POB Grade 11
Week:
One
Lesson:
One
Topic:
LOGISTICS AND SUPPLY CHAIN
Logistics is the flow of funds, goods and information between origin and
consumption. Logistics involves information, material handling, production, packaging,
inventory, transportation, warehousing and often security.
Logistics is specifically, ‘the management of the flow of goods and supplies.’ This also
includes the flow of information, data and business documentation between businesses. A
key role of logistics is in the delivery of raw materials from a supplier to the production
function and in dispatching finished goods from the production facility to the customer.
Logistics is a sub-component of the Supply Chain Management function.
ACTIVITY
1. Define the term supply chain management
2. Define the term logistics
3. Outline TWO components of the logistics process
Week:
Lesson:
Topic:
One
Two
LOGISTICS AND SUPPLY CHAIN
What is a Supply Chain?
A Supply Chain is global network
used to deliver goods and services,
from raw materials to end
customers through an engineered
flow of information, physical
distribution and cash.
Supply chain operations include the
systems, structures and processes to
plan and execute the flow of goods
and services from supplier to
customer.
Basic Supply Chain of a product
A basic supply chain is made up of these entities:
Seller – is a supplier who provides good and services or a person or organization with
whom the buyer does business. Supplier
provides raw materials, energy, services, or
components for a product or service such as
plastic, fabric, electric wiring or aircraft.
Producer – the producer is the one who receives
components from the seller to produce a
finished good or service such as shirt from
fabric, crockery from plastic, power from electric
wiring or provide transportation through
aircraft.
Customer – the customer is the one who receives
the finished product. That is the one who wears
the shirt, uses the crockery, turns on the lights or flies in an airplane.
ACTIVITY
Define the following terms
1. Customer
2. Producer
3. Seller
Week:
Lesson:
Topic:
One
Three
LOGISTICS AND SUPPLY CHAIN
ACTIVITY
Complete the Word search Below ( six words pertaining to the topic)
Week:
Two
Lesson:
One
Topic:
LOGISTICS AND SUPPLY CHAIN
THE DISTRIBUTION CHAIN
Producer
Wholesaler
Retailer
Consumer
A producer sells goods in large quantities to wholesalers. The wholesaler breaks down the large
quantities for sale to retailers and also stores stocks in warehouses. The retailer in turn breaks the
Producer
Wholesaler
Consumer
quantities into smaller units for the final consumers.
The retailer is omitted. The wholesaler assumes the role of the retailer.
The wholesaler is left out and the retailer may assume the role of the wholesaler.
There is no intermediary between the producer and consumer.
Producer
Producer
Retailer
Consumer
Consumer
Wholesaler
Retailers
The Wholesaler purchases goods in large quantities Retailers provide goods directly to the
from producers and thus assumes some of the risks consumer. They possess ownership of the
of the manufacturer such as, warehousing goods.
goods and bare all risks of losses should
This is at a cost and there is the risk of demand
demand fall or taste change.
falling or goods becoming obsolete.
Role of the retailer includes:
Roles of the Wholesaler:
 Breaking bulk into small quantities to
 Breaking bulk produce for sale to retailers
meet the demand of individual
 Warehousing facilities: Wholesalers usually have
consumers
closer proximity to the target market
 Provides outlets close to targeted
 Assumes risk: By buying large quantities, the
markets to ensure timely provision of
wholesaler undertakes risks as prices could fall
products
and tastes may change leaving the wholesaler
 Provides credit facilities e.g. hire
with stocks of obsolete goods
purchase to consumers
 Key source of market research for producers
 May provides delivery service to
 Helps manufacturers advertise goods
customers free or at a cost
 Helps maintain price stability as goods are
 Gives technical product advice to
incrementally released on the market to prevent
customers
surplus or glut, leading to price reduction
 Provides after-sales service as part of the
 Provides credit facilities to retailers to ensure
service package
goods are sold.
 Acts as a source of market intelligence to
the manufacturer
ACTIVITY
Explain the concept of chain of distribution. Give examples of TWO chains
Week:
Two
Lesson:
Two
Topic:
LOGISTICS AND SUPPLY CHAIN
Modes of Transportation
Transportation is the movement or conveying of goods or human beings from one point to
another. It is an indirect service and is part of tertiary production. Transportation dealing
with business is called commercial transport.
Suppose if you are importing some goods from China all the way to Australia, the goods will be carried by
several modes of transportation. For example, the cargo will come to the port by a cargo carrier big van, it will
be transported by ship and from the port in Australia it will be transported by a minivan to reach the desired
place.
You can clearly see that we used different modes of transportation to transport that
one product.
Intermodal – is the movement of cargo from origin to destination by several modes of
transport where each of these modes have a different transport provider or entity
responsible, each with its own independent contract.. Multiple carriers contracted to
fulfill a single journey.
Multimodal – is the movement of cargo from origin to destination by several modes of
transport where each of these modes have a different transport provider or entity
responsible, but under a single contract. A Single carrier contracted to fulfill a single
journey.
Simply put, the key functions of both terminologies are the same, but the differentiation lies
in the contract and responsibility of the movement.
Intermodal Transportation: Separate contract
 Lower shipping costs
 Negotiate separate terms and agreement
 Flexibility and specialized handling of goods
 Increased security of goods
Multimodal Transportation: One contract
 Reduced involvement during shipment delays
 Easier shipment tracking
 Delivery time efficiency
 Less overhead costs
In differentiating between multimodal and intermodal transport one must consider the
type of contract or bill of lading and the transport provider or carrier. Summarily, in
multimodal shipping one company or one contract will handle all parts of the process.
Whereas, intermodal shipping or transport utilizes several modes of transport with
different transport carriers, each with a different contract.
Factors influencing the choice of transport method
 The geographic distance between channel members
 Domestic trade or international trade
 Nature of good to be transported e.g. fragile or perishable items; large bulk items; items
needing high security; dangerous chemicals requiring special containers
 Cost of transportation method
 The availability of ports of entry and exit e.g. airports, harbors, ports
 Handling charges and insurance costs e.g. freight costs
 Availability, location and costs of warehouse facilities
ACTIVITY
Differentiate between intermodal and Multimodal means of transportation
Week:
Lesson:
Topic:
Two
Three
LOGISTICS AND SUPPLY CHAIN
Methods of Transportation
Specific goods would require specialized forms of transport e.g. the use of pipelines and
tankers to transport oil and gas; timber and logs via rivers and barges; flower and
perishable food items when shipped from one country to the next needs to be in a
temperature controlled container; fragile items e.g. computers need to be packaged in
Styrofoam and cardboard to prevent damage; chemical and other flammable substances
must be transported in special containers to prevent spills.
Air
Advantages
 Quickest form of transport
 Suitable for light and perishable
goods
Disadvantages
 Can be expensive for bulky goods
 Technical difficulties, like bad weather, can
interfere with schedules
 There can be a weight limit on cargo
 Relies heavily on other forms of transport to
take goods to their destinations
Rail
The use of railway lines as a means of transport has declined in recent years. This is due
mainly to the increase in road networking and an increase in the number of vehicles.
Advantages
Disadvantages
 Quicker than road transport for distances  Slower than road transport, over short
over 200 kilometres
distances
 Bulky goods are cheaper to transport by
 Less convenient than road transport due
rail
to transfer of cargo and people from one
 Schedules are reliable
train to another
 Timetable may be inflexible
Road
Advantages
Disadvantages
 It is only type of transport that can reach  There is a limit to the weight that can be
all destinations in a country
carried
 It is flexible, especially where door to door  Goods in transit can be held up by
deliveries are concerned
congestion
 It is faster than other forms of transport
 Pollution is a problem. For example, the
for distances below 200 kilometres
smoke from diesel engines causes air
 Reliable because control is under the lorry pollution
driver
 For distances over 200 kilometres, road
transport is slower and more expensive
 Cheaper for consumers
Marine (Cruise and Cargo)
Advantages
Disadvantages
• possibility to ship
• shipping by sea can be slower than other transport systems and
large volumes at low
bad weather can add further delays
costs
• routes and timetables are usually inflexible
• shipping containers • tracking the goods’ progress is difficult
can also be used for
• port duties and taxes
further
• further transportation overland might be needed to reach the
transportation by
final destination
road or rail
• basic freight rates are subject to fuel and currency surcharges
Pipeline
Advantages
Disadvantages
 Convenient for transporting oil, water and gas  Broken lines can lead to leakage and waste
 Cheaper for consumer
of resources
 It is costly to build pipelines
 Inflexible- pipelines are not easily moved
Digital Delivery
Digital Delivery: According to https://www.excella.com, 'digital service delivery' is 'the
electronic delivery of information including data and content across multiple platforms and
devices like web or mobile'. This reduces the reliance on paper and seeks to improve the
user experience e.g. Dell Digital Delivery which allows the customer to purchase selected
software at the same time a new computer is ordered, which can be downloaded and
installed, when customer gets the computer.
Advantages
 It’s Environmentally Friendly
 It Encourages eLearning
 Creates More Efficient Communication
This is the delivery or distribution of digital media content such
as audio, video, software and video games. The term is generally used to describe
distribution over an online delivery medium, such as the Internet, thus bypassing physical
distribution methods, such as paper, optical discs, and VHS videocassettes.
ACTIVITY
1. Differentiate between multimodal and intermodal transport.
2. Describe the concept of digital delivery as a form if transport
You are familiar with the various modes of transport since as a consumer you always use
one mode or the other. This activity, however, will extend your knowledge on transport
because it includes commercial activities that you will not encounter in your day-to-day
activities.
Complete the following sentences
1. The movement of people from one place to another is called ……………………………..
2. The modes of land transport include ………………..…, …………………… and …………………
3. The modes of sea transport include ……………., ………….., …………….. and …………………..
Week:
Three
Lesson:
One
Topic:
LOGISTICS AND SUPPLY CHAIN
Answer ALL the questions
1. Define the term supply chain management. (2 marks)
2. Define the term logistics. (2 marks)
3. Outline TWO components of the logistics process. (4 marks)
4. Explain the concept of reverse logistics. (4 marks)
5. Describe each of the following types of logistics: (I) Second Party; (II) Third Party (III)
Fourth Party (3 marks each)
6. Explain the concept of chain of distribution. Give examples of TWO chains. (6 marks)
7. Differentiate between multimodal and intermodal transport. (4 marks)
8. Describe the concept of digital delivery as a form if transport. (4 marks)
9. Outline TWO problems in the distribution process and STATE one possible solution for
each. (4 marks)
10. Discuss TWO forms of information technology used in supply chain and logistics.
(4 marks)
Week:
Three
Lesson:
Two
Topic:
LOGISTICS AND SUPPLY CHAIN
Some documents used in International Trade
Import Licence: A permit that specifies the good to be imported and in what quantity. It is
used by the government to restrict the importation of certain goods.
Bill of Lading: A document used in the transportation of goods via ship. It outlines details of
the goods and the destination. The bill of lading gives title to the goods. Moreover, it is used
as a receipt for the goods. The document is also a contract between the seller and the
shipping agent.
STRAIGHT BILL OF LADING
ORIGINAL - NOT NEGOTIABLE
Bill of Lading Number:
FROM:
1. Shipper / Generator Location
A Top Generator
567 Oak Drive
Carterville, MI 48222
Emergency Response Phone:
2. Shipper / Generator Mailing
Address (if different)
Phone No.:
Generator ID (if applicable):
TO:
3. Consignee / Facility Name and Address
Best Disposal
123 Main Street
Smithtown, MI 48333
4. Consignee / Facility ID#
MIK23321456
Phone No.:
9. Notes:
DELIVERED BY:
5. Carrier/Transporter Name and Address
A Great Transporter
123 Elm
Jonesville, MI 48222
6. Carrier Transporter ID#:
MIK987789987
Phone No.:
7b.
7a.
HM
8. Containers
BASIC DESCRIPTION
UN or NA number, Proper Shipping Name, Hazard Class, Packing Group (if
any)
1.
Antifreeze
No.
40
Type
DM
9.
10.
Total
Quantity
2200 g
Unit
Wt./Vol.
Gallon
11.
other
2.
3.
18.Special Handling Instructions and Additional Information:
By signing below, Shipper hereby declares that the contents of this consignment are fully and accurately described above by the proper shipping name and
are classified, packaged, marked and labelled/placarded, and are in all respects in proper condition for transport according to applicable governmental
regulations. As shipper, I hereby certify that the liquid industrial by-product(s) are fully and accurately described on this shipping document, in proper condition
for transport, and that the information contained on the shipping document is factual.
SHIPPER (Print Employee Name)
Signature
Day
Year
Month
Sam Redding
Sam Redding
5
Carrier / Transporter (Print Driver Name)
John James Doe
Consignee / FacilityAcknowledgement of Receipt (Print Name)
Jane Smith
Signature
John James
Signature
X
Doe
Jane Smith
Month
5
Month
5
16
16
16
16
Day
Day
26
Year
Year
16
White Copy: Consignee/Facility Original● Yellow Copy: Consignee to Shipper● Pink Copy: Carrier/Transporter●Green Copy: Shipper Initial Copy
Airway Bill: A document used to transport goods by air. It gives title to the goods as well as,
serves as a receipt of goods.
Certificate of Origin: A document that shows the country of manufacture or origin of goods.
It is an important document in trade within a free trade area. It prevents non-member
countries from taking advantage of free trade arrangements within area e.g. low tariffs.
Some terms that may be contained in documents:
‘FOR’ means free on rail: The seller pays for transport and insurance to the railway
station and loading on train. After, the buyer assumes responsibility for transport and
insurance.
‘FOB’ means free on board: The seller pays for transport and insurance to the port and
loading cargo on ship or aircraft. After the buyer assumes responsibility for transport
and insurance.
Franco: The seller pays all transportation and insurance costs to the buyer’s premises
wherever it is located.
Loco: Price of goods excluding transport costs. The buyer has the responsibility for
transport and loading costs to his/her destination.
Carriage Forward: The cost of delivery is borne by the purchaser.
Carriage Paid or Carriage Free: The cost of delivery is borne by the seller of the goods.
Certificate of origin: A business document stating the country of origin of goods or where
the goods were made. This is used to determine if the goods will attract tariffs.
‘FAS’ means free alongside ship: The seller is responsible for payment of transport to the
port but not loading costs.
Activity
Circle the correct answer.
1. The government issues export licences in order to
(a) encourage the country importing to demand more of its goods
(b) encourage manufactures to make more goods for export
(c) control the flow of goods out of the country
(d) control the price of export
2. A Bill of Exchange is known as
(a) a document which must be endorsed by both parties
(b) a document drawn on a banker payable on demand
(c) an unconditional order in writing in which a debtor undertakes to pay an
amount owing to his creditors
(d) a document exchanged for goods supplied
Week:
Lesson:
Topic:
Three
Three
LOGISTICS AND SUPPLY CHAIN
The role of transport in Marketing
Transport is important in international, regional and local trade so that consumers can
have access to a variety of goods and services; to improve the ability of firms to supply
markets; to provide valuable raw materials and capital inputs into the transformation
process of businesses; to develop infrastructure of countries to facilitate trade; to provide
greater access to markets; to develop commercial and political links between trading
partners.
1. Physical Supply of Products
Transportation carries necessary raw materials to factory for production of goods and
supplies finished goods to consumers. It creates place and time utility of goods by
transporting from one place to another. It easily carries finished to the hands of those who
need and use them. This significantly increases aggregate sales of goods. In fact, transport
is such a key of marketing, which helps in carrying goods to the scattered consumers in
different places, narrows the gap between producers and consumers and facilitates to
distribute goods to the consumers at minimum cost and time.
2. Specialization
Transportation facility encourages division of labor and specialization on geographical or
regional basis. Transportation cost highly affects localization of industries. Production of
goods may center at such place where the environment is the best and production cost is
minimum. This makes maximum utilization of local resources possible, which is both
economically and socially necessary.
3. Mobility of Labor and Capital
Transportation facility provides mobility to labor and capital. If more labor force is
available at any place, transport helps to carry it economically to necessary place. The
means of transport carry labors from one place to another. This encourages labor and
capital to use and invest in more productive sectors.
