POB Revision Text With MCQ (1) 230530 192650
POB Revision Text With MCQ (1) 230530 192650
POB Revision Text With MCQ (1) 230530 192650
Study Guide
Topic by Topic
Test 1 186-197
Test 2 198-209
Test 3 210-221
Test 4 222-233
Test 5 234-245
Test 6 246-258
Test 7 259-270
Test 8 271-282
Term Explanation
Organization A group of persons coming together to achieve a particular goal. There is a degree
of permanence in the unit. The organization is characterized by division of labour
and specialization e.g. a school; hospital; Neal and Massy Group of Companies;
Trinidad Cement Limited
Enterprise An initiative or business activity
Entrepreneurship The willingness of an individual or group to undertake the risks of
conceptualizing, developing and operating a business
Barter A system of exchange without the use of money e.g. trading oil for wheat
Profit The excess of total revenue gained from sale of the good or service after deducting
the total cost of producing the good or service.
Loss The excess of total cost incurred in producing the good or service after deducting
the total revenue from sale of the good or service.
break-even A position of zero profits; total cost incurred in producing the product is equal to
total revenue gained from sale of the product.
Exchange The giving up of one thing for another with or without the use of money.
Producer The economic agent that makes the good or generates the service.
Consumer The economic agent that buys or uses the good or service.
Product The concept of a good or service.
Good A tangible product e.g. a book, it can be touched and stored for use at a later date.
Service An intangible product or series of related activities. The service and the provider
are inseparable and the service is consumed at one point in time.
Market A physical or virtual situation where buyers and sellers interact to trade.
Commodity A good traded in bulk e.g. wheat. These goods are usually the output of
agriculture and other primary sector activities.
Capital Physical inputs into the production process e.g. machinery and equipment,
financial inputs such as loans and equity and human capital inputs.
Labour The effort of animals or specifically the physical or mental output of humans. Also
called human capital input into production.
Specialization The focus of effort on a particular task leading to expertise in the area e.g. a
paediatrician; a Mathematics teacher
Division of Labour The dividing of a job into different tasks or specializations, to be performed by
different persons e.g. assembling a car or the job of providing education in a
school.
Human Resources The citizens of a country who are available, willing and capable to work. All
categories of professional, skilled, semi-skilled and unskilled workers in a country.
• Method of
payment that can • Guaranteed by • A bank fee is
be issued in the bank issuing attached to the
Bank Draft the draft
foreign currency bank draft
• Allows for the
transferring of
large sums of
money across
territories
Subject to fraud
The person such as, false
paying the signatures
money, orders
Allows persons lack of funds to
the bank to pay
to issue cheques encash cheque
the amount
instead of money from drawer
Cheques indicated on the
Variety of leading to
cheque to a
cheque types “bounce” cheque
business or
available:
person named on
the cheque
Open Cheque:
can be
easily
encashed at the
bank on which it
is drawn
Crossed Cheque:
two vertical or
diagonal
lines are
drawn on the
cheque; usually
encounters
a waiting
period
(deposited
in
payee’s account)
to be encashed
Manager’s
Cheque:
Issued
when large sums
of money
are
transacted
A document used
to settle debts in
trade Allows for
An order that a credit
Not readily used
requires the facility to be
Bill of Exchange by small
person to whom allowed for the
it is addressed to businesses
importer The
pay an amount exporter has
of money to a options in terms
specified party. of executing the
May be used in bill
situations of
credit facilities to
importers
The document
can be
discounted by a
bank; kept until
maturity or sold
to a third party.
Tele-banking
According to businessdictionary.com, tele -banking or telephone banking is the 'provision of certain banking
services through telephone.' Key features include:
• automated service
• simple to use from a landline or cellular phone
• usually available 24 hours, everyday
• allows user to know account balance; credit card balance
• transfer funds between accounts in the same bank; stop payments
• access information by receiving SMS
• make utility payments
• calls are recognized from registered number
• customer gets a secured PIN number
E-Business or specifically 'electronic business ' incorporates the processes that allows a business to use
electronic media involving internet technologies to conduct business operations. This has enabled organizations
to increase competitiveness.
• 3D modelling
• knowledge management
• supply chain and logistics optimization models
Whereas, E-Commerce or 'electronic commerce' is the process for buying and selling goods and services
and transferring funds using the internet or computer networks. E-commerce is an E-Business process. E-
commerce involves: Electronic Data Exchange; Electronic Mail; Electronic Bulletin Boards; Electronic Fund
Transfer; Digital Library; Electronic Publishing.
• Enables the use of electronic fund transfer; debit and credit cards, e-wallet, mobile money in transacting
business i.e. Non-Cash Transactions
• Service can be available anywhere and anytime
Benefits of e-commerce:
Mobile Money
According to businessdictionary.com, mobile money is described as ' the use of a mobile phone in order
to transfer funds between banks or accounts, deposit or withdraw funds or pay bills'. It further
encompasses using a mobile device to buy products. This may be in a physical or electronic setting.
A mobile wallet or mobile money transfer is a payment service through which individual or business
clients can send or receive money using mobile devices. This facilitates convenient transactions.
(Source: techopedia.com)
Further, a 'mobile money wallet' e.g. Bibi money Mobile Wallet (www.bibimoney.com) is described as a
product that allows financial institutions with their own mobile wallet solution that works with any
mobile phone i.e. smart phone and on any mobile network. Services include bill payments, remittance,
and payments from persons to merchants. A key benefit is that of customer acquisition.
RBC (registered trademark of the Royal Bank of Canada) has offered 'RBC Digital Banking' as an
alternative to traditional banking. customers can use the ' mobile app RBC Caribbean' to facilitate
banking on the go using a mobile device. Customers can for example, deposit and withdraw cash, check
account balances, process wire transfers and pay bills.
Another contemporary concept utilizing mobile money is the E-wallet. This facility is an online, prepaid
account. It does not require a credit or debit card. E-wallet is a payment option. The client can sign in
to the business site E-wallet service and create a wallet, money can be transferred into the using
ebanking or debit card or credit card. If the customer chooses to buy from the site he/she can use the
ewallet. The customer does not have to enter debit or credit card details for every transaction.
However, online transactions carry the risk of password theft and there is no refund on purchases. A
mobile phone can be used as a wallet.
Using the E-wallet allows the customer to store credit card and bank account numbers. (Source:
economictimes.indiatimes.com; officialpayments.com)
The transition of business activity from bartering to the use of money: Subsistence
Economy to Money Economy
• Economic activities were born out of the desire of human beings to satisfy their immediate
• Human beings strive to satisfy their wants and needs. Wants are our desires.
• Given that needs and wants are unlimited in relation to scarce or limited resources, it is
necessary to make choices. Choice leads to OPPORTUNITY COST i.e. the cost of the alternatives
or options foregone / given -up.
• The early method of satisfying basic needs was called DIRECT PRODUCTION.
• Direct Production means that human beings provide what they need for themselves and for
their families; on their own e.g. they hunted, fished and grew food. They did not depend on
other persons to produce the goods and services they needed or desired.
• Early economies were then described as SUBSISTENCE ECONOMIES. Here human beings
focused on survival and not so much on improving standard of living or economic well-being.
They were able to get what they needed from nature; they provided for themselves.
• As a result of specialization, human beings began to produce in excess of what was needed for a
family. This extra amount was SURPLUS.
• Surplus production led to the development of the Barter System. This is a system of exchange
of goods or services for goods or services. This was money less transaction.
Barter
Barter is described as the trading or exchanging of goods and services for goods and services without
the use of money. Surplus production or excess was traded to get what the farmer did not produce.
This was termed indirect production or the satisfaction of needs and wants through other persons.
Moreover, barter provides an alternative form of trading without the need to hold cash for transactions.
Barter can lead to an increase in production and trade which can lead to flexibility e.g. countries can
trade goods and services for goods and services. It can also facilitate access to more services.
• A double coincidence of wants e.g. Farmer A had corn to trade and wanted bananas. Farmer A
had to find someone who wanted corn and had bananas to trade.
• An exchange rate e.g. Farmer A and Farmer B had to agree on how much corn would be
exchanged for given quantity of bananas.
• Divisibility of the commodity e.g. Some goods such as live animals were difficult to divide into
smaller quantities for trade.
• Storage of wealth e.g. given the perishable nature of some commodities such as food goods,
storage for long periods of time became relatively impossible.
• Division of Labour is basically the breaking up or dividing a job into various tasks to be
performed by different persons in an organization.
• Specialization: As a result of division of labour, workers concentrate on particular areas of the
job. Each worker can become more specialized in specified areas.
• Main advantages of specialization include: workers become more skilled and competent in job
performance; efficiency and productivity increases; increase scope for using automation and
mechanization
• Main disadvantages of specialization include: repetition of the same task can become boring and
lead to errors; individuals can lose their competences as a result of not using certain skills;
automation can result in less need for labour leading to unemployment;
Think
How has the concept of 'mobile money' redefined the banking sector?
Money
In early economies money addressed most of the problems associated with the barter system. In
contemporary societies money is associated with notes and coins. However, in early economies items
such as shells, beads, precious stones and arrow heads were classified as a medium of exchange.
Characteristics of Money
Functions of Money
• Medium of exchange: Money facilitates trade. Goods and services could be exchanged for
money, thereby addressing the problems of the barter system. In the digital age, mobile money
or mobile wallets and e-wallets can facilitate trade.
• Measure of value: Money is used as a declaration of the price of products e.g. high prices can
signal that products are of high quality
• Store of Value: money can be saved and invested
• Standard of deferred or postponed payment: money can be earned and spent at a future date
or it can facilitate credit
Legal Tender
Legal tender means that, by law the commodity must be accepted when exchanged for a good or service
or to pay a debt.
Structured Questions
2. Outline TWO advantages and TWO disadvantages of the 'barter system'. (4 marks)
Research: Place students into groups of 4-6 pupils. Each group will research the application of 'mobile
money ' in contemporary business organizations.
Key reasons why an individual or group will want to undertake the risks of establishing a business:
Key Terms:
• Incorporated: The business is registered as a separate legal entity from its owners. The
company can enter into contracts. Shareholders have limited liability. Unincorporated: The
business and the owners are one and the same.
• Liability: The obligation to be borne by the owners or shareholders e.g. debts
• Limited Liability: The liability or obligation of the owners or shareholders extends only to their
investment in the business.
• Unlimited Liability: The liability or obligation of the owners or shareholders can extend beyond
their investment in the business to their personal wealth and assets.
• Nationalization: A situation where the state or government assumes the assets of a business
entity to ensure that the products are available to citizens e.g. water and electricity.
• Privatization: A situation whereby the state sells the assets in a public sector entity to the
private sector.
• Public corporation: State owned organizations that may be profit oriented.
Sole trader or sole One owner Quick decision making The owner assumes
proprietor unlimited liability
There may be employees Flexible in terms of
hired in the business responding to The business and the
environmental influences owner is one and the
same, if the owner dies
Not legally complicated to the business ceases to
start exist
Types of co-operatives
include: consumer, producer, Benefit from economies May lack managerial
financial, services and worker of sale expertise in membership
co-operatives.
Support services e.g.
A credit union is a purchasing and marketing
cooperative which acts as a for members
financial institution.
Membership may comprise
Profits shared among the
members of specific groups
or open for anyone members
Administration includes: a
Memorandum of
Association; Articles of
Association; Prospectus;
Financial Reports
Incorporated
2 to 50 shareholders
Usually owned by families
Legal entity Limited liability Capital is still limited as
Private Companies (ltd.) shares are not publicly
Control is maintained traded
Administration includes: a within a small group of
Memorandum of shareholders Limited managerial
Association; Articles of expertise
Association; Financial
Reports;
Incorporated
A franchise is a legal
Franchise agreement in which the Access to new markets for The franchisee must pay
franchisor allows the the franchisor the royalties regardless of
franchisee to use the business size
established name of the
Source of revenue for the
business and to produce The franchisee has to
products to the franchisor’s franchisor
operate under supervision
standards. of the franchisor
The franchisee bears
Royalties are paid to the some of the risk
The franchisee is legally
franchisor.
bound to sell only the
Franchisee benefits from products of the
the support provided by franchisor.
the franchisor e.g.
training
Government control of
factors of production on Government provides In order to
behalf of citizens public goods that the finance
Public Sector
Private individuals or
businesses own the factors
of production
Brings more competition
and product variety to the
Motive is to maximize profits Will only provide products
Private Sector market
that citizens can pay for
Consists of sole traders, Increased use of
partnerships, public and technology
private companies, Engages in the production
multinationals, of de-merit goods once
Provides investment and
conglomerates, franchises there is demand
employment
Notes:
Memorandum of Association: A document that outlines the external relationship of the company and
gives details of its existence e.g. company name, objects of the company, share capital and divisions,
whether the business is a public company, liability, guarantee
Articles of Association: A document stating the firm’s internal relationships (the running of the
company). This includes the voting rights, conduct of meetings, election methods, management’s
powers and how profits will be shared.
Prospectus: A document prepared by a public company intended to provide details of new issues of
shares. It outlines what the intention of the company.
Structured Questions
1. State THREE reasons why a person will want to undertake the risk of establishing a business. (3 marks)
3. Distinguish between the 'public sector and the 'private sector'. (4 marks)
5. State TWO disadvantages of a 'sole trader or sole proprietor' type of business. (2 marks)
6. Differentiate between 'a private limited company' and 'a public limited company'. (4 marks)
Research: Place students into groups of 4-6 pupils. Each group will research one business entity from the
list. Students can drawn numbers. (Name, Vision/Mission, Objectives of the business, Liability, Products
of the business etc.)
List:
1. Franchise business
2. A co-operative business
Economic Systems
Key Terms
Economic System: An economic system describes the organization of a country’s resources to decide on
the basic economic questions.
Basic Economic Questions: Scarcity forces society to consider three issues: What to produce with the
available supply of resources? How to produce these products (methods or techniques)? Who should
benefit from the production of these goods and services?
Merit Goods: Products funded by the state because of the potential benefits to society e.g. health care,
education, medicines
Demerit Goods: Products which produce negative externalities, where the social costs are borne by the
society e.g. Gambling, cigarettes, alcohol
Public Goods: Goods provided to the public or society. These goods are non –excludable in that all
members of society stand to benefit from production of these products. It is the government that
provides these goods for the benefit of all citizens e.g. roads, street lights, defence.
Structured Questions
1. Differentiate between a 'planned economic system' and a' free market system'. (4 marks)
Rewards system
Industrial relations
Occupational safety and health
Grievance, dismissal and discipline procedures
Structured Questions
2. Choose TWO key functional areas and state TWO main activities. (6 marks)
3.Explain the role of the 'research and development' functional area to the survival of a business. (6
marks)
Research: Place students into groups of 4-6 pupils. Present the following case.
Stakeholders
According to investopedia.com, a 'stakeholder is a party that has an interest in a company, and can
either affect or be affected by the business'.
•Suppliers
External Shareholders do not •Customers
directly work in the business but •Government
may be affected by the operations •Community
of the business or may have a •Environment
direct effect on the business •Creditors
•Trade Unions and Future Generations
Managing stakeholder interest in the business can sometimes lead to conflict for example, in trying to
maximize shareholder or owner return on investment can directly impact the organization's ability to
provide improved benefits to employees. Managers, must therefore try to balance the interest and
expectations of the stakeholder groups.
Provide capital for growth and expansion or to launch the venture's products
May provide guidance to management
Shareholders May help set the strategic direction of the organization
Provide the raw materials that the firm needs at reasonable prices
May provide solutions to the company in terms of the company's supply chain
Suppliers
as a corporate citizen
includes groups in the community such as NGO’s e.g. trade unions; Parent/
Teachers Associations etc.
Communities
Structured Questions
1. Define the term 'stakeholder' and identify TWO stakeholders in a typical business. (4 marks)
2. Explain the role of the following stakeholder groups in the functioning of a business organization (a
business example can be used if necessary): (3 marks each)
(ii) employees
(iv) community
Research: Place students into groups of 4-6 pupils. Each group will identify a business and outline the
various stakeholder involvement. Consider for example:
Ethics
Pupils will:
discuss the concept of ethics in the business environment
explain the ethical and legal issues in the establishment of a business
explain the ethical and legal issues in the operation of a business
explain the ethical and legal principles that must be implemented in the establishment and
operations of a business
explain the consequences of unethical and illegal business practices
describe some careers in the field of business
Ethics in business
• Ethical business practices deal with doing what is right, moral and just in practices.
• Companies can develop ethical codes of conduct and communicate these practices throughout
the organization. There should be management commitment in implementing ethical codes and
• Ethical issues in the organization can impact the corporate brand of an organization. Business
ethics provide guidelines for the organization's interactions with internal and external
stakeholder groups. The concept of business ethics seeks to create a workplace that sees
• Some activities may be unethical but not illegal e.g. testing products on animals. The choice of
• Unethical activities include: misleading or advertisements with false claims; improper disposal of
waste; using expired or poor quality raw materials; taking bribes in the tendering process;
colluding to prevent competition; poaching workers from other companies; not following clear
• Illegal activities are for example insider trading; money laundering, tax evasion, not paying the
minimum wage.
Legal Issues:
• The obligation of the business to abide by the laws governing the work place such as,
occupational safety and health; employment laws; discrimination; equal opportunities; minimum
wages; payment of taxes; statutory deductions such as deducting and remitting income taxes
and national insurance payments;
• Registering the business to secure its name and to ensure the validity of the business to help
secure funding.
In Trinidad and Tobago for instance: all sole proprietors, partnerships and limited liability
companies must reserve a business name;
Businesses may also seek to protect ideas and products by applying for trademarks, patents or
copyrights.
(ttconnect.gov.tt)
Ethical and Legal Principles that should be adopted in the establishment and operation of a business
The organization must know what it wants in establishing a 'culture of ethics'; adopt a code of
ethics;
Establish a climate that seeks to reinforce the core values such as respect, fairness, trust
worthiness, good citizenship that emphasize ethical conduct. This can be done by establishing a
system of incentives.
The organization must put in place selection criteria aimed at pinpointing candidates who can fit
into the ethical environment of the organization;
Ensure that training programmes, performance appraisals, coaching, mentoring, dismissal and
discipline programmes reflect and reinforce the desired ethical behaviours;
Develop appropriate consequences and rewards to reflect ethical and legal compliance e.g.
through the dismissal and discipline procedures and rewards and incentive programme e.g.
rewards for OSHA compliance;
Create a physical environment to reflect what the organization stands for;
A code of ethics is a company document that communicates the organization's values and shows the
commitment to standards and benchmarks. The Sarbanes-Oxley Act (2002), in response to business
scandals, mandates a stricter code of conduct with respect to corporate governance and financial
controls. The code of ethics is viewed as the standards that are 'reasonably necessary to promote' for
example; honest and ethical conduct,' 'full, fair, accurate, timely and understandable disclosure in the
periodic reports,' and 'compliance with applicable governmental rules and regulations.'
The code of ethics is also seen as guidelines governing the day to day decision making processes. It
brings clarity to what is expected within the scope of organizational values and policies. It brings
alignment of the organization's vision, mission and values with standards /benchmarks of 'professional
conduct'.
A 'compliance code' forms part of the code of ethics whereby the organization meets all legal
requirements.
The principles to be respected by all internal and external stakeholders in the code of Ethics are for
example:
Observe the laws and regulations so that conduct of business activities will be compliant with
laws;
Ensure integrity of conduct e.g. free and fair competition, honest relationships with
stakeholders;
Avoid discrimination based on sex, sexual orientation, age, race, nationality, religion, political
opinion in dealing with stakeholders; recruitment and selection and other personnel processes;
Avoid the abuse of authority in the organization structure;
Protection of occupational health and safety
Protection of the environment
Organization can sponsor activities that benefit the community without conflict of interest.
Unethical business practices can include: pilfering of company's property, dishonest conduct in financial
dealings, testing products on humans and animals, giving kickbacks; using underhanded means to
discredit a competitor; pollution; false advertising; immoral behaviour based such as bullying,
harassment; These behaviours carry consequences such as:
Impacting sales negatively as clients and customers stop buying products as they do not want to
be associated with an 'unethical business';
Can lead to a fall in share prices as investors lose confidence;
Increase turnover of valued employees;
Affect the health and safety of customers;
Workers can be dismissed;
Image of business can suffer
May be subject to litigation in the courts
Endangering users
Illegal business practices would include: tax evasion; money laundering, failure to comply with financial
obligations, bribery: These behaviours carry consequences such as:
According to' businessdictionary.com', a career can be defined as, ' The progress and actions taken by a
person throughout a lifetime, especially those related to that person's occupations.' According to
'education.vic.gov.au', apart from paid employment and a single occupation, the term career, 'is seen as
a continuous process of learning and development. Further, activities such as, training, education,
employment, work experience, community activities, volunteer work and leisure activities may
contribute to a career.
Functional Areas Career Path Examples
Marketing
Production • Production Manager
• Production Engineer
• Quality Control Officer
Database Analyst
Privacy Coordinator
Research and
Development Research and Development Scientist
Business Development Analyst
Compliance Officer: Ensures that the business complies with external regulatory requirements e.g.
employment laws and trade agreements; and internal company policies and procedures. This office will
seek to develop, implement and update or revise policies for compliance to prevent illegal and unethical
business conduct. The office must also collaborate with other functional areas to guide issues to
appropriate channels. Further, the compliance office will develop and implement a system for handling
violations of rules and procedures. Also, providing regular and proper reporting to management.
Strategic Planner: This involves engaging in research and analysis of business information, tracking and
analysis of industry trends, designing scenario analysis and forecasting models. A strategic planner will
examine business strategic performance, track market opportunities and threats and develop action
plans. The office involves an understanding of the past, present and future of the business.
Entrepreneur: The entrepreneur is a person who comes up with or conceptualizes the business idea,
exploits opportunities in the environment and assumes the risk of establishing and operating a business
venture e.g. A nascent entrepreneur is described as a person who is in the process of starting a new
business and may use his/her skills in the business development.
Web Designer: A person who builds or redesigns websites. This includes making the site visually
appealing and functional.
Web Planner: A person who will be involved in anticipating the skills and resources needed by the
business for developing, constructing and operating the web. This will involve defining the audience;
formulating the purpose; gather domain information to support web.
Graphics Designer: A person who creates visuals manually or utilizing computer software. The visuals
are intended to capture the consumers’ attention. He /She combines techniques in art and technology
to communicate through web screens, images or print media.
Brand marketing: This deals with creating a market identity for the business and its products. Career
paths:
• Brand Manager
• Assistant Brand manager
• Brand strategist
• Product Manager
• Merchandiser
Public Relations: This deals with enhancing the visibility of the business to the public in an effort to
attract customers, investors and employees. Career paths include:
• Communications manager
• Marketing Communications Coordinator
• Marketing Consultant
• Public Relations Officer
E-commerce marketing: Use the internet to offer brands and products e.g. online shops, email
marketing. Career paths include:
Sales: Engage the client in face to face, telephone or internet setting to sell products. Career paths
include:
• Sales Representatives
• Regional Account Manager
• Sales Director
• Sales Consultant
Advertising and Promotion: Engages the customers via messages and offers. Career paths include:
• Advertising Director
• Copy Writer
• Creative Director
• Graphic Artist
• Media Planner
• Promotions Specialist
Market Research: Gather and analyse data related to the market and marketing strategies. Career
paths include:
• Data Analyst
• Marketing Analyst
• Research Officer
Structured Questions
2.Outline ONE unethical business practice and ONE illegal business practice. (4 marks)
Topic: Testing products on animal subjects can be deemed unethical. Agree or Disagree.
Each group will research a career path in business e.g. Human Resources; Finance; Information
Technology; Production; Legal
1. In early economies, man engaged in direct production. Sometimes they produced more than
what was needed for their consumption. Which statement appropriately reflects how surplus
was dealt with in these economies?
a) Through exchange of goods for money
b) Through the establishment of the barter system
c) Through a system of exchange
d) Through the price mechanism
2. Barter is a system of exchange. Which statement does NOT reflect the barter system?
a) The direct exchange of goods for goods
b) A moneyless system of exchange
c) A system of indirect production
d) A system of exchange involving the exchange of goods and services for an establish
medium of exchange or currency.
3. The barter system produced certain disadvantages. Which drawback is described in the case
illustrated?
Marcus had to find someone who wanted his potatoes and the trading party must possess the
tomatoes that Marcus wanted, for the trade to take place. a) Store of value
b) Indivisibility of some goods
c) Rate of exchange
d) Double coincidence of wants
5. E-commerce is specifically
12. Which of the following statements are key disadvantages of a command or planned economy?
I. Limited choice of goods and services
II. Provision of basic goods and services
III. Provision of public goods
IV. Lack of incentive for workers to be innovative
a. All of the above
b. l, ll and lll
c. ll, lll and lV
d. l and lV
b. l and lV
c. l and lll
d. all of the above
15. People who conceptualize and undertake the risk of starting a business venture are specifically
a. Superiors
b. Subordinates
c. Managers
d. Entrepreneurs
16. Tax evasion, money laundering and insider trading are specifically
a. Unethical practices
b. Illegal practices
c. Misrepresentation
d. Corrupt practices
17. Misleading advertisements, testing products on animals, using expired food items in business is
considered
a. Illegal
b. Unethical
c. Practical
d. Economical
19. The Finance department is responsible for all of the following functions, EXCEPT
a. money management in the entire business
b. payroll system
c. making statutory deductions
d. performance management system
20. 'Duty to pay for work done' is a key function of which stakeholder group?
a. Employees
b. Employers
c. Shareholders
d. the Society
Management Functions
Management is described as a process that involves planning, organizing, directing and controlling the
organization’s resources (human and non
- human) to achieve the vision, mission and goals of the
organization.
Functions include:
• Delegating: This is the process of transferring responsibility for a task to lower level positions or
workers in the organization hierarchy e.g. from manager to department employees. This may
take the form of assigning responsibility for performing tasks, allocating authority to give orders
to others and giving decision making power within a defined scope. A key purpose of delegation
is distribution of the workload within the organization structure. Moreover, delegation
develops the skills and competences of staff.
• Motivating: This is the process of creating a drive in employees to want to achieve a higher
level of productivity. It involves management providing the right stimuli in the environment to
influence worker’s actions and perception e.g. providing competitive salaries, flexible working,
good working conditions, promotion, status, opportunities for development, achievement,
challenging jobs.
Managers have to be aware of all the stakeholder groups and challenges they pose to the
organization. Management also needs to be cognizant of the most influential stakeholders.
Consequently, the organization’s management has certain responsibilities to all major
stakeholder groups.
Government country
• Make the necessary statutory deduction on behalf of workers
Pay taxes
STRUCTURED QUESTIONS
(i) employees
(ii) shareholders/owners
Research: Place students into groups of 4-6 pupils. Each group will take a stakeholder group and
• Authority: The legitimate right exercised by a manager to issue commands and make decisions.
• Unity of Command: This is the principle that states that each person in the organization should
receive commands from one superior and report to only one manager.
• Delegation is the downward transfer of authority and responsibility in the hierarchy.
