TEST BANK
FORM 1
CHAPTER ONE
INTRODUCTION TO BUSINESS STUDIES
OBJECTIVES
By the end of the topic, the learner should be able to;
a) explain the meaning of business studies;
b) explain the importance of business studies in society.
Meaning of business
Business refers to any activity that is carried out by an individual or an organisation concerning provision of goods and services
with a view to making profit.
Business studies is the study of the activities that are carried out in and around production, distribution and consumption of goods
and services.
Goods are items that are tangible e.g. furniture
Services are actions that can be sold e.g. teaching
Production is the creation of goods and services or increasing their usefulness through activities such as transporting them to
where they are required.
Distribution is the movement of goods and services from producers to the users.
Consumption means to use a service or a good to satisfy ones need.
Components/disciplines of Business Studies
1. Economics-this is the study of how human beings strive to satisfy their endless needs using the available scarce resources.
2. Commerce-this is the study of trade and aid to trade
3. Accounting-this refers to a systemic way of recording business activities which are used for decision making
4. Office practice-this refers to all the activities that are carried out in an office
5. Entrepreneurship-this is the study of the activities involved in the process of identifying a business opportunity and acquiring
the necessary resources to start and run a business.
Importance of Business Studies in society
Assist members of society to relate the knowledge, skills and attitude acquired to the day to day business activities around
them.
Equips the members of society with knowledge and skills necessary to start and run a business comfortably.
Assist the individual in appreciating the role of business in provision of goods and services.
Makes the members of society to appreciate the need for good business management practices
Assist individual to acquire self-discipline and positive attitude towards work
Equips individuals with abilities to promote cooperation in society through trade
Enables the individuals to understand the role of government in business activities
Equips individuals with abilities to understand the role of communication and information technology in modern business
management.
Helps the individuals to develop positive attitudes towards the environment
Equips the individual with knowledge and skills required to evaluate business performance.
Ways in which business studies may benefit an individual
Equips an individual with skills and knowledge to manage a business
Prepares one for future career in business/employment
Enables one to relate issues affecting business/problems to its environment.
Enables one to relate issues affecting business activities taking place globally
Enables one to identify business opportunities to venture into
Prepares one for further studies
Enables an individual to think critically and make sound judgement in day to day activities
Enables an individual to appreciate the role of government in business
Makes an individual be disciplined and have positive attitude towards work
Enables an individual to appreciate and take care of the environment
Appreciate the role of technology in the country
Enables an individual to evaluate business performance
Enables an individual to learn other subjects
, Enhances cooperation of members of a society
Able to appreciate the need for ethical practises in business
Appreciate the economic issues in the country e.g. inflation unemployment
Able to understand the role of business (trade and aids to trade)
CHAPTER TWO
Business and its environment
Objectives
By the end of the topic, the learner should be able to:
a) explain the meaning and purpose of a business;
b) identify& various business activities;
c) identify various types of business environments;
d) explain how the various business environments influence a business;
e) recognize the need for maintaining a healthy business environment.
Business is defined as any activity carried out by an individual or an organisation with an aim of making profit. It also refers to the
firms or entities that provide goods and services to make profit.
Purpose of business
a) To earn profit
b) Job creation
c) Provision of goods and services
d) To become an owner or manager
e) For prestige
f) To earn the government revenue
g) Earn foreign exchange for the country
h) Promotion of creativity and innovation among people
i) Facilitate development and transfer of technology
j) Leads to effective utilisation of available resources
k) Promotion of peace and understanding among people
l) Provides an opportunity to develop and exploit individual talents.
Types of business activities
There are many types of business activities, but the main ones include:
a) Extraction-obtaining goods from their natural setting e.g. mining, farming etc.
b) Processing of raw materials. Changing the form of goods without combining it with other goods
c) Manufacturing-combining different raw materials to come up with one final product
d) Construction like building of houses, roads etc.
e) Distribution of goods-moving goods from where they are produced to where they are needed.
f) Trade-buying and selling of goods with a view to making profit
g) Provision of services like insurance etc.
BUSINESS ENVIRONMENT
As defined earlier, business environment refers to CONDITIONS OR FACTORS THAT AFFECT BUSINESS
OPERATIONS.
Types of business environment
These factors that affect business operations are classified according to their origin i.e. those that originate from within the
business and those that originate from outside the business.hence there are two classes namely:
1. Internal business environment/micro-environment.
2. External business environment/macro-environment.
a) Internal business environment. This consists of factors that are within the business unit itself. It could either be
strengths or weaknesses of the business. Firms have influence and control over these factors. They include:
1. Objectives of the business
These ate targets or goals that are set by the owners or managers of a business to be achieved. The objectives will
influence the following;
a. The strategies of a business-This is a plan of action which a business intends to follow so as to achieve its
goals.
b. The resources required-By studying the objectives set; a business can determine the resources required for
its effective operation. These resources may be physical,financial,human e.t.c
2. Management policies and style
The management refers to the people who are responsible for directing the day-to-day operations of a business. It is
the management that sets the objectives and policies of an organization.
