PRINCIPLES OF BUSINESS HANDOUT

CONTENT: NEW SYLLABUS

THE NATURE OF BUSINESS

The role of the Accounts Clerk:

- To serve as support to the accountant
- To verify, organise, process and store the financial records of the
company.

The role of a compliance officer:

- To ensure that the business operates in accordance with accepted
standards.
- To execute the compliance policy to ensure that the business meets
professional and accepted business standards.

The negative effects of unethical and illegal practices on the business:

 Misleading advertisements (This is the unfair and fraudulent practice on the population.)
- This can lead to consumers making uninformed decisions. They may waste
money on a product or service that can't provide what they are looking for.
- Consumers do not like being conned, and oftentimes they will retaliate against
companies that trick them.
- They may be directly blamed for a malfunctioning product. When employees are
subjected to unpleasant conditions, they are likely to leave or to not work as hard,
providing more problems for the company.

 Withholding of tax (Cheating the government of revenue)

 Unethical disposal of waste (pollution)
 Money laundering (Distortions in the national economy)

Examples of careers in the field of business:

Advertising and Public Relations; Compliance Officer; Strategic Planners; Educators (online
and face to face); Information Officers; Entrepreneurs; Resource Personnel; Web Designers;
Web Planners; Software Developers.

ESTABLISHING A BUSINESS

Local, regional and global rules for establishing and conducting business, including local
government (municipal, village council, parish council). For example:
- Monetary and fiscal policies
Monetary policy is typically implemented by a central bank, while fiscal policy decisions are set
by the national government. However, both monetary and fiscal policy may be used to influence
the performance of the economy in the short run.

In general, monetary policy is expected to improve the economy's rate of growth of output
(measured by Gross Domestic Product or GDP) in the quarters ahead; tight or restrictive
monetary policy is designed to slow the economy in the future to offset inflationary pressures.
Likewise, fiscal policies, tax cuts, and spending increases are normally expected to stimulate
economic growth in the short run, while tax increases and spending cuts tend to slow the rate of
future economic expansion.

- Consumer Protection Agencies

Consumer protection is a group of laws and organizations designed to ensure the rights of consumers, as
well as fair trade, competition, and accurate information in the marketplace. The laws are designed to
prevent the businesses that engage in fraud or specified unfair practices from gaining an advantage over
competitors. For example; Bureau of Standards, Consumer Protection Act and Ombudsman.

- Environmental Policies
The environmental policy is designed to promote the sustainable management of natural resources and
the preservation of a healthy environment as an integral part of our country's development agenda.
For example; “Every citizen has a duty to participate in activities to improve the environment and
protect the health of the nation.”

MARKETING

Terms of Sale:
Consignment - is a business arrangement in which a business, also referred to as a consignee, agrees to
pay a seller, or consignor, for merchandise after the item sells. Consignment businesses are typically
retail stores that specialize in a particular type of consumer product. The business accepts items for sale
and agrees to pay the seller a percentage of the proceeds if and when the goods do sell.

Forms of customer service

 Warranty - A seller's assurance to a purchaser that the goods or services being purchased are or
shall be as represented and, if not, will be replaced or repaired.
 After Sales Service – this includes all the help and information that a company provides after
they have bought a particular product.
 Feedback – this is information coming directly from customers about the satisfaction or
dissatisfaction they feel with a product or service.
 Online chat – this refers to any kind of communication over the internet that offers quick
responses between sender and receiver.
 Toll Free Numbers/Call Centers – this is equipped to handle large amounts of customer
telephone requests for an organization.
 Suggestion box – a means by which customers can leave comments about dissatisfactions in the
company and how it can be improved.
 Surveys – these help companies measure satisfaction, identify unhappy customers and find
potential advocates.

