analysis, marketing plan, operations plan, management team, financial forecasts and risk assessment.

Purposes of a business plan: secure finance, test feasibility, guide operations and communicate vision to partners.

Feasibility study tests whether the idea is viable in terms of demand, cost, skills and legal requirements before full investment.

Botswana's economy is diamond-dependent; diversification into tourism, agriculture, manufacturing and services is a stated national goal.

Support institutions include the Botswana Development Corporation, Citizen Entrepreneurial Development Agency and local enterprise authorities offering finance and advice.

Small and medium enterprises dominate employment; common challenges are access to finance, small domestic market, skills shortages and high import costs.

Social and cultural context: cooperatives, citizen-owned enterprises and community tourism are encouraged to spread benefits of growth.

Inflation is a sustained rise in the general price level; it erodes the value of money and can raise wage demands.

Interest rate rises increase loan repayments and reduce consumer spending, lowering demand for many products.

Exchange rate changes: a weaker pula makes exports cheaper abroad and imports dearer, affecting import-dependent firms.

Consumer protection law gives buyers rights to safe goods, accurate information and redress; firms must honour warranties.

Competition policy prevents anti-competitive practices such as price fixing and abuse of market dominance.

Environmental regulation may require permits, emission limits and waste disposal standards, raising costs but protecting reputation.

Automation and digital payment systems raise efficiency and reduce cash handling but require staff retraining.

Multinational companies can bring capital, technology and jobs but may dominate local firms and repatriate profits.

Businesses must register for tax and comply with tax obligations; non-compliance brings penalties and legal action.

Profit maximisation occurs where marginal cost equals marginal revenue; firms may pursue sales growth or market share instead.

Market share (%) = (firm's sales ÷ total market sales) × 100.

Survival is a short-term objective in a recession or start-up phase; it may override profit goals.

Shareholders seek dividends and share value; managers may pursue growth or status, creating a principal-agent problem.

Employees seek fair pay, job security and good conditions; customers seek quality, low price and service.

Suppliers seek prompt payment and stable orders; lenders seek interest and repayment; the community seeks jobs and environmental care.

Government seeks tax revenue, employment and compliance; pressure groups seek ethical or environmental change.

Stakeholder mapping by power and interest helps a firm decide whom to consult and prioritise.

Corporate social responsibility means accepting obligations beyond legal minimums to stakeholders and society.

Gross profit margin = (gross profit ÷ revenue) × 100; a fall may indicate higher cost of sales or discounting.

Net profit margin = (net profit ÷ revenue) × 100; a fall may indicate rising overheads or interest costs.

ROCE = (net profit ÷ capital employed) × 100; it measures the return earned on long-term funds invested.

Current ratio = current assets ÷ current liabilities; a ratio near 1.5–2 suggests adequate short-term liquidity.

Acid-test (quick) ratio = (current assets − inventory) ÷ current liabilities; it tests liquidity without relying on stock sales.

Gearing (%) = (long-term debt ÷ capital employed) × 100; high gearing means greater risk from fixed interest payments.

Break-even output = fixed costs ÷ contribution per unit; contribution per unit = selling price − variable cost per unit.

Margin of safety = actual output − break-even output; it shows how far sales can fall before a loss occurs.

Cash flow forecast: net cash flow = inflows − outflows; closing balance = opening balance + net cash flow.

Job description lists duties and responsibilities; person specification lists qualifications, skills and experience required.

Internal recruitment: cheaper, faster, motivating for staff, but limits new ideas and leaves another vacancy.

External recruitment: wider pool and fresh ideas, but higher cost and longer induction.

On-the-job training is realistic and cheap but may pass on bad habits; off-the-job training is broader but costly and causes absence.

Maslow: physiological, safety, social, esteem, self-actualisation; satisfied lower needs stop motivating.

Herzberg: hygiene factors (pay, conditions, policy) prevent dissatisfaction; motivators (achievement, recognition, responsibility) create satisfaction.

Financial motivators include salary, piece rate, commission, bonus and profit sharing; non-financial include enrichment, teamwork and praise.

Labour turnover (%) = (leavers ÷ average number employed) × 100; high turnover raises recruitment and training costs.

Dismissal must follow fair procedure; unfair dismissal and discrimination are unlawful under employment law.

Market research: primary data is first-hand and specific but costly; secondary data is cheaper and quicker but may be outdated.

Sampling methods: random, stratified, quota and convenience; a representative sample improves reliability.

Segmentation divides a market by demographics, income, geography or lifestyle; targeting selects segments to serve.

Product life cycle: introduction, growth, maturity, decline; extension strategies include rebranding, new packaging and new markets.

Pricing: cost-plus, penetration, skimming, competitive, promotional and price discrimination.

Distribution: direct (producer to consumer), via retailer, via wholesaler and retailer; choice depends on product, cost and control.

