Meaning of Trade
This is the buying and selling of goods and services with the aim of making a profit.
Importance of trade:
Trade plays a vital role in any economy. The various roles played by trade in the economy include;
Classification of Trade
Trade can be classified on the basis of geographical location of the portion involved, these are;
1. Home trade
Also called internal, local or domestic trade. It refers to the buying and selling of goods and services within the boundaries of a given country.
It is further divided into retail trade and wholesale trade.
2. International trade (foreign trade)
This is trade that is carried out beyond the boundaries of a country
This is trade carried out between individuals or government of different countries e.g. trade between a citizen of Kenya and a citizen of Tanzania, or trade between the government of Kenya and the government of Southern Sudan
International trade carried out between two countries is referred to as bilateral trade and international trade carried out among many countries (more than two countries) is referred to as multilateral trade.
International trade is classified into the following;
Forms of Home Trade
ââIt is a place, a room or a building set aside in an organization where communication, secretarial, administration and clerical work take place. Various operations are planned, coordinated and monitored in an office.
Functions of an office:
1. Receiving and recording information â this aids in making informed choices.
2. Distributing (disseminating) information â through the office, information is channeled to the relevant departments for action and implementation;
3. Mailing. Letters and parcels for and from various departments are dispatched and received in an office;
4. Communication. It serves as the communication centre to and from which the information flows.
5. Safeguarding and controlling of an organizationâs property. The office ensures safety of the organizationâs property through:
a) Carbon copying:
This method uses carbon papers placed between papers stacked together with the carbonated side facing down and the original paper to be handwritten or typed on placed topmost.
It involves use of a master copy like for instance a stencil to reproduce a copy or a succession of copies. The master copy can be prepared by hand writing, typing or scanning. There are different methods of duplicating namely:
I. Ink duplicating
It uses ink duplicator, duplicating stencil, stylus pen, typewriter, run-off paper and ink. The stencil is cut using a stylus pen or a typewriter and is then fed into the duplicator to produce the required copies. The duplicator can be manual or electric.
This method uses a spirit duplicator which transfers carbon from the master copy to the other copies.
This method uses a photocopier which photographs the master copy and prints out the photography on blank pieces of paper to produce an exact copy of the master copy.
This process uses computerized or manual printing equipments to produce documents. Computer and printers can be networked to have the following advantages.
This is a mechanical method that uses the concept of cutting out an outline of some letters on a template such as a piece of paper, placing the cut out template against the background of the surface to be printed and then spreading ink onto the template to produce the prints. It is mainly used on surfaces that cannot be fed into a printer.
In this method, the document to be printed is first printed onto a metallic plate which then affixed onto a printer for duplication.
Types Office layouts
âOffice layout refers to the outlook, arrangement and positioning of furniture and equipment in an n office. There are different kinds of layout such as:
a) Open office layout
The staff members are housed in one large room and are usually grouped into departments. This is common in banks and some KPLC offices.
Also known as cubicles. Usually occupied by one or two people with their names and/or their designations written on the door.
It is similar to the open layout but is more sophisticated with some glass semi-partition, sometimes with different floor levels so as to have senior employees on a slightly higher level for easier supervision and may have some decorations.
ââThese are facilities used in an office to make work easier.
Roles of office equipment
Types of office equipment
ââAdvantages of Office Machines
âDisadvantages of office machines
âFactors considered when selecting office equipment
These comprise of the people who work for the business organization. They are usually categorized into:
Duties of various office staff
A. General Manager
Include production manager, sales manager, technical manager, finance, human resources manager, etc. The finance manager:
A senior employee usually attached to a more senior officer.
Essential qualities of office staff.
â(a) Personal attributes
Trends in Office Management
Office management and operations are currently taking a transformation through such technologies like:
A. Computers â it is used for:
âUses for computers in communication
âAdvantages of internet, intranet, website, extranet, and e-commerce
âDisadvantages of internet, intranet, website, extranet, and e-commerce
i. High initial cost of equipment;
ii. High maintenance cost;
iii. Requires training for the users
iv. Suffers from occasional breakdown e.g. internet down-times, computer virus,
v. Prone to misuse
vi. Requires power to operate.
