December 11, 2020

Warehouse; This is a building or a part of a building where goods are received and stored until need arises for them. -Other terms used to refer to a warehouse are depot, a go down or a silo. Warehousing; This is the process of receiving goods into a warehouse, protecting such goods against all types of hazards and releasing them to users when need arises for them -There are three distinct stages in warehousing process namely: Receiving goods into a warehouse Storing them Releasing them to users Importance of warehousing to Business Steady/continuous flow of goods; Producers can produce and store goods awaiting demand through warehousing e.g. agricultural products that are produced seasonally are made available throughout the year Stability in prices; Warehousing ensures that there is no surplus or shortage of goods. It ensures that goods are stored when in plenty and released to the market as their need arises. This helps to keep their prices fairly stable Security; Warehousing ensures that goods are protected against physical damage and adverse weather conditions. This also ensures that the quality of the goods is maintained until they are demanded. Goods are also protected from loss through pilferage and theft. Bridging the time lay/difference between production and consumption; many goods are produced in anticipation of demand. Such goods must be stored until their demand arises e.g. gumboots, umbrellas and sports equipment are needed seasonally but are manufactured in advance and stored in a warehouse so as to be released to the users when need arises for them. Continuous/uninterrupted production schedules; Manufactures are able to buy raw materials in large quantities and store them awaiting their need to arise. This prevents interruption of the production process because of lack of raw materials Preparation of goods for sale; While in the warehouse, goods can be prepared for sale e.g. they can be blended, packed, graded or sorted out. Sale of goods; Goods may be sold while still in the warehouse. If sold while still in a bonded warehouse, duty passes to the buyer Specialization; Warehousing encourages specialization in production and distribution. Producers concentrate on producing while distributors store the goods for sale to the customers. Unexpected demand can be met; The government collects agricultural goods e.g. cereals and stores them as buffer stocks to be used in times of disaster or serious shortages. Clearance of goods; Warehousing helps in clearance of goods i.e. goods entering the country can be inspected by the customs officials. Warehousing helps to improve the quality of goods e.g. goods like tobacco and wine mature with time. Warehousing enables buyers to inspect the goods before they buy them. Wholesale warehouses may also operate as showrooms for traders. Essentials of a warehouse These are the features and resources a warehouse should have in order for it to function effectively. These include; Ideal location; A warehouse should be located at a suitable place to facilitate receipt and issue of goods e.g. a manufactures warehouse should be located near his/her factory. Proper building; A warehouse should have proper buildings which are suitable for different types of goods to be stored. Equipment; A warehouse should be equipped with appropriate facilities for handling goods such as fork-lifts conveyer belts e.t.c.It should also be well equipped with necessary storage facilities e.g. provision of refrigerated or cold storage for perishable goods such as meat and fruits. Accessibility; A warehouse should be accessible to its users. It should therefore be linked with good and appropriate transport system to facilitate movement of goods in and out of the warehouse. Safety and security; It should have/be fitted with safety equipment or facilities necessary for protection of goods against damaged caused by such things like water, fire or sunshine as well as for the protection of the personnel. Communication; A warehouse should have a good communication network or system for easy contact with its clients and suppliers Qualified personnel; A warehouse should have well trained and efficient staff/personnel for proper management and efficient functioning of the warehouse. Recording system; There should be a proper recording system in a warehouse to ensure that all movement of goods is properly monitored. A warehouse should be spacious enough to allow easy movement and accumulation of goods and personnel. Types of warehouses Warehouses can be broadly classified into three namely: Private warehouses Public warehouses Bonded warehoused   Private warehouses These are warehouses that are owned by private individuals/organizations for the purpose of storing their own goods only. They include; Wholesalers warehouses Producers warehouses Retailer’s warehouses. a) Wholesalers warehouses These are warehouses for storing the wholesalers’ goods as they await distribution or sale. They need warehouses because they buy goods in bulk from producers and store them until they are needed by retailers. -The wholesalers warehouses also act as showrooms i.e. they display their goods in the warehouse. -These warehouses also enable the wholesalers to prepare their goods for sale e.g. branding, blending, packing and sorting may be carried out in the warehouse b) Producers warehouses; -These warehouses are owned by producers and they are for storing goods prior to their demand. -The producers may be manufactures of finished goods or farmers -Such warehouses are built near the manufactures factories or the farmers production points. -Manufactures who export may locate some warehouses near ports through which they export e.g Mumias sugar warehouse, Bamburi Portland cement warehouse e.t.c c) Retailers warehouses Some large-retailers such as chain stores and supermarkets own warehouses for storing their large stores -It becomes necessary for such business to have warehousing facilities due to their large and bulky purchases dictated by the nature of their business -Goods are distributed from their warehouses to the retail outlets or to the branches Advantages of private warehouses The owner has full control over its operation and may make major decisions without having to consult anyone. The warehouse is designed to suit the specific needs of the organizations It enables special handling, storage and protection of goods by having special facilities which may not be available

