Principles of Business

Sept 29, 2022,

P OB

Economic System

Types of Economic System

1. Free Market
2. Command
3. Traditional
4. Mixed

Traditional / Subsistence

● The traditional economic system existed in early societies and is rarely used
today. In those early societies, people formed communities and produced
food and essential goods for a simple lifestyle

Command or Planned (Socialist)

● A planned economy is one in which the government assumes responsibility for

economic planning in order to achieve the best possible use and distribution
of a country's scarce resources.

Characteristics of the Planned Economy

● The government plans, coordinates and controls all economic activities.

● The government decides what to produce, and how much to produce and
controls the distribution of output
● Prices are set by the state

Advantages of the Planned Economy

● The state can direct its development since it controls all resources
● There is likely to be less waste of resources
● Income is more likely to be evenly distributed
Disadvantages of the Planned System

● Government planning may be more rapid and flexible compared with the
decision-making of the capitalist economy, and this may lead to scarcity of
goods and services.
● Private sector initiatives may be blocked
● Planning may be manipulated by the more powerful groups that may not act in
the best interests of all

Mixed (Public and Private)

● Mixed Economies are economic arrangements in which both government and

private individuals make economic decisions as to what to produce, how to
produce and for whom goods and services should be produced

Characteristic of the Mixed Economy

● Involvement of both state and private individuals.

● Efficient use of resources
● Most equitable distribution of income than free market economies

Advantages of Mixed System

● Both sectors of the economy, the government and private individuals, engage
in activities that can best produce and therefore there is more efficient use
of resources.
● Governments are free to make laws to protect natural resources and the
people.

x Disadvantages of Mixed Systems

● There is always a need to keep a balance between government and private

sector involvement
● Conflict may arise between government and private investment, and thus
result in long delays in the production of goods and services
Free or Capitalist Economy

● The free market is an economic system in which the customer drives the
economy. The consumer influence the producers’ decisions on what to
produce since the producers will not make a profit by producing goods that
are not in demand

Advantages of Free Market Economy

● Government's involvement is very limited. The activity of the government is

usually restricted to the collection of taxes.
● Competition among firms forces prices down
● Producers are free to use the factors of production in any way they consider
to be most suitable to them.

Disadvantages of the Free Market

● The profit motive drives this economy and thus unequal distribution of
wealth
● Large sums of money are spent on advertising, which creates artificial
demand and increases prices

Sept 22, 2022

POB
The Nature of Business
Objectives:
i) Private and Public Sector
ii) Business organization
iii) Formation of a company

Public and Private Sector

Public is runned by the government

Private is runned by private agents

Public Sector
● Public sector — is that part of the economy that is financed by the
government through taxpayers, and is controlled and operated by the
government or its agents. The surplus or profit is used for the benefit of
the entire population.

Public sector business falls under two (2) categories:

Municipal Undertakings
1] are enterprises or services operated on a commercial basis by local
government authorities, e,g sport center, bus services, conference calls and
other culturally important facilities.
State Undertakings
2] referred to a variety of enterprises operated by the government on the
behalf of the [Link]
Private Sector
● is that part of the economy that is funded by private individuals and is
therefore owned and controlled by private firms. The objective of the
private sector is to make a profit.

Privatization VS Nationalization
i] When a business moves from being run by the government to being privately
owned, this is called privatization.
ii] Movement from private sector to the public sector is described as
Nationalization

Forms of Business Ownerships:

Companies (Private and Public)

1] A Private limited company has to have a minimum of one member
(shareholder) and there is no maximum. The capital of the business is
divided into shares, but the shares cannot be advertised for public sale.
2] Public Limited companies are sometimes called JOINT STOCK COMPANIES
because each is an association of people who join together to contribute to a
joint or common stock. The profit received is shared among the
contributors.

Advantages of a company
1] Shareholders have limited liabilities
2] Large sum of capital can be raised by the company enabling it to grow in size

Disadvantages of a company
1] Shares are not easily transferred without the consent of the directors
2] Decision making can be slow

Setting up a limited company

1] All types of business, including sole traders and partnerships as well as
private and public companies, must register with the Registrar of Business
Names if they wish to trade in a name other than that of the owner.
2] When a company is being formed, it is regulated in the COmpanies Acts of
the country to which it belongs and operates in and the name of the business
is registered with the Registrar of Companies (or its equivalent).
Memorandum Of Association
● This document states the external relationships of the business, such as the
relationship between the company and others

Articles Of Association
● The articles of association outline the internal relationships of the business,
that is, the broad way in which the internal organization will operate

Co-operatives
● A co-operative is a business organization formed by a group of co-operators
who work together to achieve shared objectives. Profits are typically shared
among the co-operators.

Co-operative are formed in the following areas:

● Agriculture
● Producers co-operative
● Retail
● Workers

Sept 23, 2022

POB
The Nature of Business [CONTD]
Objectives:
i] Forms of business [cont'd]
ii] Advantages and disadvantages of forms of business organizations [cont'd]

Advantages of Co-operatives
● Members work for themselves and make shared decisions
● Some cooperative have limited liability
● Co-operatives share the profits
 Disadvantages of Co-operatives
● Members may lack managerial and technical experience
● Decision-making can be slow if members are consulted

Franchises
● A franchise business is made up of franchisors and franchisees. The
franchisor is an established business with a well-known name and products or
services. It grants a license to a franchisee so that it can sell the
franchisor's products/services and pay for the rights to use the name, logo
and marketing etc.
● Examples of franchises include KFC, Payless ShoeSource and Starbucks

Advantages of Franchises
● The franchisor only has to invest a limited amount of capital in each
franchisee, but takes profits from all of them.
● Banks are more likely to allow loans to a new entrepreneur backed by a
known, successful business
● The franchisor will have an established supplier relationship, so the
franchisee does not need to create this.

Disadvantages of Franchises
● Cost may be higher than expected. This will affect the franchisee's
potential to make a significant profit.
● If the franchisor changes its operational techniques, the franchisee must
adhere to the changes even if they do not agree.
● If the franchisor goes out of business this will have a direct effect on the
franchisee.

The Sole Trader

● The sole trader as the title suggests is a single business owner. This person
may employ several other persons to work in the organization, but he has to
 make all the decisions, acquire all the capital required and other resources
needed for the business on his own

Advantages of The Sole Trader

● The business owner gets all the profit
● Makes all the decisions
● Consultation isnt needed for decision-making

Disadvantages of The Sole Trader

● Little time with the family and friends
● Unlimited liability
● Bares all the risk

Sept 30, 2022

Functional Areas of a Business
Functional
● Different areas of a business that ensures that the business is running
smoothly, additionally this refers to the grouping of individuals on the basis
of the role or purpose each performed in the organization .

Production / Operation
● The processes and methods used by the producers to transform inputs such
as raw materials, semi-finished goods.

Marketing
● Marketing refers to all the processes involved in promoting and selling goods
or services in the most profitable and efficient manner. It includes market
research and advertising as well as actual selling to the customer

Finance
● The finance department is responsible for securing funds for the business,
keeping accounting records to show how funds are used, and recording the
sales and costs of the business
Human Resource (HR)
● HR is responsible for areas such as recruitment, training, managing wage
payments, looking after employee welfare and managing disciplinary systems .

Research and Development

● R&D is the investigative activity a business carries out with the aim of
getting new knowledge that it can use to create new products or systems.
Basic research identifies new knowledge that may not be used at some
future

Oct 6, 2022
The Nature of Business [CONTD]
Stakeholders in Business
Objectives:
1. Definition of stakeholders
2. External & internal stakeholders
3. Functions of stakeholders
● S
Stakeholder
● Stakeholders are individuals/groups / entities who have an interest in a
business and as well as the outcome from its action
OR
● A stakeholder is any individual or group which has a vested interest in how
well a business performs.

Place into 2 types of stakeholders

● Internal
● External
Internal and External stakeholders
● Internal stakeholders are individuals within an organization who have a
special interest in its activities and its financial performance
● External stakeholders are individuals who are not employed by an
organization but have a vested interest in its activities

Different types of stakeholders and their function

● Owners or shareholders [internal]
- to provide financial capital,
- to invest in and operate the business in
- to ensure that managers are fulfilling the objectives of the business and
using resources efficiently

● Employees [internal]
- To perform duties that ensure that the business continues to maximize
profit and that their job remains secure

● Consumers [external]
- To ensure that the products and services offered by the business are of
good quality and are reasonably priced.
- To encourage competition among firms and influence product prices
- To report unethical practices

● Suppliers [external]
- To provide businesses with the necessary raw materials to produce goods
and services

● Communities [external]
- To influence businesses regarding how they impact the local environment
- To provide the workforce for the business
- To ensure that businesses within the community operate within the law and
contribute towards the development of the community

● Government [external]
- To ensure that businesses operate within the scope of the law of the
country
 - To ensure that businesses publish a financial report that is accurate and
truthful
- To ensure that businesses pay all taxes
- To protect consumers
- To provide financially, managerial, or technical assistance where necessary

● Future Generation [external]

- To provide future customers and employees
- To provide a reason why businesses should operate sustainably
Class activity
Match the following stakeholders with their roles

Roles Function

Owner Invest capital into the business

Employees Perform duties required in their job

requirements

Managers Maximize profit on investment

Government Protect consumers

Suppliers Provide raw materials for the business

Customers Influence product pricing

The community Ensures the business contribute

towards the development of the
society

Competitors Stimulate competition

Lenders Provide financing for the business

Board of directors Develop goals for the business

Oct 7, 2022
The Nature of Business [CONTD]
Objectives:
1. Legal and Ethical Issues in Business
2. Consequences of Legal and Ethical issues
3. Principles that must be adopted in the establishment of businesses
Legal Issue
● Legal issues inform the way in which business operations need to be
conducted and how the business should be formally established. This will be
directly related to government regulations and laws.
Ethical Issues
● Refer to the moral responsibility of the entrepreneur to do the right thing
towards internal and external stakeholders.
Misleading Advertising
● Is where you lie in an advertisement to make more customers buy it such as
having a hair product saying it will grow your hair in 2 weeks

Consequences:
1. Lawsuit
2. Fewer customers and loss in loyalty

Improper Disposal of waste

● Is the process of which businesses disposal of their waste badly and can
have an impact on wildlife or human being

Consequences
1. Government can charge fines for breaching laws
2. Businesses can be closed if citizens are at risk from improper waste disposal

Withholding taxes
● Not paying your taxes to the government

Consequences:
1. Government can charge a fine
2. Imprisonment
3. Businesses can be shut down
Filing fraudulent tax returns
● Where you submit fraud tax return to get more money

Consequences:
1. Government can charge a fine
2. Imprisonment
3. Businesses can be shut down

Environmental Pollution
Where businesses dump their waste in environment areas such as rivers or pond
Consequence:
1. Government can charge a fine
Failure to adhere to money laundering act
● the concealment of the origins of illegally obtained money, typically by means
of transfers involving foreign banks or legitimate businesses.

Consequences:
1. Business can be demolished by municipal authorities
2. Investment can be lost

Noise Pollution

● Where businesses or party make too much noise causing a mess

Consequences:
1. Fines

Failure to obtain licenses and permits

● Including having a party and not having the permits to play the song
Consequences:
1. Business can be closed due to illegal operations

Adoptions of a business code of ethics

● A code of ethics is a written statement setting out the expectations and
principles governing the behavior of an organization.
● This will form a key part of the trading of employees and will appear in key
documents as well as a prominent locations such as on the company’s website
Policies on environmental issues
● A policy is a statement of intent on a particular issue and environmental
policy will set out how the company will act. For example in relation to
eliminating or minimizing pollution as well as recycling waste.
● The policy will also set out how the employees will operate in order to
protect the environment such as processes they go through in separating and
handling different types of waste.

Handling of personal information

● This may help guard against fraud and the leakage of confidential
cooperative data and information.
● They are legally and morally bound with regards to what information they
cannot make available to others.

Oct 27, 2022

Internal Organizational Environment
Objectives:
1. Functions of management
2. Responsibilities of management

● Planning
To create short term and long term goals to achieve the goals of a business
and sourcing the necessary resources to accomplish these goals. Managers
often use the acronym SMART: specific, measurable, attainable, relevant,
time-based.

● Organising
Bringing together all the factors of production.

● Directing
Getting people to perform assigned tasks willingly and in an effective
manner.

● Controlling
Monitoring employees activities determining whether the organization is on
target.

● Coordinating
Making all the resources in the business work together efficiently.

● Delegating
Assigning work activities to subordinates.

● Motivating
Creating an environment in which employees feel enthusiastic about their
jobs and therefore accomplish their assigned task to the highest standard.
● Staffing
This function involves filling the vacancies with the right people.

Responsibilities of Management
● Management has responsibilities to each of the following:
1. Owners and shareholders
2. Employees
3. Society
4. Customers
5. Government

Management’s Responsibility to owners and shareholders

● Ensuring that the company is operating efficiently and maximizing profits
for shareholders
● Operate within the scope of its authority and in keeping with the prevailing
laws and the company’s acts that are in place
● Ensure that the firm meets the strategic goals in an efficient and effective
manner,
● Advise shareholders on any changes that may be necessary to ensure
growth.
● Make recommendations to owners regarding changes in structure or goals of
the organization that may be necessary to realize growth
● Provide adequate working conditions and training.
● Maintain food communication and human relations with staff.
● Provide adequate remuneration and incentives, provide promotional
opportunities, and acknowledge good performance by staff members.
● Provide the necessary materials and equipment so that employees are able to
perform their jobs
● Comply with the legal requirements of employment laws and regulations
● Respect the rights of employees to join trade union organizations where
applicable.
Management’s Responsibility to Society
● Operates within the law by carrying out fair trading practices
● Ensuring the environment is not damaged by the business’ operation.
● Enhance social standing in the community by supporting charitable
organizations.

Management’s Responsibility to Customers

● Produce goods and services of marketable quality and at reasonable prices.
● Provide adequate customer information on goods and services that the
business provides
● Ensure service to the customer continues after a sale has been concluded
and there is adequate room for redress in the event that the customer is
dissatisfied with the product.
● Honors all guarantees and warranties and provides adequate and fair
arbitration in dealing with customers’ complaints.
● Comply with consumer protection laws.

Management’s Responsibility to Government

● Abide by the laws of the land by paying corporation taxes and making
deductions from employees’ salaries such as National Insurance and Income
taxes.
● Ensure that the business is contributing to the welfare of the society by
adopting nationalistic goals such as reducing unemployment

Oct 28, 2022

Internal Organizational Environment [CONTD]
Organizational Charts
● An organizational chart is a diagram of the organization of an enterprise. It
is used to display visually the structure of a formal organization. The
pyramid gets wider towards the bottom depicting the greater number of
workers at its base.
Purpose of Organizational Charts
● Show lines of authority (hierarchy)
● Differentiate departments and specialists
● Outline span of control
● Serves as a graphical representation of management and employee positions

Chain of Command
● The direction of authority within a business. This means that the right or
authority to command must be seen from the top to the button of the
organization.
Span of Control
● The number of people a person is responsible for. In organizing, management
should ensure that the number of people supervised by any one person is of
manageable size, to facilitate the effectiveness of supervision
Interpretation of Organizational Charts
● The organizational chart is a pictorial representation of the formal
structure of a business. The word formal is used to indicate that this is
created by the owners or managers of the business.
● The most senior position in the organization is placed by itself, with no other
post at that level.
● All positions with the same level of authority, although in different
departments, are placed at the same level as each other.
hello
Line Organizational Chart
● This is a direct relationship between managers, junior managers and ordinary
or subordinate staff members. In a line organization authority flows from
top to bottom.
Example:
 Line and Staff
● This combines line and staff. The aim is to show line or main relationships
and staff or supporting relationships within an organization. It shows the
relationship between line managers and specialist staff who work together
to meet the goals of the organization.
Example:

● Staff organization is created to assist line organization when it is proven

that the line organizational arrangements are inadequate to take care of
some of the activities of the organization.

Functional Organizational Chart

● This is organized according to the functional areas such as marketing
production, finance and research and development.
Example:
Nov 7, 2022
Internal Organizational Environment
Objectives:
1. Characteristics of a good leader
2. Leadership styles

Who is a Leader?
● A leader is someone who can get things done on time to a high standard by
motivated employees
Characteristics of a leader
1. Honesty

2. Flexibility - Show willingness to change their plans or ideas if they prove to

be wrong. They will response to changes in the business environment and
move the organization into new areas or directions when the need arises

3. Focus - Good leaders will focus intensely on the task to be achieved rather
than being distracted away from the central purpose of the organization,
the plan and the needs of each situation

4. Trust worthiness - This involves doing what they say they will do and also
supporting others in appropriate situations

5. Ability to make intelligent decisions - The business world is a complex one, so

good leaders need to be able to make intelligent decisions which are best for
the organization and all stakeholders.
Leadership Styles
1. Autocratic
●
● This leadership style tells people what to do and expects borders to be
followed without questions.
Advantages
1. Decisions are made quickly as there is no consultation with subordinates.
2. There is a clear chain of command; employees are not confused as to who
they are to refer to
3. New employees can be provided with clear directives to follow.

Disadvantages
1. Employees may lack a sense of belonging within the firm as they are not
involved in the decision making process
2. Employees become resentful towards the manager and may retaliate by not
giving their best on the job
3. Worker creativity and innovation may be stifled as their ideas are not
sought by the leader

Democratic Leadership
● Democratic leaders consult other managers and employees and involve them
in problem-solving and decision-making.

Advantages
1. Employees may feel a greater sense of belonging as they are actively
involved in the decision-making process
2. Teamwork is encouraged
3. The leader provides a scope for the development of worker creativity and
innovation and sources the team ideas

Disadvantages
1. Decision-making process may be slow
2. Employees may influence decisions more in line with their personal
preferences and skills rather than the goals of the organization as a whole.

Nov 10, 2022,

Leadership Styles [CONTD]
Laissez-Faire Leadership
● The laissez-faire leader allows staff to work with little or no guidance.
Staff members are left on their own to fulfill their role in contributing to
the goals of the organization and their opinions are taken into account when
company decisions are made.
Advantages of Laissez-Faire Leadership

● Permits staff to innovative and encourages horizontal communication among

members of the organization
Disadvantages of Laissez-Faire Leadership
● Becomes very difficult to arrive to a consensus and decision making becomes
tardy through numerous discussions and deliberation
● The delay costs the business
Other Leadership Styles
Charismatic
● A leader who creates a self image so powerful that people are naturally
drawn to them. A charismatic leader gathers followers through personality
and charm, rather than any form of external power or authority.
Transformational
● Employees are inspired to embrace changes in the organization regardless of
the consequences

Internal sources of conflict

What is Conflict?
● Conflict may be described as a clash of interests, ideas or objectives
between one or more individuals within an organization. This may be between
 employees, between managers at the same or different levels or between an
employee and a manager

Types of Conflicts
Levels of worker pay
● This may be a point of disagreement for employers and employees where the
employees may demand higher pay for the following reasons:
1. They work hard and deserve a better pay
2. The business has been more profitable and their pay has not increased
3. The competition pays their employees more

Internal changes
● Changes in working practices or the implementation of new technologies can
become a source of conflict.

Interpersonal relationships
● Disagreement between supervisors and employees or between work
colleagues can cause conflict.

Poor communication
● This can cause conflict when instructions for tasks or expectations are
clearly expressed
● The tone used whether vocally or in writing is also important.

Harassment
● Harassment can be bullying, racism, sexual or any form of making that
person being harassed not safe.

Activity
1. Why is it important for a leader to be believed to be honest & trustworthy?
● Being an honest leader makes employees trust your word while being
trustworthy involves doing what they said they will do and supporting others.
 2. Which leadership enables quick decision-making
● Autocratic is a leadership style that enables quick decision making

3. Why might a laissez-faire leader be less effective than an autocratic one?

● A laissez-faire leader would be less effective than an autocratic because an
autocratic tells people what to do and expects them to follow the borders of
the rules while a laissez-faire leader makes the employees do it and leads to
a long decision-making process while an autocratic is quick.

Nov 14, 2022

Internal Organizational Environment
Conflict
Objective: i) Strategies used by employers and employees to gain the upper hand
during industrial dispute

Strategies used by employers

Hiring scab labor or temporary employees
● An Employer may employ other employees on a short time basis to replace
those who are engaged in this fuse.

Lockout
● This involves an employer stopping employees involved in a dispute from
entering the business premises so they cannot work for disrupt production
Union Busting
● They may attempt to prevent employees from joining or forming a trade
union. This is called Union Busting

Scared Tactics
● There may be threats of dismissal or disciplinary action against workers who
attempt to question the decisions and authority of management or who
partake in protest action.

Refusal to negotiate to employees or their representatives

● The hope maybe that employees will end their dispute if they realized their
employer is unwilling to negotiate

Strategies used by employees

Strike or with holding their labor
● Ultimately employees may walk out of the organization and refuse to return
to work.
Type of Striking
Picketing
● Is a rather public activity which draws attention to the conflict. Sometimes
bearing pickets or plains. Pricketins assemble outside the workplace and
discourage others from entering the premises

Work to Rule
● Employees report to work but only complete tasks that are strictly within
their job description and working hours

Go Slow
● The workers do their work but at a slower pace

Using a sick/out option

● Workers declare sick and cannot turn up for work
 Sit in
● Workers occupied the firm's premises ensuring that no goods enter or leave
the premise
Nov 17, 2022
Strategies for Conflict Resolution
Conflict resolution
● This refers to the methods and processes involved in facilitating the
peaceful ending of a conflict

The value of Trade Representation

● A trade union is a collection of workers who agree to negotiate with
employers. They negotiate for wage increases and other improvements and
benefits and also settle disputes.
● The trade union represents the employees’ interest They educate the
employees on their rights and responsibilities and negotiate for better
wages and better working conditions on employees’ behalf
● The union becomes the “collective voice” of a large group of workers. The
members of a trade union pay membership fees and dues to the trade union.

Types of Conflict Resolution

● Grievance Procedure
- A grievance at the workplace exists only when a labor law or work code had
been violated, or a worker is treated unfairly or his health or safety is
threatened
- The grievance procedure is the process used to resolve the conflict.
- The conflict may be resolved at any of the stages:
i) The union delegate seeks to solve the conflict by holding discussions with the
supervisor/ manager involved.
ii) If there is no agreement, he speaks to the Human Resources Manager or
Industrial Relations Manager.
iii) If there is still no agreement, it is reported to the union officials (at the trade
union) who will discuss the matter with top level management.
iv)If there is still no agreement, the union officials will then try each of the
following stages: (NOT APART OF GRIEVANCE PROCEDURE)

1. Conciliation
2. Mediation
3. Arbitration

Conciliation
● A third party such as a representative from the Ministry of Labour will be
present during discussions to ensure that communication takes place and
encourage the two groups to reach an agreement. The conciliator will not
suggest a particular suggestion or compromise

Mediation
● This involves the third party proposing solutions to problems, which are then
considered. This is merely a suggestion.

Arbitration
● The two groups agree to ask the third party to give the solution, which they
both will both accept. This means that the agreement reached by the
arbitrator is legally binding and must be accepted by both parties.

Nov 25, 2022

Internal Organizational Environment
Objectives:

i) Guidelines for establishing good relations between manager & employees

ii) Strategies for motivating employees

Guidelines for establishing good relations

Good communication
● Management will benefit from having regular meetings with employees to
discuss policies and company goals and to listen to employees' concerns.
Newsletter and bulletins
● This will also keep employees in the picture.
Grievance procedure
● This should be clear, well-publicized and documented.
Improving working conditions
● Employees are most likely to be content when there is good a working
environment that is safe & which promotes well-being as well as there being
suitable rest breaks, canteen facilities and other conditions
Motivating workers
● Business that focus on motivating workers are likely to be more success for
example: offering opportunities of training and promotion, rewarding
employees well and showing concern for their welfare
Practicing good leadership
● Employees will want to be lead by good leaders such as leaders that are seem
to be honest, approachable and trustworthy

Strategies for motivating employees

Finance method
● The payment for a normal working week is the basic pay or salary. Many
employees receive extra benefits on top of their basic wage either as money
or in some other form.

● Some example of Finance method include:

1. Bonus - An additional encouragement for achieving a set target
2. Commission - Payment as a set percentage of the sales made by a
salesperson
3. Performance Rate - Pay is related to meeting certain performance target
4. Profit sharing - Pay is related to the profit that the company makes
5. Time rate - A worker is receives a set pay per hour
6. Flat rate - A set amount of pay for a set number of hours

Non-financial method (also called fringe benefits)

● Use of a mobile phone
● Hotel and food payments when on company business
● Company health benefit
● Free or subsidized meals at work
● A company car
● Bursaries for children’s education

POB Topic (UNIT 2)

● 20 multiple choice questions (only)
● All of Unit 2

Dec 1, 2022
Internal Organizational Environment
Objectives: i) Communication
ii) Teamwork

What is Teamwork?
● A group of two or more people interacting regularly and coordinating their
work to accomplish a common objective

Advantages of Teamwork
● Teamwork benefits employees because:
1. It gives them a sense of common purpose and a feeling of belonging
2. They can consult experienced colleagues if they are unsure of something
3. Working as a part of a group is easier than working alone
4. Able to achieve more in a shorter period of time
 5. Ensures continuity, ie, in the absence of one member the others will
complete the task.
6. Team members benefit from sharing ideas, and the pooling of expertise
teaches new skills.

Disadvantages of Teamwork
1. More time is needed to make decisions and solve problems because more
people are participating in the process.
2. The cost of training the team members to work as a team might be high.

Strategies for Effective Communication

What is communication?
● Communication is the means by which we create, transmit and interpret
ideas, facts , data, feelings and opinions. The communication process is a
stage-by-stage process that involves the following:
1. The sender
2. The message
3. The receiver
4. The channel or medium
5. Feedback (confirms whether the message was received or understood)
6. Included in this process is the presence of noise

Strategies for Effective Communication

● For effective communication the sender should:
1. Decide exactly what is to be communicated and who the receiver will be
2. Choose the most appropriate medium for the message
3. Identify any possible barriers to communication and take steps to overcome
these barriers
4. Decide on the most appropriate type of feedback
5. Continue the process, but make necessary changes if communication fails

The receiver should:

 1. Try to understand the message
2. Identify any possible barriers to communication and take steps to overcome
these barriers
3. Send required feedback

UNIT THREE

Establishing a business
Terms to Note
Who is an Entrepreneur?
● An entrepreneur is one who undertakes the risk of investment to create and
market a good or service for financial gain
● Entrepreneurship refers to the variety of activities that lead to the
creation of new value, wealth, commercial enterprise and profit.

Role/Function of an Entrepreneur
1. Conceptualising
● (forming a new idea) it may be a new product or service or improvements to
an existing one, or ways to fill a need

2. Accessing funds or financing

● The entrepreneur will find ways to finance the business (savings, loans,
credit, the government, other investors)

3. Operating the business

● Ensuring that the day-to-day activities are carried out in different
functional areas.

4. Risk bearing
● A risk is any situation that has more than one possible outcome which is
unknown; the entrepreneur will make decisions that are risky, in the hope
that the profits will be great.
 5. Evaluating the performance of the business
● Ensuring that effective controls are in place (employees do their assigned
tasks, money is not stolen, accounting is accurate, resources are not wasted)
also conducting a thorough analysis on the efficiency in using resources.

6. Planning
● Identify targets, goals and objectives and also ways of accomplishing them

7. Organizing
● The business keeps records and documentation, creating a formal structure
with activities and authority assigned to different persons.

Characteristics of an Entrepreneur
● Creative-innovate new products and ideas
● Flexible-to adapt to changes in the market and industry.
● Very goal-oriented to purposely and aggressively accomplish tasks and meet
objectives
● Risk taker
● Persistent - they should have drive and determination to be successful
● Innovative

Jan 13, 2023

Role of the Entrepreneur in Economic Development

1. Collaborating
● Entrepreneurs work with many organizations when they create a new
business or expand existing ones including suppliers of materials and
equipment, banks and recruitment agencies. They must work closely with
 stakeholders including the government, communities and charitable
organizations

2. Creating Job
● The creation or expansion of businesses provides employment opportunities
within those businesses and suppliers. This job reduces unemployment and
provides income for employees that can improve their standard of living and
boost their financial stability. These economic opportunities support and
enhance communities by increasing the quality of life and overall standard of
living.

3. Contribution to Nation Building

● Business creation and expansion supports economic, social and political
integration and development within a country in the following ways:
● 1. Collaborating and trading with local, regional and national organizations.
● 2. Providing income and employment, which helps to reduce levels of poverty
and crime.
● 3. Training workers with new and enhanced skills, increasing their knowledge,
expertise, inventiveness and productivity
● 4. Taxes on wages and profits help to fund government investments in
infrastructure, policing, national security and defense, healthcare, education
and social programmes- all of which help boost future levels of productivity
and output.
● 5. International trade generates foreign earnings which can be used to fund
imports of goods and services from producers in other countries
● 6. Innovations in products and production processes can reduce waste and
pollution and contribute to more sustainable growth and development.
● 7. Collaborating with government organizations to develop solutions to social
and economic problems e.g social programmes, funding education for
unattached youths and institutions to help persons below the poverty line
 Establishing a Business
Objectives:
i) Reason for Establishing a business
ii) Steps taken in establishing a business

Reasons for establishing a business

● Self-actualization / fulfillment
- Owning and operating a successful business will give a feeling of
accomplishment

● Financial Independence / Increased Income

- Some people feel restricted financially with the income received from their
job. Starting a business would give them the opportunity to be a successful
business person and achieve financial independence

● To create employment for relatives, friends and community members

- Businesses can assist in providing jobs for persons in communities with high
levels of unemployment.

10 steps to starting a business (video)

1. Write a business plan
2. Obtain Start-up capital
3. Set up a legal business structure
4. Obtain a federal employer identification number
5. Satisfy business licensing requirements
6. Establish a web presence
7. Develop business collateral
8. Open a bank account and merchant account
9. Identity where to get help
10. Follow government rules
Steps to start a business (lesson)
1. Conceptualization
- All business ventures begin with the conceptualization of an idea. At this
initial stage the product or service idea is envisioned. Most entrepreneurs
identify a need in the market i.e. a service that is not being provided or a
product that does not exist. If the product or service already exists then
ideas to make improvements may be conceptualized

2. Research
- This involves: market probe or analysis of customers’ want, the competition.
Market research involves gathering information about a potential market to
help an investor make decisions about entering that market.

3. Identification of resources
- The resources required are land, labor and capital (financial, human,
material)

4. Creation of a business plan

- A detailed document that provides information on the purpose, the
resources and main activities of the business

5. Acquisition of funds
- There are several ways of acquiring funds to start a business. The investor
must weigh the advantages and disadvantages of acquiring funds from the
various financial institutions. The cost of borrowing i.e. the interest rate
charged and the length of the repayment period are factors to consider
 6. Operation of a business
- A business must be efficiently operated to ensure high quality and service.
This is important to keep existing customers and for business growth. Many
companies employ an operation manager to design and oversee its operations

Jan 20,2023

Establishing a business (2)

Objectives:
1. What is a business plan
2. Elements of a business plan

What is a business plan

● Preparing a business plan tests the feasibility of the business idea. The
research that complication of the business plan demands can save a lot of
time and money if the act of working through the business plan reveals that
idea of the business is not viable

cElements of a business plan

Executive summary
● This is a summary that gives a concise but clear picture of the main points of
the business plan. It should identify the business, its main objectives and
the owner/s; briefly describe the product and the nature of the business. It
should state the legal form of ownership, and the government regulations
that affect the business.

Operation Plan
● Description of the goods/services
● Suitability of location for production/operations
● Describe the type and level of production
● Labour skills required
● Quality control
● Technology required
● Raw materials and other input required, as well as sources. Ethical
issues related to production

The Marketing Plan

● Organization of the marketing department
● Market research
● Product strategies (design, branding, packaging)
● Pricing strategy
● Distribution strategy
● Consumerism issues
● Ethical issues relating to marketing strategies

The Financial Plan

● Purposes for which finance is needed
● Production
● Other costs (capital goods)
● Ethical issues relating to financing
● Projected performance
● Capital instruments
● Collateral
● Financing required
● Sources of finance

The organization and management plan

● Organization structure
 ● Human resources (available required) and duties, responsibilities of each

Jan 26, 2023

Sources of Information for conducting research into the establishment of a
business

Primary Sources
● This refers to the collection of primary data, that is, information that does
not already exist.
Examples include:
1) Personal interviews
2) Telephone interviews
3) Postal surveys
4) Observation
5) Consumer panels
6) Test marketing

Secondary Sources
● This is information that has already been collected by someone else for
some other purpose, but is useful to the entrepreneur.
1) Existing market research reports
2) Sales figures
3) Reports from sales / persons regarding customer feedback
4) ANnual reports and accounts published by businesses
5) Stock exchange reports
6) Government publications
7) Customer complaints at government agencies
8) Information from competitors e.g brochures
Feasibility study

What is a Feasibility study?

● A feasibility study is an analysis of the viability of a business idea, and an
examination of the different aspects of operating a business. It will show
whether the business idea is a worthwhile / lucrative business opportunity.

The feasibility study will examine and conduct research on:

● Market demand
● Target market
● Profitability
● Production methods
● Operating expenses
● Distribution channels
● Competition
● Promotional requirements
● Cash-flow
● Resources required
● Any special requirements

Reasons for conducting a feasibility study

● To ascertain the viability
● The possible cots attached to the project
● Possible sources of finance

Jan 27, 2022

Relationship between planning and the operation of a business

What is planning
● A decision-making process by which an organization decides what it wants to
achieve, how it intends to achieve it and in what manner
 Importance of Planning
● Planning gives direction
● Planning forces managers to look ahead and anticipate possible changes. This
helps them to make better decisions
● Planning helps to avoid mistakes and waste.
● Planning helps to set the standard for control purposes,that is, it provides a
measurement or target to compare what actually happens in the business

Types of Goals

● Managers/entrepreneurs must plan in order to ensure that their operation

meets all long - term, medium - term and short - term goals.

Short term
● Short-term plans are made daily, weekly and monthly by supervisors or
persons in lower-level management positions. These plans are centered on
meeting daily, weekly and monthly production targets.

Medium-term
● Medium term plans range from 1 to 2 years. They are made by department
managers or persons in middle management positions. Medium term plans
include increasing the efficiency of a department in order to increase the
quality and quantity of output

Long-term
● Long term plans are made for 3 to 5 year periods. Long-term plans determine
the direction of the company. These plans set out the firm’s overall strategy
to move from its present position to where it intends to be.
● Long-term plans include expansion plans and plans to create new products
and services. Long-term plans are made by the directors or persons in senior
management positions of a company
 This would involve implementing training programmes for staff and identifying
equipment that would increase efficiency

Mar 2, 2023
Establishing a Business
Regulatory practices instituted by government for establishing a business

Monetary and Fiscal policies

● A country’s central bank provides financial banking services for the country’s
government and commercial banking system. It also implements the
government’s monetary policy which involves controlling the quantity of
money in an economy and the interest rate for borrowing.
● A fiscal policy relates to government spending and government taxation. The
government collects taxes from business in the form of sales taxes and
businesses also collects income tax on behalf of the government

Consumer Protection Agencies

● The government sets up consumer protection agencies to protect consumers
against unfair business practices. Such practices might include providing
inaccurate weights and measures of goods, offering goods that are unfit for
sale, selling products that are harmful to consumers, unfair advertising etc.
● Businesses benefit from such agencies in that they create standards and
rules to be followed so that consumers can have confidence in legitimate
traders and businesses that break the rules can be punished in court

Environmental policies
● Governments establish environment agencies that are responsible for
creating rules relating to the environment, and then monitoring how
effectively these rules are being applied
Factors affecting Location
Geography
These include:
● Natural features such as land terrain availability of water
● Population - the size of the population, age structure etc
● The industries that already exist in a region
● Many businesses need to located close to market and their customers
● Availability of raw materials and supplies
● Some manufacturing businesses use a lot of heavy, bulky raw materials to
make their products even though the end product is smaller and lighter

Infrastructure
● This refers to the physical and organizational structure and facilities
needed for the operation of a business.

Power and Water supplies

● A business must consider five standard utilities: gas, electricity, water,
waste disposal and drainage. Power is particularly important in
manufacturing, but it can also be important for large services organizations
such as banks and insurance companies. Industries such as food preparation
and paper production use large quantities of water

Telecommunication
● Businesses need a strong communication system. It is important to set up in
areas where communications are clear and reliable. Cities with excellent
wireless and broadband facilities can be attractive for new businesses.

Transport Links
 ● Transport cost will be affected by whether goods are large and heavy or
small and lighter as they are assembled. Most businesses set up close to
good transport links for example close to a road junction, rail station or
airports this means they are conveniently located for customers

Supply of labor
● Labour skulls are more readily available in some areas than others and this
will be an important factor for most businesses when they choose their
location. If businesses want a large pool of cheap labor, they might set up in
areas where there are not many existing employers. If they want skilled
labor, they will need to set up where they are most likely to find those skills.

Health Facilities
● A health facility is any location where healthcare is provided. Good
healthcare facilities are an important aspect of business, particularly for
industries that are more likely to result in accidents and injury. Employers
also benefit from having easy access to health facilities to keep a workforce
healthy and capable of effective work.

Government Regulations
● Government regulation can influence business location for example no0t
being able to locate industrial premises in residential areas. Local and central
government planning authorities have a duty to serve the interest of their
populations and they have to protect the environment of towns and villages
even though they want businesses and industry.

The significance of collateral

Collateral
● Collateral is something that is pledged in order to serve as security for the
repayment of a loan.
Example of collateral
1. Property
2. Stocks
3. Bond (are investments in the form of lending to the government
4. Money
5. Cash surrender on life insurance
6. Motor vehicles
7. Appliances

Past Paper Question

Joane wants to set up a cosmetic store in her community and therefore needs to
collect data to determine the feasibility of this type of business.
1. Identify two main types of research data she would need to gather in order
to establish the business?(2 marks)
2. State one source of each type of data above. (2 marks)
3. State four reasons why Joane may want to set up her own business.( 4
marks)
4. Outline three steps that Joane must take in setting up the cosmetic
business. (6 marks)
5. Explain one benefit of short-term planning and one benefit of long-term
planning to the successful operation of a business.( 6 marks)

Mar 17, 2023

 Past paper questions 2

Muffin man is a 21 yr old article who performs both reggae and soca. He was
contracted by IRIE Promotions Ltd. to perform at a show on July 29, 1999.
He was given 10% of his performance fee on the day he signed the contract.
One day before the show Muffin man’s appendix ruptured. His agent called
the promoters for IRIE Promotions Ltd. to inform them that Muffin Man
could not perform because he had to undergo surgery. IRIE promotions was
forced to cancel the show and decided to sue Muffin Man for breach of
contract

a) Define the term ‘contract’

Ans: The term contract means a written agreement to two parties or more making
a legally binding deal with one and other.
b) Identify FIVE essential features of a valid contract present in the dealings
with Muffin Man
Ans:
c) Explain the term ‘breach of contract’
Ans;

c) ii Give one remedy for breach of contract

Ans:
d) State TWO ways by which a contract can be terminated
Ans: If one of the parties died and

e) Advise IRIE Promotions Ltd. whether they would succeed in court against
Muffin Man.
Ans:
e) ii Give reasons for your answer
Ans;
 Mar 24, 2023
POB
Legal aspects of business
Production (unit 3)

What is production

● This refers to the resources that are combined in the production process to
create goods and services. The purpose of production is to provide people
with goods or services they need or want to consume.

What is the difference between production and productivity?

● Productivity is the increase of output for each unit in the production
process. There are several ways of achieving productivity. These include the
training of workers and the introduction of machinery and equipment into
the production process.

Factors of production
1. Land
● Land as a factor of production includes not only the physical land itself but
all the natural resources found in the earth and on sea. Land in this sense
includes: geographical surface area, rivers, lakes and seas minerals and
chemicals

2. Labour
● Labour as a factor of production which is people’s physical and mental
contribution to the creation of goods and services. It is the factor that
converts resources into goods and services that people [Link]
● Labour is often divided into three groups:
● Skilled
● Semi-skilled and unskilled
● Managerial and professional
3. Capital
● Capital is the money and all other assets (possessions of value) which are
employed in the process of production
● Capital includes the buildings, machinery, equipment, stocks and other things
(producer goods) used in making the items we consume ( consumer good)

4. Entrepreneurship
● Entrepreneurs are those who organize and co-ordinate the other factors of
production. In order to participate in entrepreneurship the entrepreneur
must be willing to do a number of things

March 31, 2023

Production Part 2

Objectives:
1) Ways to increase productivity
2) Determinants of labor supply and quality

Ways to increase productivity

Productivity = Total output
No. of employees

Attracting a supply of labor with the right skills

● If the labor force within a country lacks the commercial, financial, technical
and other skills they need, then this will limit what they can produce, and
opportunities for growth. Levels productivity will be lower and costs higher
as a result.
Human Resources Development
● A well-educated, skills and healthy workforce is more productive. Expanding
and improving education and training workers with new and multiple skills will
help the workforce productivity, the quality of their work and their ability
to innovate

Improving the working environment and motivating employees

● Demotivated workers are less productive than those who are happy and have
a positive attitude ethic. Low wages, poor working conditions, repetitive
uninteresting work and feeling undervalued by managers can result in poor
motivation. Improving working conditions, making the best use of the skills
and interests of individuals creating jobs that are varied and interesting,
and opportunities for promotion can all.

Improving the business organization and management skills

● Poor organization and management can waste a lot of time and create
friction between different departments and with employees. Managers must
encourage good working relationships with employees and trade unions. They
need to communicate effectively and provide a safe working environment.
This will help to motivate employees and reduce industrial disputes with
union members which can disrupt production

Improving Land use

● This can be achieved by bringing unused areas of land into productive use
and changing land use from less productive uses to more productive ones.
The introduction of modern fertilizers, new strains of seeds and better
equipment has also helped to increase crop yields per hectare of farmed
land.

Making better use of capital equipment

● Replacing old and inefficient machinery and equipment with new, more
advanced ones can greatly improve levels of productivity. Productivity is
 usually highest in business with a higher level of investment in capital
equipment and workers who have been trained to use modern equipment.

Determinants of labor supply

● Quality of the labor force: they must have appropriate skills. A lack of this
will result in the supply of labor.
● Health: the standard of health of workers obviously affects their efficiency
and productivity. Health is not only affected by living conditions but also by
working conditions
● Training facilities: A shortage of workers with particular skills can be
overcome by training more of these specialists through the education
systems.
● Economic conditions: In some countries the ‘Family wage’ may be sufficient
and thus wives may not be required to work.
● Cultural patterns and religious reasons: if women are not allowed to work,
the availability of labor would be affected
● The structure of the population: an aging or very young population would
mean a smaller labor supply.
● For e.g If the policy is to retire its citizens at an earlier age then this
would restrict the labor supply. Similarly if the population is very young then
the majority of the citizens are still in school and not available to join the
labor force.
Rewards
● Profit (Entrepreneurship)
● Rent (Land)
● Wages (Labour)
● Interest (Capital)
Importance of Productivity
● Productivity increases output. High productivity results in lower cost per
unit of output resulting in higher levels of profit. Higher profits for the
firm will mean more funds available for its expansion, new business ventures
and community support. It may also wish to pass on the benefits of lower
costs to consumers in the form of lower prices for a business
 The Role of Capital In Production
● Capital refers to machinery, equipment, tools and buildings that a business
uses to produce other goods. This is referred to as physical capital.
● All businesses need financial capital if they are going to pay for physical
capital.

Capital is divided into two categories:

Fixed Capital
● Money invested in business premises, machinery, tools, vehicles and other
capital equipment with long productive lives.

Working capital
● Money used to buy stocks of material and components for use in production
and to pay all the other day-to day operating costs (wages,rent,loan
repayments with interest electricity, telephone and insurance)
● If a business is unable to make enough working capital to pay its running
costs, then it will not be able to operate.

The Role of Capital in Production

● Capital equipment can make a significant difference to levels of productivity
and the amount and quality of outputs
● They can improve the speed at which different tasks can be completed,
improve accuracy and reduce waste.

Using more capital intensive methods of production offers the following

advantages:
● Products can be mass-produced if the market size is large
● Automated production can be continuous 24 hours a day and every day
● Programmed equipment cannot lose skill or concentration. As a result, there
is less risk of human error and product quality may be uniform.
 ● Less labor input is required, reducing wages and other employment costs.

Levels of Production

The Level of production is dependent on the following factors:

● The availability of resources including the availability of land, machinery and

buildings
● The level of technology, that is, manual labor, mechanization, automation or
computerization.
● The cultural patterns of the country
● The political and economic policies of the country

Subsistence Level
● This level of production meets only the basic needs of the country in which
it takes place. Production is done only for survival but not to improve the way
of life.

Domestic Level
● At this level everything is produced locally, that is, in the home country. This
level does not involve any imports from foreign countries. Excess is not
available for export. However, production is adequate to supply local demand
● Both human and natural resources are employed and the whole economy is
dependent upon what it can produce from these resources.

Surplus Level
● This level of production is adequate to supply local demand and for export.
Large industries can produce large quantities of output to satisfy local
consumption and earn foreign exchange from export, for example, the sugar
and banana industries
 Export Level
● In some countries, businesses produce goods and services almost entirely
for the export market. Few if any their outputs are sold to their own
country
● This may be because there is insufficient domestic demand, or to avoid
competition with other local businesses. For example many Caribbean
countries provide tourism and hospitality services primarily for travelers
from other countries.

Types of Production
Primary Production / Extractive
● This involves extracting from our natural resources. It is the first stage of
production
● Examples include: agriculture, mining and fishing

Secondary Production / Manufacturing / Construction

● This involves converting raw materials into finished goods. Examples include:
caning, refining of oil, construction of buildings, roads, assembling and
refining etc.
Tertiary Production / Service
● This includes all kinds of service industries such as transportation,
communication and tourism. These can be grouped into direct and commercial
services

Past paper june 2018

Question 3
 a) Define each of the following
i) Production ii) Productivity
b) Identify TWO factors that can affect the supply of labor
c) Describe TWO factors that can influence the productivity of labor
d) Differentiate between ‘subsistence production’ and ‘domestic production’

Cottage Industries
● A cottage industry is a small firm or business that produces a good or
service by using simple technology.
● This production was traditionally carried on at home. Today these industries
may be found in community shops, parish halls etc.

Products made by cottage industries are:

● Handicraft items e.g, leather craft, knitted items, floral arrangements,
making of dolls, embroidery works and battery items
● Foods item e.g, condiments, pastries, jams and jellies
● Personalized services e.g, tailoring, hairdressing, barbering and sewing

Advantages of cottage industries

● These are usually one-person businesses, partnerships or very small family
businesses.
● It is generally home based.
● Local raw materials are used.
● Family members are normally used for labor.

Importance of Cottage industries

● Cottage industries are important because they;
1. Provide employment
2. Help to promote the country since most of these items may be purchase as
souvenirs by foreigners
 3. Use local materials

Small Businesses/ Firms

● The concept of small varies from organization to organization and is relative
to the type of business. In describing a small firm one must consider the
following
- The amount of capital invested
- The number of employees
- The gross sales receipt
- The land space available

Characteristics of Small Firm

● Small capital
● Small sales turnover
● One to 20 employees (May depend on the industry)
● Simple technology
● Occupying small land space

Functions of Small firms

● Provide services that large firms are not willing to produce
● Create employment
● To provide personalized services
● To increase national income and economic growth because small business
increase output

● To help with the redistribution of income

- Because ownership is by locals and profits are usually plowed back into
the business or used to improve the standard of living of the owners

● To act as a middleman and thus as a source of information e.g small firms are
able to give large firms information on the sale of products.
Advantages of Small Firms

● Closer communication exists between employees

● It is easier to have good working relationships
● Employees feel a personal involvement in the business
● There is more personal contact between employees and customers
● Increase competition for large firms
● Generate employment especially in rural areas and economically depressed
areas
● Introduce new products and ideas

Disadvantages of small firms

● The business may lack expertise in certain areas
● Owners find it difficult sourcing finance from financial institutions.
● Limited liability to service customers due to unavailable resources
Small businesses may find it harder to compete on costs or prices with larger
firms.
Marketing
Objectives:
1. What is a market
2. What is marketing
3. Types of markets

Market
● A market is the potential buyers of a product; people who are willing to buy.
It is the target group of buyers for a particular product.
● A market can also be an environment in which buying and selling take place

What is marketing?

The process involved in finding out and catering to the needs of prospective
consumers in an efficient manner.
The objectives of marketing include:

● Identifying consumer wants and buyer trends

● Raise consumer awareness about a product
● To improve the image of a product or an organization
● To improve the design and quality of existing products
● To develop and successfully introduce products
● To increase sales by entering new markets at home or overseas
● To encourage repeat purchases and customer loyalty
● To create a competitive advantage over other suppliers
● To increase sales and profit

Types of Market
Consumer markets

Goods that satisfy basic needs for food, clothing, shelter, transport,
entertainment, health, and durable goods

Commodity Markets
These are usually found in developed countries. These products include agricultural
products (bananas and coffee), oil, bauxite or nickel.

Money Markets

The money market includes numerous financial institutions engaged in short-term

lending. The duration of the loan should be less than three years.

Capital Market
● The capital market includes those financial institutions involved in long-term
lending to acquire capital goods
Foreign Exchange Market
● This market engages in the sale of purchases of international [Link]
trading price of currencies is usually quoted in the newspaper or on the
display boards in financial institutions such as banks.

Labor Market
● This market describes those willing and available to work (labor supply) and
those employers who demand their skills. E.g the market for teachers or
medical personnel

Linkage Industries
A linkage industry is a firm that is connected to another industry or when one
industry depends on the output of another for its own production or [Link]
output (finished product) of one firm is the input (raw materials) in the making of
the product(s) of another firm.
Types of Linkage
● When an industry or sector produces the raw materials for another, this is
referred to as forward linkage.
 ● When an industry is dependent on another industry for raw materials this is
known as backward linkage.
Benefits of linkage
● Linkage generate income
● There are more opportunities for employment. More opportunities for
employment suggest that people of a country can improve their standard of
living
● Linkages provide an outlet for the product (in the case of forward linkage)

Internal and External Growth of Businesses

● Business grow and expand for a variety of reasons:
1. They are successful and expansion is necessary to meet the demand for
their product.
2. They wish to make a greater level of profit
3. They are trying to achieve economies of scale
4. They wish to reduce competition and become market leaders, maybe even
gain a monopoly

Internal Growth
A business may grow internally by:
● Opening other outlets
● Employing more workers
● Increasing capital by working existing plant and machinery harder and
pushing towards full capacityMarketing
● The process involved in finding out and catering to the needs of prospective
consumers in an efficient manner
External Growth
A company may grow externally by:
● A merger with another company. This is where two or more companies
voluntarily join together to form a single organization
● By takeover or acquisition. This is where the company being taken over has
not agreed to the two companies joining together

Joint Venture
● Contractual agreement between two or more organizations to share their
expertise, investment, management, costs, profits and risks of running a
business project. The businesses involved in a joint venture remain separate
and once they have completed their objective, they separate.

Effects of growth on a business

● The growth of a business may have a effect on the following
● Organizational Structure
● Capital
● Labour
● Use of technology
● Potential for Growth
● Scale of production (economies of scale)

May 18, 2023

POB
New Marketing Trends
Integrated Marketing
● An approach to creating a unified and seamless experience for consumers to
interact with the brand/ enterprise; to attempts to meld all aspects of
marketing communication such as advertising, sales promotion,public
relations, direct marketing and social media, through their respective mix of
 tactics,methods channels, media and activities so that all work together as a
unified force

Social media marketing

● A form of internet marketing that utilizes social networking websites as a
marketing tool. The goal of SMM is to produce content that users will share
with their social network to help a company increase brand exposure and
broaden customer reach.
● E.g of social media outlets include: Facebook, Instagram, Twitter, Pinterest,
Snapchat

Marketing Activities

Market Research
● The process of finding out about a particular marketing problem or situation
by gathering, analyzing and interpreting information in a systematic way.

Pricing
● Pricing is one of the most important elements of the marketing mix, as it is
the only element of the marketing mix, which generates a turnover for the
organization.
● In setting prices, the business will take into account the price at which it
could acquire the goods, the manufacturing cost, the marketplace,
competition, market condition,brand and quality of product.

Packaging
● Is the technology of enclosing or protecting products for distribution,
storage, sale and use. Packaging also refers to the process of designing,
evaluating and producing packages. Your package design may affect
everything from breakage rates in shipment to whether stores will be willing
to stock it
Branding
● The marketing practice of creating a name, symbol or design that identifies
and differentiates a product from other products

Sales Promotion
● Is any initiative undertaken by an organization to promote an increase in
sales, usage or trial of a product or service. Examples of sales promotion
includes: free gift, discounted products and free samples.

Advertising
● The paid, public, non-personal announcement of a presentation or promotion
by a firm of its products to its existing and potential customers. Advertising
includes the placement of an ad in such mediums as newspapers,direct
mail,billboard, television, radio and of course the internet.

Distribution
● The process of making a product or service available for the consumer or
business user that needs it

June 1,2023
Marketing Mix
4 P’s
Product, Price, Place and Promote
Place
● This is the pattern of distribution that the firm uses to get its product to
the consumer
● Where do buyers look for your product or service?
● How can you access the right distribution channels?
● What does your competitor do, and how can you learn from that and/or
differentiate
Product
● This identifies the good(s) or service(s) that should be produced. It also
considers the quantity that should be made, for whom the goods or services
should be made and the design and specification of the products.
● The product life cycle shows the stages through which a product develops
over time. The stages are based on the level of sales:
1. Introductory Stage
2. Growth Stage
3. Maturity Stage
4. Decline Stage

Price
● The price is the monetary value of the good or service. It is usually
calculated based on what the customer is willing and capable of paying for
the product and the firm’s willingness to sell in order to make a reasonable
profit.
● Some factors affecting price include:
1. The average cost of producing each product unit
2. The strength of consumer demand for the product
3. The degree of competition in the market from rivals products and producers
4. The number of close substitute to the product that can be bought instead
5. The stage in the product’s life cycle
● What is the value of the product or service to the buyer?
● What discounts should be offered to trade customers, or to other specific
segments of your market?
● How will your price compare with your competitors?

Promotion
● These are methods the firm would use to make consumers become aware of
the product. This may be done through branding, advertising, sales
promotion, personal selling and after-sale service.
 ● Where and when can you get your marketing messages across to your target
market?
● Will you reach your audience by advertising online, in the press, on TV, radio,
or on billboards?
● How do your competitors do their promotions? And how does that influence
your choice of promotional activity
Sept 14, 2023
Consumer buying behavior

● This is the study of the buying decision-making process of consumers. It is

dynamic, and is influenced by several factors the company cannot control.
These include culture, social and personal events, the consumer's
psychological needs, income and social class.
Factors that influence
1. Price
- Consumers can afford to buy more of a good when price falls and less when
its price rises
2. Taste
- A change in consumers' taste for goods and services will impact their
demand. For example,c changes in fashion will result in a drastic decline in
demand for an outgoing fashion and a rise in demand for what is trendy.
3. Spending Patterns
- Some consumers form spending habits or patterns which may include their
favorite store, a routine shopping list, as well as a particular day of the
week. Market researchers may try to identify this spending pattern so that
they may influence consumers.
4. Income (affordability)
- One’s income affects one’s ability to purchase
5. Brand Loyalty
- Brand loyalty will ensure continuous demand for a product regardless of
changes in it price or the prices of other goods and services
 6. Tradition
- The customs and culture of people also influence the buying patterns of the
population. E.g there is a longstanding tradition to cook rice and peas and
thus an international chain store was forced to include rice and peas in their
offerings to the public in order to enter the market.
7. Quality
- Product quality is an important consumer demand determinant, it is often
said that a clever market can make many consumers purchase a product once
but it is the quality of the product that will encourage consumers to make
repeat purchases.
8. Price of substitute
- Consumer demand for a product can also be affected by changes in the price
of other products. A substitute is a good or service that may be used or
consumed in place of another to satisfy the same or similar consumer needs
or wants.

Sept 15, 2023

Packaging and presentation of goods
Factors that influence packaging and presentation of goods

● Packaging refers to designing and producing the container that holds the
product. A good package must identify, protect and advertise the product.
It must also make the product convenient to use.
● Therefore products such as toothpaste are best packaged in a tube as it has
to be squeezed out. Milk must be poured from its container. Egg containers
are so shaped to hold them securely.

● A product must also sell the product. It must first attract customers to buy.
It must provide information about the product i.e ingredients, amount of
contents, prices, the name and address of the manufacturer and instructions
for usage. The brand name is also displayed on the package.
Good Packaging Facilitates
● Instant Brand Recognition
● Easy distribution
● Information to the customer
● Protection and preservation of the product
● Protection of the end user

Packaging regulation (labeling regulation)

● Businesses are required by law to include certain information on product
packaging. Some of the most important details to include are:

1. The name of the company that made the product

2. The ingredients of the product and packaging materials
3. Health and safety guideline about using the product
4. Country or origin

Branding
● A brand is any identifiable feature of a product which makes it different
from its competitor. A brand may be a name, term, symbol, design or
combination of these.
● Examples of brand names include: Colgate and Nike. A branded product will
increase the value of the product in the eye of the consumer.

Sept 21, 2023

Methods of Promoting Sales
Advertising
● To introduce new products and remind consumers of old ones
● Highlight the unique features of the product
● To increase demands for goods
● To create customer loyalty
● Educate consumers about the product
Type of advertising
● Informative - gives factual information about a product
● persuasive - tries to entice the customer to purchase the product by using
emotional and physical appeals.
● Competitive: the producer tries to gain market share by telling the good
points about the product and comparing these with their competitors.
● Collective/generic/cooperative: aimed at getting the public to buy a product
in general without focusing on a particular brand.
Public relation
● Public relations activities are aimed at creating a favorable impression of a
business in the eyes of the public. Public includes its customers, its
suppliers, the government and the surrounding community. The public
relations activities include sponsorship of local sporting events, press
conferences, and donations to charity.

Sales Promotion
● Sales promotion is a marketing strategy that is used to induce customers to
buy immediately.
Example of sales promotions include:
● A sale on items
● Bargain packers, e.g. two for the price of one’.
● Coupons. These are printed in the daily newspaper or magazines. The holders
of coupons are allowed a discount on the item.

Personal Selling
● This is the use of sales persons to present and sell goods and services of a
firm. Sales persons promote a firm’s goods directly to a specific consumer.
They locate new customers, provide display services, demonstrate the use of
products, deliver goods, collect payments and provide the firm with
feedback.
Techniques of Selling
Sales Persons And Their Approaches
● In order to succeed, a good salesperson should possess certain qualities.

● Sales personality
● A friendly personality that will put customers at ease and facilitate
confidence in the salesperson and product .

● Physical traits
● good health in order to have endurance to sell the products and achieve the
targets set, good posture and good communication skills.

● Mental traits
● should have the mental strength to persevere despite failure.

● Social traits
● should possess good manners and social graces, and be able to communicate
and extend courtesies to prospective clients.

● Knowledge of the product

● A good sales person should be an expert in his or her field. Should know all
the features of the products, policies behind the product.

Merchandising
● Merchandising refers to self service methods of sale. This is used in
supermarkets and department stores. It allows for a better display of goods
and creates more comfortable shopping environment

Adjusting of pricey policy

● A price adjustment is the difference between the price paid for a product
and the sale price. The price charged for a product is the key influencer of
 whether sales are made. Prices should be set at a point that is acceptable to
customers. This will typically involve adjusting prices so as to make them
competitive and maximize sales.

Pricing policies include some of the following:

1. Competitive pricing
● Undercutting prices of rivals

2. Premium pricing
● Charging relatively high price so that customers feel the price accurately
reflects the exclusive nature of the product

3. Bundling pricing
● The seller bundles together a number of products with a discounted prices
for buying the whole bundle

Methods of Retailing

Department Stores
● These stores carry several lines of goods under one roof. A department
store may feature a clothing department, household items, stationery,
hardware etc, it provides convenience to customers who can prick up several
items in one place, and allows the businessman the cost effectiveness of
operating several business entities in one location

Mail order
● Companies that retail through mail order benefit from reduced operating
costs of location and staff. Since display areas are not required only an
office and storage facility are necessary for the operation of this business.
Orders are made from catalogs and goods are delivered by courier or mailed
to customers. This saves time and effort of customers to visit shopping
location
E-commerce
● Orders are made by customers over the internet from the websites of
business. Payments are also made over the internet. Packages are delivered
by mail or courier.

Telemarketing
● Tele-markets introduce the company’s goods and try to obtain orders via the
telephone.

Vending machine
● These self-service machines are placed at various locations by their owners.
Customers are required to palace the required funds inside these machines
and are then instructed on how to make their choice. The machine then
dispenses the product. This type of business is very cost effective as
owners may only pay a fee for locating the vending machine

Understanding different terms of sale

Terms of Sale

Cash
● This is preferable by most businesses and therefore customers are
encouraged to make cash payments. They are usually offered a lower
payment amount for goods bought for cash.

Advantages
● There is no interest charged
● May receive cash discounts

Disadvantages
● There is risk of money being lost
Credit
● Customers are allowed to pay at intervals over a short-term, usually one to
three months to settle outstanding balances.

Advantages
● Goods become the property of the buyer immediately
● Buyer enjoys the uses of the goods while paying for them
● No down payment

Disadvantages
● Interest is payable thus increasing the cost

Hire purchase
● Hire purchase is a long term payment plan e.g 24-36 months. Interest is
charged to the customer increasing the amount owed

Advantages
● Goods become the property of the buyer after the final payment
● Buyer enjoys use of the good while paying of them

Disadvantages
● Interest payments increase the cost

Layaway
● The purchaser makes an agreement to pay for the goods by installments.
The goods remain with the seller until all payments are made.

Advantages
● Purchaser is able to pay for goods in small portions
Disadvantages
● Goods remain with the seller until all payments are made.

Cash Discount & Trade Discount

● A trade discount is the reduction in the price of a good given by a
manufacturer or a wholesaler to a retailer to allow the retailer to make a
profit or to encourage bulk buying
● A cash discount is the reduction in the price of a good that is paid for
immediately or over a short period of time by a customer

Advantages
● Encourage buyers to pay before the end of the credit period
● Reduction in the price for buyer

Disadvantages
● Reduction in income for seller if discount is taken

Consignment
● This is a business arrangement in which a business also referred to as the
consignee, agrees to pay a seller (consignor), for merchandise after an item
sells.

October 5, 2023
What is consumerism?
Consumerism is defined as the education and protection of consumers
to prevent their exploitation

Reasons for consumer protection

- There are many 'copycat' products on the market.
- They may use false advertising
- They can work together to control the price of a product or its supply
- Consumer can be treated unfairly
- Some consumers may be unable to read
Consumer exploitation includes:
- overcharging
- offering poor quality goods and services
- short measurements and weights

Consumerism is practiced by various groups in the economy: the government,

private institutions
an private firms

How are consumers protected?

- Laws and regulations that are put in place by the government
- Consumer organizations which serve to inform consumers about their own rights
and responsibilities
- Government agencies enacted by legislation to protect the rights of consumers: in
the Caribbean
(Bureau of Standards and the Ombudsman)

Consumerism practiced by the government

- This is done through various government agencies.
These include:
1. The consumer affairs commission - This institution was set up to disseminate
information about consumer
rights and responsibilities as well as provide consumers with an avenue for redress
if they are exploited.

Consumer Rights
- The right to safety
- The right to be informed
- The right to choose
- The right to be heard
- The right to redress
- The right to consumer education
- The right to a healthy environment

Consumer Responsibility
- The responsibility to beware
- The responsibility to be aware
- The responsibility to think independently
- The responsibility to speak out
- The responsibility to complain
- The responsibility to be an ethical consumer
- The responsibility to respect the environment and avoid waste, littering and
contributing to pollution

The Bureau of standards

● The bureau carried out regular checks on business enterprises to ensure
that goods and services offered for sale meet the standards stipulated by
this institution

The Ombudsman
● The Ombudsman is a government official who protects the rights of citizens
who may suffer any kind of injustice from dealing with a government agency
or a government official. For example, the Ombudsman will investigate the
death of a loved one due to the negligence of a public hospital.

The role of the private sector in consumer protection

● The National Consumers League - an international organization operating in
many countries of the world, including the caribbean.
● It is a non-profit, non-governmental, non-political and non-denominational,
private voluntary organization.

● The League
● Conducts research on consumer- related issues
 ● Seeks to ensure that remedial measures are taken against unfair trading
practices
● Monitors price movements and provides consumers with information on goods
and services which they provide.

Customer Service
● Can be defined as any series of activities that takes care of the customers
needs before, during and after the purchase of the product. It plays a vital
role in promoting sales and the success of a business.

Characteristics of customer service

1. Politeness
2. Personalisation
3. Prompt response to customer
4. Professionalism
5. Special needs aware

Forms of customer service

1. Warrant
2. After sales service
3. Feedback
4. Online Chat
5. Toll free number
6. Suggestion box
7. Survey

Benefit of excellent customer service

1. Repeat customers
2. Positive business image
3. Less legal action
 4. Stands out from competition
5. High staff morale and motivation

Find the meaning

Intellectual property
Intellectual property rights
Patent
Copyright
Trademark
Industrial design

POB
19/10/2023
Logistics and Chain Supply Management
What is Logistics?
● Logistics is used more broadly to refer to the process of coordinating and
moving resources
- people , materials, inventory and equipment
- From one location to storage at the desired destination

What is Chain Supply?

● Supply Chain Management is primarily concerned with the efficient
integration of suppliers, factories, warehouses and stores so that
merchandise is produced and distributed in the right quantities, to the right
locations and at the right time.

Components of Logistics
Forward and reverse flow of goods
● Reverse logistics encompasses recapturing the value of products, parts and
materials that have been returned from the end consumer in order to get
them back into the marketplace as quickly as possible. Reverse logistics
 management usually involves returns, recalls, repairs and refurbishment,
repacking for restock or resale, recycling and disposal.
● Forward logistics deals with the flow of products from the factory to the
consumer

Storage of goods/Warehousing
● Storage/ warehouse facilities are locations where food and non-food
commodities are stored pending onward movement. Storage facilities may:
- Be co-located with the distribution point
- Serve a number of separate points
- Serve as an intermediate store from which commodities are forwarded to
another storage facility.