• Responsibility: The obligation to carry out an assigned task or achieve certain objectives.
• Accountability: The obligation to accept the consequences of one’s actions and the obligation to
report to a superior or manager for one’s actions.
• Span of control: The number of workers or subordinates under the direction a manager or
supervisor. Spans of control can be narrow or wide. A narrow span shows fewer subordinates
under the control of the manager. This is applicable in situations where the job is complex or
for new workers on the job. A wide span is applicable in situations where the work is routine or
where workers are experts and need little supervision. A wide span is characterized by a greater
number of subordinate reporting to a manager. The appropriate span of control depends on
the complexity of the job, the competences of the manager, the training of workers and the
level of centralize decision making in the organization.
• Chain of command: The reporting relationship from top to bottom of the organization or the
line of authority in the organization.
Line Relationship
Line relationships take a hierarchical form in the organization. Authority is passed down the
hierarchy of the structure. The line shows the relationship between the manager and
employee.
Line relationships or the length of the chain of command can result in tall structures or flat
structures.
A tall structure has many levels and a long chain of command. This structure tends to be
inflexible.
A flat structure has few levels and there is the possibility of greater use of teamwork. It tends to
be more flexible in nature.
Staff Relationship
This gives managers the right to serve in an advisory role. These managers can provide
specialized advice or technical assistance to other managers. There is no direct control over
subordinates or activities in departments.
Managing Director
Legal officer
Line relationship
Staff relationship
Organizational activities can be group in a number of ways to produce various structures e.g.
Managing Director
Executive Secretary
• A Matrix Structure: This is a combination structure that joins functional areas with structures for
projects and teams. The functional areas flow vertically down the chain of command.
Simultaneously, a worker can be horizontally attached to a project team. Matrix structures offer
flexibility for organization employees to utilize skills and competencies. It is based on the
individual having expertise in functional areas and be able to transfer these skills to projects.
Difficulties can occur in areas of control of tasks, role ambiguity and role conflict.
• A Product –based structure: In this instance, work is divided by the product provided. This
structure allows the organization to offer a range of products. Each product (good or service)
will have various functional areas. However, there may be the duplication of tasks and
responsibilities and each product group may become too independent.
Managing Director
Executive Assistant
STRUCTURED QUESTIONS
Pupils will:
outline the main characteristics of a good leader
discuss some leadership styles
identify potential sources of conflict in organizations
outline dysfunctional or negative strategies used by employers and employees to deal with
conflict
describe conflict resolution strategies within an organization
establish guidelines for the conduct for effective management and staff relations in the
workplace
identify strategies for motivating employees
evaluate the role of teamwork in organizational success
outline strategies for effective communication in the organization
Leadership
• Leadership can be described as a process of influencing an individual, group or team to work
towards achieving particular targets or goals.
• Characteristics of effective leaders include:
Persistent
Integrity
Motivated to achieve
Maturity in actions
Self –confident
Able to work under pressure Conscious of change
Objective in decision making
Possess emotional intelligence or self- awareness to enable empathy and manage
emotions
Energetic
Determined and decisive
Visionary and strategic thinker
Leadership Styles
Leadership styles are a combination of characteristics or traits, competences and skills, attitudes and
behaviours that an individual use in a leadership role.
The leader assumes responsibility and authority over the subordinates, workers or
followers.
The leader makes decisions and issues orders for subordinates to follow.
This style is appropriate when managing a crisis situation in an organization Advantages:
It can cause the worker to experience frustration at not having control over work
situations.
The leader facilitates consultation and shares responsibilities with the followers or
workers
Shared decision making
Promotes involvement and team work Advantages:
Also called ‘free rein’ where the leader assumes a passive role and lets workers make their own
decisions about the work situation
The leader still engages in the overall goal setting and monitoring of workers The leader is
available when needed Advantages:
There may be a lack of clear direction and workers may get caught up in irrelevant activities
The work may not get done and the leader will eventually have to step in
A leader who motivates and inspires followers or workers because of his or her strong
personality
Advantages
Disadvantages
There is no one ‘best’ style of leadership. Instead contemporary management studies indicate that a
leader’s style can be contingent or situational. That is, based on the particular circumstances the leader
is faced with e.g. for emergency situation the leader can be autocratic; when developing a new product
line the leader can be democratic to allow many ideas to come forward.
STRUCTURED QUESTIONS
2.Distinguis between 'autocratic leadership style' and 'democratic leadership style'. (4 marks)
Motivation
• Management is responsible for creating an environment whereby the individual needs such as
physical well-being, job satisfaction, personal development, achievement and respect are
reconciled with the organizational needs e.g. increased productivity, low absenteeism, harmony,
low turnover. Met needs can result in a productive workforce.
esteem needs
affiliation needs
physiological needs
• Pay and allowances: basic pay; travelling • Job Security where the worker is provided
allowance; pay increments with a contract legally binding the business
• Gain sharing where a bonus is earned for • Challenging work through mentoring, job
increasing productivity or wastage redesigning, job enlargement and job
reduction enrichment;
• Profit sharing where a portion of company's • Recognition where the employer shows
profits are shared with employees as a appreciation for an employee's hard work;
bonus • Enhanced Job titles can be provided to meet
• Stock options which gives employees the employees esteem needs;
right to purchase a specific number of • Opportunities for promotion and
shares in the business at a fixed price advancement should be provided to avoid
• Retirement benefits such as gratuity, leave career stagnation; this provides upward
encashment benefit, company pension mobility in the organization's hierarchy
STRUCTURED QUESTIONS
1. Outline TWO financial incentives and TWO non-financial incentives that management can use to
motivate workers. (4 marks)
2. Discuss TWO ways in which management can meet the needs of employees. (4 marks)
Conflict
Conflict: Behaviour intended to obstruct the achievement of some other person’s goals. Conflict can be
described as a dispute or disagreement that prevents individual or organizational goals from being
achieved.
Clarification of goals and objectives: People need to be aware of what they have to
achieve; their role and functions.
Resource Distribution: Ensure that to some extent people are provided with the tools to
do their jobs.
Develop proper policies and procedures: Ensure that policies are fair to employees e.g.
Health and Safety; Promotion; Discipline; Grievance.
Mediation: This is a process whereby recommendations are made for resolving the conflict after
the mediator has heard both parties’ cases, but the final responsibility for settlement still lies
with the parties themselves.
Arbitration: This is a process whereby the third party effectively adjudicates/ gives a ruling/
passes judgment on the disputes by determining the means of settlement, after hearing
evidence from both parties. The parties agree in advance to accept the arbitrator’s findings and
the award is therefore binding.
Conciliation: A process of intervention designed to narrow disagreements between the parties
by clarifying positions and keeping negotiations going, but where the responsibility for
settlement of the dispute/conflict still lies with the parties themselves.
Trade Union Representation: Represent workers interest to help settle disputes between
workers and management.
Employers may employ or use the following adversarial tactics in dealing with conflict:
A lock out, where the owners or managers intentionally refuse entry to the compound to
employees.
The use of scab labour or temporary labour to cover striking employees during industrial
disputes.
Threats of dismissal or disciplinary action against workers who dispute the actions of
management.
Management refuses to recognize the legitimate trade union and therefore, refuses to negotiate
with the employees’ representatives.
Employees may employ or use the following adversarial tactics in dealing with conflict:
Strike action or refusal to perform the job accompanied by demonstrations and organized
protest actions.
Work to rule is a situation where the workers decide when to work and what to accomplish. It
may lead to the disruption of work flow and the reduction of output levels of the firm.
Sick out is a situation where workers collectively take sick leave to disrupt the functioning of the
organization.
Sit in is a situation where workers are present on the plant site or compound but refuse to go to
perform their tasks. They sit in a particular area for the work period.
Establish guidelines for the conduct of good management and staff relations
Establish a 'code of conduct' for both managers and employees; Address unacceptable behaviour
in the workplace; address professionalism and dress code; conflict of interest; issues of smoking,
alcohol and drugs;
Communicate a clear mission and vision to all internal stakeholders. Engage stakeholders with
how the company's mission align with personal goals;
Conduct regular meetings e.g. with departments to discuss progress towards the mission; find
out about gaps and get feedback and suggestions on meeting goals;
Encourage teamwork with management and staff e.g. company retreat, sports, charitable
activities;
Allow for communication to be free from barriers; encourage feedback; use a variety of media to
relay messages to ensure target audience is reached;
Practice good leadership in terms of adapting style to the situation; value the employees’
contribution; provide direction; allow autonomy when necessary; develop employees;
Recognize the role of employee representation in the dialogue process e.g. trade union
representation;
Trade Union
2. Outline TWO negative strategies used by employers to deal with a conflict. (4 marks)
3. Outline TWO negative strategies used by employees to deal with a conflict. (4 marks)
4. Discuss TWO strategies involving third parties that are used to resolve a conflict within
theorganization. (6 marks)
5. Outline THREE guidelines for establishing good relations between management and employees.
(6 marks)
Communication
Diagram of the Communication Process
ENCODE MESSAGE CHOOSE APPROPRIATE MEDIUM
BARRIERS TO COMMUNICATION
FEEDBACK LOOP
Channels Examples
• Verbal:
Spoken Spoken e.g. face to face, telephone, voice mail or voice messaging
Written Written e.g. letters, memos, manuals, faxes (facsimile), pagers, e-mails
• Non-verbal:
Messages transmitted Non -verbal e.g. facial expressions, gestures, posture, proximity to others
without the use of words
Visuals or graphics Visuals e.g. pictures, charts, videos
Barriers to communication
• The choice of words used in speech and writing
• Words may mean different things in different context
• Specialized jargon used or technical language
• The communication source may not be credible or trustworthy
• Different perceptions
• Noise
• Conflicting non-verbal signals
• Emotional interference
• Information overload
• Filtering of information before it reaches receiver
Formal communication channels in the organization result from the structure and design of the
organization. It may be downward, upward or horizontal.
Informal communication channels exist outside of the formal structure. It is used to transmit gossip,
personal information and social opinions. This is termed the grapevine.
STRUCTURED QUESTIONS
1. Describe ONE way in which management can communicate with the following stakeholders.
(i) Employees
(ii)Shareholders
(iii) Suppliers (2 marks each)
2. Outline TWO strategies for effective communication between managers and employees. (4 marks)
3.Explain with examples 'verbal' and 'non-verbal' communication channels. (6 marks)
Teamwork
Team: A group of persons who come together to achieve a particular goal or to accomplish a particular
task. Each team member has a role to perform for the accomplishment of tasks.
A manager or team leader can consider the following factor when deciding on the composition of an
effective team:
Structured Questions
3. Making payments on behalf of the company, designing payroll systems and making statutory
deductions are responsibilities of
a. Human resource department
b. Marketing and sales department
c. Production department
d. Finance department
4. The formal relationships in an organization and the outline of reporting relationships from top to
bottom of the organization is specifically the
a. Organization structure
b. Organization chart
c. Span of control
d. Responsibility
5. An organization structure that reflects the chain of command from top to bottom of the
organization and the authority flow shows
a. Staff relationships
b. Line relationships
c. Responsibility
d. Authority
6. An organization structure that shows the relationship and roles in an organization divided
according to areas such as production, marketing, finance and personnel is a
a. Product based structure
b. Functional structure
c. Geographic structure
d. Matrix structure
9. Ensuring that responsibilities are defined and departments are allocated resources are key
elements of
a. Planning
b. Organizing
c. Directing
d. Controlling
c. Controlling
d. Directing
12. According to Herzberg’s theory of motivation, workers are motivated or satisfied on the job
when which of the following factors are present?
a. Salary
b. Good working conditions
c. Achievement
d. Good inter personal relations
13. George allows his subordinates to make decisions on getting the task done. He does not
interfere in the work process except when needed. George is displaying
a. Democratic leadership
b. Autocratic leadership
c. Transformational leadership
d. Laissez faire leadership
14. In a crisis situation, a leader may have to tell and instruct workers on what needs to be done.
He or she displays
a. A laissez faire leadership style
b. A transformational leadership style
c. A participative leadership style
d. An authoritarian leadership style
15. Which of the following is NOT a key form of written communication in organizations?
a. Memorandum
b. Annual report
c. Minutes of meetings
d. Speeches
16. The use of graphic representation and pictures to communicate a message is specifically
a. Written communication
b. Electronic communication
c. Oral communication
d. Visual communication
17. The strategy of using a third party to settle conflicts whereby the parties to the conflict agree to
accept the judgement of the third party is
a. Communication
b. Mediation
c. Arbitration
d. Conciliation
a. pooling of ideas
b. conflict as a result of personality differences
c. creative problem solving
d. shared leadership
Pupils will:
define the terms entrepreneur and entrepreneurship
explain the key functions of an entrepreneur
identify key characteristics or traits of an entrepreneur
describe the role of the entrepreneur in the decision making process
Outline the role of entrepreneurs in economic development
Outline reasons why an individual may want to establish a business
Outline the steps in establishing a business
Identify the main reasons in preparing a business plan
Describe the key elements of a business plan
Identify sources of information for conducting research
Discuss the significance of conducting a feasibility study
Explain the relationship between planning and the operation of a venture
Identify key regulatory statutory/government practices for the establishment and
conduct of different types of businesses
Outline the factors that determine the location of a business
Explain the significance of collateral in accessing capital to establish a business
to realize a business idea. He or she bears the risk associated with failure and the successes of
the venture.
Roles of the entrepreneur include:
• Creativity in developing new, innovative ideas to sustain the business in a declining markets
• Flexibility in terms of decision making and leadership style
• Goal oriented in terms of setting targets and monitoring achievement towards goals
• Persistent in working towards achieving set targets
• Possess a propensity to take risk such as entering a new market, adding a new feature to a
product, change the organization structure, make investment decisions
o Use resources and borrow for investment e.g. setting up ventures which leads to the creation of
wealth and capital;
o Creation of employment opportunities in businesses which aids in reducing the unemployment
rate;
o Can encourage linkages among businesses i.e. backward and forward linkages e.g. providing
specialized machinery for firms in the construction sector; landscaping and maintenance services
to government agencies;
o Promote export of locally made products such as, using local raw materials e.g. processing fruits
and vegetables to condiments and exporting to other countries;
o Improve the standard of living or economic well-being of persons associated with
entrepreneurship; GDP and per capita income can increase with the creation of business;
o Spreading the economic concentration of power from a few to more persons in the society; o
Contribute to the development of communities by providing assistance through job creation;
assisting charitable events and infrastructural development;
o Engage in regional development e.g. trading with CARICOM nations; setting up businesses in
other regional countries;
o Foster a culture of innovation and creativity that reduces the dependence on social services; o
Contribute to taxation in the economy.
Decision making can be described as a process where the decision maker selects a particular option from
possible alternatives. In arriving at a decision or course of action the objective is to achieve a particular
goal.
According to (managementstudyguide.com), the decision maker should follow the following steps in
decision making:
In carrying out the decision making process, the entrepreneur must determine certain courses of action,
for example:
Therefore, he or she must determine how to allocate the factors of production and other input factors
to produce the goods and or services of the business. The entrepreneur will have to make different
decisions every day in the operation of the business. Some decisions will affect the entire organization.
Step 3 Step 5
Step 1 identify acquire
conceptualize input funding for
or develop the resources venture
business idea
• Registration of business
• Adhere to employment legislation e.g. Occupational safety and health requirements; Equal
Opportunities legislation; Equality and diversity legislation; Pay legislation; Maternity and
paternity
• Make necessary statutory deductions e.g. national insurance
• Pay taxes
• Receive the necessary planning permits e.g. environmental clearance to build
• Observe regional agreements such as CSME and CARICOM requirements
• Observe international issues such as trading blocs e.g. European Union, international law,
international treaties
Some Laws to consider in Trinidad and Tobago in the conduct of business (www.legalaffairs.gov.tt)
(Chapter 81-84)
Companies Act Hire Purchase Act
Partnership Act Sale of Goods Act
Co-operative Societies Act Protection Against Unfair Competition Act
CARICOM Enterprises Act Consumer Protection and safety Act
Collateral
• If the borrower defaults on the loan the lending institution can take the pledged collateral to
offset the losses incurred;
• The value of the item used as collateral should be comparable to the value of the loan; the item
should also have equity (the value of the item or asset after deducting outstanding
debts/liabilities);
• Types of collateral includes: land, building, equipment, securities or shares, vehicles, money.
• According to 'thebalance.com' when a loan is backed by collateral it is referred to as a 'secured
loan'. This type usually attracts a lower interest rate than an unsecured loan.
• If an entrepreneur does not have the collateral to access a loan, as is often the case, then other
options will have to be sought. This may include 'equity financing,' where the venture is financed
by investor who puts capital into the venture for equity share or becoming part owner e.g. angel
investors (individuals who are willing to invest in ventures that can provide a higher rate of
return than traditional investments); or venture capitalist (a group that invest in existing
ventures that are growing and require capital for expansion)
• A business plan is a detailed, written description of the proposed business. It outlines the vision,
mission and goals of the business and key functional areas and activities.
• Coulter (2003) describes the business plan as a 'blueprint and road map for operating the
ongoing business.'
Allows the entrepreneur to conduct research into the feasibility of the venture. It involves
assessing key areas so that proper planning is done
and assessing opportunities
.
It communicates to the
target audience the purpose of the venture and what it wants to achieve
in the future.
Provides the entrepreneur with guidedsteps for beyond initial start-up phase. Further, it
provides ways that the entrepreneur can deal with uncertainties in thealextern
environment.
Provides a guide for potential investors as to the attractiveness of the business, in terms of
projectedfinancial statements e.g. cash flow analysis; balance sheet; income statements;
Provide guidelinesfor the entrepreneur in operating the business and decision making. It
should guide the venture towards growth and help in taking advantage of opportunities and
overcoming challenges.
Relationship bet
ween planning and the operation of a venture
The planning process helps the entrepreneur to map out plans to achieve the businessThis
goals.
can
be achieved in different time fames in the operation of the venture for example:
Feasibility Study
• The feasibility study is an investigation or research to determine if the business idea has a
probability of success. It assesses the viability of the idea against costs and projected revenue.
The feasibility study incorporates an evaluation of the opportunity cost of entering a particular
business.
• The process of assessing the feasibility of a business idea can reveal any problem issues or
strengths and weaknesses to be addressed before the business plan is written. It can therefore
provide information to write the business plan.
• Moreover, it seeks to address the potential of the venture to generate profits.
• It also identifies whether there is a target market for the good or service.
• Common feasibility studies include:
Technical Feasibility Study: This assesses the company’s technology requirements as well as, the
procedures needed to undertake a venture.
Marketing Feasibility Study: This assesses the likelihood that there will be a demand for the
product; the determination of the target market; does the product have the potential to create
a market presence.
Economic Feasibility: This is an assessment of the company’s ability to complete the venture
given the present financial resource base. It is basically a cost /benefit analysis.
Entrepreneurs must decide on the most suitable location to situate the business. The site chosen should
provide the organization with a number of key advantages. These would include factors such as:
• Advantages that occur as a result of locating close to a source of raw material or accessibility to
land space or climatic factors suitable for the production of certain goods
Market Research: An investigation into the market with the objective of finding out the size of the
market, market share of a company’s brand or products and that of competitors.
Marketing Research: The collection and analysis of data from the market to deal with issues or policies
in marketing e.g. find out what customers want. Marketing research is a part of market research.
• To find out what customers want in the market and to assess the changes in taste patterns so
that the business can meet the needs of the market efficiently
• To gauge customer behaviour and what influences behaviour so that appropriate stimuli can be
used to attract customers
• To evaluate demand so as to set production targets and ensure that for example, there is
enough sales personnel to service the market
• To identify market opportunities by analyzing information to forecast the growth potential in
the market
develop the
identify problem or collect information
research plan based
issue and define using methods e.g.
on problem and
research objectives interviews
objectives
analysis of
Use findings for Present relevant information using
decision making findings statistical techniques
e.g. averages
According to 'entrepreneurship.org,' market research is ' the process of gathering, analysing and
interpreting information about a market, about a product or service to be offered for sale in the market,
and about the past, present and potential customers for the product or service.'
In conducting market research the entrepreneur can consider two main categories of data sources:
Primary Research Sources and Secondary Research Sources.
• online means can include online • external to the business: industry surveys;
questionnaires and video conferencing published companies' financial records;
focus groups; journals; trade magazines; books, trade
associations' publications, banks, mass
media;
Structured Questions
4. List THREE reasons why an individual will want to start a business. (3 marks)
12.State THREE factors that an entrepreneur must consider in locating a business. (6 marks) 13. Describe
Research: Place pupils in groups of 4-6 students. Have each group research aspects of primary or
secondary sources of data.
a. Savings
b. Venture capital
c. Collateral
d. Shares
2. Which of the following is NOT a traditional source of collateral for a small business? a. Stocks or
shares
b. Building and equipment
c. Property
d. Insurance policy
4. The section of the business plan that outlines how the business will be managed in terms of
departments and resources is specifically
a. The executive summary
b. The operational plan
c. The marketing plan
d. The financial plan
5. When an organization engages in market research and requires original information particular to
the organization and suited to that organization’s needs, it is required to gather this information
from
a. Primary sources
b. Secondary sources
c. Trade journals
d. Annual reports
6. Sources of information already published can be used for market research by companies. This is
termed
a. Primary sources
b. Secondary sources
c. Qualitative data
d. Quantitative data
7. Tactical planning is planning in the medium term where the strategic goals are broken down to
be more specific and within a specific time frame e.g. a budget. Strategic goals are the overall
goals that define the organization. Strategic goals are by nature
a. Short term
b. Long term
c. Medium term
d. Short to medium term
8. Planning at the operational level such as setting individual employee’s work load per week is
specifically
a. Long term planning
b. Short term planning
c. Medium term planning
d. Short to medium term planning
9. Developing a business idea based on a passion, to be self -employed, to utilize a skill or to meet
market demand is the stage of
a. Market research
b. Conceptualization
c. Creating the operational plan
d. Planning
10. An investigation of the business idea to determine whether it is likely to generate financial and
economic benefits against the risk of failure is appropriately termed
a. A Business plan
b. A Feasibility study
c. Market research
d. Qualitative research
11. Assessing the venture’s technological requirements, as well as, the procedures needed to undertake the
venture is specifically a / an
a. Economic feasibility
b. Marketing Feasibility
c. Technical feasibility
d. Cost of benefit Analysis
12. People who conceptualize and undertake the risk of starting a business venture are specifically
a. Superiors
b. Subordinates
c. Managers
d. Entrepreneurs
14. Which of the following is NOT a key reason for developing a business plan?
a. The business plan is a guide for potential investors.
b. The business plan communicates with the target audience, the purpose of the venture.
c. The business plan guides in the operation of the business.
d. The business plan keeps the business focused and helps it to be unresponsive to
environmental changes.
Pupils will:
explain the concept and define a contract
identify the types of contracts
describe the characteristics of a simple contract
describe the characteristics of a specialty contract
explain the conditions for offer and acceptance
explain various ways in which a contract can be ended or discharged
explain the role of business documentation in business transactions
describe business documents
evaluate the principles of insurance
explain the various types of insurance policies
explain how insurance facilitates trade
CONTRACTS
Key Points
Capacity: This relates to the competency of the party to enter into a contract e.g. a child’s
capacity may be limited or someone who is intoxicated.
Form: This relates to whether the contract is verbal or written e.g. a specialty contract must be
written.
Content: All parties should agree to any terms of the contract.
Genuine consent: All parties should in good faith agree to the terms of the contract. There
should not be any misrepresentation or duress on the part of the parties.
Illegality: In a situation where the nature of the contract is illegal, this makes the contract void
(there is no legal validity).
4. Void/Voidable/Unenforceable Contracts: This describes a situation where the contract has no
legality or legal effect or where it does not meet the key elements or validity factors.
5. In order for a determination to be made whether there is agreement, offer and acceptance
should be present. The person who makes the offer is the offeror. While, the person to whom the offer
is made is the offeree.
7. Acceptance: The unconditional agreement to accept the terms of the offer. Acceptance may be
in the forms of writing, oral or inferred by the conduct of the accepting party.
8. A Counter-offer: This is described as a rejection of the original offer made by the offeror. This
cancels the original offer and the person to whom the offer was originally made (the offeree), now
makes an offer (counter-offer).
9. An Invitation to treat: This is described as an invitation made to another party to make an offer.
Invitations to treat include the presentation of goods for sale in a store display; advertising goods for
sale; inviting tenders; a company’s prospectus inviting the general public to purchase shares.
10. Consideration: In order for a contract to be valid, a tangible benefit must be exchanged. This
may be in the form of a promise to carry out an act or pay a sum of money.
11. Executory consideration: This type of consideration encompasses mutual promises to perform
the acts in the future.
12. Executed consideration: The consideration for the promise is an act that is performed or carried
out. Therefore, one party promises to do something if the other party performs an act or does
something.
13. Past consideration: If an act was performed before a promise of payment was made, then,
consideration is not valid.
Simple contract: This may be a written or verbal agreement or one implied by conduct.
Simple contracts are legally binding or valid when they have the elements of offer and
acceptance; consideration; genuineness; capacity; legality; possibility and good faith. A
simple contract must satisfy all the stated elements. Examples include, buying a grocery
item or hiring a taxi.
Specialty contract: This is a formal agreement in writing. Specialty contracts are also
referred to as deeds. These contracts must be signed; sealed and delivered. Examples
include mortgage contracts and sale of land.
Contracts of record: This type of contract is handed down by court order. Examples
include alimony payment or an order to cease a particular activity.
15. Termination and discharge of a contract may occur in the following circumstances where the
rights and obligations of the parties to a contract come to an end. Termination and discharge have
different ways to end or bring a contract to an end. Some of the ways may overlap.
Performance: The contract comes to an end when the parties have carried out their obligations.
Agreement: The contract may be discharged if there is agreement by both parties to end the
contract in the event that the contract is executory, where obligations are outstanding.
Frustration: The contract can be discharged or terminated if performance becomes impossible
based on future circumstances that makes performance different from what was initially
expected.
Breach: The contract can be discharged if one party fails to perform his /her obligations.
The importance of Record Keeping and Documentation in a business includes the following reasons:
• To keep track or monitor the progress of business activities to see whether the business is
making a profit, or manage expenses, or evaluate the business strategy
• To provide a financial history to banks and other lending institutions when accessing loans
• To prepare and file tax returns
• To provide written records of transactions in business to aid decision making
• To identify sources of revenue and expenditure in the business
• To evaluate the company’s present performance against set targets or against past
performance, to identify gaps in performance
• The Requisition: An internal document used to control the flow of stocks in the organization. It
informs the organization of internal stock needs e.g. the quantity of stationery needed per
person or department.
• Catalogue: A document that gives details about products available for sale e.g. size, quality,
price and colours. It provides the procedure for ordering the products.
• A Tender: This is also called a bid. It outlines the requirements and specifications of tendering
for a project.
• Quotation: A document that provides information requested by the potential purchaser e.g.
details of the products and pricing details.
• The Purchase Order: a document which describes the goods to be purchased, the quantity and
the price of the items.
