APA To Commerce O-Level Revision

Commerce
‘O’ Level Revision
ar y notes
• With summ
bus objectives
covering sylla
SEC questions
• Model ZIM
and answers
Commerce
‘O’ Level Revision Book
ring
ar y notes cove
• With summ
ives
syllabus object and
d el Z IM SEC questions
• M o
answers
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A Practical Approach to Commerce | ‘O’ Level Revision Book
ISBN: 978-0-7974-8511-2
First Published in January 2023
Copyright © Secondary Book Press
Editor in Chief: Munyaradzi Gunduza

Development Editor: Phinias T. Bhidhi
Text and design layout: Beverly Maraya
Acknowledgements
The publisher would like to express heartfelt appreciation and thanks to the following contributors;
Mabhandi T, Mataga G, and T. Chikuni. Their contribution and devotion are recognised in making this
publication a success.
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or errors, any information that would enable the publisher to make the proper arrangements will be
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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system,
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otherwise, without prior permission of the copyright owner.
Contents
Introduction.....................................................................................................................................(i)
Topic 1: Production..............................................................................................................................1
Topic 2: Trade.......................................................................................................................................14
Topic 3: Consumer protection..............................................................................................................50
Topic 4: Business organisations...........................................................................................................55
Topic 5: Enterprise...............................................................................................................................69
Topic 6: Finance and banking..............................................................................................................77
Topic 7: Insurance and assurance....................................................................................................... 103
Topic 8: Business communication........................................................................................................119
Topic 9: Transport................................................................................................................................140
Topic 10: Warehousing.........................................................................................................................149
Topic 11: Marketing.............................................................................................................................152
Specimen Examination Papers
Specimen Examination 1.......... ...........................................................................................................169

Specimen Examination 10.......... .........................................................................................................227
Answers ...............................................................................................................................................234
INTRODUCTION
Commerce is a commercial subject with interesting facts about business. It allows students to
understand how goods or services are distributed from the producer to the consumer. Commerce
O-Level Revision Book covers all the topics and concepts that are found in the ZIMSEC Syllabus and
are structured according to the New Curriculum expectations. It summarises the eleven main topics
that are in the Syllabus whilst equipping students with relevant information in their preparation for
the O-Level Commerce examinations. You must work your way through this study guide to improve
your understanding, identify your areas of weakness and correct your own mistakes. To ensure a
high-quality pass, you should also substantiate your knowledge from other textbooks and your class
notes. We are confident that this Commerce study guide can help you prepare well so that you pass the
ZIMSEC O-Level exams.
Overview of the exam for Commerce O-Level Study Guide

The exam questions have been arranged topically and in the respective order in which they are taught,
for example, Production, Trade and Consumer protection. The questions are structured typical of
ZIMSEC exam standard.
Paper 1 carries 40 multiple choice questions which carry one mark each and the student is required to
answer all the questions.
Paper 2 carries 13 structured questions. It is divided into two sections which are section A and B.
Section A has 6 questions which carry a total of 40 marks and Section B has 7 questions with each
question carrying 20 marks. The candidate is required to answer all the questions in Section A and any
three questions in Section B.
How to use this study guide

This study guide covers selected aspects of the different topics of O-Level Commerce curriculum in
the order that it is usually taught during the year. The selected aspects of each topic are presented in the
following way:
• An explanation of terms and concepts.

• Worked examples to explain and demonstrate.
• Activities with questions for you to answer.
• Answers for you to use to check your own work.
• There are exercises on the notes section based on exam-type questions. Cover the answers
and do the exercises on your own. Then check your answers. Reward yourself for the things
you get right. If you get any incorrect answers, make sure you understand where you went
wrong before moving onto the next section.
• Typical ZIMSEC exam papers are included in the study guide for you to practice.
i
Top 10 study tips
Try these study tips to make learning easier:
• Have all your materials ready before you begin studying – pencils, pens, highlighters, paper
and all the other necessary material.
• Be positive. Make sure your brain holds on to the information you are learning by reminding
yourself how important it is to remember the work and get the marks.
• Take a walk outside. A change of scenery will stimulate your learning. You will be surprised
at how much more you take in being outside in the fresh air.
• Break up your learning sections into manageable parts. Trying to learn too much at one time
will only result in a tired, unfocused and anxious brain.
• Keep your study sessions short but effective and reward yourself with short, constructive
breaks.
• Teach your concepts to anyone who will listen. It might feel strange at first, but it is worth
reading your revision notes aloud.
• Your brain learns well with colours and pictures. Try to use them whenever you can.
• Be confident with the learning areas you know well and focus your brain energy on the
sections that you find more difficult to take in.
• Repetition is the key to retaining information you must learn. Keep going, don’t give up.
• Sleeping at least 8 hours every night, eating properly and drinking plenty of water are all
important things you need to do for your brain. Studying for exams is like strenuous exercise,
so you must be prepared physically.
Question words to help you answer questions

It is important to look for the question words (words that tell you what to do) to correctly understand
what the examiner is asking. Use the following table as a guide when answering questions.
State – express something definitely or clearly in writing.

Explain – give reasons for what is asked for. Provide causes.
Give – mention what you are asked.
List – make a numbered list.
Outline – make a numbered or well organised list.
Discuss – write as much as you can.
Define – give a concise and accurate definition of what is called for.
What is meant by – this is asking you to clearly show the examiner that you know what a term means.
A single sentence answer is nearly always sufficient.
Comment – express an opinion or reaction in writing.
Suggest – mention or introduce (idea, action or plan) for consideration or possible action.
Justify – discuss the good and the bad points of the subject and discuss why it is good or bad.
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Distinguish – discuss differences.
Evaluate/Criticise – discuss the good and the bad points of the subject and conclude whether it is
primarily good or bad.
Identify – establish or indicate who or what (someone or something) is.
Compare and contrast – discuss similarities and differences.
Differentiate – recognise or show that two things are not the same.
In your own opinion – what you think or believe about something.
To what extent – the degree to which something extends / the particular degree to which something is
or believed to be the case.
Study skills to boost your learning
This guide makes use of three study techniques you can use to help you learn the material:
• Mobile notes
• Mnemonics
• Mind maps
Mobile notes
Mobile notes are excellent tools for learning all the key concepts in the study guide. Mobile notes are
easy to make and you can take with them with you wherever you go:
1. Fold a blank piece of paper in half. Fold it in half again. Fold it again.
2. Open the paper. It will now be divided into 8 parts.
3. Cut or tear neatly along the folded lines.
4. On one side, write the basic concept.
5. On the other side, write the meaning or the explanation of the basic concept.
6. Use different colours and add pictures to help you remember.
7. Take these mobile notes with you wherever you go and look at them whenever you can.
8. As you learn, place the cards in three different piles:
• I know well
• Getting there
• I need more practice
9. The more you learn them, the better you will remember them.
Mnemonics
A mnemonic code is a useful technique for learning information that is difficult to remember. This is
an example of a word mnemonic using the word MAPPING where each letter of the word stands for
something else:
M – Make an effort
A – Apply yourself to your studies
iii
P – Practise, practise, practise your mapwork
P – Prepare well for the exams
I – Ignite your passion for Geography
N – Notice your subject around you
G – Go for it – the stars are the limit!
Mnemonics code information and make it easier to remember. The more creative you are and the more
you link your ‘codes’ to familiar things, the more helpful your mnemonics will be. This guide provides
several ideas for using mnemonics. Be sure to make up your own.
Mind maps
There are several mind maps included in this guide, summarising some of the sections.
Mind maps work because they show information that we have to learn in the same way that our brains
‘see’ information.
As you study the mind maps in the guide, add pictures to each of the branches to help you remember
the content.
You can make your own mind maps as you finish each section.
How to make your own mind maps:
1. Turn your paper sideways so your brain has space to spread out in all directions.
2. Decide on a name for your mind map that summarises the information you are going to put on it.
3. Write the name in the middle and draw a circle or bubble or picture around it.
4. Write only key words on your branches, not whole sentences. Keep it short and simple.
5. Each branch should show a different idea. Use a different colour for each idea. Connect the
information that belongs together. This will help build your understanding of the learning areas.
6. Have fun adding pictures wherever you can. It does not matter if you cannot draw well.
Top 10 exam tips

1. Make sure you have all the necessary stationery for your exam, such as pens, pencils, eraser, as
well as your ID document and exam admission letter.
2. Arrive on time, at least one hour before the start of the exam.
3. Go to the toilet before entering the exam room. You do not want to waste valuable time going to
the toilet during the exam.
4. Use the 10 minutes reading time to read the instructions carefully. This helps to ‘open’ the
information in your brain. Start with the question you think is the easiest to get the flow going.
5. Break the questions down to make sure you understand what is being asked. If you do not answer
the question properly you will not get any marks for it. Look for the key words in the question to
know how to answer it. A list of these words is on page (ii) of this study guide.
6. Try all questions. Each question has some easy marks in it so make sure that you do all the
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questions in the exam.
7. Never panic, even if the question seems difficult at first. It will be linked with something you have
covered. Find the connection.
8. Manage your time properly. Do not waste time on questions you are unsure of. Move on and come
back if time allows.
9. Check weighting – how many marks have been allocated for your answer? Take note of how
marks are allocated to the questions in this study guide. Do not give more or less information than
is required.
10. Write big and bold and clearly. You will get more marks if the marker can read your answer
clearly.
Common errors
• Most candidates do not read instructions before attempting the paper.
• Some candidates fail to pay attention to the keywords and do not understand the demands of
the question.
• Some of the candidates’ work is not clear and not readable.
• Others fail to manage their time effectively to ensure that they do not spend more than enough
time on one question.
• Some students fail to number correctly their work.
v
TOPIC 1 PRODUCTION
Topic objectives Production

