PRINCIPLES OF BUSINESS

ARNOLD SOOGRIM
2022
 BROAD TOPICS

• A structured essay paper consisting of five compulsory questions, drawn from the following
areas of the syllabus:
• Section 3 – Establishing a Business
• Section 4 – Legal Aspects of Business
• Section 5 – Production
• Section 7 – Logistics and Supply Chain
• Section 10 – Technology and the Global Business Environment
 SECTION 3

• ESTABLISHING A BUSINESS
 REASONS FOR ESTABLISIHNG A BUSINESS

• DESIRE FOR FINANICAL INDEPENDENCE

• SELF FUFILLMENT
• SELF ACUTALISATION
• INCREASED INCOME
• INCREASED CONTROL OF WORKING LIFE
 STEPS IN ESTABLISHING A BUSINESS

• CONCEPTUALISATION
• RESEARCH (MARKET PROBE)
• IDENTIFICATION OF RESOURCES (FINANICAL, HUMAN ,MATERIAL)
• CREATION OF BUSINESS PLAN
• ACQUISITION OF FUNDS
• OPERATION OF THE BUSINESS
 REASONS FOR ESTABLISHING A BUSINESS
PLAN
• to ensure that careful research is conducted into the feasibility of the business;
• to attract potential investors;
• source financing
• to guide the operations of the business when making decisions
FACTORS THAT DETERMNE THE LOCATION
OF A BUSINESS
• Geographical
• availability of raw materials and supplies
• Infrastructure
• power and water
• Telecommunications
• Transport
• health facilities
• labour supply
• governmental regulation.
ACCESSING CAPITAL TO START A BUSINESS

• PROPERTY
• BONDS
• STOCKS
• MONEY
• CASH
• SURRENDER ON LIFE INSURANCE POLICIES
• MOTOR VEHICLES
• APPLIANCES
 2019

• Define the term Stakeholder as it relates to business (2 marks )

• Someone who demonstrates an active interest in the business.
• A person who plays a part in the business or is directly involved in operating the business.
• A group of persons who have a general interest in a business organisation .
 2019

• Identify TWO stakeholders who are involved in a business.

• Owners
• Employers
• Employees
• Suppliers
• Government
• Managers
 2019

• Outline ONE of the function each of the stakeholders identified above. (4 marks)
• Creditors/lenders provide businesses with capital/finance whether by loan or investing in
business, by purchasing shares in a company.
• Employees carry out assigned work by providing labour and to provide good customer service.
 2019

• Describe ONE activity that may be carried out in EACH of the following functional areas of a
business.
• Marketing- Marketing research is used to investigate consumers’ opinions and preferences in
order to plan production.
• Promotion is a marketing activity that helps to make the goods and services known to the public.
• (ii) Finance
• Draw up financial statements for the firm every year in order to analyse income and expenditure.
• Ensure that the business has sufficient capital to further its operations
 2019

• (iii) Personnel/Human Resources (HR)

• The recruitment and training of staff to undertake assigned tasks so as to achieve the firm’s
objectives.
• Interviewing future employees for the organization, ensuring that they are up to the standard that
the organization is looking for.
 2019

• Explain TWO legal or ethical principles that business owners should adopt in the establishment
and operation of a business. In your explanation, include relevant examples of each principle. 6
marks
• The payment of taxes by businesses
• Not engaging in money laundering, fraud or accepting or giving bribes
• Protection of the environment by appropriately disposing of waste
 SECTION 4

• LEGAL ASPECTS OF BUSINESS

• CONTRACTS
• BUSINESS DOCUMENTS
 BUSINESS DOCUMENTS JAN 2019

• Business organizations performs many transactions daily, which require the use of documents.
• List THREE types of business documents. 3 marks
• Invoice
• Receipt
• debit note
• credit note.
 STATE THREE REASONS WHY FIRMS UTILIZES
BUSINESS DOCUMENTS IN BUSINESS TRANSACTIONS
• record keeping
• evidence of transaction
• to avoid confusion
• tax and auditing purposes.
 DISTINGUISH BETWEEN INSURANCE AND
ASSURANCE.
• Insurance is based on the probability of an event occurring whereas assurance is based on an
event that is inevitable, for example, death.
 NAME TWO TYPES OF INSURANCE
POLICIES.
• MOTOR
• HOME
• HEALTH
• TRAVEL
 OUTLINE ONE PRINCIPLE ON WHICH
INSURANCE IS BASED
• Utmost good faith
• indemnity
• Average
• Insurable Interest
 EXPLAIN TWO WAYS IN WHICH INSURANCE
IS BENEFICIAL TO A FIRM.
• Provides property damage coverage
• Covers for advertising liability
• Helps minimizes the financial issues
• Aids in risk sharing
• Helps promotes business continuity
 SECTION 5

