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Business Studies Notes Form One
CHAPTER ONE OF BUSINESS STUDIES NOTES FORM 1
INTRODUCTION TO BUSINESS STUDIES
Definition of terms used in business studies
Business – refers to any activity that is carried out by an individual or an organization concerned with provision of goods and services with the aim of making profits
Business studies– it is the study of the activities that are carried out in and around production, distribution and consumption of goods and services
Business environment – these are the business surroundings which may be internal or external
Goods – These are items which are tangible i.e. can be touched and felt e.g. furniture, buildings, bread. Etc
Services – These are actions or activities that may be sold. They are intangible e.g. teaching, banking, hairdressing etc
Production – It is the creation of goods and services or increasing their usefulness. Its done by producers e.g. farmers.
Distribution – It’s the movement of goods and services from the producer to the user. Involves transport, communication etc
Consumption – Refers to using of goods/service mostly done by consumers
Disciplines in business studies
- Economics – it’s the study of how human beings strive to satisfy endless wants using the available scarce resources. Human wants are the desires that people strive to satisfy using goods and services. Resources – Things that are required in order to satisfy human wants
- Commerce – Study of trade and aids to trade. Trade is the exchange of goods and services for other goods or services or for money.
- Accounting – It’s a systematic way of recording business activities which are used for decision making.
- Office practice – these are activities carried out in the office e.g. communication, filling, reproduction of documents etc.
- Entrepreneurship – It’s the study of activities involved in the process of identifying a business opportunity and acquiring necessary resources.
Importance of business studies in the society
- Assists members to relate the knowledge, skills and attitude acquired to day to day business activities.
- Equip members with knowledge and skills to start and run a business
- Assists individuals in appreciating the role of business studies in provision of goods and services
- Makes the members to appreciate the need of good business management practice.
- Assist individuals to acquire self discipline and positive attitude towards work.
- Equips individuals with abilities to promote cooperation
- Enables individuals to understand the role of government in business.
- Equips individuals with abilities to understand role of communication and modern technology to business management.
- Help individual develop positive attitude towards the environment
- Equips individuals with knowledge and skills required to evaluate business performance
BUSINESS STUDIES NOTES AND REVISION PAPERS DOWNLOAD LINKS
CHAPTER TWO OF BUSINESS STUDIES NOTES FORM 1
BUSINESS AND ITS ENVIRONMENT
The main purpose of a business is to make profits. To achieve this, a business needs to
- Satisfy customer needs
- Reduce operating costs
- Strive to survive by competing favorably
Types of business activities
- Extraction – means obtaining goods from their natural setting e.g mining, farming, lumbering etc
- Processing of raw materials – it is changing the form of goods without combining it with other goods
- Manufacturing – combining different raw materials to come up with one final product e.g. table is made of wood, glue, nails and varnish
- Construction – Rails, road and buildings
- Distribution of goods – Spreading of goods from the manufacturers to the users. Done by distributors
- Trade – Buying and selling of goods with the aim of making profits. Done by traders
- Provision of services – Selling services to consumers e.g. hairstylist, car washers
Business environments and their effects
Internal and external
Internal environment
- May either be strengths or weaknesses of the business e.g. skilled man power.
- It is also called micro environment
They include :-
- Business structure
This is the formal arrangement of the activities carried out at various levels of the organization. A well laid business structure would lead to success because:-
- Each employee knows what is expected
- No conflict or confusions
- Team work is enhanced
- Proper control – promotes efficiency
- Resources
A resource is something that can be used to achieve an objective. The following are some of the resources to a business
- Human resource
Employees in a business provide human resource. A business with qualified human resource is more likely to do well.
- Financial resources
A business with adequate finances is more likely to do better than one lacking such aspects.
- Physical resources
These are tangible facilities which belong to a business e.g. buildings, machinery, furniture and stock.
- Technology
These are the skills and methods used in production. A business with the relevant technology is more likely to succeed.
- Business culture
Business cultures arise from the combination of employees expectations, beliefs and values within the business. A culture of involving employees in decision making always does better.
- Owner
He provides finances and makes decisions concerning operations of the business.
External Business Environment
- Also called macro environment – large in scale
They include:-
- Economic environment
These are factors that affect the buyers’ ability to buy goods and services offered by a business e.g charges, taxes, rates etc
- Demographic environment
- Includes factors in population change – size, distribution, age, density, birth and death rates
- A growing population provides market for goods and services
- Age and sex distribution shape the line of business while better education and jobs for consumers would improve their taste and demand for quality goods services
- Legal – political environment
The government closely monitors and passes laws and policies to regulate activities. Traders may opt to invest in some areas because of lower taxes or nor taxes
Manufactures of foodstuffs are required to include expiry dates to their goods. Political stability also creates a conducive working business environment
- Technological environment
Technology refers to level of know-how, efficient use of tools and equipments and other resources. Advancement in technology would lead to better quality of goods being produced.
- Cultural environment
Culture is the norms that regulate the behavior of people in society. Includes customs, beliefs and values. Dictates how people live and products they consume e.g. Muslims and pork.
- Competitive environment
Firms trying to outdo each other in their endeavors to maximize profits. Competition can ether be generic or enterprise.
Generic competition refers to competition where the products are used for the same purpose though the products are different. E.g. cinemas and discos are competing form of entertainment.
Enterprise competition is found were products are similar to those of the other firm. E.g a local shoe manufacturing company competing with imported shoes.
- Physical environment
Includes factors such as climate and infrastructure e.g. roads, water supply, electricity, banks etc
CHAPTER THREE OF BUSINESS STUDIES FORM 1 NOTES
SATISFACTION OF HUMAN WANTS
Human wants
- These are desires that people have or strive to satisfy e.g. thirst is a desire for drink
- Goods and service provide by the business are intended to satisfy a human want.
Classification of human wants
- Basic/ primary wants/needs
- Are the necessities that are absolutely vital for the human survival
- They include food, shelter and clothing
- They must be satisfied first before one thinks of satisfying the rest
- Lack of basic needs may lead to death
- Secondary wants
- Are needs one can do without but are desired to make life more comfortable
- They can be categorized into comforts and luxuries
- Comforts improve ones living standards beyond the status of mere survival e.g. furniture, medication, education, utensils, transport etc.
- Luxuries are goods that provide excessive comfort e.g. cars, watches. Luxuries are for prestige purposes
Characteristics of human wants
- Unlimited– Human wants are so many that they can never be satisfied. They are insatiable.
- Varied. They change with factors like age, gender, income, geographical location and social status.
- Competitive. They compete against each other for satisfaction using the limited goods and services
- Complimentary. Satisfaction of some wants automatically leads to creation of other wants e.g. when you purchase a cell phone, you will automatically need airtime.
- Repetitive. After some wants have been satisfied once, they recur thereby creating the need to satisfy them again.
- Habitual. Some wants result in the formation of certain habits e.g. use of certain brands of toothpaste, perfumes, body lotion and beverages based on habits .
- Universal. Human wants are experienced by every human being without exception whether they are satisfied or not
- Vary in intensity. Different wants have different priority
Challenges faced in the satisfaction of human wants
- Human wants are too many and varied to satisfy fully
- The resources needed for the satisfaction of human wants are never enough
- Resources are scarce
- People must continually look for fresh resources to satisfy recurring wants
- Human wants change with time, age and gender
Goods and services
- Goods are tangible visible objects that can be used to satisfy human wants
- Services are intangible efforts or acts that can satisfy human wants. Services cannot be seen i.e. not visible
Goods can be categorized as follows
- Free goods and economic goods
- Free goods are gifts of nature e.g. sunshine, rain, oceans
- They have utility but no monetary value
- Economic goods are scarce in supply and have money value e.g. TV, books, minerals etc
- Producer and consumer goods
- Producer goods are used in producing other. They are also known as capital goods e.g. machines, equipments and tools.
- Consumer goods are readily usable by the final consumer. E.g. food, clothing, furniture, cosmetics, medicine etc
- Perishable and durable goods
- Perishable goods go bad easily unless stored using very special facilities e.g. meat, milk, vegetables, tomatoes.
- Durable goods continue giving services for a long time and can be spoiled by agents such as wear and tear e.g radio, furniture, buildings,
- Public and private goods
- Public goods belong to no one in particular but are owned by the government or by all of us collectively e.g. roads, airports, rivers, public hospitals, public parks, railways, churches etc.
- Private goods are owned by private individuals in their private capacities either singly or as a group e.g. personal cars, private schools etc.
- Intermediate goods and finished goods
- Intermediate goods are used as inputs/raw materials to be processed into a more useful form. E.g sisal, sugarcane, wood, cotton etc.
- Finished goods are final products that come out of processing in the required form (output) e.g flour from maize or wheat, dress from cotton.
- Material goods and non material goods
- Material goods are commodities that are tangible e.g food, books, chairs, vehicles, shoes
- Non-material goods are intangible e.g. teaching, nursing etc
Differences between goods and services
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Economic resources
- These are inputs needed in the production process in order to produce what is required to satisfy human wants.
- They are the means by which production and provision of goods and services is made possible.
Types of economic resources
Natural resources – Are gifts of nature e.g. land, natural forests, rivers, oceans and minerals
Artificial resources – Are man made resources e.g. machinery, tools, tarmac roads, dams, railways lines etc
Human resources – Refers to mental and or physical efforts rendered by people to organizations or to other human beings in producing goods and providing services e.g. nurses, teachers, painters, drivers.
Economic resources can be divided into
- Renewable resources
- Non-renewable resources
Renewable resources are those whose supply can be restored and if not, creating goods and services is reduced and it may stop altogether
Non-renewable resources are those whose supply cannot be stored after use. Using these resources leads to their exhaustion sooner or latter
Example of renewable and non renewable resources
Renewable resources | Non-renewable resources |
Wood | Coal |
Natural rubber | Building stones |
Wool | Gravel |
Silk | Iron |
Leather | Aluminium |
Solar energy | Gold |
Hydro-electric power | Lead |
Wind power | Natural gas |
Soda ash | |
Vehicle |
Characteristics of economic resources
- They are scarce
- They have monetary value
- They are unevenly distributed
- They can be used to create goods and service
- They can be combined together in different proportions to create goods and services
- They can be transformed from one party to another
Scarcity, choice and opportunity cost
- Scarcity is used to describe the limited nature of economic resources
- Choice id the act of deciding what wants to satisfy first with the scarce or in adequate resources available. Choice is made with a list of scale of preference which is a list of unsatisfied wants arranged in order of priority
- Opportunity cost is the value of the best foregone alternative. The real cost of satisfying any want is the alternative that has to be foregone in order to do so