TOPIC OBJECTIVES By the end of the lesson, the learner should be able to: Explain the meaning and importance of transport to business. Explain the essential elements of transport. Describe the modes and means of transport. Discuss the advantages and disadvantages of each means of transport. Discuss the factors that influence choice of appropriate means of transport. Discuss trends of transport. MEANING OF TRANSPORT Transport is the physical movement of people and goods from one place to another. It helps bridge the gap between producers and consumers hence creating place utility. Importance of Transport to Business Bridging the gap between producers and consumers/ linking consumers to producers-Transport links consumers to producers which enable the consumers to obtain the goods they need. Employment creation-Transport helps in solving unemployment problem by creating job opportunities. For example, people may be employed as drivers, pilots, mechanics and road constructors. Promotes specialization-Transport enables people to specialize in jobs they are best at. For example; producers would concentrate in production only while other people carry out distribution. Making goods and services more useful-Through transport goods are moved from a place where they are least required to a place where they are most required thereby making them more useful. Improving people’s standard of living-It enables consumers to get a variety of goods and services thereby improving the standards of living. Availing a wide market for products-It helps producers to widen the markets for their products by enabling them access to areas they would otherwise not have accessed Increased production/ facilitates mass production-Due to the wider market created through transport, producers are able to increase the volume of goods produced. Avoiding wastage-Transport makes it possible for surplus goods to be disposed of by taking them to areas where they are required. Perishable goods such as flowers, fruits and vegetables can also be transported fast hence minimizing/ avoiding wastage. Promoting development of industries-Through transport, raw materials can be taken to manufacturing industries and also finished goods to the market. Similarly, it promotes development of service industries such as tourism. Adds value to goods and services- creates utility in goods by moving them from the point of production to where they are needed thereby adding their value. Leads to the opening of new markets- Goods and services can be taken to new areas with ease. It facilitates the movement of labour- people can easily move from where they stay to where they work  ESSENTIAL ELEMENTS OF TRANSPORT In order for a transport system to function efficiently it should have certain basic elements. These elements are: Unit(S) of carriage Methods of propulsion Ways Terminals(terminus) Unit(S) of carriage This refers to anything i.e. vessel that is used to transport goods and people from one place to another. Units of carriage include: ships, trains, aeroplanes, motor vehicles, bicycles and carts. Units of carriage are also referred to as means of transport. Methods of propulsion This is the driving force (source of power) that makes a unit of carriage to move.The power for most vessels may be petroleum products, electricity, human force or animal power. Ways It refers to either the route or path passes by the vessel. The route can be on land, on water or through air. Examples of ways are roads, railways, paths, canals, seaways and airways. The ways can be classified into either natural ways or manmade ways. Natural ways-As the name suggests, natural ways are the ways that are provided by nature. They are therefore free to acquire. They include airways and seaways. Man-made ways-These are ways that are made available by human being. They include roads, canals and railways. Manmade ways are usually expensive to construct and maintain. Terminals (terminuses) The vessel used to carry goods and people starts from one destination and ends up at another. At these destinations the loading and off-loading take place respectively. The loading and off-loading places are referred to as terminals or terminus. Examples of terminuses are bus stations, airports and seaports.   MODES OF TRANSPORT Mode refers to the manner in which transport is carried out. There are three modes of transport namely: Land transport Water transport Air transport Land transport This mode of transport involves movement of goods and people using units of carriage that move on dry land. The various means under this mode includes: Human Porterage This involves human beings carrying goods on their heads, shoulders or backs. Human Porterage as a means of transport is the oldest kind of transport and is still very common in our society. The means is suitable for transporting light luggage over short distances. It is also appropriate where other means of transport are not available or convenient. Advantages of Human Porterage Could be the only means of transport available Compliments other means of transport Flexible as it has no fixed time table or routes May be a cheap means compared to other means of transport Readily available when required Convenient over short distances Disadvantages of human Porterage Not suitable for long distances They add onto congestion on roads Not suitable for transporting heavy and bulky goods It is relatively slow Relies on human energy which is exhaustible Carts Carts are open vessels usually on two or four wheels that are pushed or pulled by either human being or animals such as oxen and donkeys. The carts pushed or pulled by human beings are referred to as hand carts or mikokoteni. The ones pulled by animals, on the other hand, are called animal driven carts. Carts are used to carry relatively large quantities compared to human porterage. Like human porterage, they are not suitable for long distances. Types of goods that are transported using this means include, agricultural produce, water and animal feeds. Advantages of carts Compliments other means of transport Relatively cheap to hire Initial buying and maintenance cost is low Appropriate in remote areas where other means are not available Readily available for hire Can carry fairly heavier and bulky goods Convenient for transporting goods over short distances Disadvantages

COMMUNICATION Meaning of communication Communication is the transfer or conveyance of messages or information from one person to another. Communication is the process of sending and receiving meaningful messages, information and ideas between two or more people located at different points in space. Note: The space between the sender (s) and the receiver (s) maybe as narrow as when people are talking to each other or as wide as between the North Pole and the South Pole. Effective communication is vital/important for business in that it serves the following purposes. Importance of communication (purposes) To give and obtain information For an organization to run smoothly there should be proper flow of information within the business and also between the firm and outsiders e.g. the manager may inform members of staff about a planned meeting. Similarly the business may receive a letter of inquiry from a customer To clarify issues and points Through proper communication the organization is able to clarify confusing issues from within and without the firm for