4. Stabilization in Price
Transportation helps to bring stability in price of different products. It transports goods
from more supplied places to scarcely supplied areas. This establishes coordination
between demand and supply, and brings stability in prices. It helps to supply necessary
goods regularly to the consumers. Besides this, consumers get necessary goods at lower
prices, because it encourages competition among producers and makes mass production at
lower cost possible.
Importance of transport in domestic, regional and foreign trade
Beside economic importance, transportation has also social, political and cultural
importance. It establishes social and utility by narrowing geographical distance. It
consolidates social and cultural utility and strengthens national integration. It helps to
establish relationship with foreign countries. Transportation also helps widen knowledge
and skill in different sectors. In this way, it helps establish social utility, uniformity and
integrity and strengthens national security.
ACTIVITY
Describe the role of transport in marketing
Week:
Lesson:
Topic:
Four
One
LOGISTICS AND SUPPLY CHAIN
ADVANTAGES AND CHALLENGES OF SUPPLY CHAIN OPERATIONS;
Advantages: better quality of life; wealth creation; new and innovative job opportunities
including entrepreneurship, for example, telemarketing.
1. Expanded sourcing opportunities. A world market offers businesses opportunities to
secure a diverse selection of workers, materials, and products. This larger selection of
goods and services often means the opportunity to select higher-quality or lower-cost
options.
2. The opportunity to reach new customers in new markets. Just as globalization offers more
materials and laborers, it also offers new customers in new locations with new needs.
3. More room to grow. New technologies and a shrinking globe mean that it is easier for
companies to grow generally: to produce more, offer more, and sell more. Expanding
borders also means expanding businesses and corporations.
4. More opportunities to save money. Globalization’s biggest benefit is that increases options:
options for source materials, options for workers, and options for transportation. More
options mean more chances to save on spending and increase profits.
Disadvantages: globalization, counterfeiting, product complexity, rapid product
obsolescence, regulatory complexity, management blunders, changing market conditions,
natural disasters, and political instability.
1. Large-scale management issues. The opportunity to grow business goes hand-in-hand with
the issue of greatly increased supply chain complexity when it comes to management.
Companies must scale up all aspects of their business as it grows across borders, which can
cause problems that stretch the globe. Inventory issues and distribution issues are high on
the list of problems encountered by going global.
2. Greater risk. Having materials, factories, and customers all over the world means being at
the mercy of global events, from natural disasters, to port closures, to political uprisings.
Globalization requires that supply chain managers have detailed risk management plans in
place and that they are prepared when disaster strikes.
3. Global competition. You are not the only entity with access to supplies, products, and labor
around the world – you now have a lot of competition scattered across the globe.
Globalization necessitates that supply chains are highly efficient and and well-run in order
to stay competitive in a global market.
4. Information collection challenges. With different aspects of your supply chain scattered
around the world, and with an increasingly complex process for getting products to
customers, data collection and oversight can be huge new challenges. While big data
analytics is helping some supply chain managers tackle the issue of information collection,
it is still a large problem that has emerged alongside globalization.
5. Legal issues. Operating across borders means operating in countries that very likely have
different laws and regulations. For example, secret product details may not be safe in China,
where they have less stringent intellectual property laws. In another example, a country
where you have a factory may have very different employment laws than another where
you have an identical factory.
ACTIVITY
List TWO advantages and THREE disadvantages of Supply Chains Operations
Week:
Lesson:
Topic:
Four
Two
LOGISTICS AND SUPPLY CHAIN
IMPACT OF LOGISTICS AND SUPPLY CHAIN OPERATIONS ON THE COMPETITIVENESS OF
BUSINESS
Here are a number of solutions that if used will help a company gain the competitive
advantage:
 Shipper Associations / Consortiums: By being a part of a shippers association, a business
can benefit from lower transportation rates due to the competitive negotiations and
economies of scale.
 Transportation Management Systems (TMS): Such platforms allow a business to manage
their data flow more efficiently and allows for visibility of performance and cost. Keeping
an eye on costs, transit times, delivery performance, freight claims, and compliance will
allow for strategic thinking and put a company a step in front of its competitors.
 Auto-Tender Functionality: This feature allows freight to be tendered directly to carriers,
greatly reducing the time spent scheduling a shipment. When set up using a least cost
carrier, the savings combined with the efficiency gain provide a great advantage.
 Advanced Tracking: Visibility and transparency are becoming more and more important in
business. Advanced tracking features have been adopted to give customers real-time
information on where their goods are.
2PL - A second-party logistics provider is an asset-based carrier, which actually owns the
means of transportation. Typical 2PLs would be shipping lines which own, lease or charter
their ships; airlines which own, lease or charter their planes and truck companies which
own or
lease their trucks.
3PL - A third-party logistics provider provides outsourced or 'third party' logistics services
to companies for part or sometimes all of their supply chain management functions.
4PL - A fourth-party logistics provider is an independent, singularly accountable, non-asset
based integrator who will assemble the resources, capabilities and technology of its own
organization and other organizations, including 3PLs, to design, build and run
comprehensive supply chain solutions for clients.
THE PROBLEMS LIKELY TO BE ENCOUNTERED IN DISTRIBUTION;
 availability of airport, harbor and docking facilities
 Delayed shipment,
 spoilage,
 misdirection of goods,
 inadequate warehousing facilities,
 lack of proper security measures,
 industrial unrest
 Ineffective communication.
ACTIVITY
1. Which of the following is NOT a key distribution problem?
a. Shipping delays
b. Theft
c. Red Tape or unnecessary paperwork
d. Worker incentives
As a consumer I am sure you will have encountered problems while moving from one place
to another. The businessperson also experiences certain problems. This activity will help
you to understand the problems faced by business persons and the possible strategies that
can be used to solve these problems.
The import or export trade provides opportunities to sell one’s products in foreign
countries but there are many obstacles along the way, which can increase the cost
consumers have to pay. Identify the problems experienced by the business person in the
monologue below and give possible solutions to these problems.
Boy, ah tell yuh, the ship may be delayed due to poor weather conditions and perishable
goods can spoil from inadequate refrigeration.
And sometimes yuh have to pass some islands straight, if yuh please, yes because they doh
have proper deep water harbor for docking.
Even when yuh dock at a port man off-loading the cargo could really make yuh bawl.
Because braps, jus so, the equipment malfunctioning or the workers down tools.
I tell you, all my business friends, they really pray for grace cause when the goods come off
the ship, the warehouse clerk only apologizing, “Sorry sir” no space.
And then I have to pay a higher insurance fee because my goods are at risk too theft, due to
poor security.
So you see my dear consumer, why the price you pay is high. The problems faced are many,
that, no one can deny.
The following problems were outlined in the monologue
1. Delays because of poor weather conditions
2. Inadequate refrigeration facilities
3. Inadequate berthing facilities
4. Malfunctioning off loading equipment
5. Industrial unrest
6. Inadequate warehousing space
7. Poor security and thus higher insurance coverage
Solutions to the above-mentioned problems are:
1. Lobby Government to improve facilities at the ports, that is improve the refrigeration
facilities, build deeper and larger harbours to accommodate larger vessels, provide more
warehousing space and improve security
2. The businessmen can also plan to off-load their goods from the ships directly to their
transport and then to their factories or own warehouse
3. The authority should have a proper maintenance programmer to service equipment thus
preventing breakdowns
4. Good communication and industrial relations policies should be implemented.
Week:
Lesson:
Topic:
Four
Three
LOGISTICS AND SUPPLY CHAIN
MEASURES TO MITIGATE PROBLEMS IN DISTRIBUTION
 Government intervention.
 Communication network including use of the internet.
 Insurance.
 Selecting the most appropriate channel of distribution based on product.
 Use handling services with good reputation.
 Careful labelling and documentation.
 Avoid holding large stocks.
 Employing Security Company, use of security cameras
IMPACT OF INFORMATION TECHNOLOGY ON LOGISTICS AND SUPPLY CHAIN OPERATIONS
Global Positioning Systems (GPS)
Logistics management, when distracted driving is an issue, helps fleets locate vehicles to
update vendors and customers regarding shipments. Updated GPS systems are able
to accurately direct a driver on a safe route, without showing roadways that don’t really
exist or roadways that are not complete.
Geographic Information System (GIS)
GIS as a tool can be used to map manufacturing, warehouse locations, clients, supplier
locations and distribution centers, showing product supply or manufacturing facilities.
Geographic Information Systems helps in analyzing and representing the information
visually, allowing for greater understanding of the operating environment around the
corporate. GIS can be used to analyze the routes. Route analysis helps us to generate the
most efficient route (best route / shortest route) that the vehicle should take between the
company and it supply chain link. Alternative routes can also be generated and analyzed.
Alternative routes help in rerouting of the supplies in case of problems (either man –made
or natural) on one route. GIS helps in identifying the locations of new depots and
warehouses based on the factors like source of incoming materials and the target market to
which the stocks will move that is the different links in the supply chain.
Portnet
The National Single Window for Foreign Trade Procedures, this is a computer tool which
enables the e-processing of authorizations, permits, certificates, customs documents and
other deliveries by the competent organizations of the State, to undertake specific import
and export operations. The developed system guarantees the technological and legal
security of different documents upon the integration of a digital signature and e-payment.
Benefits of Portnet
 Increasing the efficiency of the logistics chains of economic operators and public and
private service providers.
 Speeding up cross-border movement of exported and imported goods
 Providing an environment favorable to the competitiveness of economic operators with
the possibility to deliver just in time.
 Reducing uncertainty regarding timeframes and logistic costs.
 Improving business climate, good governance and increasing transparency in companyadministration relationships.
 Simplifying and speeding up procedures and formalities of the entry and withdrawal of
goods.
 Improving the traceability of operations at any time, anticipation and planning capacities
due to the quality and good flow of information.
 Saving paper costs. ·
 Saving costs of transports and archiving documents. ·
Telemarketing, e-commerce
 Increasing transparency into all operations through the internet and mobile devices.
 Omni channel retailing, keeping customers involved in management decisions and
reducing downtime by using all the resources of the company to fill more orders.
 Enhanced reverse logistics, increasing customer service and giving warehouse managers
a means of handling returns regardless of their origin.
 Automated inventory systems, ensuring stock levels are appropriate, and self-optimizing
slotting systems that can tell warehouse managers what needs to be moved, as well as
when and where.
Global logistics providers such as Fedex, DHL, and Amazon Logistics
Global logistic providers now allow for logistical services to be provided at a much lower
cost than in previous decades and encourages businesses to outsource their logistic needs
to these global providers. These firms have enhanced their technically capabilities and
economies of scale to offer global logistical services at competitive rates. They have also
utilized efficient systems that would for large scale, complex logistical task to be
undertaken with relative ease.
Logistics Hub
A Logistics Centre is the hub of a specific area where all the activities relating to
transport, logistics and goods distribution – both for national and international transit – are
carried out, on a commercial basis, by various operators.
Logistics hubs, for example, Jamaica is a premier logistics node within the Americas set up
to capitalize on the trade and business opportunities that will emanate from the expansion
of the Panama Canal.
With strategic investment and global partnerships, the Jamaica logistics hub will include:
 maritime and air cargo logistics hubs;
 strategic storage, handling and processing points for bulk commodities;
expansive special economic zones facilitating assembly, warehousing, sorting, distribution
and other value-added services, particularly for industries catering to time-sensitive and
high-value cargo;
 aviation-related maintenance repair and overhaul, ship repair and dry-docking;
 a robust digital network to support efficient global value chain tracking and tracing as well
as e-commerce operations.
POB
Week:
Lesson:
Topic:
Grade 11
Five
One
LOGISTICS AND SUPPLY CHAIN
Since we have completed the topic Logistics and Supply Chain, Answer the following
questions to find out what you have learnt.
1. Which of the following activities is NOT a key feature of the components of Logistics?
a. procurement logistics
c. distribution logistics
b. production logistics
d. compensation logistics
2. Supply chain operations entails which of the following activities
I. planning and developing strategies for procurement
II. designing and developing distribution network
III. selection of manufacturing location
IV. finish goods distribution
a. all of the above
b. I, II and III
c. I, II and IV
d. II, III and IV
3. Forward logistics is specifically
a. 'green logistics'
b. getting materials back from users
c. delivering the goods to customers from the point of raw materials to manufacturer,
distributor, retailer and customer
d. forwarding salvage items to the business
4. Which of the following statements BEST describes ‘a direct chain of distribution’?
a. one which involves the use of wholesalers
b. one which involves the use of retailers
c. one which does not involve the use of intermediaries between producer and consumer
d. one which involves the use of intermediaries
5. Which of the following statements outline the KEY roles of retailers?
I. Breaking of bulk items
II. Provide sales outlets near to the target market
III. Warehousing of stocks
IV. Provide after-sale services
a. l and lll only
b. l, ll and lll only
c. I, lll and lV only
d. l, ll and lV only
6. A document used in shipping, that gives a description of the cargo, its destination and title
of ownership is called a/an
a. Airway bill
b. Bill of lading
c. An invoice
d. A consignment note
7. Multimodal transport is a process involving
a. several modes of transport operating under a single transport contract
b. several modes of transport each with an independent contract
c. one mode of transport with one contract
d. one company and one contract
8. A document that shows the country of manufacture of goods is called a/an
a. airway bill
c. certificate of origin
b. certificate of authenticity
d. certificate of lading
9. Specific goods require specialized forms of transport. Which of the following forms of
transport is BEST suited to transporting natural gas from the ocean?
a. barges
b. tankers
c. pipelines
d. trucks
10. Which of the following is NOT a key distribution problem?
a. Shipping delays
c. Red Tape or unnecessary paperwork
b. Theft
d. Worker incentives
11. A Global Positioning System is specifically used in logistics and supply chain to
I. track where delivery vehicles are in the delivery cycle
II. improve efficiency
III. track containers at sea
IV. planning routes before the start of a delivery
a. I, II and III
b. II, III and IV
c. I, II and IV
d. I, II, III and IV
12. 'A regional cross-docking point, where products from multiple supply sources arrive and
are then delivered to destination points' is appropriately termed a/an
a. portent
c. logistics store point
b. logistics hub
d. logistics distribution centre
Week:
Lesson:
Topic:
Five
Two
BUSINESS FINANCE
The financial sector is made up of agencies such as:
 Government financing agencies
 Central bank,
 Commercial banks,
 Mortgage companies,
 Credit unions
 Insurance companies
 Building societies - A building society is a type of financial institution that provides
banking and other financial services to its members. Building societies resemble credit
unions in that they are owned entirely by their members.
 Micro-lending agencies– eg Island Finance
 Unit trust, stock market.
 Development banks (Caribbean Development Bank, Agricultural Development Bank)
Complete the following exercise to find out the various financial institutions
(a) ___ ___ ___ ___ ___ ___ ___
3
___ ___ ___ ___
5 14 20 18 1 12
2
1 14 11
(b) ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
3 15 13 13 5 18 3
9 1 12
___ ___ ___ ___ ___
2 1 14 11 19
(c) Non-bank financial institutions
___ ___ ___ ___ ___ ___
3 18 5
4 9 20
___ ___ ___ ___ ___ ___
21 14 9 15 14 19
___ ___ ___ ___ ___ ___ ___ ___ ___
9 14 19 21 18 1 14 3 5
___ ___ ___ ___ ___ ___ ___ ___
2 21 9 12 4 9 14 7
___ ___ ___ ___ ___ ___ ___ ___ ___
3 15 13 16 1 14 9 5 19
___ ___ ___ ___ ___ ___ ___ ___ ___
19 15 3 9 5 20 9
5 19
(d) ___ ___ ___ ___ ___ - ___ ___ ___ ___ ___ ___ ___
13
9
3
18 15
12 5
14 4
9
14
(e) ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
7
15 22
5
18
14 13
5
14
20
7
___ ___ ___ ___ ___ ___ ___ ___
1 7 5 14 3 9 5 19
___ ___ ___ ___ ___ ___ ___ ___
1 7 5 14 3
9 5 19
ROLE OF FINANCIAL INSTITUTIONS
 Commercial bank accepts money deposits and therefore provides a safe place for saving
money.
 Offering loans and overdraft to persons who need financial assistance.
