Business Success & Failure (Cambridge (CIE) IGCSE Business): Revision Note

Why businesses succeed

• Successful businesses often share similar strengths, such as good management, strong products and enough finance

• These factors help them grow, stay competitive, and meet customer needs in changing markets

Strong management skills

• Good managers make effective decisions, organise resources well and motivate employees

• They plan ahead, solve problems quickly, and lead the business towards its goals

  • For example, Steve Jobs helped Apple succeed by making bold decisions and focusing on design and innovation

Availability of finance

• Having enough money (capital) allows a business to invest in equipment, marketing, staff and product development

  • For example, Amazon used early investment to grow its operations and dominate online shopping

Suitable product

• A successful business offers a product that solves a problem, meets customer needs or has unique features

• Products must be high quality and appealing to the target market

  • For example, Dyson vacuum cleaners became popular by fixing problems like loss of suction

High demand for the product

• When many people want the product, sales rise and the business earns more profit

• Demand can increase due to trends, changes in lifestyle or special events

  • For example, Zoom became a global success during the COVID-19 pandemic as remote working increased

Favourable economic conditions

• In a strong economy, people have more money to spend, which increases sales

• Low interest rates and low inflation can also help businesses grow

  • For example, during economic growth periods, car manufacturers often see rising sales

Low competition or competitive advantage

• Businesses succeed when they offer something better than their rivals

  • For example, lower prices, better quality or a strong brand

• Having few competitors also gives more control over pricing and customers

  • For example, Nike stays successful by constantly innovating and using powerful branding

Why businesses fail

• Business failure is a risk to both new and established businesses

  • In 2021, an average of 8% of businesses in EU countries failed

    • In Estonia, almost one in four businesses failed

    • However, in Greece, just over 2% of businesses failed

• New businesses are often more at risk of failure than well-established businesses

  • This is often due to lack of management skills, limited experience or cashflow problems during the initial start-up phase

  • The volume and variety of tasks required of new business owners can be overwhelming

  • Market research is unlikely to be detailed, as small business owners may lack the skills to understand findings and make effective decisions

The main reasons why some businesses fail