example in cases where there are many managers. It would be necessary to clarify the responsibilities of each manager. To enhance public relations Good/efficient communication enables the business to create a more positive image and a favorable reputation of itself to outsiders and overcome prejudices and negative attitudes that people may have against the business. To start and influence Action Proper communication enables the business to get new ideas make plans and ensure that they are implemented in the desired way. Improving customer service; Good communication helps in reducing errors providing customers with desired feedback and assisting in handling inquiries more efficiently Giving instructions; Through proper communication management is able to get work done by issuing instructions (procedures and orders)e.g. a supplier may be instructed when and where to deliver the goods ordered. To give Reassurance; Information is needed to reassure people that their performance is good e.g. an employee may feel better is he/she is served with a “will done”memo or a “customer of the year” award. Confirming arrangements; Through communication arrangements are confirmed for example confirmation of meetings conferences or details of transactions Co-ordinating departments of the firm; Charges in one department are communicated to other departments that have a direct bearing to those changes e.g. when sales increase the sales department informs the production department so as to increase production proportionality Modifying behavior of persons within or outside the organization; Through effective communication persons are trained and counseled and as a result their behavior knowledge and attitudes change Communication process Communication is a process that involves interchange of information and ideas between two or more people. Communication therefore is a circular process i.e communication may lead to some reaction which in turn may generate further communication or feedback. This flow can be illustrated as below: (2) Message (3) Receiver Message                                                                                   3 Receivercdddd Sender Sender (4) Feed back Feedback Sender –this is the person who writes, speaks or sends signs (symbols or signals) and is the source of the information. Receiver – this is the person to whom the information or the message is sent. Message – this is the information that is transmitted from the sender to the receiver. It may be spoken, written or in the form of symbols. Feed back – this is the response to the sender’s message. A message is said to have been understood if the receiver provides the desired feedback. Lines of communication Communication can be classified according to either the levels of the communicating parties or according to the nature of the message. According to levels-This can either be: I) Vertical ii) Horizontal iii) Diagonal   Vertical communication This is where messages are passed between a senior and her/his juniors in the same organizations Vertical communication can be divided into two parts –Downward communication -Upward communication -Downward communication-This is a communication process which starts from the top manager to her/his juniors. This can be informed of: Training juniors Evaluating performance Delegating duties Solving the problems facing workers Inspiring and motivating the juniors(giving rewards) -Upward communication-This is a communication process that starts from the juniors to the seniors and maybe in the form of: Submitting reports Giving suggestion Submitting complaints a grievances Making inquiries ii) Horizontal communication (lateral communication) This is communication between people of the same level (rank) in the same organization e.g. departmental heads in an organization may communicate to achieve the following: Co-ordination and harmonization of different activities. To create teamwork within the department. To exchange ideas in order to develop human resources. To reduce goal blindness among different departments. To create a sense of belonging among department heads thus acting as a motivating factor. One of the major characteristics of this type of communication is that there are less inhibitions. The people involved are more open and free with each other than in the case of people with different ranks.     iii) Diagonal communication This is communication between people of different levels in different departments or different organizations e.g. an accounts clerk may communicate with a sales manager of the same organization or of different organizations. Diagonal communication enhances team work. b) According to nature of message This can either be; i) Formal communication ii) Informal communication Formal communication This is the passing of messages or information using the approved and recognized way in an organization such as official meetings, memos and letters. This means that messages are passed to the right people following the right channels and in the right form. Formal communication is also known as official communication as it is the passing of information meant for office purposes. Formal systems of communication are consciously and deliberately established. Informal communication This is communication without following either the right channels or in the right form i.e. takes place when information is passed unofficially. It is usually used when passing information between friends and relatives hence it lacks the formality. Informal communication may also take the form of gossips and rumor-mongering. Informal communication usually suppliments formal

GOVERNMENT AND BUSINESS BY THE END OF THE TOPIC, THE LEARNER SHOULD BE ABLE TO: Explain reasons for government involvement in business. Explain how the government gets involved in business. Discuss the merits and demerits of government involvement in business. Discuss the importance of consumer protection. INTRODUCTION Government involvement in business activities is one of the commercial duties it owes its citizens. It is the one that provides the necessary environment for investments to be undertaken by itself, or by the local and foreign investors. This, the government may do in various ways, these include; Producing goods and services Distributing goods and services Advising producers and traders Promoting trade and economic development. Protecting consumers against exploitation by producers and traders. As a consumer of goods and services. Reasons for Government involvement in business The following are the major reasons for the government’s involvement and participation in business activities; To prevent exploitation of the public by private business persons especially in the provision of essential goods and services such as sugar, transport, communication etc. the Kenya Bureau of standards (KEBS) regulates the quality of goods consumed in Kenya. To provide essential goods and services