By the end of the topic, you should be able to: • It is the making or provision of goods
and services to meet human needs and
• explain the need for production.
wants.
• classify goods and services.
• explain primary, secondary and tertiary • It is done by different producers at
production. different stages of production.
• describe factors of production. Producer – Refers to any individual or
• describe the importance of land reform organisation which makes goods or services to
and indigenisation of our economy. satisfy human needs and wants.
• explain direct and indirect production.
• explain the advantages of division of Goods – These refer to all tangible and physical
labour and specialisation. products produced and offered by organisations.
• state ways in which goods are Examples are cars, furniture and food.
distributed from producers to
Goods can be classified into:
consumers.
• identify factors considered when (a) Consumer goods
selecting channels of distribution.
• explain the terms value addition and These are all goods ready for use or consumption
beneficiation and give the benefits. by consumers such as clothes and food.
• add value to a product. (b) Producer goods
• explain how value can be added at each
stage of production. • These refer to goods that are used to
• identify how the community and make other goods.
the country at large benefit from • They are goods used in production of
exploitation of resources. other goods such as machinery and a
• describe business environment. grinding mill.
• identify the internal and external • They are also called capital goods.
factors affecting a business.
• explain how each factor affects a
business.
1
(c) Durable goods Primary production
• These involve consumer goods which • This is the first stage of production.
last for a long period of time. • It involves the extraction of raw
• They are goods that have a long life materials and all natural resources from
span such as furniture. the earth.
• The extraction of raw materials takes
(d) Perishable goods
place on land, in mines, seas, forests
These involve all goods with a short life span, and rivers.
such as fresh fruits, vegetables and meat. • Industries at this stage are called
extractive industries.
Services
• Examples include farming, mining
These refer to all intangible products offered by fishing, forestry and quarrying.
producers to satisfy human needs and wants.
They cannot be seen or touched such as
entertainment, teaching, health and insurance.
There are two groups of services. These include

direct and indirect services.
(a) Direct services - these refer to personal

services provided to consumers such as teaching,
health care and entertainment.
Figure 1.1 Agriculture as an example of primary
(b) Indirect services - these are services which production
are provided indirectly to consumers such as
banking, insurance and advertising. Secondary production
Human needs • It is the second stage of production.

• It involves the processing of raw
These are all basic items that people cannot live materials into finished or semi-finished
without. They are necessary in life such as food, goods.
shelter, clothing and water. • An example is of maize being processed
Human wants into mealie meal.
• The processing or conversion of raw
Refer to all items that people can live materials takes place in manufacturing
without such as cars, television, fashion and industries.
entertainment. • This stage also involves assembling
of parts or components into finished
Stages of production products and construction of buildings,
Goods and services can be produced in three roads and bridges.
different stages of production. The three stages of
production are primary, secondary and tertiary.
2
Figure 1.4 B
anking as an example of tertiary
Figure 1.2 Construction as an example of production
secondary industry
Stages of production summary
Primary Secondary Production
Production
Extraction Manufacture Assembly
Tertiary Production
Oil Computer
shop
Transport Advertising Warehousing Selling

Figure 1.5 Stages of production
Figure 1.3 Manufacturing as an example of
secondary production Factors of production
These are means of production that are necessary
Tertiary production
for production to take place, these include:
• This is the third stage of production. It • Land.
involves the distribution of goods and • Labour.
services to the consumers. • Capital.
• It is the stage which deals with service • Enterprise and organisation.
provision. The services include direct
services and indirect services. Land
• Direct services are all personal
It refers to the place where production takes place.
services such as teaching, health and
This includes all natural resources on which
entertainment.
production is done. Examples include seas, farms,
• Indirect services involve all aids to
mines and forests. The reward for land is rent.
trade, that is banking, insurance,
transport, warehousing, advertising and
communication. Indirect services are
also called commercialised services.
3
Labour Land reform
• This refers to human effort exerted in • It involves the redistribution of land
the production of goods and services. from being owned by a few elite to
Human effort can either be physical or being owned by the majority.
mental.
• Labour can also be skilled, semi-skilled
and unskilled. The reward for labour is
wages and salaries.
Capital
• It refers to the money or any other
resources used by the owner to start a
business.
• It can be in form of assets.
• The reward for capital is interest. Figure 1.6 C
ommunal farmers as beneficiaries of
the land reform
Enterprise
Importance of land reform
• This refers to the skill of combining
• It brings empowerment to the majority.
the other factors of production so as to
• It improves food security to families
obtain a profit. It is the ability of the
and the economy at large.
owner to organise the other factors of
• It can be used as collateral security to
production.
obtain loans.
• It is also called organisation or
• It creates employment and reduces
entrepreneurship. The reward for
poverty.
enterprise is profit.
Indigenisation
Ownership of means of
• It is the process of making local
production
(indigenous) people own the means of
• Means of production used to be owned production.
by a few people. These few people were • It enables the local people to have
from the better or upper class social control over the local means of
group (the elite). production.
• Productive land used to be owned by a
Importance of indigenisation
few privileged. This was not fair as the
means of production are the peoples’ • Employment creation to the locals.
heritage. Heritage is something that is • It encourages participation of
passed on from one generation to the indigenous people.
other. • It allows redistribution of wealth.
• This means it is the people’s legacy • It empowers local people.
which they have a right over. The • It allows people to have full control
government then came up with the land over their resources.
reform program to redistribute the land.
4
Forms of production • There is use of highly skilled labour.
• There is greater specialisation since
There are two forms of production. These are
producers focus on producing one line
direct and indirect production. of product.
Direct production
Advantages of indirect production
• It refers to the provision of goods and • There are high levels of production
services for one’s own use. (mass production).
• Examples are designing one’s clothes • Goods and services of high quality are
or a family farming maize for home produced.
consumption. • It leads to trade. There is high and
• The purpose of production is for better living standards due to trade.
personal use not for resale. • Use of machinery and technology leads
• It makes use of simple home tools like to creativity.
hoes and light machines. • Mass production reduces cost of
Advantages of direct production production per unit.
• There is variety which leads to
• Products are made to suit personal taste. consumer satisfaction.
• Less capital is required.
• Simple and cheap tools are used. Disadvantages of indirect production
• Labour costs are eliminated since it • Use of machinery may increase
usually make use of family members. unemployment.
• Less or no wastage of resources. • Highly skilled and specialised labour is
Disadvantages of direct production expensive which increases costs.
• There is product standardisation which
• It does not lead to trade.
may affect variety.
• Usually poor quality goods are • Mass production may ignore customer
produced. taste and preferences.
• There is lack of variety in the goods
that are produced. Mass production
• It leads to low living standards. • Mass production is the provision of
• Less goods or services are usually goods and services in large quantities.
produced. • Standardised products are produced
Indirect production often using automation technology.
• In mass production, mechanisation is
• Refers to the provision of goods and used to achieve high volumes.
services for commercial purpose.
Advantages of mass production
• Goods and services are produced in
large quantities for sale. • It creates room for specialisation.
• Producers make use of heavy machines • Specialisation improves efficiency in the
and advanced technology in production. production process.
• The use of have machinery is known as • It reduces production cost per unit due
automation or mechanisation. to high rate of production.
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• It allows firms to enjoy large-
scale production benefits known as
economies of scale.
Each worker has Division
• Raw materials can be purchased in of
large quantities which is often cheaper.
a specific task Labour
• It promotes automation and

mechanisation which reduces labour
Figure 1.7 Division of labour
cost.
• Large quantities produced eliminates Advantages of division of labour
shortages of goods.
• Less time is taken in training workers
• Allows standardisation of products
for a simple task.
which leads to consistency.
• It improves skills of workers.
Disadvantages of mass production • No time is wasted on switching from
one task to another.
• Standardisation eliminates variety of
• Allows use of machinery and
goods for consumers.
technology.
• Automation leads to unemployment.
• Work becomes very easy.
• It is a high capital intensive method of
• There is also improvement in speed due
production which is expensive.
to experience.
• Automation may lead to serious
production halts if machines break Disadvantages of division of labour
down.
• Repetitive small task are boring due to
Division of labour lack of challenge.
• Workers may lose job satisfaction.
• It is the division of work processes into
• It leads to interdependence of workers.
various tasks.
• Each task is performed by one person Specialisation
or group of people.
• It is often applied where there is mass • It is performing a task or job one is best
production. at.
• It reduces unnecessary movement and • It is as a result of division of labour.
handling of different tools and parts by • Specialisation can be in different forms
such as:
one person.
– Specialisation by country: is
• It reduces handling of different tools
when a country focuses on a
and parts by many people.
certain product it is best at, for
• Workers become specialised in certain
example, Zimbabwe concentrating
areas of work.
on producing tobacco, Botswana
producing beef.
– Specialisation by region: occur
when a certain area of the country
focuses on producing a product
which it is best at, for example,
6
Matabeleland specialises in • It increases labour immobility to
cattle ranging and Manicaland workers.
specialises in tea production. • It leads to standardisation which
– Specialisation by firms or reduces variety to consumers.
companies: occur when a
Chain of distribution
company focuses on producing
only one line of products or one • It shows how goods move from the
particular service, for example, producer to the consumer. When
Doves provides funeral services producers finish producing goods they
and Lobels bakery specialises in need to be distributed to the consumer,
confectionary products. who is the final user.
– Specialisation by individual: it is • There are different channels or routes of
when a person focuses on what he distribution that can be used.
or she is good at.
Route 1
Advantages of specialisation
Producer Wholesaler Retailer
• As workers focuses on a specific job
Consumer
they become experts.
• It leads to mass production. Route 2
• There is high quality of production due
Producer Retailer Consumer
to workers’ expertise.
• Automation and mechanisation also Route 3
result in high productivity.
Producer Consumer
• Costs of labour are usually reduced
because of use of technology. These three can be represented diagrammatically
• Allows workers in the same job as below:
category to share ideas.
• Less worker supervision is required as 1 Producer Wholesaler Retailer Consumer
workers become experts.
• It enables trade.
Producer Retailer Consumer
• Use of technology reduces cost per 2
unit which consequently results in low