Promotion mix: advertising, sales promotion, personal selling, public relations and sponsorship; medium choice depends on audience and budget.

Branding builds recognition and loyalty and can support premium pricing.

E-commerce widens market reach and lowers distribution costs but requires logistics and secure payment systems.

Job production: one-off customised output; batch production: groups of identical items; flow production: continuous standardised output.

Productivity = output per unit of input; raising productivity lowers unit cost and improves competitiveness.

Capacity utilisation (%) = (actual output ÷ maximum possible output) × 100.

Buffer stock covers demand variation; reorder level triggers a new order; lead time is the delivery delay.

Just-in-time holds minimal stock, reducing storage costs but requiring reliable suppliers.

Quality control inspects finished output; quality assurance builds quality into the process; TQM involves all staff.

Lean production reduces waste through JIT, kaizen and standardisation.

Location factors: proximity to materials or market, labour supply, transport, power and government incentives.

Break-even output = fixed costs ÷ contribution per unit.

Sole trader: one owner, unlimited liability, full control and all profit, financed mainly by personal savings and retained profit.

Partnership: two or more owners share capital and profit under an agreement; unlimited liability unless registered as a limited liability partnership.

Private company (Pty Ltd): shares sold privately with restrictions; public company (Ltd): shares offered to the public and listed.

Cooperative: owned and democratically controlled by members who share benefits; forms include producer, consumer and credit cooperatives.

Public corporation: state-owned, set up by statute to provide essential services; objectives may include social goals.

Franchise: franchisee pays an initial fee and royalties to use the franchisor's brand, systems and training.

Internal growth comes from more sales, new products or branches; external growth comes from merger or takeover (horizontal, vertical or conglomerate).

Diseconomies of scale are rising average costs as a firm grows too large, caused by poor communication and slow decisions.

Organisational structures: tall (many levels, narrow span) versus flat (few levels, wide span).

Factors of production: land, labour, capital and enterprise; they are combined to produce goods and services.

Needs are essential for survival; wants are unlimited desires that are not essential.

Primary sector extracts raw materials; secondary sector manufactures; tertiary sector provides services.

Specialisation concentrates effort on one task or product; division of labour splits production into tasks to raise output per worker.

Added value = selling price of output − cost of bought-in inputs; branding, processing and convenience add value.

Opportunity cost is the value of the next best alternative forgone when a choice is made.

The chain of production links primary, secondary and tertiary activity before a product reaches the consumer.

Businesses create employment, tax revenue and foreign exchange, but may cause pollution or resource depletion.

An entrepreneur identifies opportunity, takes risk, organises factors of production and innovates.

A business plan contains the idea, objectives, market analysis, marketing plan, operations plan, management team, financial forecasts and risk assessment.

Purposes of a business plan: secure finance, test feasibility, guide operations and communicate vision.

A feasibility study tests demand, cost, skills and legal requirements before full investment.

Botswana's economy is diamond-dependent; diversification into tourism, agriculture, manufacturing and services is a national goal.

Support institutions include the Botswana Development Corporation and the Citizen Entrepreneurial Development Agency, offering finance and advice.

SMEs dominate employment; challenges include access to finance, small domestic market, skills shortages and high import costs.

Cooperatives, citizen-owned enterprises and community tourism are encouraged to spread the benefits of growth.

Common objectives: profit maximisation, sales growth, market share, survival, social and environmental goals.

SMART objectives are specific, measurable, achievable, relevant and time-bound.

Stakeholders include owners/shareholders, employees, customers, suppliers, lenders, government, community and pressure groups.

Stakeholder conflict arises when objectives clash, e.g. higher wages versus higher dividends.

Aims are long-term intentions; objectives are specific targets; strategies are plans to achieve them.

PESTLE covers political, economic, social, technological, legal and environmental influences beyond the firm's control.

The business cycle has boom, recession, slump and recovery phases; demand and profits vary with the phase.

Ethical behaviour goes beyond legal minimums; social enterprises trade to achieve social aims and reinvest surplus.

Internal sources: retained profit, sale of assets, owner's capital; external: bank loan, overdraft, trade credit, share issue, debenture, leasing, hire purchase.

Short-term finance covers working capital; long-term finance funds fixed assets.

Cash flow forecast: net cash flow = inflows − outflows; closing balance = opening balance + net cash flow.

Profit is revenue minus total costs; cash flow is the movement of money; a profitable firm can fail from a cash shortage.

Income statement: gross profit = revenue − cost of sales; profit for the year = gross profit − expenses.

Statement of financial position: assets = liabilities + equity; assets and liabilities are current or non-current.

Gross profit margin = (gross profit ÷ revenue) × 100; net profit margin = (net profit ÷ revenue) × 100.

ROCE = (net profit ÷ capital employed) × 100; current ratio = current assets ÷ current liabilities.