 Assisting customers to easily make payments through standing orders, current accounts
and debit cards.
 They also offer investment opportunities such as mutual funds, annuities and stocks and
bonds
Week:
Lesson:
Topic:
Five
Three
BUSINESS FINANCE
Services offered by Financial Institutions
 Commercial banks provide advisory services to clients who wish to borrow a loan to
make investments and persons who wish to purchase securities.
 Safety deposit boxes at the bank are used to store safely items that individuals deem as
highly valuable.
 Selling travellers cheques.
 A credit card allows persons to purchase items by using funds that the bank makes
available. There is a limit to how much the bank makes available to credit card holders.
 Offer a variety of deposits- Money can be deposited in a current account upon which
cheques can be drawn or a fixed deposit account where a higher interest rate is earned.
Foreign currency can also be deposited.
 Credit facilities (loans) can be provided through deposits where through using a cash
ration a portion of the deposits are kept in the bank while the rest are loaned.
 Money Transfers (remittance services) from depositors account to another account. This
called a standing order. They also facilitate bank drafts and letters of credit.
 Trustee work - Any individual or company who manages assets on behalf of another.
For example, a bank may hire a trustee to distribute funds from a loan to the borrower.
 Offering settlement services such as authorizing credit card payments
The Central Bank does not offer banking services to private individuals and other
businesses. It is a government institution that carries out the following functions.
1. Responsibility for issuing notes and coins to commercial banks. It will also redeem
(replace) damaged notes or coins that have been collected by commercial banks.
2. Banker to the government and offer services to the government that are similar to those
offered by commercial banks
3. Banker to commercial banks; this involves holding the cash reserves of the commercial
bank. The amount of the cash reserves is based on the cash ratio.
4. Centre of the Clearing House System and ensures a smooth exchange between the
different commercial banks.
5. Management of the foreign exchange reserves of the country to ensure a stable buying
and selling rate for foreign currency. If the country has a fixed foreign exchange rate then
this is set by the Central Bank.
6. Regulator of the activities of (supervises) the Commercial Banks.
7. ‘Lender of last resort’ which means that the Central Bank will assist the commercial
banks with loans when necessary
Commercial Banks: A commercial bank is a for profit financial institution that provides a
range of financial services to individuals and business clients. Basic functions and services
of commercial banks include: accepting clients’ deposits; lending to individuals and
businesses (short term loans and long term loans, mortgages); processing payments on
customers’ behalf; providing night safe deposit services for business clients; online banking
services (using the internet); tele-banking services (using the telephone); investment
services; foreign exchange transactions e.g. money orders, bank draft; credit facilities e.g.
overdrafts; credit cards and debit card facilities; mobile money facilities; ATM facilities or
automatic teller machine facilities e.g. deposit and withdraw cash
Credit Union: A non-profit co-operative controlled by member/owners. Members are able
to access lower cost services e.g. low interest loans, credit cards and deposit at a higher
interest rate than market rates. The members are the depositors, borrowers and
shareholders
Insurance Companies: Insurance companies operate by collecting premiums from large
groups of people or pooling risk against the possibility of an event occurring. Insuring large
numbers of people allows the companies to pay claims and at times turn over a profit.
These companies use utilize statistics to project the likelihood of an event occurring. They
provide coverage against risks such as, fire, car accidents, illness, disability, death. Some
insurance companies also provide annuities and investment services;
Building Societies: An institution that provides banking and other financial services such as,
mortgages and demand deposit accounts (investopedia.com). Building Societies tend to
focus on savings and mortgages.
Microfinance Agency: A financial institution that provides banking services to low income
groups and individuals (www.investorwords.com). These agencies tend to provide loans to
members (low income earners or groups), offer insurance and deposits. The aim is to
improve the quality of life of the poor.
The persons who access the services of microfinance agencies would usually have no
access to traditional banking institutions.
Mortgage Company: A firm engaged in originating and or funding mortgages for residential
or commercial properties. Some mortgage companies offer 'turnkey mortgage services'.
These include origination, funding and servicing mortgages' (investopedia.com).
Origination is the process the individual has to go through to obtain a mortgage or home
loan.
Unit Trusts: An unincorporated mutual fund structure that allows funds to hold assets and
provide profits for the individual unit holder. The investment fund is set up under a trust
deed e.g. Trinidad and Tobago Unit Trust provides a series of mutual funds both TT$ and
US$, asset management, financial advisory, bureau de change, ATM services, call centre,
card services;
Development Bank E.g. Caribbean Development Bank (CDB): The CDB services include:
assisting borrowing member countries to develop their economies; assist in expanding
production and trade; promote investment, mobilize financial resources for development,
provide technical assistance to borrowing members; to support regional and local financial
institutions, support and stimulate the development of capital markets.
(www.caribank.org)
A development bank is a financial institution established 'to fund new and upcoming
businesses and economic development projects by providing equity capital and or loan
capital' (www.businessdictionary.com)
Stock Market: The collection of markets and exchanges where the issuing and trading of
equities, bonds and securities takes place (investopedia.com). Its benefits include:
For firms:
 Raising capital for business
 Facilitate growth through share acquisition e.g. mergers
For investors:
 Although investment in the stock market is risky by nature, it provides higher capital
gains in the long term.
 Provides a diversified portfolio
For the economy:
 Promotes economic growth through investment in business
 Used as an indicator of the economy’s performance in terms of share price performance
 Provides for good corporate governance in terms of record keeping for publicly listed
firms
 Provides an avenue for government to access funds
ACTIVITY
Explain THREE services offered by Financial Institutions
Week:
Lesson:
Topic:
Six
One
BUSINESS FINANCE
THE ROLE AND FUNCTIONS OF FINANCIAL REGULATORY BODIES
The role of regulatory bodies such as the Central Bank and the Financial Services
Commission is to monitor, control and guide various industry sectors in order to protect
depositors and consumers in an effort to maintain stability in the national economy.
The function of these regulatory bodies is to enforce regulations and licenses of various
financial activities. This is aimed at ensuring that these institutions function within the
confines of legislation.
Central Banks
The central bank in a country is the official government’s bank. It is the central authority
regulating the financial sector in the economy and managing the public debt.
Key roles of the central bank include:
a. The banker to the government: Managing the country’s debt and issuing bonds to raise
revenue; the government has an account in the central bank
b. Banker to commercial banks: Each commercial bank is required to keep a reserved ratio
with the central bank. Further, all commercial banks are required to be inspected by the
central bank to ensure that they meet financial requirements.
c. The central bank has the authority to issue bank notes.
d. Advisor to the government in terms of managing the money supply through monetary
policy such as influencing the interest rates
e. Lender of last resort to commercial banks to prevent failure of the commercial banks
f. To hold the country’s gold reserves and foreign currency
g. To manage the exchange rate and influence the demand and supply of foreign currency
The Central Bank of Trinidad and Tobago (www.central-bank.org.tt)
 The Central Bank of Trinidad and Tobago is the supervisory authority for the financial
institutions regulated by it;
 The Central bank is responsible for ensuring that institutions comply with Anti- Money
 Laundering and Combating Financing of Terrorism legislative and regulatory
requirements;
 The Central Bank Issues Guidelines and Circulars which provide guidance to the industry
focusing on anti-money laundering and combating the financing of terrorism;
 Contribute to national initiatives against money laundering
Jamaica Deposit Insurance Corporation(JDIC)
 JDIC was created by the Government of Jamaica;
 The main objective of the JDIC is 'to protect depositors and promote stability and
confidence in Jamaica's financial system (www.jdic.org); establish and manage the
Deposit Insurance Scheme;
 It seeks to strengthen the sector's regulatory framework
 Main goals include: provide the highest level of coverage possible to small depositors;
restore and maintain confidence in deposit-taking institutions; provide a clearly defined
system for dealing with problems which may arise in insured financial institutions
(www.jdic.org);
RELATIONSHIP BETWEEN FINANCIAL INSTITUTIONS AND REGULATORY BODIES
FINANCIAL
REGULATORY
RELATIONSHIP
INSTITUTION
BODY
Commercial
The Central Bank
The Central Bank regulates commercial
Banks
banks by e.g.:
(T&T)
 adjusting the reserve ratio (the portion of deposit
balances that commercial banks must have on
hand) held in the central bank;
 adjustment of interest rates to control savings and
borrowing;
 ensuring compliance with Anti- Money Laundering
and Combat Financing of Terrorism legislation;
 Inspection of commercial banks to ensure
compliance with financial requirements;
Insurance
Supervisor of
The Supervisor of Insurance is responsible
Companies
Insurance(T&T)
for enforcing the Insurance Act; Example:
Insurance Act Chapter 84:01;
 'Part 1 5. The Supervisor shall be charged with the
general administration of this Act...'
 'Part 1 8. Subject to subsection (2) where in
relation to a policy, a dispute or difference arises
between a company and a policy holder, the
Supervisor may upon written request of either
party act as arbitrator of the dispute or difference.'
 'Part 1 9. 'The Supervisor shall maintain such
registers .........and maintain separate registers for
(a)companies which are registered to carry on
various classes of insurance business in Trinidad
and Tobago; (b) privately administered pension
fund plans.......
Financial
Non-bank financial The FSC is responsible for:
Services
institutions
 administration of specified enactments (licensing
Commissions (entities licensed
or registration of financial institutions);
(FSC)
or registered under  supervising and regulating the financial
(Barbados)
specific Acts of
institutions;
Parliament e.g.
 establishing standards for control and
credit unions,
management of risk in the financial services
Insurance
sector; (www.fsc.gov.bb)
companies)
Administration of the Insurance Act and Regulations
Licensing of Insurance Companies and Insurance Intermediaries
Ensure the payment of appropriate annual fees
Monitor statutory departments and statutory funds
Review annual financial statements submitted by insurers and intermediaries
Ensure overall compliance by all licensed insurance entities with requirements of the
Insurance Act and Regulations
Role of regulatory bodies
 To monitor, control and guide various industry sectors in order to protect consumers.
Functions of regulatory bodies:
 To enforce regulations and licenses of various financial activities, including depository,
lending, collection and money transmission activities.
ACTIVITY
Fill in the blanks using the words provided
loans
issued
interest rate
increased
fixed
deposit
demand
commercial
cheque
central bank
The ___________________________ is the head of the financial system. All financial institutions
including ___________________________ banks are regulated and monitored by the Central Bank.
All commercial banks must keep an account with the Central Bank. These balances are used
for _______________________ clearing purposes between banks. Payments for cheques between
banks are set off at the Central Bank’s clearing house. The Central Bank can also demand
commercial banks to _____________________ a certain percentage of their total deposits with the
central bank in order to control the money supply. (Setting the cash reserve ratio)
The Central Bank is a lender of last resort and will aid commercial banks when needed. The
Central Bank dictates the _______________________________ that commercial banks can offer by
setting the bank rate. This is the interest rate set by the Central Bank and the rate at which
commercial banks and the Central Bank do business, e.g. _____________________ offered by the
Central Bank to commercial bank.
Direct controls and requests are also _______________________. These might include the
reduction of loans to particular industries. This could be the form of verbalised
encouragement (moral suasion) or measures such as _______________________________ interest
rates on certain loans.
Central Bank may ________________________ special deposits from the commercial banks, which
are for _________________ time periods. Although these earn interest it means that there is less
money for commercial banks to lend out.
Week:
Lesson:
Topic:
Six
Two
BUSINESS FINANCE
Ways used by an individual to manage personal income
Personal income includes compensation from a number of sources including salaries,
wages and bonuses received from employment or self-employment; dividends and
distributions received from investments, rental receipts from real estate investments and
profit sharing from businesses. (investopedia.com).
Ways to manage personal income include:
Make a budget; this entails making a statement of expenditure and how these will be
funded by income and other sources; the individual has to prioritise needs and wants;
Subsequent to the deduction of taxes and other statutory payments the income earner
must manage his money to maximize its use. He must exercise and develop habits of careful
spending and saving techniques. A good money manager will budget.
1. A budget outlines how much of an individual’s income is to be spent on his various
expenses; it disciples an individual to live within the constraints of his personal income.
The process of preparing a budget involves the record keeping of past expenditures, and
making decision based on these about future expenditures. Priorities must be set to meet
basic needs and a systematic plan for savings to achieve future goals.
Sample of a personal budget for Mrs. J. (Monthly)
2. Savings and Investments
Savings is defined as money set aside or not spent from ones personal income. Money
saved is most effective in an interest bearing facility such as a commercial bank to keep up
with inflation which reduces the value of money over time. Other forms of savings include,
1. The credit union- is not-for-profit cooperative financial institutions that are owned and
controlled by their members. They are operated to promote saving and to offer loans, or
credit, to members at reasonable rates of interest. Each member has one vote when key
decisions need to be taken, such as the election of directors. Members pool their savings
and loans are made approved purposes, such as home improvements.
2. Insurance and partner: - sousou -is a savings arrangement where a group of people each
pool an equal amount of money for a period of time (a month, two weeks, etc.) and after the
time is up, one person in the group receives all the money. It is also known as the meetingturn or partner or box hand.
3. Investment is defined as methods of increasing wealth. It differs from savings as it
involves risks. Earning from capital invested is usually much higher than interest earned on
savings. Forms of investments include: unit trust companies, mutual funds, the stock
exchange and starting a business.
4. Financial advising provides financial advice or guidance to customers for compensation.
Financial advisors, or advisers, can provide many different services, such as investment
management, income tax preparation and estate planning.
Savings versus Investment
Savings: Income that is not used up in
Investment: Money used to add to the
consumption e.g. money placed in bank
capital of a business e.g. spending on
account, sousou (paying into a pool to
expansion of factories or purchasing
receive a hand until all members receive a
machinery or equipment or spending on
hand), credit union deposits, insurance;
training and development, buying shares,
Objective: Meet short term needs
credit union shares, mutual funds, opening
Risk: Lower risk and rates of return than
a business; bonds and debentures;
investment
Objective: Long term growth
Risk: Low to high risk and; variable to high
rates of return
Sources of Short & Long Term Financing
Short-term capital may be accessed through the money market. Institutions in the money
market include commercial banks, merchant banks, credit unions and discount houses.
Borrowers are required to repay within a short-term e.g. 1 to 5 years.
Sources of Short term financing include:
 Personal sources e.g. personal savings,
 Loans from family
credit cards and redundancy
 Loans from government agencies such
payments
as NEDCO
 Trade credits and Promissory Notes
 Advances from customers
 Unsecured loans (no collateral
 Crowd funding e.g. Kickstarter,
required) and overdrafts
Patreon
 Secured loans
Long –term capital may be accessed through building societies, the stock exchange, unit
trust companies and development banks. Borrowers are given a much longer repayment
periods e.g. up to 20 years.
Sources of Long term financing include:
 Shares
 Loans from government agencies
 Secured loans
 Mortgages
 Debentures
ACTIVITY
Fill in the blanks using the words in the box to find out what have you learnt.
Budgeting
Investment
Capital
Personal savings
Capital
Saving
Fixed
Stock market
_________________ is the difference between income available for spending (Disposable Income
or DI) and actual consumer expenditure. If this money is not used to create __________________
or long-term ___________________, then it is not referred to as investment. ________________________
is simply doing without consumption today in order to use the money to create
_____________________ to generate future returns. To the economist, investment means the
purchase of capital equipment, for example, computers, machinery and buildings. On the
________________________ investment means buying shares. __________________________ is the ability
of the individual to save. Savings may be done at Credit Unions, Commercial Banks or
through the insurance companies. ____________________ means having a plan or systematic
approach to spending and saving.
Week:
Lesson:
Topic:
Six
Three
BUSINESS FINANCE
Budgeting
Week:
Lesson:
Topic:
Seven
One
BUSINESS FINANCE
1. Outline the Main functions of TWO institutions in the Financial Sector. (4 marks)
2. Describe the relationship between the Central Bank and Commercial Banks. (4 marks)
3. Outline the goal of the Jamaica Deposit Insurance Corporation. (2 marks)
4. State TWO ways that an individual can manage personal income. (2 marks)
5. State FOUR personal sources of capital an entrepreneur can access. (4 marks)
6. Identify the main purpose of a Cash Flow Statement. (2 marks)
7. Outline THREE sources of Short Term finance. (6 marks)
8. Outline THREE sources of Long Term finance. (6 marks)
Week:
Lesson:
Topic:
Seven
Two
BUSINESS FINANCE
Personal sources of capital for setting up a business
The entrepreneur can access personal capital through:
 Friends and family: The entrepreneur accesses private financing from family and friends.