prices. 3 Producer Consumer
Disadvantages of specialisation
Figure 1.8 Routes of distributing finished goods
• Automation and mechanisation may
result in unemployment. Factors to be considered when
• Repetitive tasks are not challenging; choosing a chain of distribution
hence, boring. The nature of the product
• There is too much interdependence,
for example, at a firm if one worker is • Perishable goods quickly go bad,
absent the whole production process hence, they need to reach the consumer
will be affected. quickly.
7
• Fragile goods also need special Value addition and beneficiation
handling.
• Technical goods also require Beneficiation
manufacturers to give instructions to • It is a process of preparing natural
the consumer directly. resources mainly mineral ores into a
The nature of the market state that is suitable for the next stage of
production.
• When dealing with a small niche • Minerals are mined with a lot of
market direct route is the best. impurities from the ground.
• A company can select channels on the • Beneficiation allows the removal of
basis of customer wants depending these impurities to make them ready for
on how, where and under what processing. Examples include smelting
circumstances the customer wants the and grinding.
goods.
• The number of buyers of the product Value addition
affects the choice of a channel of
• It refers to the process of increasing or
distribution.
improving the value of a product.
Cost involved • It involves various processes that allows
a product to fetch a higher price.
Some channels involve lower costs such as the
• Such processes as drying, boiling,
route 1.
manufacturing, bottling and packaging.
The size or weight of goods • It changes the state of a product into a
better state that has a higher economic
Bulky and heavy products need to be distributed
value.
directly to users.
• Examples: Instead of selling raw
Competition vegetables, the producer can bottle them
for future use or pack them and sell
• Marketers closely watch the channels
them at a higher price as shown below.
used by rivals.
• Many a time, similar channels may be
desirable to bring about distribution of a
company’s products.
• Sometimes, marketers deliberately
avoid channels used by competitors.
• For example, a company may bypass
retail store channel (used by rivals) and
adopt door-to-door sales (where there is
no competition).
Figure 1.9 Pickled fruits
8
Exploitation of resources
• The act of making full use of resources
and derive benefit from it.
• Making use of natural resources
to build a city is an example of the
exploitation of those resources.
Benefits of exploitation of resources
• It brings foreign currency to the
Figure 1.10 Value addition concept for
country.
different vegetables • Creation of employment.
Advantages of value addition and • Improves living standards.
beneficiation • May raise government revenue through
taxation.
• It may increase the life span of a • May lead to infrastructure development.
product.
Disadvantages of exploitation of resources
• The product will have a better and
improved appearance. • Land degradation.
• The product fetches a higher price. • It leads to deforestation.
• Increases profit margins. • Leads to depletion of non-renewable
• Consumer satisfaction is increased. resources.
• Mining may create hazards to
• Increase foreign currency into the
communities.
country due to increased exports.
• There is usually pollution of the
• Reduces trade deficit due to reduced
imports and increased exports. environmental elements.
• It allows firms to create brand loyalty
Business environment
with customers.
• It results in employment creation. • It refers to the factors that influence or
• Leads to development of related affect the business as it carries out its
industries. operation.
• The import bill is reduced as the local • The factors can either be internal or
products can now meet the expectations external.
of the local customers.
Classes of the business
Disadvantages of value addition and
beneficiation environment
• It increases costs of production since • Internal business environment.
huge amounts of capital may be • External business environment.
required.
Internal business environment
• Many producers lack knowledge on
how to add value. • It is also known as micro environment.
• The product becomes more expensive • These are factors that influence the
for some consumers. business activities and the business has
• It requires the use of machines which is control over them such as:
costly to many producers.
9
(a) Employees. 2. They are hired by owners or directors to run
(b) Owners. the business.
(c) Managers. 3. They are responsible for planning,
(d) Customers. controlling, coordinating and organising.
(e) Suppliers. 4. A good and visionary manager has a positive
effect on the business.
(d) Customers
Owners
1. They are individuals and organisations
Employees Customers which buy goods and services from the
Internal business.
environment 2. They provide revenue to the business from
sales.
3. They allow the business to function and
Managers Suppliers
expand.
4. A business should maintain a good
Figure 1.10 Internal business environment relationship with customers to gain loyalty.
5. Customer loyalty is good for the growth and
(a) Employees profitability of the business.
1. They provide manual and other labour (e) Suppliers
services to the business.
2. They ensure that goods and services are 1. Provide or supply goods and services to the
provided to consumers. business.
3. Employees can be skilled, semi-skilled or 2. Enable the business to offer products and
unskilled. services to customers.
4. A good workforce impacts positively on 3. Reliable suppliers have a positive impact on
business operations. the business while unreliable suppliers have
5. A weak workforce impacts negatively on a negative impact on the business.
business operations. External business environment
6. They expect wages and salaries.
• These are also called macro
(b) Owners environment.
• These affect the business operations
1. They are individuals who provide capital to
either positively or negatively and the
the business.
business has no control over them.
2. They will get profits and dividends at the end
• They include the following:
of the year.
(a) Political environment.
3. They identify business opportunities and
(b) Economic environment.
invest their money.
(c) Social environment.
(c) Managers (d) Technological environment.
(e) Legal environment.
1. These are senior employees within an
(f) Physical environment.
organisation.
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• During times of inflation, consumers
Political fail to buy many products, hence,
businesses are affected negatively.
Environment Economic • Low levels of inflation are good for
External businesses as prices are kept stable
environment within the reach of many consumers.
Legal
Social
(d) Interest rates
Technological • Interest refers to the cost of borrowing

money.
• High interest rates render borrowing
Figure 1.10 External business environment
expensive to business; hence, businesses
(a) Political factors will be affected negatively.
• Businesses will be affected financially
• Consists of the policies and laws put in
by lack of working capital.
place by the ruling government.
• Low interest rates are good for
• These laws and policies affect the
businesses as they encourage them to
business negatively or positively.
borrow more money to use.
• Favourable business laws and policies
help businesses to prosper. (e) Social factors
• Unfavourable policies affect the
• These involve items such as
businesses negatively.
demographics, attitudes and beliefs.
• It also involves the political status of
• Lifestyle, opinions, values, behaviours
a country, whether there is stability or
and interests of consumers.
instability.
• These directly impact the business
• Political instabilities bring about a lot of
operations in various ways.
disturbances to local businesses.
• For example, the beliefs of a society
• A stable political environment is good
may affect the type of goods a business
for businesses.
has to sell.
(b) Economic factors
(f) Technological factors
• It involves the economic status of all
• Refer to the constant change that takes
economic factors such as employment,
place in the technological world.
inflation, exchange rates, interest rates
and wealth. • Technology is the application of science
• Some economic factors are favourable and engineering skills and knowledge
to the business while others are to solve production and organisational
unfavourable. problems.
• As technology continues to advance,
(c) Inflation
companies can benefit from these
• High levels of inflation affect the breakthroughs or face challenges in
business negatively as cost of competing with them.
production rises frequently.
11
• New equipment and software that Business stakeholders
improve productivity and reduce
• Refers to individuals or organisations
costs can be among a company’s
which have some interest in the
most valuable assets needed in the
business.
organisation.
• Stakeholders can either be internal or
• Changes in technology may bring
opportunities to the business if it is able external.
to quickly adapt to the changes. Internal stakeholders
• Technological changes may also bring
threats to the business thereby affecting • They are found inside the organisation.
it negatively. • They influence and are directly
• The ability of the business to maintain influenced by what is happening in the
and build wealth depends on its speed business.
and effectiveness with which they use • Each stakeholder has certain interests
technology. or expectations from the business.
• The business must be able to invent Below is a table with a list of internal
and adapt more efficient equipment to stakeholders, their roles and interests in the
improve manufacturing productivity, business.
to develop new products and to process
information and make it instantly Table 1.1 Roles and interests of internal
available across the organisation, to stakeholders
suppliers and customers. Stakeholder Role(s) Interests or
(g) Legal factors expectations
Workers/ – Produce – Fair regular wages
• These are factors that involve matters of Employees goods and and salaries
the law and legislation of a country. services – Job security
• Every business should follow the
country’s laws in its operations so that it – Good working
runs smoothly. conditions and
promotions
Physical environmental factors – Retrenchment or
• These are factors that involve the retiring package
surrounding environment of the Managers – Running – High salary
business’ location. and – Growth of business
• The factors include climate, weather, controlling
– Freedom to control
geographical location and natural the
the business
resources. business
• The business operations may be Shareholders – Invest – High profits
affected negatively or positively by capital – Regular and high
these factors. dividends
12
External stakeholders Suppliers –S upplies raw – Continuous orders
• They are found outside the business materials or – Quick payments
organisations. goods to the on goods supplied
business
• They are indirectly affected by the
Government – C reate – Law abiding
business organisation.
business business
Below is the list of external stakeholders, their friendly – Payment of tax
roles and interests. environment
Competitors – K
eeping the – Fair competitions
Table 1.2 Roles and interests of external business on
stakeholders its toes
Stakeholder Role(s) Interests or Community/ – S
upporting – Job creation
expectations society the business – Infrastructure
Customers –B
uys goods – Good quality development
from the products – Safe products
business – Timely delivery of
– Safe production
products bought
methods that
– Fair prices do not harm the
– Good customer environment
care
13
TOPIC 2 TRADE
Topic objectives Trade