A policy is a course of action of action for achieving set objectives, which is adopted by a business.(it is the
established way of doing things in a business.
, a) The policies of a business-The policies adopted by a business may boost or hinder its growth and survival e.g.
the management may decide that workers will not be allowed to join trade unions. This may make the workers
feel locked out of the decision making process, resulting in tension. This tension may interfere with the
performance of the employees and result in inefficiency.
b) The activities of a business-Management policies will determine the activities of a business i.e. the goods and
services provided, location of business e.t.c.
c) Management style-This refers to how managers conduct the daily operations of the business. This will
determine how workers relate with their managers. The style adopted by the management will influence the
workers performance positively or negatively thus affecting the overall performance of the business.
3. Business structure
This is the formal arrangement of activities that are carried out at various levels of the organization so that objectives of
the business can be achieved.
Duties and responsibilities of all the workers are defined in the business structure. Their interrelationship are also
defined.
A well laid out business structure is likely to lead to success of the business since:
i. Each of the employees know what is expected from them
ii. There will be no conflicts or confusion among the workers
iii. Team work is enhanced
iv. Ensures proper control which is turn promotes efficiency.
A poor business structure leads to business failure.
4. Business Resources
A resource refers to anything that can be used to achieve an objective. These resources include;
a. Human resource-Human resource (personnel) refers to the employees working in an organization. Employees
will only be useful if they have the necessary knowledge and skills to successfully carry out the assigned tasks.
It is therefore necessary for the management to match the correct people with the correct job activities; this will
ensure success for the business.
b. Financial resource-Money is required in order to start and operate a business.A business with adequate
finances that are property allocated to various activities and also monitored is likely to do better than the one
lacking such aspects.
c. Physical resources-These include tangible facilities which belong to the business such as buildings, machinery,
furniture and stock. Availability of such facilities enables the business to operate.
d. Technology-This refers to skills and methods used in production. Use of modern technology enhances
production of goods and services.
5. Research and development
Research and development is an important factor for the success of a business. Research generates new ideas, skills
and better methods of doing things.
A business has to do market and consumer research regularly to find out how the consumers perceive its goods and
services, and how they can improve in order to outdo their competitors.
Research also assists in the development of new and unique goods and services that may attract new consumers or
maintain the loyalty of the existing ones.
6. Business culture
This is a combination of employees expectations, beliefs and values within the business. It is normally passed on
from one generation of employees to the next. Employees acquire norms and code of conduct that is acceptable to all
from the general manager down to the sweeper. A business that has a culture of involving employees in decision
making may perform better than one that does not involve its employees.
7. Owners
The owners of the business provide finances/resources to start and run the business. They also make decisions
concerning operations of the business.
Appropriate decisions are likely to lead to well being of the business while poor decisions may adversely affect the
business.
8. Communication
The success or failure of failure of a business depends on how communication flows internally and externally.
9. Innovations cultivated in the business.
10. Management policies and style.
b) External business environment/macro-environment
This environment consists of factors that affect business from outside of the business. A business has little or no control over these
factors. They include:
A. Economic environment that affect consumers buying abilities and preference in terms of level of income, level of prices, the
structure and levels of saving, credit availability and debt patterns.
B. Demographic environment. These are changes in the population in terms of age groups, distribution pattern, growth rate,
movement patterns and levels of education
C. Legal-political environment-Legal environment comprises of laws political stability and policies that regulate business
activities in a country. If the laws are favourable business will succeed. If on the other hand the laws are unfavourable the
, businesses will not succeed. Political stability creates conducive environment for businesses to thrive. If there is political
hostility or unfavourable political climate the business cannot do well.
D. Cultural environment-Culture refers to the norms that regulate the behaviours of the people in a society. It dictates how
people live and what products they consume. Businesspersons should assess people’s culture so as to get information on the
opportunities that exist.
E. Competitive environment-This is where firms are trying to outdo each other so as to maximise profits. There are two types of
competition; generic and enterprise competition.
Generic competition is where different products are used for the same purpose.
Enterprise competition is where firms produce similar products and compete for the same market
F. Physical environment-These environment comprises of factors like climate, relief, infrastructure etc. if they are favourable
the business will succeed.
G. Technological environment- It refers to level of know-how, efficient use of tools and other equipment. Advanced technology
leads to high quality goods and services. A firm that uses out-dated technology may not compete favourably with a firm that
uses the latest technology in their production.
Ex.