This can also take the form of equity financing where the family or friend becomes a
shareholder.
 Personal savings: This includes life insurance policies where the owner can borrow
against the cash value of the policy; A home equity loan, that is, accessing a loan backed
by the value of the property.
 Government grants: Accessing a government backed grant to facilitate start-ups e.g. in
Trinidad and Tobago the government offers the Micro-Enterprise and Training grant
aimed at needy persons who want to undertake a small business venture or access skills
training
 Loans: Access loans from commercial banks backed by collateral.
 Equity: The entrepreneur sells ownership in the venture to acquire financial investment.
This allows the investor to become a shareholder in the venture and share in the profits.
 Venture capital: Access funding from individuals or firms that finance or invest in startup ventures. The venture capitalist may provide funding for a stake in the business
venture.
 Crowd funding: This is the use of small amounts of capital from a large number of
individuals to finance a new business venture (www.investopedia.com).
Purposes of basic financial records for sole traders
Record keeping in a small business refers to the 'orderly and disciplined practice of storing
business records'. This activity allows the venture to comply with financial regulations or
meeting legal requirements. Further, it allows the sole trader to keep track of the business;
plan for the future; meet legal compliance and tax preparations.
Bookkeeping is the recording and classifying of accounting transactions.
Types of bookkeeping include:
Single-Entry bookkeeping: This involves recording transactions as payments are made from
and deposits are made into the venture's account. This is suited to a 'low volume' of
transactions.
Double-Entry Bookkeeping: This can be used in businesses of any size. Two entries are
made for each transaction. A debit entry and a credit entry. This emphasises that a change
in total assets must equal a change in total equity (Assets = Liabilities + Owner's Equity).
Purpose of basic financial statements
Income statement or Profit and Loss Statement
Allows owners, shareholders and partners and investors to identify whether or not the
business is profitable. Investors would only invest in a profitable business while owners
must justify the continuation of the business.
Balance Sheet or Statement of financial position
The Balance Sheet illustrates the businesses net worth through its assets and liabilities. If
the Net Assets are significant then there is little chance that the business will fail. Investors
and owners use this statement to assess the performance of a business.
Cash Flow Statement
This statement gives information on the liquidity of the business or its ability to possess
and retain liquid cash for the operation of a business. Liquid assets such as cash are
important as goods and services have to be acquired in order for a business to be
successful. If a business cash outflows are greater than its inflows then this indicates low
level of performance for the business.
ACTIVITY
Match the following statement to its correct purposes
Statement
Purpose
Income Statement
 provides a summary of assets, liabilities and equity of
(Profit and Loss)
a business, at a specific date;
 it facilitates decision making and provides
information on the financial position of the business;
 provides information on whether the business has the
ability to meet its debts and obligations;
Statement of financial
 shows the revenue and expenses of the venture;
Position(Balance Sheet)
 results in the profit and loss over a specific period of
time;
 shows how good or how poor the venture performed
financially during the year;
Statement of Cash Flow
 summary of the results of all cash transactions during
the reporting period;
 shows how the business gets cash or inflows and how
the business spends cash or outflows;
Week:
Lesson:
Topic:
Seven
Three
BUSINESS FINANCE
Since you have completed the topic Business Finance, you are required to answer the
question below
1. Which of the following is LEAST LIKELY to be a source of long term financing for
business?
a. Bonds
b. Bank loan
c. Mortgage
d. Bank overdraft
2. Which of the following is NOT a main loan providing institution for individuals and
businesses?
a. Commercial banks
c. Credit unions
b. Agricultural development banks
d. Central bank
3. Savings is that part of income that is not spent. Which of the following is NOT a form of
savings?
a. A fixed term deposit in a bank
c. Buying shares on the stock exchange
b. A sou sou hand
d. Placing money in a cash box at home
4. Which of the following instruments is NOT a source of long term funding?
a. Debentures
b. Share capital
c. Bonds
d. Trade credit
5. The central bank is an important financial institution in an economy. Which of the
following is NOT a major function of the central bank?
a. Banker to commercial banks
b. Advisor on monetary policy to the government
c. Lender of last resort to commercial banks
d. Provider of online commercial banking services to businesses
6. The hiring out by one firm of an asset e.g. machinery to another firm for a rental period is
termed
a. Factoring
b. Overdraft
c. Credit
d. Leasing
7. A situation where expected income is less than projected expenditure is
a. A balanced budget
b. A deficit budget c. A surplus budget d. Equilibrium
8. Where an individual’s income is equal to spending or expenditure his/ her budget is
a. A balanced budget
b. A deficit budget c. A surplus budget d. A fixed budget
9. A financial institution established to finance new ventures and economic development
projects e.g. agricultural undertakings by providing equity capital or loan capital is
essentially a/an
a. insurance company
b. commercial bank c. development bank d. central bank
10. Recording payments made from a venture's account and deposits into the account is
specifically
a. double entry bookkeeping
c. journal entry
b. single entry bookkeeping
d. cash flow entry
11. Where a credit entry and a debit entry are made for a transaction, the entrepreneur
uses a
a. journal entry system
c. double entry bookkeeping system
b. single entry bookkeeping system
d. cash flow system
12. A credit arrangement with a bank that allows the entrepreneur to borrow and spend
money up to a fixed amount and subject to an interest rate is termed a/an
a. trade credit
b. hire purchase agreement
c. overdraft
d. leasing
13. Which of the following are main forms of short term sources of finance?
I debenture
II trade credit
III overdraft
IV hire purchase
a. all of the above
b. I, II and IV
c. II, III and IV
d. I, III and IV
14. Savings is income that is not used up in consumption. Which of the methods listed is
NOT a form of savings?
a. credit union deposits
b. sou sou
c. bank account
d. buying shares
15. Main forms of investment for a small business include all of the following, EXCEPT
a. spending on business expansion
c. mutual funds
b. credit union shares
d. credit union deposits
Week:
Eight
Lesson:
One
Topic:
ROLE OF GOVERNMENT IN AN ECONOMY
STRUCTURED QUESTION ON THE TOPIC ‘ROLE OF GOVERNMENT IN AN ECONOMY’
1. Distinguish between Savings and Investments. (6 marks)
2. Describe the importance of a budget to an individual. (4 marks)
3. (i) Outline TWO ways in which governments can regulate business activity. (4 marks)
(ii) Describe TWO measures which governments can take to protect consumers. (4 marks)
4. Outline THREE ways in which citizens of a country can benefit from improved roads and
transportation. (6 marks)
5. Explain TWO ways in which government could improve the education sector in a
country. (6 marks)
Week:
Lesson:
Topic:
Eight
Two
ROLE OF GOVERNMENT IN AN ECONOMY
The government of a country is described as the body of representatives charged with
management of the country’s affairs on behalf of the citizens.
Responsibilities of a government in an economy include:
 Security of the State or National Security: The government is responsible for the
protection of the country from external threats and for maintaining law and order by
setting the legal framework. The government is also responsible for disaster
preparedness in the country.
 Protection and welfare of citizens: The government has the responsibility for the well being of all citizens through the provision of social services and merit goods such as,
health and education, and various grants made to the less fortunate, elderly and
disabled citizens. This is a key area in the redistribution of income in the economy.
Further, the state or government is responsible for maintaining the traditions and
cultural heritage of the nation e.g. through funding of the arts.
 As a major employer, the government is responsible for job security of workers and
ensuring that severance benefits are paid to workers should they become redundant.
The government is therefore responsible for employment legislation to meet the needs
of the workforce e.g. health and safety, equal opportunities, maternity benefits and
general labour laws.
 Environmental sustainability through protection of the natural environment. The
government is responsible for legislation relating to environmental issues such as
pollution, use of dangerous chemicals, traffic congestion and deforestation.
 The government is responsible for management of the economy, through fiscal policies
(Government expenditure and taxation) and monetary policies (control of the money
supply and interest rates). It is also responsible for the creation of a safe climate for
investors through the maintenance of political stability, an equitable and fair legal
framework, exchange rate controls and the maintenance of the exchange rate system.
 Another responsibility of the state is infrastructural development e.g. creation and
maintenance of a network of roads, bridges, ports of entry and exit, airports, water and
electricity supply.
Adherence by business to laws:
A business operates in an open system, with an external and internal environment and
many stakeholder groupings, as well as, operating within a legal framework. Therefore, the
business has to adhere to or obey the laws governing the environment e.g.
 Deduct and pay in the necessary statutory payments such as National Insurance, health
surcharge and income tax as well as, corporation taxes.
 Abide by labour laws such as, Occupational Safety and Health, Equal Opportunities,
Minimum Wages Legislation and Maternity Benefits.
 Ensure that environmental laws e.g. Certificate of Environmental Clearance or zoning
laws are followed.
Some areas in which the Government regulates business:
 Consumer Protection from unfair treatment e.g. the existence of the Bureau of Standards
and the Ombudsman; Consumer Affairs Division;
 Employee protection e.g. minimum wages; severance benefit; recognition of trade
unions
 Hire Purchase Act
 Minimum and maximum price controls
 Zoning or control of land use to protect the environment and pinpoint areas for
agricultural development; housing development; commercial business development.
 Fiscal Policy e.g. taxation
 Waste Disposal from businesses in terms of hazardous substances; packaging; recycling
How government can influence businesses to protect the environment
Governments can seek to establish policies or legislation on areas targeted to
environmental sustainability. These areas should form part of the 'Corporate Social
Responsibility ' aspect of the organization. Moreover, Governments should move to ensure
that businesses comply with legislation.
These areas include:
 Green Technology: This entails using science and technology to protect the environment.
It involves areas such as: green chemistry, environmental monitoring, recycling of waste
materials, purifying water, purifying the air, conserving energy (electric cars,
environmentally friendly devices such as solar panels), rejuvenating ecosystems
(replanting trees, managing waste). Green technology is also called environmental
technology or clean technology.(https://usgreentechnology.com)
 Reforestation: This is the 'replanting of trees in a stretch of terrain which had for some
reason lost its forest cover.' It is, 'a planned or deliberate movement to re-grow
vegetation lost due to human activity, natural calamity or sudden climate
change.'(www.eartheclipse.com)
 Proper disposal of waste: Waste management legislation will cover the collection,
transportation and disposal of garbage, sewage and other waste products. Waste
management is the 'process of treating solid wastes'. It encompasses solutions for
recycling materials. (www.conserve-energy-future.com)
 Zoning laws: Zoning is the restriction on the way land within a specified area can be
used. Planning and development laws help in preserving natural habitats, ensuring that
a business fit into the landscape with other types of institutions and to prevent
overcrowding. It is also used to cluster businesses in an area and to spread development
to less developed areas.
 Appropriate use of technology in the production and disposal of waste: Examples include:
Low pollution garbage collection trucks. Where the truck generates electricity required
for loading and unloading while the truck is operating; use of new generation garbage
incineration facilities (ash recycling and power generation) (Japan); using dispensers for
dry foods in supermarkets reduces the need for packaging (Eco-point initiative Italy); EU
legislation restricts the amount of hazardous materials used in electrical and electronic
equipment. This makes it easier and safer to recycle waste.(eceuropa.eu)
Why protect the environment?
 Preservation of the living conditions of people (Health)
 To protect against global warming and climate change
 To ensure that resources are not depleted (fisheries and forestry)
 To protect against disasters (landslides, hurricanes, flooding)
Ways in which Businesses Protect the Environment
 Business owners must adhere to the various legislation set out by government and
reduce pollution in rivers, seas and the atmosphere.
 Establish business in the zones legally allocated to reduce the impact of noise and air
pollution in residential areas.
 Being part or initiating environmental projects such as beach clean-up and planting
trees.
 Use of renewable sources of energy (solar, wind, thermal)
 Use of non-hazardous materials in the production process.
 Use of green technologies such as CNG for vehicles and use biodegradable materials.
Ways by which Government Regulates Business Activities
Businesses operate within a legislative framework. Some of the laws that govern
businesses are:
 Statutory Deductions e.g. National Insurance, health surcharge, income tax (PAYE)
corporation taxes
 Labour laws e.g. Occupational Safety and Health, Equal Opportunities, Minimum wage,
Maternity Benefits.
 Environmental Laws e.g. Certificate of Environmental clearance and zoning laws.
Consumers must be protected from business owners who are eager to sell without taking
into consideration the well-being of customers. Consumers must be protected from
overcharging, poor quality goods and services and short measurements and weights.
Consumers are protected by legislation delegated to various government agencies. These
agencies include:
1. The Consumer Affairs Commission- aids consumers with redress
2. The Fair Trading Commission- investigates cases of tied selling and misleading
advertising.
3. The Bureau of standards – set standards for goods and services to be sold on the market.
4. The Ombudsman- investigates injustices suffered by citizens from dealing with a
government agency or official
ACTIVITY
Match the following
Consumer Protection
The Food and drugs Act
The Standards Act
Laws
The Public Health Act
The Weights and Measures Act
The Processed Food Act
The Hire Purchase Act
Hire Purchase Law
This refers to the disposal of hazardous substances, packaging
and recycling.
Price controls
Buyers and sellers must sign the hire purchase contract. The
seller must state the cash price, down payment and monthly
installments and total to be paid. Goods cannot be repossessed
by the seller once the buyer pays up to three quarters of the hire
purchase price.
Taxation
These laws protect the environment by identifying certain
wildlife areas that should not be disrupted by development.
Therefore, areas are designated for factories, shopping centres
and residential, away from protected wildlife.
Waste Disposal
Firms that pollute the atmosphere, rivers and seas are charged a
tax for the harm caused to the environment. This forces firms to
find methods to reduce pollution to avoid this penalty.
Zoning Laws
Price controls are levied on certain good and services to prevent
suppliers from increasing prices. For example basic food items
such as corn meal, flour, rice and sugar.
Week:
Lesson:
Topic:
Eight
Three
ROLE OF GOVERNMENT IN AN ECONOMY
Taxation
A tax is on the individual or business entity. It is a compulsory payment made by
individuals and businesses to the government.
Taxes must be:
 Fair and equitable
 Economical in terms of administrative costs
 At convenient times so as not to interrupt the individual or business functioning
 Implemented with the full knowledge of persons being affected.
Purpose of Taxation
Taxes are mainly used to finance the expenses incurred by government to manage an
economy. These expenses include: health care, education, garbage collection and operating
government business entities. Taxation is also used by government for several other
purposes.
 To reduce pollution by taxing offending firms
 To discourage unhealthy lifestyle e.g. a tax on cigarettes
 To protect local and infant industries by taxing imports
 To achieve greater equality of wealth and income. Revenue from taxation is used to help
the very poor e.g. providing food stamps.
 To improve the balance of payments (BOP) by increasing the duties charged on
imported goods.
 To control spending in an economy thus reduce inflation
 To redistribute income through expenditure on social welfare programmes.
Reasons for taxation:
 To generate revenue for government expenditure
 To manage the economy in terms of fiscal policy e.g. an expansionary fiscal policy involves
reducing taxation. This allows the individual consumer to have more disposable income,
thereby increasing purchasing power and stimulating demand. Businesses will have more
money available for investment. A deflationary fiscal policy involves an increase in
taxation intended to reduce the level of demand in the economy.
 To address a balance of payments deficit where the government seeks to reduce the
outflow of money (imports) by using tariffs or a tax on imported goods to increase the
price of the imports. This is intended to discourage imports and encourage the demand for
local goods and services.
 To reduce the demand and consumption of de-merit goods and services such as,
cigarettes, alcohol and gambling.
 To redistribute income through expenditure on social welfare programmes
ACTIVITY
1. Define the term 'tax'.
2. State TWO reasons for taxation.
Week:
Lesson:
Topic:
Nine
One
ROLE OF GOVERNMENT IN AN ECONOMY
Direct and Indirect Taxes
Direct taxes are paid by individuals directly from income earned or on the value assets
owned to the income tax department.