By the end of the topic, you should be able • Refers to the buying and selling of
to: goods and services.
• There are two forms of trade, that is,
• explain the need for trade.
barter trade and monetary trade.
• explain forms and branches of trade.
• There are two branches of trade, that is,
• explain the services of wholesalers.
home trade and foreign trade.
• describe the different types of
wholesalers. Forms of trade
• identify marketing boards.
Barter trade
• explain the functions of retailers.
• describe the characteristics and • Refers to the buying and selling of
organisation of the different types of goods and services without using
retailers. money.
• discuss the various trends in retailing. • It involves the exchange of goods for
• discuss the reasons for the survival of goods or services.
the small-scale retailer. • It was commonly practiced long ago
• identify the documents used in home before the invention of money.
trade. • As time went on this form of trade
• explain the importance of documents became less popular because it caused a
used in home trade. lot of challenges.
• list the contents of each document used Problems or challenges of barter trade
in home trade.
Indivisibility of some goods
• justify the interdependence of countries
within the global market. The nature of some goods such as livestock make
• explain free trade and protectionism. them impossible to divide and give change to the
• identify methods of restricting trade. customer.
• list documents used in foreign trade. Double coincidence of wants
• identify intermediaries in foreign trade.
• distinguish between visible and It occurs when a person faces difficulties in
invisible trade. finding another person with the exact item they
• calculate balance of trade, invisible want in exchange of what they are offering.
trade and balance of payments. For example, a person who has a book and wants
• outline the ways of correcting balance to exchange it with a pen may find someone
of payments deficit. with a pen who does not want a book but a ruler
instead.
14
• The seller and the buyer make an The seller can The seller cannot
informal agreement. repossess the repossess the goods if the
• The customer is allowed to pay for the goods if the buyer buyer defaults.
goods at a future date. defaults.
• A verbal agreement is acceptable. The buyer is not The customer can sell the
• It is a contract of sale based on trust. allowed to sell goods during the contract.
• The buyer owns and uses the goods as the goods during
soon as the agreement is made. the hire purchase
• The seller cannot repossess the goods if period.
the buyer defaults. Interest is charged Interest is charged at a low
• The instalments are spread over a few at high rate. rate.
months. The instalments The instalments are
• The customer can sell the goods during are spread over spread over a few months,
the contract. a long period, for example, 3 months.
• Interest is charged at a low rate. for example, 36
• The seller can sue the customer for the months.
outstanding amount. An initial deposit No deposit is required.
• It is financed by the trader. has to be paid.
• No deposit is required. It is financed by a It is financed by the trader.
• It is suitable for non-durable goods, finance house.
such as clothes, food staffs and
stationary. Discounts
• A discount is a deduction made from
Differences between hire purchase
the original price of a good.
and credit sale • It is given to the buyer by the seller for
Hire purchase Credit sale or deferred different reasons.
payment • The two main reasons for discounts are
It is suitable for It is suitable for non- bulk buying and prompt payment.
durable goods durable goods, such as • Therefore, there are two types of
such as cars and clothes, food staffs and discounts, namely:
machines. stationary. (i) trade discount.
It is formal. It is informal (ii) cash discount.
A written A verbal agreement is Trade discount
agreement is acceptable.
required. • It is the total deduction from the total of
The contract is not It is a contract of sale an invoice.
based on trust. based on trust. • It is given by one trader to another.
Ownership remains The buyer owns and uses • It is given for bulk buying.
• It enables another trader to sell at a
with the seller until the goods as soon as the
profit.
the last instalment agreement is made.
• It usually has a high rate such as 30%.
has been paid.
• It is not recorded in the books of
accounts.
32
Example 1 Balance of Payments (BOP)
Total value of goods exported $100 million • It is a country’s record of transaction
Total value of goods imported $80 million with its trading partners or countries
within a given period of time usually a
Balance of trade (BOT) = $100 million − 80
year.
million = $20 million
• It shows how much is being spent by
Invisible trade individuals and firms and government
on imported goods and how much has
Involves trade of intangible items, that is, trade been exported from the country.
in services such as banking, insurance, tourism, • It is used to calculate the difference
transport and many more. between exports and imports.
Invisible balance • It is the difference between total exports
and total imports.
It calculates the difference between invisible
• It takes into account both visible and
exports and invisible imports.
invisible trade.
Invisible balance = Invisible exports ˗ Invisible imports
Balance of payment = Total exports –
Total imports
Example 2
Insurance services provided to Zimbabwean Example 3
firms by foreigners $50 million. Value of exported goods $120 million
Tourists to Zimbabwe from South Africa $75
million. Value on imported goods $100 million
Banking services provided by Zimbabwean Value of imported services $150 million
banks to foreigners $35 million. Value of exported services $90 million
Transport services provided to Zimbabwean
firms in Zambia $80 million. Find the balance of payments?
Solution:
Required:
B.O.P = Total exports – Total imports
Calculate invisible balance for Zimbabwe.
= ($120 million + $90 million) –
First of all find the total value of exported
(100 million + 150 million)
services and total value of imported services if
= $210 million – $240 million
not given.
= – $30 million
Solution:
Invisible balance = Invisible exports ˗ Invisible • The balance of payments can either be
imports positive or negative.
• A positive B.O.P shows a surplus and is
= ($75 million + $35 million) ˗
favourable.
($50 million + $80 million)
• A negative B.O.P is called a Deficit and
= $110 million ˗ $ 130 million
is unfavourable.
= ˗$20 million
48
• A positive B.O.P (surplus) is favourable Ways to increase exports and inflow of
because it shows that a country has foreign currency
exported more than it has imported,
hence, it has surplus foreign currency. • Devaluation of the local currency, to
• A negative B.O.P (deficit) is make exporting cheaper.
unfavourable because it means that • Negotiating debt cancellation with its
a country has imported more than it creditors (the International Monetary
Fund, World Bank and African
has exported, hence, it has used more
Development Bank) to reduce the
foreign currency.
outflow of foreign currency.
Methods or ways of correcting balance of • Subsidising exports to make local goods
payments deficit cheaper on foreign markets.
• Establishing export promotion
• Because a deficit is unfavourable any
programmes, such as the Zimbabwe
country that has a balance of payments
Export Promotion Programme (ZEPP),
deficit takes various measures to correct
to assist exporters to take part in trade
or cure or curb it.
fairs by advertising locally produced
• It should focus on items that reduce or
goods.
suppress imports. • Giving tax concessions to exporters,
• It should focus on items that increase which reduces export costs for the
exports. exporter; this increases exports by
Ways to reduce imports or outflow of foreign making exporting cheaper.
currency • Utilising the gold reserves, such as
selling gold reserves in order to raise
• Rationing or reducing foreign currency foreign currency.
allocation to importers. • In Zimbabwe, gold is reserved at the
• Substituting imports or replacing them Reserve Bank of Zimbabwe.
with locally produced goods. Exchange rates
• Charging (high) customs duties,
which make imports more expensive, It is the rate at which one currency can be
discouraging the consumption of exchanged for another. It is the value of one
imported goods. country’s currency in terms of another country’s
• Controlling new import licences and currency, for example, the value of Zimbabwean
dollar in terms of American dollar. The exchange
refusing to renew expired licences,
rate:
which reduce the number of importers
and consequently reduces imports. (a) Tells you what a dollar is worth in relation to
• Devaluing the local currency, which other foreign currencies.
make imports more expensive. (b) Determines how much of one currency you
• Enforcing quotas, which limits the can exchange for another.
quantities of goods that may be
imported.
• Enforcing trade embargoes to reduce
imports from certain countries to zero.
49
TOPIC 3 CONSUMER PROTECTION
Topic objectives • Conditional buying of goods, whereby

consumers are forced to buy a certain
By the end of the topic, you should be item in order to be able to buy something
able to: on demand.
• Misleading advertisements that make
• identify areas where consumers need
false claims.
protection.
• Indecent or immoral advertisements that
• identify ways in which consumers can
undermine social standards, for example,
be exploited. using a picture of naked women in a bath
• explain consumer rights. to promote a brand of soap.
• list and explain consumer • Incorrect labelling of goods, for example,
responsibilities. writing white sugar on a packet of salt.
• identify consumer protection boards • Being overcharged for goods and
and explain functions of each. services.
• describe methods of protecting the • The unfair and unlawful repossession of
consumer. goods bought on hire purchase.
• explain the role of government in • The selling of harmful or dangerous
protecting consumers. goods such as drugs without notifying
• identify how consumers can protect the consumers about the dangers.
themselves. • The sale of goods which are not fit for
human consumption.
Consumer protection • Refusal by some manufacturers to
honour guarantees when the product has
Involves laws, regulations and practices put in
a problem during the guarantee period.
place by the government and other organisation in
• The use of disclaimer clauses, for
order to protect consumers. example, at supermarket parcel counters
Consumers need protection from the there are often signs saying parcels are
left at the owner’s risk.
following malpractices by traders:
• Hoarding goods by traders to create an
• False cutting of prices, for example, artificial shortage of the goods so that
lying to consumers that a product was they hike prices.
$10 and now its $6 yet it was originally • Selling poor quality goods.
$6. • Bad production methods that pollutes the
• Wrong or incorrect weights and environment.
measurements of goods.
50
Consumer rights Right to redress
Right to be heard • To redress means consumers have a

way to make things right again.
• Consumers are allowed to express • Consumers must be compensated
themselves in matters of their concern. fairly when they make claims against
• They must also be allowed to lodge suppliers.
complaints whenever they are not
satisfied. Right to a healthy environment
Right to safety • Consumers must be protected against

harmful environmental practices.
• Consumers must be protected against • To keep their environment safe.
harmful goods and services.
• They should be protected from Consumer responsibilities
dangerous production methods.
Social responsibility:
• Methods that are dangerous to their
health. • Consumers have to control their actions
Right to basic human needs (consumption) habits.
• They should not affect others in the
• Consumers must have access to basic society.
goods and services. • They should not abuse public goods.
• For example, clothing, food, shelter,
water and health care. Personal awareness:
• Traders should provide basic needs at
• They need to be careful when shopping.
affordable prices and in good quality.
• They have a responsibility to
Right to be informed understand the safety requirements.
• Consumers must be provided with all Caring for the environment:
the necessary information.
• Information about a product such as • They should take care of their
price, weight, colour and many more. environment.
• Avoiding things such as deforestation,
Right to choose
river banks cultivation and many more.
• This right protects consumers against
Consumer solidarity:
monopolistic tendencies by traders.
• They must be provided with a variety of • They should unite to have group
goods and services. bargaining power.
• To allow them to choose what they want • Big numbers make a difference when
exactly. fighting for rights.
Right to consumer education • Folding hands will not help them
instead they will be exploited more.
Consumers must be taught and be aware of their
rights.
51
TOPIC 4 BUSINESS ORGANISATIONS
Topic objectives • describe the features of Small to

Medium Enterprises (SMEs).
By the end of the topic, you should be • explain the importance of SMEs.
able to: • outline the challenges faced by Small to
Medium Enterprises (SMEs).
• justify the importance of business
• explain the reasons for and against
organisations.
commercialisation, privatisation and
• describe private and public sectors. nationalisation.
• identify business units under private
and public sectors. Business organisations
• explain the features of unincorporated • A business organisation involves an
businesses. individual or group who undertake an
• examine advantages and disadvantages activity towards the attainment of a
of unincorporated business units. common objective.
• distinguish between sole proprietorship • There are various organisations with
and partnership. various objectives.
• state the types of incorporated business • Examples are profit making, services
units and give characteristics of each. provision or charity.
• describe the formation, ownership and Importance of business organisations
control of incorporated business units.
• outline advantages and disadvantages • They provide goods and services to
of incorporated business units. various types of consumers.
• distinguish between private limited • They create employment in the areas
companies and public limited they are situated.
companies. • They contribute to economic growth.
• They improve people’s living standards
• explain the features, advantages
by availing variety.
and disadvantages of multinational
• They help by bringing technology into
corporations.
the country.
• give reasons for the formation of public
• They generate foreign currency through
enterprises.
the sale of goods and services to foreign
• state the functions of public enterprises.
countries.
• outline the merits and demerits of
• They provide training in skills and
public sector enterprises. further education to their employees.
• identify traders associations and • They help in reducing social problems
explain their functions. such as crimes by keeping many people
busy.
55
The reasons why a cheque may be Example 6.1
dishonoured by the bank
T. Chikuni, a trader, paid a cheque of $15 000
• The amount in figures is different from to Levite a supplier of rice. Both the trader and
the amount in words, for example, the supplier use CBZ as their bank and both use
thirty thousand dollars and in figures as Kwekwe as their bank branch.
$300 000.
• There is insufficient balance in the Required
drawer’s account. Describe the process on how a cheque paid to
• Wrong signature, that is, the one which Levite is cleared by the bank.
is different from the specimen signature
in the bank. Suggested answers
• There is no date to show when the • Levite (payee) deposits a cheque of $15
cheque was written. 000 in his bank account.
• Cheque is torn or dirty. • The CBZ (drawee) will credit Levite’s
• When the cheque is expired. account with $15 000.
• When the cheque is not signed.
• The CBZ also debits $15 000 in T
• When alterations are not signed for by
Chikuni’s account.
the drawer.
• In short, Levite’s account increased
• Drawer’s account is closed.
with $15 000 and T Chikuni’s account is
• When the cheque is post-dated,
reduced by $15 000.
presented before the actual date.
• All these transactions are done at
• When the cheque was stopped by the
branch level since both use the same
drawer for payment.
• When the drawer is dead or mad. bank and branch.
• When the drawer has declared
(b) When the drawer and the payee use the
bankruptcy.
same bank but with different branches
Clearing of Cheques
• Payee deposits the cheque in his or her
• This refers to the process of transferring account.
funds from the drawer’s account to the • The payee’s account is credited by the
payee’s account. payee’s branch.
• A cheque may be cleared under any of • The payee’s branch will send the cheque
the three conditions these include: to its headquarters.
(a) W
hen the drawer and payee use the same • The headquarters will arrange the
bank and branch
cheques received according to their
branches.
• The payee deposits the cheque in his or • The headquarters will send the cheque
her bank account. to the drawer’s branch.
• The account of payee is credited. • The drawer’s branch then debits the
• The account of the drawer is debited drawer’s account.
(reduced).
86
Example 6.2 • The cheque is then send to the drawer’s
branch by the headquarters.
Mudzimba, a trader, paid $35 000 by cheque
• The drawer’s branch will then debit the
to Nxumalo, a supplier of potatoes. Both
drawer’s account.
Mudzimba and Nxumalo use the same bank,
CBZ. Mudzimba’s bank branch is Gweru and Example 6.3
Nxumalo’s bank branch is Bulawayo.
Chirambwi, a trader, paid $50 000 by cheque to
Required Duri, a supplier of tomatoes. Chirambwi uses
Explain the process on how the cheque will be Barclays and his Branch is Masvingo and Duri
cleared by the bank. uses CBZ and his Branch is Mutare.
Suggested answer Required

• Nxumalo deposits the cheque in CBZ Explain the process of clearing the cheque from
branch of Bulawayo. Duri to Chirambwi.
• CBZ Bulawayo branch will credit
Suggested answer
Nxumalo’s account with $35 000.
• CBZ Bulawayo will send the cheque to • Duri deposits the cheque of $50 000 to
its headquarters. CBZ at Mutare Branch.
• Headquarters will arrange cheques • CBZ will then credit the account of
received according to their branches. Duri with $50 000.
• The cheque is then send to the branch • CBZ Mutare Branch will take the
of Mudzimba by the headquarters. cheque to its headquarters.
• CBZ Gweru branch will then debit • The headquarters will arrange all
Mudzimba’s account with $35 000. cheques received from its branches
according to their banks.
(c) W
hen the drawer and the payee use • Chirambwi’s cheque is then send to
different banks the Reserve Bank of Zimbabwe for
• The payee deposits the cheque into his cleararnce.
or her account. • At the Reserve Bank of Zimbabwe, the
• The account of payee is credited by his representatives of Barclays collect the
or her bank branch. cheques to its headquarters.
• The payee’s branch send the cheque to • The headquarters of Barclays will sort
its headquarters. cheques according to their branches.
• At the headquarters, the cheques are • Chirambwi’s cheque is then send to
sorted according to banks. Barclays Masvingo Branch.
• The cheques sorted by the headquarters • The account of Chirambwi will be
are then send to the clearing house debited by Barclays Masvingo branch.
(Central Bank).
• Representatives of the drawer’s bank Advantages of using a cheque
will take the cheques to their bank. • It is faster to write a cheque than to
• The headquarters of the drawer will count notes and coins.
sort the cheques according to their • It is safe to use if crossed.
branches.
87
• Reducing the debtors collection period. Opening + Closing inventory
But, Average inventory =
• Delaying to pay suppliers. 2
• Leasing idle and inefficient assets. Margin
• Dispose inefficient and old assets.
• Is when gross profit is expressed as a
Turnover percentage of turnover.
• Helps to measure the company’s
• Is the sales figure after deduction of the
performance.
goods returned by credit customers.
• It is calculated as follows;
• Also known as net sales.
Gross profit
• Is calculated as follows: Margin = Turnover # 100%.
Turnover = Sales – Returns inwards Mark-up
(Sales returns).
• Is when gross profit is expressed as a
Gross profit percentage of cost of sales.
• Is the excess of turnover over the cost • It is calculated using the following
of sales. formula:
Gross profit
• Is the profit before any other income Mark – up = Cost of sales # 100%.
and operating expenses.
• It is determined as follows: Example 6.5
Gross profit = Turnover – Cost of sales.
Ncube is a trader and has provided you the
Cost of sales following information for the year 2022
• Is the value which represents the cost of $

goods sold during the year. Inventory, 1 January 2022 17 000
• It is calculated as follows; Inventory, 31 December 2022 13 000
Cost of sales = Opening inventory + Purchases 86 000
purchases – Closing inventory. Sales 99 000
Sales returns 2 000
Net profit
Calculate
• Is the excess of gross profit over
(a) Turnover
expenses.
(b) Cost of sales
• Is the difference between gross profit
(c) Gross profit
and expenses.
(d) Rate of inventory turnover
• It is calculated as follows;
(e) Margin
Net profit = Gross profit – Expenses. (f) Mark-up
Rate of inventory turnover Suggested solution
• Is a measurement of the number of (a) Turnover = Sales – Sales returns
times inventory is sold in a given = $(99 000 – 2 000)
period. = $97 000.
• It is calculated as follows; (b) Cost of sales = Opening inventory +
Cost of sales Purchases – Closing inventory
Rate of inventory turnover = Average inventory
100
= $(17 000 + 86 000 – 13 000) • The ZSE is a market for second hand
= $90 000. shares.
• Shares sold at the stock exchange are
(c) Gross profit = Turnover – Cost of sales
those which have already been issued
= $(97 000 – 90 000)
by the firms and investors are changing
= $7 000.
hands on ownership.
(d) Rate of inventory turnover = • Members of the public who are
Cost of sales interested to invest in shares buy their
Average inventory shares on the stock exchange where
= $90 000 they are listed.
$15 000 • Different companies list the shares they
= 6 times. are issuing on the stock exchange.
• The nominal or the issuing price per
Average inventory
each share is indicated at the Zimbabwe
Opening inventory + Closing inventory
= 2 Stock Exchange.
$ _17000 + 13000 i Functions of the Zimbabwe Stock Exchange
= 2
= $15 000 • Acts as a market that puts together
(e) Margin
Gross profit
= Turnover # 100% those willing to buy and issue second
hand shares.
= $$97
7000 #
100%
000 • Controls admission of new members.
= $97 000 • Regulates admission of new members.
= 7.22%. • Lists and delists some companies
Gross profit after examining and assessing their
(f) Mark-up = Cost of sales × 100
performance.
= $90
7000 • Acts as a barometer of the well-being of
000 × 100
the economy of Zimbabwe.
= 7.78%
• Establishes prices of shares depending
Return on capital employed on the supply and demand.
• Quotes and publishes prices of shares.
• Is when net profit is expressed as a • Educates members of the public on
percentage of capital employed. investment of shares through the
• Capital employed is the difference outreach programmes.
between assets and liabilities. • Sets a code of conduct for dealers
It is calculated as follows; to protect investors against unfair
Net profit
Return on capital employed = Capital employed dealings.
• Provides investors with names of
The Zimbabwe Stock Exchange (ZSE) reputable companies.
• Compensates investors who may be
• This is a market for buying and issuing
defrauded by dealers.
of shares, stocks and bonds and other
• Prepares reports and information
second hand securities.
on companies dealing on the stock
exchange.
101
TOPIC 8 BUSINESS
COMMUNICATION
Topic objectives • It deals with the transmission of

information from one person or
By the end of the topic, you should be
business to another.
able to:
• The sender pass the information and the
• explain the term communication. receiver receives the information and
• outline the importance of gives feedback through a reply.
communication. • The information send by the sender
• state advantages and disadvantages of may be oral, printed, electronic, boldly
various telecommunication and postal and diagrammatic or images.
services.
• outline factors to consider in choosing Importance of communication
the mode of communication.
• Helps the business to send orders to its
• distinguish between formal and
customers.
informal business communication.
• identify advantages and disadvantages • Helps the business to receive enquiries
of formal and informal business from its customers and suppliers.
communication. • Enables the business to receive
• explain the importance of effective documents from different stakeholders.
communication. • Helps the business to settle queries
• identify enhancers of effective between the business and its customers
communication. and suppliers.
• outline barriers to effective • Helps to cut the distance barrier
communication. between the business and its suppliers
• suggest ways of overcoming barriers to and customers.
effective communication. • Helps the business to receive complains
• identify trends in communication. from its customers and suppliers.
• assess the impact of these technological
• Helps the business to arrange contracts
developments in communication.
with customers, suppliers and
Communication employees.
• Helps the business to place orders to its
• Is the passing of message from one
suppliers.
place or person to another.
• Helps the business to make payments
• Is the process of sharing of messages,
to its suppliers, employees and service
facts, opinions, ideas and emotions
providers.
between a receiver and sender.
• Is the process of conveying information • Helps the business to receive payments
from a sender to a receiver using a from its customers.
medium of transmission.
119
TOPIC 10 WAREHOUSING
Topic objectives The importance of warehouses

By the end of the topic, you should be able • Help to protect goods against weather
to: conditions.
• Help to reduce theft of goods.
• describe warehousing.
• Help to reduce damage of goods.
• identify indigenous storage systems.
• Help to avoid shortage of goods at the
• discuss importance of warehousing.
market.
• identify types of warehouses.
• Help to minimise price fluctuations.
• explain the functions of warehouses.
• Facilitate international trade.
• select an appropriate site for a
• Enable the government to collect
warehouse.
customs duty.
Warehousing • Help to keep seasonal goods.
• Provide place for displaying goods.
• Is the process of storing physical goods • Store raw materials needed for future
before they are further distributed. production.
• It is the holding and protection of • Even out supply.
goods until they are dispatched to the • Enable goods to be available at the
consumers. market all the time.
• It is the storing of goods that are to be • Help to clear lines of production.
distributed later. • Enables goods to mature, such as wine.
• It is the process of physically storing • Facilitate branding, packing, blending,
goods until they are sold or distributed bottling and so on.
to another location. • Help to store raw materials, equipment
• It is the aid to trade which facilitates the and spare parts.
storage of goods. • Help to store excess or surplus of goods.
Warehouse Indigenous storage systems
• Is a large building used to store goods. • Is the storage system usually used in
• It is a building reserved for storage of communal or rural areas.
goods. • The facility helps to keep harvested
• It is the premise used to store goods crops at the end of the farming season.
before they are sold, used or sent to • The indigenous storage warehouse is
consumers. known as dura or isiphala.
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• They are ventilated and dry places. (b) Manufacturers warehouse
• They are usually built on raised ground
• Is owned by manufacturers.
to prevent moisture getting into the
• Used to store finished goods, raw
crops.
materials and work in progress.
• Grass thatching is used for more
• Usually located in manufacturers
ventilation.
production houses.
• Usually splitted into three or more to
• Also used to store spare parts of the
accommodate different types of crops
manufacturing plant.
to be kept.
• The security feature is a lock in which a (c) Retail warehouse
key is kept by the father or mother.
• Is the warehouse owned by retailers.
• Enable farmers to keep farming
• Stores goods bought in bulk from
equipment.
wholesalers.
• Help to keep the harvested crops for use
• Retailers have the capacity to pack,
throughout the season.
blend and brand goods while in
• Used to measure the status quo of the
warehouse.
farmer in rural areas.
• Helps the retailer to store seasonal
Types of warehouses goods.
• Reduces theft risks.
There are several types of warehouses.
• Evens out supply.
(a) Bonded warehouses
(d) Wholesale warehouse
• Is a warehouse that stores dutiable
• Is owned by wholesalers.
goods.
• Goods are kept in bulk from different
• They secure space for goods before the
manufacturers.
payment of duty.
• Helps wholesalers to stock goods ahead
• Allow goods to be graded.
of demand.
• Enable imported goods to be tested.
• Helps wholesalers to brand, blend, pack
• Help the government to raise revenue.
and bottle goods.
• Are owned by both the government and
private firms. (e) Cold storage warehouse
• If owned by private firms, they have to
be given a licence by the government. • Is a warehouse used to store perishable
• Goods are not manufactured in bonded goods such as meat.
warehouses. • It has a refrigerator.
• Enable goods to be inspected by the • Temperatures can be adjusted.
revenue authorities. • Needs electrical power in order to
• Bonded storage ensures that duty is operate.
paid before goods are released.
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(f) Public warehouses Factors considered when choosing the
• Are owned by governmental bodies. site of a warehouse
• Store goods that belong to the • The safety of the goods.
government. • The availability of the security.
• Private sectors can rent places to store • The availability of the electrical power.
their goods. • Convenient to suppliers and customers.
• Used to store public goods. • The cost of buying land to construct a
• Usually used by small firms which warehouse.
cannot construct their own warehouses. • The cost of renting a warehouse if the
(g) Co-operative warehouse company does not afford to construct a
warehouse.
• Is owned by a co-operative. • Regulations and rules of the local
• It is managed by a management authority.
committee. • The availability of the transport
• Members can store their goods. network.
• Has no middlemen. • The availability of the communication
• Non-members can store their goods at network.
lower costs. • Available technology.
(h) Transporter warehouse • The environmental condition of the site.
• The size of the warehouse.
• Owned by transporters.
• Helps to store goods in transit.
• Goods kept are those waiting for
delivery.
• Provides safety for goods in transit.
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TOPIC 11 MARKETING
Topic objectives The need for marketing

