Scribd Logo
Upload

Welcome to Scribd!

  • Section 1 - The Nature of Business Full Notes

    Uploaded by

    K' Ayana
    17 views35 pages

    Original Title

    SECTION 1- THE NATURE OF BUSINESS FULL NOTES

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    17 views35 pages

    Section 1 - The Nature of Business Full Notes

    Uploaded by

    K' Ayana

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 35
    GuySuCo - a business that contributes to nation bi businesses makea major contributior life of any country, providing important products a employmentfor people. They also contribute to the earning, of foreign cur n goods are exported to other parts of the world Guyana Sugar Corporation Ine. (GuySuCo} is one of the most important businesses in Guyana, although in rece has faced increasing competition from huge sugar-g across the glabe (suchas India, Or land). GuySuCo generates about 2-3 per cent of Guyanals annual revenue and is a key part ofthe agricultural sector. Its famous for brown sugar produced in the Demerara River basin. On 26 May 1976, the _government of Guyana nationalised and combined the large su ‘owned by private businesses The Guyanese governments a major stakeholder in GuySuCo because the corporation is such an important provider of jobs, government revenues and a basic staple agricultural product. A stakeholderis someone who has an interest in how a business isrun, Other groups with en interest in the success ‘of GuySuCo include its workers as wellas other businesses that benefit from cantracts with the campany, suich asthose sing agricultural machinery Most recently, GuySuCo is working towards diversification through value added products such as the production of white sugar (plantation white) and co-generation, Heritage tourism (sugar/plantation) is also being explared. Why is GuySuCo considered to be a business? Why does the govemment of Guyana have a stake in the success of GuySuco? Who are the other stakeholders with an interest in the success of GuySuCo? Identify thelr specific inter What large businesses do you know that make a major contribution to the life of your country? To what extent do you havea stakein the success of one or more of these businesses? Describe the role of money identify the instruments of exchange interpret infor Differentiate between private and public sectors jon on various instruments of payment the various forms of business organisation and arrangements, Ditterentiate among the types ot economic systems Describe the functional areas of a business Jenitily tne stakehwlders involved in business activities Discuss the role and functions a stakeholders involved in business activities plain the ethical and legal issues in the catablishment and operation of a business Explain the principles that must be adopted in the establishment and operation in the consequences of unethical and ill icesin business Describe the careers in the field of business questions you can checkyour wwaw.oxfordsecondary com/9780198437352. ey CR) Business activity: the activity of producing and selling goods/services to consumes. Barter: the exchange of, oods and services for other goods without the use of money. Double coincidence of wants: two people who want what each other hasto offer. L Identify situations where you have engaged in ‘barter’ with friends, What were the key factors, that made an exchange possible and desirable? 2. Identifya situation where you refused tomokea.awap with someone, Why did ‘you turn down their offer? What does this, say about barter? 3. Business in action: Find a picture ofacowrie shell online, What are the distinctive features that you think helped tomaketheshella means of exchange? €xplain the development of barter Business activity only became possible when a means of exchanging goods and services was developed. As we shall see in the units below, it was the development of money that enabled the development of a trading economy, and therefore the development of business activity Business activity is concerned principally with producing and selling ‘goads and services to consumers (people who make use of these goods and services) Inorder to understand how business has developed, itis frst necessary to explain the development of money, and how trade took place prior tothe developmentot money. Barter Before money, people would barter, ie. they would exchange goods and/or services for ather goods and/or services without the use of money (such as a goat for several chickens). This requires two people ‘who want what each other has to offer (@ double coincidence of wanils) Ari avetilege of Lar ring is Ulal iuney is nol HeeUed, SU Lung ‘aSyou have what someone else wants, you can barter. It also allows forvatiety hecause anything can be hartored en lang asitis dasirod hy someone else, You could barter a holiday home for an urban flat, ora carfor an expensive watch, etc. The obvious disadvantage is that one person may not have enough goods to make the exchange fair, or they may not want a whole goat for example. ver time, people realised that small but valuable items, such as cowrie shells, beads, stones and animal teeth, could be used instead of simply exchanging goous. Barter inig does atluelly still happen to this day, particularly on websites that allow people to swap goods ‘Advantages of bartering sdvantages of bartering Facilitates trade without money snot possibleif there isno double coincidence af wants Enables the disposal of surplus Thereis often a lack ofan production equitable exchange rate Increases the availabilityof goods | Thereare often dificulties in Gividing goods fairly Lays thefoundation forthe orgenised | Itcloes not allow for wealth to be method of trading weenjoy nowadays _|stored overtime Describe the role of money ‘subsistence economy is one in which people simply produce enough to survive on an individual, family or group basis. The group may grow crops and raise livestock, as well as hunt, gather