Types of Direct Taxes
Income Tax
This is a tax on earned income- individuals pay a percentage of their income.
Corporate Tax
This is a tax on the profits of companies
Capital Gains Tax
This is a tax on the proceeds resulting from the sale of assets, e.g. houses, land etc.
Capital Transfer and Estate Duties
This is a tax on the transfer of property (gifts) and on legacies (death duties)
Other Direct Taxes
These include: stamp duties, motor vehicle duties land taxes, etc.
Indirect taxes are paid to the income tax department through the suppliers of goods and
services. These taxes are levied on consumption and therefore are paid by individuals
when purchasing commodities.
Value Added Tax (Ad Valorem Tax)
This is the tax levied on goods as each stage of production. This tax generally is known as a
General Consumption Tax (G.C.T.).
Purchase Tax
This tax is placed on specific goods at retail outlets. These include gasoline, tobacco, rum
etc.
Excise Duties
A tax placed on goods manufactured within a country. This tax is paid by the manufacturer
of the product.
Customs Duties
This is a tax on imports i.e. goods entering the country.
Stamp duty
This is a tax levied on the purchase of financial assets, such as shares and property
ACTIVITY
UNSCRAMBLE the following words then define them.
IMONEC ATX
________________________________________
NTROIARPCOO XTA
________________________________________
CLTAPAI SGAIN ATX
________________________________________
AIAPLCT ARNFRSET XAT
________________________________________
UOTMSC DTUY
________________________________________
ESICEX YDTU
________________________________________
AERCUPSH XAT
________________________________________
SMPAT TDYU
________________________________________
NMPUOTNSCOI ATX
_________________________________________
Week:
Lesson:
Topic:
Nine
Two
ROLE OF GOVERNMENT IN AN ECONOMY
Taxation Systems
Proportional Taxation System: All taxpayers pay
the same proportion or percentage of income in
taxes.
Regressive Taxation System: As an individual’s income
increases, the percentage of income paid in tax, falls.
Therefore, a regressive tax represents a smaller portion of
the high income than it represents of the smaller or lower
income.
Progressive Taxation System: As an individual’s income
increases, the percentage of income paid in taxes
increases. Therefore, a progressive tax system represents
a larger portion of the high income than the lower income.
Forms of Government Assistance to Business
Institutions for lending capital: Government through various agencies provide funding for
small entrepreneurs and start- up businesses. Usually, traditional lending agencies such as
commercial banks consider small start -up businesses to be risky in nature. The
Government therefore provides venture capital loans at lower interest rates.
Training and technical assistance: The government provides training and technical
assistance to business persons in areas targeted for national development e.g. vocational
skills; agriculture; small business development. Further, the national curricular at the preschool, primary and secondary schools needs to be up- dated as necessary to be relevant to
the environment.
Research and information centres: Government departments usually conduct market
research and are able to provide information to businesses in terms of potential markets;
new technologies; trade agreements; business registration process; the legal framework.
Subsidies and grants: Subsidies are payments made to producers intended to reduce the
cost of production, thereby, reducing the price to the consumer.
Tax incentives: Government can offer tax incentives to business that set up in fields of
national importance e.g. tourism and agriculture.
Trade Fairs and Promotions: Government can assist business by mounting trade fairs to
showcase goods and services. It can also promote businesses on foreign trade missions.
Research and information centres
Government departments usually conduct market research and are able to provide
information to businesses in terms of potential markets, new technologies, trade
agreements business registration process and the legal framework.
Impact of Social Services Provided by Governments
These services are provided by government to ensure the well-being of all citizens.
Education
An effective national education plan will ensure that the innate skills, talents and abilities of
individuals are harnessed and developed to their fullest potential. High levels of literacy
and numeracy will increase productivity.
Health
The economic development of any nation is dependent upon its population being physically
and mentally healthy. For someone to be productive he or she must be in good health.
Roads and Transportation
Proper Infrastructure such as roads, railways, sea and airports coupled with an efficient
transportation system are important to a country’s economic activities. Roads and
transportation facilitate trade of goods and services.
National Insurance Scheme
National Insurance Schemes protect the elderly and other categories of vulnerable persons
within a society. The elderly have contributed to the development of a nation and must be
adequately provided for when they no longer a part of the labour force.
ACTIVITY
1. Explain the concept of direct tax. Give TWO examples. (4 marks)
2. Explain the concept of indirect tax. Give TWO examples. (4 marks)
3. Outline THREE forms of Government assistance to business. (6 marks)
Week:
Lesson:
Topic:
Nine
Three
ROLE OF GOVERNMENT IN AN ECONOMY
Since you have completed the topic ROLE OF GOVERNMENT IN AN ECONOMY, circle the correct
answer in the following questions
1. A tax rate system where the tax rate falls as income rises is
a. A proportional system
b. A regressive system
c. A progressive system
d. An equitable system
2. A tax system where the tax rate remains fixed regardless of income levels is
a. A proportional system
b. A regressive system
c. A progressive system
d. A fixed system
3. A direct tax is paid directly to the government by the person or business entity on which it
is levied. Which of the following is NOT a direct tax?
a. Income tax
b. Corporation tax c. Value added tax d. Capital gains tax
4. A tax that is levied on specific goods such as alcohol to discourage consumption is a/an
a. Purchase tax
b. Excise duty
c. Tariff
d. Capital gains tax
5. Which statement best describes a subsidy?
a. A payment levied on firms
b. A bonus given to workers to increase productivity
c. A cash grant given to a business to encourage production of a particular product
d. A tax levied on a good or service
6. While subsidies encourage business to increase production of needed products. Which of
the following statements describes a major disadvantage of subsidies?
a. Economies of scale from expansion
b. Lower cost passed on to consumers
c. Opportunity cost in terms of less money available to be spent on education and health
care
d. Surplus goods on the market
7. The government can assist the development of small and micro businesses in which of the
following ways?
I. Provide low interest loans
II. Provide technical assistance
III. Reducing subsidies
IV. Reducing taxes
a. l and ll
b. l, ll and lll
c. l, ll and lV
d. all of the above
8. Zoning is a government policy to protect the environment. This involves
a. Creating defined areas for business activities and restricting production in other areas
b. Developing highly urbanized areas
c. Easing restrictions to increase business activity
d. Banning the production of certain goods
9. Government implements fiscal policies such as reducing and increasing taxes for many
reasons. Which of the following is NOT a key reason for taxation?
a. To redistribute wealth
b. To restrict importation of certain goods
c. To reduce the standard of living
d. To reduce the demand for demerit goods
10. A key reason for government’s role in business is
a. Compete with the private sector
b. To crowd out private sector investment
c. To provide services to benefit all citizens
d. To influence private sector decision making
11. All of the following are KEY areas where Government regulates business activity, EXCEPT
a. Zoning of business location
b. Price controls
c. advertising
d. Consumer protection
12. Using science and technology to protect the environment e.g. recycling is termed
a. zoning
b. green technology
c. Proper disposal of waste
d. environmental sciences
13. In order to reduce the demand for foreign exchange, the government decided to place a
tax on goods imported into the country. It seeks to reduce the consumption of foreign goods.
This tax is called a/an
a. excise duty
b. capital gains tax
c. corporation tax
d. tariff
Week:
Ten
Lesson:
Topic:
One
TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT
Business technology refers to applications of science, data, engineering, and information for
business purposes, such as the achievement of economic and organizational goals. The
main element of technology is the idea of change, and how it can affect business and society
According to study.com, the term 'business technology' refers to, ' the applications of
science, data, engineering and information for business purposes, such as the achievement
of economic and organizational goals. The main element of technology is the idea of change
and how it can affect business and society.'
Changes in technology will affect how a business operates in both the internal and external
environments. Examples include:
 using accounting software to file information electronically;
 targeting both the consumer and business market with product e.g.' Apple I Phone'
enhanced security features that can benefit business clients;
 using social networking/social media to monitor customer satisfaction and gain new
customers;
 Telecommuting where with broadband access employees can work from home or on the
field (flexible working arrangements); video conferencing can save time and money in
accommodating out of town or foreign executives or clients;
Role of technology in business
ICT is considered to be all uses of digital technology that exist to help individuals,
businesses and organisations use information. So ICT is concerned with the storage,
retrieval, manipulation, transmission or receipt of digital data. Importantly, it is also
concerned with the way these different uses can work with each other.
ci.uky.edu, describes 'Information and Communication Technology' or ICT as,' all rapidly
emerging, evolving and converging computer, software, networking, telecommunications,
internet, programming and information systems technologies.' In adopting ICT strategies, a
business seeks to utilize aspects of information, communication and technology to help the
business achieve its objectives. It should add value to business operations and help the
business save time and costs. ICT can lead to:
 improved communication in business operations through the use of mobile phones,
emails, internet and intranet e.g. mobile money applications, e-commerce, management
information systems;
 improvements in record keeping and management e.g. using Quick Book, MS Projects
 online market research and information gathering on competitors;
 more efficient deliver using GPS systems
 using the internet to advertise products
 use of robotics and computer aided design software to enhance production; Computer
aided manufacturing to increase production efficiency
 improved stock control management through the application of electronic point of sale,
electronic data interchange and electronic funds transfer
(source: adapted from free. regenesys.net; BBC.co.uk 2012)
ACTIVITY
In your own words, explain the role of technology in business.
Week:
Ten
Lesson:
Two
Topic:
TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT
Ways in which technology has influenced banking and commerce
a) Through the introduction of Automatic Teller Machines (ATMs) and Automated Banking
Machines (ABMs) which facilitate the deposit and withdrawal of funds, as well as other
services without having to go into a bank to access teller services. The location of ATM
machines in hotels, petrol stations, malls and supermarkets adds to the convenience of
customers who can transact business without having to wait in line at a bank.
b) The practice of on-line banking which enables customers to access their accounts from
home and other locations using personal computers. This facility enables customers to
check their balances from the comfort of their homes and permits easy and convenient
payment of utility and other bills. Customers with more than one account can also use
this facility to transfer funds from one account to another.
c) Through electronic commerce (ecommerce). Using the internet, individuals and
businesses are now able to make business transactions via the World-wide web, without
having to visit a physical brick and mortar store. E-commerce has given rise to many online stores which permit customers to browse for products and pay for them
electronically.
The types of ICT used in business
(a) Traditional
(i) Productivity tools, for example:
- Word (Word Processor or Microsoft Word)
A word processor is a program that allows the user to type, edit and format text-based
documents.
- Excel (Spreadsheet or Microsoft Excel)
A spreadsheet is a program in which data is displayed in table format. It is designed for the
manipulation of numerical data such as the calculation and comparison of costs and to
represent data using charts and graphs.
Businesses therefore use spreadsheet to:
o Produce financial documents such as estimates, invoices and statements of income and
expenditure
o Produce statistical reports, for example, to compare quantities of goods that are sold over
a period of time
o Represent data in graphical format
- Database software (Microsoft Access)
A database is a collection of structured data that is arranged to allow its contents to be
easily retrieved, managed and updated.
- Presentation software (Microsoft PowerPoint, Prezi)
A presentation program is used to create slides containing a variety of elements such as
text, pictures, sounds, graphs and video clips). You would use a slideshow when making a
presentation to an audience, such as giving a report in a meeting, speaking at a conference
or when teaching a lesson.
Prezi is a web-based tool for creating presentations (called prezis for short). It's similar to
other presentation software like Microsoft PowerPoint, but it offers some unique features
that make it a good alternative. In recent years, it has become popular in schools and
businesses.
- Graphics software (Adobe Photoshop)
Adobe Photoshop is software that is extensively used for raster image editing, graphic
design and digital art. It makes use of layering to allow for depth and flexibility in the
design and editing process, as well as provide powerful editing tools, that when combined,
are capable of just about anything.
Exercise:
Match the following
APPLICATION
PURPOSE
Most appropriate for preparing and manipulating text-based documents
Database
such as letters, memos, wills, leases and hire purchase agreements
Presentation
Designed for the manipulation of numeric data such as the calculation of
software
costs and preparation of graphs
Best suited for sorting, organizing and retrieving collections of interrelated
Spreadsheet
data
Used to produce sequences of slides with text and graphics that present
Word processor
information on a topic, usually for use with a multimedia projector
Week:
Lesson:
Topic:
Ten
Three
TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT
The types of ICT used in business cont’d
(ii) Specialist applications:
- Accounting (QuickBooks)
QuickBooks is the most popular small business accounting software businesses use to
manage income and expenses and keep track of the financial health of their business. You
can use it for invoicing customers, paying bills, generating reports, and preparing taxes.
The QuickBooks product line includes several solutions that work great for anyone, from a
freelancer to midsized business.
Small business owners typically use QuickBooks to manage their invoices, pay their bills,
and track their cash flows. They also use it to generate month- and year-end financial
reports as well as prepare for quarterly or annual business taxes. Some business owners
manage QuickBooks themselves while others prefer to use an in-house or outsourced
bookkeeper.
- Computer Aided Design (CAD)
Computer aided design or CAD is an important industry within the tech world. It involves
utilizing computers to help with engineering and design for a wide range of projects.
Common types of computer aided design include metal fabrication, carpentry, and 3D
printing, as well as others that have impacted modern manufacturing and other business
processes.
- Management Information Systems
A Management Information System (MIS): A system, manual or computerized designed to
collect, sort and analyse data to provide information to enhance decision making. The
information for the MIS is used to generate reports on areas such as employee absences
and overtime, cash flow, sales and profitability.
Examples of Management Information Systems
Transaction Processing System: Supports the day to day operations of the business e.g.
electronic transfer of funds
Decision Support System: Provides information for managerial decision making e.g. sales
figures for reports.
Office Automation System: Provide support for office operations e.g. communication
Executive Support System: Provides information for high level management or executive
decision making
Human Resource Information System: Provide information related to the people aspect of
the organization e.g. performance management
Marketing Information System: provides information on the marketing aspects of the
organization e.g. market research, pricing strategies
(b) Digital communication technologies
(i) Internet
The Internet is an increasingly important part of everyday life for people around the
world. The Internet is a global network of billions of computers and other electronic
devices. With the Internet, it's possible to access almost any information, communicate
with anyone else in the world, and do much more.
You can do all of this by connecting a computer to the Internet, which is also
called going online. When someone says a computer is online, it's just another way of
saying it's connected to the Internet. One of the best features of the Internet is the ability to
communicate almost instantly with anyone in the world. Email is one of the oldest and
most universal ways to communicate and share information on the Internet, and billions of
people use it. Social media allows people to connect in a variety of ways and build
communities online. There are many other things you can do on the Internet. There are
thousands of ways to keep up with news or shop for anything online. You can pay your
bills, manage your bank accounts, meet new people, watch TV, or learn new skills. You can
learn or do almost anything online.
(ii) Mobile
Today uses of a mobile phone can be compared with a computer. Modern mobile phone has
all the facilities that a computer had. Mobile phone usage is taking a lead to a computer that
it is small in size, light in weight, and can operate with minimum power.
Its component is cheap though mobile phone has limited capacity and speed. It is handy in
dialing, talking, making video film, e-mailing, sending pictures etc. They are used by
students at all levels, doctors, engineers, service man, jobbers and common man and
woman in their day-to-day activities. Today business is next to impossible without a mobile
phone. Starting from aviation industry to service sector, the mobile phones are playing an
important and vital role.
ACTIVITY
Since you are au fait with the computer complete the activity below by choosing the correct
word to fill in the blanks.
Principals of Business
Week:
Lesson:
Topic:
Grade 11
Eleven
One
TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT
Distinguish between e-commerce and E-business
In both cases, the e stands for "electronicnetworks" and describes the application of
electronic network technology - including Internet and electronic data.
E-commerce covers outward-facing processes that touch customers, suppliers and external
partners, including sales, marketing, order taking, delivery, customer service, purchasing of
raw materials and supplies for production and procurement of indirect operating-expense
items, such as office supplies. It involves new business models and the potential to gain
new revenue or lose some existing revenue to new competitors. interchange (EDI) – to
improve and change business processes.
E-business includes e-commerce but also covers internal processes such as production,
inventory management, product development, risk management, finance, knowledge
management and human resources. E-business strategy is more complex, more focused on
internal processes, and aimed at cost savings and improvements in efficiency, productivity
and cost savings.