• An Advice Note: The seller sends an advice note to the purchaser. This informs the purchaser
of the goods to be sent and any conditions for receipt.
• A Delivery Note: A document used in transporting the goods to the purchaser. The buyer
would check to see if the delivered items match the items listed on the delivery note.
• A Destination Sheet: A document used by the seller that outlines the destination of goods for
delivery.
• Goods Received Note: A document that confirms receipt of goods and whether the items were
received in good or damaged condition.
• Stock Card: A document that provides up- to -date information on goods received e.g. stock
levels, items received and disbursed. As stocks are received, the stock cards are updated.
• Sales Invoice: A document that outlines the goods purchased and sent to the buyer by the
seller. It provides information such as, quantity and description of goods, the amount (or unit
price) and price of items. The sales invoice indicates that payment for goods is due.
• The Pro forma Invoice: An invoice sent under particular circumstances to a buyer e.g. before all
invoicing details are clear. When all details are clarified a final sales invoice is sent.
• A Debit Note: A document that is issued to the purchaser when he/she has been undercharged
by the seller. This can occur when there are errors in calculations or when the customer is not
billed for transport costs.
• A Credit Note: A document that is issued to a purchaser when he/she has been overcharged by
the seller. This can occur when there are errors in calculation or as compensation for damaged
or faulty goods.
INSURANCE
Key Points
Insurance: A legal contract in which an insurer promises to pay a specified amount to another party, the
insured, if a particular event happens and the insured suffers a financial loss as a result (Oxford
Dictionary of Business and Management).
1. Insurance is therefore a contract that provides compensation against the risk or likelihood of an
event happening.
2. Risks are described as insurable or non-insurable. An insurance company will only insure
against risks that are calculable or predictable that is, insurable. Actuaries are persons who calculate
risks.
3. The expense incurred to pay for insurance is a premium. This is paid into a pool for
compensation by persons requiring insurance for that risk (pooling of risk).
4. Principles
: of Insurance Compensation
The major principles area:
Utmost Good Faith: The insured must give accurate and relevant information to the insurance
company. The insurance company must also provide all relevant information to the client
concerning the insurance policy.
Insurable Interest: An insurance company will only insure against a risk only if the party would
suffer if the event insured against happens or occurs.
Proximate Cause: An insurance claim will only be honoured if the loss suffered is as a direct
result of the insured risk occurring.
Indemnity: This is compensation for losses incurred. Indemnity seeks to restore a person to
where he/she was before the loss was sustained. This does not apply to life insurance or
personal accident.
Subrogation: This principle states that where a claim is settled, the insurer (the insurance
company) has the right to recover a claim paid, from a negligent third party. This means that
the insured cannot bring a claim on the negligent third party if the claim was already settled.
Contribution: Insurance companies come together to compensate the insured party, to ensure
that the insured does not profit from the event occurring. This is in the event that the insured is
covered for the same risk by different companies.
Average Clause: The insured will only be compensated in the proportion or ratio that he/she is
insured at today’s value. If for example, a person’s property is under insured, the insurer
(insurance company) can adjust a claim to reflect this under insurance.
Assurance: This is based on risk that is bound or known to happen, e.g. death (that must occur).
Insurance: This is based on the likelihood of the risk occurring, although, the details of when it
will happen are unclear or if it will happen.
Types of Life Insurance:
Whole Life Policies: These policies are payable on the death of the insured.
Term Policies: These policies are taken for a specified period of time, for example, a
mortgage guarantee policy which is accessed by persons who need mortgages. If the
person dies before the end of the mortgage/loan period, the proceeds of the policy will
be used to settle the outstanding mortgage/loan amount.
Annuity: These policies provide for a specified sum of money to be made payable on a
specified date or on the death of the insured. It can be structured in a number of ways e.g. a lump
sum payment and monthly payments until the death of the insured. Non-Life Insurance Policies:
For Example:
Marine Insurance: This deals with the sea and provides coverage against certain risks at
sea, for example:
o Cargo Insurance: This provides coverage for loss or damage to cargo while in
transit.
Motor Insurance: This is a compulsory insurance coverage for all drivers. This includes:
o Third party Cover: this provides minimum legal cover (injury to third party on
roads) but also covers compensation for property of third parties.
o Full Comprehensive Cover: This includes third party cover, as well as, damage to
the insured vehicle, personal injury to the driver, damage or loss of personal
items in the car.
Aviation Insurance: This covers the plane/aircraft against damage by accident and the
operators against injury claims or death of passengers or personnel/crew.
Property Accident Insurance: This provides coverage of risks related to property such as,
accidental damage to machinery and vehicles. It also covers intentional damage caused
by vandalism.
Personal Accident Insurance: Coverage and compensation are provided for loss suffered
due to total or partial disability caused by accidents.
Fidelity Guarantee: Insurance that provides coverage to employers for financial losses
sustained as a result of theft/dishonesty by employees e.g. in situations of
embezzlement or misappropriation of finances.
Insurance:
Facilitates trade between countries whereby, businesses would be compensated for losses
incurred during transit.
Provides a source of capital for business investors.
Provides coverage against personal risk when an individual is not able to manage it.
Structured Questions
1. Distinguish between a contract and 'an invitation to treat'. (4 marks)
2. Outline THREE ways of terminating a contract. (6 marks)
3. State the key elements of a contract. (3 marks)
4.Explain with an example the concept of 'a counter offer'. (4 marks)
5. Discuss the importance of business documents in the operation of a business. (4 marks)
6.Define the term 'insurance'. (2 marks)
7.Outline THREE principles of insurance. (6 marks)
8.Discuss the role of insurance in trade. (4 marks)
1. John makes an offer to sell his taxi car to Jeremy for $30 000.00. Jeremy rejected John’s offer
and suggested that he wants the vehicle but he is willing to pay $20 000.00. Jeremy’s
expression is an example of
a. Invitation to treat
b. Counter offer
c. Acceptance
d. Void contract
3. For a contract to be valid it must contain essential features. The feature that describes an
expression of interest of one party to another and a subsequent act of indication to accept the
terms outlined is
a. Offer and acceptance
b. Form or consideration
c. Capacity of parties
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PRINCIPLES OF BUSINESS
d. Good faith
5. When a contract has been executed or may have come to an end before its time, discharge of
the contract takes place. If one party fails to honour the terms of the contract this may lead to
termination of the contract. This is termination by
a. Performance
b. Breach
c. Frustration
d. Deed
6. Techno Doc. A computer store, displays a computer sale sign in its showcase. Chantel goes into
the store to enquire about a computer that was displayed for sale. She is told that it is no longer
available. She is upset and demands to get the computer. The store owner
a. Is bound by law to provide the computer
b. Has to enter into a contract with Chantel to provide the computer
c. Does not need to provide the computer since the display was an invitation to treat d. Is
dishonest
7. The ability and right of parties to a contract to understand the terms, be able to give consent
and to sign the contract is the condition of
a. Intention
b. Consideration
c. Counter offer
d. Competence or capacity
8. A document that outlines the transactions of a business, the money paid and outstanding
balances is
a. A bid
b. A statement of account
c. A credit note
d. A pro forma invoice
9. A document sent to a customer outlining the customer’s indebtedness to a business for failure
to be billed for transport costs is a
a. A credit note
b. A notice
c. A debit note
d. A statement of record
10. A document outlining the indebtedness of the organization to the customer for damaged goods
is a
a. Credit note
b. Debit note
c. Pro forma invoice
d. Catalogue
11. A document used internally in the organization to request supplies from a warehouse is a a.
Delivery note
b. Requisition
c. A purchase order
d. An invoice
12. Max has insured his property against the risk of suffering a financial loss because of floods. Max
wants to ensure that his neighbour’s house is protected; however, he is not the owner and
cannot succeed in this venture. This describes the insurance principle of
a. Insurable interest
b. Indemnity
c. Proximate cause
d. Contribution
14. The principle where insurance companies come together to compensate the insured party, in
the event that the insured party is covered for the same risk by different companies is
specifically a. average clause
b. proximate cause
c. contribution
d. indemnity
Unit 5: PRODUCTION
Pupils will:
identify factors of production
identify industries developed from the natural resources in the Caribbean
differentiate between the terms production and productivity
explain the importance of productivity
explain the role of capital in the production process
Aims of Production
• The basic aim or purpose of production is to produce goods and services to meet the needs of
the target market.
• Production refers to the creation of goods and services, that is, the creation of utility to meet
customer needs
• Needs are things or items that are essential or necessary for human survival e.g. food, shelter,
clothing.
• Production also facilitates the provision of products (goods and services) that people may want
to consume or use, but which are not necessary for survival (non-essential product).
• Productivity deals with the capacity to produce and the efficiency of productive activity e.g. a
high level of productivity.
Factors of Production
• Factors of production describe the scarce resources used in the production process. These
resources are land, labour, capital and entrepreneurship/enterprise.
• Each of these factors receives a payment or reward in return for its input in the production
process: land receives rent; labour receives wages; capital receives interest and enterprise
receives profit.
• Land includes the physical land as well as, the natural resources or endowments found in
nature.
• Land includes gold, oil, bauxite, natural gas, deserts and forests
The Factor of Labour
• Labour is the factor that describes the physical efforts and mental contribution of people in the
production process.
The quality of labour available for production is influenced by factors such as:
• The standard or quality of health of the workforce and the availability of health care available to
the population
• Natural talent or abilities available within the workforce
• The availability of training and developmental facilities in the country e.g. primary, secondary
and tertiary level institutions; skills development facilities
• Quality of educational programmes available e.g. access to local and foreign degrees and skills
programmes; industry relevant educational programmes; updated syllabuses and trained
instructors
Migration
• Internal migration is the movement of people within a country e.g. from a rural area to urban or
town areas.
• External migration is the movement out of one’s country to another country e.g. from Trinidad
to the United States of America.
• Decrease in the labour supply of the community from which the migrants move
• A loss of skills and competences as a result of people moving from the community
• Effect on social and cultural systems e.g. relationships, traditions
• Increased urbanization of certain areas leading to social and economic problems e.g. poor
housing, creation of slums
• Strain on the provision of public goods such as health care in highly populated areas
• External migration can result in a ‘brain drain’ for the home country. A brain drain is the result
of migration of skilled and professional persons from a community and country. This may lead
the country to import skilled and professional labour from abroad.
• Migration disrupts family life and cultural traditions.
• Some countries benefit from people migrating into that country
• Capital includes assets such as machinery and equipment needed to produce the good or
service; and money needed for investment in business.
• Venture Capital refers to the money used to finance start-up businesses and activities
considered to be risky, and may not be able to attract financing through commercial banks.
• Fixed Capital refers to items such as, buildings, machinery and equipment used over the long
term in the production process.
• Working Capital consists of the short term assets used up daily in the business. This includes
cash in hand; cash in bank; raw materials; work in progress and finished goods.
• Diminishing marginal returns: When a variable factor such as labour is added to a fixed factor
e.g. land, at first output increases to a maximum point and then the extra output from
additional units of the variable factor will diminish or fall.
Entrepreneurship refers to the skills, abilities and talents available to lead and transform the
business into a viable entity. These persons are the risk takers and strategic decision makers in
the business. They provide the managerial expertise to help the business achieve its goals.
Entrepreneurs conceptualize the business ideas and decide when it is time to change the
business focus.
Production Levels
A firm’s production level refers to the volume of output produced to satisfy the market. Volume of
output can be at the:
• Subsistence Level: This is where sufficient amounts are produced with the motive of survival
and not to improve the economic well- being of the population.
• Domestic or local level: All production or transformation occurs locally or in the home country.
Surplus products are consumed within the national borders.
• Surplus level or excess production: Production levels that meet local or domestic demand as
well as, some measure of foreign demand for the country’s products (exports).
Types of Production
Types of production describe the forms of economic activities involved in the production of goods and
services. This is the industrial structure of the economy. The types of production are primary,
secondary and tertiary production.
• Primary production: This is the first stage of productive activity. It involves the extraction of
raw materials through processes such as, mining, agriculture and fishing.
• Secondary production: This is the second stage of productive activity. This involves
transforming inputs into finished products such as, manufacturing and processing, construction
and baking.
• Tertiary production: This is the final stage of productive activity. It involves services such as
transportation and distribution of finished goods; service industries such as banking, insurance,
hairdressing, medical and dental services and education.
Primary Production
Secondary Production
Tertiary Production
Methods of Production
• Job or unit production: This involves the making of a single unit of a product from start to finish.
The product is usually customized to the customer’s specifications e.g. a joiner making a piece of
furniture.
• Batch production: This usually involves increase use of automation on a production line to
produce a batch of standardized products in large quantities for example, bread.
• Flow or process production: This involves increase use of automation to create a continuous
production line or flow of production for example production in oil refineries.
The method of production chosen will depend on the nature of the product, the quantity of the product
needed to meet demand, the level of automation in the firm and the size of the organization.
Quality Control
• The quality control process in the organization is designed to ensure that the products (goods
and services) meet the standards set by the firm or industry, international requirements or
minimum legal requirements.
• Quality control measures would include: monitoring for defects on the production line, setting
standards for business operations e.g. code of conduct; adhering to legal obligations; collecting
feedback from clients or customers; performance appraisals for employees; refurbishing plant
and equipment.
Cottage Industries
• A cottage industry can be classified as a small or micro business that produces a good or service
through the use of simple technology and small amount of start-up capital.
• Cottage industries can be seen in industries such as craft, for example, floral design, drapery,
leather and natural material craft; food items, for example, baked items, pepper sauce,
seasonings and; personalized direct services such as hairdressing, babysitting, sewing.
Linkage Industries
A linkage industry is one that is linked to another industry or borne out of the development of another
industry. The output or finished products of one firm becomes the input or raw material for the
Linkages may be backward or forward:
• Backward Linkage: One industry produces the raw material for another industry. One firm is
linking with another firm in a previous stage of production e.g.
• Forward Linkage: One industry or firm links or connects with another industry or firm in a
further stage of productive activity e.g.
• May lead to increased employment and improved economic well-being in the region or country
• May lead to reduced dependency on imported raw materials and products
• May lead to growth in connected industries
• Encourage human resource development to meet new industry needs
• Promote regional integration
• Promote greater scope for foreign exchange earnings through increased output
• Promote innovation and investment in new technology and research and development
• Promote industrialization in developing nation states which can lead to economic growth and
increased standard of living
Business Size
The scale of production refers to the level of output of the firm. The entrepreneur has to decide on the
scale of production as well as, the size of business to operate and manage. This decision will impact
profitability, survival and the ability to access funding.
Large businesses tend to acquire certain advantages over smaller firms, in that, by producing in larger
quantities or by increasing the scale of production, allows the unit cost of production to decrease. The
lowest cost of production is the optimum point. However, costs will eventually rise and some firms may
accept a higher cost level in order to achieve increased production levels.
Economies of Scale
When a firm expands there are benefits which results in cost savings related to large scale production
operations. These advantages or economies of scale can be internal or external.
• Technical economies of scale: The larger the organization, the more opportunities are available
for division of labour and automation of production. This can result in increased output levels.
• Managerial economies of scale: Larger firms tend to attract the best talent in the industry by
providing competitive salaries, mobility and opportunities for development.
• Marketing economies of scale: Large firms can engage in bulk buying of raw materials, thereby
reducing the cost of production. The large firm can engage in mass production of standardized
goods and save in advertising and distribution costs.
• Financial economies of scale: Less risk is associated with large firms than small firms. The large
firm is therefore able to attract financing at lower interest rates from banks. Moreover, a large
firm can raise capital by issuing shares or going public.
External economies of scale are cost savings or advantages that accrue as a result of external factors.
These include:
• Firms benefit from being part of a cluster of similar businesses in an industry through improved
infrastructure development and marketing in the industry e.g. in an Industrial estate.
• Peripheral or temporary workers can locate next to industries to provide contract labour to
groups of firms.
• Linkage industries can develop from industries to provide services that would allow the large
firm to save on costs in the long term e.g. outsourcing of accounting and maintenance activities;
food catering and insurance.
Dis-economies of Scale
The increase in cost levels as a result of expansion and increased scale of production is referred to as
diseconomies of scale. This can occur at both the internal and external levels.
• Large firms may employ automation to mass produce standardized products. This limits the
variety of goods available to the consumer thereby, limiting choice. Standardization reduces the
ability of the firm to adapt to market changes and it may be difficult to redeploy capital.
• A large firm can experience communication problems and this can make management difficult in
terms of control and decision making.
• Shortages of input factors in an industry can severely impact the production levels in large firms.
• Businesses that belong to a particular industry can decline if the industry as a whole is declining.
• Negative externalities such as pollution can impact negatively on all businesses in the industry.
Large Business
Advantages of large business Disadvantages of large business
Small Business
Advantages of small business Disadvantages of small business
• improved internal communication as a • usually involves unlimited liability
result of less layers of management • seen as high risk making it difficult to
• more personal interaction with clients; access financing
customization • unable to spread risk making small firms
• less complicated to start susceptible to economic pressures
• tends to benefit from government • unable to compete with the cost savings in
assistance large firms
Internal Growth:
• Expanding production as a result of working existing plant and equipment to full capacity
• Extending capacity by increasing plant size
External Growth:
• Mergers or the voluntary joining of two companies to create a legal entity or new business. A
horizontal merger occurs where two or more organizations at the same stage of production join
to form one larger organization. A vertical merger occurs when two firms at different stages of
the production process join. This can be forward or backward in the same production process.
• A takeover can also result in growth. This can be done through the influencing of shareholders.
This is usually not welcomed by the firm being taken over.
• Growth can also occur through conglomeration. Where firms in unrelated businesses merge to
form a group of companies.
People: culture and natural talents; Tourism and Festivals (Carnival and Music); Craft
Structured Questions
1. Define the following terms: (I) production and (II) productivity (2 marks each)
5.Differentiate between domestic or local level of production and surplus level production. (4 marks)
10. Outline TWO advantages and TWO disadvantages of (I) large businesses (II) small businesses ( 4
marks each)
11. Discuss TWO methods of external growth that a business can consider. (4 marks)
12. List TWO industries coming out of the natural resources of the Caribbean region. (2 marks)
1. A measure of the output of a person, firm or economy relative to inputs of labour, capital and
raw materials is specifically
a. Maturity
b. Productivity
c. Effectiveness
d. Growth
2. The mental and physical contribution of people to the production process is referred to as a.
Land
b. Labour
c. Capital
d. Enterprise
4. A volume of output that is produced locally and where surplus is used within the local
community is described as production at the
a. surplus level
b. domestic level
c. subsistence level
d. frugal level
The above diagram illustrates a linkage where the timber/wood producer supplies the office
furniture maker with raw materials. This is an example of the timber/wood company linking
a. Forward with the office furniture maker
b. Backwards with the office furniture maker
c. Horizontally with the office furniture maker
d. No linkage is illustrated
6. Which of the following statements outline a KEY benefit of linkage industries to the Caribbean
region?
a. Increased automation
b. More division of labour
c. Assist in developing regional self sufficiency
d. Improve the quality of life in the region
7. Being part of a cluster of industries e.g. an industrial estate; a firm can benefit in areas such as
infrastructure development and marketing. This is a situation of
a. Internal economies of scale
b. External economies of scale
c. Internal diseconomies of scale
d. External diseconomies of scale
8. In a large firm, managers may find it difficult to manage. Problems in areas such as, decision
making, communication and policy implementation may be experienced. These issues are
specifically
a. Internal economies of scale
b. External economies of scale
c. Internal diseconomies of scale
d. External diseconomies of scale
9. When an industry is in decline, all businesses connected to it, in the cluster, may feel the
negative effects. This is MOST LIKELY
a. Internal economies of scale
b. External economies of scale
c. Internal diseconomies of scale
10. A merger exists where two or more companies join together to form a single business entity. A
merger that occurs where two or more businesses at the same level of production join together
is called
a. A horizontal merger
b. A vertical merger
c. A conglomerate
d. A sole trader
11. When a firm expands it can achieve certain benefits called economies of scale. The utilization of
equipment to full capacity as a result of increased production, is specifically
a. Financial economies of scale
b. Technical economies of scale
c. Risk bearing economies of scale
d. Marketing economies of scale
12. A situation whereby a variable factor e.g. labour is added to a fixed factor e.g. a building, the
marginal output increases to a maximum point and then declines, is termed
a. The efficiency of production
b. The law of diminishing returns
c. The law of supply
d. The law of demand
a. tertiary production
b. secondary production
c. primary production
d. domestic production
I. baking
II. fishing
III. hairdressing
IV. banking
a. all of the above
b. I, II and II
15. Which of the following products is NOT usually associated with the output of cottage industries?
Unit 6: Marketing
Pupils will:
explain the concept of the term market and marketing
explain key marketing activities
describe the marketing mix
describe key factors that influence consumer behaviour
identify factors affecting the areas of packaging and presentation of goods
describe methods of promoting sales
identify techniques of selling
explain some terms of sale
list key functions of some consumer organizations
outline the role of customer service
describe the forms of customer service
explain the concept of intellectual property rights
Market: A market is a place where people meet to exchange or buy and sell their goods and
services. A market can be a physical place, as well as, a virtual setting.
Definitions of Marketing:
1. The Institute of Marketing defines marketing as ‘the management process responsible for
identifying, anticipating and satisfying consumers’ requirements profitably.’
2. Kotler and Armstrong (1999) define marketing as, ‘a social and managerial process by which
individuals and groups obtain what they need and want through creating and exchanging
products and value with others.’
3. According to Boone and Kutz (1999), ‘Marketing is the process of planning and executing the
conception, pricing, promotion, and distribution of ideas, goods, services, organizations and
events to create and maintain relationships, that will satisfy individual and organizational
objectives.’
4. Marketing refers to all the processes involved in selling goods or services in the most profitable
and efficient manner.
o Product testing on the market i.e. pilot project. If the pilot project is successful, then the
product is marketed. If the initial pilot project fails, the product may be redesigned and
retested.
o Next the firm has to develop a marketing strategy. This is a plan of how to get the
product to the market at an appropriate price. This involves pricing, promotion, product
and package design and place or distribution.
o The firm has to engage in monitoring and evaluation of the product performance in the
market.
o Market research o
Pricing o Packaging o
Branding o Sales
promotion o
Advertising o
Distribution
Before developing the marketing strategy using the marketing mix the marketing department usually
engages in the following processes regarding the market:
3. Market positioning: this involves developing the marketing strategy involving the use of the
marketing mix to help the product to get noticed by the consumer.
The marketing mix is a term used to refer to the range of marketing activities, techniques and strategies
that a firm uses to reach its target market. The activities are referred to as the Four P’s: Product; Price;
Place; Promotion. In recent times, developments have now included ‘the Seven Ps’. This includes
product, price, promotion, place, people, processes and physical evidence.
Product
The term product refers to the good or service that is needed by the targeted group or the product, idea
or service that the firm wishes the target group to buy. The following must be considered in discussing
the nature of the product:
o Packaging: This is the outer wrapping or container for goods. Packaging presents the product
in an attractive way and also serves to give details about contents, any potential hazards or
dangers, correct usage etc. The packaging of a product does the following: protect the product,
promote the product, preserve the life of the product, prevent health hazards, make it more
convenient to handle the product, enhance the appearance of the product.
o Labeling: Labels are important features of the packaging of a product. It consists of printed
information that describes the product. A label performs the following functions: Identification,
that is it gives the brand name of the product; Grading, it gives the grade of the product;
Product description, it tells about the composition of the product or ingredients, uses, identifies
the maker, caution or side effects, expiry date, date of manufacture, storage etc.
o Branding: This is giving the product a distinctive name, term, symbol or design to enable it to
be recognized easily. The brand name or trademark differentiates one product from another
product. A trademark can be registered so that one firm only can use it. The reasons for
branding are as follows: to provide legal protection for ownership rights; to be able to promote
the product more easily through advertising; to promote the firms image by using the name of
the firm as the brand; to gain greater control over different products in a product line.
Introduction
: The product is advertised and placed on the market for sale. Large
amount of capital tends to be used in introducing the product to the market. At this
stage sales maybe low or high.
Growth: If consumers accept the product, sales and profits will increase steadily. This is
the time for increased marketing to promote maximum demand for the product.
Maturity: Once a market is established, sales may not increase. Th e firm may face
competition from producers of the same or similar products. Maturity may mean that
profits will fall. At this stage the firm will try to improve the product or find a new one.
The firm may engage in price cutting or heavy advertising. he firm
T may
Decline: At this stage sales volume and profits fall steadily. Some firms may harvest or
divest the product, while other firms may try to revive the product by adding new
features.
Price
Price is the amount that is asked for the product. The price must be attractive to customers,
competitive so that it is favoured
, enough to cover cost of production and gain a profit for the firm.
Most products have price
a plateauthat represents the price the customer expects to pay for a good or
service.
A pricing strategyinvolves any pricing policy by a firm to gain market attention. Some examples
include:
Penetration Pricing
: A new firm entering the market may price its product below that of its
competitors. The aims are to gain entry intomarket
the and increase market share.
Cost-plus pricing: This involves taking the unit cost, adding overheads and a profit margin to
arrive at the selling price.
(Price = unit variable cost + fixed cost + mark -up)
Market-oriented pricing: The seller surveys the market to find out what consumers are willing
to pay before setting the price.
Promotional pricing: this is a form of sales promotion used by producers and retailers that
involves ‘introductory-price’ offers, ‘money-off’ packs, ‘two-for-the -price-of-one” offers etc.
Loss leading is where firms use special offers or discounts in order to attract new customers.
They may sell below cost or accept a low profit in the process.
Market-skimming pricing: This involves charging a relatively high, introductory price for a
product in order to secure a large profit margin.
Psychological pricing: Firms keep prices just below certain levels so that they appear cheaper to
the customer. This also includes matching high quality with high price.
Differential pricing: This is where the same product is sold at different prices to different
market segments e.g.
a) Price lining: The seller identifies different segments of a market and prices the product
to match each segment.
b) Price discrimination: Prices vary between customers and market.
Dumping: Products may be sold below cost or at a loss just to obtain some income from them.
Forces of demand and supply will also affect pricing strategy.
Pricing Objectives
Some common pricing objectives are as follows:
Survival: In the case where there is increasing competition, changing economic environment
and changing tastes, the firm must set low prices to attract consumers.
Profit Maximization: The aim is to set a price that will maximize current profits.
Market-share leadership: Companies believe that increase market share will mean lower costs
and increased profits. To achieve this they may set prices as low as possible.
Product Quality Leadership: The aim is to have the highest quality product on the market. The
company will charge a high price to cover the high product quality and high cost of research and
development.
Promotion
Promotion is the act of attracting the attention and interest of the target market to the product or
service offered for sale. Promotion also refers to the ways in which consumers are made aware of the
availability of the good or service and the qualities it has. This is done by:
Advertising
Sales Promotion
Personal Selling
Public relations
Functions of Advertising:
To introduce new products on the market;
To highlight the features of a product in order to differentiate form competitors;
To build loyalty towards a brand;
To create awareness of promotional activities;
To educate and inform consumers about the goods and services
Types of advertising:
Informative: This type aims at informing and educating the consumer about a particular product
or service.