Meaning of entrepreneurship
This is the process of identifying business opportunities and gathering the necessary resources to start and run a business.
An entrepreneur who identifies business opportunities and gets the necessary resources in order to start and run a business. The entrepreneur therefore creates new businesses or transform the existing ones in the face of risks and uncertainties in order to make profits.
An entrepreneur is therefore a business owner; he starts and organizes the business (the factors of production in appropriate combination)
Importance of entrepreneurship to an economy
Characteristics of an entrepreneur
A good entrepreneur should have the following characteristics;
Generating Business Ideas
For an entrepreneur, the first step in starting a business begins with an idea (business idea)
Business ideas are all about thoughts on possible businesses an entrepreneur can start or improve. It indicates among other things;
Sources of Business Ideas
A good business plan is not necessarily a business opportunity. A business idea becomes a business opportunity if it is viable i.e. it can be developed into a successful/profitable business enterprise
A business opportunity is a favourable chance that an entrepreneur accepts for investment. It exists where there is a gap to be filled in the needs of the market. Examples of such gaps include;
Evaluating a business opportunity
This means assessing whether the identified opportunity is viable or not. This helps in arriving at the best decision concerning the business idea to implement
Evaluation should be done carefully, systematically and without emotions. Evaluation is necessary even where there is only one business idea. This will help in avoiding starting a business that cannot succeed.
Factors to consider when evaluating a business opportunity
The following are the factors to consider when evaluating a business opportunity.
a. Personal consideration
These are the abilities and expectations of an entrepreneur. They include the following;
These are external factors that are likely to affect the operations of the business and they include;
This is a written document that highlights the objectives of the business and steps to be followed in order to achieve these objectives. It indicates where the business is, where it wants to move to, how and when.
Contents of a good business plan
Need for the business plan
A business plan is necessary to an entrepreneur for the following reasons:
Factors that influence entrepreneurship practices.
There are many conditions or factors which may encourage or discourage entrepreneurship. Some of these factors are:
Causes of Business success
A business is considered as being successful if it makes consistent profit and experiences progressive growth in the scale of its operations.
Some of the factors that lead to the success of business may include;
ETHICAL ISSUES IN BUSINESS
Need for Ethical issues in Business
The need for ethical issues in business includes the following;
It can be defined as the creation of goods and services or increasing their usefulness to become more satisfying. Production activities include transforming raw materials into finished products, transportation and storage. Goods and services produced must have utility. There are several types of utility:
Types of Utility
Direct and Indirect Production
a. Direct Production
This is where goods and services are produced for own consumption rather than for commercial purposes. It is commonly referred to as subsistence and is much more common in rural areas. However, nowadays it is difficult to find someone living purely on this form of production.
Characteristics of Direct Production
a. Indirect Production
It is the production of goods and services for selling the excess to the market in order to purchase what one needs but doesn’t produce. It thus leads to specialization.
Characteristics of Indirect Production
Level of Production and Related Occupations
i. Primary Level
This involves extracting the goods from their natural setting. The goods are either used as is or they are processed further to make them more useful. Primary level of production mainly involves mere ‘looking after’ e.g. growing crops where the farmer looks at the crops and nature grows them, or extracting the materials from nature. Examples of primary production include: farming, mining, fishing and lumbering.
ii. Secondary level
It involves processing raw materials into much more useful products like processing clothes, processing and food canning, manufacturing like furniture making and welding, and construction roads, houses and railways
iii. Tertiary level
This level deals with production of services. It may be divided into two categories:
Factors of Production and Their Rewards
They are resources necessary for the production process such that without them, production would not be possible. They include:
It refers to all natural e.g. soil, rivers, lakes and climate. Since it is natural, it cannot be increased in quantity, it can only be improved in quality. Land earns rewards to the owners or users in terms of royalty, rent and rates.