E-commerce differs from E-business in the following ways:
 E-commerce focuses on the outward processes that impact the external stakeholders
(customers, suppliers, external partners). Processes that impact the external
stakeholders include: sales, marketing, order taking, delivery, customer service,
purchasing of raw materials and supplies e.g. office supplies. This is the process of
buying or selling goods and services using an electronic medium such as the internet
(www.tutorialspoint.com);
 E-business contains the E-commerce process but also involves internal businesses
processes such as, inventory management, product development, risk management,
finance, production, knowledge management and human resource management. Ebusiness focuses on cost savings and efficiency on business processes;
 E-Commerce utilizes information exchange through technology such as, electronic data
exchange(EDI); Email; Electronic fund transfer(EFT) and Digital Libraries;
 A venture can consider E-commerce models such as B2B or Business to Business
website that sells products to other business entities; B2C or Business to Consumer
website that sells directly to the consumer.
WAYS IN WHICH ICT CAN BE USED TO IMPROVE EFFICIENCY OF BUSINESS OPERATIONS
(a) Ways in which technology can improve business
It is important for businesses to keep up with the changing pace of the technological
environment.
Business efficiency can be improved by ICT in the following ways e.g.:
 more efficient business operations e.g. document templates; digital filing system;
 instant communication through the use of emails, video conferencing;
 access to information via websites; request information at any time; share information;
 use software programmes to collect and interpret data;
 customer relationship management software records customer information e.g. buying
history, follow up on complaints;
 Application of Automation and Mechanization
Automation is described as the employment of machines in a continuous process of
operation. It is characterized by minimal use of labour in the process.
Mechanization is the substituting of human and animal labour with machines such as
robotics and computers to produce more efficiently.
Capital intensive production involves the increase use of more equipment and machinery
than labour.
Labour intensive production is dependent on the extensive use of manual labour.
ADVANTAGES OF AUTOMATION AND
MECHANIZATION
 Increase productive capacity in shorter
cycle time
 Reduce labour cost
 Reduction in defects on production line
 Minimal need for supervisors
 Increase access to tertiary services
DISADVANTAGES OF AUTOMATION AND
MECHANIZATION
 Increased unemployment
 High initial investment costs
 High maintenance costs over time
 Prone to technical disruptions
 Can only be employed for large output and
standardized production
 Machines can become obsolete and
subject to depreciation
ACTIVITY
Use the alphabet to find out the Ways in which technology can improve business.

____ ____ ____ ____ ____
19 16 5
5 4

____ ____ ____ ____ ____ ____
5 1 19 9 5 18

____ ____ ____ _____ ____ ____ ____ ____
9 13 16 18 15 22 5 4
___ ___ ___ ___ ___ ___ ___
1 14 4 20 9 13 5
____ ____ ____ ____ ____ ____ ____
19 20 15 18 1 7 5
____ ____ _____ ____ ____ ____ ____
19 8
1 18 9 14 7
____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____
9 14 6 15 18 13 1 20 9 15 14

___ ____ ____ ____ ____ ____ ____ ____ ____ ____
1 21 20 15 13 1 20 9 15 14
____ ____
15 6
Week:
Lesson:
Topic:
Eleven
Two
TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT
WAYS IN WHICH ICT CAN BE USED TO IMPROVE EFFICIENCY OF BUSINESS OPERATIONS
Benefits of technology to business
(i) reach more potential customers, develop a business relationship with potential
customers
(ii) Streamline operations, reduce costs, improve efficiency, maximise profit, minimize
waste, devote talent to core business instead of overhead
(iii) Provide better service to customers
(iv) Support better relationships with key partners
(v) Allow customers to better guide the business
Consequences of Unethical use of ICT
 Privacy and Data Security issues: Privacy or the 'right of a person not to reveal
information about himself or herself' is of prime concern when using ICT applications. In
the business environment privacy can be compromised when systems are attacked
(unauthorized access/hacking). This has become an issue with the increase use of
mobile banking, e-banking and e-commerce e.g. identity theft
Businesses can seek to upgrade security via password security and personal
identification numbers.
 Intellectual Property rights are considered infringed when intellectual work e.g.
writings, theories, studies, songs, music etc. protected by law is used without permission
from the owner. This involves piracy of material protected by intellectual property
rights that is, the unauthorized use, copying, distribution or downloading of software,
games, information. The person or business can lose income and control over material.
 When employees access social media during the course of working hours, unless for
business use, this can prove to be a distraction from doing one's job.
 Using social media to engage in cyber bullying or intimidating other persons or
manipulating media to damage the image of competitor's product.
ACTIVITY
Unscramble the words to find out about the Consequences of unethical use of ICT
RESUYCIT
________________________________________________
CYIVRAP
________________________________________________
LEUCILETLTNA ROPYTEPR RMEGTFNININE
________________________________________________
CPAMIT ON MNSAUH
________________________________________________
TRCODATINSI
________________________________________________
Week:
Lesson:
Topic:
Eleven
Three
TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT
The factors that determine a country’s standard of living and its quality of life
Indicators of a country’s standard of living (SOL)
Standard of living indicators are quantifiable or measurable factors. Indicators of the
standard of living of a country may include, for example:
Factors indicating Standard of Living
- GDP or National income per capita
- Average personal disposable income (the amount of money individuals have to spend
after deductions are taken out).
- Life expectancy
- Quality and quantity of available health care
- Diet of citizens
- Degree of leisure time or recreation enjoyed by citizens
- Income levels
- Employment rate
- Poverty rate
- Level of consumption of goods and services;
-Average disposable income of the population;
- Level of national ownership of capital equipment;
- Access to modern technology
-Level of investment in research and technology
Quality of Life
Quality of life measures the basic freedoms and rights that citizens enjoy e.g. freedom to
worship; freedom of movement; freedom of association; crime rate. It is a qualitative
measure of the life of citizens.
Quality of life indicators include:
 Freedom form bondage or oppression
 Equal opportunities
 Freedom from discrimination from various characteristics such as gender and race
 Freedom of movement
 Freedom to worship
 Freedom of speech
 Freedom to exercise franchise or the right to vote
 The freedom to enjoy recreation
 The right to be educated
 Level of safety experienced by citizens extent of security enjoyed (level of crime)
 Availability of health, educational and recreational facilities
 Diet and nutrition
 Life expectancy
 Rate of infant mortality
 Access to public utilities, such as, electricity, potable water and technology.
ACTIVITY
1. Define the term Standard of Living. (2 marks)
2. State THREE indicators of Standard of Living. (3 marks)
3. Define the term Quality of Life. (2 marks)
4. State THREE indicators of Quality of Life. (3 marks)
Week:
Lesson:
Topic:
Twelve
One
TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT
National income and its variations: gross national product, gross domestic
product, per capita income
Gross Domestic Product (GDP) + Net Property Incomes from Abroad (NPI)
= Gross National Product (GNP)-Depreciation = National Income
Definitions of Terms
National Income: the money value of all goods and services produced in the country and
from interest abroad after deducting depreciation (GNP-Depreciation=National Income).
Gross National Product: This is the money value of goods and services, produced in a
country and includes money coming in from abroad less money leaving the country, in a
year (GDP+NPI=GNP).
Gross Domestic Product: The total money value of the goods and services produced in a
country in a year.
Net Property Incomes from Abroad: This is the difference between money coming into the
country e.g. remittance of incomes, interest form investment abroad and money leaving the
country. The figure can be positive or negative.
Depreciation: This is the reduction in the value of an asset over time e.g. wear and tear of
machinery. Also called capital consumption.
Ways of calculating National Income
1. The Income Method: this involves taking into account all the incomes earned by
individuals and firms within a country e.g. Income from employment+ Profits +Rents +Net
Property Incomes from Abroad= Gross National Product -Depreciation= National Income
2. The Output Method or Product Method: this involves taking into account all the output in
the country in a year e.g. Total Domestic Product (GDP) + Net Property Incomes from
Abroad = Gross National Product – Depreciation = National Income
3. The Expenditure Method: this method involves totaling the amount spent on investment
and consumer goods and services in the country in a year e.g. Investment Expenditure at
Market Prices (Business) + Consumption Expenditure at Market Prices (Consumers)
+ Subsidies - Indirect Taxes + Net Property Incomes from Abroad = Gross National
Product – Depreciation = National Income
Standard of Living
Standard of Living describes the economic well-being of a country’s citizens. It reflects the
amount and quality of goods and services consumed by the population. It therefore reflects
the material comforts at the disposal of and enjoyed by citizens.
A country may record a high GDP per capita figure, which indicates that on average citizens
are making a certain income. This may indicate a high standard of living. However, not all
citizens may have access to this money. The figure does not show how income is
distributed in the economy.
Measuring standard of living:
GDP per capita =
GDP
Population
National income per capita = National Income
Population
Per capita means per head of the population. It is the average income per head of the
Population.
Problems in Computing National Income Statistics
 Double Counting e.g. including transfer payments that is, counting income twice.
 Some activities are not accounted for e.g. the payments made to babysitters, the work of
housewives, and the income from the illicit drug trade.




Uses of National Income Statistics
To give an indication of the standard of living of a country
To compare the standards of living of different countries
To determine the rate at which national income is growing
To determine which sectors of the economy needs improving
Economic Growth and Economic Development
 Economic Growth: This describes the expansion of the country’s economy that is, an
increase in the real level of national output or Gross National Product. This is after the
effects if inflation has been taken into account. Economic Growth is a quantitative
increase in production. However, this concept does not take into account the informal
economy or environmental degradation.
 Negative Economic Growth: This situation exists when there is a fall in productive
capacity from one period to another. It may also describe a failure of the economy to
expand production.
 Economic Development: This describes qualitative changes in the economy. It refers to
increases or improvement in living standards, human capital development and the
enjoyment of freedoms. It incorporates the development of telecommunication facilities
and greater access to governmental services. Moreover, it is concerned with
environmental sustainability. Economic development can be measured by the Human
Development Index; Infant mortality rate; the Human Poverty Index and literacy rates.
Economic Development can lead to economic growth.
 Human Resource Development (HRD): HRD describes the training and developmental
activities that create avenues for learning in the workforce. This learning can lead to
human capital becoming the competitive advantage of businesses. This would include
on the job training; off the job training; coaching; mentoring; e-learning; greater access
to facilities for learning; governmental support; national skills development. The
development of the individual learning capacity can lead to the person becoming more
effective and efficient. This can lead to increased output, thereby increasing economic
growth.
 Real GDP or Real National Income: ‘Real’ indicates that the effects of inflation have been
taken into account.
 The Human Development Index (HDI): A measure of social and economic development
developed by the United Nations. The HDI is a broader measure than the National
Income per capita measure. It encompasses:
- Health of people that is life expectancy at birth
- Education that is enrolment in primary, secondary and tertiary education
- Standard of Living that is national income per capita
ACTIVITY
Calculate the National Income for an imaginary country (Expenditure Method)
National Income of Caribland
$ billions
Consumer expenditure
400
Public sector expenditure
120
Capital expenditure (gross)
100
Value of increase in stocks
20
Exports of goods and services
250
Total final expenditure
Less Imports
280
Gross Domestic Product (at market prices)
Less Indirect taxes
100
Plus Subsidies
40
Gross Domestic Product (at factor cost)
Net property income from abroad
85
Less Capital consumption (depreciation)
115
(Net) National Income
Week:
Lesson:
Topic:
Twelve
Two
TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT
The role of education in economic growth and development
 Education increases productivity: Increases in the abilities and learning of the labour
force can increase labour productivity and foster higher output
 Education enhances creativity and innovation: By applying new ideas and capitalizing on
opportunities where one can implement knowledge on technologies, products and
processes economic growth or productive output can increase.
 Education promotes entrepreneurship by providing tools (knowledge of the
environment, markets, competitors; know-how in producing goods and services) to
develop ideas.
 Education fosters technological advancement which facilitates new and improved
processes that leads to increased productivity
 Education facilitates economic progress: Education can promote the transmission of
knowledge and facilitate the implementation of technology which can promote economic
growth
 Education facilitates social progress: Education helps to foster an understanding of the
environment. It improves the quality of life of individuals and leads to increasing social
benefits to people and society
The reasons for international trade
International Trade is trade or the exchange of goods and services between and among
nations
Reasons why countries trade with each other
(a) One country may not be endowed with certain assets or have the natural resources
such as land, labour, capital or enterprise to produce the goods that they need
(b) A country may not be able to produce the goods and services they need in the
quantities or of the quality that they require;
(c) A country may not have the climate to grow certain foods and have to depend on trade
to get it for example wheat in United States; and,
(d) International trade allows for foreign direct investment allowing individuals in one
country to invest money in foreign companies and other assets.
Reasons for International Trade include:
- Some countries because of their climates are better able to produce certain products and
then trade with the rest of the world.
- Some countries achieve a competitive advantage because of their access to natural
resources e.g. oil, natural gas, asphalt, gold. These countries can extract the raw materials
and sell to other countries.
- Some countries can specialize in the production of certain goods and services and then
engage in trade
- Technological expertise can lead to increases in production
- The development of transportation and communication networks has led to increase
trade among countries.
 Absolute advantage: This situation exists when a country is more efficient in the
production of a good than another country.
 Comparative Cost Advantage: This is based on the assumption that a country will engage
in the production of a good in which it has
ADVANTAGES OF INTERNATIONAL TRADE
 Increase utilization of productive capacity
to produce surplus for trade
 Increase employment to produce goods
and services for trade
 Improvement in the standard of living as a
result of greater access to goods and
services
 Improved quality of goods and services as
a result of international competition
DISADVANTAGES OF INTERNATIONAL TRADE
 Local industries may have to lobby the
government for protectionist policies to
prevent foreign competition
 Dumping of goods in less developed
countries at lower prices than goods
available on the market, especially where
the goods are no longer needed in the
more developed country
 Underdevelopment of local industries
ACTIVITY
Answer the following questions
1. Define the terms GDP, GNP and National Income.
2. Define the term Standard of Living.
3. State THREE indicators of Standard of Living.
4. Define the term Quality of Life.
5. State THREE indicators of Quality of Life.
6. Describe the role of education in economic growth and development.
7. Define the term international trade.
8. Outline THREE reasons for international trade.
Week:
Lesson:
Topic:
Twelve
Three
TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT
The functions of major economic institutions and systems
ECONOMIC
INSTITUTIONS AND
SYSTEMS
Caribbean
Community
(CARICOM)
Caribbean Single
Market and
Economy
(CSME)
Caribbean
Development Bank
(CDB)
World Bank (IBRD)
Inter-American
Development Bank
(IADB)
Organization of
Eastern Caribbean
States (OECS)
Organization of
American States
(OAS)
Economic
Commission for
Latin American
Countries (ECLAC)
Association of
Caribbean States
(ACS)
FUNCTIONS
 Promote integration among member nations e.g. The
 Caribbean Examination Council (CXC)
to foster regional trade and the removal of trade barriers
 To promote economic development in the region
 To encourage co-operation on trade issues with the rest of the
world e.g. the Common External Tariff which is levied at the
same rate by all members on imported goods
 To promote the free movement of people, goods and services among
member countries
 To foster a single market without trade barriers
 To facilitate the free movement of capital
 A financial institution that finances social and economic programmes
in Caribbean countries
 To offer assistance in the event of natural disasters
 Consists of two institutions: The International Bank for Reconstruction
and Development (IBRD) and the International Development
Association (IDA).
 The main function of the IBRD is to provide low interest loans to
developing countries and the poorest nations. These loans are to be
used for areas such as education, health, infrastructural development,
and agriculture and environmental management. The aim is to reduce
global poverty.
 Foster the economic and social development of nations in the
Caribbean and Latin America
 Provide loans to borrowing members at competitive interest rates.
 Encourage co-operation among member countries
 Promotes economic integration
 Promote and maintain peace among member countries through the
defense of human rights, encouraging free trade, prevention of trade in
illicit drugs, poverty reduction and social and economic development.
 Coordinating the development of members through collaboration with
member states and various institutions
 Offers technical assistance and training to members
 Provides a forum for discussion on economic and social issues
 Promote communication among Caribbean states
 Promote trade through co-operation and reduction in crimes such as
drug trafficking
 Promotes environmentally sustainable tourism
 Disaster response for nations
ECONOMIC
INSTITUTIONS AND
SYSTEMS
European Union
(EU)
World Trade
Organization (WTO)
FUNCTIONS
 An economic and political union
 A single economy
 Promotes the free movement of goods, services, capital and people
among member states
 Promotion of trade liberalization
 Provides a system of rules for negotiation and settling trade disputes
 Concerned with fair trade where no one country benefits from trade at
the expense of others
 Concerned with trade in goods, services, intellectual property, the
environment, regional trade agreements and technology for example.
 Promote trade initiatives to allow Caribbean economies with
preferential and duty free access to United States market.
 Determine the quantity of oil to be supplied on the world market
 Influence the price of oil on the world market as these countries act as
a cartel
Caribbean Basin
Initiative (CBI)
Organization of
Petroleum
Exporting Countries
(OPEC)
Eastern Caribbean
 Promote free trade among members in the Eastern Caribbean
Common Market
(ECCM)
North American
 A trade bloc among Mexico, Canada and the United States of America.
Free Trade
 Removal of trade barriers among these members
Agreement (NAFTA)
Caribbean Canadian  Initiative of the Canadian government to provide countries in the
Agreement
Commonwealth Caribbean with preferential access to Canadian
(CARIBCAN)
markets
Free Trade Area of
 Proposal to remove trade barriers among countries in the Americas to
the Americas
create a free trade area
(FTAA)
International
 Providing advice to member countries on economic, monetary and
Monetary Fund
technical matters
(IMF)
 Promoting adjustment of exchange rates
 Providing short term credit facilities to members for meeting
economic difficulties due to adverse balance of payments
ACTIVITY
State the functions for the following:
(a) Caribbean Community (CARICOM)
(b) Caribbean Single Market and Economy (CSME)
(c) Caribbean Development Bank (CDB)
(d) International Bank for Reconstruction and Development (IBRD)
(e) World Bank
(f) International Monetary Fund (IMF)
(g) World Trade Organisation (WTO)
(h) Organisation of American States (OAS).
Week:
Lesson:
Topic:
Thirteen
One
TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT
How economic institutions or trade agreements impact the Caribbean
1. Caribbean Community Common Market (CARICOM)
A common market is an association of countries that have joined together to bring about
the harmonious development, continuous economic expansion and increased stability of
the countries involved. CARICOM was formed in July 1973 when Barbados, Trinidad and
Tobago, Jamaica and Guyana signed the treaty of Chaguaramas. Since then the following
Caribbean countries have joined: Antigua and Barbuda, Belize, Dominica, Barbados,
Suriname, Grenada, Montserrat, St. Kitts & Nevis, St. Lucia, St. Vincent and the Grenadines
and Bahamas and Haiti.
Associate members of CARICOM are Anguilla, Bermuda, British Virgin Island and Turk and
Caicos.
Objectives of CARICOM
-Improved standard of living.
-Expansion of trade.
-Joint negotiations internationally.
-Co-ordination on foreign and economic policies.
-Full employment of labour and other factors of production.
-Economic integration.
2. Caribbean Single Market and Economy (CSME)
The CSME was established in 2006. It seeks to transform the common market into a single
market and economy. It was established to deepen the integration among Caribbean states
and to respond effectively to the challenges and opportunities globally.
Objectives of CSME:
-Deepening economic integration.
-Free trade of services.
-Free movement of capital, labour and the freedom to establish business enterprises
anywhere within CARICOM states.
-Widening of membership.
-A common currency/single currency.
3. Caribbean Development Bank
The CDB is a regional financial institution. It finances regional projects that contribute to
the economic growth and development of the region. Sectors financed by the CDB includes:
infrastructure, tourism, mining and refining, agriculture, agriculture, manufacturing, heath
and education.
The objectives of the Caribbean Development Bank are:
-Supporting regional and local financial institutions
-Assisting borrowing member countries to optimize the use of their resources
-To mobilize financial resources regionally and internationally
-To support capital markets
-Stimulating growth
-Supporting business activities
4. The World Bank
The aim of the World Bank is to reduce poverty worldwide. It therefore assists developing
countries by providing loans for projects such as housing, infrastructure and industry. The
World Bank provides long term loans for developmental purposes. It is used
interchangeably with the International Bank for Reconstruction and Development (IBRD).
However, the IBRD is only one of the five agencies of the World Bank.
The five agencies of the World Bank are:
-International Bank for Reconstruction and Development (IBRD)
-International Development Association (IDA)
-International Finance Corporation
-Multilateral Investment Guarantee Agency (MIGA)
-International Centre for Settlement of Investment Disputes (ICSID)
5. Inter-American Development Bank (IADB)
The IADB was established in 1959 for the purpose of assisting Latin American and
Caribbean countries. It offers loans, lines of credit and technical assistance to member
governments for social and economic development. Areas of assistance include:
agriculture, industry, mining health, tourism and infrastructure.
6. The Organization of Eastern Caribbean States (OECS)
OECS was formed in 1981 for the purpose of promoting cooperation among member states.
These countries include Montserrat, Anguilla, Antigua, Dominica, Grenada, St. Kitts and
Nevis, St. Lucia and St. Vincent, Anguilla and the British Virgin Islands are associate
members.
7. Eastern Caribbean Common Market (ECCM)
The objectives: Creating a single financial and economic space Organization of American
States (OAS). The OAS was established for the main purpose of increasing interdependence
and solidarity, and promoting regional co-operation and the peaceful settlement of
disputes among the member countries. These countries include: North and South America,
Canada and the Caribbean.
8. Economic Commission for Latin American Countries (ECLAC)
The ELAC was established in 1948 for the main purpose of integrating Latin American
countries for their development. Caribbean countries were later included in the ELAC.
Their objectives include:
-Guaranteeing equal rights and opportunities
-Economic integration of Latin American and Caribbean countries.
-Reinforcing economic ties among countries of Latin America and other nations of the
world
-Economic development of Latin America
9. Association of Caribbean States (ACS)
The ACS was established in 1994 to promote cooperation among Caribbean countries. Its
objectives include:
-The strengthening of regional cooperation and integration
-Preserving the environmental integrity of the Caribbean Sea
-Promoting the sustainable development of the Caribbean
10. The European Union (EU)
The European Union is an economic and political partnership between its 27 member
countries. It is a single market economy with the euro as its common currency.
These countries include: Spain, Luxemburg, Britain, France Portugal, Italy, Greece, Belgium,
Germany, Denmark, Finland, Sweden and Switzerland.
Their objectives include:
-Free movement of people services and capital
-Removal of customs duties and quotas among members
-Establishment of common policies for agriculture and transport
-Establishment of a common tariff and common policies towards other countries
-Economic cooperation
-Promoting equal rights
-Fighting climate change
11. World Trade Organization (WTO)
The WTO is an international organization that monitors and regulates trade among the
nations of the world based on trade agreements by member states. The WTO replaces the
General Agreement of Tariffs and Trade (GATT). Their main aim is to encourage the free
flow of trade among nations. Their objectives include:
-discouraging unfair trading practices e.g. export subsidies and selling products below cost
to gain market share
-settling disputes among members
-environmental protection
-monitoring and reviewing the trade policies
-reducing trade
12. Caribbean Basin Initiative (CBI)
CBI allows certain Caribbean and Central American products duty free entry into the
United States. Products exported include chemicals, manufactured goods, fresh fruits and
vegetables.
13. Oil Producing Exporting Countries (OPEC)
OPEC is an organization of 12 oil –exporting countries. This organization was established in
1960 for the purpose of unifying the petroleum policies of member countries.
Objectives include:
-Regular supply of petroleum products on the world market
-A steady income for producers
In 1976 OPEC established a special fund to provide financial assistance to developing
countries. OPEC countries: Kuwait, Venezuela, Iran, Iraq, Angola, Saudi Arabia, Algeria,
Ecuador, Libya, Nigeria, Qatar, United Arab Emirates.
14. CARIBCAN
The agreement allows preferential duty free access to the Canadian market for almost all
imports from Commonwealth Caribbean Countries. Its main objectives are:
-to enhance the Commonwealth Caribbean’s existing trade
-improve economic development prospects of the region
-promote new investment opportunities
-encourage economic integration and cooperation within the region
-to encourage long term investments through development projects.
15. North American Free Trade Agreements NAFTA
This agreement allows duty free entry of goods among Canada, United States and Mexico.
16. Free Trade Area of the Americas (FTAA)
The FTAA is an expansion of NAFTA. It is an organization of 34 countries of the Americas
including North and South America, Canada and the Caribbean except for Cuba. It s
objectives include economic prosperity, free market of goods and services and democracy.
ACTIVITY
Complete the following table
ABBREVIATION
WHO
CARICOM
CSME
CDB
IBRD
IMF
WTO
OAS
MEANING
Week:
Lesson:
Topic:
Thirteen
Two
TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT
ECONOMIC AND SOCIAL PROBLEMS IN THE CARIBBEAN
Unemployment
Globalization has contributed significantly to unemployment in the Caribbean. With the
removal trade barriers, some industries have not been able to compete globally. The lack
adequate skills that are required for the new industrial paradigm for example, information
technology skills have also contributed to the problem of unemployment.
A high level of unemployment among the young people of the Caribbean may results in
various social problems, as survival may depend on illegal activities.
Reasons for unemployment
-firms e.g. multinationals closing down
-lack of investment to create new businesses
-lack of skills training
Population density
Population density Refers to the average number of people living on every square kilo
meter in a country. The formula used for calculating population density is:
Density of population = Total population Area (sq. km.)
Very high population densities can indicate overpopulation. This occurs when the facilities
in a location, are not able to serve the number of persons in that location. This will cause
heavy competition for jobs, schools, health facilities etc.
Migration
Caribbean people migrate to first world countries in search of opportunities such as
employment and education. When skilled and professional workers migrate, Caribbean
countries may experience shortages in critical areas such as health care. Loss of skilled
workers from industry will also retard growth and development. Social problems may arise
when children are left in the care of grandparents and other relatives who have challenges
to discipline them.
Debt burden
Many Caribbean countries have high debt- to-GDP ratios. This ratio is the amount of
national debt of a country as a percentage of its Gross Domestic Product. High debt-to-GDP
can stifle an economy as a large portion of its GDP is consumed in debt payment and very
little is left for investment in the economy. A very low debt- to- GDP ratio is desirable for
economic growth and development.
Sourcing Capital and raw materials
While the Caribbean might be rich in certain natural resources such as bauxite, oil and gold
the region lacks other very important resources such as capital and entrepreneurial skills.
Capital is important as it increases production through the use of machinery, equipment
and money invested. The spirit of entrepreneurship is necessary for the creation of new
business ideas and entrepreneurship skills are important for the successful running of the
businesses.
Economic dualism in the region
Economic dualism occurs in countries where there exist two opposite economic sectors.
One sector is characterized by development, capital intensive industries, large scale
farming and technological advancement, and the other sector is characterized by
subsistence farming, labour intensive industries, handicraft industries and simple trading
means of survival.
Exercise
Define the following terms
1. Unemployment
2. Population Density
3. Migration
4. Debt Burden
5. Capital
6. Raw Materials
7. Economic Dualism ‘
Week:
Lesson:
Topic:
Thirteen
Three
TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT
Possible Solutions to Economic and Social Problems
Access to Foreign Direct Investment (FDI)
Foreign Direct Investments refers to capital investments into factories, machinery and
equipment by a foreign company or an individual. FDI is important for the development of
Caribbean economies as they are challenged by their high debt- to-GDP ratios and
increased global competition for export earnings. Attracting foreign direct investment is a
way for Caribbean countries to obtain capital for growth and development.
Benefits of FDI include:
-Employment for nationals
-Increased access to global markets
-Introduction of advanced technologies and processes
-Improvement in human resource skills
Development of human resource
Investment in human resources is imperative for Caribbean economies to compete globally.
Improving the value of human resources through education and training will increase the
productive capacity of Caribbean countries.
Development of manufacturing sector
The manufacturing sector creates value added products which increases export earnings
for Caribbean economies. Developing the manufacturing sector therefore will impact on the
potential economic growth of a country.
Methods of developing the manufacturing sector:
-Encouraging Foreign Direct Investment
-Retooling
-Research and development
-Technological advancement
PROBLEM
1. Industrialization: this refers to business
activities such as production and
manufacturing on a large scale.
Major heavy industrial activities in the
Caribbean are in areas such as oil drilling;
natural gas extraction and bauxite.
Problems involve: the disposal of industrial
waste; reliance on primary production;
capital intensive nature of activities; high
energy costs; opportunity cost of
investment in these areas.
2. Unemployment: Types of unemployment
include:
a) Seasonal Unemployment:
Persons are employed only when the
season for certain types of economic
POSSIBLE SOLUTION
 Government can establish legislation on
waste disposal and the regulation of
negative externalities or economic bad.
 Training and development of locals in
modern technological methods
 Encourage investment in secondary and
tertiary production
 Use profits to create businesses to foster
employment
Government can:
 Provide incentive to businesses to hire
more persons
 Invest in small business development
 Enhance programmes such as on-the –
job training
activities comes around e.g. During the
Carnival season.
b) Casual Unemployment: Refers to persons
who work on an on–and- off basis.
c) Cyclical Unemployment: Unemployment
that occurs as a result of the cyclical nature
of the economy. People are laid off during a
depression or recessionary period.
Unemployment is reduced during periods
of boom.
d) Technological Unemployment:
Unemployment that occurs as a result of
the adoption or implementation of
technology or more capital intensive
means of production. Increase automation
and mechanization results in less need for
human capital.
e) Structural Unemployment:
Unemployment that occurs as a result of
long term changes in the economy and
results in decrease demand for a good
or service e.g. movement away from
agriculture based production to tertiary
production.
f) Frictional Unemployment:
Unemployment that occurs as a result of
the period of time between one losing or
leaving a job and subsequently finding one.
g) Residual Unemployment: Unemployment
that occurs as a result of persons not
having the capacity to undertake or engage
in employment.
 Invest in vocational programmes to
enhance skills development.
 Increase government expenditure in
sector development e.g. farming, cottage
industries; agriculture; horticulture;
aquaculture
 Increase access to foreign employment
through bilateral agreements e.g.
seasonal employment in the agricultural
sector in developed countries.
 Ensure that firms continue to employ a
percentage of human capital as they
engage in mechanization and automation
e.g. through business levy.
 Creation of a data base of persons
seeking employment
 Proper human resource or workforce
planning to ensure that there are
adequate skills development
programmes to meet the demand for
certain skills in the country
 Encourage foreign direct investment into
the country to develop sectors and
business. This would encourage
technology transfer, employment,
infrastructural development, transfer of
learning.
Overpopulation: A situation where there is
an excess of persons living in a defined
area e.g. a square kilometer. Problems such
as poverty, social issues e.g. crime and
increases in communicable diseases; lack
of proper housing and jobs can result from
overpopulation.
Rural-urban drift: The movement of
persons from rural or less developed
country areas to urban centers or towns.
Government can:
 Develop policies for family planning
 Develop zoning policies regarding the
location of industry spread
 Put in place proper roads and utilities
such as water and electricity
 Provide incentives programmes for the
location of business in rural areas
 Support self-help programmes to
develop skills
Migration: Movement of persons from one
country to another or movement of
persons from one area within a country’s
borders to another area within the
country’s borders.
Government can:
 Encourage Foreign Direct Investment
into the country to develop sectors to
utilize skills
Problems include a loss of skilled and
competent labour supply or a ‘brain drain’.
 Encourage more local business
investment to utilize skills by providing
subsidies and tax incentives to business.
 Implementing stricter immigration
rules e.g. make it compulsory for
students to return home
 Improve living standards by fostering
economic growth and development.
 Train local professionals to fill positions
instead of recruiting foreigners.
Urbanization: A situation where persons
move from rural areas to settle in cities and
towns. Problems occur in that: The rural
urban drift results in fewer persons being
left in rural communities. This reduces the
labour supply in those communities. Urban
communities will tend to become
overcrowded.
