‘In life we should measure twice and cut once.

’
 This book is a special dedication to my wife Alice and my sons
Preston, Presley, and Prescott

‘In life we should measure twice and cut once.’ 0777329822/ 0717140557
TABLE OF CONTENTS

The business Enterprise ……….………….……..……4

Possible business Enterprise questions…………..…………………….…...8

The Enterprising Environment……………………….9

Possible Enterprising Environment questions…………………….……….15

Setting Up a New Enterprise…………………………16

Possible Setting Up a New Enterprise questions………………….…..….23

Business Planning………………………..………..….24
Possible Business Planning questions ..…….……............................…….30

Enterprise Finance and Securing Investors..………..31

Possible Enterprise Finance and Securing Investors questions…….….38

Markets and Marketing.………….………….…..….39

Possible Markets and Marketing questions…………………….……..…43

Operations Management.…………………..…….....44
Possible Operations Management questions………………………..….50

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 THE BUSINESS ENTERPRISE F1 COMPLETE NOTES
Lesson objectives
➢ Define the term enterprising, enterprise enterpriser
➢ Explain the concept of enterprising
➢ Identify skills and personal attributes needed to run an enterprise
➢ Explain skills and personal attributes needed to run an enterprise
➢ Identify the benefits and demerits of enterprising
➢ Explain the benefits and demerits of enterprising
ENTERPRISING
Def.: is the process of identifying a business idea/ opportunity and nurturing it so as to enjoy
profits as a return on investment
Def.: is the process of identifying a business idea and implementing it to make a profit
ENTERPRISE
Def.: is formed by an individual or individuals for the purpose of undertaking an activity or
activities for a profit.
Def.: is an establishment aiming to produce, manufacture, trade or provide a service for a
profit for its entrepreneur/owner
ENTERPRISER/ ENTREPRENEUR
Def.: these are risk takers that invest money in their business ideas with a motive of making
a profit
Def.: Entrepreneur ls a person who organises, operates and takes the risk for a new business
venture
Drivers towards
✓ Failure to secure employment after college
✓ Loss of jobs through retrenchment
✓ Poor working conditions
✓ Lack of promotional prospects
✓ The need to be one’s boss
✓ Creative and innovative business ideas
Characteristics of a successful entrepreneur.
➢ Creativity/ innovativeness ➢ Team building
➢ Perseverance / ability to bounce ➢ Self confidence
back. ➢ Passion
➢ Dedication/ hardworking ➢ Problem solving
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 ➢ Leadership ➢ Effective communicator
➢ Emotional intelligence ➢ Independent
➢ Risk takers

✓ Hardworking - Long hours and short holidays are typical characteristics of

successful entrepreneurs.
✓ Risk taker - They put money in investments that they are not sure will pay off but are
always optimistic that they will earn returns on investments
✓ Creative - They come up with business unique ideas that will give them returns and
create a unique selling point
✓ Optimistic - Entrepreneurs are hopeful and confident about the future, they see
positivity in every situation hence support their business ideas.
✓ Self-confident - Successful entrepreneurs have a feeling of trusting one's abilities,
qualities, and judgement hence becoming successful.
✓ Innovative - Entrepreneurs will develop the available original ideas to create a unique
selling point so as to lure customers
✓ Independent - Entrepreneurs will often have to work on their own before they can
afford to employ others, they should be able to work without any help
✓ Effective communicator - Talking clearly and confidently to stakeholders about the
new business will raise the profile of the new business
✓ Leadership - Entrepreneurs should possess the ability to inspire people to do work so
as to create a unique selling point.
✓ Team building, - Entrepreneur is a person who plays or works well as a member of a
team and is able to convince people to join his/her initiative and work for a common
goal.
✓ Delegation - Successful Entrepreneurs possess the ability to allocate tasks to
subordinates so as to make the job easier, successful and fun.
✓ Ability to bounce back - Entrepreneurs no matter how many times they might fail,
they will always look forward for a better future
✓ Problem solving, - In spite of the challenges they might face in achieving objectives
they always find solutions to the available problems
✓ Determination to succeed - Entrepreneurs have firmness of purpose, and have a
tendency to move in a fixed direction so as to achieve set objectives.

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 ✓ Perseverance. - Entrepreneurs will continue in a course of action in spite of difficulty
or with little or no indication of success.

Advantages of being an entrepreneur

✓ Entrepreneurs create new businesses. In many cases, entrepreneurial activities
increase competition and, with technological or operational changes, it can increase
productivity as well.
✓ Small businesses broaden the base of participation in business by ordinary people in
Society in the process this creates more jobs.
✓ Small businesses are more likely than large companies to produce specialty goods and
services and custom-demand items.
✓ Innovations improve the quality of life by multiplying consumers' choices. They
enrich people's lives in numerous ways by, making life easier, improving
communications, providing new forms of entertainment and improving health care.
✓ Entrepreneurial behaviour drives innovation and growth for the economy and for
individual companies since it involves a willingness to take advantage of unexploited
opportunities. Thus, entrepreneurs play a crucial role in mobilising resources and
promoting economic growth and socioeconomic development. Tills is particularly
true in the developing world, where successful small businesses are primary engines
of job creation and poverty reduction.
✓ Create your own destiny - Entrepreneurs are their own bosses, this enables creativity
and innovativeness
✓ They make quick decisions, choose whom to do business with and 'what work they
will do and decide what hours to work, as well as what to pay and whether to take
vacations.
✓ Reach your full potential- Entrepreneurs can do what they are passionate about.
✓ Reap impressive profit – Entrepreneurship offers a greater possibility of achieving
significant financial rewards than working for someone else.
✓ Contribute to Society and be recognised for your efforts - most entrepreneurs help the
local economy, but some, through their innovations, contribute to society as a whole.
One example is entrepreneur Strive Masiyiwa, who co-founded Econet and helps the
Zimbabwean community through offering scholarships. Corporate Social
Responsibility [CSR]

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 ✓ Collect prestige - There is prestige in being the person in charge, thereby complying
with Maslow’s hierarchy of needs
✓ Infrastructural development – they can be involved in building of roads, hospitals and
schools assisting the community
✓ Revenue to the government through payment of taxation to the ZIMRA which can be
used in other sectors to enable economic growth e.g. public sector i.e. ZINWA
✓ Raise standards of living – provision of goods and services that will ensure the life of
the local people is made easy and better.
✓ Economic development – this will be achieved through increase in the gross domestic
product [GDP]and gross national product [GNP]
✓ Technology is introduced in to the country which will be used to improve the quality
of goods and services provided to the customers hence satisfaction
✓ Provide competition to large organisations hence quality products are produced and
eliminates consumer exploitation

