Ps of cotuT Di gece ) ‘0 Level : A @} x 4 S 1 f v ; i F { e y 7 AON ii , Editec sabre Ginio and M.Z MbireEdited by M.Z. Mbire and J. Ginio en imbabwe Publishing House wwe chon Pablihing Eel© Zimbabwe Publishing House ‘ 183 Arcturus Rd, Kamfinsa P.O, Box GDS10 Greendale Harare Zimbabwe First Published by Zimbabwe Publishing House 2016 Compiled by Zimbabwe Publishing House (Pvt) Ltd. Editors Munyaradzi Z. Mbire James Ginio Design & Layout Violet Kazingizi Cover Design Thabiso Moyo ISBN: 978 07974 59380 Printed by: Repro India Ltd. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publishers. - ‘The Publishers have made every effort to trace copyright holders, but if they have inadvertently overlooked any, they will be pleased to make the necessary amendments at the first opportunity. ACKNOWLEDGEMENTS ‘The Publishers would like to thank the following for their invaluable contribution in the compilation of this book: Last Kakora Sylvia Tukwane Rosa Mukazi Orga Chapwanya Hilda Chishanu Eunice Chikanya Peter B. Gambiza Grace Manyathelo Chikomborero S. Néhtuni Agnes Tungwarara Egely Dongo ‘Thomas Mavesere Lydia Mazango ‘Aletha Mudavanhu Precious Juru Rabeca Ngoro ‘Nomatter Tsanga Bernard A. KanyenzeBusiness organisations |. Finance and banking, 66 Finance of the business units 77 Insurance and assurance 3 . Business communication 90 . Marketing and advertising 96 }. Transpor 108 ). Warehousing 4 SECTION B: PAPER 1 EXAMINATION PRACTICE, u7 SECTION C: PAPER 2 EXAMINATION PRACTICE, 133 SECTION D: ANSWERS. 145 146 147 148 149 151 151 153 155 158 _ Finance and banking . 159 Finance of the business units.. . 160 161 164 166 167 169 Paper 1 Examination Practice Answers . 170 Paper 2 Examination Practice Answers .. 171Te Introduction This revision book completely covers all aspects of the “O° Level Commerce Syllabus. Today Revision Commerce is written in simple and straightforward language to help you to understand and remember the facts. The aim of this revision book is to assist you to, recall facts easily, ‘The book addresses the challenges that Commerce students face in preparing for their examination, It gives hints and tips that will assist students to do well in their Commerce examinations. It provides the necessary information and practice that will help students recall and analyse facts, and present answers that score high marks. Today Revision Commerce is divided into: * Section A; Study Notes and Exercises; * Section B: Paper 1 Examination Practice; * Section C: Paper 2 Examination Practice; and + Section D: Answers - Answers for structured/essay questions are given in brief or point form. You are advised to expand and explain these points in a way that best suits the demands ofthe question, These are suggested answers, therefore you are encouraged to come up with more suggestions, Hints and Tips The *O° Level Commerce Examination has Paper 1 (Multiple Choice) and Paper 2 (Structured Questions). It is essential to have a clear idea of the full ‘scope of each paper, the demands of each question and the skills in answering the questions. a) Paper 1: Multiple Choice Questions * Paper 1 usually has forty multiple choice questions which must all be answered. CoAT . ratte + The questions will be set from all the topics in the syllabus. * Candidates need to, therefore, study all topics prescribed in the syllabus. + Studying topics selectively will definitely result in scoring low marks in the multiple choice paper. b) Paper 2: Structured Questions * Paper 2 usually has nine questions from which candidates must answer four questions only. * Most questions begin with instructive words such. as: list, state, define, describe, explain, outline, distinguish or calculate, Here are a few hints on how to tackle these questions: Y List or state requires simple recall and you should use one word, phrases or one-sentence answers, The number of points that need to be listed ot stated should tally with the marks allocated for the question, ¥ Define requires you to give the meaning ofa word/ term or concept. Y Describe or outline requires candidates tell or write about, trace the outline, give a picture in words or state the characteristics, Y Explain requires you to make known in detail, to give the meaning, stating the reasons or giving an account of. ¥ Distinguish or differentiate or give the difference requires that you show how two words, ideas or concepts are opposed to each other. The use of tables for answering such questions is encouraged. Ensure that opposing points or ideas are presented side by side. Calculate requires giving the formula and the actual working/calculation and then the answer.‘The use of examples is encouraged (iff not a must) wherever applicable. Every definition, description’ outline, explanation or distinction/differentiation should be supported by relevant and appropriate real-life examples. ‘the examination: ‘Take time to read through the whole question ‘paper, choosing questions you want to answer. Read through those sections you studied and do not ‘waste time on sections you did not study. Write clearly and legibly. Examiners have no time to struggle with poor handwriting, Be concise and straight to the point in your answers. Flowery, long and winding language does not earn ‘you marks. ‘When you answer a question, you should be guided by the marks allocated to it. For example, a recall question that is allocated six marks requires you to ive six points. Each point or fact scores a mark. Your work must be well planned and facts must follow each other logically. Use correct grammar and correct spellings. oaF narees neta 2 geaneeeeee tiem CHAPTER 1 1.0 Objectives By the end of this chapter learners will be able to: a) _ state the differences between needs and wants; b) illustrate the chain of production; ©) draw the diagram showing production and its branches; 4) differentiate between directand indirect production; ©) explain the three stages of production; Production goods, Examples are tractors, sewing machines and lorries. Consumer goods are the goods used by final consumets to satisfy their needs and wants, Examples of consumer goods are bread, mealie~ ‘meal and clothes. Producers are those people or firms that provi goods and services while consumers are the users of goods and services, na 1.2 The stages of production 4) distinguish between consumerand producer goods; 8) explain why it is important for indigenous people _ . The three stages of production are primary, secondat to own the means of production; and tertiary. 1) identify the importance of land reform; i) describeindigenisationofoureconomy; 4) explain the different factors of production and their rewards; and k) list the advantages and disadvantages of division of labour and specialisation, 1.1 Defining production ~ _ Thisis the provision of goods and services to satisfy human needs and wants. Needs are basic things that a person cannot do without, for example, food, water, shelter, clothing and healthcare. Wants are luxury things which a person can survive without, For example, a bed, radio or television, Needs are consumed to sustain life. On the other hand, wants are consumed to improve life. ~ Production is divided into primary, secondary and tertiary production. + It also includes the making of goods (cars, beds, furniture) and provision of services (teaching, ‘medical care and transport services). Goods are tangible, that is they can be touched and seen. Services are intangible; they cannot be seen or touched. ~ The goods can either be producer or consumers goods. Producer goods are used to produce other ee ——— 1.2.1 Primary production ~ Its the first stage of production. - Includes extractive industries, - Examples are agriculture, mining, forest quarrying and fishing. - Raw materials are obtained from the ca including rivers and lakes. + Examples of companies in primary producti are Mbada Diamonds, Zimplats, ‘Timbers and Lunar Chickens. 