Paper 1 IGCSE Commerce Short Notes For Edexcel
Paper 1 IGCSE Commerce Short Notes For Edexcel
3. Tertiary Sector:
• Involves providing services directly
to consumers or businesses.
• Examples: Retail stores,
Division of Labour
transportation services, education,
healthcare. Definition
• Division of labour refers to splitting
Relationship Between
the production process into smaller
Sectors tasks that are performed by
different workers or groups.
• The sectors are interdependent:
1. The primary sector provides raw Specialisation
materials for the secondary sector.
2. The secondary sector processes • Specialisation occurs when
these materials into finished goods. individuals, firms, regions, or
3. The tertiary sector delivers these countries focus on producing
goods or provides related services specific goods or services in which
to consumers. they have expertise or an
advantage.
Relative Importance of
Each Sector Levels of Specialisation:
6. Mail Order:
• Buying products through mail
Costs Associated
catalogs or online platforms.
with Buying
• Advantages:
• Convenience for customers. Types of Costs
• Wide product range available.
1. Transport Costs:
• Disadvantages: • Costs associated with moving goods
Costs Associated
Types of
with Selling
Commercial
Types of Costs Enterprise
1. Sales Staff Costs:
• Salaries and benefits for sales
Private and Public
personnel. Enterprises
• Includes commissions and bonuses.
2. Payment Processes Costs: 1. Private Enterprises:
• Costs associated with processing • Owned by individuals or private
payments. entities.
• Includes transaction fees for credit • Examples: Sole traders,
card processing and online partnerships, private limited
payment platforms. companies.
1. Stolen Inventory Costs: • Motivated by profit.
• Costs associated with theft or loss 2. Public Enterprises:
of inventory. • Owned by the government or public
• Includes replacement costs and entities.
potential loss of sales. • Examples: State-owned
2. Damaged Inventory Costs: corporations, public limited
• Costs associated with inventory companies.
damage during storage or shipping. • Often serve public interests or
• Includes replacement costs and strategic sectors.
potential loss of sales.
IGCSE Edexcel Commerce Short Notes (Paper 01)
Disadvantages
1. Unlimited Liability:
• The owner is personally
responsible for all business debts
and liabilities.
1. Limited Access to Capital:
• Difficulty in securing large loans or
investments.
IGCSE Edexcel Commerce Short Notes (Paper 01)
Partnership Implications
• Business Formation: Requires a
Definition partnership agreement.
• Documents Required: Partnership
• A partnership is a business owned
agreement; may need to register
and operated by two or more
with relevant authorities.
individuals or entities.
• Raising Capital: Easier than sole
traders but still limited compared
Advantages to corporations.
• Ownership and Control: Shared
1. Shared Risk and Expertise: among partners.
• Partners can share responsibilities • Distribution of Profit: Profits are
and bring different skills to the shared according to the
business. partnership agreement.
2. Easier Access to Capital: • Liability: General partners have
• Compared to sole traders, unlimited liability; limited partners
partnerships may find it easier to have liability limited to their
secure loans or investments. investment.
3. Flexibility: • Suitability: Suitable for businesses
• Partners can make decisions that benefit from shared expertise
collectively. and risk.
Disadvantages
1. Unlimited Liability:
• General partners have unlimited
personal liability for business
debts.
2. Potential for Conflicts:
• Disagreements among partners can
hinder decision-making.
3. Limited Growth Potential:
• Similar to sole traders, scaling can
be challenging without converting
to another structure.
IGCSE Edexcel Commerce Short Notes (Paper 01)
Definition
A limited company is a separate
•
Implications
legal entity from its owners
(shareholders).
• Business Formation: Requires
• Private Limited Company (Ltd.):
registration with Companies House.
Shares are not publicly traded.
• Documents Required: Articles of
• Public Limited Company (PLC):
Association, Memorandum of
Shares are publicly traded on
Association.
stock exchanges.
• Raising Capital: Can issue shares to
raise capital.
Advantages • Ownership and Control: Ownership
through shares; control can be
1. Limited Liability: distributed among shareholders.
• Shareholders have liability limited • Distribution of Profit: Profits are
to their investment in shares. distributed as dividends to
2. Access to Capital: shareholders.
• Can raise capital through share • Liability: Shareholders have limited
issuance. liability.