Inadequate Sources of Capital: The
Caribbean region is characterized as
having an adequate supply of labour but
inadequate capital (plant, machinery,
equipment, technology, infrastructure and
money) to put the labour to work.
Economic Dualism: This situation occurs
because the economy is based on two
separate sections/sectors. One sector is
characterized as being technologically
developed and the other underdeveloped
due to a lack of modern technological
inputs e.g. agricultural sector. The focus
tends to be on the more advanced sector.
Government can:
 Improve zoning regulations to spread
businesses to less developed areas
Debt Burden: This arises from a country’s
borrowing to finance deficits. Eventually,
the country has to pay the loan with
interest and a substantial portion of
revenue generated has to go to towards
financing this loan. This is a debt burden.
The problem is the opportunity cost of
paying the loan, in terms of using the
money for social and economic
programmes in the country.
Government can:
 Encourage Foreign Direct Investment
 Borrow money from other countries or
lending agencies
 Reduce interest rates to stimulate
borrowing for investment
Government can:
 Develop policies to spend the gains
from the profitable sector in
developing the underdeveloped sector
e.g. increase government spending in
agriculture sector programmes and
training and development
 Encourage small business
development by providing funding at
low interest rates to entrepreneurs in
underdeveloped areas
Government can:
 Issue bonds to the public to raise capital
 Lower interest rates to stimulate
investment
 Raise taxes to generate revenue
 Increase trade through trade
agreements
 Get bailouts from foreign countries
 Reduce government expenditure e.g.
cut social programmes
ACTIVITY
Think of one more possible solution for the problems above.
Week:
Lesson:
Topic:
Fourteen
One
TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT
The role, benefits and impact of foreign investment
According to investopedia.com, foreign investment, 'involves capital flows from one
country to another, granting extensive ownership stakes in domestic companies and
assets.' Foreign investments can be classified as:
-Foreign direct Investment (FDI) which are physical investments e.g. opening a
manufacturing plant, purchasing buildings, machinery and equipment in a host/foreign
country;
-Foreign indirect investment is where companies, corporations or investors by shares in
foreign companies that are traded on the stock exchange; also called foreign portfolio
investment (FPI)
Foreign Investments are usually made by companies, corporations or individuals looking
to grow, or take advantage of cost savings (cheaper production and labour costs or lower
taxes).
Benefits:
 allows the investor to seek the highest rate of return;
 allows owners of capital to reduce their risk by allowing them to spread their
investment;
 encourages the spread of best practices across borders e.g. accounting standards,
corporate governance;
 according to Feldstein (2000) et al., the host country benefits from foreign direct
investment by
- gaining corporate tax revenues
- accessing training which helps in human capital development in the host country
- allows the transfer of technology in capital inputs to the host
Impact
Positive: developing and underdeveloped nations are impacted as foreign investment is a
way of increasing the capital for investment and economic growth or increases in Gross
Domestic Product. It helps to reduce poverty and increase the standard of living or
economic well-being of some impacted by the investment. It also aids in human capital
development as locals can be trained in managerial competencies and how to use new
technologies.
Negative: Repatriation of profits to home country; worker exploitation by not recognizing
the legitimate trade union; poor working condition for host country workers to minimize
costs; may use transfer pricing to benefit the company thereby affecting the level of taxes to
be paid to the host country;
ACTIVITY
1. Identify THREE economic problems in the Caribbean and suggest appropriate solutions.
2. Explain the role and impact of foreign investment.
Week:
Lesson:
Topic:
Fourteen
Two
TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT
Upon completion of this topic you are required to answer the following questions
1. Caribbean Single Market and Economy (CSME) ‘free movement’ of productive resources
applies to
I. Capital
II. Services
III. Goods
IV. Human resources
a. All of the above b. l and ll
c. l, lll and lV
d. ll, lll and lV
2. A key function of the Caribbean Development Bank (CDB) is
a. To facilitate the development of goods and services
b. To facilitate loans at reduced interest rates for social and infrastructural development
c. To reduce import duties among member countries
d. Fostering free trade and the removal of tariffs
3. Major goals of the Organization of American States (OAS) includes
I. The promotion of human rights
II. The promotion of sustainable development
III. The promotion of free trade
IV. The promotion of free movement of people
a. l and lV
b. l, ll and lV
c. l, ll and lll
d. all of the above
4. The key role of the World Trade Organization (WTO) is
a. To reduce poverty
c. To develop trade restrictions
b. To develop trade in more developed countries
d. To liberalize international trade
5. An economy usually experiences periods of boom and recession. A period of recession
usually results in unemployment. This is specifically
a. Technological unemployment
c. Seasonal unemployment
b. Cyclical unemployment
d. Frictional unemployment
6. Unemployment that stems from a lack of fit between the job market and job seeker or
where there is a deficiency in sourcing workers to fill vacancies is MOST LIKELY
a. Cyclical unemployment
c. Real –wage unemployment
b. Structural unemployment
d. Frictional unemployment
7. A key problem facing Caribbean nations is Population Density. Under -population in an
area affects a country by
a. Placing a strain on the country’s financial resources
b. Reducing the labour supply available
c. Increase social costs in certain areas
d. Causing high interest rates in the country
8. Which statement BEST describes the problem of ‘Debt Burden’ experienced by Caribbean
nations?
a. A situation where government spends more than it receives in revenue
b. Small island developing nations have to borrow extensively from international
institutions to balance their respective budgets
c. Growth is stifled due to low demand for goods and services
d. A situation of high interest rates in the country affecting investment
9. A situation where there are two sectors in an economy at different levels of development
and where one is significantly more technologically advanced is specifically
a. Foreign direct investment
c. Economic dualism
b. Fiscal austerity
d. Human resource development
10. Which of the following statements are effects of Foreign Direct Investment on a host
country?
I. Employment generation
II. Exploitation of resources
III. Introduction of technology
IV. Social investment in sports and charities
a. l and lll
b. l, ll and lll
c. l and lV
d. all of the above
11. Extending opportunities to citizens for training and development in areas needed to
encourage economic growth and development is specifically
a. Human development index
c. Human resource management
b. Human resource development
d. Human ecology
12. Which of the following initiatives can the government implement to develop the
manufacturing sector in respective countries in the Caribbean Region?
I. Provide tax breaks to firms
II. Reduce interest rates to make borrowing for investment more attractive
III. Increase corporation taxes to increase government revenue
IV. Provide subsidies to reduce factor costs
a. l, ll and lll
b. ll, lll and lV
c. l, ll and lV
d. all of the above
13. The total money value of goods and services produced in a country in a year is
specifically
a. Gross national product
c. National income
b. Gross domestic product
d. Property Incomes
14. An organization that seeks to make the most efficient and best use of labour and
technology to improve production for example, using just –in –time inventory systems;
reducing the number of defects; or reducing costs is engaged in
a. Computer aided production b. Division of labour c. Specialization d. Lean production
15. Using computer technology to design products or building prototypes using software is
appropriately termed
a. Computer- aided manufacturing
c. Computer –aided instruction
b. Computer-aided design
d. Software developers
16. In order to increase efficiency and speed of production, a soft drink firm replaced its
human labour with machines. This is an example of
a. Computer aided manufacturing
b. Computerized production line
c. Mechanization
d. Technology
Week:
Lesson:
Topic:
Fourteen
Three
CXC PAST PAPER
Here is a sample of CXC questions. Have a try!
The business appears to be doing well but it needs additional funding. The country is facing
a recession and most of Ford Poplen’s clients are operators of flower and gift shops who
require 30 days credit. Mr Poplen is badly in need of a loan to cover the purchase of raw
materials to give him some ease while he waits on his debtors. He wants to attract
customers who can pay immediately. If his business does well, he plans to employ more
persons and may even venture into the export market. However, he is now realizing that
loans from the credit union and his small savings are not enough to expand the business.
1. Sources of Finance
(a) Identify TWO sources, other than credit union and personal savings, from which Poplen
may obtain capital to expand the business.
(2 marks)
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(b) State TWO reasons why Poplen Iron Works may need additional funding. (2 marks)
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2. Government Regulations
Outline ONE way in which Poplen Iron Works can contribute to the protection of the
environment.
(2 marks)
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3. Identify TWO government regulations to which Poplen Iron Works must adhere.
(2 marks)
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4. Executive Summary
Write a summary which includes information from the three sections of the business plan.
(2 marks)
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Week:
Lesson:
Topic:
Fifteen
One
CXC PAST PAPER
CASE STUDY: SOLSTICE LIMITED
Solstice Ltd. is the name of a supermarket that has just been registered as a limited liability
company. The company, which was formed by four brothers, plans to sell a wide range of
brand and non-brand products.
When the supermarket opens next month, it will be selling goods, which will also carry the
Solstice brand, as well as other brands.
Depending on the success of this initial venture, Solstice Ltd. Is considering opening other
branches of the supermarket in various parts of the country over the next five years.
Solstice Ltd. has entered contracts with suppliers, both local and foreign. It has already
recruited staff for the supermarket. It plans to have a very successful and impressive
opening.
In spite of their expectations of success, the owners are anxious about the state of the
economy at the moment. Also, the decline in tourist arrivals since September 11, 2001, is
also cause for concern as Solstice Ltd. is opening its first supermarket in a large tourist
resort area.
The owners of Solstice Ltd. expect that the social and economic policies of the Government
will generate more employment. They are also optimistic that the incidence of crime will
fall over the next five years.
1. (a) What type of business is Solstice Ltd.?
(1 mark)
(b) List two features of the business organisation to which Solstice Ltd belongs. (2 marks)
2. State four functions which the manager of Solstice Ltd. Is expected to perform. (4 marks)
3. Outline three benefits which Solstice Ltd. will enjoy if it installed a management
information system in the supermarket chain.
(3 marks)
4. (a) What type of industry is Solstice Ltd?
(1 mark)
(b) Name ONE other type of business which belongs to the same type of industry. (1 mark)
Total 12 marks
1. List two factors which could influence Solstice Ltd. in deciding where to set up new
branches of the business.
(2 marks)
2. Discuss three benefits which the company will enjoy by having a chain of supermarkets.
(3 marks)
3. (a) List three methods which the company might use to promote the launch of its FIRST
branch.
(3 marks)
(b) Explain any one of the promotional methods you identified in (a) above.
(1 mark)
4. (a) Discuss one benefit of Solstice Ltd. having its own brand name.
(2 marks)
(b) Outline one difficulty relating to marketing which Solstice Ltd. might face.
(1 mark)
Total 12 marks
Week:
Fifteen
Lesson:
Topic:
Two
TECHNOLOGY AND THE GLOBAL BUSINESS ENVIRONMENT
QUESTION 1
Tasty Fruit Ltd. is a manufacturer of several types of exotic tropical fruit juices. Without
consultation, Mr. Albert, the general manager, took a decision that with immediate effect all
breaks would be reduced from 15 minutes to five minutes. He claimed that the change
became necessary to enable the factory to process a larger amount of fruit juices daily.
(a) What type of leadership style did Mr. Albert appear to be practising? (2 marks)
(b) (i) Name TWO other leadership styles. (2 marks)
(ii) Describe ONE of the leadership styles you named in (b)(i) above. (2 marks)
(c) Identify TWO situations that can result from the action taken by Mr. Albert. (4 marks)
(d) (i) State FIVE qualities of a good manager. (5 marks)
(ii) Give an example to show how lack of one of the qualities you mentioned at (d)(i) above
can affect the operation of the factory. (2 marks)
(e) State THREE responsibilities of management to its employees. (3 marks)
Total 20 marks
DISCUSSION AND GUIDELINE ANSWER
(a) Autocratic/Authoritarian leadership style.
(b) (i) Any TWO of the following can be named: laissez-faire/free reign leadership style,
democratic leadership style, charismatic leadership style.
(ii) Laissez-faire individuals are given the broad outlines, but left on their own to carry out
the major aspects of the decisions.
Democratic those who will be affected by the decision are consulted before the decision is
taken, though the leader still reserves the right to make the final decision.
Charismatic the leader leads by virtue of his/her personality or charisma. Any ONE of the
leadership styles can be described.
(c) The following situations may result: poor management-worker relationship; industrial
action may be taken by workers; resignations by workers; workers may become
discontented; poor self-esteem of workers and reduced productivity of workers. Any TWO
situations may be used.
(d) (i) The qualities of a good manager include: honesty, flexibility, ability to carry out
management functions and responsibilities, show genuine concern for employees and
customers, ability to motivate workers, be adaptable to various situations, able to work on
own initiative, ability to use Management Information Systems, be aggressive, but not too
aggressive, be reliable etc.
(ii) If for example the manager is unable to motivate his employees, they will become lax
and productivity will fall. The business will end up loosing profits.
The negative effects of the lack of any of the qualities you listed in (d)(i) can be explained.
(e) Responsibilities of managers to employees include: to treat them fairly, to give them
safe, clean environment to work in, to allow them the freedom to join trade unions, to
support their desires to be educated and trained, to pay fair wages and salaries, to honour
leave entitlement, to give adequate compensation for injury on the job etc. Any THREE
responsibilities can be stated.
QUESTION 2
The Caribbean island of Green Mountain is having problems with its financial institutions.
Customers of some banks are adding to the problems as many have withdrawn their
deposits from the banks. The government has asked the central bank to do all it can to
prevent a collapse of the commercial banking sector.
(a) State FOUR characteristics of money.
(4 marks)
(b) List TWO functions or services offered by commercial banks.
(2 marks)
(c) For EACH of the functions mentioned above, explain what benefit customers obtain
from using these functions.
(4 marks)
(d) List FOUR features of central banks.
(4 marks)
(e) Select THREE of the features of central banks you mentioned above, and explain how
they help to promote smooth operation of the banking system in your country. (6 marks)
Total marks: 20
DISCUSSION AND GUIDELINE ANSWER
(a) You must be careful not to confuse the characteristics of money with the functions of
money.
The characteristics of money are the features of money. Money should be:
Generally acceptable
Durable or long-lasting
Homogeneous
Divisible into large and small units
Scarce or limited in supply
Portable
Any FOUR characteristics may be stated.
(b) The functions or services offered by commercial banks today are many and varied.
They include the following:
Accept deposits from customers for safekeeping and makes these deposits available to
customers when needed.
Lend money to qualified customers at interest.
Allow standing order payments at customers’ requests.
Make the use of the cheque as a means of payment possible.
Sell travellers’ cheques and buy and sell foreign currency.
Give financial advice to customers.
Help customers to open letters of credit.
Act as agents in collecting dividends on behalf of their customers.
Act as executors and trustees to the written wills of their customers.
Allow customers use of the banks’ safety deposit boxes and night safe facilities etc.
Any TWO functions or services may be listed.
(c) Whichever TWO functions you choose to explain, you must ensure that you properly
explain the benefits of them to the customer. For example:
The function of accepting deposits from customers benefits the customers in that it allows
them to keep their money in a safe place instead of keeping it at home. In addition, for most
deposit accounts, the customer earns interest on his deposits and this encourages him to
save with commercial banks.
Commercial banks lend money to qualified customers by opening loan accounts, by means
of overdrafts and by discounting bills of exchange. Whatever the method, customers are
granted loans and benefit from large sums of money, which they perhaps could not save
for, while they benefit in being able to pay back loans in small installments. Customers
benefit in getting loans for various purposes including education, vacation and for
purchasing cars and other assets.
(d) The features of the central bank includes:
Carrying out government’s monetary policies.
Control and monitoring of commercial banks and other financial institutions.
Issuing notes and coins and recalling them from circulation when necessary.
Being banker to commercial banks and to the government.
Negotiating on behalf of the government in international financial agreements, e.g. with the
IMF, etc.
Any FOUR features may be listed.
(e) Again, in explaining the THREE chosen features, you must be careful to show how they
promote smooth operations of the banking system. For example, in monitoring the
commercial banks and other financial institutions, the central bank ensures that
governments’ monetary policies are carried out and that they are not promoting the
opposite policy which would cause chaos in the financial system and in the country. You
must explain THREE features in like manner.
Week:
Lesson:
Topic:
Fifteen
Three
CXC PAST PAPER
Have a try at a CXC Principles of Business Past Paper One.
GOOD LUCK !!!
THE END