Differentiate between macro and micro environments of a business
Outline seven types of business activities
In groups of five discuss and list down factors that affect academic performance in your school
Differentiate between generic and enterprise competition
FORM 1
CHAPTER ONE
INTRODUCTION TO BUSINESS STUDIES
OBJECTIVES
By the end of the topic, the learner should be able to;
a) explain the meaning of business studies;
b) explain the importance of business studies in society.
Meaning of business
Business refers to any activity that is carried out by an individual or an organisation concerning provision of goods and services
with a view to making profit.
Business studies is the study of the activities that are carried out in and around production, distribution and consumption of goods
and services.
Goods are items that are tangible e.g. furniture
Services are actions that can be sold e.g. teaching
Production is the creation of goods and services or increasing their usefulness through activities such as transporting them to
where they are required.
Distribution is the movement of goods and services from producers to the users.
Consumption means to use a service or a good to satisfy ones need.
Components/disciplines of Business Studies
1. Economics-this is the study of how human beings strive to satisfy their endless needs using the available scarce resources.
2. Commerce-this is the study of trade and aid to trade
3. Accounting-this refers to a systemic way of recording business activities which are used for decision making
4. Office practice-this refers to all the activities that are carried out in an office
5. Entrepreneurship-this is the study of the activities involved in the process of identifying a business opportunity and acquiring
the necessary resources to start and run a business.
Importance of Business Studies in society
Assist members of society to relate the knowledge, skills and attitude acquired to the day to day business activities around
them.
Equips the members of society with knowledge and skills necessary to start and run a business comfortably.
Assist the individual in appreciating the role of business in provision of goods and services.
Makes the members of society to appreciate the need for good business management practices
Assist individual to acquire self-discipline and positive attitude towards work
Equips individuals with abilities to promote cooperation in society through trade
Enables the individuals to understand the role of government in business activities
Equips individuals with abilities to understand the role of communication and information technology in modern business
management.
Helps the individuals to develop positive attitudes towards the environment
Equips the individual with knowledge and skills required to evaluate business performance.
Ways in which business studies may benefit an individual
Equips an individual with skills and knowledge to manage a business
Prepares one for future career in business/employment
Enables one to relate issues affecting business/problems to its environment.
Enables one to relate issues affecting business activities taking place globally
Enables one to identify business opportunities to venture into
Prepares one for further studies
Enables an individual to think critically and make sound judgement in day to day activities
Enables an individual to appreciate the role of government in business
Makes an individual be disciplined and have positive attitude towards work
Enables an individual to appreciate and take care of the environment
Appreciate the role of technology in the country
Enables an individual to evaluate business performance
Enables an individual to learn other subjects
, Enhances cooperation of members of a society
Able to appreciate the need for ethical practises in business
Appreciate the economic issues in the country e.g. inflation unemployment
Able to understand the role of business (trade and aids to trade)
CHAPTER TWO
Business and its environment
Objectives
By the end of the topic, the learner should be able to:
a) explain the meaning and purpose of a business;
b) identify& various business activities;
c) identify various types of business environments;
d) explain how the various business environments influence a business;
e) recognize the need for maintaining a healthy business environment.
Business is defined as any activity carried out by an individual or an organisation with an aim of making profit. It also refers to the
firms or entities that provide goods and services to make profit.
Purpose of business
a) To earn profit
b) Job creation
c) Provision of goods and services
d) To become an owner or manager
e) For prestige
f) To earn the government revenue
g) Earn foreign exchange for the country
h) Promotion of creativity and innovation among people
i) Facilitate development and transfer of technology
j) Leads to effective utilisation of available resources
k) Promotion of peace and understanding among people
l) Provides an opportunity to develop and exploit individual talents.
Types of business activities
There are many types of business activities, but the main ones include:
a) Extraction-obtaining goods from their natural setting e.g. mining, farming etc.
b) Processing of raw materials. Changing the form of goods without combining it with other goods
c) Manufacturing-combining different raw materials to come up with one final product
d) Construction like building of houses, roads etc.
e) Distribution of goods-moving goods from where they are produced to where they are needed.
f) Trade-buying and selling of goods with a view to making profit
g) Provision of services like insurance etc.
BUSINESS ENVIRONMENT
As defined earlier, business environment refers to CONDITIONS OR FACTORS THAT AFFECT BUSINESS
OPERATIONS.
Types of business environment
These factors that affect business operations are classified according to their origin i.e. those that originate from within the
business and those that originate from outside the business.hence there are two classes namely:
1. Internal business environment/micro-environment.
2. External business environment/macro-environment.
a) Internal business environment. This consists of factors that are within the business unit itself. It could either be
strengths or weaknesses of the business. Firms have influence and control over these factors. They include:
1. Objectives of the business
These ate targets or goals that are set by the owners or managers of a business to be achieved. The objectives will
influence the following;
a. The strategies of a business-This is a plan of action which a business intends to follow so as to achieve its
goals.
b. The resources required-By studying the objectives set; a business can determine the resources required for
its effective operation. These resources may be physical,financial,human e.t.c
2. Management policies and style
The management refers to the people who are responsible for directing the day-to-day operations of a business. It is
the management that sets the objectives and policies of an organization.
A policy is a course of action of action for achieving set objectives, which is adopted by a business.(it is the
established way of doing things in a business.
, a) The policies of a business-The policies adopted by a business may boost or hinder its growth and survival e.g.
the management may decide that workers will not be allowed to join trade unions. This may make the workers
feel locked out of the decision making process, resulting in tension. This tension may interfere with the
performance of the employees and result in inefficiency.
b) The activities of a business-Management policies will determine the activities of a business i.e. the goods and
services provided, location of business e.t.c.
c) Management style-This refers to how managers conduct the daily operations of the business. This will
determine how workers relate with their managers. The style adopted by the management will influence the
workers performance positively or negatively thus affecting the overall performance of the business.
3. Business structure
This is the formal arrangement of activities that are carried out at various levels of the organization so that objectives of
the business can be achieved.
Duties and responsibilities of all the workers are defined in the business structure. Their interrelationship are also
defined.
A well laid out business structure is likely to lead to success of the business since:
i. Each of the employees know what is expected from them
ii. There will be no conflicts or confusion among the workers
iii. Team work is enhanced
iv. Ensures proper control which is turn promotes efficiency.
A poor business structure leads to business failure.
4. Business Resources
A resource refers to anything that can be used to achieve an objective. These resources include;
a. Human resource-Human resource (personnel) refers to the employees working in an organization. Employees
will only be useful if they have the necessary knowledge and skills to successfully carry out the assigned tasks.
It is therefore necessary for the management to match the correct people with the correct job activities; this will
ensure success for the business.
b. Financial resource-Money is required in order to start and operate a business.A business with adequate
finances that are property allocated to various activities and also monitored is likely to do better than the one
lacking such aspects.
c. Physical resources-These include tangible facilities which belong to the business such as buildings, machinery,
furniture and stock. Availability of such facilities enables the business to operate.
d. Technology-This refers to skills and methods used in production. Use of modern technology enhances
production of goods and services.
5. Research and development
Research and development is an important factor for the success of a business. Research generates new ideas, skills
and better methods of doing things.
A business has to do market and consumer research regularly to find out how the consumers perceive its goods and
services, and how they can improve in order to outdo their competitors.
Research also assists in the development of new and unique goods and services that may attract new consumers or
maintain the loyalty of the existing ones.
6. Business culture
This is a combination of employees expectations, beliefs and values within the business. It is normally passed on
from one generation of employees to the next. Employees acquire norms and code of conduct that is acceptable to all
from the general manager down to the sweeper. A business that has a culture of involving employees in decision
making may perform better than one that does not involve its employees.
7. Owners
The owners of the business provide finances/resources to start and run the business. They also make decisions
concerning operations of the business.
Appropriate decisions are likely to lead to well being of the business while poor decisions may adversely affect the
business.
8. Communication
The success or failure of failure of a business depends on how communication flows internally and externally.
9. Innovations cultivated in the business.
10. Management policies and style.
b) External business environment/macro-environment
This environment consists of factors that affect business from outside of the business. A business has little or no control over these
factors. They include:
A. Economic environment that affect consumers buying abilities and preference in terms of level of income, level of prices, the
structure and levels of saving, credit availability and debt patterns.
B. Demographic environment. These are changes in the population in terms of age groups, distribution pattern, growth rate,
movement patterns and levels of education
C. Legal-political environment-Legal environment comprises of laws political stability and policies that regulate business
activities in a country. If the laws are favourable business will succeed. If on the other hand the laws are unfavourable the
, businesses will not succeed. Political stability creates conducive environment for businesses to thrive. If there is political
hostility or unfavourable political climate the business cannot do well.
D. Cultural environment-Culture refers to the norms that regulate the behaviours of the people in a society. It dictates how
people live and what products they consume. Businesspersons should assess people’s culture so as to get information on the
opportunities that exist.
E. Competitive environment-This is where firms are trying to outdo each other so as to maximise profits. There are two types of
competition; generic and enterprise competition.
Generic competition is where different products are used for the same purpose.
Enterprise competition is where firms produce similar products and compete for the same market
F. Physical environment-These environment comprises of factors like climate, relief, infrastructure etc. if they are favourable
the business will succeed.
G. Technological environment- It refers to level of know-how, efficient use of tools and other equipment. Advanced technology
leads to high quality goods and services. A firm that uses out-dated technology may not compete favourably with a firm that
uses the latest technology in their production.
Ex.
Differentiate between macro and micro environments of a business
Outline seven types of business activities
In groups of five discuss and list down factors that affect academic performance in your school
Differentiate between generic and enterprise competition