Disadvantages of being an entrepreneur

✓ The uncertainty of income - There is no guarantee of earning money and the income
can vary daily, monthly and yearly, unlike a salary, which is fixed.
✓ The risk of losing entire investment - If the venture is not successful, the resources
that were invested go to waste.
✓ The long hours and hard work - This is especially the case when establishing the
venture. An entrepreneur has no set times to start and finish work. They work as long
as the situation demands.
✓ The high levels of stress – This result from the desire to see the project succeeding
and the desire not to waste time and money.
✓ Maybe overworked – due to level of commitment they will end up working for long
hours and over holidays
✓ May evade payment of taxes – majority will operate as backyard industries hence will
avoid paying taxes hence creating a burden to the few tax payers
✓ Some are engaged in illegal business dealings e.g. selling of drugs that need doctor’s
prescription over the counter and without any prescription
✓ May be involved in smuggling of illegal products
✓ Some may be involved in political issues thereby creating political instability which is
not a favourable situation for enterprising
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BUSINESS ENTERPRISE POSSIBLE QUESTIONS
explain the concept of enterprising
identify skills and personal attributes needed to run an enterprise
explain skills and personal attributes of a good enterpriser
apply leadership skills in a given project
identify the benefits and drawbacks of enterprising
explain the role of an enterpriser in an enterprise
list the drivers towards enterprising
explain the different drivers towards enterprising
evaluate drivers towards enterprising
􀁸 State characteristics of an entrepreneur
􀁸 Analyse advantages and disadvantages of being an entrepreneur
􀁸 Discuss importance of enterprise skills
􀁸 Assess the importance of enterprise skills to the economy
􀁸 Analyse management functions
􀁸 identify on effective management skills
􀁸 Describe importance of management functions
􀁸 identify ethical considerations in business
􀁸 Describe the role of ethics
􀁸 Analyse importance of ethics in business
􀁸 Cite unethical conduct in business
􀁸 List contents of a business plan
􀁸 Describe contents of a business plan
􀁸 Craft a business plan of a business of your choice
􀁸 identify business ideas
􀁸 List different types of Intellectual Properties
􀁸 Describe types of intellectual properties
􀁸 Propose solutions to intellectual properties infringements
􀁸 Explain functions of Zimbabwe Patents office
􀁸 identify areas where of the African Regional International Property Organisation (ARIPO)
and Zimbabwe Patents Office are located

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 THE ENTERPRISING ENVIRONMENT F1 COMPLETE NOTES

Lesson objectives
➢ Define the term internal and external stakeholders
➢ Identify internal and external stakeholders
➢ Distinguish between internal and external stakeholders
➢ Identify different ways of acquiring resources
➢ Different between resources and capabilities
➢ Explain the ned for resources
➢ Explain the need for analysing capabilities
➢ Identify the different types of resources needed by an enterprise.
Stakeholders
Def: these are individual or organisations that have a direct interest in the business activities
and they influence the business’ activities e.g. employees and suppliers
Internal stakeholders
Def: these are individual or organisations that have a direct interest in the business activities
and they influence the business’ activities and are from within the business e.g. employees
and managers
External stakeholders
Def: these are individual or organisations that have a direct interest in the business activities
and they influence the business’ activities and are from outside the business e.g. suppliers,
consumers
Internal stakeholders

Owners

Employees Directors
Internal
stakeholde
rs

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Managers
committee
Directors / owners
➢ These are the individuals who provide capital to the business in form of financial and
physical resources.
➢ These directors/ owners will get profits and dividends at the end of the year.
Board of directors
➢ This a group of people that is chosen or appointed from the existing shareholders or
from outside the business and monitor the day to day running of the business so as to
earn better dividends and investment success.
Employees
➢ These are the physical and mental effort of the business hat is needed in the
production process
➢ Employees can be in different forms namely skilled, semi-skilled and unskilled labour
and permanent and contract worker and mainly concerned with job security and better
wages and salaries
Workers committee
➢ This a group of people that is chosen from the existing employees and monitor the
day to day working conditions of the employees so as to ensure that the welfare of the
workers is good and they are motivated.
Managers
➢ These are senior employees within an organisation and are responsible for planning,
leading, controlling, coordinating, organising.
➢ These are the individuals who are responsible for running the daily business activities.
➢ Managers have levels and the levels are as follows:
✓ Low level managers
✓ Middle level managers
✓ High level managers

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External stakeholders

Customers

competitors suppliers

External
Trade stakeholders
Government
unions

Creditors
society and
Banks

Customers
➢ these are people who buy a company’s products and are mainly concerned with
quality products and low prices. So, the company needs to mainly cater for their
tastes and preferences
Suppliers
➢ these are people who provide the company with goods or resources [inputs], they are
mainly concerned with the credit worthiness of the business and ability to finance.
They sell goods and services on a cash and credit bases.
Competitors
➢ these are people or organisations that provide the same products as us on the market
hence we compete to satisfy consumer tastes and preferences. Businesses should
ensure that they offer better quality goods and services to have competitive advantage
over its rivals

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Government
➢ this is the state that sets rules and regulations that will govern the economy, it will
also dictate the tax, interest and wage rates to be used by enterprises
Society
➢ These are the people in which the business will be operating and have different
culture, norms and beliefs and the business to be profitable is supposed to cater for
each and every individual need or selected individuals especially through corporate
social responsibility [CSR]
Creditors and banks
➢ These are the individuals that offer goods, services on credit and financial resources
to the firm, these can be individuals or organisations and are mainly concerned with
credit worthiness of the business.
➢ These individuals or businesses will withdraw their services if the business does not
meet the agreed terms or default payment.
Trade unions
➢ This is a worker’s representatives board that is made up of different workers
committees, it negotiates with the employers for better working conditions and
salaries and wages e.g. Zimbabwe congress of trade unions [ZCTU] and Zimbabwe
energy workers union [ZEWU]

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Need for resources and capabilities
Resources
Def: these are items that are needed in the production process and can be physical, human
and financial resources
Capabilities
Def: this is the ability to perform to a certain capacity and is determined by the availability
of resources within a business e.g. volume of sales or products produced.