By the end of the topic, you should be able • To educate customers about the
to: company’s product.
• Helps to satisfy the customer’s needs.
• justify the need for marketing.
• Helps to gain information about
• explain different marketing concepts.
consumers.
• assess the implications of various
• To establish revenue.
marketing concepts to the business.
• To promote product awareness to the
• identify types of markets.
public.
• explain types of markets.
• Helps to anticipate changes in the
• discuss the advantages of physical and
customer’s needs.
virtual markets.
• Helps to identify the customers’ needs.
• describe features of physical and
• To keep pace with changes on
virtual markets.
customer’s preferences, tastes, fashion
• explain market segmentation.
and so on.
• identify bases of market segmentation.
• To increase revenue.
• outline reasons for market
• To ensure that revenue is obtained on a
segmentation.
long run.
• explain mass and niche marketing.
• To build the reputation of the company.
• identify marketing mix variables.
• To enable customers to get the best
• explain marketing mix variables.
products and services at the market.
• analyse impact of marketing mix
• To develop the economy of the country.
variables.
• To create employment through
Marketing marketing managers, sales personnel
and advertising agents.
• Is the management process responsible
for identifying, anticipating and Marketing concepts
satisfying customer requirements
• Are all efforts aimed at satisfying
profitably.
consumers with the aim to get profit.
• There are activities the business
• It is preoccupied with the idea of
conduct to promote the buying and
satisfying the needs of the customer by
selling of a product or service.
means of the product as a solution to the
• It is a process of getting potential
customer’s needs.
customer or interested customers in the
• It is the strategy that firms implement to
business’ product or service.
satisfy the customers’ needs.
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• It aims at increasing sales, maximising • Aims to identify and understand
profits and fighting competition. customer needs.
• The marketing concepts include: • So that the product will be self-selling
at the market.
(a) Production concept
(e) Social marketing concept
• Operates on mass production.
• It assumes that its customers value • Focuses on the impact that the
price. organisation and products have on
• It focuses on lowering its production societies.
costs in order to meet prices which • The firm do not only produce what the
customers can afford. customer needs.
• Assumes that the product will be sold • It produces what is good for the
as long as it has low production costs customer.
which makes it cheap at the market.
Types of markets
• Enables the business to enjoy
economies of scale and promotes • A market is a place or process where
efficiency on production. buyers and sellers meet or interact to
exchange goods and services for profit.
(b) Product concept
• It is the total of all buyers and sellers
• Is concerned on company’s products within considerable area or region.
and refining them to be superior at the • There are several types of markets.
market. (a) Physical markets
• It is centred on the quality of the
product. • Is a set up where buyers and sellers can
• The firms produce what they think are physically meet.
quality goods in their point of view. • The buyers will purchase the desired
• They assumes that consumers do merchandise from sellers in exchange
not know what is good until they see for money.
something which has been designed. • There is face to face interactions
between buyers and sellers.
(c) Selling concept • There is physical location.
• It does not prioritise its customers. • Goods are displayed at the market.
• It focuses on the business to sell more • Can be quickly recognised by the
products and building on its profit public.
margin. • There is immediate delivery of goods
• The firm produce whatever they can and services.
and then try to sell them to customers. Advantages of physical markets
• The firm undertakes a large-scale of
• Buyers and sellers physically meet at
retailing and promotional effort.
the market.
(d) Marketing concept • Buyers and sellers can negotiate since
there is face to face interaction.
• The firm begins with the customers and
their needs.
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• Customers have capacity to view the (c) Auction market
quality of the product.
• Is the market where buyers compete
• Physical outlets assists customers in
with each other to buy stocks through
making decision.
bidding.
• There are no shopping costs on physical
• The sellers state the price and bidders
markets.
(buyers) will compete.
Disadvantages of physical markets • The seller will increase the price of item
to allow buyers to compete.
• Goods are sold on cash basis only.
• The buyer who will buy stock is the one
• Congestion at the market may cause the
who is willing to pay the highest price.
environment to be unhygienic.
• The price is determined by the highest
• Have limited operating time unlike
bid.
virtual market.
• It has a physical location where buyers
(b) Virtual markets and sellers meet.
• Customers purchase goods online. (d) Black market

• They use computers or smartphones
• Refers to illegal trade that takes place in
connected to the internet.
secret.
• Transactions can be conducted at
• Goods and services are illegally
anytime.
exchanged between buyers and sellers.
• Remove the distance barrier.
• It takes place outside government
• Have wide coverage as compared to
sanctioned channels.
physical market.
• It is physical or sometimes virtual.
• There is no need for travelling.
• It is usually caused by scarcity of
• Variety of goods can be accessed.
goods.
Advantages of virtual markets • For example, people buying and selling
foreign currency using their own
• Goods can be purchased at anytime.
exchange rates, ignoring the official
• No travelling costs.
bank rate pegged by the government.
• Have wide coverage.
• Remove distance barrier. Market segmentation
• Customers have access to get images of
• Is the process of dividing up the market
the product they want to acquire.
of potential customers into their own
Disadvantages of virtual markets unique groups.
• Is the process of classifying consumers
• There is a lot of scams on virtual
into groups based on geographic,
market.
demographic, psychographic and
• Goods are expensive due to postage
behaviour difference.
costs.
• It is the practice of dividing target
• There is high advertising costs.
market into approachable groups.
• Pictures may not portray the real
quality of goods.
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Methods of segmenting a market • To enable the firm to conduct different
promotional activities.
(a) Geographic segmentation
• For the business to concentrate on
• The market is divided by locations. producing high quality goods.
• It is based on the belief that consumers • Helps the firm to target its potential
who live in the same region share some customers.
common human needs and wants.
• The reason behind is that, consumer Mass marketing
tastes may vary between geographical Is the selling of one product to the whole market
areas and it is appropriate to offer with no attempt to target groups within it.
different products in different
Features of mass marketing
geographical areas.
(b) Demographical segmentation

• Serves a large market as compared to
niche market.
• Is a market segmentation technique • There is mass production in order to
where an organisation’s target market satisfy the large market it serves.
is segmented based on demographical • There is low production costs due to
factors such as age, gender, education mass marketing.
and income. • Ignores the segments.
• This refers to the categorisation of • It is suitable for large firms.
consumers into segment based on their • Goods are sold at low prices due to low
characteristics. costs of production.
(c) Psychographic segmentation
• The firm has the capacity to dominate
the market.
• This refers to the breakdown of the • Has high sales volume.
customer groups into segments that • There is mass distribution of product.
influence the buying behaviour. • It assumes that all customers need the
• The buying behaviour include beliefs, same product.
occupation, values, life style, social • Promotes one product to all customers.
status, opinions and activities. • Use advertising media with high
(d) Behavioural segmentation
coverage.
• Takes place when the product life cycle
• Divides people into groups who share is at maturity phase.
common behavioural patterns. • It ignores the existence of segments and
• It is based on lifestyle, purchasing offers a single mix to the heterogeneous
power, customer loyalty, customer market.
satisfaction, customer benefits and
Advantages of mass marketing
reasons for purchase.
Reasons for market segmentation

• Enables the firms to maximise profits.
• Mainly concerned with low costs and
• To identify competitors at the market. high sales volume.
• To enable the firm to conduct effective • Reduces the production cost per unit
advertising. due to mass production.
155
EXAMINATION PRACTICE 1
EXAMINATION PRACTICES
PAPER 1
Time 1 hour 15 minutes
Answer all questions
1. Raw materials turned into finished goods at which stage of production?

A. Extractive B. Primary C. Secondary D. Tertiary
2. Production of goods on a large scale is known as
A. direct production. B. commerce.
C. standardisation. D. mass production.
3. Which of the following is an indirect service?
A. Teaching B. Nursing
C. Advertising D. Singing for fans
4. Identify an external stakeholder from the following.
A. Worker B. Manager C. Customer D. Owner
5. Which of the following is not an advantage of value addition?
A. Increased costs B. Increased value
C. Better appearance D. Increased life span
6. An indent is a used when
A. paying for goods. B. requesting for goods.
C. delivering goods. D. collecting goods.
7. Which is a characteristic of a supermarket?
A. Deliver goods to customers B. Offer credit
C. Offer personal service D. Wide aisles
8. Identify the function of a wholesaler to the manufacturer.
A. Offering credit
B. Advising on display technique
C. Clearing production line
D. Evening out supply of goods
9. Small-scale retailers survive competition from large scale retailers because
A. small-scale retailers can afford expensive advertising.
B. small-scale retailers have easy access to credit finance.
C. small-scale retailers offer a wide variety of goods.
D. small-scale retailers put emphasis on personal service.
169
10. What can be done to correct an unfavourable balance of payment?

