PRINCIPLES OF BUSINESS – REVISION STUDY NOTES
Types of Discounts
Discount means a reduction from the marked price.
Trade Discount
A trade discount is a reduction given by a manufacturer or
wholesaler to a retailer on the marked price of goods.
Purpose:
• Encourage retailers to buy large quantities
• Maintain long-term business relationships
• Allow retailers to make a profit when reselling
Important:
➡️It is NOT recorded in accounting books.
Example:
A wholesaler sells shoes marked at $10,000 but gives a 20% trade
discount.
Retailer pays a$8,000.
✅ Cash Discount
A cash discount is given to customers who pay early or
immediately.
Purpose:
• Encourages prompt payment
• Improves business cash flow
• Reduces risk of bad debts
Important:
➡️This IS recorded in accounting books.
Example:
“5% discount if paid within 7 days.”
✅ Quantity Discount
A quantity discount is given when customers buy large amounts of
goods.
Purpose:
• Encourage bulk purchases
• Reduce storage costs
• Increase sales volume
Example:
Buy 50 notebooks and get 10% off.
✅ Seasonal Discount
A seasonal discount is offered during off-peak seasons when
demand is low.
Purpose:
• Clear old stock
• Maintain sales during slow periods
• Prevent goods from spoiling or becoming outdated
Example:
Discount on school uniforms after September.
✅ Promotional Discount
A promotional discount is used as part of advertising or marketing
campaigns to attract new customers or increase sales.
Purpose:
• Introduce new products
• Boost short-term sales
• Compete with other businesses
• Encourage customers to try products
Example:
“Grand opening sale – 15% off everything!”
Loyalty Discount
Given to regular customers to keep them returning.
Purpose: increase sales and loyalty.
Intellectual Property Rights
Piracy
Illegal copying of movies, music, books, software.
Plagiarism
Using someone’s work and claiming it as yours.
Legal protection for ideas and creations.
Copyright – books/music.
Patent – inventions.
Trademark – logo/brand.
Industrial design – product appearance.
Trade secrets – formulas.
Prevents copying and rewards creativity.
Market and Marketing
A market is where buyers and sellers meet.
Marketing identifies needs and satisfies them profitably.
Aims: satisfy customers, increase sales, build reputation.
Market Segmentation
Dividing customers into groups based on age, income, lifestyle.
Marketing Mix (4Ps)
Product, Price, Place, Promotion.
Used to compete effectively.
Marketing Activities
Market research, pricing, advertising, selling, packaging,
distribution, after-sales service.
Consumer Behaviour
Cultural, Social, Personal, Psychological, Economic and Marketing
factors affect buying.
Selling Techniques & Salesperson Qualities
Attention → Interest → Desire → Action → Satisfaction
Demonstration (show how it works)
Suggestive selling (recommend add-ons)
Handling objections (answer doubts)
Closing the sale (get the “yes”)
Qualities
Honest & trustworthy
Friendly, confident, polite
Product knowledge
Good communication
Patient, persistent
Neat appearance
🧠 Memory: AIDAS = the sale “story”.
Salesperson must be honest, confident, patient, knowledgeable and
polite.
Sales Promotion Techniques
Coupons, samples, competitions, discounts, loyalty cards, BOGO
offers. Short-term sales boost.
Insurance
Life
• Health/medical
• Motor vehicle
• Fire
• Property/home
• Business insurance (theft, liability)
Types:
• Whole life
• Term life
• Endowment
HEALTH INSURANCE – EXTRA
May include:
• Prescription drugs
• Surgery
• Lab tests
MOTOR INSURANCE – EXTRA TYPES
• Third party
• Third party fire & theft
• Comprehensive
FIRE INSURANCE – EXTRA
Does NOT cover:
• War damage
• Earthquake (unless added)
CONFLICT – EXTRA TYPES
• Interpersonal (between people)
• Organizational (between departments)
Utmost good faith: a legal doctrine requiring all
parties in an insurance contract to act honestly,
providing full and accurate disclosure of all
material facts without concealing information. It
obliges both insurer and insured to be
transparent, preventing fraud or
misleadingInsurable
Insurable interest: you must suffer loss if it’s
damaged.
Indemnity: a contractual agreement, often known
as a "hold harmless" clause, where one party
(the indemnitor) agrees to compensate another
(the indemnitee) for specific losses, damages, or
legal liabilities
Subrogation: insurer can recover from the guilty party.
Contribution: if multiple insurers, they share the loss.
Proximate cause: insurer pays if the loss was caused by an
insured risk.
Conflicts
Disagreements in business.
Interpersonal: between individuals
Intragroup: within a team/group
Intergroup: between departments
Industrial: workers vs management (wages/conditions)
Barter
Exchange of goods and services without the use ofmoney.
Problems
: Pros
useful when money scarce
Cons
needs “double coincidence of wants”
hard to value items
cannot store value easily
Money
Money is any widely accepted medium of exchange
for goods and services
Functions: medium of exchange, measure of value, store of
value, deferred payment.
Instruments of Payment
Cash, cheque, debit card, credit card, bank draft, standing
order, online transfer.
Private and Public Sector
Private sector: owned by individuals/shareholders; profit
motive.
Examples: supermarkets, private schools.
Public sector: owned/controlled by government; service
motive.
Examples: public hospitals, police.
Economic Systems
Allocation of resources – how land, labour, capital and enterprise
are shared.
Why governments intervene in mixed economies:
• Prevent monopolies
• Protect consumers
• Provide public goods (roads, schools)
• Control inflation
Traditional: based on customs (farming/fishing patterns).
Command (planned): government decides production/prices.
Market (free enterprise): supply/demand decide.
Mixed: both government + private sector (most Caribbean
countries).
Stakeholders
People/groups affected by business:
Owners, employees, customers, suppliers, government,
community, banks.
Functional Areas of Business
Production, Marketing, Finance, HRM, Purchasing,
Customer Service.
Capital (Types)
Why capital is important:
• Increases production
• Improves efficiency
• Reduces physical labour
• Increases profits
Capital = resources used to produce goods/services.
Fixed capital: long-term assets (buildings, machinery).
Working capital: day-to-day money for operations
(stock, wages).
Human capital: skills/knowledge of workers.
Venture capital: funds invested in new businesses.
Loan capital: borrowed funds.