Need for resources

➢ Provision of goods and services
➢ Establish business e.g. capital
➢ Fund the day to day running of the business e.g. fuel and power
➢ Operate machinery in the production process
➢ Acquisition of assets
➢ Acquire raw materials
Reasons for analysing capabilities
➢ To employ the required labour
➢ To produce what the business can afford [resource wise]
➢ To meet a certain quality
➢ To meet consumer tastes and preferences
➢ To fight competition
➢ To meet unexpected demand
Types of resources in a business
Resources are divided into three ain headings namely:
➢ Physical resources
➢ Human resources
➢ Financial resources
Financial resources
These are all monetary items that are needed for acquisition of physical assets and funding
the day to day running of the business e.g. cash in hand, cash at bank, working capital.
Financial resources can be sourced from different areas such as banks, family and friends,
personal savings.
Physical resources
➢ These are what the business owns and is divided into:
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 ✓ Tangible are the items that we can see and touch and comprise of Buildings,
motor vehicle, forests, land, water, capital.
✓ Intangible are the items that we cannot see or touch and comprise of goodwill,
patents, labour, knowledge, skills.
➢ The tangible resources can also be classified into:
✓ movable -these are assets that are used are not stationery on the same place
e.g. motor vehicles
✓ Immovable - these are assets that are used and are stationery on the same
place e.g. plant and machinery. These assts can be acquired through use of
cash, credit [hire purchase] and leasing.
Human resources
this resource comprises of recruitment and selection of the mental and physical effort needed
in the production process. The employees can be skilled, semi-skilled and unskilled labour.
More so, the employees can be permanent [full time] or contract workers

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THE ENTERPRISING ENVIRONMENT POSSIBLE QUESTIONS
distinguish between internal and external stakeholders
explain the role of each internal and external stakeholder
differentiate resources and capabilities
explain the need for resources in an enterprise
explain reasons for analysing capabilities
identify different types of resources required in an enterprise
identify the internal and external environmental factors
describe the internal and external environmental factors
identify different ways of acquiring resources
analyse different forms of resource ownership
justify ownership of resources
explain various ways of sustainable use of resources
explain the importance of using resources sustainably
identify business constraints
explain the business constraints
identify opportunities and risks for enterprise
investigate opportunities and risks associated with local business enterprises
identify risks associated with business enterprises

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 SETTING UP A NEW ENTERPRISE F1 COMPLETE NOTES

Lesson objectives
➢ Define the term unincorporated business
➢ Identify forms of unincorporated businesses
➢ Describe forms of unincorporated businesses
➢ Explain the benefits and limitations of different unincorporated businesses
➢ Explain the purpose of business enterprises
Unincorporated businesses
Def: These are businesses that have no limited liability and separate legal entity and have a
small amount of capital.
Def: These are businesses that have not been registered according to the company’s act such
sole traders and partnerships
Unincorporated business units
Sole Trader
Features
➢ Is owned by one person who provides all the capital.
➢ Their motive is to make profit.
➢ Tends to be small in size.
➢ Has few legal formalities.
➢ Easy to form as they require little start- up capital.
➢ Controlled and run on a daily basis by the proprietor himself.
➢ Family members may sometimes provide labour.
➢ Have unlimited liability.
➢ Has flexible opening and closing hours.
Sources of capital
➢ Own personal savings.
➢ Borrowing from friends and relatives.
➢ Loans and overdrafts from commercial banks.
➢ Mortgage loans from Building Societies.
➢ Retained Earnings.
➢ Hire Purchase buying.
➢ Leasing of fixed assets.
➢ Purchasing goods for resale on credit.
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 ➢ Forming a partnership of a private limited company.
Advantages
➢ Requires little start- up capital.
➢ Has fewer legal formalities.
➢ Is easy to run and control.
➢ There is close supervision of workers.
➢ Operates for longer hours which may increase sales.
➢ Offers personal service to customers.
➢ There is quick decision making.
➢ The business can quickly adapt to changes.
➢ The owner enjoys profits alone.
➢ Overhead expenses are usually lower.
➢ The business affairs can be kept private.
➢ Provides employment for the owner.
Disadvantages
➢ Has unlimited liability.
➢ Bears the losses and debts alone.
➢ Decision making may be poor since there is no one to consult.
➢ There is no room for specialisation.
➢ There is limited room for expansion due to limited sources of capital.
➢ There is no continuity after the owner dies.
➢ Prices of goods are usually high.
➢ The trader may be overworked.
➢ Cannot borrow money from financial institutions due to lack of collateral.
Partnership
Features
➢ Is formed by written or verbal agreement between partners.
➢ They are formed by 2-20 partners.
➢ Professionals such as lawyers, doctors and accountants can form partnerships of 2 to
unlimited members as they are not allowed to form limited liability companies.
➢ Has fewer legal formalities.
➢ Requires a partnership Deed or Act.
➢ Is governed by the Partnership Act or a where it exists a Partnership Deed.
➢ It is jointly owned and controlled by the partners
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 ➢ Active partners control the business’s day to day operations.
➢ Sleeping partners contribute capital only and do not manage the business.
➢ Decisions made by one partner are binding on all the other partners.
➢ The liability of the partners is usually unlimited.
➢ General partners have unlimited liability.
➢ Limited partners have limited liability.
➢ Profits and losses are shared either equally or according to the provisions of the
Partnership Deed.
Types of partners
Ordinary/General Partnership
➢ All partners have unlimited liability of the partnership’s debts which means that they
can lose their own personal property in settlement of partnership debts.
➢ Active partners take part in the day to day running of the business.
Limited liability partnership
➢ Limited liability and sleeping/dormant partners:
➢ Contribute capital only.
➢ Enjoy limited liability.
➢ Do not take part in the day to day running of the business.
➢ The Partnership Act requires that at least one of the partners in a Limited Liability
partnership should have unlimited liability:
➢ The active partner must run the business on a daily basis.
➢ Bear the unlimited liability.
Sources of capital
➢ From their own personal savings.
➢ From family and friends.
➢ Loans and overdrafts from commercial banks.
➢ Mortgage loans from Building Societies.
➢ Retained Earnings.
➢ Hire Purchase buying.
➢ Leasing of fixed assets.
➢ Purchasing goods for resale on credit.
Partnership Deed (Agreement)
➢ Drafted by partners.
➢ Contains:
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 ✓ The objectives of forming the partnership.
✓ The amount of capital each partner is going to contribute towards the
partnership.
✓ Duties, responsibilities and rights of each partner.
✓ Terms and conditions under which the partnership operates.
✓ Circumstances under which the partnership can be terminated.
✓ Methods employed to settle disagreements.
✓ The ration in which profits and losses are to be shared.
✓ Salaries and bonuses to be paid to each partner if any.
✓ Interest rates charged on capital and drawings.
✓ The name of the partnership.
➢ Importance:
✓ Used to form a partnership.
✓ Used instead of the Partnership Act.
Partnership Act
➢ Where a Partnership Deed has not been drafted, the Partnership Act is applicable
➢ It is enacted by Parliament.
➢ The Act sets out the following provisions:
✓ The partners must contribute equal amounts of capital
✓ Any disputes must be settled by a majority decision.
✓ Profits or losses are to be shared equally.
✓ No partner must claim interest on capital.
✓ No partner earns a salary.
✓ Books of accounts must be kept at the place where business is conducted and
all partners have the right to inspect them.
➢ Importance:
✓ Used to form a partnership.
✓ Applicable in the absence of a Partnership Deed.
Advantages
➢ Management is duties are shared amongst the partners.
➢ More capital can be raised.
➢ More skills are available resulting in better quality decision making.
➢ Specialisation is possible.
➢ Partners can consult one another.
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 ➢ There are fewer legal formalities.
➢ Losses are shared amongst partners.
Disadvantages
➢ Disputes may lead to the dissolution of the partnership.
➢ Some partners have unlimited liability.
➢ Consultations may lead to delays in decision making.
➢ There is no continuity as the partnership is dissolved if one of the partner dies or
leaves the partnership.
➢ Agreements made by one partner are binding to the whole partnership.
➢ Amount of capital raised is still limited due to a cap on the number of partners for
most partnerships.
➢ Profits have to be shared among partners.

