Principles of Business CSEC Revision Guide done by Massiah Constantine 22010 2 164700 PDF

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PRINCIPLES OF BUSINESSREVISION GUIDE FOR CSEC ®EXAMINATIONSMassiah Constantine Woodbrook Secondary School (Alumni 2021) Trinity College, Moka (Student 2021- 23 ) 7 CSEC® Grade 1s in the 2021 Exam Sitting Including Principles of Business and Principles of AccountsCSEC is a registered trademark of the...

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apte terr 2 – Inte terrna nall Orga rgan zatiiona nall Env nviironment Chap te nizat Objective 1 – Describe the functions of management ................................................................. 17 Objective 2 – Outline the responsibilities of management .......................................................... 18 Objective 3 – Construct simple organizational charts .................................................................. 19 Objective 4 – Interpret simple organizational charts ................................................................... 20 Objective 5 – Outline the essential characteristics of a good leader ........................................... 20 Objective 6 – Discuss the different leadership styles ................................................................... 21 Objective 7 – Identify potential sources of conflict within an organization ................................ 22 Objective 8 – Outline strategies used by employers and employees to gain an upper hand during a period of conflict............................................................................................................. 23 Objective 9 – Describe strategies for the resolution of conflict within an organization.............. 24 Objective 10 – Establish guidelines for the conduct of good management and staff relations in the workplace ............................................................................................................................... 25 Objective 11 – Identify strategies for motivating employees in a business ................................. 25 Objective 12 – Evaluate the role of teamwork in the success of an organization ....................... 25 Objective 13 – Outline strategies for effective communication within an organization ............. 26

Chap te ne s s apte terr 3 – Estab tabllishing a busi sin Objective 1 – Define the term entrepreneur & entrepreneurship............................................... 29 Objective 2 – Explain the functions of an entrepreneur .............................................................. 29 Objective 3 – Identify the characteristics of the average entrepreneur ...................................... 30 Objective 4 – Describe the role of the entrepreneur in the decision-making process ................ 30 Objective 5 – Outline the role of the entrepreneur in the economic development .................... 31

Objective 6 – Outline reasons why an individual may want to establish a business ................... 31 Objective 7 – Outline the essential steps that should be taken in establishing a business ......... 32 Objective 8 – Identify the reasons for preparing a business plan ................................................ 33 Objective 9 – Describe the elements of a business plan .............................................................. 33 Objective 10 – Identify sources of information for conducting research into the establishment of a business ...................................................................................................................................... 34 Objective 11 – Discuss the significance of conducting a feasibility study into the establishment of a business .................................................................................................................................. 35 Objective 12 – Explain the relationship between planning and the operation of a business ...... 35 Objective 13 – Identify regulatory practices instituted by the government for the establishment and conduct of different types of business .................................................................................. 36 Objective 14 – Outline the factors that determine the location of a business ............................ 37 Objective 15 – Explain the significance of collateral and inaccessible capital ............................. 37

Chap apte te terr 4 – Lega gall aasspects of business Objective 1 – Explain the concept of a contract ........................................................................... 40 Objective 2 – Identify the type of contracts ................................................................................. 40 Objective 3 – Describe the characteristics of a simple contract................................................... 40 Objective 4 – Describe the characteristics of a speciality contract .............................................. 41 Objective 5 – Explain the conditions under which offer and acceptance are communicated ..... 41 Objective 6 – Explain ways by which contracts may be terminated or discharged ..................... 42 Objective 7 – Case Studies ............................................................................................................ 43 Objective 8 – Explain why documentation is necessary for business transactions ..................... 44 Objective 9 – Preparing business documents for various purposes ............................................ 45

Objective 10 – Evaluate the principles upon which insurance is based ....................................... 48 Objective 11 – Explain the various types of insurance policies .................................................... 49

Chap apte te terr 5 – Pro Prod ductio ion n Objective 1 – Identify factors in the production of goods and services ....................................... 52 Objective 2 – Identify industries developed from the natural resources of Caribbean territories ....................................................................................................................................................... 53 Objective 3 – Differentiate between production and productivity .............................................. 54 Objective 4 – Explain the importance of productivity .................................................................. 54 Objective 5 – Explain the role of capital in production ................................................................ 56 Objective 6 – Differentiate amongst types of capital ................................................................... 56 Objective 7 – Classify the different types and levels of production ............................................. 57 Objective 8 – Describe the characteristics of cottage industries ................................................. 58 Objective 9 – Outline the functions of small businesses .............................................................. 58 Objective 10 – Discuss the advantages and disadvantages of small business ............................. 59 Objective 11 – Explain how a business grows internally and externally ...................................... 59 Objective 12 – Outline the opportunities for and benefits of developing linkage industries ...... 60 Objective 13 – Explain the effects of growth on a business ......................................................... 61