Persuasive: This is aimed at persuading or convincing the consumer to buy goods or services.
Competitive: This type aims to gain market share by telling the good points about a product and
comparing these with the competitors.
Defensive: This form of advertising reacts to competitive advertising by a competitor.
Reminder: Used in the maturity stage of the product life cycle, where the product is well known
and the customer is reminded of its availability. Used to maintain presence in the market.
Forms of Advertising
DIRECT FORMS INDIRECT FORMS
Circulars Press: Newspapers, Magazines, Trade magazines or journals
Catalogues Television and radio, website, internet (websites, videos,
Free samples social media)
Souvenirs Cinema screens: Slides, films
Word of Mouth Posters, signs and wallscapes
Cell phones Point of Sale: Special shop display
Chat room Exhibitions, fairs, carnivals
Mobile caravans
• Creates consumer awareness of the • Controlling demand e.g. people may buy
product offerings available a product that they do not necessarily
and can assist in reducing prices. • Mislead the consumer with claims
• Generates increased revenue and profits • Not always in the public interest e.g.
from which the cost of advertisement is demerit goods like alcohol and
met. cigarettes/tobacco.
Sales Promotion
• ‘Loss leader’: This is a technique where a retailer sells a manufacturer’s product at a price
below the retailer’s purchase price (cost). This is used to attract customers into the business
place and to gain market share or penetrate a market.
Techniques of selling
a) Prospecting: This involves identifying prospective customers e.g. through client databases.
b) Communicating: The sales person or sales representative should be able to effectively
communicate the firm’s message to the target audience.
c) Merchandising and servicing: This refers to the display of goods so that the potential customers
can conveniently see them and be influenced to buy. Techniques in merchandising include:
attractive window displays, use of in house displays, layout of premises, allowing customers to
interact with goods.
d) Market Research: Sales representatives provide valuable information to firms about customer
behaviour. A good sales person must therefore have:
o Technical knowledge of the
skills
The sales team is an important source of feedback for strategic decision makers since these sales
persons operate on the front line and have direct contact with channel members.
vendors o Auctions
Telemarketing
Persons who provide assistance to the producer to sell goods or services. Types of agents or
brokers include the following: stock market agents, import and export agents for international
trade, insurance agents or brokers.
Patterns in retailing:
o Bar codes: A magnetic code made up of vertical, parallel lines. A scanner is able to read the
code and this displays product information used to generate receipt and stock information.
o Logos/Branding: Many large firms now use logos or symbols with the company title on their
products to assist recognition and legal protection. The brand or logo makes the product
exclusive and distinctive.
o Credit facilities: Many retailers offer suitable credit facilities e.g. hire purchase
o Franchise which gives a retailer the right to sell a product owned by another company through a
franchise agreement.
o Electronic transfer: Customers pay using automatic teller machines which transfer funds
electronically to the retailer’s account.
o Selling through the Internet: Shopping via the Internet is also called e-commerce. Customers
can access a shopping channel through their Internet service provider.
Public Relations
Public relations (PR) refer to the act of promoting a business organization’s company image or
promoting the corporate brand. This is done to encourage sales or to influence investors to buy shares
in order to finance business activities. The public relations department may be internal to the firm or
sourced from outside e.g. an agency. This department handles the publicity of the firm. Publicity is
intended to give a favourable or positive image of the firm to stakeholders, especially during periods of
uncertainty. This may take the form of:
o Press releases that provide information to the media e,g, newspapers, magazines, radio,
television and the internet
o Sponsored activities such as, charities, sporting events, environmental and cultural activities o
Information leaflets explaining different features of the product o Scholarships and funding for
developmental programmes
Terms of Sales
This refers to the way that payment for purchases are made.
discounts
Credit Sale / Goods are paid for by Goods becomethe Interest is payable thus
Credit Selling instalments; property of the buyer increasing the cost
Credit is usually for 6 months immediately;
to one year Buyer enjoys the use of
goods while paying for
them;
No down payment
Hire Purchase Deposit/down payment Goods become the Interest payments
made; property of the buyer increase cost
Goods are paid by after the final payment;
installments; Buyer enjoys the use of
goods while paying for it
Balance is spread by equal
installments at
specified dates over a
fixed period
Lay-away Deposit made Customer is protected Goods received only after
against price changes or full payment
fluctuations
Cash Discount: Discount given to traders if they pay for goods within a specified period of time as stated
in their terms of sale agreement. Cash discounts are given as a means of boosting sales and encouraging
prompt payment.
Trade Discount: A trade discount or quantity discount is a price reduction given by a seller to purchases
in bulk, and calculated in accordance with the quantity bought.
Trade Credit: A trade credit occurs when a supplier allows a customer (a business) a certain period of
time (typically one or two months) after receiving the products in which to pay for them.
Distribution/Place
Distribution refers to storing and moving products to customers, often through intermediaries such as
wholesalers and retailers. It also includes the transportation, which includes the physical movement of
goods.
The task of distribution is getting the right amount of goods to the right places where customers can
conveniently buy them. Goods much reach the place in time to replenish stocks and must be in good
condition. Distribution also involves the selection of appropriate channels of distribution.
• The Bureau of Standards: A corporate entity established to develop and enforce standards
relating to quality of goods manufactured in a country or imported for use in the country. A
bureau of standards may also promote health and safety.
• Services provided by the Bureau of Standards may include writing of standards, inspection of
goods, testing of materials, calibration of instruments, certification (ISO certification), and
training.
• The Ombudsman is an official office set up to receive complaints and provide assistance to
persons who believe that they were unfairly treated by a public sector office or public services
personnel. A citizen can launch a grievance to the Ombudsman. The office in turn investigates
the matter and provides advice for redress.
Income level of the individual will affect buying decisions with respect to quality of good
chosen and services accessed;
Brand loyalty: Identifying with a particular brand name for reasons such as quality, price,
fashion; history; celebrity affiliation;
Demand
• Effective demand: The willingness to acquire or purchase a product backed by the ability to pay
for the good or service.
The price of other products: Substitutes are products which are used in place of each
other and gives relatively the same level of satisfaction e.g. butter and margarine;
Complements are products where the use of one product gives rise to the use of
another e.g. petrol and cars; tyres and cars
Income levels
Wealth of individuals
Supply
• Supply relates to the firms or producers of the good or service and what they are willing to
provide on the market.
• The major determinants of supply are:
• The quantity supplied is the amount of a product that firms are willing to offer to the market for
sale.
Customer Service
What is customer service? Investopedia.com describes 'customer service', 'as the process of ensuring
customer satisfaction with a product or service'. The process usually takes place while the actual
transaction is being performed. It encompasses the policies and practices that guide the way the
organization (employers and employees) interact with the customers and clients.
Customer service plays an important role in 'maintaining ongoing client relationships.' The maintenance
of this relationship affects the business' ability to gain revenue. It is important to note that front line
customer service representatives are responsible for creating the first perception of the business. This is
important for some businesses in gaining the competitive edge.
This deals with ways in which the organization can ensure customer satisfaction and meeting individual
customer needs.
• Warranty: According to business dictionary.com, warranty is 'a legally binding assurance that a
good or service is, among other things, fit for use as represented, free from defective material
and workmanship, meets statutory and/or other specifications.' The warranty document will
describe the conditions under which and the period specified, the product will be repaired by the
manufacturer or seller, replaced or compensated for without cost to the buyer.
• After sales service; making repairs: According to management studyguide.com, after sales
service refers,' to various processes which make sure customers are satisfies with the products
and services of the organization.' Techniques include: Taking customers' calls; Keeping in touch
with customers; Provide support (install product, maintain product); Listen to customers'
grievances; exchange products as necessary if found defective (due to no fault of customer);
• Feedback: Take feedback from customers; this helps the business to gain knowledge of the
customer and upgrade service to meet customer needs; Give feedback so that customers will
know that their complaints are being handled and that the business cares about customer
satisfaction.
• Online chats: Create a website where customers can register complaints or access on line help
• Call center/telephone service/toll free number: Provide a toll free number where customers
can call to register queries or concerns and comments;
• Suggestion box/handling complaints: In store customers can be given a chance to fill out
suggestion forms or cards and place in a box. Cards can cover various aspects of the customer
experience in the business;
• Surveys: The organization can conduct surveys to find out the level of customer satisfaction.
This can be done online, via a questionnaire in store or by telephone or cellular phone.
• Counter and face to face service: This initial contact point between persons can place the
business in a positive or negative light. The Customer Service Representative is most times the
first contact with an organization. This person should be trained to deliver on the company's
mission, vision and core values; be able to listen to the needs of the customer; be able to ask
questions to find out what the customer wants and seek to address the issues; be able to
respond to all questions, if the customer service representative needs help he/she should go to
the supervisor but do not leave the customer feeling his/her issues were not addressed; be
knowledgeable about department and products ; be timely; relay accurate information;
Protecting Ideas
According to wipo.int, intellectual property refers' to creations of the mind, such as inventions; literary
and artistic works; designs; and symbols, names and images used in commerce.' Intellectual property is
protected by law. This allows persons to gain recognition and benefit financially from their creations or
inventions. It aims to facilitate an environment where persons are rewarded and protected for being
creative and innovative.
There are four main ways of protecting ideas or regulate the use by others.
1. By patent: This gives the right to be the sole user or producer of a completely new
product to a person or a business.
2. By registered design: A new design that has a distinctive visual appearance may be
registered prior to its actual production.
4. By copyright: This gives legal protection by persons or businesses over certain kinds of
intellectual material e.g. artistic work, literary works, sound recordings and films.
Franchise:
A franchise gives a person or a business (the franchisee) the right to sell a good or service that is owned
by someone else (the franchisor). A franchise agreement usually involves the franchisor retaining an
interest in the product in some way e.g. ingredients and preparation, the franchisor may receive a
percentage of the profits. The established company maintains control over its brand.
Structured Questions
1.Define the term marketing. (2 marks)
2. Explain the concept of Social media marketing (SMM). (4 marks)
3.Describe the concept of Integrated marketing. (4 marks)
4.List FOUR marketing activities, (4 marks)
5.Briefly describe the elements of the Marketing Mix. (8 marks)
6. Describe the importance of product packaging. (4 marks)
7.State THREE functions of advertising. (3 marks)
2. The product life cycle describes the stages in which product sales rise and eventually fall. At
which stage will firms experience a saturated market, where sales are constant and then fall? a.
Introductory
b. Growth
c. Maturity
d. Decline
3. The time between the design of a product and its production is referred to as a. Cycle time
b. Production time
c. Lead time
d. Promotion
4. A situation whereby a firm uses special offers or discounts to attract customers and where it may
sell below cost is MOST appropriately termed a. Economies of scale
b. Optimum strategy
c. Profit maximization
d. Loss leading strategy
6. The firm’s strategy of charging a relatively high introductory price for a product with the aim of
securing a large profit margin is termed a. Differential pricing
b. Market skimming pricing
c. Price discrimination
d. Market oriented pricing
I. Survival
II. Profit maximization
III. Market share leadership
IV. Product quality leadership
a. l and ll
b. l, ll and lV
c. ll, lll and lV
d. all of the above
8. The act of attracting the attention and interest of the target market to the product offering is
BEST described as a. Transporting
b. Product innovation
c. place
d. promotion
9. The type of advertisement that aims at educating the consumer about a good, service or issue is
referred to as
a. Defensive advertising
b. Competitive advertising
c. Persuasive advertising
d. Informative advertising
10. The presentation made by persons representing a firm to potential buyers is called a. Advertising
b. Public relations
c. Personal selling
d. Branding
11. Which of the following activities is NOT a part of the merchandising process?
12. The process of promoting an organization’s corporate image is BEST described as a. Advertising
b. Sales promotion
c. Personal selling
d. Public relations
13. Payment for purchases can be made in a number of ways. A situation where a deposit is made
for the goods but the consumer only assumes possession after full payment is described as a. A
discount
b. A hire purchase plan
c. A lay-away plan
d. A credit sale
14. A quantity discount is a price reduction given by a seller to buyers who purchase in bulk. It is
calculated in accordance with the quantity purchased. This is referred to as
a. Cash discount
b. Trade discount
c. Trade credit
d. Discount
15. A situation where a supplier allows a customer, a certain period of time after receipt of goods, to
pay, is appropriately termed a
a. Cash discount
b. Trade discount
c. Trade credit
d. discount
Unit 7: Logistics and Supply Chain
Pupils will:
• explain the term logistics and supply chain operation
• describe the links in the chain of distribution
• differentiate between multi modal and intermodal transport
• interpret information on transport documents
• explain the role of transport in marketing
• identify advantages and challenges of supply chain operation
• explain the impact of logistics and supply chain operations
• identify problems in distribution
• outline ways in which distribution problems can be dealt with
• outline the impact of information technology on logistics and supply chain operation
Supply chain management involves the activities of planning, designing, controlling and implementing
the processes involving procurement, manufacturing, distribution and sales if a business or enterprise.
The fulfilling of business objectives related to supply chain would include an integrated approach
involving networks of sellers or vendors, agents, distributors, other service providers to move inputs or
raw materials and the finished goods to different locations.
Logistics is specifically, 'the management of the flow of goods and supplies.' this also includes the flow
of information, data and business documentation between businesses. A key role of logistics is in the
delivery of raw materials from a supplier to the production function and in dispatching finished goods
from the production facility to the customer. Logistics is a sub-component of the Supply Chain
Management function.
Source: managementstudyguide.com/logistics-and-supply-chain
Logistics
The Council of Supply Chain Management Professionals, defines logistics as '... that part of supply chain
management that plans, implements and controls the efficient, effective forward and reverse flow and
storage of goods, services and related information between the point of origin and the point of
consumption in order to meet customers' requirements.'
Components of Logistics
Procurement logistics is the process used to select suppliers and negotiate contracts for delivery
of products. This involves for example, market research, make or buy decisions, ordering and
order control;
Production Logistics involves controlling the flow through the supply chain from point of entry to
the destination or distribution.
Distribution logistics involves the delivery of finished products to the customer. This entails
warehousing and transportation (air, rail, water, truck, passenger transport, warehousing and
storage fleet maintenance and insurance;
Disposal logistics also called reverse logistics deals with activities related to the 'reuse of
products and materials. This area aims to reduce logistics costs, improve services and manage
environmental sustainability;
Forward Logistics:
Reverse Logistics:
operations related to the 'reuse' of products and materials; durable products are returned e.g.
trade -in, return empty bottles for credit, repair, salvage or disposal, or utilizing returnable or
reusable items;
getting materials products back form users;
Improve competitiveness by managing supply chain and logistics in such a way to eliminate
'bottlenecks' in the logistics system, identify problems and diagnose issues; consider an
'Intelligent Logistics System'. This entails using networks of dry ports and truck staging areas,
monitoring and controlling using ICT such as GPS, GIS and data exchange technologies, mobile
devices;
Gain the competitive advantage: To achieve the advantage over competitors’ logistics can be
used to provide value in services e.g. faster delivery
Gain comparative cost advantages: The business can partner with suppliers and logistic suppliers.
The firm will outsource its non- core competencies thereby reducing logistics costs. this
includes:
• Second party(2PL): Deals with the carriers who are providing a transport service over 'a
specific segment of a transport chain'. Examples include: Maritime shipping company, a
rail operator or a trucking company that are hired by a company to transport cargo from
one point of origin to a specific destination e.g. manufacturer to distribution center;
distribution center to port etc.
• Third party(3PL): The use of external individuals or organizations to carry out logistics
activities (outsourcing) traditionally executed within the business. Other businesses for
example that offer warehousing, distribution management, freight consolidation; Third
party providers are freight forwarders, Courier companies; transportation services
companies;
• Fourth party(4PL): This integrates third party competencies and other organizations to
'design, build and run comprehensive supply chain solutions.' A Fourth Party Logistics
(4PL) contractor would manage the Third Party components (truckers, custom agents)
thereby assuming responsibility of the complete process for the contracting business.
4PL acts as a 'single interface between the client and multiple logistics service providers;
4PL tends to manage all aspects of the client's supply chain.
Chain 1:
Producer-Wholesaler-Retailer-Consumer
A producer sells goods in large quantities to wholesalers. The wholesaler breaks down the large
quantities for sale to retailers and also stores stocks in warehouses. The retailer in turn breaks the
quantities into smaller units for the final consumers.
Chain 2:
Producer-Wholesaler-Consumer
The retailer is omitted. The wholesaler assumes the role of the retailer.
Chain 3:
Producer-Retailer-Consumer
The wholesaler is left out and the retailer may assume the role of the wholesaler.
Chain 4:
Producer-Consumer
Wholesaler
The Wholesaler purchases goods in large quantities from producers and thus assumes some of the risks
of the manufacturer such as, warehousing goods. This is at a cost and there is the risk of demand falling
or goods becoming obsolete.
Roles of the Wholesaler:
o Breaking bulk produce for sale to retailers
o Warehousing facilities: Wholesalers usually have closer proximity to the target market o
Assumes risk: By buying large quantities, the wholesaler undertakes risks as prices could fall and
tastes may change leaving the wholesaler with stocks of obsolete goods
o Key source of market research for producers o Helps manufacturers advertise goods
o Helps maintain price stability as goods are incrementally released on the market to prevent
surplus or glut, leading to price reduction
Retailers
Retailers provide goods directly to the consumer. They possess ownership of the goods and bare all
risks of losses should demand fall or taste change.
Role of the retailer includes:
o Breaking bulk into small quantities to meet the demand of individual consumers o Provides
outlets close to targeted markets to ensure timely provision of products o Provides credit facilities
e.g. hire purchase to consumers o May provides delivery service to customers free or at a cost o
Gives technical product advice to customers o Provides after-sales service as part of the service
Transport
Transportation is the movement or conveying of goods or human beings from one point to another. It is
an indirect service and is part of tertiary production. Transportation dealing with business is called
commercial transport.
Multimodal and Intermodal transport
Multimodal: This describes the movement of cargo from the point of origin to the destination
point by using several 'modes of transport'. Each mode used in the transportation process may
have a different transport provider, but all operate under a single transport contract or bill of
lading. Also, multimodal can utilize a company with all modes of transport or utilizing a single
contract the shipper can use an agent. The agent will be responsible for all the coordinating,
loading and unloading and any delays.
Intermodal: This is the movement of cargo from point of origin to destination point using several
modes of transport. Each of the modes has a different transport provider, operating under its
own transport contract (independent contract). The shipments are handled by several different
shipping companies; multiple carriers during a single journey where each part of the journey is
handled by a separate transport carrier. The business or person/shipper will have several
contracts, one with each transport provider to handle a specific part of the transport or
shipment process.
In differentiating between multimodal and intermodal transport one must consider the type of
contract or bill of lading and the transport provider or carrier. Summarily, in multimodal
shipping one company or one contract will handle all parts of the process. Whereas, intermodal
shipping or transport utilizes several modes of transport with different transport carriers, each
with a different contract.
international trade
o Nature of good to be transported e.g. fragile or perishable items; large bulk items;
items needing high security; dangerous chemicals requiring special containers
o The availability of ports of entry and exit e.g. airports, harbors, ports o Handling
charges and insurance costs e.g. freight costs o Availability, location and costs of
warehouse facilities
• Import Licence: A permit that specifies the good to be imported and in what quantity. It is used
by the government to restrict the importation of certain goods.
• Bill of Lading: A document used in the transportation of goods via ship. It outlines details of the
goods and the destination. The bill of lading gives title to the goods. Moreover, it is used as a
receipt for the goods. The document is also a contract between the seller and the shipping
agent.
• Airway Bill: A document used to transport goods by air. It gives title to the goods as well as,
serves as a receipt of goods.
• Certificate of Origin: A document that shows the country of manufacture or origin of goods. It
is an important document in trade within a free trade area. It prevents non-member countries
from taking advantage of free trade arrangements within area e.g. low tariffs.
• ‘FOR’ means free on rail: The seller pays for transport and insurance to the railway station and
loading on train. After, the buyer assumes responsibility for transport and insurance.
• ‘FOB’ means free on board: The seller pays for transport and insurance to the port and loading
cargo on ship or aircraft. After the buyer assumes responsibility for transport and insurance.
• Franco: The seller pays all transportation and insurance costs to the buyer’s premises wherever
it is located.
• Loco: Price of goods excluding transport costs. The buyer has the responsibility for transport
and loading costs to his/her destination.
• Carriage Forward: The cost of delivery is borne by the purchaser.
• Carriage Paid or Carriage Free: The cost of delivery is borne by the seller of the goods.
• Certificate of origin: A business document stating the country of origin of goods or where the
goods were made. This is used to determine if the goods will attract tariffs.
• ‘FAS’ means free alongside ship: The seller is responsible for payment of transport to the port
but not loading costs.
Land: This includes road, rail, and pipelines. Road includes, bicycles, cars, trucks, buses, tankers, task car;
Rails include trains
Water: Via rivers and sea. This includes cargo liners, bulk carriers, passenger liners and ferries, tankers
Air: Freights and passenger and cargo planes.
Digital Delivery: According to https://www.excella.com, 'digital service delivery' is 'the electronic delivery
of information including data and content across multiple platforms and devices like web or mobile'. This
reduces the reliance on paper and seeks to improve the user experience e.g. Dell Digital Delivery which
allows the customer to purchase selected software at the same time a new computer is ordered, which
can be downloaded and installed, when customer gets the computer.
Specific goods would require specialized forms of transport e.g. the use of pipelines and tankers to
transport oil and gas; timber and logs via rivers and barges; flower and perishable food items when
shipped from one country to the next needs to be in a temperature controlled container; fragile items
e.g. computers need to be packaged in Styrofoam and cardboard to prevent damage; chemical and other
flammable substances must be transported in special containers to prevent spills.
Efficient distribution of goods depends on the availability of proper infrastructure such as access roads,
airport, harbors and ports.
Transport is important in international, regional and local trade so that consumers can have access to a
variety of goods and services; to improve the ability of firms to supply markets; to provide valuable raw
materials and capital inputs into the transformation process of businesses; to develop infrastructure of
countries to facilitate trade; to provide greater access to markets; to develop commercial and political
links between trading partners.
floods
Red tape and bureaucracy Proper procedures; Ensuring the procedures are known by all
involved; improved communication between agents in trade;
accessing feedback from agents to improve processes
Advantages:
minimize inventory
reduce costs
reduce waste
improving the time, it takes to get the product to market or minimizing shipping and transport
delays
companies are linked through the supply chain
allows for the identification of critical risk factors with the business, its suppliers; allows for
better control over suppliers;
provide information on customer needs;
helps to improve customer care services;
improve communication among channel members; Disadvantages:
may be expensive to implement in a small business
the business will have to hire expertise to manage the system or outsource
Explain the impact of logistics and supply chain operations on the competitiveness of a business
Impact of logistics and supply chain:
(csmp.org)
Create improved customer service: expectation of accuracy in product and quality to be
delivered; available at right location; right delivery time; after sales services
Reduce Operating Costs: decrease purchasing costs; decrease production costs; decrease total
supply chain costs
Improved financial position: Control and reduce supply chain costs; decrease fixed assets (need
for warehouse, transportation vehicles); increase cash flows as products reach customers in a
timely manner
Global Positioning systems (GPS): This is a satellite navigation system used to determine the ground
position of an object (techterms.com). Key uses in logistics and supply chain:
to manage and track delivery trucks;
keep supply chain in the know whether vehicles are on course or will be delayed due to whether
restrictions; adjustments can be made to mitigate delays;
GPS provides data as to where a truck is in its delivery cycle;
a means to track containers at sea or lost at sea and to locate inventory entering ports of entry;
improve efficiency of travel in terms of direction
control of units from a centralized base of operations
planning routes before the start of a trip;
Geographic Information System (GIS): 'A system designed to capture, analyze, store, manipulate,
present and manage all types of geographical data such as map and GPS '(www.techopedia.com). It
allows users to view data patterns and relationships. Key uses in logistics and supply chain:
tool to map manufacturing, supplier locations, clients, distribution centers and vehicle routes
etc.;
can be part of the decision support system for supply chain management
track how long it will take to reach delivery locations;
find the shortest route between points on the supply chain network;
Portnet: (www.portail.portnet.ma) describes a portnet as, ' a computer tool which enables the
eprocessing of authorizations, permits, certificates, customs documents and other deliveries...'. This is
undertaken by the State or government. It facilitates import and export operations. It facilitates a
digital signature and e-payment. Key uses in logistics and supply chain operations:
speed up delivery of goods across borders (imports and exports);
increase efficiency of movement of goods;
facilitating just in time delivery processes;
Telemarketing: Telemarketing is basically marketing products to existing and potential customers. This
involves two elements (https://yourbusiness.azcentral.com): Outbound and Inbound telemarketing:
Inbound telemarketing involves the handling of incoming calls by customers and potential
customers e.g. responding to advertisements, general enquiries about products. The
telemarketer has to try to move the sale forward e.g. taking orders, sending a sales
representative;
Key uses in logistics and supply chain would include: moving a sale through stages: customer
identifies a need; seeks information on products; evaluates offers and negotiates the outcome;
telemarketing creates a direct relationship between seller and customer and helps the seller to
get instant feedback on products;
Global Logistics Providers: Logistics providers add value to the stages of supply chain operations.
Logistics enables effective and efficient storage and flow of goods from the stage of raw materials to the
manufacturing cycle and to the point of usage or consumption. Therefore, logistic providers meet the
needs of importers and exporters by managing transport essentials. They also help the organization in
problem identification and implementing solutions (www.nwccindia.com). Key uses in logistics and
supply chain:
Ensuring real time tracking and management of distribution;
Manage customs requirements and documentation;
Utilizes the transportation cycle;
Helps the business to enter new markets by providing distribution;
Helps the business to enter global distribution; Some global logistic providers are:
Company Services
Logistics hubs e.g. Jamaica: A logistics hub is a, 'regional cross-docking point, where products from
multiple supply sources arrive and are sorted in accordance to the needs of the destination points.