122 Secondary production ~ Second stage of production which includ manufacturing and processing. - Raw materials are converted to. usabl goods (semi-finished and finished goods) f example, timber to furniture, wheat to flour, flour to bread, maize to mealie-meal, cotton cloth of cloth to clothes. - It includes manufacturing, assembling, ai construction (building) industries. - Examples of companies in se production are Willowvale Mazda Motor Industries, National Foods, Delta Beveragi Dairiboard Zimbabwe Limited, —Costai Construction.1.23 Tertiary production - Third stage of production which involves commerce and direct services. ~ It includes all kinds of service industries such as transport, communication, banking; insurance, warehousing and advertising (aids to trade- those services that help trade to take place). Aids to trade are also known as commercial services. = It also includes provision of direct services such as teaching, entertainment and nursing. Direct services are also known as personal services. ~ Involved in distributing goods and services to the final user. Factors of production ‘These are resources that are required for production to take place. 13.2 Labour - This involves the human manual, mental and creative work. = Its the human effort and input in the process of production. - Tis reward is a wage/salary. 133 Capital = This comprises capital goods, human and financial capital. = Capital goods are producer goods, that is, goods that are used to produce other goods, for example equipment, tractors, grinding mills, buses and machinery. - Human capital consists of the knowledge, skills and expertise acquired by labour through education and training. ~ Financial capital comprises of money that is invested in a business, These are land, labour, entrepreneurship and ~ Its reward is interest. capital. a Factors of Production = n ‘Organisation! cf —— Land Labour eee, Capital + + + + rd —, Rent ‘Wage/Salary Profit Interest LI: Factors of production 13.1 Land - _ Refers to all the natural resources on the earth, - Its the sites where production is done. - It is an immobile (fixed) factor of production, - Examples are land for farming, mineral ores underground, oil and forests. - Its remuneration o reward is rent. 13.4 Entrepreneurship involves the ability of an entrepreneur (owner of business) to organise the available resources to produce goods and services. - The entrepreneur takes risk by investing money or time; must possess business skills or hire people with the skills. ~ «Its reward is profit.Manufacturing Wholesaling Retailing ‘Construction Primary Primary Primary Production Production Production Fig 1.2: Chain of Production 1.4 Ownership of the means of ~ Infrastructure development. production - _ Restructuring the society and redistribution of wealth, 14.1 Means of production as ourheritage = —_-Pmpleyment creation ro Ormed bysaiael in the country: Disadvantages of indigenisation up until it was resettlement, - The stakeholders are the govt ‘municipal and individuals, 1.42 Importance of land reform ~ Land empowers people. = Eradication of poverty. = Improved diet since variety of goods can be produced. = Improved food security and self-sufficiency. - Land can be used as collateral security. 1.43 Importance of indigenisation - Allows the locals to possess means of production, - Full ownership and control of means of production to locals. - _ Improved service provision in the communities. = Driving away potential investors, - Lack of transparency pertaining. to valuation methodology. = Lack of adequate skills and knowledge. = Lack of effective system to monitor an evaluate the efficiency of projects carried out, 144 The role of the government i indigenising the economy = Import equipment on behalf of farmers. = The farmers will pay for the equipment a subsidised price at low interest rate for certain period of time. = Creation of special trading zones such as hor industries. 1.5 Chain of production ‘These are stages that a product passes through fro primary production to the final consumer.‘1 Production and its branches ~ For example] a person growing crops for his iption (subsistence farmer). attempts to make all the goods they need for sustenance on their own and they ‘consume all their produce. - There is nothing for sale. ~ Needs are provided for without the aid of others. People produce that which they really need or ‘want, ‘Makes use of simple and inexpensive tools. ‘There are no labour costs. If any, they are low. ges Production levels are low. ‘Low or poor quality of goods. ‘There is no variety. ‘Lowers standards of living. Indirect production This is whereby one producer concentrates on what ‘hey can do best and relies on other producers for se needs they cannot produce on their own. PRODUCTION Primary Secondary Toho traction of raw Manufacturing/ Construction! Materials e.g. Processing Assembling, Sshing, mining, ing, forestry Comi Direct Services, ay E.g.- Teaching, Trade Aids to trade Entertainment - Nursing 1.3: Production and its branches F = There is surplus to sell, Direct and indirect production - There is interdependence and trade. - Production is mechanised and standardised g00ds are produced, ~The tasks are simplified, = There is specialisation as entities concentrate on producing one line of products. Advantages = Mass production. - Reduced costs of production. - High quality goods. - There is variety. - High standards of living. Disadvantages - Creates dependency. - Craftsmanship is lost. - High operational costs. - Unemploymentand job losses duetomechanisation. - Mass produced goods are not customer sensitive. 17 Division of labour = Ttis the breaking down of a production process into ‘a number of simpler tasks. - Bach one of these tasks is undertaken by an individual worker who specialises in it. = It can also be defined as the separation of a work process into a number of tasks, with each task being performed by a separate person or a group of persons. . a... GS) TTTFor example, in a shirt manufacturing company one or a group of workers can specialise in the making of collars, sleeves or button holes. = Assingle product passes through different stations where it is improved before being passed on to the next. Advantages Each station has equipment that is relevant for the task to be done and it is managed by personnel especially trained to perform the task. - Allocating work to employees according to their individual skills and competence leads to work efficiency. = Itallows the use of machines which results in mass production: - Production of goods becomes fast. - The workers can become experts by repeating the same task every day since practice makes perfect. - Less training of workers is required since a worker has to do only one part of the whole task. = It improves the standard of living since goods that are produced in large quantities can be sold cheaply to consumers. ~ Itsaves time since a worker does not have to move from one place to the other to do another task. = There is also the economic use of tools since a worker is just provided with the tools that he/she needs to carry out a task. = Aworker can develop new ideas by repeating the ‘same task and thus become innovative. Disadvantages = Repeating the same task everyday becomes ‘monotonous. = The worker can have less technical skills for ‘making the whole product (loss of craftsmanship). = May result in work stoppage, delays or lower productivity in the event of a strike in one department since the workers depend upon each other (interdependency). = Itmay also result in loss of responsibility sinee no one is directly accountable for bad production. - The use of machines may lead to unemployment. - It may also lead to lower productivity due to lower {job satisfaction. eG = Workers cannot easily change jobs. = — Goods are standardised. 