Depreciation spreads the cost of a non-current asset over its useful life and is a non-cash expense.

Recruitment: job analysis produces a job description and person specification.

Internal recruitment is cheaper and motivating; external recruitment brings new ideas but costs more.

Selection methods: application forms, CVs, interviews, tests and references; combining methods improves reliability.

Training types: induction, on-the-job and off-the-job; on-the-job is cheap and realistic, off-the-job broader but costly.

Maslow's hierarchy: physiological, safety, social, esteem, self-actualisation.

Herzberg: hygiene factors prevent dissatisfaction; motivators create satisfaction.

Taylor links pay to output; Mayo shows social factors and attention affect productivity.

Financial motivators: salary, wages, piece rate, commission, bonus, profit sharing; non-financial: enrichment, teamwork, praise.

Labour turnover (%) = (leavers ÷ average number employed) × 100; high turnover raises recruitment and training costs.

Primary research is first-hand and specific but costly; secondary research is cheaper and quicker but may be outdated.

Sampling: random, stratified, quota and convenience; representative samples improve reliability.

Segmentation divides a market by age, gender, income, location or lifestyle; a niche is a small specialised segment.

Marketing mix (4Ps): Product, Price, Place, Promotion; extended to 7Ps with People, Process and Physical evidence.

Product life cycle: development, introduction, growth, maturity, decline; extension strategies include rebranding and new markets.

Pricing methods: cost-plus, penetration, skimming, competitive, promotional and price discrimination.

Distribution channels: direct, via retailer, via wholesaler and retailer; choice depends on product, cost and control.

Promotion mix: advertising, sales promotion, personal selling, public relations and sponsorship.

Branding builds recognition and loyalty and can support premium pricing.

Job production: one-off customised output; batch production: groups of identical items; flow production: continuous standardised output.

Productivity = output per unit of input; raising productivity lowers unit cost.

Capacity utilisation (%) = (actual output ÷ maximum possible output) × 100; low utilisation wastes fixed costs.

Buffer stock covers demand variation; reorder level triggers a new order; lead time is the delivery delay.

Just-in-time holds minimal stock, reducing storage costs but requiring reliable suppliers.

Quality control inspects finished output; quality assurance builds quality into the process; TQM involves all staff.

Lean production reduces waste through JIT, kaizen and standardisation.

Location factors: proximity to raw materials or market, labour supply, transport, power and government incentives.

Break-even output = fixed costs ÷ (selling price per unit − variable cost per unit).

Inflation raises costs and reduces purchasing power; interest rates affect borrowing costs; exchange rates affect import and export prices.

Fiscal policy uses taxation and government spending; monetary policy uses interest rates and money supply.

Legal influences: consumer protection, competition law, employment law, health and safety and environmental regulation.

Ethical and environmental influences: fair trade, sustainable sourcing, waste reduction and carbon footprint.

Technology influences: e-commerce, mobile money, online banking and automation lower transaction costs but require investment and skills.

Globalisation increases competition and market access; multinationals bring capital and jobs but may repatriate profits.

Government support includes loans, grants, training and infrastructure; taxation and licences are obligations.

A business must comply with registration, tax registration and sector licensing before trading.

An entrepreneur identifies opportunity, takes risk, organises factors of production and innovates to create a venture.

A business plan contains the idea, objectives, market analysis, marketing plan, operations plan, management team, financial forecasts and risk assessment.

Purposes of a business plan: secure finance, test feasibility, guide operations and communicate vision to partners.

A feasibility study tests whether the idea is viable in terms of demand, cost, skills and legal requirements.

Botswana's economy is diamond-dependent; diversification into tourism, agriculture, manufacturing and services is a stated national goal.

Support institutions include the Botswana Development Corporation and the Citizen Entrepreneurial Development Agency, offering finance and advice.

SMEs dominate employment; challenges include access to finance, small domestic market, skills shortages and high import costs.

Cooperatives, citizen-owned enterprises and community tourism are encouraged to spread the benefits of growth.

Profit maximisation occurs where marginal cost equals marginal revenue; firms may pursue sales growth or market share instead.

Market share (%) = (firm's sales ÷ total market sales) × 100.

Survival is a short-term objective in a recession or start-up phase; it may override profit goals.

Shareholders seek dividends and share value; managers may pursue growth or status, creating a principal-agent problem.

Employees seek fair pay, job security and good conditions; customers seek quality, low price and service.

Suppliers seek prompt payment and stable orders; lenders seek interest and repayment; the community seeks jobs and environmental care.

Government seeks tax revenue, employment and compliance; pressure groups seek ethical or environmental change.

Stakeholder mapping by power and interest helps a firm decide whom to consult and prioritise.

Corporate social responsibility means accepting obligations beyond legal minimums to stakeholders and society.