Chap apte te terr 6 – Marketi ketin ng Objective 1 – Explain the concepts of market and marketing ...................................................... 63 Objective 2 – Explain marketing activities .................................................................................... 64 Objective 3 – Describe the marketing mix .................................................................................... 65

Objective 4 – Describe the factors that influence consumer behaviour ...................................... 66 Objective 5 – Identify factors affecting packaging and presentation of goods ............................ 66 Objective 6 – Describe methods of promoting sales .................................................................... 66 Objective 7 – Identify the techniques of selling ........................................................................... 68 Objective 8 – Explain the various terms of sale ............................................................................ 69 Objective 9 – List the functions of consumer organizations ........................................................ 71 Objective 10 – Outline the role of customer service .................................................................... 72 Objective 11 – Describe forms of customer service ..................................................................... 72 Objective 12 – Explain the concept of intellectual property rights .............................................. 73

Chap te d Supply Ch apte terr 7 – Logist stiics an and Chaain Objective 1 – Explain the term logistics and supply chain operations ......................................... 75 Objective 2 – Describe the links in the chain of distribution ........................................................ 76 Objective 3 – Distinguish between multimodal and intermodal transport.................................. 77 Objective 4 – Interpret information on transport documents ..................................................... 78 Objective 5 – Explain the role of transport in marketing ............................................................. 78 Objective 6 – Identify advantages and challenges of supply chain operations ............................ 79 Objective 7 – Explain the impact of logistics and supply chain operations on the competitiveness of business .................................................................................................................................... 79 Objective 8 – Identify the problems likely to be encountered in distribution ............................. 80 Objective 9 – Outline the measures to mitigate problems in distribution................................... 80 Objective 10 – Outline the impact of information technology on logistics and supply chain operations ..................................................................................................................................... 81

apte terr 8 – Business Finance Chap te Objective 1 – Identify various financial institutions ..................................................................... 83 Objective 2 – Describe the functions and services offered by financial institutions ................... 84 Objective 3 – Describe the role and functions of financial regulatory bodies ............................. 84 Objective 4 – Describe the relationship between financial institutions and regulatory bodies .. 85 Objective 5 – Outline the functions of the Central Bank .............................................................. 85 Objective 6 – Outline ways used by individuals to manage personal income ............................. 86 Objective 7 – Differentiate between savings and investments .................................................... 86 Objective 8 – Explain the concepts of short-term and long-term financing ................................ 87 Objective 9 – Identify personal sources of capital for setting up a business ............................... 88 Objective 10 – Identify purposes of basic financial records for sole traders ............................... 88 Objective 11 – Differentiate between money market and capital market .................................. 89 Objective 12 – Discuss the role of the stock market .................................................................... 89

Chap te ernment in aan n eco nomy apte terr 9 – Ro Rolle o off gov gove con Objective 1 – Outline the responsibilities of government in an economy ................................... 91 Objective 2 – Describe how government can influence businesses to protect the environment ..................................................................................................................................................... ..91 Objective 3 – State the purpose of taxation ................................................................................. 92 Objective 4 – Distinguish between direct and indirect taxes ....................................................... 92 Objective 5 – Describe the forms of assistance offered by the government to business ............ 93 Objective 6 – Discuss the social services provided by the government ....................................... 94

Chap apte te terr 10 – Technol olo ogy and tth he global business env enviiro ron nme men nt Objective 1 – Explain the concept of business technology .......................................................... 96 Objective 2 – Explain the role of information communication technology in business ............... 96 Objective 3 – Describe ways in which technology has influenced banking and commerce ........ 97 Objective 4 – Describe the types of information communication technology used in business… ....................................................................................................................................................... 98 Objective 5 – Distinguish between e-commerce and e-business ................................................. 99 Objective 6 – Identify ways in which information communication technology can be used to improve the efficiency of business operations ............................................................................. 99 Objective 7 – Discuss the ethical implications of the use of information communication technology in a business ............................................................................................................. 100 Objective 8 – Outline the factors that determine a country’s standard of living and quality of life ..................................................................................................................................................... 100 Objective 9 – Explain national income and its variations ........................................................... 101 Objective 10 – Explain how each of these concepts affects growth and development and impact standard of living and quality of life ........................................................................................... 102 Objective 11 – Describe the role of education in economic growth and development ............ 103 Objective 12 – Outline the reasons for international trade ....................................................... 103 Objective 13 – Identify the functions of major economic institutions and systems .................. 103 Objective 14 – Explain how economic institutions and trade agreements impact the Caribbean ..................................................................................................................................................... 106 Objective 15 – Identify major economic problems in the Caribbean......................................... 106 Objective 16 – Outline appropriate solutions to major economic problems in the Caribbean ...................................................................................................................................................…107 Objective 17 – Explain the role, benefits and impact of foreign investment ............................. 107

Objective 18 – Explain the terms “balance of trade” and “balance of payment”...................... 108

Ac Ackk now nowlledge gem ment ntss Acknowledgements…………………………..………………………………………………………………….……………….109

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Ch Chaapte pterr 1 – The N Nature ature of Busine nesss Objective 1 – Explain the development of barter Concept of barter: Early ancestors satisfied their needs directly from nature, which is called the direct satisfaction of wants. An economic system where needs and wants are directly satisfied from nature is referred to as a subsistence economy. For bartering to be successful, one person must have what the other person wants and be ready for exchange. This is referred to as the “Double coincidence of wants.”

Advantages of Barter – • A simple system, free of complex monetary problems • Ideal utilization of natural resources • No currency is needed to perform bartering Disadvantages of Barter – • Deciding the rate of exchange – The right quantity in exchange for another • Indivisibility of certain commodities – an example is an exchange from peas for a cow • Store of wealth and store of value – Some items lose value over time, while other gain value

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Objective 2 – Describe the role of money What is money? Money is any commodity that is accepted as a measurement of value and a medium of exchange. Money has helped solve many problems associated with the bartering system.

Features of money – • It must be acceptable • It must be relatively scarce • Must be capable of being divided into smaller fractions • It must be homogenous (Identical)

Functions/Role of money – 1. A medium of exchange – It is accepted 2. Standards of value – Different items have different value 3. Store of value – Can be saved and used for future use 4. Means of deferred payments – Used to pay for goods bought on credit

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Objective 3 – Identify the inst instruments ruments of exchang exchange e Instruments of exchange: • Barter – the exchange of goods for other goods without the use of money. • Bills of exchange – this is a written order from one person to another for money to be paid to another. Usually used by persons who are selling goods to others in another country. • Electronic Transfer – money is transferred electronically via the use of a computer network. • Telebanking – telebanking is a system for conducting banking transactions over the telephone. • E-commerce – any business transaction that is done through the internet. • Cheques – a document written by the drawer ordering the bank to make payments of a specific amount to the payee. • Money order (bank money order) – it is used as a method of payment that is sold by banks to persons who wish to make overseas payments for goods and services to suppliers. • Debit Cards – this is given to customers with savings on current accounts. The card may be used at the point of sale (POS) where the seller has a machine connected. • Credit Cards – these are given to customers of financial institutions (banks) who qualify for credit from the institution. The customer has a limit that cannot be exceeded. The amount used must be repaid by the due date and an interest rate is charged. • Bank Draft – this is a document drawn by one bank on another. The firm that owes money pays their bank the sum they owe, and the bank will then make out a cheque made payable to the credits. •

Telegraphic money transfer – an electronic means of transferring funds.

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• Bank transfer – when money is sent from one bank account to another. • Mobile Money – is a mobile banking service that allows users to store and transfer through their mobile phones. • Mobile Wallets – is a virtual wallet that stores payment card information on a mobile device. It can be used by merchants/traders listed with the mobile wallet service provider.

Objective 4 – Advantages and disadvantages of e-commerce Advantages – • It is convenient as purchases can be done in the comfort of your home • Access to a wider range of products and services online • Access to cheaper and affordable goods and services Disadvantages – • • • •

Your system can get hacked and you can lose all your personal information Must have access to the internet to make a purchase Items can get lost/damaged whilst in transit You can potentially get scammed from your purchase

Objective 5 – Differentiat Differentiate e between the private and public sectors

Owner

Objective

Source of capital

Private Sector ▪ Owned and controlled by private firms ▪ To make a profit

▪ Provided by

private individuals

Public Sector ▪ Owned by the government/state ▪ To gain revenue to

use for the benefit of the country ▪ Financed by the government through taxpayers

Fig 1.0 Diagram differentiating the private and public sectors

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Objective 6 – Describe the various forms of business organizations and arrangements Different forms of business organizations: 1. Sole Trader – A person who has total ownership, control and responsibility of his or her ...