Products are then delivered to these points without being stored at the hub (Creating National Wealth
Through the Jamaica Logistics Hub/ Caribbean Policy Research institute).' Key uses in logistics and supply
chain operations:
reduce cost associated with transportation, storage and distribution of goods;
facilitates trade;
Structured Questions
1. Define the term supply chain management. (2 marks)
2. Define the term logistics. (2 marks)
3.Outline TWO components of the logistics process. (4 marks)
4.Explain the concept of reverse logistics. (4 marks)
5. Describe each of the following types of logistics: (I) Second Party; (II) Third Party (III) Fourth Party (3
marks each)
6. Explain the concept of chain of distribution. Give examples of TWO chains. (6 marks)
7.Differentiate between multimodal and intermodal transport. (4 marks)
8. Describe the concept of digital delivery as a form if transport. (4 marks)
9.Outline TWO problems in the distribution process and STATE one possible solution for each. (4 marks)
10.Discuss TWO forms of information technology used in supply chain and logistics. (4 marks)
Research: Place students into groups of 4-6 pupils. Each group will produce a Graphic representation to
explain Forward Logistics and Reverse logistics.
logistics
b. production logistics
c. distribution logistics
d. compensation logistics
a. 'green logistics'
b. getting materials back from users
c. delivering the goods to customers from the point of raw materials to manufacturer,
distributor, retailer and customer
d. forwarding salvage items to the business
6.A document used in shipping, that gives a description of the cargo, its destination and title of
ownership is called a/an
a. Airway bill
b. Bill of lading
c. An invoice
d. A consignment note
8. A document that shows the country of manufacture of goods is called a/an a. airway bill
b. certificate of authenticity
c. certificate of origin
d. certificate of lading
9. Specific goods require specialized forms of transport. Which of the following forms of transport
a. barges
b. tankers
c. pipelines
d. trucks
a. Shipping delays
b. Theft
c. Red Tape or unnecessary paperwork
d. Worker incentives
11. A Global Positioning System is specifically used in logistics and supply chain to
12. 'A regional cross-docking point, where products from multiple supply sources arrive and are then
a. portnet
b. logistics hub
c. logistics store point
d. logistics distribution centre
Pupils will:
• identify various financial institutions
• describe the functions and services of financial institutions
• describe the role and functions of financial regulatory bodies
• describe the relationship between financial institutions and regulatory bodies
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PRINCIPLES OF BUSINESS
government financing agencies, the central bank, commercial banks, mortgage companies, unit
trust, stock market, development banks (the Caribbean Development Bank, the Agricultural
Development Bank), credit unions, insurance companies, building societies, microfinance
agencies;
Commercial Banks: A commercial bank is a for profit financial institution that provides a range of
financial services to individuals and business clients. Basic functions and services of commercial banks
include: accepting clients’ deposits; lending to individuals and businesses (short term loans and long
term loans, mortgages); processing payments on customers’ behalf; providing night safe deposit
services for business clients; online banking services (using the internet); tele-banking services (using the
telephone); investment services; foreign exchange transactions e.g. money orders, bank draft; credit
facilities e.g. overdrafts; credit cards and debit card facilities; mobile money facilities; ATM facilities or
automatic teller machine facilities e.g. deposit and withdraw cash;
Mortgage Company: A firm engaged in originating and or funding mortgages for residential or
commercial properties. Some mortgage companies offer 'turnkey mortgage services'. These include
'origination, funding and servicing mortgages' (investopedia.com). Origination is the process the
individual has to go through to obtain a mortgage or home loan.
Unit Trusts: An unincorporated mutual fund structure that allows funds to hold assets and provide
profits for the individual unit holder. The investment fund is set up under a trust deed e.g. Trinidad and
Tobago Unit Trust provides a series of mutual funds both TT$ and US$, asset management, financial
advisory, bureau de change, ATM services, call centre, card services;
Development Bank E.g. Caribbean Development Bank(CDB): The CDB services include: assisting
borrowing member countries to develop their economies; assist in expanding production and trade;
promote investment, mobilize financial resources for development, provide technical assistance to
borrowing members; to support regional and local financial institutions, support and stimulate the
development of capital markets (www.caribank.org).
A development bank is a financial institution established 'to fund new and upcoming businesses and
economic development projects by providing equity capital and or loan capital'
(www.businessdictionary.com)
Credit Union: A non-profit co-operative controlled by member/owners. Members are able to access
lower cost services e.g. low interest loans, credit cards and deposit at a higher interest rate than market
rates. The members are the depositors, borrowers and shareholders
Insurance Companies: Insurance companies operate by collecting premiums from large groups of
people or pooling risk against the possibility of an event occurring. Insuring large numbers of people
allows the companies to pay claims and at times turn over a profit. These companies use utilize statistics
to project the likelihood of an event occurring. They provide coverage against risks such as, fire, car
accidents, illness, disability, death. Some insurance companies also provide annuities and investment
services;
Building Societies: An institution that provides banking and other financial services such as, mortgages
and demand deposit accounts (investopedia.com). Building Societies tend to focus on savings and
mortgages.
Microfinance Agency: A financial institution that provides banking services to low income groups and
individuals (www.investorwords.com). These agencies tend to provide loans to members (low income
earners or groups), offer insurance and deposits. The aim is to improve the quality of life of the poor.
The persons who access the services of microfinance agencies would usually have no access to
traditional banking institutions.
Stock Market: The collection of markets and exchanges where the issuing and trading of equities, bonds
and securities takes place (investopedia.com). Its benefits include:
For firms:
Although investment in the stock market is risky by nature, it provides higher capital gains in the
long term.
Provides a diversified portfolio For the economy:
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PRINCIPLES OF BUSINESS
• Dividends: The return on shares paid to the shareholder. The portion of profit available for
distribution to shareholders.
• The dividend is expressed is stated as a percentage of the nominal or par value of the share. Par
value is the issue price; the price the share was originally or initially sold for.
• ‘Bulls’: Agents who buy or hold shares anticipating a price rise and make a profit at selling
shares at a higher price. A ‘bullish’ market is characterized as one where prices are generally
rising.
• ‘Bears’: Agents who sell shares anticipating a fall in market prices. ‘Bears’ look purchase shares
at a later time at lower prices. In a ‘bearish’ market prices are generally falling.
• ‘Stags’: Agents who buy new issues of shares (e.g.at an IPO) expecting to resell at a profit when
‘second hand’ trading starts on the stock exchange.
• Stock broker: An agent who buys and sells shares on behalf of his/her clients. The stock broker
deals with the public.
• Stock Jobber: An agent or wholesaler of stocks and shares. He/she deals with stock brokers and
jobbers exclusively. The stock jobber buys shares from brokers and other jobbers at a low price
and sells at a higher price (does not deal with the wider public).
• Initial Public Offering (IPO): This occurs when a company goes ‘public’ that is, traded on the
stock exchange; it issues shares to the public with an IPO.
• On-line Trading: The use of the internet to buy and sell shares or keep track of portfolio
performance.
• Cross Listing: The listing of a company’s shares on different stock exchanges or stock markets.
The company must meet the requirements of the different stock exchanges. Shares are traded
in multiple currencies and time zones. This facilitates greater avenues for raising capital e.g.
New York Stock Exchange and European Exchange.
• Ordinary shares or equities: Each share in the publicly traded company yields dividend or part
of the profits. Ordinary shares carry the right to vote at the annual general meeting. A dividends
payment depends on the performance of the business.
• Preference shares: These shares carry a fixed rate of interest. While ordinary shares carry
variable dividend payments. Preference shareholders are paid before ordinary shareholders but
are not normally able to vote at the annual general meeting.
The role of regulatory bodies such as the Central Bank and the Financial Services Commission is to
monitor, control and guide various industry sectors in order to protect depositors and consumers in an
effort to maintain stability in the national economy.
The function of these regulatory bodies is to enforce regulations and licenses of various financial
activities. This is aimed at ensuring that these institutions function within the confines of legislation.
Central Banks
• The central bank in a country is the official government’s bank. It is the central authority
regulating the financial sector in the economy and managing the public debt.
• Key roles of the central bank includes:
a. The banker to the government: Managing the country’s debt and issuing bonds to raise
revenue; the government has an account in the central bank
b. Banker to commercial banks: Each commercial bank is required to keep a reserved ratio
with the central bank. Further, all commercial banks are required to be inspected by the central
bank to ensure that they meet financial requirements.
c. The central bank has the authority to issue bank notes.
d. Advisor to the government in terms of managing the money supply through monetary
policy such as influencing the interest rates
e. Lender of last resort to commercial banks to prevent failure of the commercial banks
f. To hold the country’s gold reserves and foreign currency
g. To manage the exchange rate and influence the demand and supply of foreign currency
• The Central Bank of Trinidad and Tobago is the supervisory authority for the financial institutions
regulated by it;
• The Central bank is responsible for ensuring that institutions comply with Anti- Money
Laundering and Combating Financing of Terrorism legislative and regulatory requirements;
• The Central Bank Issues Guidelines and Circulars which provide guidance to the industry focusing
on anti-money laundering and combating the financing of terrorism; Contribute to national
initiatives against money laundering;
The main objective of the JDIC is 'to protect depositors and promote stability and confidence in
Jamaica's financial system (www.jdic.org); establish and manage the Deposit Insurance Scheme;
It seeks to strengthen the sector's regulatory framework
Main goals include: provide the highest level of coverage possible to small depositors; restore
and maintain confidence in deposit-taking institutions; provide a clearly defined system for
dealing with problems which may arise in insured financial institutions (www.jdic.org);
Personal income includes compensation from a number of sources including salaries, wages and
bonuses received from employment or self-employment; dividends and distributions received from
investments, rental receipts from real estate investments and profit sharing from businesses
(investopedia.com).
Make a budget; this entails making a statement of expenditure and how these will be funded by
income and other sources; the individual has to prioritise needs and wants;
Variable Payments:
Total income after Food
income tax is deducted • Gas for Car
Unplanned expenses
• Entertainment
Total Expenses
• Friends and family: The entrepreneur accesses private financing from family and friends. This
can also take the form of equity financing where the family or friend becomes a shareholder.
• Personal savings: This includes life insurance policies where the owner can borrow against the
cash value of the policy; A home equity loan, that is, accessing a loan backed by the value of the
property.
• Government grants: Accessing a government backed grant to facilitate start-ups e.g. in Trinidad
and Tobago the government offers the Micro-Enterprise and Training grant aimed at needy
persons who want to undertake a small business venture or access skills training Loans: Access
loans from commercial banks backed by collateral.
• Equity: The entrepreneur sells ownership in the venture to acquire financial investment. This
allows the investor to become a shareholder in the venture and share in the profits.
• Venture capital: Access funding from individuals or firms that finance or invest in start-up
ventures. the venture capitalist may provide funding for a stake in the business venture.
• Crowd funding: This is the use of small amounts of capital from a large number of individuals to
finance a new business venture (www.investopedia.com).
Record keeping in a small business refers to the 'orderly and disciplined practice of storing business
records'. This activity allows the venture to comply with financial regulations or meeting legal
requirements. Further, it allows the sole trader to keep track of the business; plan for the future; meet
legal compliance and tax preparations.
Bookkeeping is the recording and classifying of accounting transactions. Types of bookkeeping include:
• Single-Entry bookkeeping: This involves recording transactions as payments are made from and
deposits are made into the venture's account. This is suited to a 'low volume' of transactions.
• Double-Entry Bookkeeping: This can be used in businesses of any size. Two entries are made
for each transaction. A debit entry and a credit entry. This emphasises that a change in total
assets must equal a change in total equity (Assets = Liabilities + Owner's Equity).
Statement Purpose
Income Statement(Profit and shows the revenue and expenses of the venture;
Loss) results in the profit and loss over a specific period of
time;
shows how good or how poor the venture performed
financially during the year;
Statement of financial
Position(Balance Sheet) provides a summary of assets, liabilities and equity of
a business, at a specific date;
it facilitates decision making and provides
information on the financial position of the business;
provides information on whether the business has the
ability to meet its debts and obligations;
Statement of Cash Flow summary of the results of all cash transactions during
the reporting period;
shows how the business gets cash or inflows and how
the business spends cash or outflows;
Key terms
• Leasing: A lease is a legal document that outlines the terms and conditions to rent an asset. It is
the hiring out by one firm (the lessor of the asset) e.g. building or machinery to another firm (the
lessee) for a rental period.
• Factoring: A financial service provided by one firm (the factor), a financial intermediary, to
another firm (the client) by discounting unpaid invoices issued by the customers. The client sells
the debt owed by the customers to the factoring firm and the factor collects the payment due.
The factor is a source of funding that agrees to pay the company the value of the invoice minus a
discount for fees.
Overdraft: a credit arrangement with a bank that allows the firm to borrow and spend
money up to a fixed amount when needed. The overdraft is subject to an interest rate.
Short term loan: Borrowing from commercial banks
Hire purchase: A credit facility whereby the firm pays a down-payment and assumes
possession of the good and pays monthly instalments until the amount is repaid.
Leasing
Trade credit: A credit facility arrangement between two firms e.g. a manufacturer and
retailer that allows the retailer a period of time to settle debt.
Crowd funding: The use of small amounts of capital from a large number of persons to
finance a venture;
Angel investors: Private investors who tend to finance ventures in early stages of
survival; an equity investor who finances the venture for an ownership stake;
• Savings: Income that is not used up in consumption e.g. money placed in bank account, sousou
(paying into a pool to receive a hand until all members receive a hand), credit union deposits,
insurance;
Objective: Meet short term needs
Risk: Lower risk and rates of return than investment
• Investment: Money used to add to the capital of a business e.g. spending on expansion of
factories or purchasing machinery or equipment or spending on training and development,
buying shares, credit union shares, mutual funds, opening a business; bonds and debentures;
Objective: Long term growth
Risk: Low to high risk and; variable to high rates of return
Budgets
Structured Questions
1. Outline the Main functions of TWO institutions in the Financial Sector. (4 marks)
2. Describe the relationship between the Central Bank and Commercial Banks. (4 marks)
4.State TWO ways that an individual can manage personal income. (2 marks)
7. Outline THREE sources of Short Term finance. (6 marks) 8.Outline THREE sources of Long Term
finance. (6 marks)
Project
Each student is required to create a Financial Dictionary containing key terms in this unit.
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PRINCIPLES OF BUSINESS
1. Which of the following is LEAST LIKELY to be a source of long term financing for business? a.
Bonds
b. Bank loan
c. Mortgage
d. Bank overdraft
2. Which of the following is NOT a main loan providing institution for individuals and businesses? a.
Commercial banks
b. Agricultural development banks
c. Credit unions
d. Central bank
3. Savings is that part of income that is not spent. Which of the following is NOT a form of savings?
a. A fixed term deposit in a bank
b. A sou sou hand
c. Buying shares on the stock exchange
d. Placing money in a cash box at home
4. The central bank is an important financial institution in an economy. Which of the following is
NOT a major function of the central bank?
a. Banker to commercial banks
b. Advisor on monetary policy to the government
c. Lender of last resort to commercial banks
d. Provider of online commercial banking services to businesses
6. The hiring out by one firm of an asset e.g. machinery to another firm for a rental period is
termed
a. Factoring
b. Overdraft
c. Credit
d. Leasing
9. A financial institution established to finance new ventures and economic development projects
e.g. agricultural undertakings by providing equity capital or loan capital is essentially a/an
a. insurance company
b. commercial bank
c. development bank
d. central bank
10. Recording payments made from a venture's account and deposits into the account is specifically
11. Where a credit entry and a debit entry are made for a transaction, the entrepreneur uses a a.
12. A credit arrangement with a bank that allows the entrepreneur to borrow and spend money up
a. trade credit
b. hire purchase agreement
c. overdraft
d. leasing
13. Which of the following are main forms of short term sources of finance?
I. debenture
II. trade credit
III. overdraft
IV. hire purchase
a. all of the above
b. I, II and IV
c. II, III and IV
d. I, III and IV
14. Savings is income that is not used up in consumption. Which of the methods listed is NOT a form
of savings?
15. Main forms of investment for a small business include all of the following, EXCEPT
Pupils will:
• outline the responsibilities of government in an economy
• describe how the institution of government can influence the business sector to protect the
environment
• state the purposes of taxation
• distinguish between direct and indirect taxes
• describe various forms of government assistance to businesses
• identify and describe social services offered by the government
The government of a country is described as the body of representatives charged with management of
the country’s affairs on behalf of the citizens.
• Security of the State or National Security: The government is responsible for the protection of
the country from external threats and for maintaining law and order by setting the legal
framework. The government is also responsible for disaster preparedness in the country.
• Protection and welfare of citizens: The government has the responsibility for the well -being of
all citizens through the provision of social services and merit goods such as, health and
education, and various grants made to the less fortunate, elderly and disabled citizens. This is a
key area in the redistribution of income in the economy. Further, the state or government is
responsible for maintaining the traditions and cultural heritage of the nation e.g. through
funding of the arts.
• As a major employer, the government is responsible for job security of workers and ensuring
that severance benefits are paid to workers should they become redundant. The government is
therefore responsible for employment legislation to meet the needs of the workforce e.g. health
and safety, equal opportunities, maternity benefits and general labour laws.
• The government is responsible for management of the economy, through fiscal policies
(government expenditure and taxation) and monetary policies (control of the money supply and
interest rates). It is also responsible for the creation of a safe climate for investors through the
maintenance of political stability, an equitable and fair legal framework, exchange rate controls
and the maintenance of the exchange rate system.
• Another responsibility of the state is infrastructural development e.g. creation and maintenance
of a network of roads, bridges, ports of entry and exit, airports, water and electricity supply.
A business operates in an open system, with an external and internal environment and many
stakeholder groupings, as well as, operating within a legal framework. Therefore, the business has to
adhere to or obey the laws governing the environment e.g.
• Deduct and pay in the necessary statutory payments such as National Insurance, health
surcharge and income tax as well as, corporation taxes.
• Abide by labour laws such as, Occupational Safety and Health, Equal Opportunities, Minimum
Wages Legislation and Maternity Benefits.
• Ensure that environmental laws e.g. Certificate of Environmental Clearance or zoning laws are
followed.
• Consumer Protection from unfair treatment e.g. the existence of the Bureau of Standards and
the Ombudsman; Consumer Affairs Division;
• Employee protection e.g. minimum wages; severance benefit; recognition of trade unions
• Hire Purchase Act
• Minimum and maximum price controls
• Zoning or control of land use to protect the environment and pinpoint areas for agricultural
development; housing development; commercial business development.
• Fiscal Policy e.g. taxation
• Waste Disposal from businesses in terms of hazardous substances; packaging; recycling
Reforestation: This is the 'replanting of trees in a stretch of terrain which had for some reason
lost its forest cover.' It is, 'a planned or deliberate movement to re-grow vegetation lost due to
human activity, natural calamity or sudden climate change.'(www.eartheclipse.com)
Proper disposal of waste: Waste management legislation will cover the collection,
transportation and disposal of garbage, sewage and other waste products. Waste management
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PRINCIPLES OF BUSINESS
is the 'process of treating solid wastes'. It encompasses solutions for recycling materials.
(www.conserve-energy-future.com)
Zoning laws: Zoning is the restriction on the way land within a specified area can be used.
Planning and development laws help in preserving natural habitats, ensuring that a business fit
into the landscape with other types of institutions and to prevent overcrowding. It is also used
to cluster businesses in an area and to spread development to less developed areas.
Appropriate use of technology in the production and disposal of waste: Examples include: Low
pollution garbage collection trucks. Where the truck generates electricity required for loading
and unloading while the truck is operating; use of new generation garbage incineration facilities
(ash recycling and power generation) (Japan); using dispensers for dry foods in supermarkets
reduces the need for packaging (Eco-point initiative Italy); EU legislation restricts the amount of
hazardous materials used in electrical and electronic equipment. This makes it easier and safer
to recycle waste.(eceuropa.eu)
Taxation
Types of taxes
Direct Tax: The incidence of the tax falls on the individual or business. A direct tax is usually levied on
income and capital, for example:
Indirect Tax: the incidence or burden of the tax falls on various individuals in the production process. It
is usually paid by the producer who in turn passes the cost to the consumer. The incidence of the tax
results in higher prices to consumers.
• Customs Duties or Tariffs: A tax levied on goods imported into the country.
• Excise Duties: A tax levied on goods manufactured in a country.
• Purchase Tax: a tax levied on the retail price of some goods e.g. tobacco
• Value Added Tax: A tax levied or placed on goods at each stage of production as a percentage of
the value added.
• General Consumption Tax is a type of purchase tax. Note:
Value Added Tax is an ‘ad valorem tax’. That is a tax levied at a percentage of the value of the goods
e.g. the higher the value of the item, the greater the tax to be paid.
A specific tax e.g. excise duties is levied or imposed at a fixed amount, regardless of the value of the
goods
Taxation Systems
• Proportional Taxation System: All taxpayers pay the same proportion or percentage of income
in taxes.
• Institutions for lending capital: Government through various agencies provide funding for small
entrepreneurs and start- up businesses. Usually, traditional lending agencies such as commercial
banks consider small start -up businesses to be risky in nature. The Government therefore
provides venture capital loans at lower interest rates.
• Training and technical assistance: The government provides training and technical assistance to
business persons in areas targeted for national development e.g. vocational skills; agriculture;
small business development. Further, the national curricular at the pre-school, primary and
secondary schools needs to be up- dated as necessary to be relevant to the environment.
• Research and information centres: Government departments usually conduct market research
and are able to provide information to businesses in terms of potential markets; new
technologies; trade agreements; business registration process; the legal framework.
• Subsidies and grants: Subsidies are payments made to producers intended to reduce the cost of
production, thereby, reducing the price to the consumer.
• Tax incentives: Government can offer tax incentives to business that set up in fields of national
importance e.g. tourism and agriculture.
• Trade Fairs and Promotions: Government can assist business by mounting trade fairs to
showcase goods and services. It can also promote businesses on foreign trade missions.
• Health care: Some states provide a subsidized or free health care system that citizens can
access regardless of income levels. While this usually results in long lines for services, poorer
members of the society can access these merit goods that they cannot afford in the private
sector. Moreover, the government provides health centres and outreach centres in rural areas
to meet the basic needs of citizens.
• National Insurance Scheme: This provides employed persons who contribute to the scheme
with a retirement benefit and access to grants should injury or death occur on the job.
• Education: The government provides subsidized education and free education to citizens.
Moreover, governments usually provide scholarships for students to study particular fields. In
some countries the state also provides free textbooks up to the secondary level. Education is a
merit good and if left up to the private sector, poorer citizens would not be able to afford access
to educational services.
• Roads and Transport or Infrastructure: The government provides the infrastructural framework
for use by the citizens of the country and the business entities. These are public goods such as
roads and street lights or goods that are non -excludable by nature.
Structured Questions
1. Outline THREE key responsibilities of a Government. (6 marks)
2. Discuss THREE areas in which Government can influence business to engage in environmental
protection. (6 marks)
1. A tax rate system where the tax rate falls as income rises is
a. A proportional system
b. A regressive system
c. A progressive system
d. An equitable system
2. A tax system where the tax rate remains fixed regardless of income levels is
a. A proportional system
b. A regressive system
c. A progressive system
d. A fixed system
3. A direct tax is paid directly to the government by the person or business entity on which it is
levied. Which of the following is NOT a direct tax?
a. Income tax
b. Corporation tax
c. Value added tax
d. Capital gains tax
4. A tax that is levied on specific goods such as alcohol to discourage consumption is a/an a.
Purchase tax
b. Excise duty
c. Tariff
d. Capital gains tax
6. While subsidies encourage business to increase production of needed products. Which of the
following statements describes a major disadvantage of subsidies?
a. Economies of scale from expansion
b. Lower cost passed on to consumers
c. Opportunity cost in terms of less money available to be spent on education and health
care
d. Surplus goods on the market
7. The government can assist the development of small and micro businesses in which of the
following ways?
I. Provide low interest loans
II. Provide technical assistance
III. Reducing subsidies
IV. Reducing taxes
a. l and ll
b. l, ll and lll
c. l, ll and lV
d. all of the above
9. Government implements fiscal policies such as reducing and increasing taxes for many reasons.
Which of the following is NOT a key reason for taxation?
a. To redistribute wealth
b. To restrict importation of certain goods
c. To reduce the standard of living
d. To reduce the demand for demerit goods
11. All of the following are KEY areas where Government regulates business activity, EXCEPT
a. Zoning of business location
b. Price controls
c. advertising
d. Consumer protection
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12. Using science and technology to protect the environment e.g. recycling is termed a. zoning
b. green technology
c. Proper disposal of waste
d. environmental sciences
13. In order to reduce the demand for foreign exchange, the government decided to place a tax on
goods imported into the country. It seeks to reduce the consumption of foreign goods. This tax
is called a/an
a. excise duty
b. capital gains tax
c. corporation tax
d. tariff
Pupils will:
According to study.com, the term 'business technology' refers to, ' the applications of science, data,
engineering and information for business purposes, such as the achievement of economic and
organizational goals. The main element of technology is the idea of change and how it can affect
business and society.'
Changes in technology will affect how a business operates in both the internal and external
environments. Examples include:
• using accounting software to file information electronically;
• targeting both the consumer and business market with product e.g.' Apple I Phone' enhanced
security features that can benefit business clients;
• using social networking/social media to monitor customer satisfaction and gain new customers;
• Telecommuting where with broadband access employees can work from home or on the field
(flexible working arrangements); video conferencing can save time and money in
accommodating out of town or foreign executives or clients;
ci.uky.edu, describes 'Information and Communication Technology' or ICT as,' all rapidly emerging,
evolving and converging computer, software, networking, telecommunications, internet, programming
and information systems technologies.' In adopting ICT strategies, a business seeks to utilize aspects of
information, communication and technology to help the business achieve its objectives. It should add
value to business operations and help the business save time and costs. ICT can lead to:
• improved communication in business operations through the use of mobile phones, emails,
internet and intranet e.g. mobile money applications, e-commerce, management information
systems;
• improvements in record keeping and management e.g. using Quick Book, MS Projects
• online market research and information gathering on competitors;
• more efficient deliver using GPS systems
• using the internet to advertise products
• use of robotics and computer aided design software to enhance production; Computer aided
manufacturing to increase production efficiency
• improved stock control management through the application of electronic point of sale,
electronic data interchange and electronic funds transfer
( source: adapted from free. regenesys.net; BBC.co.uk 2012)
A Management Information System (MIS): A system, manual or computerized designed to collect, sort
and analyse data to provide information to enhance decision making. The information for the MIS is
used to generate reports on areas such as employee absences and overtime, cash flow, sales and
profitability.
Examples of Management Information Systems
Transaction Processing System: Supports the day to day operations of the business e.g. electronic
transfer of funds
Decision Support System: Provides information for managerial decision making e.g. sales figures for
reports.
Office Automation System: Provide support for office operations e.g. communication
Executive Support System: Provides information for high level management or executive decision
making
Human Resource Information System: Provide information related to the people aspect of the
organization e.g. performance management
Marketing Information System: provides information on the marketing aspects of the organization
e.g. market research, pricing strategies
• Market Research: This can utilize online surveys, blogs, chats, on line face to face interviews;
• Marketing: Web site advertising; emails, discussion forums, blogging, app advertisement, SMS
and MMS, social media advertising;
• Customer support: emails; webinar; social media; online newsletters; member portal;
• Cloud Technology which entails connectivity with systems that can allow personnel to access
resources from various locations.