Intellectual Property Rights

 Trademark – any sign capable of being represented graphically which is capable of distinguishing
goods and services of one trader from those of other traders.
 Industrial design – the appearance of all or part of a product that constitutes shape, colour,
texture or a combination of them.
LOGISTICS AND SUPPLY CHAIN

 Logistics is the general management of how resources are acquired, stored and transported to
their final destination. It involves identifying prospective distributors and suppliers, and
determining their effectiveness and accessibility. For example, in the natural gas industry,
logistics involves all of the systems used to gather and transport oil.
 Supply Chain operation is a network between a company and its suppliers to produce and
distribute a specific product and the supply chain represents the steps it takes to get the
product or service to the customer.
In other words, logistics refers to the production and distribution process within the company
while supply chain includes suppliers, manufacturers and retailers that distribute the product to
the end customer.

COMPONENTS OF LOGISTICS

A business logistics system is made up of three main activities: order processing, inventory
management, and freight transportation.

- Order processing is concerned with the information flow in the logistics system and includes a
number of operations. The beginning of the process consists of a request from a customer for a
particular product via an order form. These orders are then transmitted and checked for
completeness and accuracy. The availability of the requested product and the customer’s credit
status are verified. Finally, products are retrieved from the stock, packed, and delivered along with
their shipping documents. Throughout this entire process, the customers have to be kept informed
about the status of their orders.

- Inventory management is a key issue in logistics systems. Businesses choose to maintain

inventories for a variety of reasons, including:

1. Improving service level.

2. Reducing overall logistics costs.
3. Making seasonal items available throughout the year.
4. Overcoming inefficiencies managing the logistics system.

The objective of inventory management is to regulate stock levels for minimizing total operating cost
while satisfying customer service requirements.

- Freight transportation plays an important role in today’s economy since it enables production and
consumption to take place at locations far away from each other. A manufacturer or distributor can
choose among three alternatives to transport its materials: private transportation, contract
transportation, and public transportation.

The main modes of transportation used by logistics system management are ship, rail, truck, air, and
pipeline.

ACTIVITIES INVOLVED IN SUPPLY CHAIN OPERATIONS:

 Transformation of natural resources
 Movement and storage of raw materials
 Processing of raw materials and components into finished goods
 Storage of work-in-progress and finished goods
 Delivering the finished product from point of origin to point of destination.
Benefits of supply chain operations:
 Better quality of life
 Wealth creation
 New and innovative job opportunities

Challenges of supply chain operations:

 Globalization counterfeiting
 Product complexity
 Rapid product obsolescence
 Regulatory complexity
 Management blunders
 Changing market conditions
 Natural disasters
 Political instability

Impact of logistics and supply chain operations on the competitiveness of business.

 Logistics improve competitiveness – the ability of the organization to differentiate itself, in the
eyes of the customer, from its competition and secondly, by operating at a lower cost and
hence a greater profit.


THE DISTRIBUTION CHAIN

 The first channel includes all four, from producer to the end consumer. For example, the
beverage industry sells to a wholesaler who then sells to a retailer. The retailer, in turn,
sells the product to the end consumer.
 The second channel is one where the producer sells directly to a retailer, who then sells
the producer’s product to the end consumer. For example, Dell sells its products directly
to reputable retailers such as Best Buy.
 The third channel is whereby the producer sells its product directly to the end consumer.
For example. Amazon sells its Kindles to its customers.

 Intermodal Shipping is when shipments are handled by several different shipping companies
while Multimodal Shipping would be where one company or one contract would handle all
legs of the journey.

Mode of transportation:
Digital Delivery – this allows persons to reinstall purchased software applications without physical
CDs or DVDs.

Role of transport in marketing:

 To fast track sourcing of commodities
 To ensure security of supply
 To have cost reduction

Importance of transport in domestic, regional and foreign trade:

 The importance of domestic trade in a country is that it facilitates exchange of goods

within the country. By doing this it also makes sure that factors of production reach to the
right places so that the economy of the country can grow. By allowing all different types
of goods and services to reach to all parts of the country it improves the standard of living
of the residents of the country as well as the employment rate of the country. And it helps
the growth of an industry by ensuring the availability of raw materials. Traders from
 outside the country will have to come in contact with internal traders, because it is not
easy to come directly into another country and get the required products.