1.8 Value addition and beneficiation 1.8.1 Beneficiation = Process whereby ore is extracted frot nature with the mineral ore being suitable for further processing, ~ Can also be referred to as economic development and corporate soci responsibilities. = It describes the proportion of val derived from an asset exploitation that stays in the country to benefit the society. 1.8.2 value addition - Manufacturing process that increas commodities value such as cooling drying. - The new product will be different fror the original raw material. - Value addition increases the economi value of the commodity through particular process. E.g instead of selling groundnuts to the gai marketing board, the farmer can roa salt and process the groundnuts i peanut butter and sell it Advantages of value addition ~ Products look attractive. = Products will fetch more money when sold. ~ Increase economic value. Disadvantages of value addition = Lack of knowledge on how to add value to product. ~ Lack of technology. = Its costly. Merits of exploitation of resourees Wealth to the country. ~ Infrastructure development. - Brings in foreign currency.-merits of exploitation of resources Land degradation. Under declaration of extracted minerals value. Deforestation. Destruction of wetlands. Soil erosion. Business environment = Area where the business is carried out. - Situation in which the business is ‘operating in. 1.9.1 Elements of the business - Land, = Capital - Labour. - Organisation. - Technology. 1.9.2 Business stakeholders and their interests a) Internal factors (i) Owners - Business growth. - Constant dividends. - Maximised profits Gi) Workers : Job security. - Training and carrier development prospects. . ~ Constant payments of salaries and wages. - Fringe benefits. (ii) Managers - High salaries. - Job security. = Business growth. = Prestige that comes with running a successful business. - Independence to make decisions. b) External factors 7 (i) Customers ~ Reliable suppliers. - Timely deliveries. = Safety of goods. (ii) Suppliers - Interested in doing business with a ‘company that is able to pay debts within the agreed period of time. (iii) Competitors Ensure that the business deals honestly and does not use monopoly powers. (iv) Community Employment creation. =~ Safe products. - Production that does not harm the environment. (v) Banks = Expect the business to pay interest and repay loans. (vi) Investors = Expect the business to have sufficient cash flow thereby avoiding liquidity problems. ~ Expects a return from their investments, (vii) Government = Want businesses to abide by the laws of | the country. = Businesses to pay taxes. - Businesses to remain in business for a long time. Common errors Branding and packaging add value to a product Elements of the business are the same as factors of production Candidates often confuse production and commerce when answering questions requiring them to define concepts. While processes of production bring goods into existence and put them in usable form, commerce ensures that those goods are distributed to consumers through different channels,2 ai 5. 1 TEST YOURSELF @ Multiple choice questions Which of the following is @ consumer good? A. Fertilizer B. Plough C. Seed D. Vegetables is part of primary production. A. Canning beef B. Constructing bridges C. Growing trees D. Milking cows Of the following, identify an example of direct production. ‘A. Canning factory B. Clothing manufacturer CC. Subsistence farmer D. Commercial farmer Which one of the following is pot an advantage of indirect production? ‘A. Loss of craftsmanship B. Division of labour CC. Goods are mass produc D. Surplus in production Which of the following fators of production has to do with equipment/machines and productive capacity? A. Land B. Labour C. Capital D. Entrepreneurship Of the following which one is not a way of adding value to a product, A. branding. B. packaging. C. drying. D. buying. Exploitation of resources results in ‘A. land degrading. B. control of budgets. 10. Structured questions 4, C. inflation. D. land reform. Who owns the means of production in Zimbabwe’ A. Foreignors B. Locals C. Zimbabwe D. Christians Which of the following is not an advantage indigenisation? ‘A. Full ownership of means of production B. Employment creation C. Infrastructure development D. Inadequate skills and knowledge ‘Value addition can be best defined as ‘A. manufacturing process that increase product value. B, a way of making produetion easy. C. proportion of value derived from an asset, D. increase in economic value. (a) Explain the term production tu (b) How is a miller assisted by communication?” fat (a) Distinguish between primary and secondary” industry. t (b) State the advantages of division of labour. [ (©) Differentiate between direct and indi production. (a) Distinguish between needs and wants. (b) Explain the four factors of production. (a) Explain what is meant by value addition and beneficiation giving examples. [I (a) Identify the advantages and disadvantages indigenisation. (b) Discuss the impact of exploitation of res to the country, (a) Explain the importance of land reform (b) What role is played by the government in indigenising our economy? i (©) Whyis it important for a business to add val to its products? iossary of terms in of production - stages of production through which a product passes from primary industry to the final consumer. Commerce ~ the distribution and exchange of goods to satisfy human needs and wants. Ponsumer: = the final use‘of goods and services. umer goods - goods used by consumers to satisfy their needs and wants. Production - provision of goods for one’s personal use without the aid of others. on of labour ~ the breaking down of a production process into a number of simpler tasks that are done by different people. - tangible products like bread, car and television. } genisation __- the transferring of ownership of business and the means of production to locals | ect Production ~ thisis production of goods and services through specialisation by entities, Needs are satisfied through trade. ns of production - resources required in order for production to take place s + basic things that a person cannot do without, jeer goods —_- goods that are used to produce other goods. tion ~ provision of goods and services to satisfy human needs and wants. ~ intangible products such as teaching, nursing and entertainment. ~ luxuries of life which a person can survive without, = ealCea TV ia] v3 2.0 Objectives It facilitates the movement of goods from ot class of producers to another and finally By the end of this chapter learmers will be able to: the consumer. For example, the manu! ; buys raw materials from a primary produ 2 bay nf es ocr ee and processes them into finished and usabl ) expla the pore oe goods which are then distributed throu ©) distinguish between home and foreign trade; ‘wholesaleilfatd fobiles ail ey 4) explain the functions of various commercial the final consumers. Such a process can activities and how they aid trade; illustrated as shown in fig 2.2 below: ©) define barter trade; and Primary Producer e.g Farmer 1) state various channels of distribution of goods. Secondary Producer e.g Miller 2.1 Commerce and trade 4 Wholesaler 2.1.1 Commerce ie 1 cdg romen ecm Consimer - It does not involve the making of goods but Fig 2.2 Movement of goods provides services that assist in the exchange ean. Farmer Sells - Miller Buys - Miller Sells - Wholesale Be Buys - Wholesaler Sells - Retailer Buys - Retailer Sell - _ Itis trade and aids to trade. Consumer Buys Commerce Aids to trade - advertising ~ insurance ~~ banking - warehousing communication ~ transport Wholesale Retail Import Export Entreport (re-cport) Fig. 2.1 Commerce and its branches 21.2 Trade ~ Trade involves the buying and selling NB: Trade can either be home trade or internatic (exchange) of goods and services to satisfy fede, hhuman needs and wants2.1.3 The importance of trade to a country ~ Enables the exchange of goods and se = Gets rid of surplus products. - Prevents shortages. - Enables goods to be produced in large ‘quantities. = Satisfies human needs and wants. - The country can obtain what it cannot produce. - The country gets foreign currency. - _ Awide variety of goods is available. = Improved standards of living, - Raises revenue for the government. Home trade This is buying and selling of goods and servicts between citizens/businesses/companies of the same country. It is also called domestic, internal or focal trade because goods are produced, exchanged and consumed within the country in which they are produced. It consists of wholesale and retail trade. 23.1 Wholesale trade = Goods are bought in bulk (lange quantities) from the manufacturers and also sold to retailers in bulk. = Can be cash and carry wholesalers who sell to both retailers and final consumers. 23.2 Retail trade ~ Retailers buy goods in bulk from wholesalers and even from manufacturers (large scale retailers) and sell them in smaller quantities (breaking the bulk) to consumers. International trade = Goods are produced in one country but consumed in a different country. ~ Trade between citizens of different countries, e.g, maize produced in Zimbabwe is consumed by citizens of Malawi as maize or as maize products. ~ This is also called foreign or external trade, Cre a ~ Usually involves the use of foreign currency (forex). = Itcan be import, export or re-export. 24.1 Import trade = This is the buying of goods and services from other countries. - Forexample, buying machinery from China or electricity from Mozambique. = Goods or services bought from other countries are imports. 24.2 Export trade - This involves the selling of goods and services to other countries. - For example, selling diamonds to Britain, = Goods seld to other countries are exports 243 Re-export = Itis also called entre-pot trade. = This occurs when goods are imported for the purpose of re-exporting them to other counties. 2.5 Aids to trade ‘These are the services that help trade to take place, ‘They are also known as commercial services. These include banking, insurance, warehousing, transport, advertising, and communication. 25. Banking - Provides the safe custody of money and other valuables’such as jewellery. - Provides loans and overdrafts to business persons. = Accepts deposits into various accounts such as current account, savings and term deposits. = Accept and discount bills of exchange. - Offer foreign currency and issue travellers? cheques. - Offer night safe facilities. - Actas trustees and executors of estates. = Dostockbroking. - They also provide automated teller machines (ATMs) so that money can be withdrawn at any time of the day.= They facilitate the use of cheques in business. - Provide telebanking faci 25.2 Insurance = It covers against risks that may be encountered, in business. For example fire, theft, ‘consequential loss, etc. = Covers a firm’s assets such as machinery, inputs, outputs and stock. = Covers workers injured at work (employer's liability) and injuries to members of the public (public liability). = Covers embezzlement of funds (fidelity guarantee). = Insurance companies compensate the insured in the event that the risk covered occurs. - _ Firmsare able to remain in business. - Businesses can operate confidently. 25.3 Warehousing ~ This is the provision of safe storage facilities for raw materials, semi-finished or finished ‘goods, machinery, spare parts, seasonal goods, perishables and goods in transit before use or sale, = Enables goods to be produced ahead of demand. ~ Can be bonded warehouses to store imported ‘goods before duty has been paid. = Goods can also be left in a warehouse to ‘mature, for example, bananas, tomatoes, and wine, - Allows branding, labelling, blending and pre- packaging to be done, = Warehousing reduces risks of damage to goods. ~ Reduces the risk of theft, = Reduces deterioration of goods due to bad weather. = Goods that are off season can be stored in a ‘warehouse, for example Christmas cards and jerseys. Evens out supply — makes goods readily available, 25.4 Transport - Carries raw materials, semi-finished and finished goods from one place to another. = Carries equipment, machinery and spare parts} to the plant/factory. = Can be by road, rail, sea, air or pipeline. = Moves goods to where there are shortages. - Carries workers, managers and executives and from work. = Motor vehicles can be used for advertising as a status symbol. 25.5 Advertising = It provides information to customers abot goods and services on offer, prices and whe to buy. = It increases the trader’s sales and profits. = Improves the image of the trader, = Used to launch new products and fi competition and negative publicity. ~ It tells of forthcoming events. ~ Itcan be informative or persuasive. - Tomaintain sales. 25.6 Communication - Information can be sent or received. - Payments can also be made or received. - Enables orders to be placed or received. = Business documents can be sent or received. = Provides contact between employers at employees. = Enquiries can be made. » = Contracts can be arranged. ~ Complaints can be lodged and queries sett! - This enables the suppliers/sellers and the customers to contact each other. - This can be done by the use of fax, telephor letter or internet. 2.6 Barter trade ergs This is the buying and selling of goods and servi without the use of money, It is whereby people exchange goods for services for goods or services for services. For example, one may exchange five goats for cow. It is the oldest form of commeree; it was cor in traditional primitive societies.have to be used before they go bad, Channels of distribution (i) Perishable goods: have a short shelf life and Most goods are moved ftom producers to } consumers as illustrated in table 2.1 below. Gi) Low tumover goods: sales volumes are small. | ipsa tiete ae) sisioas chai throne Gili) Goods made to order: the customer specifies which consumers can get goods or services from the goods they want and are made 1) thet eeooeers. specifications. Some goods are also provided from producers : . directly to consumers, e.g. newspapers and farm (iv) Technical goods: require the manufacturer's produce. . installation and after-sales services. When goods do not pass through wholesalers or retailers, this is called direct dealing and it is used for: (v) Fragile goods: at high risk of breaking. Cc Primary Producer ‘Consumer Consumer 2.1: Channels of distribution Channel followed depends on: + Size of the market. Nature of goods. + Quantity of goods involved in a specific + Price of goods. ‘transaction. = Government policy. + Size of the firm manufacturing and distributing Expertise needed in using the goods. the goods. Common errors + The question: ‘Distinguish between trade and barter,’ is impossible because barter itself is a form of trade. The concept of comparison should be between ‘monetary trade’ and ‘barter trade.” ‘+ Direct production is not the same as direct services. r When asked to explain the importance of aids to trade, it is important to mention specific examples of raw ‘materials or finished goods. Specificity is called for, e.g: ) What is the importance of warehousing to a farmer? ‘Answer: To keep inputs like fertilizers, seed and chemicals; and produce like grain and cotton, Cat ae| f a . TEST YOURSELF & Multiple choice questions 1. Which statement does not describe barter trade? ‘A. Exchange of goods for services. B. Exchange of goods for goods. C. Exchange of services for money. D. Exchange of services for services. 2. Which statement indicates entre-port trade? ‘A. Zimbabwe buying maize from South Africa, B. Storing maize from South Africa destined for Zambia, C. Zimbabwe selling maize to South Africa. D. Insuring exported goods. 3. Choose the statement that best describes trade, ‘A. Buying of goods and services. B. Selling of goods and services. C. Buying and selling of goods and services. D. Distribution of goods and services. 4 isa branch of home trade. A. Wholesaling B. Exporting CC. Importing D. Entre-port trade 5. Which statement best describes the term producer? ‘A, Maker of goods B, Seller of goods C. Provider of goods and services D._ Distributor of goods and services. Structured questions 1. Explain giving examples, the circumstances why some goods are distributed directly from th producer to the consumer. [20] 2. Explain the role of the following in trade: (b) advertising « (@) warehousing [20] (@) transport (©) communication Labour, Consumer, Sea, Trade, Raw, Loan, Yen, Air, NV, Natural, Wants, Secondary, Rent, Direct, Cane, The practice oftrade [Services Price, Producer, Primary Across 1. The first stage of production. 2. What a good or service is worth, is it’s the market. Grown as a source of energy. ‘Remuneration for land. Those things that consumers can live without. ‘An example of a want, Japan's currency. ‘materials are obtained by primary industri Mode of transport used to carry bulky goods ii foreign trade. 10. A factor of production, ees anay Down 1. One who provides goods or services. 2. Intangible good. 3. Type of production in which one produces for ‘consumption. 4. A branch of production that deals ‘manufacturing, construction and assembling. 5, Land refers to all resources. 6. One who uses goods and services to satisfy his needs and wants. 7. Amode of transport used to carry ight and valuat goods. 8. Financial assistance obtained from a bank. 9. Buying and selling of goods and services.~ exchange of goods for goods, or goods for services, or services for services. = re-exportation of previously imported goods. = buying and selling of goods and services between or amongst different countries. = buying and selling of goods and services within the same country. = providers of goods and services. = buying and selling of goods and services using money.CHAPTER, 3 3.0 Objectives By the end of this chapter leaners will be able to: a) define a wholesaler; b) explain the functions of wholesalers; ©) describe the features of different types of wholesalers; 4) explain trends in wholesaling; ©) discuss the reasons for the climination of wholesaling; 4) state the role of agents in trade; 8) explain different types of agents; and h) explain the role of marketing boards in the distribution of goods. 3.1 What are wholesalers? - Wholesalers link the manufacturers to retailers or consumers. + Buy goods from manufacturers or producers and sell to retailers or consumers, - They buy goods in large quantities, ~ Operates from a warehouse - Manufacturer/Producer—+Wholesaler—»Retailer—> Consumer - Manufacturer/Producer—>Wholesaler—Retailer - Manufacturer/Producer—-Wholesaler-»Consumer - Examples of wholesalers: N. Richards, Mohammed ‘Mussa, OK Mart 3.2 Functions of wholesalers 3.21 To retailers ~ Sell goods in smaller quantities to retailers (breaks bulk). - Store goods in readiness of retailers. - Receive orders. = Stabitise prices. ~ Ensure that goods are always available, 3.3 Types of wholesalers PRP (5) is neither shortage nor oversupply. - Provide a variety of goods bought fio different manufacturers. ~ Bring goods nearer to retailers (situated retailers), = Transport goods to retailers, ~ Receive complaints from retailers. ~ Sell goods on credit to retailers (financing, retailer). 3.22 To manufacturers - Buy goods in large quantities ft ‘manufactures or producers. - Clearing lines of production. + Financing the production process by payit cash for goods bought so that producers have money to produce more goods. ~ Can grade, blend, package, bleach, ds or brand goods before selling them her completing the production process. - Transport goods from manufacturers. - Advice on market feedback so. that ‘manufacturers know what the market requi - Advertise manufacturers’ brands, ~ _ Relieves the producers of the burden of stora and marketing. ‘Wholesalers are classified according to the gi they sell and the service they offer. 3.3.1 General (traditional) wholesalers ~ Sella variety of goods, mostly groceries, = They deliver goods to retailers, - Offer credit to retailers. + Steady prices. = Store goods. + Offer information and advice to retailers,= Bear risks. ~ Even out the supply of goods. = Operate from a warehouse. 2.3.2 Specialist wholesalers = Sell one line of goods or an assortment of related products, ¢.g. electrical goods, or hard wares or building materials. = Offer expert advice to retailers or consumers ‘on the use of goods. ~ May deliver goods. - May offer credit. = May operate from the warehouse. 3.3.3 Cash and carry wholesalers = Sell goods for cash, no credit (cash and carry). - Donot offer delivery. ~ Operate like a supermarket. = Sell groceries/houschold goods. = Sell to both retailers and consumers. ~ Goods are packed in different sizes for the convenience of consumers or retailers. = Less advice is given to customers, - Offer a variety of goods. ~ Cut on overheads (transport and labour). = Goods are usually cheaper. ~ Use of self-service method. 3.3.4 Co-operative wholesale societies ~ They are formed either by producers (such as farmers) or retail co-operatives. ~ Each member contributes capital by buying shares. — They are non-profit making. = They are controlled by a selected management committee. - They are run on democratic principles and decide policies through voting in an annual ‘general meeting, = Membership is open and voluntary. = Buy goods in bulk from producers at lower prices and sell them to co-operative members at lower prices. = Goods are also sold to non-members at market price, Dividends are paid to members in proportion “o the purchases made from the society. = Provide a wide variety of goods. - Surplus is shared among members. 3.4 Elimination of wholesalers ‘The following are reasons why the wholesalers are often excluded (by-passed) from the channel of distribution: - Large scale retailers have enough capital to buy in bulk directly from manufacturers at low prices. ~ Large scale retailers have their own transport and warehousing. = Manufacturers employ their own agents. who establish direct links with the market, eg. Dairiboard (ice cream vendors). - Manufacturers establish their own chain stores (manufacturer's retail shops) through which they sell their products e.g. Bata Shoe Company. - Manufacturers sell directly to consumers (direct, dealing). - The nature of the goods: (Perishables, for example vegetables; (ii). Fragile goods, for example glass; (ii) Sophisticated goods that need the producer's advice, for example computers; (iv) Low tumover goods, for example vehicles and jewellery; (¥) Goods sold in sets and breaking-bulk cannot, be done. = Goods made to order or customer specifications, for example birthday cakes. - The growth of pre-packaging and branding, 3.5 Marketing boards - These are wholesalers specialising in the buying and marketing of primary goods (agricultural produicts) - Established by government (parastatals). ~~ Specialise in marketing of particular products, e.g. grains, minerals, milk or meat. - Buy from farmers, miners and other primary producers. = Store the produce. 4 ~ Sell produce to local and foreign markets. - Can import produce in times of shortage (to supply the local market). = Can export produce when there is a surplus. - Provide a ready market to primary producers.- Enable primary producers to concentrate on production, = Set prices of produce! fix producer price, ~ Determine production by setting prices (prices ean make producers to produce more or less). - Grades the commodities. ~ May process the commodities they deat in. - Finance producers. - Conduct research on production of commodities, = May give advice to producers. 3.5.1 Examples of marketing boards a) Grain Marketing Board (GMB) - Deals with all grain (maize, wheat, rice, soya beans, ete.) b) Minerals Marketing Zimbabwe (MMCZ) ~ Deals with the marketing of minerals. ©) Tobacco Industry and Marketing Board (TIMB) ~ Deals with tobacco, Cotton Marketing Board - Deals with cotton = It is now a registered company called Cotteo. ©) Cold Storage Commission ~ Deals in meat, especially beef. = It is now a registered company called Cold Storage Company. ) Dairy Marketing board - Deals with mitk and milk products. - It is now a registered company called Dairiboard Zimbabwe Limited. Corporation of NB: The Cotton Marketing Board, Cold Storage Commission and dairy Marketing Board were once marketing boards but they have since been privatised and are now operating as private companies 3.6 Commodity markets - These are organised/specialised wholesale produce markets where raw materials such agricultural produce and minerals are bought sold. - Examples include Mbare Musika, Makokot Market, Boka Tobacco Auction Floors and London Baltic Exchange, = They observe set rules and regulations. - The prices of commodities depend on demand a supply, + The commodities are graded to have sta quality. - Trading on the markets may be done by age such as brokers or by auction or direct sales. ~ Commodities bought may be delivered immedi (pot dealing) or delivered at a later/future (forward dealing). = Dealers may do hedging whereby commodi prices are determined today to protect both buy. and sellers from future price fluctuations. 37 Agents ~ Sell or buy goods or services on behalf of principal. = They do not take title to the goods they distil ~ Link those who want to buy goods or services those who are selling the goods or service. - Agents deal with consumers, retailers ‘manufacturers. ~ They establish the best terms. = They look for the best price for both the buyer. the seller. = Theyestablish the best quality of goods and servi = They advise both the buyer and the seller. - Eara commission for services provided. « - They can be brokers, factors and del credere ager (See Chapter on International Trade for detail) Common errors Commercialisation and Privatisation are terms often confused. Commercialised marketing boards st belong to the government, but they are now required to work at a profit so that they are not funded grants. On the other hand, when a marketing board is privatised, the government would have sold ‘company to individual or corporate investors and it ceases to be a statutory body, | wateWhich goods are best distributed straight from the producer to consumer? ‘A. Chairs B. Newspapers C. Suits D. Soap An agent A. advises only the buyer. B. earns a salary for services provided. C. can be a broker, del credere or factor. D. always wants the best price for hinvherself. Which of the following is nota commodity market? A. Stock exchange B. Baltic exchange C. Grain marketing board D. Cold storage commission is a feature of a cash and carry Wholesaler? A. Offering credit to customers. B. Carrying goods for customers. C. Offering specialist advise to customer. D. Offering a variety of goods to customers. Which of these is not a service offered by a wholesaler? A. Grading goods to be sold by a retailer, B. Producing goods for sale by a retailer. CC. Packing goods before they are sold to a retailer. D. Blending goods before they are delivered to a retailer, Structured questions L. State the services offered by wholesalers to the: (@) retailers (s] (b) matiufacturers (5 2. Describe the features of'a cash and carry wholesale. fi [8] 3. (@) Explain the services offered by the Grain Marketing Board. . [10] (b) State the reasons why the government has commmercialised marketing boards, (51 4, Explain the circumstances under which wholesalers are by-passed by retailers and consumers. [10] 3. (@) What are commodity markets? PI (b) Explain the functions of commodity markets. [5] ~ one who sells goods or services on behalf of a principal. = a specialist agent. a broker specialises on a particular trade e.g, insurance broker. specialised market where raw materials or minerals are bought and sold. ~ the fixing of commodity prices today to guard against future price fluctuations. ~ a market for buying and selling agricultural produce or minerals.Cela Vout zy 4.0 Objectives By the end of this chapter leamers will be able to: a) ») Do) a ny i define the term retailer; list the factors considered when establishing a retail outlet; state the functions and services of retailers; describe the different types of retailers; state the advantages and disadvantages of each type of retailer; explain modern trends in retailing; state reasons why retailers sometimes bypass wholesalers; state reasons for the survival of small scale retailers; and distinguish between hire purchase and deferred payments. 4.1 What are retailers? Retailers are organisations/intermediaries that buy goods from wholesalers and producers and sell to consumers. ‘They sell in smaller quantities or single units of a product. ‘They are located closer to the consumers. Examples of retailers are OK, Pick n' Pay, Spar, Ramji's 4.2 Functions of retailers 4.2. To consumers = They break bulk - They buy goods in large quantities from wholesalers or producers and sell in small quantities to consumers. - Retailers are conveniently located close to consimers. =, Can be situated in the central business district (CBD) making it easier for consumers to visit several shops in one trip. XU cele = Store goods: goods are always available. = Allow consumers to buy on credit. = May deliver goods to the homes of consut = Provide personal service such as advice information to consumers. = Provide after sales service i. follow up goods sold to provide back-up service lil demonstrations, installations and repairs. = They can open for long hours so that custo ‘have more shopping time. Store a variety of goods offering the consi a wide choice and one-stop shoppit convenience. 4.22 To wholesalers = Inform wholesalers on goods required customers, = Store goods. = Provide finance by buying for cash. = Bearrisks. = Advertise the wholesaler’s goods. - Brand, package and grade goods. = Relieve the wholesaler of the burden marketing and distribution. 43 Factors to consider when establishing a retail outlet = Adequacy of capital. = Demand for the products. = Government laws and by-laws. - Labour requirements. = Closeness to suppliers — wholesalers — manufacturers. - Knowledge and experience in retailing. = Proximity to customers, = Competition from other retail outlets. = Accessibility - transport and communication lin = Location of the business premises. <= ———Size of the market or target group. - They have their own transport systems. Future development potential. - They have storage facilities and stock large quantities, { General classification of retailers - They brand goods and advertise their brand Retailers can be classified into two main categories, Super Saver for TM Supermarkets. small and large seale (depending on size, capital = They employ specialists in areas like buying, | say ata abe) ‘marketing and business expansion. | 4.4. Small scale ~ Provide self-service and self-selection. | = Sell large volumes of goods at low prices Po ame eas coma pee (SPOR-small profit quik return. - They are usually sole proprietorships with | very few legal requirements for opening. | = Most of them are located in the residential 4-5 Types of retailers areas. + _ Retailers range in size from a small market stall to - Low volume of goods. very large business organisations. - Private sector. ~ When looking at retailers, it is convenient to classify them using the following headings: 4.4.2 Large scale (@) Commodities/goods sold fp: Highcvolame of goods, (ii) Size of shop and location ~ Large start-up and operational capital. (iii) Advantages ~ They can borrow money from banks to finance ij their operations. (iv) Disadvantages - They buy in bulk from producers and get (v) Main features discounts. of reteller | Sla/location | Goods sold | Main features ‘Advantoges Disedvantager -Smalt/fond | Mainly -Uoually a farity owned | -Convenienty lees in|-Cannot tuy in bulk inresidenial | grocery stop. reside aeas because of. searintat | Saka Financed by owner, Uaully run by leas and] * luck of capital md | ayo | “seta roc. commer can’ ge ied | + gore spece = a se | -Salstn see *anspont wat | tee pe | Smee ete Off eronl service - sods move souls cat bak Off pesos atenion |" ow nove) “meister | “ERRY less Workers ae]. Goody ae analy a lpecatedanas wages enh became they ne Cont semua exgemive | “Szilisto-tow eats | lng on te shee oes Longer opening hours | - Poor management = Provide variety = Beak blk Many Seton tie | Has many tranches | -Buy in bulk and enjoy lz Lars capitalequied stone | “ructew | ofgonis | sroughoa be oy discounts (eanh _mangea| aaa © AIL branches us the same | Prices ofgnodsarelow | cant adapt to hcl un ut ‘same Goods and staff can be| Situations as policy is} mases Edgarsand yl rein | Powersaes | ~AIL tances hve simi | trasfrod tom one branch | datemined at Srabopreg. | forelhing. | sbopfomi (hand name) | another fe enema Decorated the same Canard wo heey ve ach |Tv tintin, “Branches hae similar yout | ‘TnRingattemporry lose | INE _varchow, ie, TAN mock ase goods nod | O26 adver wil bene at] ‘MEPS ‘argethe sume poset | _bruoches tus sharing on cons | ozanietions ae itt to cont There is cenmtised baying | “EASY 10 recognise by yal ate conten“ype ofretclier | Ste/location | Goods sold ‘Main features ‘Advantoges Disoevantogee Each bandh hs a branch] Cosonen wit scouts [If easomes ‘manager whe ments the day] in one beach can get| diets with Dayrmngorbusiness | oolsinaterbnaches | ope banc, they may Stace and. atoffcan__be| ~Traveling customers can | lletber branches tree toe ranches | ews dey the shop in ox ces Customers can by goods in one branch andrea them to antier branch Departmental |-Lareand | -Selavaity | -Very large usally in’ mli-| -Oftr a vary ofgpods- | - Ronny inthe CBD. sores loetedinciy | oF gods storey Blinn ester ean ge al his | igh ene Comat | indicat | Ser i avid imo diterent| et teedsunder one rot |. puking space ii Basa epermenis | “opnrmena Cosme shop is ry | High ovebend ii Fach department is controled} -Shopatendanscan assis | KE rel wages ty mmnager who does ks] buyerson tecnica goals | cletiiy ‘ving High quality goods ae | Prices ar high Hn spacious hayut ote =CBDiscongese Lana appears: One adver caters forall | “rpe capital * dep capt eparinents rege sar andra * tears -Costomers see what | Risk of tad deb de 7 is dipayed Ia other | “Sed onte ‘cates Sepa rine | ~ Sood are unaly” + rests ‘parents avers for | "Gols are ena Sa high unity goods sch oer ue rid sata -Loses inne Depertnent | “Pious ips poche sxc covered by pros in| 08 peor to by Vises seltsclction method of| ESO afte impulse teling ieee ite purchase and erat ies te uly igh See tr rest and Hire Prctase | by consumer dahes “Offer afer sales service es. thivesy Cosh ls re within the stop 2 Buamples are MeiklesM ‘Barbour and Gresrmans ertoty Chain |-targesiops | -Settavariey | -Lite departmental store: | -Se a varity of gods | -Larme Stores stunedinety | ofgedlie | + gn mutinorey (isomer cin all | egured. cenre/tas | hardware, | snunaer| 07g UNE one Toa) | All decions are my bcs | cotingard | oe mays took | fom he Henge voughout the | reer in A apn ranch managers county eg, OK | diferent, ssettavainyofgods | ~Asisant can np the] SO, alto deparonens | + hey ate sated in the cy] SO Tice tual a eee ocd sre of igh quay |e cont wetninetasins | “ae me ai cali Cen ving Lite din moe heya: | “Cent bang any. tanches thoughout] ich in ea result it the country larg dcouns * nave identical sop fom | Prices of goods ar lo * haves yout One avert can benef sek same goods in all] ancien Iranches Gees ought fom one * wir ces tran can be exchange eau uy at apother banc, * cenalised contol Supermerket|-Lanzsshop | -Sellgucey | Leeson Bulk baying ~ routs n |= EGE opal — ol sited in (foodand” | -sett_ mostly grocery and| large dco reed populous howstoid | “howehold pods eis ~ Goods canbe lost thou mene soos) carnal al, pillaged ef. eee Seservie Low overheads as Po ones Selion acashand cary basis: | fewer workers needed |“ Sslfservice and di * no credit themselves results in impulsebuy ‘which sad or eustome‘of retaler] Siza/location| Goods sold ‘Main features ‘Advantoges| Disadvantages ‘zac and no dalivry ~ Goods ascot diplayed. towns Goods areatractvely displayed | -Goods are branded. and Examples are OK onsets individually priced making Bazaars, SPAR, tine wide tses between] i easy for customers to Food Chain, shelves shop aroun Offer 9 variety of goods Food World, TM, long ists Casters move slong se) inet brands of SM0 Paige ey want | rent nd te pre ‘or trolleys in which to put the| “No bad debts as they oar pa Opera a Sei gt pn sn td nis oa Con ly tse “Rvp omer “Gone if oi “Hn sey fas ee Splice A superette has same features as a supermarket, They differ in size, The difference, is that a superette is smaller than a supermarket. ofretailer] Size location] Goods sold ‘Main fectures ‘Advantoges Disadvantages ‘er Tare shops [= Sella variety | =Vary lage etal ote “Parking space is avable [-Large capital outays sully foundon | of goods) and| -Opertes ikea supermarket, | oF motorists rewuied. theouskits of | provide many |” Oo sre building with many | Situated oubide CBD whee |-Large business thereto lage cies were | auary services | “06 001% P