3. Credibility and Stability: • Suitability: Suitable for larger
• Often perceived as more businesses seeking to raise capital
professional and stable. and protect owners from personal
liability.
Disadvantages
1. Complex Setup:
• Requires registration with
Companies House and more formal
documentation.
2. Higher Regulatory Requirements:
• More compliance costs and
administrative tasks.
IGCSE Edexcel Commerce Short Notes (Paper 01)
Examples
• Telecommunications, utilities,
transportation services.
Services Provided
Key Factors
• Retailers act as intermediaries
• Availability of Labour:
between suppliers and consumers,
offering a range of services that • Closeness to Markets:.
enhance the shopping experience, • Transport Links:
including product information, • Availability of Power:
customer assistance, and logistics • Reliable energy supply for
management operations.
2. Availability of Raw Materials:
• Relevant for retailers handling
Types
perishable goods.
3. Competition:
1. Street Markets:
IGCSE Edexcel Commerce Short Notes (Paper 01)
Key Functions
Impact on Individuals
1. Breaking Bulk:
• Job Market Changes: Shifts in • Purchasing goods in large
employment opportunities due to quantities and selling them in
automation and digitalization. smaller quantities to retailers.
• Consumer Choices: Increased access 2. Risk Bearing:
to diverse products and services
through online platforms.
IGCSE Edexcel Commerce Short Notes (Paper 01)
Disadvantages
1. Cultural Challenges: Navigating
different cultural norms can be
complex. Essential Principles
2. Regulatory Compliance: Must comply
1. Indemnity: Ensures that insured
with various laws across countries.
parties are restored to their
3. Political Risks: Exposure to political
financial position before the loss
instability in host countries.
occurred.
2. Contribution: If multiple policies
Impact on Host cover the same risk, each insurer
Countries contributes to the claim.
3. Subrogation: Allows insurers to
• Can lead to job creation but may pursue third parties responsible
also result in local businesses for a loss after compensating the
being outcompeted or insured.
environmental concerns arising 4. Insurable Interest: The insured
from operations. must have a legitimate interest in
IGCSE Edexcel Commerce Short Notes (Paper 01)
1. Premises
2. Theft
2.
3. Motor
4. Marine Claim Process
5. Fire
6. Consequential Loss • Involves submitting a claim form
7. Employers’ Liability detailing the loss or damage
8. Product Liability incurred along with supporting
9. Fidelity Guarantee documentation as required by the
10. Credit Insurance insurer.
11. Plate Glass
Main Documents
IGCSE Edexcel Commerce Short Notes (Paper 01)
Legislation
Types of Trade
• Various laws exist globally to Protection
protect consumers from fraud,
unsafe products, and unfair 1. Tariffs:
business practices (e.g., Consumer • Taxes imposed on imported goods,
Rights Act). making them more expensive than
domestic products.
• Purpose: To raise revenue for the
government and protect local
Buyer Actions against industries by discouraging imports.
2. Quotas:
faulty goods or poor
• Limits on the quantity of specific
service goods that can be imported over a
set period.
• Making complaints about faulty • Purpose: To protect domestic
goods or poor service through producers by reducing foreign
customer service channels or competition and increasing prices
regulatory bodies. for consumers.
3. Trade Restrictions:
Seller Actions
IGCSE Edexcel Commerce Short Notes (Paper 01)
Definition
Exchange Rates
• Bad debts refer to amounts owed
Key Concepts by customers that are unlikely to
be collected.
1. Foreign Exchange Markets:
Impact of Bad Debts
IGCSE Edexcel Commerce Short Notes (Paper 01)
1. On Businesses:
• Financial Losses: Reduces cash flow
and profitability.
• Increased Costs: May require
additional resources for debt
collection efforts.
• Creditworthiness: High levels of bad
debts can affect a company's
ability to secure financing.
2. On Individuals:
• Credit Score Impact: Accumulation
of bad debts can lower credit
ratings.
• Financial Stress: Individuals may
face difficulties in meeting other
financial obligations.