Purpose of business enterprises

Advantages
➢ Entrepreneurs create new businesses. In many cases, entrepreneurial activities
increase competition and, with technological or operational changes, it can increase
productivity as well.
➢ Small businesses broaden the base of participation in business by ordinary people in
Society in the process this creates more jobs.
➢ Small businesses are more likely than large companies to produce specialty goods and
services and custom-demand items.
➢ Innovations improve the quality of life by multiplying consumers' choices. They
enrich people's lives in numerous ways by, making life easier, improving
communications, providing new forms of entertainment and improving health care.
➢ Entrepreneurial behaviour drives innovation and growth for the economy and for
individual companies since it involves a willingness to take advantage of unexploited
opportunities. Thus, entrepreneurs play a crucial role in mobilising resources and
promoting economic growth and socioeconomic development. Tills is particularly
true in the developing world, where successful small businesses are primary engines
of job creation and poverty reduction.
➢ Create your own destiny - Entrepreneurs are their own bosses, this enables creativity
and innovativeness

‘Together we are stronger’ 0777329822/ 0717140557

 ➢ They make quick decisions, choose whom to do business with and 'what work they
will do and decide what hours to work, as well as what to pay and whether to take
vacations.
➢ Reach your full potential- Entrepreneurs can do what they are passionate about.
➢ Reap impressive profit – Entrepreneurship offers a greater possibility of achieving
significant financial rewards than working for someone else.
➢ Contribute to Society and be recognised for your efforts - most entrepreneurs help the
local economy, but some, through their innovations, contribute to society as a whole.
One example is entrepreneur Strive Masiyiwa, who co-founded Econet and helps the
Zimbabwean community through offering scholarships. Corporate Social
Responsibility [CSR]
➢ Collect prestige - There is prestige in being the person in charge, thereby complying
with Maslow’s hierarchy of needs
➢ Infrastructural development – they can be involved in building of roads, hospitals and
schools assisting the community
➢ Revenue to the government through payment of taxation to the ZIMRA which can be
used in other sectors to enable economic growth e.g. public sector i.e. ZINWA
➢ Raise standards of living – provision of goods and services that will ensure the life of
the local people is made easy and better.
➢ Economic development – this will be achieved through increase in the gross domestic
product [GDP]and gross national product [GNP]
➢ Technology is introduced in to the country which will be used to improve the quality
of goods and services provided to the customers hence satisfaction
➢ Provide competition to large organisations hence quality products are produced and
eliminates consumer exploitation
Disadvantages of Business enterprises
➢ The uncertainty of income - There is no guarantee of earning money and the income
can vary daily, monthly and yearly, unlike a salary, which is fixed
➢ The risk of losing entire investment - If the venture is not successful, the resources
that were invested go to waste.
➢ The long hours and hard work - This is especially the case when establishing the
venture. An entrepreneur has no set times to start and finish work. They work as long
as the situation demands.

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 ➢ The high levels of stress – This result from the desire to see the project succeeding
and the desire not to waste time and money.
➢ Maybe overworked – due to level of commitment they will end up working for long
hours and over holidays
➢ May evade payment of taxes – majority will operate as backyard industries hence will
avoid paying taxes hence creating a burden to the few tax payers
➢ Some are engaged in illegal business dealings e.g. selling of drugs that need doctor’s
prescription over the counter and without any prescription
➢ May be involved in smuggling of illegal products.
➢ Some may be involved in political issues thereby creating political instability which is
not a favourable situation for enterprising

‘Together we are stronger’ 0777329822/ 0717140557

SETTING UP A NEW ENTERPRISE POSSIBLE QUESTIONS
identify forms of unincorporated business enterprises
describe the forms of unincorporated business’ enterprises
explain advantages and disadvantages of unincorporated business enterprises
explain the purpose of business enterprises
identify forms of incorporated business enterprises
explain the features of incorporated business enterprises
analyse the benefits and limitations of different incorporated business enterprises
identify the requirements of setting up a business enterprise
establish a sole proprietorship or partnership business enterprise
explain issues concerning business ethics
evaluate the importance of being ethical in business
apply business ethics in their projects
describe factors influencing business growth
discuss the reasons why some businesses failure
suggest solutions to causes of business failure
Outline forms of business enterprises
describe the features of different forms of business enterprises
analyse the advantages and disadvantages of each form of business enterprise
compare and contrast different forms of business enterprises
justify reasons why new business enterprises need support
identify ways of support given to new business enterprises
explain why some enterprises grow and others remain small
discuss advantages and disadvantages of business enterprises being small or large
identify risks associated with formation of new business enterprise
explain the concepts of corporate legal personality and limited liability
evaluate the importance of limited liability
perform fundraising activities to raise money for mini-enterprises
identify legal formalities required in the formation of a business enterprise
explain the contents of business documents required in the formation of a business
enterprise
Identify ways of measuring business size
evaluate the methods of measuring business size

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 BUSINESS PLANNING F1 COMPLETE NOTES

Lesson objectives
➢ Define the term business plan
➢ Explain business planning and a business plan
➢ Discuss the importance of business planning
➢ Discuss the importance of business plan
➢ Design a mini-business plan.
Business Planning
A business plan – is a set of management decisions that clarify what the business will do to
try to be successful in the future
A business plan – is a management tool that sets short term objectives and defines the steps
necessary to achieve them.
A business plan - these are the planned activities and aims of any entity, individual group or
organization where effort is being converted into results,

Business planning
Components of a business plan
A business plan comprises of the following components:

Executive
summary

Organisational
Financial plan
background

Business
plan
Management
contents Products

Strategy and
Market analysis
implementaition

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Executive summary
This is an overview or summary of the whole business plan. A business plan explains the
fundamentals of the proposed business, these will include:
➢ The product or service that the company will sell,
➢ where the customers will come from,
➢ who the owners of the business will be,
➢ it clearly states the location of the business in relation to customers and supplier’s.
Organisational background
This content will comprise of the following:
➢ A general company description
➢ A mission statement, or purpose of the company
➢ Company’s goals and objectives
➢ The role of the business
➢ Your role in the business
➢ Mission statement, or purpose of the company
Product and services
This is when one describes one’s products or services in depth. Tills is where you describe
your products or services in depth.
Market Analysis
This is where you need to decide how the company intends to market its products. How will
you make the products known to the customers? Market research is important because no
matter how good a product or service is the company cannot succeed without effective
marketing.
Operational plan and strategy
This is where you explain the daily operation of the business; its location, equipment, people,
processes and the surrounding environment. A number of factors to consider include:
• Production
• Location
• Access
• Management.
Management
These are senior employees who decide who will manage the business. You need to find
people with specific talents and experience that they can bring benefits to the enterprise.
Financial plan
The fincial plan will include start-up expenses and capitalisation. There will be many start-up
expenses before you even begin operating your business. The financial plan consists of:

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 ➢ a profit and loss projection
➢ a cash flow projection
➢ a projected balance sheets
➢ a break-even calculation
Together, they will give you a reasonable estimate of your company's financial future. The
sales projections will come from a sales forecast in which you forecast sales cost of goods
sold expenses monthly profits for one year.

Objectives
Def: these are short term goals that are set by an organisation and will be achieved in a week
or 6 months, the objectives are supposed to be S.M.A.R.T
S – Specific Objectives should focus on what the business does and should apply directly to
that business e.g. a school may set an objective of increasing enrolment by 10%.
M – Measurable Objectives that have a quantitative value is likely to prove to be more
effective targets for directors and staff to work towards e.g. increase sales by 15%
this year.
A – Achievable Objectives must be achievable. Setting objectives that are almost impossible
to achieve in a given time will be pointless e.g. unachievable objectives will demotivate staff
who have the task of trying to reach these targets.
R – Realistic and relevant Objectives should be realistic when compared with the resources
of the company e.g. expecting to sell 5000 000 goods by the end of the month
T – Time-specific A time limit should be set when an objective is established e.g. business
expect to increase profits by 5% in 6 months.

Hierarchy of objectives
➢ Objectives form a hierarchy that shows the lowest up to the highest objectives e.g.
✓ Individual targets [lowest objective on the hierarchy]
✓ Departmental objectives
✓ Divisional objectives
✓ Corporate objectives
✓ Mission
✓ Aim [highest objective on the hierarchy]

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 Aims

Mission
Corporate
Divisional
Departmental
Individual
Major Objectives
Profit maximisation objective
Profits are essential for rewarding investors in a business and for financing further growth,
profit maximisation means producing at the level of output where the greatest positive
difference between total revenue and total costs is achieved
Growth objective
The growth of a business in terms of sales, value of output, labour, Assets has many potential
benefits for the managers and owners. Larger fi rms will be able to benefit from economies of
scale. Employees may gain higher salaries and fringe benefits.
Market share objective
Growth of a business can also be the market share it enjoys within its main market.
Increasing market share indicates that marketing strategies of the business is successful than
that of its competitors resulting in being the market leader.
Survival objective
This is likely to be the key objective of most new business start-ups. The high failure rate of
new businesses means that to survive for the first two years of trading is an important aim for
entrepreneurs.
Ethical objectives
Ethical objectives are targets based on a moral code for the business, for example ‘doing the
right thing’. The adopting of an ‘ethical code’ to influence the way in which decisions are
taken.

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Corporate social responsibility objective [CSR]
this concept applies to those businesses that consider the interests of society by taking
responsibility for the impact of their decisions and activities on customers, employees,
communities and the environment. The enterprises will give back to the community e.g.
scholarships and social soccer
Sales revenue objective
This could benefit managers and staff when salaries and bonuses are dependent on sales
revenue levels. Increased sales can be achieved by reducing prices, sales objectives can be set
on a weekly, quarterly and yearly bases.
Importance of stages of the planning
➢ Will assist the management to make a plan that shows whether or not a business has
the potential to make a profit.
➢ It helps map the future of the business. The plan helps the business to be managed
very well by continuously referring to goals and objectives.
➢ A well-set objective helps to attract prospective investors to feel confident in the
company and can therefore offer assistance to the company in the face of competition.
➢ It assists a company to manage its cash flow so as to avoid becoming insolvent. Most
businesses fail due to poor management of cash, not because the business did not
make a profit.
➢ A business plan helps in setting the future vision of the business venture. It helps to
anticipate growth strategies, a merger by constantly revisiting the goals.
➢ A business’ planning shows organisational structure of the business, including the
titles of directors or office bearers,
➢ It shows the strengths, weaknesses to make it a true reflection of a real business
rather than an unrealistic projection.
➢ Obtaining banks loans and bank overdrafts is made possible due to feasibility of the
business plan.
➢ A guideline for what the company intends to achieve which are known as objectives
of the business.

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 A business plan for Together we are stronger institute
Name of the business Together we are stronger institute
Type of organisation Private limited company
Business aim To be the number one service provider of tertiary
education
Product High quality educational service
Prices 600us Tertiary education per Semester
Market aimed Both young and adults
Market research undertaken The research was done through interviews and
and the outcome questionnaires. More so, used national statistics on tertiary
institutions
Human resource plan 40 staff members [lecturing and ancillary]
Details of business owners Bhandawa Peter. V Director [teacher for 10 years]
Chimbade Eutycus Director [teacher for 14 years]
Mapanga Weston Director [teacher for 4 years]
Chahweta Tapiwa Director [teacher for 4 years]
Production details Main supplier - First pack
Fixed costs – 8000 us, Variable costs - $2
Location of the business 1985 residential stand Karoi out of the city centre close to
GMB it’s a 10-year lease
Physical resources needed Buildings, buses, furniture, computers, utensils, apparatus
and reagents
Forecast profits Profits from first year average to 0us
Cashflows The first year will be having negative cashflows which
will increase as years progress with an increase in
enrolment covering fixed costs
Finance 100 000 capital, including hire purchase of major physical
assets and bank loans

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BUSINESS PLANNING POSSIBLE QUESTIONS
explain business planning and a business plan
describe importance of business planning
explain importance of a business plan
design a mini-business plan
identify different business objectives
describe business planning process
discuss importance of each business planning step
execute business planning process
explain components of a business plan
explain the importance of a business plan
develop a business plan
implement designed business plans on selected projects
manage selected projects

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 ENTERPRISE FINANCE AND SECURING INVESTORS F1 COMPLETE NOTES

Sources of finance
Lesson objectives
➢ Explain the need for finance in an enterprise
➢ Explain the terms investment and savings
➢ Identify sources of finance
➢ Differentiate between internal and external sources of finance
➢ Explain the advantages and disadvantages of different sources of finance
➢ Identify factors to consider when choosing sources of finance
Finance
Def: these are all the monetary resources needed and used by a business
Why do enterprises need finance?
➢ Acquisition of assets/ building own infrastructure
➢ Acquisition of raw-materials/ goods for resale
➢ Payment of day to day expenses e.g. salaries and wages, rentals
➢ Legal formalities

Def: Internal finance is obtained from within the business itself e.g. retained income,
personal savings, sale of idle assets
Internal finance
The most common examples of internal finance are as follows.
Retained profit
This is profit kept in the business after the owners have taken their share of the profits. It
is often called ploughed-back profit.
Advantages.
➢ Retained profit does not have to be repaid unlike e.g. a loan.
➢ There is no interest to pay - the capital is raised from within the business.
➢ No collateral security required
➢ It is the cheapest and readily available source of finance
Disadvantages
➢ A new business will not have any retained profits.
➢ Many small firms' profits might be too low to finance the expansion needed.