• PRODUCTION
 2019

• Define the term Production. 2 marks

• Production is the converting or manufacturing of raw materials into finished products and
production is the creation of goods and services to satisfy human needs.
 2019

• Identify TWO factors of production , other than capital, used in the manufacture of goods and
provision of services.
• land/natural resources,
• labour/human resources
• and enterprise.
 2019

• Define the term Capital 2 marks

• Capital is money and other assets employed in the process of production of goods and services
• It is money or assets such as machinery/equipment that is used to start/establish a business
 2019

• Differentiate between the term fixed capital and working capital and give an example of each.
• Fixed Capital are plant , machinery and office equipment employed in the process of production
• Working Capital refers to items that are used in the day to day operations of the business , for
example, stocks of raw material, cash, and bank balances.
 2019

• customers would benefit by having access to more branches leading to greater convenience and
growth could lead to greater profits by the firm which would result in the shareholders receiving
higher dividends.
 2019

• Explain TWO ways in which increased productivity may be advantageous to a firm

•
 2019

• Increased productivity in the business means there will be a lower cost of input for each unit of
output this could lead to lower prices on goods and services to the consumers. Consumers may
then demand greater volume, leading to increased sales and to higher profits for the firm.
 SECTION 7

• LOGISTICS & SUPPLY CHAIN

 ACTIVITIES INVOLVED IN SUPPLY CHAIN
OPERATIONS
• : transformation of natural resources;
• movement and storage of raw materials
•

processing of raw materials and components into finished

 DEFINE THE TERM CONSUMER
PROTECTION
• Consumer protection is the practice of safeguarding buyers of goods and services and the public ,
against unfair practices in the marketplace.
 LIST TWO RIGHTS OF THE CONSUMER

• right to redress
• the right to be heard
 OUTLINE TWO ROLES OF THE BUREAU OF
STANDARDS
• To promote and enforce standards in order to improve the quality and performance of goods
produced.
• To protect the environment
• Standardisation in relation to commodities, processes and practices
 STATE TWO CHARACTERISTICS OF THE
WHOLESALER AS A DISTRIBUTOR
• the wholesaler distributes goods to the retailers by breaking the bulk and selling the goods at a
cheaper price
• He buys and sells goods in large quantities
• He deals with only a few types of products
• He acts as the middleman between the producers and retailers
 IDENTIFY TWO PROBLEMS RELATED TO
THE DISTRIBUTION OF GOODS
• Inadequate facilities for temporary storage, for example warehouse space
• Inadequate and dysfunctional tools and equipment for the movement of goods and people , for
example, not enough cranes.
• Delayed shipment in ports (perhaps due to bad weather, or unprocessed documents )
• Industrial unrest
• Poor communication within the distribution network
 OUTLINE MEASURES TAKEN TO AVOID
PROBLEMS IDENTIFIED
• Government intervention
• Implementation of good industrial practices may solve the industrial problems
• The communication networks among all parties should be implemented. The use of internet can
be a good starting point.
• Member of the public can be educated about the laws governing the distribution of goods.
Misdirection of goods and proper labelling and lack of knowledge of custom regulations can be
solved by educating the population of users of the service.
 SECTION 10

• TECHNOLOGY & THE GLOBAL BUSINESS ENVIRONMENT

 2019

• Define the term ‘Information and Communication Technology’ 2 marks

• Information and telecommunications technology is the use of information technology/computers
to enhance business performance and relates to the manner in which information is created and
shared among departments in an organization.
 2019

• Describe one way in which computer-aided design (CAD) is used in a business (2 marks)
• Responses suggested that CAD is generally used in construction firms which use programmes
like AUTOCAD to perform drawings in both two- and three-dimensional views.
 2019

• Outline three ways in which the use of automatic teller machines (ATMs) or automated banking
machines (ABMs) could assist a business.
 2019

• Outline two ways in which electronic commerce (e-commerce) can improve the performance of
a business
• Records
• Storage
• Enhance executive decision making
• Planning
 2019

• Explain two ways in which businesses can demonstrate the ethical use of ICT in the conduct of their operations
• Privacy: Businesses can demonstrate the ethical use of ICT by ensuring that they do not infringe on the rights
and privacy of individuals. Persons will therefore feel more comfortable in conducting business and sales and
profits are likely to increase.
• Security: Businesses should properly manage the monitoring of employees and customers. If surveillance is
suitably managed, employees and customers will feel comfortable and will be more inclined to conduct business.
• Protection of personal data: Businesses should ensure that there is confidentiality of personal data. They should
therefore ensure that they do not make public the information that is gathered on customers’ biodata forms, for
example insurance details and medical history.