● Warehousing is an important part of distribution particularly because it

bridges the time gap between when goods are available and when they are
actually needed.

Insurance
● There is always a risk of damage, regardless of how careful people are. The
following are examples of insurance that may be provided when shipping
products;
- Liability for lost/damage cargo
- Liability for errors/omissions (including delays and unauthorized or failed
delivery)
- Third part liability

● Cover for regulatory breaches (customs problems, pollution or safety at

work issues this is an essential cover for 3PL operators who are reliant on
client information about cargos)
● Cover for disposal costs after accidents including
quarantine/disinfection/pollution controls where required
Information Services
● Information needs to be managed and shared between destinations (such as
pricing, delivery dates and the method of transport used)

Packaging
● Packing goods in ways that makes them easier to load and transport e.g
strong stackable boxes that can be carefully labeled for dispatch and
delivery

Activities involved in supply chain operations

Transformation of natural resources
● This involves the processing of raw materials to create parts and materials
that can be used in the production of other goods, for example a
manufacturer taking produce from farmers and processing them in some
way, such as canning them.

Movement and storage of raw materials

● Raw materials received must be moved to a secure location and managed until
they are needed by production. Stock or inventory control monitors and
protects the raw materials in the warehouse, and ensures the material are
stored in the appropriate climatic, and clean secure conditions

Processing of raw materials and components into finished goods

● This involves converting the raw materials and components into finished
goods
Storage of work in progress and finished goods
● Work-in-progress goods partially finished products that have yet to be
completed. Many completed items will be stored in the warehouse before
they are distributed to final consumers.

Delivery of finished goods

● This involves the movement of finished goods from producers to their final
[Link] may initially involve moving goods into storage using the
services of a wholesaler, and then retail outlets where they are offered for
sale. However, some may market, sell and transport their products directly
to consumers from their own warehouses.

Links in the Chain of Distribution

1) Manufacturers |Producer —> Wholesaler—> Retailer—-> Consumer (indirect)
2) Manufacturers—> Wholesaler —> Consumer (indirect)
3) Manufacturers —> Retailer —> Consumer (indirect)
4) Manufacturers —> Consumer (direct)

Manufacturers
● The producer of manufacturer is the person who converts the raw material
or semi-finished goods into finished products or service.
Wholesaler
● A wholesaler is a middleman who sells finished goods to retailers agents. He
is the link between producers and retailers.

Functions of the Wholesaler

1. Risk bearing
2. Warehousing of goods
3. Breaking bulk, ie. Repackaging
4. Promoting sales and market goods or services
5. Forming the link between consumers and producers
6. Maintaining stable prices
7. Granting credit retailers
Retailers
● Retailer is a middle man, who obtains his goods from the producer or
wholesaler and sells to the final consumer.

Functions of the retailer

● Breaking bulk-repacking
● Providing convenient outlets for the customers
● Providing credit
● Providing a link between wholesaler and producer and the customer and
therefore a source of information
● Providing after-sales services
● Offering the customer a wide variety of goods

Consumer
● Individuals who utilize goods and services

What is transport?
● The movement of goods and people from one place to another. This may be
interal or external.

What is Intermodal & Multimodal Transportation?

Multimodal and Intermodal Transport
● Multimodal transport refers to the transportation of goods under a single
contract, but involving at least two different means of transport, for
example using road to transport the goods to the seaport, marine transport
to take the load to an overseas destination and at that point forwarding it to
the final destination by another form of transport.

● Intermodal transport involves the transportation of freight in an intermodal

container or vehicle using multiple modes of transportation (road, rail, ship,
 truck) without any actual handling of the freight itself when changing modes
of transport

Types of Mode of transport

Air
Advantages
1. This is the quickest form of transport
2. It is suitable for light and perishable goods.
3. It allows buyers to carry a minimum of inventory or stock
4. Sellers can reduce or eliminate warehouse cost.
Disadvantages
1. Expensive, especially for bulky goods
2. Weather conditions and technical difficulties can interfere with schedule
3. Relies on other form of transport to take goods to final destination

Rail
Advantages
1. Convenient for consumers
2. Best to transport water, oil or gas
Disadvantages
1. Expensive to maintain
2. Inflexible timetable
3. Inconvenient to transfer cargo from train to another

Road
Advantages
1. Can reach all destinations within a country
2. Flexible and direct
3. Fast for short distance
4. Reliable because control is under lorry driver (truck driver)
5. Fairly reliable schedules
6. Cheaper for consumers
Disadvantages
1. Weight Limitations
2. Congestion can cause delays
3. Air pollution
4. Expensive for long distances

Pipelines
Advantages
1. Best to transport water gas and oil
Disadvantages
1. Broken lines can lead to leakages
2. High installation costs
3. Inflexibility - products cannot be easily changed

Marine (cruise and cargo)

Advantages
1. Cheap, especially suited for bulky and heavy goods e.g lumber, minerals
Disadvantages
1. Slow form of transport
2. May require containers
3. Purchasers must carry additional stock which adds to the cost of the
product

Digital delivery
● The electronic delivery or distribution of data and media content such as
audio, video and software games via a variety of devices such as the web and
mobile phone. It also applies to the practice of completing and submitting
forms online and making immediate payments to purchase items such as
passports, driving license renewals, car parking fees and hotel reservations.
Advantages
1. It is fast. Customers can receive their product instantly
 2. There are no physical barriers to affect the transfer of data unless through
legislation

Disadvantages
1. It usually requires the use of a credit card
2. It requires the use of the internet

Factors influencing choice of transportation

- Distance
- Cost
- Warehousing
- Insurance cost
- Nature of the goods
- The urgency factor
- The reputation of the carrier

Role of transport in Marketing

- Fast tracking
● involves finishing a job eariler than normal becuase the sequence of
operation required to produce good is simplified and involves fewer
relationship.

- Ensure security of supply

● An organized transport system creates predictable in the supply chain and
wil get goods to the right place at the right time.

- Reduce cost
● When transport is organized efficiently cost of distribution are minimized
enabling business to become competitive.

Transport Documents
1. Airway bill
 2. Import license
3. Bill of lading

Import License
● An import license is an international document. It is the document given by
the government to the manufacturer or trader giving permission to trade
with other countries. It gives information on: importer giving name and
address, goods being imported, the country of origin, description of goods,
name and address of the trader or user

Bill of Lading
● This is used in the transportation of goods by ship. It gives details of the
description and destination of the goods. The bill of lading is issued by the
captain of a ship or shipping firm that agrees to transport a consignor’s (the
person who is sending the goods) goods to a consignee (the person named to
receive the goods or the buyer)

Airway bill
● An airway bill or consignment note is receipt issued by an international
airline for goods and an evidence of the contract of carriage, but is not a
document of title to the goods

Importance of Transport in domestic regional and international trade

● Domestic trade takes place within a country. Regional trade takes place
between a country and regional partners. Foreign trade involves exchange
beyond regional grouping for e.g Caribbaen and USA
● Domestic trade is mainly carried out by the various forms of road transport
and in some countries rail is also available
● Interregional trade additionally include sea and air transport
● International trade that emcompasses importing and exporting enages all of
the modes of transport
Advantages of Supply Chain

Improved quality of life

● People depend of the supply chain to deliver the basic necessities they need
to survive such as food and water. Additionally people may also want many
things that are not necessary for survival but improve the quality of their
lives

Supports Economic growth

● Societies with a highly developed infrastructure enable citizens to access
goods and services when they need them and exonomically becuase the
supply chain promotes competition

Employment opportunities
● The supply chain provides employment opportunities in areas such as
production, transport, packaging, purchasing, warehousing, marketing,
advertising, wholesaling, retailing and much more. There are also
opportunities for self-employment/ entrepreneurship

Wealth Creation
● Effective supply chain enables countries to become wealthier for example
through effective logisics hubs

Disadvantages of Supply Chain

Globalisation
● Global supply chain management is concerned with developing effective
supply cvhains across the globe, bringing together networks of factories and
sourcing of materials on a global scale. However there are a number of
challenges to developing effective global supply chainsin some regions
including poor transport infrastructure, shortage of logistics professionals
and technology-related challenges.
Product Complexity
● The greater the product complexity, the greater the chance of issues inthe
supply chain. This is because there is a greater chance that one or more
parts will not be available when they should be.

Counterfeiting
● Global supply chains have contributed to an increase in counterfeitingwhich
refer to false labelling of products, the false use of trademarks and trade
names and the sue of inferior materials in goods that are passed off as the
real thing

Regulatory Complexity
● Regulations are rules created by official bodies regarding such aspects as
when vessels are allowed to enter ports, when loading and unloading can take
place what documents need to be completed before delivery and during
delivery etc. Customs officials may also want to inspect documents to check
that they are accurate.

Management Blunders
● The over-handling of freight, so that it needs to be loaded and unloaded too
often and in quantities that are too small.
● Not having enough information about customer requirements. E.f when and
where they want a delivery.
● Holding too much inventory stock, where it can be damaged or become
obsolescent.
● Using unsuitable IT systems or unsuitably trained IT staff

Changing market Condition

● When sales and marketing departments fail to develop accurate forecast
and recognise changes in market conditions, such as a fall in demand,k there
will be a glut of products in the supply chain blo9cking up storage facilities.
Similarly when demand rises, operational plans need to be put in place to
increase supply.
 Nov 23, 2023

Impacts of Logisticis and Chain Supply the Competitiveness of Business

Logistics Improves Competitiveness

● Logistics aims to meet the increasing demands of customers at the lowest
possible cost, managing the flow of materials and information in every
activity that makes up the logistics system, from the supplier to the end
customer.

Logistics results in competitive advantage

● Competitive advantage refers to conditions or circumstances that put a
business in a more favorable or superior position in comparison with its
competitors. It can gain advantage through differentiation and cost
advantage.

Comparative cost advantage outsourcing through: second, third and fourth party
● Outsourcing is the business practice of hiring a party outside a company to
perform services and create goods that traditionally were performed
in-house by the company’s own employees and staff. This is normally done to
cut cost.

First party logistics

● Any business individual who needs goods moved from position A-B

Second party logistics

● These firms provide their own assets such as trucks and drivers, warehouse
operators etc
Third party logistics
● A business which provides more than one type of logistics services e.g trucks
and planes

Fourth party logistics

● Specialist who are general contactors performing all the logistics functions
for a firm from beginning to end

Problems With Distribution

Delayed Shipment
● Both ships and aircraft area affected by which could cause delays, weather
however, inefficiency can also be the reason. Some delay is caused by a
consignment being delayed during transit from one form of transport to
another

Spoilage
● This refers to goods being spoiled in transport and it is particularly a
problem with food. Where handling facilities are poor or there is
insufficient packaging, goods can be damaged

Misdirection of goods
● If goods are poorly labelled or the paperwork is inadequate, they can be sent
to the wrong location, which in international trade may be thousands of miles
away from where it was intended.

Inadequate warehousing facilities

● Good warehousing involves having sufficient space, good handling equipment,
a clear organization of goods and the right temperature. Where warehousing
is poor, goods can be damaged.
Lack of proper security measure
● Proper security involves having gated or fenced port and airport freight
handling facilities, security personnel working with good security cameras,
bays locked overnight, and safe places for lorries to park.