Gross profit margin = (gross profit ÷ revenue) × 100; a fall may indicate higher cost of sales or discounting.

Net profit margin = (net profit ÷ revenue) × 100; a fall may indicate rising overheads or interest costs.

ROCE = (net profit ÷ capital employed) × 100; it measures the return earned on long-term funds invested.

Current ratio = current assets ÷ current liabilities; a ratio near 1.5–2 suggests adequate short-term liquidity.

Acid-test (quick) ratio = (current assets − inventory) ÷ current liabilities; it tests liquidity without relying on stock sales.

Gearing (%) = (long-term debt ÷ capital employed) × 100; high gearing means greater risk from fixed interest payments.

Break-even output = fixed costs ÷ contribution per unit; contribution per unit = selling price − variable cost per unit.

Margin of safety = actual output − break-even output; it shows how far sales can fall before a loss occurs.

Cash flow forecast: net cash flow = inflows − outflows; closing balance = opening balance + net cash flow.

Job description lists duties and responsibilities; person specification lists qualifications, skills and experience required.

Internal recruitment: cheaper, faster, motivating for staff, but limits new ideas and leaves another vacancy.

External recruitment: wider pool and fresh ideas, but higher cost and longer induction.

On-the-job training is realistic and cheap but may pass on bad habits; off-the-job training is broader but costly.

Maslow: physiological, safety, social, esteem, self-actualisation; satisfied lower needs stop motivating.

Herzberg: hygiene factors prevent dissatisfaction; motivators create satisfaction.

Financial motivators include salary, piece rate, commission, bonus and profit sharing; non-financial include enrichment, teamwork and praise.

Labour turnover (%) = (leavers ÷ average number employed) × 100; high turnover raises recruitment and training costs.

Dismissal must follow fair procedure; unfair dismissal and discrimination are unlawful under employment law.

Market research: primary data is first-hand and specific but costly; secondary data is cheaper and quicker but may be outdated.

Sampling methods: random, stratified, quota and convenience; a representative sample improves reliability.

Segmentation divides a market by demographics, income, geography or lifestyle; targeting selects segments to serve.

Product life cycle: introduction, growth, maturity, decline; extension strategies include rebranding, new packaging and new markets.

Pricing: cost-plus, penetration, skimming, competitive, promotional and price discrimination.

Distribution: direct, via retailer, via wholesaler and retailer; choice depends on product, cost and control.

Promotion mix: advertising, sales promotion, personal selling, public relations and sponsorship; medium choice depends on audience and budget.

Branding builds recognition and loyalty and can support premium pricing.

E-commerce widens market reach and lowers distribution costs but requires logistics and secure payment systems.

Job production: one-off customised output; batch production: groups of identical items; flow production: continuous standardised output.

Productivity = output per unit of input; raising productivity lowers unit cost and improves competitiveness.

Capacity utilisation (%) = (actual output ÷ maximum possible output) × 100.

Buffer stock covers demand variation; reorder level triggers a new order; lead time is the delivery delay.

Just-in-time holds minimal stock, reducing storage costs but requiring reliable suppliers.

Quality control inspects finished output; quality assurance builds quality into the process; TQM involves all staff.

Lean production reduces waste through JIT, kaizen and standardisation.

Location factors: proximity to materials or market, labour supply, transport, power and government incentives.

Break-even output = fixed costs ÷ contribution per unit.

Sole trader: one owner, unlimited liability, full control and all profit, financed mainly by personal savings and retained profit.

Partnership: two or more owners share capital and profit under an agreement; unlimited liability unless registered as a limited liability partnership.

Private company (Pty Ltd): shares sold privately with restrictions; public company (Ltd): shares offered to the public and listed.

Cooperative: owned and democratically controlled by members who share benefits; forms include producer, consumer and credit cooperatives.

Public corporation: state-owned, set up by statute to provide essential services; objectives may include social goals.

Franchise: franchisee pays an initial fee and royalties to use the franchisor's brand, systems and training.

Internal growth comes from more sales, new products or branches; external growth comes from merger or takeover.

Diseconomies of scale are rising average costs as a firm grows too large, caused by poor communication and slow decisions.

Organisational structures: tall (many levels, narrow span) versus flat (few levels, wide span).

Factors of production: land, labour, capital and enterprise; they are combined to produce goods and services.

Needs are essential for survival; wants are unlimited desires that are not essential.

Primary sector extracts raw materials; secondary sector manufactures; tertiary sector provides services.

Specialisation concentrates effort on one task or product; division of labour splits production into tasks to raise output per worker.

Added value = selling price of output − cost of bought-in inputs; branding, processing and convenience add value.

Opportunity cost is the value of the next best alternative forgone when a choice is made.

The chain of production links primary, secondary and tertiary activity before a product reaches the consumer.

Businesses create employment, tax revenue and foreign exchange, but may cause pollution or resource depletion.