Business studies is the study of how production, distribution and consumption of goods and services is done.
Items provided to customers are known as goods while activities done to customers are known as services. Can you name three examples of goods and three examples of services? I’ll help you with one service: Banking!
Components of Business Studies
Enterpreneurship – Study of activities that are involved in setting up and running a business.
Economics – Study of how people satisfy their wants and needs with the resources that are available to them.
Commerce – The study of trade, or the exchange of goods and services.
Accounting – How financial transactions are recorded. Those transactions include a budget or a profit and loss statement.
Financial Literacy – The ability to know and understand various financial skills.
Importance of Business Studies
- Helps one know how to buy and sell.
- Gives one the necessary knowledge on how to run a business.
- Helps us understand why the government’s role is important in business.
- We understand better the country’s economy.
- Helps us understand the many business opportunities that are available.
MONEY
Money is we use to buy necessities such as food and other goods such as clothes. It is a medium of exchange, meaning anything accepted for the exchange of goods and services.
Money is not only used as a medium of exchange but also is a measure of value. It is also a standard of future payment, meaning money is often used to pay for things at a later date. Money is also a store of value; can be saved now and used to buy things at a later date. Money can be used as a transfer of immovable assets too.
Key Security Features Of The Kenyan Currency
a) The name KENYA on every note.
b) A lion head watermark on each note that only be seen when the note is held up against light.
c) A golden band on every note.
d) The value of the note e.g 50,100,500
Themes and Symbols On The Kenyan Currency
a) A photo of the first president of Kenya, Mzee Jomo Kenyatta.
b) A coat of arms in every currency.
c) A photo of the Kenyatta International Convection Centre (KICC)
d) A photo of one of the Big Five animals. Lion, buffalo, leopard, rhino and elephant.
e) All the notes have a photo of a dove that symbolizes peae.
50 shilling note represents green energy.
100 shilling note represents our country’s agriculture.
200 shilling note represents our social services.
500 shilling note represents our tourism sector.
1000 shilling note represents our country’s governance.
As for the coins…
1 shilling coin has a giraffe.
5 shilling coin has a rhino.
10 shilling coin has a lion.
20 shilling coin has an elephant.
PERSONAL GOALS
Personal goals are short-term or long-term objectives that one intends to achieve.
Why Must We Set Personal Goals?
a) Motivates us to work hard.
b) Helps our mind focus on exactly what we need to do.
c) Boosts our self-confidence when we achieve our goals.
d) We can measure progress as we attain the goals.
When Setting Personal Goals, They Should Be:-
S-M-A-R-T
Specific – Measurable – Achievable – Relevant – Time bound
Here is an example of a SMART goal that Kamau set last week.
“I will improve my math grade from a C to a B by the end of the next school term. I will study for 30 minutes every weekday, and ask my teacher for help whenever I don’t understand a topic.”
Here is another example of a SMART goal that Stacy set today.
“I will improve my 3-kilometer cross-country time from 21 minutes to 18 minutes within 10 weeks by running four times a week; every Monday, Wednesday, Thursday and Saturday at 5 p.m.”
TALENTS AND ABILITIES
A talent is a natural ability to do something well. This is something that you are born with. What talent do you have, dear learner?
An ability is a skill that you develop by learning.
Ways Of Nurturing Talents and Abilities For Business Purposes
We can improve our talents by:-
- Being a part of the music club.
- Being a part of the drama club.
- Being a part of the journalism club.
- Participating in sports and talent shows.
Talents and abilities are meant to make your life better. People earn a living with their talents for example, Eliud Kipchoge and Faith Kipyegon are famous for their running ability. Do you know who is the best chess player in Kenya? Find out and type it in the comments!
We should not use our talents and abilities to:-
- Treat someone better than others. This is called favourism.
- Favour our relatives more than other people. This is called nepotism.
- Mistreat or look down upon those who do not have the same talents as ourselves.
- Discriminate others in business.
BUSINESS AND ENVIRONMENT
Human wants and needs in business studies.
Needs are goods and services that people absolutely require for living. Food, shelter and clothing are examples. However, we can do without wants eg. we can survive without a television or ice-cream.
Scarcity, Choice, Scale of Preference and Opportunity Cost.
Scarcity – Not enough availability of resources to get goods and services that the consumer needs and wants.
Choice – The ability of the consumer to select the goods or services they need or want.
Scale of preference – A consumer’s list of wants and needs that helps the consumer in decision making. It is ranked from the most important to the least.
Opportunity Cost – What you give up when you chose one thing over another. For example, dad gives you Kshs 200. You can either go to a cyber and play a video game or you can buy a chicken pie. If you chose to buy the chicken pie, the opportunity cost is the video game you didn’t play.
Why is a scale of preference important?
a) It helps us buy the most important things we need.
b) Helps us make wise decisions.
c) It helps us make good use of the available resources.
Why Are Business Activities Important In The Community?
- Business activities help people to improve their lives because they earn income when they sell their goods or services.
- People are able to get the goods and services they need that may not be available in their community.
- People are able to create employment for themselves and for others.
- The government is able to get taxes from the business people.
Goods and Services
These are the types of goods available:-
- Economic goods: Goods that have prices.
- Non-economic goods: Goods that are free without prices.
- Producer’s goods: Goods that are used to produce other goods.
- Consumer’s goods: Goods that are ready to be used by consumers.
- Intermediate goods: Goods that have to be processed before they are used.
- Finished goods: Goods that have already been processed and are ready for consumption.
Types of Services:
Direct services: Services given by someone depending on the needs of the individual e.g entertainment.
Commercial services: Services used by businesses to carry out business activities eg insurance or banking.
Social services: Services provided by the government or private organisations eg. medical, sanitation.
Importance of goods and services
Helps business people earn income after they sell the goods or services.
Our wants and needs are satisfied when we get the necessary goods or services.
They are necessary for our survival.
Our economy grows thanks to business activities.
Difference Between Goods and Services
Goods can be touched while services cannot.
Goods can be transfered but services cannot.
Goods are material while services are an activity.
A barber offers you a service but you buy goods in a supermarket. A dentist offers you a service but you buy goods from a hawker. A matatu offers you a service but you buy goods from your local shop.
Economic Resources
These are the building blocks of production. They include land, forests, buildings, minerals, tools, machines, water, labour.
Characteristics of Economic Resources
They are usually scarce.
They have monetary value so they can be bought or sold.
They can be combined.
They can be used in different ways.
There are various types of economic resources:
Human resources: People who have the ability to produce goods or services eg engineers, architects, doctors, carpenters, farmers.
Natural resources: These are found in the environment and are not man-made eg water, land, oil, gold, forests.
Artificial resources: Machines, factories, tools, vehicles.
Sustainable Ways of Using Economic Resources In Kenya
a) By treating industrial waste before it’s release.
b) By recycling plastics.
c) By maintaining our tools and machines well.
d) By planting more trees.
Business Communication
This is when information is passed from one person to another.
Proper Communication Is Important In Businesses For The Following Reasons:-
- Customers are satisfied when proper communication takes place. This can lead to better sales.
- Conflicts can be resolved easily.
- The business’ image can be built well.
- Leads to better customer service.
- The relationship between the business owner and the employees is enhanced.
PRODUCTION
Production is how me make things. It’s the process of making goods and services that the consumer will use. It involves using raw materials and eventually, the finished good reaches the consumer
Can you name five finished goods? I’ll help you with one. A sofa!
Production helps the economy by creating jobs and promoting trade.
Factors of Production – What Are They?
Land – A natural resource provides water, greenery and minerals. We get rent and rates from land.
Capital – Includes equipment, machines and tools used to produce goods and services. The reward is interest.
Labour – The effort used to bring about production of goods and services. The reward of labour is wages and salaries.
Entrepreneurship -Involves developing a good or service for the market, and getting a profit as the reward.
Factors of Production Have Certain Characteristics:
Land –
- can be used for farming or building.
- cannot be moved from one place to another.
- is the main factor of production.
- gives it’s owner or owners rent
Labour –
- cannot be stored.
- is rewarded in form of salaries or wages
- can move from one place to another.
Capital –
- can wear out
- is man-made
- can be improved through technology
- can be moved from one place to another.
What Are Consumers Usually Worried About-
- Ingredients and their safety
- Pricing
- How scarce a product or service is
- Quantity
Marketing Of Goods and Services
A market is place where buyers and sellers meet to exchange goods and services, while marketing is the process of promoting and creating awareness about products and services. A consumer the individual who uses the good or service.
Abdi’s mother received an SMS from Lalaika Supermarket about the price of one kilo of rice being slashed in half. Abdi’s mother rushed to the supermarket and purchased the rice.
Can you spot the marketing? Where was the market and who was the consumer?
Factors To Consider When Selecting a Suitable Market For Goods and Services:
- Competition
- The size of the market
- What the customers want
- Cost of doing business
- Culture
What Customers Want (Preference of the Customer)
Depending on an individual’s income, a customer may prefer a certain good and not another.
Competition
Healthy competition is important in any market. It leads to better goods and services, and even prices that can be better received by the consumer.
Cost of Doing Business
This is what is required for a business to do well, for example, rent, salaries, raw materials.
Culture
This is a people’s way of life. In some cultures, some things may be allowed and in others, not. For example, you should not open a butchery that sells pork outside a mosque. Technically, you can (it’s not illegal) but it would be offensive to the Islam community.
Market Size
The number of customers for a given good or service. A market may be small or large. In a small town, the market size may be small as compared to a city. The product being sold also determines the market.
ICT Platforms Used for Marketing Goods and Services
Smartphones – Tablets and other smart devices can be used to create awareness of a good or service.
Social Media – Businesses promote their products on Facebook, Instagram and Tiktok all the time to reach a wider audience.
Email – Businesses use email to reach their prospective customers.
Website – Numerous businesses have websites so as to reach customers.
GOVERNMENT AND GLOBAL INFLUENCE IN BUSINESS
Why does the government get involved in business?
- To improve the country’s economy.
- To provide services countrywide from the taxes it receives.
- To attract investors : local and international.
- To create employment opportunities for its citizens.
Legal Requirements For Starting A Business In Kenya
- A business or company name.
- Kenya Revenue Authority pin
- Business license
- National Identity Card
Taxation In Kenya
Tax is a necessary payment to the government that businesses are required to do. What is its importance?
Importance of Taxation
When taxes are paid like they should be, the government is able to:-
- plan the various development projects across the country e.g build dams, schools etc.
- give education loans and bursaries to needy students.
- pay salaries to its employees, also known as civil servants.
- support people living with disabilities.
FINANCIAL RECORDS IN BUSINESS
Business transactions are the process of exchanging goods and services between two or more people.
Types of Business Transactions
- Cash transactions
- Credit transactions
Differences Between Cash Transactions and Credit Transactions
In cash transactions, there is no debt involved. Goods are paid for there and then. In credit transactions, debt is involved and goods or services are paid for later. Can you explain what debt is? Write it down in the comments in your own words, as you understand it.
The following documents are used in the process of buying and selling:-
Receipt – A document given to a buyer after the buyer has purchased the good or service.
Invoice – A document given to a buyer asking for payment for services rendered or for goods delivered.
Bill – A statement showing money owed by an individual for goods and services. Have you ever visited a hotel or restaurant with your parents or guardian and seen them receiving a bill for them to pay?
Credit Note – A credit note is given when the seller owes the buyer money—for example, if the buyer returned goods or was overcharged.
Debit Note – A debit note is given when the buyer owes the seller more money—for example, if goods were undercharged or extra items were added.
Payment Voucher – A document that is used for recording payments.
Methods Used in Making Payments For Goods and Services
Mobile money transfer – A type of service in which the buyer sends money to the seller using their mobile phone. Do you know of any mobile money transfer service?
Cash – A type of payment that requires a buyer to use notes or coins to purchase a good or service.
Cheque – A buyer instructs his or her bank to pay a certain amount of money to the seller via a piece of paper called a cheque. Money will be deducted from the buyer’s bank account. Example: Mr. Omondi buys 6 goats from Mrs. Laleta. He gives Mrs. Laleta a cheque of Kshs 36,000 which Mrs. Laleta will present to her bank.
Banker’s cheque – A banker’s cheque is a special cheque that you buy the amount for from the bank, which the bank gives to the person you have specified. It’s as easy as you Individual A going to the bank, gives the bank the amount for the cheque, the bank prints the cheque and then Individual A gives that cheque to Individual B.
Debit Card – When you own a debit card, you can pay for goods and services using the money in your bank account. The advantage to this is one does not have to walk around with cash. What could be a disadvantage? Discuss with your fellow learners.
Credit Card – When you own a credit card, you can buy things now and pay later. You can purchase goods or services on credit.