• Communication; cell phones, smart phones, emails, text messaging, social networking, web
conferencing;
• Traditional productivity software tool: Microsoft Word, Access, Excel, Power point, Adobe
Illustrator
Accounting and Finance: QuickBooks, Sage Intacct (Cloud based accounting software), NetSuite
(enterprise resource planning and customer relationship management), Multi-view (financial
solutions), Deskera ERP (cloud based suite that automates sales, billing, distribution, sales
commission calculations, purchasing, payment etc.);
E-commerce focuses on the outward processes that impact the external stakeholders
(customers, suppliers, external partners). Processes that impact the external stakeholders
include: sales, marketing, order taking, delivery, customer service, purchasing of raw materials
and supplies e.g. office supplies. This is the process of buying or selling goods and services using
an electronic medium such as the internet (www.tutorialspoint.com);
E-business contains the E-commerce process but also involves internal businesses processes
such as, inventory management, product development, risk management, finance, production,
knowledge management and human resource management. E-business focuses on cost savings
and efficiency on business processes;
E-Commerce utilizes information exchange through technology such as, electronic data
exchange(EDI); Email; Electronic fund transfer(EFT) and Digital Libraries;
A venture can consider E-commerce models such as B2B or Business to Business website that
sells products to other business entities; B2C or Business to Consumer website that sells directly
to the consumer.
It is important for businesses to keep up with the changing pace of the technological environment.
Business efficiency can be improved by ICT in the following ways e.g.:
more efficient business operations e.g. document templates; digital filing system;
instant communication through the use of emails, video conferencing;
access to information via websites; request information at any time; share information;
use software programmes to collect and interpret data;
customer relationship management software records customer information e.g. buying history,
follow up on complaints;
Mechanization is the substituting of human and animal labour with machines such as robotics and
computers to produce more efficiently.
Capital intensive production involves the increase use of more equipment and machinery than labour.
• Lean production describes production processes designed to eliminate wastage through the
most efficient employment of technology and labour to meet customer requirements.
• To achieve lean production, the firm can utilize the following techniques:
Computer Aided Design (CAD): this uses computer software to design products which can be
configured to meet customer specifications. It reduces the need to construct actual prototypes.
The computer design can be modified and various models evaluated before actual production.
Computer –aided manufacture (CAM): Used in the manufacturing sector in mass or flow
production. It may also involve the use of robotics.
Privacy and Data Security issues: Privacy or the 'right of a person not to reveal information about
himself or herself' is of prime concern when using ICT applications. In the business environment
privacy can be compromised when systems are attacked (unauthorized access/hacking). This has
become an issue with the increase use of mobile banking, e-banking and e-commerce e.g.
identity theft
Businesses can seek to upgrade security via password security and personal identification
numbers.
Intellectual Property rights are considered infringed when intellectual work e.g. writings,
theories, studies, songs, music etc. protected by law is used without permission from the owner.
This involves piracy of material protected by intellectual property rights that is, the unauthorized
use, copying, distribution or downloading of software, games, information. The person or
business can lose income and control over material.
When employees access social media during the course of working hours, unless for business
use, this can prove to be a distraction from doing one's job.
Using social media to engage in cyber bullying or intimidating other persons or manipulating
media to damage the image of competitor's product.
Structured Questions
1. Define the term business technology. (2 marks)
-Depreciation
= National Income
• Gross Domestic Product: The total money value of the goods and services produced in a country
in a year.
• Net Property Incomes from Abroad: This is the difference between money coming into the
country e.g. remittance of incomes, interest form investment abroad and money leaving the
country. The figure can be positive or negative.
• Gross National Product: This is the money value of goods and services, produced in a country
and includes money coming in from abroad less money leaving the country, in a year
(GDP+NPI=GNP).
• Depreciation: This is the reduction in the value of an asset over time e.g. wear and tear of
machinery. Also called capital consumption.
• National Income: the money value of all goods and services produced in the country and from
interest abroad after deducting depreciation (GNP-Depreciation=National Income).
1. The Income Method: this involves taking into account all the incomes earned by individuals and
firms within a country e.g.
Income from employment+ Profits +Rents +Net Property Incomes from Abroad= Gross National
Product -Depreciation= National Income
2. The Output Method or Product Method: this involves taking into account all the output in the
country in a year e.g.
Total Domestic Product (GDP) + Net Property Incomes from Abroad = Gross National Product –
Depreciation = National Income
3. The Expenditure Method: this method involves totalling the amount spent on investment and
consumer goods and services in the country in a year e.g.
Terms to consider
• Market Prices: The final price inclusive of taxes to be paid by the consumer.
• Factor Cost: The cost of factors of production used in producing the good.
• To move from market prices to factor cost: add subsidies and subtract indirect taxes
• Transfer payments: Payments made to individuals who are not engaged in productive activities
e.g. old age pensions and social welfare grants. This should not be counted as income in
National income statistics.
• Double Counting e.g. including transfer payments that is, counting income twice.
• Some activities are not accounted for e.g. the payments made to babysitters, the work of
housewives, and the income from the illicit drug trade.
Standard of Living
• Standard of Living describes the economic well-being of a country’s citizens. It reflects the
amount and quality of goods and services consumed by the population. It therefore reflects the
material comforts at the disposal of and enjoyed by citizens.
• A country may record a high GDP per capita figure, which indicates that on average citizens are
making a certain income. This may indicate a high standard of living. However, not all citizens
may have access to this money. The figure does not show how income is distributed in the
economy.
Population
Population
Per capita means per head of the population. It is the average income per head of the
population.
Standard of living indicators are quantifiable or measurable factors. Indicators of the standard of living
of a country may include, for example:
- Average personal disposable income (the amount of money individuals have to spend
after deductions are taken out).
- Life expectancy
- Quality and quantity of available health care
- Diet of citizens
- Degree of leisure time or recreation enjoyed by citizens
- Income levels
- Employment rate
- Poverty rate
- Average number of hours of work
- Inflation rate
- Number of paid vacation days per year
- Proper infrastructure
- Economic growth
- Access to education - Cost of products
• A people can enjoy a high standard of living but a poor quality of life. Conversely, a people can
enjoy a high quality of life but a low standard of living.
Quality of Life
• Quality of life measures the basic freedoms and rights that citizens enjoy e.g. freedom to
worship; freedom of movement; freedom of association; crime rate. It is a qualitative measure
of the life of citizens.
Quality of life indicators include:
• Economic Growth: This describes the expansion of the country’s economy that is, an increase in
the real level of national output or Gross National Product. This is after the effects if inflation has
been taken into account. Economic Growth is a quantitative increase in production. However,
this concept does not take into account the informal economy or environmental degradation.
• Negative Economic Growth: This situation exists when there is a fall in productive capacity
from one period to another. It may also describe a failure of the economy to expand production.
• Human Resource Development (HRD): HRD describes the training and developmental activities
that create avenues for learning in the workforce. This learning can lead to human capital
becoming the competitive advantage of businesses. This would include on the job training; off
the job training; coaching; mentoring; e-learning; greater access to facilities for learning;
governmental support; national skills development. The development of the individual learning
capacity can lead to the person becoming more effective and efficient. This can lead to
increased output, thereby increasing economic growth.
• Real GDP or Real National Income: ‘Real’ indicates that the effects of inflation have been taken
into account.
• The Human Development Index (HDI): A measure of social and economic development
developed by the United Nations. The HDI is a broader measure than the National Income per
capita measure. It encompasses:
• Education increases productivity: Increases in the abilities and learning of the labour force can
increase labour productivity and foster higher output
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PRINCIPLES OF BUSINESS
• Education enhances creativity and innovation: By applying new ideas and capitalizing on
opportunities where one can implement knowledge on technologies, products and processes
economic growth or productive output can increase.
• Education promotes entrepreneurship by providing tools (knowledge of the environment,
markets, competitors; know-how in producing goods and services) to develop ideas.
• Education fosters technological advancement which facilitates new and improved processes that
leads to increased productivity
• Education facilitates economic progress: Education can promote the transmission of knowledge
and facilitate the implementation of technology which can promote economic growth
• Education facilitates social progress: Education helps to foster an understanding of the
environment. It improves the quality of life of individuals and leads to increasing social benefits
to people and society
International Trade
• International Trade is trade or the exchange of goods and services between and among nations.
• Absolute advantage: This situation exists when a country is more efficient in the production of a
good than another country.
• Comparative Cost Advantage: This is based on the assumption that a country will engage in the
production of a good in which it has the least cost than another country or the lower opportunity
cost than another country. This leads to trade.
• Increase utilization of productive capacity • Local industries may have to lobby the
to produce surplus for trade government for protectionist policies to
prevent foreign competition
• Increase employment to produce goods
and services for trade • Dumping of goods in less developed
countries at lower prices than goods
• Improvement in the standard of living as a available on the market, especially where
result of greater access to goods and the goods are no longer needed in the
services more developed country
Structured Questions
1. Define the terms GDP, GNP and National Income. (2 marks each)
Economic
Institutions and
Systems Functions
Caribbean Community Promote integration among member nations e.g. The
(CARICOM) Caribbean Examination Council (CXC)
To foster regional trade and the removal of trade barriers
Purpose:
• To make it easier for persons and businesses from the Caribbean and the European Union
regions to invest in and trade with each other; allows duty free/quota free access for all
CARIFORUM goods into the EU (except sugar);
• To help Caribbean countries grow their respective economies; To create jobs;
The agreement facilitates trade in services and investment; access to financial support from the
European Union; easier methods of doing business in the Caribbean.
Purpose:
• Allows most products manufactured or grown in CBI member countries to be eligible for duty
free entry into the United States.
• This agreement created a free trade zone between the United States and 24 Caribbean
countries;
Purpose:
• A preferential trade arrangement that guarantees duty free access to Canada for a range of
products. This excludes textiles and apparel, foot ware, luggage, handbags, leather garments,
lubricating oils and methanol;
Purpose:
• Benefit the region by providing opportunities to produce and sell goods and services. It serves to
attract investment.
• Create one market among member countries;
• Encourage full employment of labour and other factors of production;
• Produce a greater variety of goods and services to trade with;
• Free movement of goods and services: eliminating barriers to intra-regional movement goods
and services; using common standards; free movement of capital; free movement of labour;
• to allow CARICOM owned businesses to operate in other member states without restrictions'
• Common External Tariff: a duty applied by all CSME members to products imported from a
nonmember;
• Common Trade Policy where members agree on matters relating to regional and international
trade;
Role, benefit and impact of foreign investment
According to investopedia.com, foreign investment, 'involves capital flows from one country to another,
granting extensive ownership stakes in domestic companies and assets.' Foreign investments can be
classified as:
o Foreign direct Investment (FDI) which are physical investments e.g. opening a manufacturing
plant, purchasing buildings, machinery and equipment in a host/foreign country;
Foreign Investments are usually made by companies, corporations or individuals looking to grow, or take
advantage of cost savings (cheaper production and labour costs or lower taxes).
Benefits:
- accessing training which helps in human capital development in the host country
- allows the transfer of technology in capital inputs to the host
Impact
Positive: developing and underdeveloped nations are impacted as foreign investment is a way of
increasing the capital for investment and economic growth or increases in Gross Domestic Product. It
helps to reduce poverty and increase the standard of living or economic well-being of some impacted by
the investment. It also aids in human capital development as locals can be trained in managerial
competencies and how to use new technologies.
Negative: Repatriation of profits to home country; worker exploitation by not recognizing the legitimate
trade union; poor working condition for host country workers to minimize costs; may use transfer
pricing to benefit the company thereby affecting the level of taxes to be paid to the host country;
Structured Questions
1. Identify the main functions of (I) CARICOM) (II) IMF (3 marks each)
2. Give ONE example of a trade agreement and its impact on Caribbean nations. (4 marks)
3.Identify THREE economic problems in the Caribbean and suggest appropriate solutions. (6 marks) 4.
1. Caribbean Single Market and Economy (CSME) ‘free movement’ of productive resources applies
to
I. Capital
II. Services
III. Goods
IV. Human resources
a. All of the above
b. l and ll
c. l, lll and lV
d. ll, lll and lV
5. An economy usually experiences periods of boom and recession. A period of recession usually
results in unemployment. This is specifically
a. Technological unemployment
b. Cyclical unemployment
c. Seasonal unemployment
d. Frictional unemployment
6. Unemployment that stems from a lack of fit between the job market and job seeker or where
there is a deficiency in sourcing workers to fill vacancies is MOST LIKELY
a. Cyclical unemployment
b. Structural unemployment
c. Real –wage unemployment
d. Frictional unemployment
7. A key problem facing Caribbean nations is Population Density. Under -population in an area
affects a country by
a. Placing a strain on the country’s financial resources
b. Reducing the labour supply available
c. Increase social costs in certain areas
d. Causing high interest rates in the country
8. Which statement BEST describes the problem of ‘Debt Burden’ experienced by Caribbean
nations?
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PRINCIPLES OF BUSINESS
9. A situation where there are two sectors in an economy at different levels of development and
where one is significantly more technologically advanced is specifically
a. Foreign direct investment
b. Fiscal austerity
c. Economic dualism
d. Human resource development
10. Which of the following statements are effects of Foreign Direct Investment on a host country?
I. Employment generation
II. Exploitation of resources
III. Introduction of technology
IV. Social investment in sports and charities
a. l and lll
b. l, ll and lll
c. l and lV
d. all of the above
11. Extending opportunities to citizens for training and development in areas needed to encourage
economic growth and development is specifically
a. Human development index
b. Human resource development
c. Human resource management
d. Human ecology
12. Which of the following initiatives can the government implement to develop the manufacturing
sector in respective countries in the Caribbean Region?
I. Provide tax breaks to firms
II. Reduce interest rates to make borrowing for investment more attractive
III. Increase corporation taxes to increase government revenue
IV. Provide subsidies to reduce factor costs
a. l, ll and lll
b. ll, lll and lV
c. l, ll and lV
d. all of the above
13. The total money value of goods and services produced in a country in a year is specifically a.
Gross national product
b. Gross domestic product
c. National income
d. Property Incomes
14. An organization that seeks to make the most efficient and best use of labour and technology to
improve production for example, using just –in –time inventory systems; reducing the number of
defects; or reducing costs is engaged in
a. Computer aided production
b. Division of labour
c. Specialization
d. Lean production
15. Using computer technology to design products or building prototypes using software is
appropriately termed
a. Computer- aided manufacturing
b. Computer-aided design
c. Computer –aided instruction
d. Software developers
16. In order to increase efficiency and speed of production, a soft drink firm replaced its human
labour with machines. This is an example of
a. Computer aided manufacturing
b. Computerized production line
c. Mechanization
d. Technology
MULTIPLE CHOICE
Tests
Time: 75 minutes
Test 1
1. Country X pays for wheat from Country Y with the commodity bananas. This system of
exchange can be described as
a. Electronic transfer
b. Bill of lading
c. Barter
d. Financial trade
2. A situation where each party to trade must have what the other party wants is BEST described
as
3. A card that allows the client the facility of using money and pay the bank at a later date, with
interest is a
a. Discount card
b. Debit card
c. Credit card
d. Smart card
4. The organization of the factors of production to decide what to produce; how to produce and
for whom to produce is specifically
a. A network
b. An economic system
c. A planned economy
d. A mixed economy
6. Which of the following are key features of telebanking? I. usually available 24 hours, everyday
II. customer can access account balances
III. customer can transfer funds between accounts
IV. business can sell products online using the shopping cart feature
a. I, II and IV
b. II, III and IV
c. III and IV
d. all of the above
10. An economic system is the mechanism by which a country will utilize its limited resources
among unlimited needs and wants. Which of the following statements accurately reflect the
basic economic questions that must be answered by each economy?
a. l, ll and lll
b. ll, lll and lV
c. l, lll and lV
d. l, ll and lV
11. Health and education are products which provide some benefit to the society. These goods are
SPECIFICALLY referred to as
a. De-merit goods
b. Public goods
c. Merit goods
d. Beneficial goods
12. Which of the following does NOT reflect management’s responsibility to shareholders?
13. Which department in a business is responsible for product quality standards, capacity planning,
product design and stock management?
a. The process whereby planning, organizing, directing and controlling the business are
carried out.
b. A group of people who organize the business.
c. A system for co-ordinating the business.
d. A body responsible for motivating the workers.
15. Motivation is creating a drive in the worker to achieve particular goals. An organization that
ensures that workers have a job contract and that the physical surroundings are free from
hazards is meeting workers
a. Esteem needs
b. Affiliation needs
c. Safety and security needs
d. Basic physiological needs
17. The organization structure outlines the formal relationship between each department, job and
management in a business. A functional organizational structure is one where
18. Ethical issues can affect the corporate brand of an organization: Which of the following actions
are unethical BUT not illegal in nature
a. Money laundering
b. Testing products on animals
c. Sexual harassment in the workplace
d. Embezzlement from company's pension fund
a. l and lll
b. ll, lll and lV
c. lV
d. all of the above
20. Conflict is a dispute or disagreement that prevents the achievement of goals. A MAJOR source
of conflict between workers and management is
a. Leadership style
b. Trade unions
c. Dividend payments
d. Government policy
21. A team is described as a group of persons who come together to achieve a particular goal. A
key advantage of teamwork is
22. Communication is defined as the transmission of ideas, information, facts and opinion from an
individual or group to other individuals or groups. Which flow diagram represents the effective
communication process?
24. Which of the following statements is LEAST LIKELY to be a major function of the entrepreneur?
25. Planning involves developing proposals for the future activities of the firm. Short term
planning specifically deals with
26. An asset handed over as security for a loan if the debtor fails to pay is
a. Consideration
b. Collateral
c. Contract
d. Car
27. A business plan is a detailed description of the proposed business. Which of the following is
NOT included in the business plan?
a. Financial plan
b. Operational plan
c. Executive summary
d. Business associations
30. Mary decides to unconditionally agree to all terms and conditions of an offer made by Max.
Mary has made a/an
a. Consideration
b. Acceptance
c. Counter offer
d. Performance
a. A counter offer
b. A void contract
c. Enforceable by law
d. Form or consideration
32. For a contract to be valid it must contain essential features. The feature that describes an
expression of interest of one party to another and a subsequent act of indication to accept the
terms outlines is
33. An internal document used by departments of a business to request goods from the
purchasing department in a company is
a. An advice note
b. A credit note
c. A requisition
a.
b.
c.
d.
d. A catalogue
34. A document that outlines the supplier details; a specific number; customer’s details; terms of
sale and details of goods is referred to as
Statement of accounts
Pro forma invoice
Purchase requisition
Stock card
35. A permit allowing the trader to bring a specified quantity of particular goods into a country as
a means of import restriction is
a. Import licence
b. Export licence
c. Import quota
d. Tariff
36. Insurance calculates the risk that a particular event happens. Assurance is
37. Jobs requiring a high level of training or vocational qualifications e.g. plumbers, electricians,
engineers are referred to as
a. Unskilled
a.
b.
c.
d.
b. Professional
c. Semi-skilled
d. Skilled
38. Movement of people from a home country e.g. Trinidad and Tobago to live and work in
Canada is specifically
a. Emigration
b. Internal migration
c. External migration
d. Rural-urban drift
39. The factor of production that consists of the money invested in business and the assets e.g.
machinery and equipment is
Land
Labour
Capital
Enterprise
40. A level of output that meets the basic needs of the society but not significant to improve the
way of life or standard of living is BEST described as production at the
a. Export level
b. Subsistence level
c. Domestic level
d. Surplus level
a.
b.
c.
d.
43. Which of the following list of activities specifically gives the composition of the 4Ps in
marketing?
44. A firm has to protect its ideas and regulate the use of its products by others. One way this can
be done is to be given the rights legally to be the sole producer of a new product. This is
appropriately called a/an
Patent
Registered design
Trademark
Copyright
a.
b.
c.
d.
45. The price the customer expects to pay for a good or service is referred to as a
a. Price ceiling
b. Price flow
c. Price plateau
d. Cost price
46. A firm’s strategy to keep a product’s price below certain levels, so that the good or service
appears cheaper to the customer is MOST LIKELY:
a. Psychological pricing
b. Differential pricing
c. Dumping
d. Market skimming pricing
a. Advertising
b. Personal selling
c. Public relations
d. Transportation
a. Breaking bulk
b. Bearing risk in case of price fluctuations
c. Reduce transportation cost to manufacturers
d. Sell in small quantities to the final consumer
50. Which of the following activities form part of Supply Chain Operations?
I. planning and developing strategy for procurement II. sales order fulfilment
III. selection of manufacturing location
IV. developing the distribution network
a. all of the above
b. I, II and III
c. II, III and IV
d. I, III and IV
51. Savings refer to that part of income that is not used. Which of the following is NOT a main
form of savings?
52. A non-profit co-operative controlled and owned by members, that provides low interest loans
to membership is specifically a/an
a. Development Bank
b. Commercial Bank
c. Insurance Company
d. Credit Union
53. The economic well-being enjoyed by the citizens of a country is the specifically
a. Quality of life
b. Standard of living
c. Per capita income
d. Gross domestic product
54. Stamp duty, income tax and property tax are examples of
a. Indirect taxes
b. National taxes
c. Direct taxes
d. Non- tax revenue
56. Where a country seeks to expand its economy, the focus is on economic growth. Economic
growth is BEST described as
57. Which of the following statements best describe the reasons for international trade?
I. specialization
II. to increase choice to consumers
III. geographic and climate factors
IV. to break up monopolies
a. l, ll and lll
b. ll and lV
c. I, ll and lV
d. l, ll, lll and lV
58. Restrictions on the way land within a specified area can be used is best described as
a. Planning
b. Development
c. Zoning
d. Land Settlement
59. The World Trade Organization seeks to promote which of the following objectives:
60. The key purpose of the International Bank for Reconstruction and Development (IBRD) is to
Test 2
1. Early economies were structured whereby people engaged in production to satisfy their basic
needs and not to improve their standard of living. This system is BEST described as
a. A mixed economy
b. A subsistence economy
c. Indirect production
d. The barter system
2. The problem of barter where it was sometimes not possible to divide certain commodities for
trade is appropriately referred to as
a. Store of value
b. Indivisibility of goods
c. Standard of value
d. Double coincidence of wants
3. The use of a card that facilitates the use of funds directly from a person’s bank account to a
merchant’s account and where a person spends his or her own money is BEST described as a
a. Credit card
b. Debit card
c. Smart card
d. Gold card
5. A document detailing the amount of profit each partner gets; salaries and interest each
partner will receive in a partnership is SPECIFICALLY called
6. Max invested in a publicly traded company. If the company goes bankrupt, Max loses only
what he invested in the company. This is a case of
a. Limited liability
b. Unlimited liability
c. Limited company
d. Limited partnership
7. The memorandum of association gives information about the company and governs its
relationship with the external environment. All of the following statements EXCEPT one are
included in the statement. Which statement is not included?
8. A public limited company (plc.) is distinguished from a private limited company (ltd.) by which
of the following key points?
a. Shares in the public limited company are family owned. Whereas, in a private company,
shares are public.
b. Shares in the public limited company are traded on the stock exchange. While, shares in
the private limited company are not.
c. There is a minimum of two shareholders in both companies.
d. There is no distinction.
9. Which of the following statements accurately reflects the major purpose of the public sector?
a. Profit maximization
b. Sales maximization
c. Welfare of citizens maximization
d. Maximization of production efficiency
10. An economy characterized by individuals engaging in direct production for basic survival, is
BEST described as
a. Free economy
b. Subsistence economy
c. Planned economy
d. Mixed economy
11. Cigarettes and alcohol are goods that are sold to consumers. While persons may gain
employment in these industries, the consumption of these goods produces negative effects in
terms of social and health issues. These goods are MOST appropriately described as
a. Merit goods
b. De-merit goods
c. Public goods
d. Non-beneficial goods
12. Employees represent a key internal stakeholder group. A key responsibility of management to
employees is
14. The process of establishing objectives and setting objectives to work in the short term,
medium term and long term is referred to as
a. Directing
b. Co-ordinating
c. Planning
d. Controlling
15. An organization that provides proper salaries and medical plans for employees is meeting their
a. Affiliation needs
b. Esteem needs
c. Safety needs
d. Physiological needs
18. A structure that involves representation from various functional areas, to deal with specific
organizational issues or problems and is usually dissolved on completion of the responsibility is
referred to as
a. Work group
b. Task force
c. Staff group
d. Matrix structure
21. Which of the following statements describe the MAJOR advantages of teamwork in business
organizations?
a. l and lll
b. l, ll and lll
c. ll and lV
d. I, ll, lll and lV
22. The medium of communication is the means by which the sender sends the message. Which
of the following are key verbal methods of communication used in organizations?
a. l, ll and lV
b. l, ll and lll
c. ll, lll and lV
d. all of the above
a. A document that shows the organization's core values and demonstrates the
commitment to standards.
b. A document that outlines the operational plans for the organization.
c. A compliance code.
d. A circular memorandum stating how employees should behave.
a. Avoiding taxes
b. Evading taxes
c. Paying workers minimum wages
d. Government setting maximum prices or price ceilings
26. Collateral is required to reduce the risk the lender is made to bear. Which of the following is
NOT a main form of collateral?
b. Plant/manufacturing facility
c. Stocks
d. Insurance policy
30. Mark is twelve years old. He is the sole heir of the family’s house. Mark agrees to sell the
house to his neighbour for $200 000. This contract is void because of which feature?
a. Legality
b. Capacity
c. Possibility
d. consideration
31. In a credit sale, the consideration due from the customer to pay at a future date is
a. Executed
b. legal
c. Implied
d. Executory
32. An agreement for the sale of a manufacturing plant must be made in writing. This is an
example of a
a. Contract of record
b. Simple contract
c. Specialty contract
d. Seal
33. A business document that outlines the transactions the business has conducted, outstanding
money to be paid, opening and closing balances of the business is specifically a
35. An agreement by the insurer to make good the losses suffered by the insured by means of
money or replacement is a principle of insurance called
36. Which of the following are KEY determinants of the labour supply?
I. Capital
II. Economic conditions
III. Quality of the labour force
IV. Governmental policies
a. l and lll
b. ll, lll and lV
c. lll and lV
d. all of the above
37. A situation where there is a movement of skilled and professional persons from a community
or country is specifically called
a. Rural-urban drift
b. Brain drain
c. Internal migration
d. External migration
38. Converting raw materials into finished goods for example, constructing a building or
processing canned goods are activities belonging to which type of production?
a. Domestic output
b. Primary production
c. Secondary production
d. Tertiary production
39. Which of the following factors should be present for cottage industries to achieve the goal of
employment?
a. l and ll
b. l, ll and lll
c. l and lV
d. l, ll, lll and lV
40. Benefits that accrue to a firm through expansion for example, technical advantages through
automation and mechanization are referred to as
a. Diseconomies of scale
b. Economies of scale
c. Cost savings
d. Marginal costing
41. All of the following are key examples of Primary Sources of data, EXCEPT
42. Kelly has developed a line of exotic, organic soaps. She gives her line of products a distinctive
name and design. She wants to differentiate her soaps. Kelly has engaged in marketing
activity of
a. labelling
b. psychological pricing
c. positioning
d. branding
44. A pricing strategy that enables a firm to price its products below that of its competitors to
enter a segment is BEST described as
a. Advertising
b. Personal selling
c. Public relations
d. Transportation
46. Short term incentives to channel agents and consumers, to encourage sales e.g. free samples,
price discounts and trade discounts describe
a. Advertising
b. Sales promotion
c. Public relations
d. Personal selling
48. Which of the following is NOT a KEY way to ensure good customer service?
a. Warranty
b. Statement of income and expenditure
c. Patenting ideas for good customer service
d. After sales service
49. Investment activity is usually risky in nature. Which of the following are main forms of
investment?
a. l, ll and lV
b. l, ll, lll and lV
c. l, ll and lll
d. l and ll
50. A tax rate system where the proportion of taxes collected rises as income increases is
a. A proportional system
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PRINCIPLES OF BUSINESS
b. A regressive system
c. A progressive system
d. An equitable system
51. The standard of living measures the economic well-being of the citizens. Whereas, the quality
of life describes
52. Government raises revenue to finance expenditure through the levying of taxes. Which of the
following is NOT a main role of taxation?
a. To redistribute income
b. To reduce the demand of certain goods
c. To reduce the importation of certain goods
d. To burden the population
53. To convert Gross National Product (GNP) to Net National Income (NI) the following must be
considered
a. capacity planning
b. logistics
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PRINCIPLES OF BUSINESS
55. The movement of cargo from the origin to the destination using several modes of transport
thus a single transport contract or bill of lading is BEST termed
57. A major section of CARICOM’s operation is the Common External Tariff (CET). This is where a
tariff is applied by all member states at the same rate on imports. The aim of the common
external tariff is
58. Which of the following is NOT a key purpose of the CARIFORUM-EU Economic Partnership
Agreement is
a. To gain easier access to Caribbean and EU regions to invest in and trade with each other
b. To create jobs
c. To help Caribbean economies grow
d. To allow investors to seek the highest rate of return
59. An index of the degree of over- population or under-population in a defined area which
measures the average number of people living in a square mile is
a. Population count
b. Population density
c. Population width
d. Population statistics
60. The loss of jobs as a result of changes in the economy, such as a recession, is specifically,
a. A skill deficit
b. Frictional unemployment
c. A brain drain
d. Cyclical unemployment
Test 3
1. In early economies, it was not always possible to produce to satisfy all individual wants and
needs. Man therefore engaged in trade with each other. This is most appropriately described
as
a. Direct production
b. Indirect production
c. Subsistence production
d. Domestic production
2. A medium of exchange that is acceptable to parties involved in trade and reduces the need to
barter can BEST be called
a. Services
b. Goods
c. Money
d. Coins
3. To transfer money from one bank account to another utilizing computers is appropriately
termed
4. A situation where Country A trades oil to get wheat from Country B, is appropriately called
a. Scarcity
b. Opportunity cost
c. Barter
d. Mutual trade
5. Like sole traders, partners in a partnership business may have unlimited liability. However,
there may be a partner who contributes capital but does not participate in the daily running of
the business. This partner normally has limited liability and is appropriately titled
a. A sleeping partner
b. A slack partner
c. A simple partner
d. A sole partner
7. Shareholders who receive dividends before other shareholders and where the dividend is fixed
are referred to as
a. Ordinary shareholders
b. Preference shareholders
c. Shareholders
d. Directors
8. A legal agreement in which an established company allows a venture to use the established
name of the business and to produce the established company's products is termed a
a. Franchise
b. Conglomerate
c. Multinational
d. Public company
9. There are many social issues that arise from the free market system. An economic system
created to establish more equal distribution of income among citizens by full government
involvement is commonly called
a. A capitalist system
b. A planned or controlled system
c. A mixed system economic system
d. A subsistence economy
10. The profit maximizing motive of the free enterprise system produces a major disadvantage to
the citizens of a country. Which of the following statements best addresses this drawback?
11. Goods such as roads and street lights are usually provided by the state. These goods can be
consumed by each member of the society regardless of income or status levels. They are
nonexcludable in nature. They are
a. Merit goods
b. De-merit goods
c. Public goods
d. State goods
12. The government sets the legal framework in which businesses operate. A major responsibility
of management towards the government is
13. Which of the following is NOT a key role of the Marketing Department?
14. The function of ensuring that a business has put in place the relevant structure to achieve its
objectives; allocating resources and delegating tasks is BEST described as
a. Planning
b. Controlling
c. Directing
d. Organizing
General
Manager
Industrial
Relations
Officer
a. Line relationships
b. Line and staff relationships
c. A functional chart
d. A matrix organization
18. Which of the following statements best describe the key advantages of the informal group in
organizations?
a. l, ll and lll
b. l, ll and lV
c. ll and lll
d. all of the above
20. A situation where both parties to a conflict e.g. management and trade union, agree to let a
third party rule on a matter with the outcome being accepted by the parties is appropriately
termed
a. Conciliation
b. Accommodation
c. Arbitration
d. Mediation
21. While teamwork is likely to bring benefits to a business, there are also limitations to consider. A
MAJOR drawback of teamwork is
22. A major disadvantage of electronic means of communication such as, e-mails, fax messages and
telephone messages is
a. Can be speedy
b. Can be transmitted over large geographical spaces
c. Relies on the electronic capabilities available to the receiver
d. Can be sent to large groups of persons at the same time
24. Which of the following are reasons why an individual will undertake to start a business rather
than work for someone else?
a. l, ll and lll
b. l and lll
c. ll and lV
d. l, ll and lV
25. Preparing a business to meet future challenges and change in the next 5 to 10 years is
26. Finance provided to start up small businesses considered to be risky in nature is called
27. The section of a business plan that outlines the strategies and decisions of the key functional
areas such as finance, production and marketing is a/an
a. Feasibility study
b. Operational plan
c. Forecast
d. Budget
28. A business can have a clearly defined policy of what the business stands for; the acceptable and
unacceptable behaviours; how it would relate to its stakeholders. This is specifically
a. An employment contract
b. An ethical code of conduct
c. A psychological contract
d. A dress code
29. The offeror and the offeree must exchange something for a contract to exist e.g. Z promises to
paint R’s wall, in exchange for R to repair Z’s van. The benefit received by both Z and R is
termed
a. An offer
b. An acceptance
c. A consideration
d. Validity
30. A contract is a legally binding agreement between two or more persons. Whereas, an invitation
to treat is
a. An unconditional acceptance
b. A clearly stated offer
c. An agreement
d. An indication of a party’s willingness to encourage someone else to make an offer
32. A offers his car for sale to B, for $100 000. B accepts the offer, but, introduces a new term to
the acceptance, in that, he wants to buy the car for $95 000. This has created a /an
a. Acceptance
b. Offer
c. Counter offer
d. Consideration
33. Which of the following statements is NOT a situation in which a credit note might be issued?
a. A statement of stock or inventory on a plane that serves as a receipt for the goods
b. A document representing title to the goods
c. A document that states the description and destination of goods
d. A document issued by the importer
35. To allow an insurer to accurately assess insurance premiums, the potential client has to be
truthful and give all relevant information. The insurer must also provide all necessary
information to the client. This is the principle of
a. Proximate cause
b. Insurable interest
c. Utmost good faith
d. Average clause
36. Natural talent, training facilities and quality of education available in a country are key
influences on the
a. Labour supply
b. Labour quality
c. Labour flexibility
d. Skilled labour
37. Plant, machinery and equipment needed to facilitate a start-up business of a risky nature is
referred to as specifically
a. Capital
b. Fixed capital
c. Working capital
d. Venture capital
38. Production levels where output satisfies the domestic market and surplus can be exported to
other countries is described as production at the
a. Surplus level
b. Domestic level
c. Subsistence level
d. Tertiary level
39. A hairdresser and doctor provide direct services to a client or customer. They are involve in
production that is MOST LIKELY at the
a. Primary stage
b. Secondary stage
c. Tertiary stage
d. Domestic stage
41. The office set up to deal with persons who feel they were unfairly treated by a public sector
office or personnel is the
a. Bureau of Standards
b. President
c. Ministry of Consumer Affairs
d. Ombudsman
42. Which of the following is the BEST reason for branding a product?
43. The use of a logo or symbol to distinguish a firm's brand is appropriately termed
a. A patent
b. A franchise
c. A trademark
d. A copyright arrangement
45. A situation where a retailer sells a manufacturer’s branded product at a price below cost, with
the intention of attracting customers is referred to as
a. Loss leader
b. Customer maximization
c. Market share leader
d. Market leader
46. A good sales person should satisfy all of the following criteria EXCEPT
47. A commercial bank is a financial institution that accepts deposits and makes loans available to
Private individuals. Whereas, the central bank is
48. Short term financing for business is usually available for a period up to one year. Which of the
following is NOT a short term measure of financing?
a. Mortgage
b. Bank loan
c. trade credit
d. loan from family
49. A financial institution that provides banking services to low income groups and individuals with
the aim to improve the quality of life of the poor is a/an
a. Insurance company
b. Credit Union
c. Microfinance Agency
d. Stock market
a. To punish businesses
b. To discourage production of certain goods
c. To set price controls on critical goods and services
d. To encourage businesses to locate in rural area
55. The current account in the balance of payments, contain two sections, the balance of trade and
the invisible balance. The balance of trade records
56. To reduce competition and protect local infant industries, a physical limit can be placed on the
quantity of specific goods imported into a country. This is specifically called a/an
a. Tariff
b. Import licence
c. Export licence
d. Quota
57. Which of the following statements outlines the roles of the Organization of American States?
a. l, ll and lV
b. ll, lll and lV
c. l, ll and lll
d. all of the above
d. Promoting the free movement of people, goods and services among member countries
59. When a country has a high debt burden it can lead to the effect of ‘financial austerity’. Which
statement BEST describes this effect?
60. Manufacturing industries form part of the secondary sector. Which of the following outline key
ways in which the government can develop the manufacturing sector?
a. l, ll and lll
b. ll, lll and lV
c. l and ll
d. l, ll and lV
Test 4
1. The situation where an individual produces what he/she needs e.g. through agriculture or
fishing is termed
a. Division of labour
b. Direct production
c. Indirect production
d. Exchange
2. A facility offered by the bank where a customer in using the card takes a loan from the bank to
be repaid with interest is called
a. Loan facility
b. Bank card facility
c. Credit card facility
d. Debit card facility
3. Some banks facilitate customers paying utility bills, checking account balances and transferring
money between accounts using the telephone. This is most appropriately described as
a. Electronic transfer
b. Debit card transfer
c. Credit card transaction
d. Telebanking
4. A document used to settle debts in trade and may allow for a credit facility for an importer is
a. Loan
b. Bill of Exchange
c. Airway Bill
d. Credit Card Facility
5. A co-operative is an incorporated business where the members are also the owners. Which of
the following statements are principles of co-operatives?
I. Membership is voluntary
II. One member, one vote
III. Unlimited liability
IV. Surplus is allocated to members
a. l and lll
b. l, ll and lll
c. l, ll and lV
d. l, ll, lll and lV
6. Shareholders who receive their dividend payment after preference shareholders and may not
receive any dividends if the company does not make a profit are termed
a. Ordinary shareholders
b. Preferred shareholders
c. Directors
d. Major shareholders
7. A company where shares are traded on the stock exchange is BEST described as
a. Partnership
b. Public company
c. Private company
d. Conglomerate
8. Popular franchises are KFC, Pizza Hut and Burger King. A franchise is a licence granted to a
trader or business to sell or manufacture a particular good or service for a period of time.
Which of the following statements outline a key advantage of a franchise?
9. An economic system in which the factors of production are shared by the state and private
business owners is commonly referred to as
a. A planned economy
b. A free economy
c. A mixed economy
d. A subsistence economy
10. All of the following statements are advantages of a command economy, EXCEPT
11. Which of the following is one key way that the state seeks to restrict the consumption of
demerit goods e.g. cigarettes?
12. Customers represent a major stakeholder group for an organization. Which of the following is
NOT a responsibility of management to customers?
13. All of the following are functions of the Human Resource Department, EXCEPT
a. Co-ordination
b. Control
c. Planning
d. Organizing
15. The highest level of needs according to Maslow is self-actualization. The organization can assist
the worker to achieve this level of needs in which of the following ways?
16. The process whereby a manager assigns tasks to subordinated who are qualified and capable is
BEST referred to as
a. Authority
b. Responsibility
c. Delegation
d. Empowerment
17. Retirement benefits such as gratuity, company pension, profit sharing and stock options are
specifically
a. recognition benefits
b. financial incentives
c. non-financial incentives
d. entitlement benefits
18. Arbitration is the third party involvement strategy to resolve conflict whereby
20. A legally recognized third party that represents workers interest is specifically named
a. A non-governmental organization
b. A trade union
c. A lobby group
d. A stakeholder
21. Which of the following is NOT a key factor to consider in choosing members of a team?
22. Negotiations between management and the workers representatives to arrive at the terms of
the employment relationship is
a. Mediation
b. Collective bargaining
c. Industrial action
d. Grievance procedure
23. A key advantage of a Management Information System (MIS) is that it provides a data base for
the organization. Which of the following is NOT an example of a MIS?
25. Primary market research deals with data collection from the source or first-hand research.
Which of the following is NOT a source of primary research?
26. Which of the following factors is NOT a key influence on consumer behaviour?
27. A business plan is a comprehensive written description of the elements of the proposed
business. Which of the statements is NOT included in the Marketing section?
a. Advertising plans
b. Competitor analysis
c. Trends in the market
d. Employee rewards and recognition plans
28. A study that investigates whether a new business idea is likely to be profitable is called a/an
a. Market study
b. Market segmentation
c. Feasibility study
d. Operational study
29. A contract cannot exist if there is no consideration. Mary agrees to babysit Joan’s children
with the agreement that Joan will pay her $40.00 per hour. The consideration in this case is
30. A simple contract does not have the elements of signing, sealing and delivery. Whereas, a
contract of record is
a. An order of the court e.g. ordering the business to cease a dangerous practice
b. A specialty contract that must be signed
c. An agreement between parties
d. A record by both parties
31. An agreement between two parties to commit an illegal act, makes a contract
a. Valid
b. Void
c. Legally binding
d. Good
32. Simple contracts require consideration. Which of the following rules apply to consideration?
a. l and ll
b. l and lll
c. l, ll and lll
d. all of the above
33. A document that outlines the terms, specifications and requirements of a project or order is
termed
a. Purchase order
b. Statement of record
c. Tender
d. Catalogue
a. l and ll
b. l, ll and lV
c. ll and lll
d. l, ll, lll and lV
35. In the Caribbean region, it is important to note whether goods have been made in the
CARICOM territory. These goods would not incur import tariffs. Which is the most appropriate
document to show this?
a. Insurance certificate
b. Certificate of origin
c. Origin label
d. Import licence
36. An insurance policy that seeks to cover employers from the risk of financial losses they may
sustain, as a result of disloyal and dishonest employees is specifically
a. Fidelity guarantee
b. Indemnity
c. Liability insurance
d. Subrogation
37. Items such as buildings, machines and equipment that are used over a long term period of time
in a business is specifically called
a. Fixed capital
b. Capital
c. Venture capital
d. Working capital
38. An important element in the creation of wealth in an economy, that usually involve the risk
associated with investment and a willingness to undertake risk is
39. Primary production is the first stage of the production process. This involves the extraction
from natural resources. Which of the following is the BEST example of primary production?
a. Construction
b. Baking foodstuff
c. Quarrying
d. Transportation of goods to supermarkets
40. Cottage industries are typically small businesses, usually found in homes, entrepreneurial
estates and community centres. Which of the following is/ are the BEST example(s) of cottage
industries?
41. In a large firm, managers may find it difficult to manage. Problems in areas such as, decision
making, communication and policy implementation may be experienced. These issues are
specifically
42. In the marketing process, which is the most appropriate step to include in the box to complete
the process?
b. Public relations
c. Advertising
d. Distribution
43. Packaging is the outer wrapping for a good. Which of the following statements BEST describe
the functions of packaging?
44. The legal protection by persons or businesses over certain kinds of intellectual material for
example recordings, films and literary works is referred to as
a. A patent
b. A registered design
c. A trademark
d. A copyright
45. Short term incentives to channel agents and consumers, to encourage sales e.g. free samples,
price discounts and trade discounts describe
a. Advertising
b. Sales promotion
c. Public relations
d. Personal selling
47. Inflation is a general increase in price levels. The central bank can seek to reduce inflation
levels by
48. Which of the following is LEAST likely to be a long term method of financing?
a. Mortgage
b. Debenture
c. Hire purchase
d. Trade credit
49. The development of technology has allowed buying and selling on the internet via sites like
AMAZON.com. This is specifically termed
a. E-trading
b. Online trading
c. E-commerce
d. E-business
50. Import tariffs, purchase taxes and property taxes are examples of
a. Direct taxes
b. Indirect taxes
c. Income taxes
d. Transfer payments
52. Which of the following is a MAIN disadvantage of ICT implementation in business operations?
53. Gross Domestic product (GDP) can be measured by using the Income approach. The Income
approach is BEST described as
a. l and ll
b. l, ll and lll
c. l, ll and lV
d. ll, lll and lV
56. Which of the following are KEY benefits of Foreign Investments? I. allows investors to seek
the highest rate of return
II. encourages the spread of best practices across borders
III. the host country gains from technology transfer
IV. the host country gains corporate tax revenues
a. I, II and III only
b. all of the above
c. I, III and IV only
d. I and IV only
57. A main benefit of the Caribbean Single market and Economy (CSME) is
59. Extensive borrowing by a government to finance a deficit budget and where a part of revenue
generated has to go towards financing the debt is specifically called
a. Debt burden
b. Debt financing
c. Debt relief
d. Debt consideration
60. Human capital development aims to develop a flexible, trained and competent workforce.
Which of the following are key ways of investing in people?
a. l, ll and lll
b. ll, lll and lV
c. l, lll and lV
d. l, ll and lV
Test 5
1. In early economies the development of money helped to deal with the problems associated
with the barter system. Which of the following are key problems associated with the barter
system?
I. storage of wealth
II. exchange rate
III. divisibility of the commodity
IV. division of labour and specialization
a. all of the above
b. I,II and III
c. II, III and IV
d. I, II and IV
2. Placing money in a savings account that can be accessed at a future date describes which of
the functions of money?
3. When parties to trade live in different countries or are geographically far apart, they can use a
written agreement where the drawer instructs the drawer to make a payment of a specified
amount by a specified time to a payee. This situation is appropriately termed
a. Credit arrangement
b. Debit arrangement
c. Electronic transfer
d. Bill of exchange
4. The utilization of the internet to buy and sell goods and services for example via a website is
specifically called
a. E-bay
b. E-banking
c. E-commerce
d. E-business
5. The process that a business goes through to acquire its own identity and to be able to engage
in trade under its own name is known as
a. Memorandum of association
b. Incorporation
c. Articles of association
d. Deed of partnership
7. A type of co-operative created by people who are involved in production and assist members
to source and purchase equipment is commonly called a
a. Retail co-operative
b. Workers’ co-operative
c. Credit union
d. Producer co-operative
8. Nationalized industries are public corporations which are controlled by the state. Which
statement outlines the MAIN objective of nationalized industries
9. All of the following are disadvantages of the free market system EXCEPT
10. In a capitalist or free market system the prices of goods and services are determined by
11. A franchisee pays a percentage of money earned to the franchisor for use of the business
image. This payment is specifically termed
a. Royalties
b. Dues
c. Fees
d. Credit
12. A corporate social responsibility policy outlines the organizations responsibilities to the
environment and wider society. Which of the following statements is a major responsibility of
management to the society?
13. All functional departments have a responsibility to implement health and safety practices.
Which department is responsible for developing the health and safety policy?
a. Production
b. Finance
c. Marketing
d. Human resources
14. The function of authorizing a subordinate to perform a task or make a decision, but, where
management has the ultimate responsibility for the decision or task is referred to as
a. Motivation
b. Delegation
c. Organization
d. Decentralization
15. An organization can meet the esteem needs of workers by
a. Authority
b. Responsibility
c. Functional organization
d. Delegation
17. The method of communication used by members of the informal group to transmit personal
information is
b. The grapevine
c. The company’s official intranet
d. The company’s bulletin board
18. One of the major objectives of an organization is growth. Which of the following statements
are major effects of growth in an organization?
a. l and ll
b. ll and lll
c. ll, lll and lV
d. all of the above
19. A leadership style where the leader or manager leaves the workers to accomplish a task, but,
assist when called upon to do so is specifically
20. Both management and workers can respond negatively in dealing with conflict. Which of the
following are negative ways management can respond to situations?
a. l only
b. l, ll and lll
c. ll, lll and lV
d. all of the above
21. Which of the following are key legal issues that must be considered in establishing and
operating a business?
I. registering the business
II. deducting and remitting income taxes
III. observing relevant legislation or laws
IV. establishing a code of ethics
a. all of the above
b. I, II,III
c. II,III and IV
d. III and IV only
22. Unethical business practices such as immoral behaviour, bullying, and dishonest conduct carry
consequences. Which of the following is NOT a key consequence of unethical behaviour
23. In a Marketing career, a person can branch off into many job areas. Which of the following is
NOT a key job path in Marketing?
24. The Research and Development function in a business is primarily responsible for
27. Which of the following is NOT included in the financial section of the business plan?
a. Costs of equipment
b. Projected costs of operating the business
c. Projection of income and expenditure
d. The overall compensation package
28. The feasibility study should seek to answer the following questions, EXCEPT
29. An advertisement in the newspaper inviting bids or tenders for government projects is a/an
a. Offer
b. Invitation to treat
c. Acceptance
d. Guarantee
30. A contract that is formally laid out, with, the obligations of the parties written down, for
example, a land sale is
a. A contract of record
b. A simple contract
c. A specialty contract
d. A general contract
32. A document used in international trade that gives a record of goods; shows title to goods and
acts as a receipt for the goods is specifically
a. Bill of lading
b. Airway bill
c. Import licence
d. Bill of exchange
33. An internal inventory control document that lists the quantity of a product that is available is
called
a. Purchase requisition
b. Statement of record
c. Airway bill
d. Stock card
37. Stock of raw materials, work in progress, cash balance are used for the day to day operations
and constantly being used up in the production process are specifically
a. Venture capital
b. Fixed capital
c. Working capital
d. Human capital
38. A construction firm links with the distributor of large machinery to get construction equipment
e.g. trucks, cranes and backhoes, to use in the production process. This is an example of
a. Backward linkage
b. Forward linkage
c. Personal selling
d. Integration
39. Bulk buying which reduces the cost of production is commonly termed
40. The following pricing strategy: Price=unit variable cost + fixed costs + mark up; is BEST
described as
a. Penetration pricing
b. Cost-plus pricing
c. Market oriented pricing
d. Promotional pricing
42. A distribution chain that involves the use of wholesalers and retailers to get the product from
the producer to the consumer is specifically a/an
43. A person who assists buyers and sellers in overseas trade or an insurance agent who sells
insurance for different companies is commonly called a
a. retailer
b. wholesaler
c. broker
d. consume
a. Storage costs
b. Red tape or unnecessary paper work
c. Inconsistency in weights, measures and sizes
d. Price of shares in the company
45. The choice of an appropriate transport method is critical to the distribution activity. Which of
the following is NOT a key factor in influencing this choice?
a. Cost of transport
b. Warehousing costs
c. Insurance costs
d. Cost of production
46. A situation where a supplier allows a customer, a certain period of time after receipt of goods,
to pay, is appropriately termed a
a. Cash discount
b. Trade discount
c. Trade credit
d. Discount
47. If a commercial bank has a cash deficit and has exhausted all means of acquiring money, then,
the central bank can provide a loan to prevent the commercial bank from failing. In this
capacity the central bank acts as
a. A loan provider
b. A lender of last resort
c. A commercial bank
d. A credit facility
a. Debenture
b. Shares
c. Dividends
d. Government grant
49. The use of small amounts of capital from a large number of individuals to finance a new
business venture is appropriately termed
a. micro finance
b. angel investment
c. crowd funding
d. equity
50. A person’s annual income is $60 000.00. A tax of 25% is levied on all income. So, the tax paid
for the year is $15 000.00. This is an example of which taxation system?
a. Regressive system
b. Progressive system
c. Proportional system
d. Equal system
51. A corporation tax reduces the profitability of the firm. However, a subsidy to the firm
52. GDP in Country D for 2013 was $ 300 000 000 Population in Country D was 1.5 million persons
53. Gross Domestic Product (GDP) is the total value of goods and services produced in a country in
one year. To calculate Gross national product, the GDP must be added to
a. Depreciation of assets
b. Only income from investments abroad
c. Net property incomes from abroad
d. Only money remittance from abroad
54. Adding consumer expenditure, investment expenditure, government expenditure and net
exports describes which approach to measuring National Income?
55. A custom duty imposed on goods imported into a country, with the intention to raise the price
of foreign goods in order to reduce demand is a/an
a. Quota
b. Embargo
c. Subsidy
d. Tariff
57. Which statement is LEAST LIKELY to be a goal of the World Trade Organization (WTO)?
58. A financial institution that offers assistance in the event of natural disasters and finances social
programmes in the Caribbean is
59. A situation where two distinct sectors in an economy exist, where one sector is highly
industrialized and capital intensive and the other sector based on primary production and uses
less technology is characterized as
a. Population density
b. Debt burden
c. Economic dualism
d. Economic development
60. Foreign Direct Investment (FDI) is an important factor in the growth of developing countries.
All of the following outline advantages of Foreign Direct Investment, EXCEPT
Test 6
1. The situation that explains the problem of barter whereby it was difficult to determine how
much of one item should be traded for another is
2. Money helped to solve the problems associated with the barter system. Which of the following
are key characteristics of money?
I. Medium of exchange
II. Acceptability
III. Durability
IV. Indivisibility
3. Which statement best describes the key feature of a centrally planned economic system?
a. Survival
b. Equal distribution of income
c. Profit maximization
d. Market leadership
5. The mixed economy is characterized by the interplay of both the public and private sectors.
The MAIN aim of the public sector is to
a. Maximize revenue
b. Maximize profits
c. Crowd out private sector involvement
d. Provide services or public goods to all members of society
7. It is advisable that a supervisor have a narrow span of control in which of the following
situation
8. Which of the following management functions involve the aligning of departmental objectives
to the overall business goals and ensuring that tasks are interdependent
a. Planning
b. Organizing
c. Controlling
d. Co-ordinating
11. Advancing the welfare of members is a key role of a trade union. Which of the following is NOT
a key purpose of a trade union?
a. Educate workers
12. An entrepreneur is an individual who is willing to undertake the risk of a new business venture.
Which of the following is NOT a MAJOR function of the entrepreneur?
13. Planning is a key management function. The purpose of planning is to allow management to
a. Allocate resources
b. Forecast key problem areas and develop business strategy
c. To recruit and select workers
d. To motivate workers
14. Commercial banks usually require that borrowers provide some measure of security should the
borrower default on loan payments. This is specifically
a. Collateral
b. Dividends
c. Stocks and bonds
d. Fixed deposits
15. A document used to settle debts in trade which allows for a credit facility to be allowed for an
importer is specifically
a. Promissory note
b. Bill of exchange
c. Import licence
d. Import quota
16. A situation where the state or government assumes the assets of a private business entity is
namely
a. Privatization
b. Nationalization
c. Creating a public company
d. Creating a public sector
18. The document that outlines details of new issues of shares and the intention of the company is
termed a/an
a. Prospectus
b. Memorandum of association
c. Articles of association
d. Franchise agreement
19. Statutory deductions such as National Insurance and income tax is the responsibility of
a. Personnel department
b. Finance department
c. Production department
d. Marketing department
20. When managers act in an advisory capacity and provide technical assistance to other managers,
they are acting in
a. A line relationship
b. A staff relationship
c. A functional relationship
d. A consultancy function
21. A document summarising a customer's transactions over time and sent to the customer when
payment is due is a
a. sales invoice
b. debit note
c. statement of account
d. bill of exchange
a. Differences in perception
b. Departmentalization
c. Differences in attitudes
d. Government policy
23. Which of the following factors does NOT affect the validity of a contract?
24. Insurance that covers a business person for financial losses sustained as a result of
embezzlement by employees is termed
a. Fidelity guarantee
b. Full comprehensive
c. Third party
d. Annuity
25. The compensation for losses incurred where a person is restored to the state he/she was in
before the loss occurred ( does not apply to life or personal accident insurance) is
a. indemnity
b. insurable interest
c. proximate cause
d. subrogation
26. Which of the following is NOT a key factor influencing the labour quality available in a country?
27. Short term assets used daily in the business such as, cash in hand and raw materials is
specifically
a. Venture capital
b. Working capital
c. Fixed capital
d. Capital
28. Services such as banking, insurance and advertising fall under which type of production?
a. Tertiary production
b. Secondary production
c. Primary production
d. Subsistence level
29. A small or micro business that produces a good or service using simple technology and small
amount of start- up capital is appropriately termed
a. Service industry
b. Primary industry
c. Cottage industry
d. Subsistence industry
a. Market research
b. Pricing
c. Packaging
d. Industrial relations
a. l and ll
b. ll and lll
c. lll only
d. all of the above
33. Protecting ideas is an important element in remaining competitive in business. Which of the
following are key ways of protecting ideas or regulating the use by others?
I. By copyright
II. By trademark
III. By patent
IV. By franchise agreement
34. Telemarketing, street and market vendors, internet websites, groceries and department stores
are examples of
a. Franchising
b. Retailing
c. Wholesaling
d. Direct selling
35. Main roles of a wholesaler include: I. breaking bulk for sale to retailers
II. undertaking risks by buying in large quantities
III. provides credit facilities to retailers
IV. provides warehousing facilities
a. I, II and III
b. II, III and IV
c. all of the above
d. III and IV only
36. Which of the following is NOT a key determinant of consumer buying behaviour?
37. The movement of cargo from origin to destination using several modes of transport. Each
mode has a different transport provider operating under its own transport contract, is
specifically a. multimodal transport
b. digital delivery
c. free on board
d. intermodal transport
38. A system designed to capture, analyze, store, manipulate, present and manage all type of data
such as maps and can solve routing problems by analyzing a number of possible solutions is
a. hub
b. GIS
c. GPS
d. Portnet
39. Which of the following are sources of short term financing for a business?
I. Hire purchase
II. Overdraft
III. Debentures
IV. Trade credit
41. Which of the following measures is used by government to reduce the disposable income of
consumers?
42. Government seeks to regulate business activity through which of the following activities?
a. l, ll and lV
b. l, ll and lll
c. all of the above
d. ll, lll and lV
43. Payments made by government to producers with the intention of increasing supply of the
good to the society at reduced costs is specifically termed
a. Trade credit
b. Tax reduction
c. Subsidies
d. Technical payments
44. Private investors who tend to finance ventures in early stages of survival for an ownership stake
is
a. venture capitalist
b. angel investors
c. crowd investor
d. early investor
45. A key drawback of using per capita income to measure standard of living is
a. Per capita income does not show how the income is actually distributed in the economy
b. Per capita income is a marginal figure of income in the economy
c. The problem of double counting
d. The problem of the hidden economy and income detection
46. Which of the following are key indicators of quality of life in an economy?
a. l only
b. l, ll, lll and lV
c. l, ll and lll
d. l, ll and lV
a. Economic development
b. Inflation
c. Human resource development
d. Economic growth
a. A customer giving the bank instructions to make payments of varying amounts from the
customer’s account
b. A customer instructing the bank to make payments of fixed amounts from the
customer’s account
c. The bank taking the initiative to withdraw amounts from the customer’s account
d. The bank acting on behalf of the recipient of the money
a. opening a venture
b. expanding a factory
c. money placed in a bank account
d. placing money in mutual funds
51. A direct tax that is levied on transactions such as the sale of land or financial transactions is
a/an
a. income tax
b. stamp duty
c. capital transfer tax
d. excise duty
52. A payment made to a producers intended to reduce the cost of production, thereby reducing
the price to consumers is referred to as
a. a tax
b. a subsidy
c. venture capital
d. microfinance
53. The distribution of part of a company’s earnings and profit to shareholders is specifically
54. A business document sent to the buyer to inform of an error of omission on the invoice e.g. an
undercharge is specifically
a. Debit note
b. Credit note
c. Invoice
d. Statement of record
55. Which of the following methods can the government use to reduce the impact of economic
dualism?
56. Which of the following factors determine the standard of living in a country?
a. l and lll
b. ll and lll
c. l and ll
d. all of the above
58. The World Trade Organization (WTO) is a key player in international trade. Which of the
following statements is NOT a function of the WTO?
59. A MAJOR economic problem facing Caribbean nations is industrialization. Which of the
following is a key drawback of industrialization?
60. Which of the following are KEY disadvantages of foreign direct Investment?
a. l, ll and lll
b. ll, lll and lV
c. l, lll and lV
d. all of the above
Test 7
1. A situation where excess production was traded to get what one could not produce is
specifically termed
a. Direct production
I. Divisibility
II. Store of value
III. Measure of value
IV. Durability
a. The business and the owners are one and the same
b. The full obligation of the business is borne by the owners
c. The business is registered as a separate legal entity form its owners
d. The obligation of the business only extends to the shareholders investment
a. The obligation of the shareholders extend beyond their investment in the business
b. The obligation of the shareholders extend only to their investment in the business
c. The business is a legal entity
d. The business and the owners are one and the same
6. A company with 2 to 20 shareholders and where shares are family owned is specifically\
a. a public company
b. a conglomerate
c. a co-operative
d. a private company
8. A good that is non-excludable where all members of the society stand to benefit from its
production is termed
a. Public good
b. A private good
c. A merit good
d. A de-merit good
9. Which of the statements below reflect the essential characteristics of a market or capitalist
economy?
10. Which of the following is NOT a key function of the finance department in an organization?
11. Performance Management strategies e.g. employee appraisals are developed by the
12. The management team at BVC Enterprises engages in job design, resource allocation and
defining the relationships between positions in the organization hierarchy. The team is
engaging in the function of
a. Planning
b. Organizing
c. Directing
d. Controlling
13. Which of the following is NOT a key responsibility of management to the government?
14. A leadership style where the leader inspires because of his or her personality but may lack the
skills needed to lead in some situations is specifically
16. Max belongs to a group in his organization. This group is based on Max’s need to interact with
persons his own age. This group is appropriately called
a. An informal group
b. A formal group
c. A task force
d. A committee
17. CVS Public Limited Company, engages its employees in projects requiring teamwork and ensures
employee participation in social events, this is in keeping with meeting employees’
a. Differences in perceptions
b. Noise
c. Filtering of messages
d. Active listening
20. Which of the following are MAJOR opportunities facing organizations in the business
environment?
21. Which aspect of a business plan gives an outline of the business structure, management levels,
resource allocation and legal requirements of the business?
22. A situation where the content of a contract is illegal e.g. human trafficking or selling illegal drugs
makes the contract
a. Void
b. Valid
c. A counter offer
d. An invitation to treat
23. Advertising a property for sale in the daily newspaper is specifically a/an
a. Offer
b. Agreement
c. Invitation to treat
d. Counter offer
24. Mr. Jonas insured his property for $800 000.00 in 1995. Today it is worth $1 500 000.00. Mr.
Jonas did not upgrade the insurance policy to reflect this change. His property was burnt in an
electrical fire. Mr. Jonas received a ratio of $ 800 000.00 in compensation. His property was
under insured. This reflects the principle of
25. A type of insurance policy that is taken for a specified period of time e.g. mortgage guarantee
policy is specifically a/an
26. A business document that provides details to a potential client about products available for sale
and their available sizes, quality, price and colours and steps for ordering is termed a/an
a. Letter of enquiry
b. Requisition
c. Quotation
d. Catalogue
27. NMB Ltd. did not include transport costs in an invoice sent to customer B. Which of the
following documents must be sent to the customer to rectify the problem of the undercharge?
a. A debit note
b. A credit note
c. A statement of account
d. A stock card
28. A document that prevents non-member countries from entering a free trade arrangement
without paying tariffs is
a. Airway bill
b. Certificate of origin
c. Bill of lading
d. Import licence
30. Home care activities such as baby sitting, geriatric care or small business such as hair dressing is
specifically
a. Primary production
b. Secondary production
c. Tertiary production
d. Extractive industry
31. Which of the following is an appropriate form of transport for perishable food items and flowers
being transported from one country to another?
32. A chain of distribution involves a series of stages that a product goes through to reach the
consumer. Which of the following represents a direct chain of distribution?
a. Producer-website-consumer
b. Producer-wholesaler-consumer
c. Producer-consumer
d. Producer-retailer-consumer
35. A long term loan taken by the firm that is issued on the stock exchange at a fixed rate of interest
is
a. a debenture
b. lease
c. share capital
d. trade credit
37. A basic financial statement that shows the revenue and expenses for a venture is
38. Highly liquid short term financial instruments are traded in which type of market?
a. Capital market
b. Money market
c. Buyer’s market
d. Seller’s market
a. Overdraft
b. Hire purchase
c. Short term loans
d. Selling assets
41. A tax rate system where all citizens regardless of income level pay the same rate in tax is a
a. Proportional system
b. Regressive tax system
c. Progressive tax system
d. Simple tax system
42. Which of the following are MAIN problems in computing national income figures?
I. Double counting
a. One country is more efficient in the production of a good than another country
b. Automation leads to economies of scale
c. One country will produce a good in which it has the lower opportunity cost than another
country
d. Expertise leads to increase production
45. International trade may produce certain drawbacks for a country. Which of the following is a
MAIN disadvantage of international trade?
48. Main forms of government assistance to business are I. providing funding for small
entrepreneurs
II. providing training and technical assistance to persons in areas of national development
III. providing subsidies and grants
IV. providing tax incentives to encourage investment in business a.
I, II and III
b. all of the above
c. II, III and IV
d. III and IV
d. increase unemployment
50. The process of selling the assets of government owned business to the private sector is
commonly called
a. Privatization
b. Nationalization
c. Industrialization
d. Entrepreneurship
51. In order to address the problem of increasing inflation (general increase in the price levels in a
country), the government can engage in which of the following actions
a. Increase taxation
b. Reduce taxation
c. Increase government spending
d. Reduce interest rates to make borrowing more attractive
52. Problems associated with industrialization include high energy costs, disposal of industrial waste
and reliance on the primary sector. What action can be taken to address these issues?
54. Unemployment that occurs as a result of persons not having the capacity to undertake or
engage in employment is specifically
a. Residual unemployment
b. Frictional unemployment
c. Technological unemployment
d. Structural unemployment
55. Government can implement which of the following initiatives to deal with the loss of a skilled
labour force?
57. The promotion of free movement of goods, services, capital and people among member states
is the prime objective of which association?
58. Which of the following is NOT a key responsibility of governments in Caribbean nations?
a. freedom of speech
b. National income per capita
c. life expectancy
d. average personal disposable income
Test 8
1. Money helped to address the problems of the barter system. Which of the following are key
functions of money
I. Medium of exchange
II. Store of value
III. Acceptability
IV. Measure of value
2. Mass production is the production of goods on a large scale. It usually involves automation of
processes. Which of the following is a KEY disadvantage of mass production?
3. Miss. Lue decides to invest her back pay by buying shares in a public company. Miss Lue will
bear the obligation of
a. Limited liability
b. Unlimited liability
c. Incorporation
d. Un-incorporation
4. Country B’s government decides to take over the assets of a private water company. This is a
situation of
a. Nationalization
b. Privatization
c. Conglomeration
d. Horizontal merger
5. Company T has decided to automate its production line. This means that there is less need for
manual labour. Production will become
a. Capital intensive
b. Labour intensive
c. Routine
d. Job or unit production
9. All functional area managers are responsible for ensuring that there is harmony among the
various departments and that there is an understanding that all departments must work
together to achieve the organizational goals. This is specifically the function of
a. Controlling
b. Directing
c. Organizing
d. Co-ordinating
10. Customer satisfaction is a major aim of all organizations. Which of the following is a KEY
responsibility of management to customers?
11. Autocratic leadership style may be relevant to situations that require quick, decisive decision
making however, it may result in which of the following drawbacks?
12. A situation where labour is added to a fixed factor such as a plant site results in increased total
productivity. However, as more labour is added the fixed factor becomes strained e.g. less room
to move, more conflict. After some time the extra worker’s productivity begins to fall. This is
the principle of
a. Ceteris paribus
b. Diminishing marginal returns
c. Economies of scale
d. Diseconomies of scale
13. To avoid conflict in the organization, it is important to ensure that each person receives
commands from one superior or manager. The is the organization principle of
a. Delegation
b. Span of control
c. Unity of command
d. Chain of command
14. An example of a management information system is the transaction processing system. This is
specifically designed to
15. According to motivation theorist, the individual has a need to be recognized for his or her
individual contribution. The organization can meet this level of needs by
17. A business faces certain opportunities and challenges in its external environment. Which of the
following are critical challenges facing organizations?
a. l and ll
b. l, ll and lll
c. l, lll and lV
d. ll, lll and lV
18. Mary buys a piece of furniture from a large retail store. She paid a down payment and is
supposed to pay equal instalments for the next eighteen months. Mary assumes possession of
the furniture. Which type of consideration is exhibited by Mary in this contract?
a. General consideration
b. Executory consideration
c. Executed consideration
d. Past consideration
a. Agreement
b. Frustration
c. Breach
d. Legislation
20. ZXC Ltd. realized that a customer has been given faulty goods in a shipment that was paid for by
the customer. The sales manager issues a specific document to rectify the error and provide
compensation for the faulty goods. This is termed
a. A debit note
b. A credit note
c. A statement of account
d. A stock check
a. venture capital
b. fixed capital
c. working capital
d. capital equipment
22. Which of the following are KEY determinants of the labour supply in a country?
23. Company D is engaged in production that meets local demand as well some measure of foreign
demand for the products. This is specifically production at the
a. Subsistence level
b. Surplus level
c. Domestic level
d. Tertiary level
24. When two firms at different stages of the production process join, this is referred to a
a. takeover
b. horizontal merger
c. vertical merger
d. conglomerate
25. MAJOR disadvantages of large business include all of the following EXCEPT
26. A business can expand through external growth. A merger where two or more organizations at
the same stage of production join to form one legal entity is appropriately termed
a. A horizontal merger
b. A vertical merger
c. A takeover
d. A conglomeration
28. Which of the following is NOT a main factor in locating a clothing factory?
I. Increased output
II. Increased unemployment
III. Increased maintenance costs
IV. Increased investment costs
a. Market research
b. Distribution
c. Industrial relations
d. Branding
31. Creating a marketing strategy to help the product get noticed by the customer and occupy a
place in the minds of the target customer is appropriately
a. Market segmentation
b. Market targeting
c. Market positioning
d. Market research
32. Market vendors, door to door sales personnel and an internet website are specifically
a. Wholesalers
b. Producers
c. Retailers
d. Consumers
33. The marketing research department of Company A is engaged in data collection. The team uses
internet sites and trade journals to gather data. They are collecting information from which
source?
a. Primary sources
b. Secondary sources
c. Quantitative methods
d. Qualitative methods
34. Which of the following are the MAIN roles of the central bank?
a. l, ll and lll
b. l, ll, lll and lV
c. ll, lll and lV
d. l and lV
35. Which statement clearly explains the role of the central bank as a ‘lender of last resort’?
36. The stock market is a situation where shares and securities are traded. Which statement
explains the role of the stock market for firms?
a. Ordinary shares
b. Preference shares
c. debentures
d. loan stock
38. 'Electronic delivery of information including data and content across multiple platforms', is
termed
39. Which of the following represent important long term sources of financing available to firms?
I. Share capital
II. Leasing
III. Debentures
IV. Trade credit
a. l, ll and lll
b. l, ll, lll and lV
c. l and ll
d. l and lll
40. Savings is that part of income that is not used up for consumption. All of the following are forms
of savings EXCEPT
a. Opening a business
b. Placing money in a fixed deposit
c. Credit union deposits
d. Placing money in a safe at home
42. Which of the following are specific areas in which government seeks to regulate business
activity?
I. Consumer protection
II. Zoning or land control
III. Taxation
IV. Waste disposal
43. Taxation should satisfy certain basic principles. Which of the following is NOT a principle of
taxation?
44. In order to prevent the importation of certain de-merit goods or to address a balance of
payment deficit, the government can implement which type of tax?
a. Tariff
b. Excise duty
c. Embargo
d. Quota
45. Mr. Eton’s monthly salary increased in January. This was accompanied by a simultaneous
increase in the percentage of income paid in taxes. This type of system is
a. Proportional
b. Progressive
c. Regressive
d. Equitable
46. 'A computer tool which enables the e-processing of authorizations, permits, certificates and
other customs documents', is called a/an
a. Portnet
b. e-processing system
c. GPS
d. GIS
47. Taking into consideration the sum of wages, profits, rents and net property incomes from
abroad suggest calculating national income using which method?
a. Salaries
b. Wages
c. Rent
d. Social welfare grants
49. Government can MOST likely effect an improvement in the economic wellbeing of citizens by
50. 'A regional cross-docking point where products from multiple supply sources arrive and are
sorted in accordance to the needs of the destination points,' is termed a/an
a. GIS
b. DHL
c. e-business
d. logistics hub
51. 'A satellite navigation system used to determine the ground position of an object,' is termed a
a. GPS
b. GIS
c. Portnet
d. Hub
52. Which of the following statements can be used to argue FOR the nationalization of a country’s
water supply?
53. Which of the following are means to eradicate a country’s ‘debt burden’?
54. Caribbean nations face the problem of inadequate sources of capital. This is in terms of
technology, equipment, machinery, plant sites and infrastructure. One way of addressing this
problem is
55. Which one of the following initiatives can the government use to reduce the unemployment
rate in a country?
56. Which of the following is NOT a main function of The Caribbean Development Bank?
57. Which of the following are KEY indicators of economic development in a developing country?
a. l, ll and lll
b. l, ll, ll and lV
c. lll and lV
d. ll, lll and lV
58. Which of the following is NOT a main function of the Caribbean Single Market and Economy
(CSME)?
59. A country’s national income for 2012 was $600 million. The population was 2.5 million people.
Calculate the country’s per capita income for the year ending 2012.
a. $240
b. $450
c. $1000
d. $390
60. Based in the initiatives listed below. Which measures can encourage more private sector
domestic investment in the local economy?
ANSWER KEY
TEST 1
1 13 25 37 49
2 14 26 38 50
3 15 27 39 51
4 16 28 40 52
5 17 29 41 53
6 18 30 42 54
7 19 31 43 55
8 20 32 44 56
9 21 33 45 57
10 22 34 46 58
11 23 35 47 59
12 24 36 48 60
TEST 2
1 13 25 37 49
2 14 26 38 50
3 15 27 39 51
4 16 28 40 52
5 17 29 41 53
6 18 30 42 54
7 19 31 43 55
8 20 32 44 56
9 21 33 45 57
10 22 34 46 58
11 23 35 47 59
12 24 36 48 60
TEST 3
1 13 25 37 49
2 14 26 38 50
3 15 27 39 51
4 16 28 40 52
5 17 29 41 53
6 18 30 42 54
7 19 31 43 55
8 20 32 44 56
9 21 33 45 57
10 22 34 46 58
11 23 35 47 59
12 24 36 48 60
TEST 4
1 13 25 37 49
2 14 26 38 50
3 15 27 39 51
4 16 28 40 52
5 17 29 41 53
6 18 30 42 54
7 19 31 43 55
8 20 32 44 56
9 21 33 45 57
10 22 34 46 58
11 23 35 47 59
12 24 36 48 60
TEST 5
1 13 25 37 49
2 14 26 38 50
3 15 27 39 51
4 16 28 40 52
5 17 29 41 53
6 18 30 42 54
7 19 31 43 55
8 20 32 44 56
9 21 33 45 57
10 22 34 46 58
11 23 35 47 59
12 24 36 48 60
TEST 6
1 13 25 37 49
2 14 26 38 50
3 15 27 39 51
4 16 28 40 52
5 17 29 41 53
6 18 30 42 54
7 19 31 43 55
8 20 32 44 56
9 21 33 45 57
10 22 34 46 58
11 23 35 47 59
12 24 36 48 60
TEST 7
1 13 25 37 49
2 14 26 38 50
3 15 27 39 51
4 16 28 40 52
5 17 29 41 53
6 18 30 42 54
7 19 31 43 55
8 20 32 44 56
9 21 33 45 57
10 22 34 46 58
11 23 35 47 59
12 24 36 48 60
TEST 8
1 13 25 37 49
2 14 26 38 50
3 15 27 39 51
4 16 28 40 52
5 17 29 41 53
6 18 30 42 54
7 19 31 43 55
8 20 32 44 56
9 21 33 45 57
10 22 34 46 58
11 23 35 47 59
12 24 36 48 60
UNIT ANSWER KEY
UNIT ANSWER KEY
1 2 3 1. c 4 1. b 5
2. a 2. b
3. d 3. a 4. b 1. b 2.
4. b 5. 5. b 6. c b
1. b a 6. b 7. b 7. d 8. b 3. c
2. c 8. b 9. b 9. c 4. b 5. a
1. b 2. d 3. d 10. b 11. 10. a 11. 6. c 7. b 8.
3. d 4. c 4. a c 12. d b 12. a c 9. d
5. c 6. c 5. b 13. b 13. b 14. 10. a 11.
7. c 8. d 6. b 14. d c b 12. b
9. c 7. c 15. b 13. b 14.
10. b 8. b d
11. d 12. 9. b 15. a
d 13. b 10. c 11.
14. d 15. d 12. c
d 13. d 14.
16. b d 15. d
17. b 16. d 17.
18. b c 18. b
19. d 19. a
20. b 20. b
6 7 8 9 10
1. 2.
1. d 3. 4.
2. b 5. 6.
3. c 4. 7. 8.
1. b 2. c 5. d 6. b 1. d 2.
9.
c 3. c 4. 7. a 8. c 9. d 3. c 4. 1. b 2. 10.
d 5. c 6. c d 5. d 6. a 3. c 4. 11.
b 7. d 8. 10. d 11. d 7. b 8. c 5. c 6. 12. a b
d 9. d d a 9. c c 7. c 8. 13. c d
10. c 11. 10. b 11. a 9. c 14. b d
12. b
b b
d 12. d c 12. c 10. c 11.
c d
13. c 13. c c 12. b b c
14. b 14. d 13. d b d
15. c 15. d 15. b
16. c
SBA GUIDE
Based on: (Caribbean Examinations Council; Syllabus Principles of Business; Effective for examinations
from May-June 2019; Caribbean Secondary Education Certificate)
Note
Each candidate must submit a report on a project done in the preparation for the final examination;
Data gathering can be done individually or in groups;
All group members must be identified in the report;
The SBA report 'should not exceed 1000 words', appendices are not included in word limit; A
project report exceeding the maximum 1000 words will incur a penalty of 10% of score gained;
Student's report should be submitted 'electronically' and following a suggested format.
Any student doing more than one subject in the cognate group e.g. POA & POB; POB &ECON.; POA & ECON
or POB, POA & ECON., is required to submit one SBA project report.
The report should be based on a topic that is relevant to the cognate area subjects undertaken by the
student e.g. POB and POA.
Objectives/Research Questions will reflect the relevant Cognate areas
Step 1: Identify the issue, topic or problem to be investigated. This must be in a business related area of
study e.g. POB, POA, ECON.). This will form the Research Topic and the Research Problem or Thesis
Statement.
Step 2: Discuss the background of the issue, topic or problem: Consider the following points;
Two to three research questions this must match to relevant syllabus objective
If study is based on one subject e.g. POB, then syllabus objectives for that subject must be identified
e.g.Syllabus Objective: POB Section (-) Objective (-)
If study is based on cognate subjects, then relevant syllabus objectives must be identified for each subject
and a combination is presented. POB Section (-) Objective (-)
Econ. Section (-) Objective (-)
Step 4: Describe the methodology and data collection instruments. This should include for example:
Primary data sources e.g. interview (include questions in appendix); State why interview was conducted.
State the type of data gathered i.e. qualitative versus quantitative data;
Secondary data sources e.g. published business data like final accounts, studies in journals (include in
appendix). State type of data i.e. qualitative versus quantitative data. State why this type of source was
used.
State limitations of the data collection process.
Note: quantitative data usually deals with numbers and statistics; qualitative data usually deals with
words, texts;
Quantitative data collection methods can include: obtaining data form records; administering surveys
/questionnaires with closed ended questions;
Qualitative data collection used for example, more open ended questions in interviews;
Realistic suggestions based on findings e.g. if a change is suggested, consider what needs to be changed,
how it will come about and what resources may be needed
Consider the overall benefit of the recommendation; how will the recommendation help resolve certain
issues
Names of authors, publishers, name and date of publication e.g. APA Style or Chicago Manual
Alphabetical order
Document retrieved from http:// www.----------------------
Person interviewed: Name, interview via personal communication, Date
Supplementary material at the end of the study e.g. questionnaire; data tally; interview questions;
excerpts from financial records etc.
Marketing Mix strategies and the impact on small businesses e.g. Mini Marts, Tyre Shops, Stationery and
Photocopying Stores, Book Stores, Clothing Stores, in terms of profitability or increased sales;
Impact of the implementation of e-commerce on the sales of a business;
Impact of financial and non-financial incentives on employee turnover in a fast food outlet;
Effects of the implementation of ICT on the sales level or profitability of a venture;
Bibliography
Leslie, D., Singh, K., Principles of Business for CSEC Examinations, Cambridge University Press (2011),
Cambridge.
Oxford Dictionary of Business and Management, Oxford University Press (2006), Oxford.
Robinson, K., Hamil, S., CXC Principles of Business with SBA, Study Guide and Exercises, Carlong
Publishers (Caribbean Ltd.) (2001), Kingston
Waterman, I. L.,Ramsingh, D., Principles of Business for Caribbean Examinations 4th Edition,
Macmillan Education (2005), Oxford.
Whitcomb, A., Essential Principles of Business for CSEC 3 rd Edition, Pearson Education Ltd. (2006),
Essex.
Worthington, I., Britton, C., The Business Environment 5th Edition, Pearson Education Limited (2006),
Essex.
Other Websites:
hanushek.stanford.edu www.smallbusiness.chron
www.reference.com www.oecd.org
unctad.org
www.scu.edu http://www.imf.org
www.logisticsmgmt.com
www.supplychainopz.com