in areas where private individuals and organizations are unwilling to venture because of low profits/ high risks involved. To provide essential goods and services which private organizations and individuals are unable to provide due to the large amount of initial capital required b e.g. generation of electricity, establishment of airlines etc. To attract foreign investment by initiating major business projects. To stimulate economic development in the country e.g. by providing social services. To provide goods and services which are too sensitive to be left in the hands of the private sector e.g. provision of firearms. To create employment opportunities by initiating projects such as generation of electricity. To prevent foreign dominance of the economy by investing in areas where the locals are not able to. To redistribute wealth where returns are very high. To prevent establishment of monopolies. METHODS OF GOVERNMENT INVOLVEMENT IN BUSINESS The government gets involved in business activities through the following methods: Regulation This refers to Rules and restrictions the government requires business units to follow in their business activities. Through this method, the government ensures high quality goods and services and puts in control measures to protect consumers from exploitation. The government regulation measures include; Licensing A license is a document that shows that a business has been permitted by the government to operate. It is usually issued upon payment of a small fee. Licensing is the process of issuing licenses to businesses. Some of the reasons why the government issues licenses include; Regulating the number of businesses in a given place at any given time to avoid unhealthy competition. To control the type of goods entering and leaving the country. To ensure there are no illegal businesses. To ensure that traders engage only in trade activities that they have been licensed for. To ensure that those who engage in professional activities meet the requirements of the profession. To raise revenue for the government. Ensuring standards/ enforcing standards; The government regulates business activities by setting standards that businesses should and ensuring that the standards are adhered to. To achieve this purpose, the government has established bodies such as; Kenya bureau of standards (KEBS) whose main responsibility is to set standards especially for the manufactured goods and see to it that the set standards are adhered to/ met. Goods that meet such standards are given a diamond mark of quality, to show that they are of good quality. The ministry of public health to ensure that businesses meet certain standards as concerning facilities before such businesses can be allowed to operate. Such standards may include clean toilets, clean water and well aerated buildings.   Legislation; The Government may come up with rules and regulations (laws) that regulate business activities e.g. banning hawking in certain areas, matatus required to carry certain number of passengers e.t.c. Training The government takes keen interest in training and advising people in business about business management strategies and better ways of producing goods and services. The government offers these services through seminars and courses. This is mainly done by the Kenya Business Training Institute (K.B.T.I). Reasons for government training include; To expose business persons to modern developments in management. Introduce modern technology and skills in management Educate the business people on efficient methods of operating a business e.g., effective methods of advertising and keeping books of accounts. Expose business people to problems/ challenges facing them and their possible solutions for example, problems of raising capital and identifying investment opportunities. Impart proper business ethics e.g. good customer relations and honesty. Creating awareness of the available profitable business opportunities in their environment. Expose business people to government policies regarding business activities in the country. Educate business people on how to use available resources to minimize costs and maximize profits. Expose people to other opportunities that exist in the import and export market. Trade promotion This is a government initiated and supported policy to encourage local business people to enter into business. This is aimed at increasing the volume and variety of goods and services traded in. Trade promotion is classified as either external trade promotion or internal trade promotion. External trade promotion The purpose of external trade promotion is to encourage local business people to enter into the export market. It also intended to attract foreign investors into the country. In Kenya, external trade promotion is done through the department of external trade in the ministry of trade and industry. External trade promotion may also be done by Commercial attaches. Commercial attaches are officers sent by the country’s government to work with the embassies in foreign countries as support staff in the field of commerce. Their main duty is to look at the interests of their home countries’ exports eg cash crops and manufactured goods. Duties of commercial attaches Explore and identify new markets for more export opportunities. Research and analyze

TOPIC OBJECTIVES BUSINESS UNITS A business unit is an organization formed by one or more people with a view of engaging in a profitable activity. Business units are generally classified into private or public sector business units’ i.e Note: Private sector comprises of business organizations owned by private individuals while the public sector comprises business organizations owned by the government.   SOLE PROPRIETORSHIP This is a business enterprise owned by one person who is called a sole trader or a sole proprietor. It is the most common form of business unit and usually found in retail trade e.g. in small shops, kiosks, agriculture e.t.c and for direct services e.g. cobblers saloons e.t.c Characteristics/Features The business is owned by one person The capital is contributed by the owner and is usually small. The main source is from his savings and other sources can be from friends, bank or getting an inheritance The owner enjoys all the profits alone and also suffers the losses alone The owner is personally responsible for the management of the business and sometimes he is assisted by members of his family or a few employees. He remains responsible for the success or failure of his/her business. The sole proprietor has unlimited liability meaning that incase of failure to meet debts, his creditor can claim his personal property There are very few legal requirements to start the business unit. Sole proprietorship is flexible; it is very easy to change the location or the nature of business.   