fruit and berries, and catch fish. There is little need for exchanging with other groups, so the requirement for money does not arse. Subsistence economies were used in early societies before money was invented, However, as soon as these early societies started to look outwards to obtain food and possessions that they didn't produce themselves, they needed to trade. Barter is helpful for trading, butit only goes so tar, because in order to barter you need to have something that others want, Over time, monetary systems developed to combat many of the problems associated with bartering, Market or money economies developed as a way of making purchases from others, using money. \We saw in the previous unit that objects such as cowrie shells became one of the earliest forms of money. These shells came to takeon the role of money due to their characteristies. Understanding these characteristics helps usto understand how something (in this case the shells] becomes acceptable as money. Cowwrie shells had the following characteristics: * Scarcity: shells were valuable because they were relatively scarce. * Acceptability: people were prepared to accept shells as payment becouse Urey kiew Ul Uiey Lould use tert for future vauling. ‘+ Portability: the shells could be carried easily for long distances. ‘© Durability the sholls wore hard.aioaring and lang:lasting * Divisibility: shells could be supplied in various quantities, to buy purchases of different sizes. In modern terms, a car can be priced at thousands or millions of dollars. Dollars can be divided into cents for small itemssuch asia packet of chewing gum or a piece of fruit, Shells could be divided in similar way. The functions of money The functions of money are as follows: ‘© Asamedium of exchange: money is generally accepted asa means of payment for most goods. ‘* Asaunit of account:the price of an item can be measured in terms of how many units of currency tis worth, For example, while a low-quality sweater may cost $10, high-quality one may be valued at $100 or more. Money: anything that serves asa generally acceptable means of exchange. Includes physical objects, eg cowrie shells and paper money, as well as cards and electronic forms of payment, Characteristics of money: features ota form of money, such as whether itis easy to carry around (portability). Functionsof money the things that money does and the purposes tt serves, forexampleasa means of makingan exchange. Cowrie shells were an early form of money Make sure that you can distinguish between the characteristics of money for example, that it can be divided into units) and the functions of money (what money actually does, for exampleit serves asa means of exchange). * Asastore of value: you can save money because it keeps its value. Saving enables use of the money in the future. * Asastandard for deferred payments: borrowers are able to borrow money and pay it back at later date. To put these functions into context, the Bahamian dollar can be used to make payments throughout the Bahamas, and is therefore a medium of exchange. The Bahamian dollar therefore serves as a unit of account, measuring the price of goods and services that can be bought and sold. People in the Bahamas are able to save their money in Bahamian banks, knowing that the Bahamian dollar serves its function as a store of value, In addition, the Bahamian dollar can be used asa means of borrowing money. It acts as a reliable store of value, and also serves as standard for defered payments. S Ek 11. Why might a business that sells goods on credit use money as a standard fordefemed payments? 2. Whyis money so effective as a unit of account in business? 3. Business In actlon: The currency of yourcountry should act as an effective store of value. If prices are rising, then money will lose its value. Study ane af yaur national newspapersto find stories about price changes in recentttimes, What do these stories tell you about how effective your national currency is at serving as a store of value? Identify the instruments of exchange ‘An instrument of exchange is anything that enables a transaction lw lake place. allows rnurey (or guvus) Wy move fruit Ue buyer tothe seller. Far example, a shopkeeper may buy supplies from a manufacturer (maker of goods) using cash, a bank card, credit (with an agreement to pay later),or one of the means outlined below. Instrument of Description exchange Barter ‘As described earlier (page 10), this involves trading items For example, swappingstickers for album cards. ‘Advantages: Easy to use, any item can be traded, Disadvantages: Relies on double coincidence of wants, and some items cannot be divided. Bill of ‘An unconditional order from one person/organisation (the drawer) to another the drawee) exchange _| agreeingto make paymentin the future. The payment willbe paid on presentation ofthe bill for payment (asight bill, orat a given date in the future (a term bill usualy inone, two orthree months). 1 The nature of business Bills of exchange are used frequently in international trade where an importer will need time to sell goods before paying for them. Bills of exchange are therefore an excellent way of aiding trade to take place because paymentis guaranteed at a stated time Advantages: Pay ment is guaranteed on a specific date Disadvantages: Often doesnot give instant funds Electronic | Any tansferof funds or payment that ismade electronically for example transfer + transfering funds from one bankaccountto another account + paying for goods usinga credit card (see below) + 2 business paying wogca each month to its employees directly to their accounts through, electronic funds transler + paying for goods online through the payment pages of a website, ‘Advantages: Electronic transfer has become increasingly popular because itcan be dane safely in the main), quiciy, without the need for detelled paper records, and large numbers of transactions can he rarried oui

    You might also like