Industrial unrest
● Strikes by airport workers will cause delays in delivery, and inland labour
disputes can also interfere with smooth and prompt delivery

Ineffective communication
● Delays or misinterpretation of instructions related to a consignment can
result in wrong goods being sent or sent to the wrong place.

Measures to mitgate the problem

Government Intervention
● Most governments recognize the important of distribution and will advice
ways for businesses to become more efficient including: investment in new
equipment and business technology, raising staff skills through education and
training and innovation through research and development.

Creating a communication network

● Employing the use of technological advancements in communication to track
the movement of goods and vehicles.

Taking out insurance

● Insurance compensates the insured i.e. the sender of goods (consignor). This
is still a cost to the seller/sender of the goods and still cause the
inconvenience such as extra paperwork
Selection of appropiatae channel of distribution
● Carefully examining the options for distributing the business’s goods
(keeping in mind factors such as speed, reliability, cost and the objectves of
the business)

Choosing a handling service

● Use handling services with good reputation.

Careful labelling and documentation

● Clear labelling is required to ensure that products are sent to the correct
location. Goods need to be accompanied by accurate documents to show who
the owner of the goods is, who the shipper will be etc.

Increasing security
● The proper security of warehouse and storage facilities helps to prevent and
reduce pilfering and damage to company. Security cameras can record all
personnel and vehicles moving in adn out of a facility and can also record
timing of such events

The impact of information technology on logistics

Forms of technology
Global positioning system
● GPS allows people to pinpoint their exact position using satellites that orbit
that earth. It is owned by the United States Defense Force, but used
commerically for logistics and supply chain management.

Geographic information system

● A geographic information system is a computer system for capturing,
storing, checking and displaying data related to positions on earth’s surface
● A sophisticated logistics GIS will contain the details of customers, where
they live, the best routes to reach them and how to contact
Portnet
● Helps the port and shipping communities to increase productivity and save
costs through the greater use of information technology and the internet.
The system enables:
1. Importers to buy space on cargo ships
2. Shipping lines to advertise and sell cargo
3. Provides information about movement of goods
4. Provides information about the location and availability of containers so they
can be hired or used for transporting goods around the globe

Telemarketing and e commerce

● Telemarketing refers to selling goods over the telephone
● Ecommerce refers to buying and selling goods electronically using the
internet. Ecommerce makes it possible for shoppers to shop at a time which
is convenient to them.

Global logistices providers

● Large multinational companies set up for the purpose of managing
distribution networks across the globe.
● For example: Fedex, DHL, Amazon

Logistics hub
● A centralized geographical location that brings together the key business
operators in logistics, e.g. manufacturers, shipping lines, air cargo companies,
third and fourth party logistics providers (e.g. express cargo service
providers) and logistics support services. Raw material and unfinished goods
are stored, processed, finalized and managed in the logistics hub, closer to
final consumers
Business Finance

Finance
● Is the art or science of managing funds and includes saving and lending
money.

Business finance
● Involves money that bank and other financial institutions make avaibable for
commerical use through short or long term lending.

What are banking systems?

● Banking systems refer to all monetary institutions which channel funds from
lenders to borrowers. They include commerical banks, buildind societies,
financial houses, developmenty banks and credit unions

Different Financial institutions

Commercial banks
● A commercial bank is a privately owned bank that provides services to
businessess and individuals. These services include accepting deposits of
funds for safe keeping, making a range of short term and long term loans and
managing customer accounts (so they can make withdrawals and payments)

Central Bank
● The central bank or monetary authority is a nationallized industry owned and
controlled by the government. It is the institution in a country or group of
countries that is responsible for regulating all the currency supplied and
related policies for the country.

Other responsiblilities of the central bank include:

1. Managing government borrowing
2. Managing the national debt, inclyuding making payments
 3. Setting interest rates
4. Issuing notes and coins
5. Supervising and limiting the lending of other banks
6. Advising the government on monetary policy
7. It is the leader of last resort
8. It is the bankers bank

Credit Unions
● These organizations use resources that their members pool inot a common
fund anbd which may be accessed by individuals members if they have a need

Insurance Companies
● An insurance company accepts risk on behalf of people that pay premiums
into a central pool. The company will then pay compensation in the event of a
loss by a policy holder

Building Societies
● Lend on the long temr. Their main thrust is lending for home purchase they
are now able to provide loans for purchasing cars and boats etc.

Micro-lending
● These agencies grant small loans to people in need. These loans may be
generally used by entrepreneurial people wanting to start a business, or to
those who need extra cash to expand.

Government Agencies
● A government agency or state agency is a permanent or semi permanent
organization in the machinery of the government that is responsible for
oversight and administration of specific functions
Functions and services offered by finanical institutions
1. Provide a safe place for customer’s cash (savings and deposits)
This can be done by opening one of the following accounts:
● An ordinary savings account
● A current account or chequing account
● A fixed deposit account

2. Making payments
This may be done through the use of:
● Cheque
● Direct transfer
● Standing order : an instruction given to a bank to make regular payments of
a fixed amount to a named person

3. Investment
● Many commerical banks also offer investment banking services to large
public limited companies or corporations. This includes helping them to issue
shares to raise additional finanace, advising on mergers, acquisitions and
takeovers.

4. Offering loans and credit facilities

● Commerical banks offer a range of different types of loans, depending on
whether they are for personal or business use and what the money is used
for.

Services offered by financial institutions

1. Night safe deposits
2. Online banking
3. Advisory services
4. Credit and Debit cards
5. Deposit box
 6. Trustee work
7. ATM/ABM services
8. Remittance services
9. E-Trade

Role and functions of financial regulatory bodies

Role of regulatory bodies

● To monitor, control and guide various indusctry sectors in order to protect
consumers
● To enforce regulations and licenses of various financial activities, including
depository, lending, collection and money transmission activities
● Regulating the issue and supply and availability of money
● Enforcing financial regulations from the government
● Registering financial institutions
● Enforcing licenses for various financial activities such as lending and
depositing money
● Advising the government on monetary and fiscal matters
● Providing statistical data to the governemnt and the public
● Promoting stability, public awareness and public confidence in the financial
institutions
● Supervising the operations of all financial institutions, especially commercial
banks

Central Bank
● The central bank or monetary authority is a nationalized industry owned and
controlled by the government
Functions of Central Bank
1. Responsibility for issuing notes and coins to commercial banks
2. Banker to the government and offers services to the government that are
similar to those offered by commerical banks
 3. Banker to commercial banks. This involves holding the case reserves of the
commerical bank
4. Management of the foreign exchange reserves of the country, to ensure a
stable buying and selling rate for foreign currency. If the country has a
fixed foreign exchange rate then this is set by the central bank
5. “Lender of fast resort’, this means that the central bank will assit the
commercial banks with loans when necessary

The regulatory role

● Governments use the central bank as a means of regulating the activities of
the commercial banks and other financial institutions:
1. By setting the cash reserve ratio, the central bank determines how much
money the commerical banks will have available to lend.
2. The central bank engages in open market operations. This means that it can
offer certain services,such as special loans, similar to those offered by
commerical bank

Jamaica Deposit Insurance Company (JDIC)

● Jamaica Deposit Insurance Corporation (JDIC) was created by the
governemnt of Jamaica to protect depositors and promote stability and
confidence in Jamaica’s financail sector. JDIC covers only those institutions
regulated and supervised by the Bank of Jamaica.

Financial Services Comissions (FSC)

● The financial services commission oversees the regulation of Jamaica’s
insurance, pension and securities industries.

The Relationship between the regulatory bodies and financial institutions

(Commercial Banks)

● The central bank is the head of the financial system. All financial
institutions including commerical banks are regulated and monitored by the
Central Bank.
 ● The central bank is a lender of last resort and will aid commercial banks
when needed. The central bank dictates the interest rate that commercial
bank can offer by setting the bank rate.
● By setting the cash reserve ratio, the central bank determines how much
money the commercial banks will have available to lend.

Ways used to Individuals to Manage personal Income

Budgeting
● Budgeting means having a plan for systematic saving and spending. This
involves making sure that, over a given period of time, spending
(expenditure) does not exceed income.

Savings
● Savings are part of an income that is not spent. They can be kept in cash or
in a bank account. A savings account is an account that usually earns a higher
rate of interest than a deposit account

Investment
● This is simply doing without consumption today in order to use the money to
create capital or to generate future returns

Financial Advising
● Most large banks employ financial advisor who can tell customers about
different financial products, such as insurance, investing in shars and
opening a savings or deposit account.

Savings verus investment

Saving
Sou-Sou (meeting - term, partner box hand.
● This is a rotating savings club where a group of people (sometimes called
partners) co-operate by contributing an equal amount og money into a fund
on a weekly, biweekly or monthly basis.
Deposits in financial insitutions
● Man registerede and regulated financial instituions provide basic savings
accounts where money can be kept safe and earn a modest amount of
interest to savers

Short term fixed deposits

● This is a method of saving whenreby an anmount of money is placed with a
financial institution for a fixed term e.g one year. If the sum deposited is
withdrawn, a penalty is imposed

Credit Unions
● The credit union movement is also co-operative system that is inetended to
help people requiring saving facilities. They offer basic bank account often
with a debit card, but not credit cards or a cheque system

Investment
Stock Market
● The stock exchange provides a market-place where buyers and sellers of
securities (the name given to describe all stocks, shares) can meet to buy
and sell.

Government securities -(bonds and debentures)

● Debentures are not shares but long term loans to a company, which are
usually to be repaid at some future date. They carry a fixed rate of interest
which is payable every year whether the company makes a profit or not.

Mutual funds
● A mutual fund is professionally organized investment company that pools
money from lots of investors, then invests this money in the stocks and
shares of a range of companies. The advantage of investing in a mutual fund
is that the investment is spread over a range of companies rather than
depending on the fortunes of a single company.
Short term financing
● This refers to financing needs for a small period normally less than a year.
In a businesses, it is also known as working capital
Types
1. Trade credit
2. Commercial bank loans
3. Promissory notes
4. Installment credit
5. Indigenous credit
6. Private money lenders
7. Advances from customers
8. Factoring
9. Venture capitalist
10. Crowdfunding
11. Angel investors

Long term financing

● This is obtained for a time frame exceeding one year in duration. When a
business borrows from a bank using long term finance methods, it expects to
pay back the loan over more than a one year period
Types
1. Loans from government agencies
2. Mortgage
3. Debentures
4. Shares
5. Insurance
6. Investment & Unit trust

Sources of Capital for setting up a business

1. Friends & family
2. Personal saving
3. Governemnt grants
 4. Loans
5. Venture capital
6. Crowd funding

The purpose of basic financial records for sole traders

Types of bookkeeping systems

1. Double Entry
● The double entry system of book keeping is a method of recording
transaction in the books of account in the business

2. Single Entry
● This involves a single entry when a transaction is made

Types of Financial Statements

1. Income statement (The TP&L)
● This shows the gross and net profits or losses made during the period

2. The balance sheet (statement of financial position)

● Indicates the financial position of the business at a particular point in time

3. Statement of cash flow

● Is a financial statement that measures the cash generated or used by a
company in a given period. It is usually drawn up at the end of the financial
year and can also be created at other times such as halfway through the
year