Formation The formation of a sole proprietorship is very simple. Few legal formalities are required i.e. to start a sole proprietorship, one need only to raise the capital required and then apply for a trading license to operate the business small fee is paid and the trade license issued. Sources of capital The amount of capital required to start a sole proprietorship is small compared to other forms of business organizations. The main source of capital is the Owners savings. Additional capital may however be raised from the following; Borrowing from friends, banks and other money lending institutions such as industries and commercial Development corporation(ICDC)and Kenya industrial estates Inheritance Personal savings Getting goods on credit Getting goods on hire purchase Leasing or renting out one’s properties Donations from friends and relatives Ploughing back profit. Management The management of this kind of a business is under one person. The owner may however employ other people or get assistance from family members to run the business. Some sole proprietorship may be big business organizations with several departments and quite a number of employees. However, the sole proprietor remains solely responsible for the success of failure of the business Advantages of sole proprietorship The capital required to start the business is small hence anybody who can spare small amounts of money can start one. Few formal/legal procedures are required to set up this business Decision making and implementation is fast because the proprietor does not have to consult anybody The trader has close and personal contact with customers. This helps them in knowing exactly what the customers need and hence satisfying those needs A sole proprietor is able to assess the credit-worthiness of his or her customers because of close personal relationship. Extending credit to a few carefully selected customers reduce the probability of bad debts. The trader is accountable to him/herself A sole trader is able to keep the top secrets of the business operations He/she enjoys all the profit A sole proprietorship is flexible. One can change the nature or even the location of business as need arises. Disadvantages of sole proprietorship Has unlimited liability. This means that if the assets available in the business are not enough to pay all the business debts the personal property of the owner such as house will be sold to meet the debts There is insufficient capital for expansion because of scarce resources and lack of access to other sources He/she is overworked and has no time for recreation. There is lack of continuity in the sole proprietorship i.e the business is affected by sickness or death of the owner. A sole proprietorship may not benefit from advantages realized by large scale enterprises (economies of large scale) such as access to loan facilities and large trade discounts. Lack of specialization in the running of the business may lead to poor performance. This is because one person cannot manage all aspects of the business effectively. One maybe a good salesman for examples but a poor accountant. Due to the size of the business, sole proprietorships do not attract and retain highly qualified and trained personnel. Dissolution of sole proprietorships Dissolution refers to the termination of the legal life of a business. The following circumstances may lead to the dissolution of a sole proprietorship: Death or insanity of the owner. Transfer of the business to another person- this transfers the rights and obligations of the business to the new owner. Bankruptcy of the owner- this means that the owner lacks the financial capability to run the business. The owner voluntarily decides to dissolve the business e.g due to continued loss making. Passing of a law which renders the activities of the business illegal. The expiry of the period during which the business was meant to operate PARTNERSHIP: This is a relationship between persons who engage in a business with an aim of making profits/ an association of two or more persons who run a business as co-owners. The owners are called Partners. It is owned by a minimum of 2 and a maximum of 20 except for partnership who provide professional services e.g medicine and law which have a maximum of 50 persons. Characteristics of partnership Capital is contributed by the partners themselves. Partnership has limited life that is it may end anytime because of the death, bankruptcy or withdrawal of partners. Each partner acts as an agent of the firm with authority to enter into contracts. Partners are co owners of a business, having an

Trade is the buying and selling of goods and service with the aim of making profit Importance of trade Avails a variety of goods and service Helps producers to dispose their surplus produce Creates employment It encourages specialization and division of labor Promotes social relations and understanding in the parties involved Ensures steady supply of goods and services Helps one to acquire what one may not be able to produce Classification of trade Trade is divided into home trade and foreign trade. Home trade is the one which is carried within a country’s boundaries while foreign trade is carried out between two or more countries. Foreign trade may be bilateral (between two countries) or multi lateral (among many countries) Home trade may further be classified into wholesale and retail trade Wholesale trade This is the buying of goods and services from producers and manufacturers in large quantities and selling them to retailers in relatively smaller quantities The person who does this is a wholesaler Functions of retailers They can be discussed based on the service they render to the wholesaler, producer and consumers Services rendered to consumers Credit facilities – since retailers are in personal contact with their customers, they may give credit to the customers they trust After sale services – These services include transport, installation, repair and maintenance Offer advice to consumers on choice and use of products Make goods available to consumers at the right time and place Breaking bulk. I.e. reducing of the size quantity to a convenient requirement   Services rendered to wholesalers Assist in distributing goods to consumers Relieve the wholesaler the burden of transportation Retailers relieve wholesaler the burden of storage Retailers are a good source of valuable information on market which assist wholesalers in anticipating consumers demand Services rendered to the manufacturer Providing valuable information on consumer demand Marketing the manufacturers products Advertise goods on behalf of the manufacturer   RETAIL TRADE Retailers can either be small scale or large scale retailers Small scale retailers They form majority of the retail traders They are found in most parts of the country In most cases they are operated as one-man business They are easy to start because they require little capital Classification of small scale retailers Classified into two main groups i.e. Small