Forms of technology:
 Global Positioning Systems (GPS) - A system of satellites, computers, and receivers that is
able to determine the latitude and longitude of a receiver on Earth by calculating the time
difference for signals from different satellites to reach the receiver.
 Geographic Information System (GIS) – a computer application used to store, view and analyze
geographical information, especially maps.
 Port net –
 Telemarketing – the marketing of goods and services by means of telephone calls
 E-commerce – transactions conducted electronically on the internet
 Global logistics – refers to the flow of resources and information between a business or source
and the consumer. For example, Amazon, FedEx.
 Logistic hubs – integrated centres for transshipment, storage, collection and distribution of goods.
For example, Jamaica.
Business Finance

Services offered by financial institutions:

 Night safe deposits – a deposit slot on, e.g. the outside of a bank, allowing money to be
deposited into the bank’s safe outside of bank opening hours.
 Online banking - a system allowing individuals to perform banking activities at home, via the
internet.
 Advisory services – a range of consulting services and other financial advisors to businesses
and high net worth individuals who require specialised advice on capital information, cash
flow and wealth management.
 Debit and credit cards – debit card is used to make a purchase with one’s own money while
a credit card is used to make a purchase by borrowing money.
 Trustee work – an individual or organization which holds or manages and invests assets for
the benefit of another.
 Deposit boxes - A box - usually located inside a bank - which is used to store valuables. A safe
deposit box is rented from the institution and can be accessed with keys, pin numbers or some
other security pass.
 ATM (Automated Teller Machine) – is an electronic banking outlet, which allows customers to
complete basic transactions without the aid of a branch representative or teller.
 E-trade – company designed to provide investors with a service to actively manage their
portfolios and execute trades at their discretion.
 Settlement services-
 Remittance services – is a transfer of money by a foreign worker to an individual in his or her
home country.

Financial Regulatory Bodies:

 Central Bank
 Jamaica Deposit Insurance Company (JDIC) – protect depositors and promote stability and
confidence in Jamaica’s financial system.
 Financial Services Commission (FSC) – supervising and regulating non-bank financial
institutions.

Financial Institutions and Regulatory bodies.

 Central Banks – regulates the commercial banks variations in the liquid assets ratio; adjust
the bank rate and change the minimum reserve requirements.
 Financial Services Commissions – protect the interest of policyholders and monitors both
local and foreign companies offering life, health and general insurance products and the
activities of brokers.
 Supervisor of Insurance – ensures payment of appropriate annual fees; monitor funds and
departments and ensures annual financial statements are submitted by insurers.

Ways of managing personal incomes:

 Allocation of income relative to commitments through the use of a budget
 Savings
 Investment
 Financial advising

Types of short term financing:

 Trade credit – an arrangement to buy goods and services on account, that is, without making
immediate cash payment.
 Commercial bank loans – a debt-based funding arrangement between a business and a
commercial bank that the company may otherwise be unable to afford.
  Promissory notes – a signed document containing a written promise to pay a stated sum to a
specified person or the bearer at a specified date or on demand.
 Instalment credit – a type of credit that has a fixed sum to be repaid in instalments.
 Indigenous credit/Private money lenders – is a non-bank individual or company that loans
money, generally secured by a note and deed of trust, for the purpose of funding a real
estate transaction.
 Advances from customers – a liability account used to record an amount received from a
customer before a service has been provided or before goods have been shipped.
 Factoring – a type of finance in which a business would sell its accounts receivables (money
owed) to a third party to meet its short term liquidity needs.
 Venture capitalists – a person who invests in a business venture, providing capital for start-
up or expansion.
 Crowd funding – use of small amounts of capital from a large number of individuals to
finance a new business venture.
 Angel Investors – a person who invests in a business venture, providing capital for start up or
expansion.

Sources of personal capital:

 Crowd funding - use of small amounts of capital from a large number of individuals to finance
a new business venture.

Financial records for sole traders:

