December 10, 2020

Decision making take too long Size of market may be too small Complexity of the organisation may create difficulty in management Lack of enthusiasm due to size which kills commitment- no personal contact High risks due to change in fashion, taste or falling prices . Formation of monopolies leading to exploitation of consumers Poor staff and employee welfare are due to large number.

To enable infant industries to grow without  interference from foreign industries. To avoid entry into the country of commodities which might be harmful to the moral culture and health standard of its people. To eliminate dumping of inferior or substandard goods in country. To correct balance of payment deficit . To enable a country to fully exploit its resources which otherwise might be idle from undue competition . To raise revenue for government projects in the country To reduce the dependency of a country on another which might mistreat her incase of misunderstanding between them . To protect key industries which promotes faster development and lead to establishment of other industries To diversify industrial growth by allowing production of different commodities to prevent dependence on other countries .

Sources of capital to small scale enterprises. Personal funds /owners capital Borrowing from friends and relatives Members contribution Loans from bank and other non bank financial institutions Going public i.e borrowing from public by use of stocks. Venture capital i.e  a group of rich people with a pool of financial resources which  they lead to viable small scale businesses.

Methods of controlling volume of imports Tariffs – Involves levying import duty on goods that are entering a country Quotas – Is a quantitative restriction permitting only a given number of units of a commodity to be imported during a specific period Exchange control – Refers to the control by the government on the exchange value of the currency of a country. Importers can only import goods when they seek permission for acquiring foreign exchange. Trade agreements – Is an agreement between different countries regarding the foreign trade. Total ban / Embargo – Involves imposing a complete ban on import of some specific commodities

HIRE PURCHASE :- A  system where the buyer agrees to pay for the commodity in installment. The buyer obtains the possession of the article on the down payment (deposit) but the title of ownership remains with the seller until the last installment is made .   CREDIT SALES/DEFFERED PAYMENT- Under this system the article becomes the property of the buyer with the payment of the first installment. The  buyer is supposed to pay the remaining amount in installments. Advantages Manufacturer. He is able to increase his volume of sales . Profit earned on hire purchase is higher than profit earned on cash basis Goods belong to the seller until the last installment is paid .   The buyer. He takes possession of goods immediately after down payment Installments to be made are predetermined enabling him to plan and budget for payment  of the amounts He is able to acquire goods he would not have afforded on cash terms. The buyer can possess more goods including expensive items.               Advantages of credit sale to: The manufacturer: He is able to increase his volume of sales Profits realised are higher since customers must pay higher prices He can reclaim the amount due from the buyer under a court order.   The buyer He is able to expensive goods on credit Ownership of the article passes to the buyer after the first installment . He is able to plan on acquisition of certain goods ( 1 x 6 = 6 marks)   Differences Hire purchase                                                   Credit sale     –  Goods can be repossessed if the                –  Goods cant but the buyer can be  sued for buyer breaches the contract.                          damages –  Ownership remains with the seller             –   Ownership passes to the buyer installment is when  the first  till the last installment            is effected. Is made

The company knows value of its shares in the market The company may sell more shares since its is known to the public. The company raises more capital by floating more shares in the stock exchange The company uses more information gathered from stock exchange to improve its performances Helps to attract competent personnel in the company Promotes company image .

Losses caused by the insurers carelessness i.e not accidental Incase the insured has no insurable interest in the property Incase of accident / loss is not directly related to the risk insured Incase the insured has not paid premiums as expected If on investigation the insurance company realises that false information was given by the insured A car accident which is caused by a third person who is not insured

Benefits of privatization Kenyans enjoy improved products and services due to research carried out by privatised firms The spirit of competition enhances good management hence efficiency Consumers enjoy fair prices of products and services due  to minimal wastes if any. Privatisation calls upon many firms entering the market leading to product diversity    hence Consumers have a wide variety to choose from. Due to stiff competition, privatised firms engage in aggressive sales promotion methods which keep consumers informed of the products in the market. The need for greater profits makes them engage in risky projects which may be  of great importance to the consumers.

Price mechanism- The interaction of demand and supply in the market .  Government policy – Through taxation subsidies and price controls   Auction – Prices suggested by prospective buyers

C.W.O –  Cash with order – The buyer  must  pay for the goods when he makes an order. C.O.D –     Cash on Delivery –  Payment is effected when goods are delivered to the buyer. F.O.B – Free on board . Prices  quoted includes expenses  from the sellers warehouse up to the docks .

Higher production leading to low cost of goods per unit thus higher profits Large market due to lower prices and no competition Reduced competition increases sales Advantages of specialisation Better management as a result of combined pool of specialist / specialised labour Cheap purchases of raw materials as a result of bulk buying at a discount Will be able to attract external finance easily for expansion Control of prices due to information of cartel

Incase of the  essential goods that must be consumed Ostentatious goods that must be consumed Luxurious goods like cars Inferior goods i.e goods for the poor Geffen goods e.g bread