scale retailers without shops Small scale retailers with shops SMALL SCALE RETAILERS WITHOUT SHOPS Itinerant traders They carry goods about with them on bicycles, motor-cycles or on their heads. They move from town to town, village to village and from door to door selling their goods They can sell clothes, plates, cups, vegetable etc They are persuasive and as a results customers sometimes buy goods they do not need Examples of itinerant traders are hawkers and peddlers Hawkers use bicycles or motorcycles but peddlers walk around Characteristics of hawkers and peddlers Are found mostly in densely populated regions Move from one shopping center to another, village to another and door to door in search of customers They are persuasive Their prices are not controlled Advantages of itinerant traders Flexible in that they move from one place to another Require little capital to start and operate their business Convenient in that they take goods to the customer Don’t suffer bad debt because they sell in cash Few legal formalities required Disadvantages Affected by weather changes because they operate in open air environment Difficult to transport business wares to various places Do not offer guarantee, in case the items are found defective Roadside sellers Hey sell goods at places where other people pass such as in busy roadsides, streets, bus stages, road junctions and entrance to schools and public buildings They deal with fast moving goods like sweets, roasted maize and fruits Place their goods on trays, card boards, empty sacks or mats Open air market traders Found in convenient places which are normally centrally located, where people meet to buy and sell goods. Traders pay entrance fee to be allowed to bring in goods Market is under the administration of the local authorities They are open on particular days of the week Automatic vending machines These are coin operated depending on what you want to buy They are used for selling commodities like cigarette, drinks and stamps. Juke boxes and telephone coin boxes are also vending machines where you buy services SMALL SCALE RETAILERS WITH SHOPS Single shops (unit shops) They have fixed premises They are usually run by one person who gets assistance from his family or employed attendant Some specialize in one line of commodities such as clothes, groceries etc Tied shops They sell exclusively the products of one particular manufacturer They are owned and controlled by the manufacturer who designs the shop and its appearance, e.g in painting. The manufacturer offers goods on credit to the trader g. Bata Shops, Petrol stations like Shell, Kenol Kiosks Usually small shops or simple structures which sell fast-moving goods like newspapers, sweets and soft drinks Located in strategic places like corners of busy street roads, residential areas Market stalls These are permanent stands found in market They are open daily Constructed and owned by the local authorities Each stall deals with a particular good or service They are rented or leased by individuals from the local authority Examples Kariokor and City Markets in Nairobi. Canteens These are retail shops found in institutions such as schools, colleges, hospitals and army barracks. They sell goods mainly to the people working in the institution They may be run by the institutions management or by individuals on rental basis Can offer tea, sodas, sugar and other foodstuffs Mobile shops They move from village to village town to town selling their goods. They have a converted van, lorry or bus arranged as a shop from which customers can buy their goods Advantages of small scale retailers Its easy to raise capital to start the business Retailer is in close contact with consumers and may give credit to credit worthy customers The risks involved in the

An office is a place, a room or a building set aside in an organization where communication, secretarial, accounting, administration and clerical work take place Functions of an office Receiving and recording information The office receives information by such means a letters, telephone calls, orders, invoices, face to face conversation and reports. Information may be recorded and stored Distribution of information This is passing information to the officers concerned for implementation or action. Mailing It is an office where out-going correspondence and parcels from various departments are processed and dispatched Reproduction of document. done through:- Carbon copying It’s a method used to obtain copies using carbon. Convenient when getting a limited number of copies Advantages of carbon copying Convenient especially where few copies are required Cheap No special training required Disadvantages Not convenient for many copies Copies could be misaligned Poor quality Difficult to produce different colours copies of photographs cannot be reproduced Duplicating Process of reproducing as copy or as succession of copies from a master copy Used when many copies are to be produced Can be through ink duplicating or spirit duplicating   Ink duplicating Reproducing using ink duplication Advantages Cheap when many copies needed Errors can be corrected Permanent copies of good quality Fast Stencil can be stored to be reused Disadvantages Expensive when few copies required Time consuming Only coarse absorbent paper is used hence not suitable for quality copies Separated runs required if two or more colours are needed Spirit duplicating Method of duplicating where a spirit duplicator is used Advantages Economical when fe copies needed Copies can be produced un several colors Disadvantages Not suitable for many copies Copies fade out with time Expensive Photocopying Reproduction of an exact copy of an original document by use of photocopier Advantages Cheap if few copies needed Quicker than duplicating or printing No special training need Copies produced of high quality Colored copies also available No need for comparison with original No pollution Disadvantages Expensive for large number of copies Copies fade over time Only selected colour can be copied Convenient hence easily misused Cannot be used without electricity Printing Method of producing documents using either printing machine or mechanical means. The methods of printing can be classified on the type of printing machines and the type of documents to be produced as follows:- Computers Copies can be produced using a printer attached to a computer information is just fed and the computer id instructed to print Advantages High quality copies Different colors can be produced Convenient for many copies No pollution Disadvantages Expensive Trained personnel required Electricity is required to operate Stencil (screen) printing Method of printing where a screen is used The screen is cut mechanically or by use of machine The method is used to print large and irregular surfaces that cannot be fed in a machine widely in textile industries Advantages Cheap Little training required Adaptable Can be used to produce variety of colours Disadvantages Poor quality Mass production is difficult Offset lithography Where documents are reproduced using a printing machine. The document to be reproduced is filmed using a camera. Lithography is mainly used for printing documents such as books, files forms, certificates and also to print on plastic, metals and cloth Advantages Documents produced are of high quality Appropriate for mass production Different color can be produced Disadvantages Initial and maintenance costs of machines are high Trained manpower is required Pollutes the environment Printing is mainly done on paper which is obtained from trees. This may lead to deforestation Filing Filing is the process of classifying and arranging of documents and records for easy retrival by office staff Information received in an organization is stored mainly in files. This ensures that information/documents are safe, neat and tidy. Filing enables office staff to locate documents which they may need easily, conveniently and quickly.     Characteristics of good filing system Simplicity – Should be simple to understand and operate Compactness- should occupy little space Suitability – Appropriate to the needs of the business Classification – files should be named and numbered to make it easy to keep and retrieve them Elasticity – system should be flexible, that is cater for future changes and expansion Safety – Documents should be safe Economical – Filing system should not be expensive to start and to maintain Role of filing Documents are protected from loss and damage It aids in office tidiness and efficiency It’s an important aid to memory Ensures information is stored systematically and thus can be retrieved easily Safeguarding and controlling organizations property The office formulates systems and policies regarding assets, keeping records of their movement or usage, issuing directives on their use etc. Communication Communication is the passing of information from one person to another. Communication from within and out of the organization goes through the office. Office layout Refers to the outlook, arrangement and positioning of furniture and equipment in an office. Types of office layout \ Open layout This is a large room where all staff work, but are grouped according to the type of work they do for example as found in many banks. Advantages of open office layout Easy supervision of workers Construction cost is low because partitions are few Easy location of workers Staff movement is minimized thus saving time on passing communication Workers make good use of office machinery and equipment since close supervision discourages them from misusing them Maintenance cost is low Floor space is saved Its cheap to decorate Disadvantages Disruption from colleagues Senior workers not placed in areas of privacy and it becomes difficult to communicate with juniors Untidy and un-business like appearance Overcrowding, air conditioning, lighting and heating in the room may not ne conducive to all. There is noise from machines Enclosed office This office is normally occupied by one person or two usually having their names and designation pinned on the door Advantages There is privacy for confidential discussion There is less noise Conducive working environment Confer status on

The process of identifying a business opportunity and getting necessary resources to start and run a business. ENTREPRENEUR- A person involved in entrepreneurship Importance to the economy creation of employment formation of capital reducing rural urban migration raising standards of living saving import improving infrastructures reducing foreign dominance making use of local resources promotion of technology promotion of entrepreneurial culture Characteristics of an entrepreneur Desire to archive Ability to solve problems Readiness to take risk Initiative Time consciousness Creativity and innovation Independence Self confidence Persistence and patience Seek information Concept before high quality products Commitment to work Desire for feedback    Business Idea Is what is cooking in the mind of an entrepreneur concreting on prospective business concept; Product Market Location Management Objectives        Sources of ideas news papers shows and exhibitions magazines altitude hobbies vocational training\ experience surveys waste products listening to what people buy sporting a market gap Business opportunity A favorable chance that entrepreneur concepts for investments. Exist were there is a gap. In availability of products Quality product Insufficient quantities un affordable prices poor services     Personal Considerations Objectives Skills Commitment Interests Business Considerations Availability of market Technology –appropriation –Cost – Suffering in case of out dated Raw materials –quality and quantity prices Government policy –requirement before starting the business Others –amount of capital – Level of competition – Difficulties in marketing – Expansion possibilities – Security – Level of development Business Plan A document that highlights the objectives of the business and steps to be followed in order to achieve the objectives Name of business product to be sold personal to manage capital needed market to be served type of employees projection summary of plan Need for a business plan Avoid mistakes identifying strength and weakness requirement by financials determination of amount of finance Allocation of resources motivating factors adoptability Tools For Control Factors influencing entrepreneur practices Government policies infrastructure levels of education and skills availability of market availability of resources culture competition political stability natural factors Causes of Business Success Ability to manage people Hiring – Process of acquiring new employees to take up new positions or to be replaced employees who left the business Assigning duties – allocating employees duties accordingly Proper location – availability of customers Availability of raw materials. Adequate finance lack of competition commitment of the business proper management of resources / finances proper debt management Ethical Issues in Business Ethics – set of values and principles which influence how individual groups of people and society behave Business Ethics – deals with how such values affect business operation Why should we have business ethics? Create fairness in competition ensure fair play ensures no discrimination in business ensures protection of the environment ensures employees rights are upheld avoid pollution avoid consume exploitation

It’s the creation of goods or provision of services to satisfy human wants It involves activities of transforming of materials into finished goods, transportation and storage Utility Utility_-is the ability of a good or services to satisfy human wants. Types of utility Form utility –this is changing the form of a commodity by converting raw materials to finished goods .e.g. sugarcane may be converted into sugar  Time Utility-this is created when a good is stored until it is appropriate time to use it. Example, storing food stuff in the school store during the holiday to use when the school opens. Place Utility– this is bridging the geographical gap between the producer of commodity and its consumers through transportation. Example, transporting books from a bookshop to the school Possessive Utility-this refers to the transfer of ownership of good and services from one person to another it maybe done through trade. Example, ownership of bread may be transferred from a canteen owner to a consumer when the customer buys it. Types of production                                                      Direct and Indirect Production Direct production (subsistence production) Is type of production from ones own personal consumption Characteristics of Direct Production Goods and services are of low quality and quantity Leads to low standards of living. Encourages individualism Can very tiring Does not encourage invention and innovation No one has the ability to provide all that he/she requires b) Indirect production Production of goods and services for sale Characteristics of Indirect Production Lead high quality and quantity goods. Production with a view of exchange. It results in surplus production of goods and services Level of Production and Related Occupation Primary Level This level is also called extractive level, involves extraction of goods from their natural setting. The products can be used in the state they are or can be processed to make them more useful. example water, mining, fishing. Lumbering e.t.c Secondary Level Involves transformation of raw materials into finished products or more useful products including; manufacturing e.g. food processing, Construction e.g. house and roads Tertiary Level Involves provision of services. Divided into commercial and direct Commercial services Activities either trade or consist trade to take place e.g wholeselling,retailing,banking . Direct Personal Service Service rendered by individual direct to the consumer e.g nursing teaching and legal service. Factors of Products and Their Rewards Are resources/agents required in production e.g L and Labour Capital Entrepreneurship Land Natural resource e.g. minerals, soils etc They are all the natural resources below or above the earth surface. The rewards are rent, rate or royalty Characteristics of Land as a Factor of Production It is a basic factor of production, that is, production can’t take place without it. Its supply is fixed that is, we cannot add more earth service on to what nature has provided. It lacks geographical mobility i.e it cannot be moved from one geographical to another. Quality is not homogeneous .Productivity of one piece of land will have different levels of fertility, mineral deposits, soil textures and varying climate conditions Productivity of land can be increased by increasing quality  and quantity of capital It’s subject to the law of diminishing return. It’s a natural resource Labour Human efforts are applied in production either physical or mental Not all human effort is labour. For it to become labour it must be aimed at production and be paid for. Rewards are wages and salary. Labour may be skilled, semi skilled or unskilled. Which is determined by the lvel of education, training and experience   Capital Refers to all the artificial resources used in the production of goods and services There are two types of capital namely fixed and operating /circulating capital Fixed capital are things that stay in a business almost permanently e.g. machinery, buildings, vehicle, furniture etc Working/circulating capital gets used up every time its applied in the production process e.g. raw material and money. Capital is rewarded in form of interest Entrepreneur This is an individual who identifies a business opportunity, devotes the factors of production and starts a business venture which may involve the creation of goods and service The entrepreneur pays for the services of all the other factors of production He makes important decisions in business e.g s/he decides what to produce or sell, how much to produce or sell and what methods to apply in the production process. The reward for entrepreneur is profit Division of labour and specialization Division of labour This occurs when the production process is split into many stages or operations Each stage involves a special task performed by one or group of workers. For example, in clothe making factory, the production process is organized in such a way that each worker performs anly a small part of the whole operation. Some cut the cloth material, others join or sew them together, others fixing buttons etc     Specialization This occurs when one worker performs certain specific tasks of a job It ensures that workers concentrate on doing those jobs which they are best suited in terms of skills, qualification and experience Advantages of division of labour and specialization Workers skills are enhanced because of performing repetitive tasks, resulting in creation of experts. Workers suffer less fatigue as they concentrate on doing one task in one place New talents and inventions are developed as workers perform repetitive tasks hence one can detect and correct weaknesses in the techniques used Work is done at a faster rate due to repetitive nature of tasks and reduced movement of workers from one station to another Goods and services produced are usually of high quality since skills of workers are matched with tasks Use of machines is made possible leading to standardization of products and lower production cost, which in turn leads to higher profits Overall output increases because work is done at faster rate Planning and management of workers becomes easy which increases efficiency in organization Disadvantages of division of labour and specialization Workers may suffer from boredom due to monotony of doing

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 Goods Service ·         Are tangible ie can be seen, touched or felt ·         Are intangible i.e. cannot be seen touched ·         Not always exhausted during use ·         Always used up or exhausted after every act ·         Identical goods can be created through mass production ·         Are difficult to make identical since they vary over tome and provider ·         The price paid is for the possession or ownership of the good ·         Price paid is the effect of the act or the effort ·         Surplus goods can be stored for latter use ·         Cannot be provided in excess and once provided cant be stored later ·         Are easily separable from the producers ·         Are inseparable cant be   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

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

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