roms are aw? ‘becomes diet lands lent | ike banking and arrest ba | ies and chop. chilren playing | Has lrg perkng apace or] “Bulk buying i | etal -Should te inked | fies onder] motorists 1 pilerng. tyamd ad | oe rot ries are usual ow. Pret aewmatyton, | Hee etvork Offera varity of goods. | ~Offerhigh quality goods, ]-Selfsevice and display resus in impulse Have _hurows shopring| “OMrvrety of woods | ving which is bal cavirment with ‘Raniss| -cosoners can tay | eaters Paying ound, restaurants] everything in oe sep. | es ox ei rit another iis. Goods ae always avaiable Good rod network for 68] Relaxed shopping ses coviroment with one op =| stoning eonvenienes frm [Large reait | -Sett «vari of| Operate fom avarehoue. | cusomers can buy inthe [Lar capt clap cgulet-asuly | goods but some] Use coloural catalogues | “luxury thet homes, | outed for stoking fopentes froma. | might specialise “aivetse ‘airy and dsb Credit i ofead wo regula ‘warchous inane line of] = Customers choose goods they] “ormpprved customer. |-H Might be expensive to = Operates ool ‘wan fom catalogs age voveage they | SRO esaloges tae en | ang AS | -Send orders which are then] “can he reached by cian [High delivery and roailngsystem | usu the pa ead | light weight bur | PSS ustomes through pst. are maled capemive pe) ~The goods re delivered to| -Low overecs Goods ae very topotential — | tke perfumes ctstomers through the postal | “customers ean tum goods | PE" causwomer who | andjewelly, | sYstemor are delveredydoo| “Gute hot ‘sateseury {NO personal ‘ouch intra back 10 door sales poole. tent, iansey | ferween te der and thie ores and Payment can be through pstor| them (goods are set on | the isomers payment. The ‘nk anova. Aandi aa comm so one seals te ‘hey dont wan pnd eed _— Goods might be sent eash on datvery (COD), ~Targereal —|-Sella vareyyof| ~Large reall oul “Enjoy Tage desounis dhe [-Large oanaiations ae crzaisation |” goods, “Nen-profitmakingconcem, | ‘© Buk buying alto mansse. formed by [Might specialise] -roymed by customers | “Sell at low pices -Disagreements among the| in "goods that) “(memes faebuk biving. | -Offra varity of goods, | embers mia ae th tusinoss, @)Type of retailer] Size/lecation| Goods sold ‘Main features ‘Advantages Disodvantages buying. members eg.| member uated for ts | Cooperative patonage co-operative. rember). ‘wholesale sociesy, ‘making. cuablebulk | are needed by| -Sell to general public end | ~Member enjoy a rebate Conveniently | Famers Retsil) iy ela variety of goods. period reser Sel atlowe prices o casos Profits (surplus) ae shared by tmembecs according fo member Members eam a rebate (dividend) ‘bated on their purchases trom the Controlled by elected members (democratically Le. one vote per =May buy fom cooperative Members may buy on ered. Membership is voluntary. They are voluntary and non-profit -Menters join though buying shares and abscrptions. Buys a variety of goods and sels te members aud non-members ‘ncmbers buy at lower pices) at the end of tading Stipulated by act. = No deposit is required. requirements ~ Buyer must pay a deposit, the | - Depends on agreement between sell balance and interest are spread over and buyer. a period. Formalities = Agreement must be in writing. = Awritten agreement is optional. = Agreement is controlled by Hire | - Based on trust. Common errors - Self-selection is often mistaken for self-service. Table 4.2: Differences between hire purchase and deferred payments 3 TEST YOURSELF & ‘Multiple choice questions L A retailer who operates from a warehouse and advertises through catalogues and delivers goods 4, to @ customer is known as a A. retail co-operative society. B. mail order firm, C. specialist retailer. D. independent retailer. 2. Which service is offered by a supermarket? A. delivery B. credit C. personal service D. _variety ‘Areal outlet has many branches and sells a vari of goods under one roof. Has many de under one roof.’ The above describes a ‘A. hypermarket, —B, department store, C. chainstore. -D._variety chain store. ‘The term branding means A. putting goods into colourful pockets. B. giving goods a distinctive name. C. putting goods into distinctive shelves. D. putting flavour into the goods. Which of the following is not a feature of a cooperative society? ‘A. Offers a variety of goods. B. Sells to members only. © RARER ZIProfits are shared according to patronage. They are democratically controlled. ed questions sate the services offered by retailers to: ) Consumers [61 ©) Manufactures [a ‘Explain the following terms: ‘%) pre-packaging {6 ©) branding (6 (© franchising 8 Distinguish between a Chain Store and a Department Store. 2) (a) &) © (a) © Describe the features of a hypermarket. [10] What is e-commerce? GS] ‘What are the advantages of e-commerce? [5] Explain how small scale retailers continue to survive in the face of stiff competition from large scale retailers, [s] What factors are to be considered when establishing a retail outlet? (6) + Do It Yourself. ~ name that distinguishes one produet from another; the trade name of a product. ~ is an optical machine-readable representation of data relating to the object to which it is attached. It represents data by varying the widths and spacing of parallel lines. _- is the practice of using another firm’s successful business name as one’s trading name, points - points/credits awarded to customer when they purchase goods or service points are redeemable. ckaging ~ putting goods in containers or wrappers before sale. ,a) b) °) d °) 0 8) hy CHAPTER 5.0 Objectives By the end of this chapter learners will be able to: 5 identify the qualities of an entrepreneur; explain the advantages and disadvantages of being an entrepreneur, show the importance of enterprise skills; expl identify ethical considerations in business; explain the contents of a business plan; ‘explain different types of intellectual property; and describe the functions of the Zimbabwe patent office. various management functions; 5.1 Characteristics of an entrepreneur Risk taker, Creative. Optimistic. Self- confident, Innovative, Independent. Effective communicator, Hard working. Advantages of being an entrepreneur Being his/her own bos. Owner enjoys all profits. Use personal skills and interests. Able to put up own ideas into practice, If entrepreneur is successful the entrepreneur will become famous. Disadvantages of being an entrepreneur Not all entrepreneurs will be successful. Lack of knowledge and experience in operating the business. Restricted sources of finance due to lack of collateral security Enterprise ~ Risk of failure if there is poor planning. - Unlimited liability 5.2 Management functions a) Planning ~ Involves setting of objectives for the busi + Identifying and meeting training needs workers, - Managers will also find out the resoi needed. 5 b) Organising + Delegating tasks to subordinates in order achieve organisational objectives. ©) Commanding ~ Managers have the authority to make decisi¢ and give instructions to workers to carry tasks and see to it that tasks are carried out @) Controlling - Involves measuring and evaluating the we of the employees so as to fulfil the object of the company. Coordinating ~ Bringing together resources and workers achieve organisational objectives working a team. 5.3 Business ethics = Donot cheat. = Donotsteal. = Donot bribe. 5.3.1 Business ethical considerations = Obey the law. - Be loyal to the company. = Treat others honestly and fairly, 5.3.2 Importance of business ethics - Gives credibility to the business. = Quality products will be produced. eS