Notesale: Turn your study into money

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BUSINESS AND ITS ENVIRONMENT
Objectives:- By the end of the topic, the learner should be able to:


Explain the meaning and purpose of a business
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

Explain how the various business environments influence a business
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PURPOSE OF BUSINESS (Reasons for the existence of businesses)
i)

To earn profit for the owners
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iv)

To achieve self satisfaction in being ones own boss
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v)

To create an outlet for new products
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groups
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g
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b) Processing-This refers to the process of converting raw materials into

more useful products
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c) Manufacturing-This involves combining different raw materials to come up

with one final product e
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furniture making, paper-making, baking and soda
bottling
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t
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1

People who carry out distribution are called distributors
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f) Provisions of services-This refers to the provision of mental or physical
human assistance
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t
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PRACTICAL ACTIVITY: Give examples of activities (not goods) you
pay for
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It may be internal or external environment
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The firm has control
over these factors
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Internal environmental conditions include:1) Objectives of the business

These ate targets or goals that are set by the owners or managers of a
business to be achieved
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The strategies of a business
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The resources required
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It comes up with the following:-

a) The policies of a business-A policy is a course of action for achieving the

set objectives
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g
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b) The activities of a business - Management policies will determine the

activities of a business i
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the goods and services provided, location of
business e
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c
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This will determine how workers relate with
their managers
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g
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A well laid out business structure is likely to lead to success of the business since:
i
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iii
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Each of the employees knows what is expected of him/her
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On the other hand a poor business structure is likely to lead to business failure
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They include:-

a
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A business that has enough,
well skilled workers who are correctly matched with the correct job activities,
is likely to do better than a business that lacks such personnel
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Financial resources- Refers to money that is available in the business for
various uses
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c
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g
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Availability, adequacy and
effectiveness of such facilities enable the business to do well
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Technology-This refers to skills and methods used in production
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5)

Research and development- Research generates new ideas, skills and

better methods of doing things
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It also
assists in the development of new and unique goods and services
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It is normally passed on from one generation of

employees to the next
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3

7) Owners-The owners of the business provide finances/resources to start
and run the business
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Adequate financing and
proper management are likely to lead to business success
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Some of these factors offer business opportunities
while others may create problems (threats)
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The external factors over which a business has some control are referred to as
operating/immediate environment
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External environmental conditions include:-

1) Economic environment-This refers to factors that affect the buyers’ ability to
buy the goods and services offered by a business
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If buyers ability to buy increases the business sells
more but where it decreases the business sells less
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Such a change
may include the size of the population, geographical distribution of people, age

and sex distribution, density, and birth and death rates
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3) Legal-political environment-These include Government policies, laws and
activities that affect and regulate businesses
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4) Technological environment-This refers to levels of know-how, efficient use of
tools and equipment and other resources
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5) Socio-cultural environment-Culture refers to the norms that regulate behaviour
of people in a society
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It dictates how
people live and what products they consume
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For example Muslims do not
eat pork
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It could be:-

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a) Generic competition-This refers to competition where products are used for
the same purpose though they are different e
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cinemas and discos are
competing forms of entertainment
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g
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Depending on the level of competition a business may do well or poorly
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These factors
may affect a business either positively or negatively
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The content in this set is appropriate for all levels
where general knowledge of business/commerce is a requirement
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Key points are
highlighted in yellow colour
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Any queries will be
addressed promptly
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Kindly give your review

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