Characteristics of Land as a Factor of Production
Also referred to as human resource, it requires either human physical effort or mental effort or both. It can be categorized as skilled where skills acquisition is required for one to be productive, semi-skilled where some simple training is needed or unskilled where no training is needed at all. Its reward is salaries and wages.
Characteristics of labour as a factor of production
This is also known as producer goods or capital goods and includes all man-made resources used in production of goods and services. It earns interest.
Characteristics of Capital as a factor of Production
An entrepreneur organizes all the other factors of production and pays rent for the land, interest for the capital and wages for the labour so as to use them. He/she is the organizer, the manager and the risk taker. His/her reward is the profit.
Functions of the entrepreneur:
Division of Labour and Specialization
This involves breaking down a production process into stages and assigning each stage to an individual or a group of individuals. It was first observed to be productive by a British economist, Adam Smith, who observed that workers in a pin manufacturing factory were much more productive when assigned to specific stages of production.
This refers to a situation where one concentrates in production of what he/she produces best and leaves the others to produce the rest. One may for example concentrate on teaching or farming or engineering or treating people.
Advantages of division of labour and specialization
Disadvantages of division of labour and specialization
Classification of Goods and Services produced in an economy
SATISFACTION OF HUMAN WANTS
For us to lead our lives well, we require certain commodities and services. These goods and services satisfy our wants. Human wants can be referred to as the desires that human beings strive to satisfy by using goods and services. The satisfaction of these wants refers to the process of acquiring and using the required goods and services.
Characteristics of human wants
Types of Human Wants
There are two main types – basic wants and secondary wants
a. Basic wants
These are the essential needs in life such that one cannot do without them. They include food, shelter and clothing. They are satisfied before the secondary wants. They have the following characteristics;
Secondary wants are requirements for comfortable and luxuriant live. Comforts provide good life, beyond mere survival. It includes such needs like Medicare, education and security. Luxuries include even much more flamboyant needs like a sleek car, a mansion, study abroad and such kinds of needs. At times some secondary want may be meant to save lives, for instance Medicare. In such circumstances, the needs become a basic want.
Goods and Services
These are also known as commodities. Goods comprise of tangible commodities while services are some desirable actions.
Characteristics of Goods
Characteristics of Services
Unlike free resources such as air, rain and sunshine, economic resources are scarce and therefore require effort or price to acquire. Nevertheless, at times free resources may be viewed as economic resources if they provide some economically valuable activities or commodities. E.g. fishing, solar power generation etc.
Characteristics of economic resources
Classification of Economic Resources
a. Natural resources
They are provided by nature and are therefore also known as gifts of nature. Man works on them to create goods and services. They include: minerals, forests, lakes, rivers, Climates Mountains, land and mountains.
For the natural resources to be beneficial, man must:
Goods produced from natural resources can be consumer goods like clothes, bread and ink or prouder goods like machinery, vehicles, trains, computers e.t.c.
b. Man – made resources
These are producer goods produced from natural resources. They include tools, machines and commercial vehicles.
c. Human resources
These are human beings involved in production activities through intelligence or physical effort. They include teachers, doctors, lawyers, engineers, manual laborers etc.
Renewable Resources and Non-renewable Resources
1. Renewable Resources
They include those resources whose production can be restored after use. Failure to restore can lead to depletion. They include wood, solar, fuel, H.E.P., wind power and soda ash.
2. Non-renewable Resources
Their supply cannot be replenished after use. They include such commodities like gold, building stone, gravel, iron, aluminum, gold, lead, natural gas, etc. These goods cannot be restored after they have been extracted and used.
Human wants are unlimited and varied in such measures as urgency, importance and intensity. They are satisfied through resources which are limited in nature. Therefore a choice has to be made based on the order of preference as to which wants to satisfy and which ones to forego. The second best alternative want foregone in order to satisfy the most preferred want is known as opportunity cost.
Introduction to business studies
The term business refers to any activity that is carried out by an individual or an organization concerning provision of goods and services with a view of making a profit.
It’s made when the activity carried out brings in more money than the amount spent.
Business study is the study of the activities that are carried out in and around production, distribution and consumption of goods and services.
Terms used in business studies
These are items that are tangible i.e. they can be touched and felt e.g. furniture, buildings, vehicles and medicine.
They are actions of activities that may be sold. Unlike goods, services are intangible e.g teaching, banking, hairdressing and shoe making
Production refers to the creation of goods and services or increasing their usefulness through activities such as transporting them to where they are required. People who produce goods are: farmers, manufacturers, house builders and road constructors. On the other hand, people who provide services include drivers, teachers, lawyers and doctors.
Distribution refers to movement of goods and services from producers to the users. Activities that take place during distribution include: buying and selling, transporting, communication, advertising and banking.
The term consumption refers to using hence it’s the usage of goods and services. A person who uses a good or service is called a consumer. E.g. when a student is reading a text book he/she is consuming it.
Branches of business studies
Business studies is a subject that covers topics from various disciplines. They are as follows:
This is the study of trade and aids to trade
Refers to exchange of goods and services for other goods and services or for money.
Aids to trade
Are human activities (services) that assist trade to take place e.g. transport, banking, warehousing and communication.
This refers to a systematic way of recording business activities which all used for decision making.
This is the study of how human beings strive to satisfy their endless wants using the available scarce resources.
iv. Office practice
This refers to all activities that are carried out in an office e.g. communication, filling, clerical work, reproduction of documents etc.
This is the study of activities involved in the process of identifying a business opportunity and acquiring the necessary resources to start and run a business. The person who carries out these activities is referred to as an entrepreneur.
Importance of Business studies in society
Business studies is meant to prepare learners to function as informed consumers, producers and workers in the society. Some of the benefits of learning business studies include:
Importance of business to an individual
Meaning and purpose of a business
Meaning of a business
This refers to any activity carried out by an individual or by an organization with the aim of making a profit. The term business also refers to firms or organizations that provide goods and services to make a profit.
Purpose of business (Reasons for the existence of businesses)
Business is important in any society because it is not possible for people to provide themselves with all what they need without direct or indirect aid from others. Some of the main reasons why businesses exist are:
People carry out different business activities in order to earn income. Business activities are activities which involve the provision of goods or services with an aim of earning a profit.
Activities done without the intention of making profit are referred to as non-business activities. Business activities may be grouped into the following seven categories:
BUSINESS ENVIRONMENTS AND THEIR EFFECTS ON THE BUSINESS.
Business environment refers to conditions or factors which surround and affect business operations. These factors could be within the business (internal environment) or from outside the business (external environment).
These factors affect the decisions, strategies, processes and overall performance of the business.
Internal Business Environment
This comprises factors that are within the business unit itself. These factors can be controlled fully by the business. Internal environmental conditions could be either strength or weaknesses. The strengths tend to improve the performance of the firm while weaknesses tend to affect the operations of the business negatively.
Internal environment is also referred to as: micro-environment. Micro environmental factors include:
1. Objectives of the business
These are targets or goals that are set by the owners or managers of a business to be achieved. The objectives will influence the following;
a. The strategies of a business-This is a plan of action which a business intends to follow so as to achieve its goals.
b. The resources required-By studying the objectives set; a business can determine the resources required for its effective operation. These resources may be physical, financial, human etc.
2. Management policies and style
The management refers to the people who are responsible for directing the day-to-day operations of a business. It is the management that sets the objectives and policies of an organization.
A policy is a course of action of action for achieving set objectives, which is adopted by a business. (It is the established way of doing things in a business.)
a. The policies of a business-The policies adopted by a business may boost or hinder its growth and survival e.g. the management may decide that workers will not be allowed to join trade unions. This may make the workers feel locked out of the decision making process, resulting in tension. This tension may interfere with the performance of the employees and result in inefficiency.
b. The activities of a business-Management policies will determine the activities of a business i.e. the goods and services provided, location of business etc.
c. Management style-This refers to how managers conduct the daily operations of the business. This will determine how workers relate with their managers. The style adopted by the management will influence the workers performance positively or negatively thus affecting the overall performance of the business.
3. Business structure
This is the formal arrangement of activities that are carried out at various levels of the organization so that objectives of the business can be achieved.
Duties and responsibilities of all the workers are defined in the business structure. Their interrelationship are also defined.
A well laid out business structure is likely to lead to success of the business since:
4. Business Resources
A resource refers to anything that can be used to achieve an objective. These resources include;
a. Human resource-Human resource (personnel) refers to the employees working in an organization. Employees will only be useful if they have the necessary knowledge and skills to successfully carry out the assigned tasks. It is therefore necessary for the management to match the correct people with the correct job activities; this will ensure success for the business.
b. Financial resource-Money is required in order to start and operate a business. A business with adequate finances that are property allocated to various activities and also monitored is likely to do better than the one lacking such aspects.
c. Physical resources-These include tangible facilities which belong to the business such as buildings, machinery, furniture and stock. Availability of such facilities enables the business to operate.
d. Technology-This refers to skills and methods used in production. Use of modern technology enhances production of goods and services.
5. Research and development
Research and development is an important factor for the success of a business. Research generates new ideas, skills and better methods of doing things.
A business has to do market and consumer research regularly to find out how the consumers perceive its goods and services, and how they can improve in order to outdo their competitors.
Research also assists in the development of new and unique goods and services that may attract new consumers or maintain the loyalty of the existing ones.
6. Business culture
This is a combination of employee’s expectations, beliefs and values within the business. It is normally passed on from one generation of employees to the next. Employees acquire norms and code of conduct that is acceptable to all from the general manager down to the sweeper. A business that has a culture of involving employees in decision making may perform better than one that does not involve its employees.
The owners of the business provide finances/resources to start and run the business. They also make decisions concerning operations of the business.
Appropriate decisions are likely to lead to wellbeing of the business while poor decisions may adversely affect the business.
External Business Environment
This environment consists of all the factors which affect the operations of the business from the outside. Some of these factors offer business opportunities while others may create problems (threats).
Business have limited or no control over external environmental factors and should therefore try to do adjust in order to cope with them.
External environmental factors are also referred to as macro-environment i.e. environment that is in large scale.
External business environment can further be sub-divided into operating environment and remote environment, depending on whether the factors can be influenced to some extent or not. Those environments that can be influenced are referred to as operating environment while those that cannot be influenced are known as remote environment.
When these factors favor a business, they are called opportunities but when they are unfavorable they are called threats. These factors include:
a. Economic environment
These are the factors that determine people’s ability to buy goods and services which is referred to as purchasing power. The ability to buy depends on amount people earn, prices of goods & changes in taxes. If the buyer’s ability to purchase increases, the business is likely to sell more.
b. Demographic environment.
It refers to factors relating to population (population change) such as growth rate, size, sex, age distribution levels & income distribution. A growing population creates a wide market for goods & services. Better education & jobs for consumers would improve their demand for quality goods and services
c. Legal – political environment
This refers to government laws, regulations, procedures that influence businesses. Firms are required by law to sell goods that meet certain specified standards. Political environment creates an environment that is conducive for the business to grow.
Unfavorable political environment such as war & political disputes creates uncertain environment hence poor performance of the business
d. Technological environment
Advancement in technology will lead to better quality of goods and services. If the business uses outdated technology, while other firms are using modern technology, consumers will tend to go for the goods and services produced by other firms.
e. Cultural environment
Culture refers to the norms that regulate behaviour of people in a society. They include customs, values and beliefs that are shared by a given society. Culture dictates how people live and what products they consume. E.g. Muslims don’t take pork.
f. Competitive environment
This is an environment whereby firms are trying to outdo each other in their efforts to maximize profits. This will take either of the following forms:
g. Physical environment
They physical environment includes factors such as relief, climate and infrastructure like roads, water supply, electricity, telephone, security and banks.
They may affect a business positively or negatively. Examples include: good infrastructure would support business activities while poor infrastructure may discourage business activities.
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