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➢ Keeping more profits in the business reduces payments to owners e.g. dividends to
shareholders.
Sale of existing idle assets
Existing assets that could be sold are those items of value which are no longer
required by the business e.g. redundant buildings or surplus equipment.
Advantages
➢ This makes better use of the capital tied up in the business.
➢ It does not increase the debts of the business.
➢ More income can be attained by selling an asset
Disadvantages
➢ It may take some time to sell these assets and the amount raised is never certain
until the asset is sold.
➢ This source of finance is not available for new businesses as they have no surplus
assets to sell.
Sale of inventories
Advantages
➢ This reduces the opportunity cost
➢ reduces storage cost of high inventory levels.
Disadvantages
➢ It must be done carefully to avoid disappointing customers if not enough goods
are kept as inventory.
➢ Stocks can become obsolete or expire
Personal savings
These are financial resources that are raised by the individual him/herself through salaries
and wages, pension, dividends from investments
Advantages
➢ Readily available
➢ No interest charges
➢ No collateral security required
➢ The more one saves the more the source of finance
Disadvantages
➢ Takes a very long period to accumulate the savings
➢ Affected by inflation
➢ Investments can have dry spells in terms of dividends
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 Def: External finance is obtained from sources outside of and separate from the business
e.g. bank loan and overdrafts, equity capital
External finance
Issue of shares
A share is part ownership of a company and one becomes an owner by acquiring shares. This
source of finance is only possible for limited companies.
Advantages
➢ This is a permanent source of capital which would do not have to be repaid to
shareholders.
➢ No interest has to be paid.
➢ Earns dividends to the investor
Disadvantages
➢ Dividends are paid after tax, whereas interest on loans is paid before tax is deducted.
➢ Dividends will be expected and shared amongst the shareholders.
➢ The ownership of the company could change hands if many shares are sold.
Borrowing from family and friends
This is an amount that can be attained on short notice from family members and friends
Advantages
➢ Immediately available
➢ No interest charges
➢ Large amounts can be attained
Disadvantages
➢ It leads to bad reputation if one defaults
➢ It can affect relationships
Bank loans
A bank loan is a sum of money obtained from a bank which must be repaid and interest is
payable.
Advantages
➢ These are usually quick to arrange.
➢ They can be for varying lengths of time.
➢ Can be obtained in large sums.
➢ Ownership is retained
➢ Offered at low rates of interest by banks
Disadvantages
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 ➢ A bank loan will have to be repaid eventually
➢ Interest must be paid
➢ Security or collateral is usually required.
➢ The bank may insist that it has the right to sell some of the firm's property if it
defaults
Bank overdrafts
This is a short term borrowing that attained from the bank, the payment is done within less
than a year.
Advantages
➢ Immediately available
➢ Quick to arrange
➢ Ownership is retained
➢ A medium amount can be obtained
Disadvantages
➢ Interest charges are high
➢ Repayment period is short
➢ Issued to a current account holder
Debentures
These are long-term loan certificates issued by limited companies, the debenture holders can
force an enterprise into liquidation
Advantages
➢ Is repaid after very long time e.g. 25 years.
➢ A large sum of money can be attained
➢ Can be converted into shares
Disadvantages
➢ These must be repaid and interest must be paid.
➢ Need collateral security
➢ Can force the company into liquidation
Factoring of debts
Debt factors are specialist agencies that 'buy' the claims on debtors of firms for immediate
cash e.g. a debt factor may offer 80 per cent of an existing debt. The debtor will then
pay the factor and the 20 per cent represents the factor's profit - when the factor collects
payment from the debtor.
Advantages
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 ➢ Immediate cash is made available to the business.
➢ The risk of collecting the debt becomes the factor's and not the business
➢ Improves working capital of the business
➢ The 20% is similar to selling commodities for a discount
Disadvantages
➢ The firm does not receive 100 per cent of the value of its debts.
➢ Reduces profit margins through factor’s commission
➢ This can give bad publicity to the business

Government grants and subsidies

the government can select certain organisations that will be issued to selected businesses
Advantages
➢ These grants and subsidies usually do not have to be repaid.
➢ No interest will be paid
➢ No collateral security is required
Disadvantages
➢ They are often given with 'strings attached', e.g. the firm must locate in a particular
area.
➢ Corruption hence become difficult to attain
➢ Must meet certain criteria [laws and regulations]

Hire purchase
This is a source of finance that that allows on to acquire assets on credit, allows a business to
buy a fixed asset over a long period of time with monthly payments which include an interest
charge.
Advantages
➢ The firm does not have to find a large cash sum to purchase the asset.
➢ A deposit is paid
➢ Profit is used to pay instalments
Disadvantages
➢ A cash deposit is paid at the start of the period.
➢ Interest payments can be quite high.
➢ Goods can be repossessed if one defaults

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Factors to consider when choosing a source of finance

Purpose and time period

What is the finance to be spent on? Is it to be used to pay for fixed assets or is it needed to
pay for a short-term cash flow crisis?
The general rule is to match the source of finance to the use that will be made of it.
➢ If the use is long term, for example the purchase of a fixed asset, the source should be
long term.
➢ If the use is short term, for example the purchase of additional inventories to cover a
busy period, the source should be short term.
Amount needed
Different sources will be used depending on the amount of money needed. A company would
not go to the expense of arranging a new share issue if only $5000 of capital was needed tor a
short time period.
Legal form and size
Companies, especially public limited companies, have a greater choice of sources of finance.
Issuing shares or debentures is not an option for sole traders and partnerships. These
businesses, if they have plans to expand, may have to depend on the savings of their owner’s
personal capital.
Collateral security
Some sources of finance require collateral to secure against the amount required in case they
fail to pay debts, the borrower will sell the assets and recover their money e.g. loans e.g.
mortgages
Control
Owners of businesses may lose control of that business if they ask other people to
invest in their firm. Owners may have to decide: what is more important, expanding
the business or keeping control of it?
Risk
This is risky because interest must be paid on the loans whether the business is
making profits or not. 'When interest rates are high and company profits are low, the
firm may not be able to pay all of the interest. The future of the business will be at
risk.

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Viability of the business
Business that is not viable or performing very well should not rely on borrowing since it will
not be able to repay the debt. This will mean the business will its investment and assets to
repay the debt
Cost
The business needs to consider the costs associated with the source of finance that is required
by the business e.g. finance costs, application, broker fees. This cost will make the source of
finance costly for the business
Financial statement of the business
The business is supposed to keep proper financial records that will enable the business to
acquire loans and overdrafts e.g. income statement, statement of financial position, budgets
and cashflow statement

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ENTERPRISE FINANCE AND SECURING INVESTORS POSSIBLE QUESTIONS
Explain the need for finance in an enterprise
Explain investment and saving
Identify sources of finance
Differentiate between internal and external sources of finance
Explain advantages and disadvantages of various sources of finance
Identify factors to consider when choosing sources of finance
Explain importance of keeping accurate financial records
Prepare an income statement
Draw a statement of financial position
Prepare a simple cash budget
Describe a cash budget
Explain the meaning of working capital
Identify components of working capital cycle
Discuss importance of managing working capital
Explain ways of managing working capital
Control working capital in a given enterprise
Prepare an income statement
Draw a statement of financial position
Identify different types of financial institutions
Explain functions of different financial institutions
Classify costs
Explain break-even analysis
Construct a break-even chart
Calculate break-even point, output and margin of safety for a business venture
Discuss importance of breakeven analysis
Explain the concepts of budgeting and budgets
Identify different types of budgets
Prepare a budget for an enterprise
Explain the importance of budgeting
Explain different ways of attracting investors

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 MARKETS AND MARKETING F2 COMPLETE NOTES
Lesson objectives
➢ Define the term market, product, demand and supply
➢ Discuss the importance of marketing to a business
➢ Explain the relationship between demand and supply

Market
Def: this a place where buyers and sellers meet to conduct business transactions and is
divided into virtual and physical
Physical market
Def: are where buyers can physically meet the sellers and purchase the desired merchandise
from them in exchange for money. Shopping malls, department stores, retail stores and
Mbare Musika.
Marketing
Def: it is the process of identifying, anticipating and satisfying consumers for a profit
Product
Def: these are items that satisfy human needs and wants on the market and are tangible and
intangible e.g. goods and services
Importance of marketing
➢ To increase profits and make the business grow by increasing sales revenue and
profits through marketing.
➢ Business often attempt to create a competitive advantage.
➢ To gain and maintain sales and market share. This can be achieved by charging low
prices to penetrate the market.
➢ To differentiate products from those of competitors by changing packaging, design,
and ingredients advertising.
➢ To introduce new products into the market if research indicates that this could be
essential.
➢ To gain consumer knowledge about their needs and wants.
➢ To satisfy consumer ‘s needs. If the business is to be successful then it has to produce
goods and services that satisfy consumer needs and wants.
➢ To identify consumer needs and wants through market research.
➢ To anticipate consumer needs and wants. This is trying to understand what consumers
want in advance.
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 ➢ This is because consumer tastes and preferences are changing faster nowadays so
marketing should respond to these e.g. type of clothing and shoes.
➢ To compete effectively by providing products and services with the greatest value to
consumers. This results from well identified consumer needs and wants.
➢ To correct negative publicity on the market
➢ As a tool to fight competition by providing what the consumers need through research
➢ Ensure the business does not waste resources through duplication of provision of
unwanted goods
➢ It creates employment opportunities
➢ Creates brand loyalty

Demand
Def: these are the quantity of goods that a consumer is willing to buy on the market and
mainly determined by price and volume of goods. The increase in demand will lead to an
increase in the price of commodities whilst a decrease in the demand of the goods will lead to
a decrease in the prices of goods.

Demand curve
400

350

300

250
Price

200

150

100

50

0
100 200 300 400
Output [units]

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Supply
Def: these are the quantity of goods that a supplier is willing to sell on the market and is
determined by the price and volumes supplied. The increase in supply will lead to an decrease
in the price of commodities whilst a decrease in the supply of the goods will lead to a
increase in the prices of goods.

Supply curve
350

300

250

200
Price

150

100

50

0
0 100 200 300
Output [units]

The relationship between demand and supply

➢ Demand and supply have a directly proportionate relationship, this simply means an
increase in the quantity of goods demanded by the consumers will led to an increase
in the quantity of good supplied by the suppliers on the market.
➢ If quantity of goods demanded by consumers decrease this means there will be a
decrease in the quantity of goods the supplier will supply on the market
➢ If the quantity of goods supplied on the market increases this will directly affect the
quantity of goods demanded by the consumers whereas a decrease in the quantity of
goods supplied on the market will lead to an increase in the quantity of goods
demanded by consumers on the market
NB if one of these two elements is affected it will directly affect the other positively or
negatively [either by increasing or decreasing the quantity demanded or supplied.]

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 demand and supply curves
350

300

250

200
costs

150

100

50

0
0 100 200 300
Output [units]

Supply Demand

➢ The graphical presentation above shows the relationship between demand and supply,
they have a linear relationship.
➢ Demand increases from the left to the right whereas supply increases from the left to
the right.
➢ There is a point on the graph where demand and supply meet this is known as the
equilibrium point, this means the quantity of goods supplied is equal to the quantity of
goods demanded and at the same price. E.g. on the graph the quantity is 150 units and
$150 which is the price.

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MARKETS AND MARKETING POSSIBLE QUESTIONS
explain the meaning of market, product, demand and supply
discuss the importance of marketing to business enterprises
explain the relationship that exists between demand and supply
identify types of markets
explain types of markets
describe the features of virtual and physical markets
discuss the advantages and disadvantages of physical and virtual markets
participate in various types of markets
evaluate benefits and challenges encountered in foreign markets
Implement solutions that reduce challenges faced in foreign markets
explain the importance of marketing research
identify different types of research data
identify sources of data
apply appropriate sampling methods to given situations
design data collection tools
Collect research data
Present data in formats such as graphs, tables and charts
interpret and analyse data
discuss factors to consider when segmenting a market
explain reasons for market segmentation
Segment a market
explain the importance of demand forecasting
identify methods of demand forecasting
explain the concept of economic integration
describe aims of different economic blocs
explain the advantages and disadvantages of economic integration
identify marketing mix variables
explain marketing mix variables
evaluate the impact of marketing mix variables on marketing

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 OPERATIONS MANAGEMENT F1 COMPLETE NOTES
Lesson objectives
➢ Define the term Production
➢ Identify the means of production
➢ Explain the means of production
➢ Explain the production function
➢ Illustrate the production function
➢ Identify the factors influencing the location of business enterprises
➢ Discuss the factors that lead to relocation of business enterprise.

Production
Def.: is defined as the provision of goods and services to satisfy human needs and wants and
comprises of factors of production, stages of production and forms of production.
Means of production
These are the factors that are owned and controlled by an entrepreneur and comprises of the
following
✓ Land
✓ Labour
✓ Capital
✓ Enterprise/ Entrepreneurship/ Organisation
Land
➢ This refers to the site on which the production process takes place
➢ It comprises of the original or natural resources that are renewable and non-
renewable such as seas, minerals deposits etc.
➢ Usually they fixed and immobile factors
➢ They don’t have a cost of production coz they occur naturally
➢ This factor varies in quality and value e.g. the productive the land is the more
expensive it will be.
➢ The reward for the factor is rent
Labour
➢ This refers to the effort needed in the production process to make goods and services
➢ Physical effort this requires the manual labour that is needed in the production process
such as shop floor workers

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 ➢ Mental effort this is the labour that thinks and manages and supervises the other
manual or physical effort.
➢ Labour is divided into skilled, semi-skilled and unskilled labour
➢ The supply of labour depends on the following, age, school leaving age, number of
people seeking employment and this is a flexible factor of production
➢ Its reward is wages and salaries
Capital
➢ This is money invested to run a business
➢ It can also be assets introduced in the business to start the business such as machinery,
equipment, motor vehicles
➢ It is wealth set aside for the production of further wealth
➢ The reward for capital is interest
Enterprise/ Entrepreneurship/ Organisation
➢ This refers to the ability to run a business
➢ It can be the skill required to mobilise, coordinate, control and combine the
contributions of the other means of production to produce goods and services
➢ This comprises of individuals who are willing to take risks through investing money,
time and effort by utilising the means of production
➢ These are Entrepreneurs who are the owners and managers of the businesses and set
objectives and ensure that they are achieved efficiently and earn returns.
➢ The reward for enterprise is profit or loss

Stages of production
As discussed above production is responsible for provision of goods and services and has
stage namely:
➢ Primary stage
➢ Secondary stage
➢ Tertiary stage
Stages are discussed using the following headings:
➢ Level of the stage
➢ What the stage does or is involved in
➢ Examples of each stage
Primary stage
➢ It is the 1st stage of production
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 ➢ This stage of production is involved in extraction of raw materials from the earth’s
crust
➢ The raw materials are extracted from the earth’s crust in their natural or raw state
➢ The raw materials extracted from this stage [outputs]are treated as inputs in the next
stage of production
➢ Examples include farming, fishing, hunting, quarrying, forestry and mining
Secondary stage
➢ It is the 2nd stage of production
➢ It is involved in the following:
✓ Manufacturing
✓ Processing
✓ Assembling
✓ Construction
➢ Manufacturing is the conversion of raw materials into finished and semi-finished
goods e.g. turning wheat to flour [semi-finished product] or turning flour into bread or
cakes [finished goods]
➢ Processing is the removal of impurities from minerals and goods to give them a better
value e.g. diamond cutting and polishing, copper ore processing, gold processing i.e.
Making rings and necklaces or removal of intestines of fish, Mopani worms etc.
➢ Assembling this involves the assembling of components to make a finished product
such G-tel phones or Mazda Willovale car plant or Foton car plant in Willovale.
➢ Construction is the building of large structures such as sky scrapers, roads and
bridges
Tertiary stage
➢ It is the 3rd stage of production
➢ It’s involved in distribution of goods and services
➢ The services involved include are direct and indirect services
➢ It also includes trade and aids to trade

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Production process
This is when inputs are taken into the production process, processed and will give outputs
which can be presented as follows:

PROCESSES: OUTPUTS:
INPUTS:
e.g. e.g.
e.g.
Mining Minerals
Land
Milking Milk
Cows
Sowing Grain
Seeds
Shearing Wool
Sheep

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NB: each input has a unique process that it has and gives an out as illustrated above in the
diagram.
Functions of production
➢ Provision of goods and services
➢ Satisfaction of needs and wants of consumers
➢ To gain foreign currency through exporting goods
➢ Improving the quality of goods and services
➢ Value addition of the available goods and services
➢ Accumulation of wealth
➢ Increase in the country’s gross domestic product [GDP]
➢ Increase in the variety of products and services offered to consumers
➢ Economic development
➢ Creation of employment opportunities
➢ Increase in sales volume and profitability of the business
➢ Increase in shareholder value
➢ Fight competition
➢ Correct negative publicity
➢ Be the number one exporter or provider of quality products n the globe

Factors influencing location of businesses

➢ Availability of land and buildings
➢ Availability of labour
➢ Availability of raw materials
➢ Availability of markets
➢ Availability of transport and communication networks
➢ Availability of capital

Relocation
Def: this the process where by an organisation is either attracted to leave its current position
of location to go to another new location or being forced to leave its old location to a new
location
Factors influencing relocation of an enterprise
➢ There re push and pull factors that influence the relocation of a business enterprise
and will clarified below.
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 ➢ Push factors are the factor that will force an enterprise to leave its current location
going to a new location:
✓ Depletion of raw materials
✓ Unavailability of skilled labour
✓ Lack of room for expansion
✓ Unfavourable government policies
✓ Cut throat competition
✓ Declining or dwindling market
✓ Increase in operational costs e.g. rentals
✓ Political instability
✓ Crime rate
✓ Lack of transport and communication networks
➢ Pull factors are the factor that will attract an enterprise to go from its current location
to a new location:
✓ Abundant raw materials
✓ Abundant skilled labour
✓ Abundant room for expansion
✓ Favourable government policies
✓ Absence of stiff/ cut throat competition
✓ Booming market
✓ Decrease in operational costs e.g. rentals
✓ Political stability
✓ Less crime rate
✓ Good transport and communication networks

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OPERATIONS MANAGEMENT POSSIBLE QUESTIONS
identify the means of production
identify stages of production
explain the production function
illustrate the production function
identify factors influencing the location of a business unit
discuss factors that lead to relocation of a business
explain value addition
explain ways of adding value to a product
explain the importance of adding value to products
create a product using locally available inputs
explain the importance of transport
identify different modes of transport
describe strengths and weaknesses of different modes of transport
explain factors influencing choice of mode of transport
Explain importance of the purchasing function
identify the five (5) ‘rights’ of purchasing
explain stages of the purchasing cycle
explain the role of e-purchasing
describe inventory management
explain the advantages and disadvantages of holding inventory
describe role of warehousing
explain factors to consider when locating a warehouse
State different types of warehouses
explain functions of different types of warehouses
explain the concept of quality management
analyse the importance of producing quality products
explain ways of assuring quality
evaluate the impact of ICTs in operations management
recommend appropriate ICT tools for given circumstances as;
- Bar codes
- Radio frequency identification (RFID)
- Computer aided design
- Online billing
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