A. Import more goods B. Reduce customs duty
C. Reduce foreign currency allocation D. Remove import quotas
11. Which is not a trend in retailing?
A. Grading B. Branding
C. Pre-packaging D. Barcoding
12. The excess of total exports over total imports is called
A. deficit. B. surplus. C. dividend. D. shortage.
13. Zimbabwean manufactures are members of the
A. Chamber of Mines.
B. Zimbabwe National Chamber of Commerce.
C. Confederation of Zimbabwe Industries.
D. Bakers Association of Zimbabwe.
14. Identify an unincorporated business unit from the following.
A. Private limited company B. Public limited company
C. Public corporation D. Partnership
15. Beloved bought goods from Blessed on 8 January 2015 costing $1000, she got a 30% trade discount
and 5% cash discount on 2 February 2015, how much did she pay?
A. $650 B. $665 C. $700 D. $950
16. Which of the following document is printed in red?
A. Pro-forma invoice B. Catalogue C. Credit note D. Invoice
17. Marketing boards are established to
A. control production. B. reduce production.
C. maximise profits. B. compete in production.
18. Which set contains legal tender?
A. Bearer cheques and notes B. Bank notes and coins
C. Voucher and money order D. Coupons and cheques
19. Inflation caused by a rise in the price of an input in production is called
A. demand pull inflation. B. creeping inflation.
C. cost push inflation. D. galloping inflation.
20. When returns inwards are subtracted from sales, we get
A. net profit. B. net loss. C. turnover. D. sales returns.
21. Who works in the insurance business?
A. Broker B. Factor C. Merchant D. Speculator
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22. Which policy covers customers injured within the shop?
A. Comprehensive B. Employers liability
C. Fidelity guarantee D. Public liability
23. Which telecommunication sends exact copies of diagram?
A. Data post B. Facsimile
C. Radio paging D. Telex
24. Radio paging is best for calling
A. shareholders for an annual general meeting. B. police to attend an accident scene.
C. an ambulance to collect a sick person. D. a till operator to the manager’s office.
25. Which factor is not considered when choosing a communication service?
A. Distance B. Cost of service
C. Urgency of message D. Status of sender
26. In containerisation, the term “groupage” means
A. storing containers in one warehouse.
B. transporting a number of containers in one ship.
C. transporting consignments to different destinations.
D. using one container for a number of consignments.
27. Which is an advantage of sea transport over air transport?
A. Speed of delivery B. Cheap
C. Flexibility D. No accidents
28. A ___________ is a ship meant for hire.
A. cargo liner B. oil bulky oil C. tramp D. roll on roll off
29. Which product would be stored for a long time in a warehouse?
A. Bread B. Eggs C. Soap D. Tomatoes
30. Which is a false statement about warehousing?
A. It reduces price fluctuations. B. It evens out supply.
C. It produces capital goods. D. It prevents shortages.
31. Silos are meant to store which product range?
A. Furniture B. Vegetables and fruits
C. Grain D. Clothing
32. What is an advantage to the consumer of competition between manufacturers of similar products?
A. Buying goods on impulse
B. Creating employment in the advertising business
C. Increasing the sales of new products
D. Obtaining high quality goods at lower prices
171
33. What does a code of advertising practice guard against?

A. Competitive advertising B. Direct advertising
C. Dishonest advertising D. Persuasive advertising
34. Identify a disadvantage of advertising in a newspaper.
A. Can only reach the literate
B. Adverts can be spread using different languages
C. Can be in colour for greater impact
D. Information can be passed on for readership
Use the following information to answer question 35 and 36.
A trader provides the following information.
Sales $12 000
Current assets $ 7000
Non-current assets $15 000
Cost of goods sold $ 8 000
Current liabilities $ 5 000
35. What is the gross profit of this business?
A. $20 000 B. $4 000 C. $8 000 D. $22 000
36. The working capital is
A. $17 000. B. $10 000. C. $2 000. D. $3 000.
37. What does consequential loss insurance cover?
A. A loss resulting from another loss
B. Expenses while a business is closed for repairs after a fire
C. Money stolen by a dishonest employee
D. The life of an important employee
38. What is the function of the Reserve Bank of Zimbabwe?
A. Giving financial advice to traders
B. Issuing shares to the public
C. Providing a clearing house to bankers
D. Running individual bank accounts for the public
39. Direct debit facility is used to make payments when
A. amounts are fixed. B. payment is regular.
C. amount varies. D. making numerous payment.
40. Which document accompanies goods being transported by ship?
A. Consignment note
B. Shipping note
C. Bill of lading
D. Bill of exchange
172
PAPER 2
Time: 2 hours
SECTION A [40 Marks]

Answer all questions in this section.
1. (a) State the two forms of production. [2]

(b) Give the reward for the following factors of production:
(i) Capital. [1]
(ii) Enterprise. [1]
(c) List any two types of wholesalers. [2]
(d) Identify any two contents of a Partnership Deed. [2]
2. (a) State the characteristics of road side traders. [2]
(b) Outline the importance of a bill of exchange. [3]
(c) Describe a post office box. [3]
3. A trader provides the following balances
Sales $4 500
Cost of goods sold $2 500
Expenses $800
(a) Calculate
(i) Gross profit. [1]
(ii) Net profit. [2]
(b) What are the advantages of a tramp over a liner? [3]
(c) Explain any two benefits of e-insurance. [2]
4. (a) State any two trends in communication. [2]
(b) Outline disadvantages of advertising. [4]
(c) Give any two functions of merchant banks. [2]
5. (a) Explain why firms have their own systems of transport to move their goods. [3]
(b) List any two types of storage facilities. [2]
(c) Outline the importance of a bonded warehouse. [3]
173
SECTION B [60 Marks]

Answer any three questions from this section.
6. (a) Differentiate between home trade and foreign trade. [14]

(b) Why do businesses need efficient communication? [6]
7. (a) Outline features of a supermarket. [12]
(b) What factors should a firm consider when choosing a mode of transport? [8]
8. (a) State and explain any five trade tariffs. [10]
(b) How does the government of Zimbabwe protect consumers from being exploited? [10]
9. (a) Outline the functions of a commercial bank. [8]
(b) Why is insurance important to a manufacturing firm? [6]
(c) Why are marketing boards of great importance? [6]
10. (a) Discuss the negative effects of inflation to a country. [10]
(b) Use the following information to prepare a trading account. [10]
$
Sales 50 600
Purchases 22 000
Returns inwards 600
Returns outwards 2 000
Opening inventory 3 000
Carriage inwards 1 500
Closing inventory 3 500
11. (a) Outline ways in which government assists small firms. [8]
(b) Give functions of customs and exercise authorities. [8]
(c) What are the disadvantages of partnership? [4]
12. (a) Explain the advantages of niche marketing. [6]
(b) Discuss the impact of multinational companies to the host country. [14]
13. (a) Explain the importance of advertising to a manufacturer. [10]
(b) What role does a forwarding agent play in international trade? [10]
174
PAPER 1
Time 1 hour 15 minutes
Answer all questions
1. At which stage of production is more value added to flour?

A. Direct production B. Primary production
C. Secondary production D. Subsistence production
2. Which of the following is concerned with the secondary stage of production?
A. A cotton farmer B. A fisherman C. A gold panner D. A stone carver
3. Why is bread distributed as quickly as possible to consumers?
A. It has a short life B. It is bulky
C. It is in great demand D. It is very cheap
4. Which is a disadvantage of specialisation?
A. Full utilisation of equipment
B. Increases productivity rate
C. Absence of a worker interrupts the whole production
D. Promotes division of labour
5. The advantage of standardisation of goods is that,
A. it improves the quality of the goods. B. it improves the standard of living.
C. it makes goods identical to each other. D. it splits work into simpler terms.
6. The self-selection method of selling is used by
A. independent stores. B. mail order firms.
C. departmental stores. D. mobile shops.
7. Which is a feature of a general wholesaler?
A. Offers credit facilities and delivery services
B. Sell goods on cash and carry basis
C. Sell goods on credit basis without providing delivery services
D. Sell goods on credit basis but do not offer delivery services
8. Which of the following helps the till operator to scan the price of the product?
A. Logo B. Barcode
C. Brand name D. Seal of approval
207
Use the information below to answers 16 and 17.
$
Sales 108 000
Sales returns 8 000
Cost of sales 58 000
Net profit 11 000
18. What is the gross profit of the business?
A. $42 000 B. $50 000 C. $47 000 D. $64 000
19. What is the value of the operating expenses of the business?
A. $47 000 B. $31 000 C. $39 000 D. $42 000
20. Which is the function of the Reserve Bank of Zimbabwe?
A. Issuing coins and notes
B. Offering loans for construction of buildings
C. Issuing trading certificates to traders
D. Collecting customs duty for imported goods
21. A bank cheque drawn by a bank on itself is known as the
A. bill of exchange. B. documentary credit.
C. cable transfer. D. bank draft.
22. Which mode of communication is used by banks to transmit foreign exchange rates?
A. Data post B. Datel C. Email D. Free post
23. Which of the following is an informal communication in business communication?
A. Email B. Memo C. Grapevine D. Letter
24. The advantage of Expedited Mail Service (EMS) is that
A. important letters are compensated if lost.
B. it provides the proof of posting.
C. urgent letters are delivered quickly.
D. letters can be posted without paying postage.
25. Which statement is a disclaimer clause?
A. Beware of dogs B. Buy where your money buys more
C. Parcels left at the counter at your own risk D. Smoking is hazardous to health
26. The function of the Standard Association of Zimbabwe is to
A. test the products and stamp a seal of approval.
B. pass legislation laws which protect consumers.
C. inspect the measurements and weights of goods.
D. inspect the prices of the basic commodities.
209
35. Which of the following risks cannot be insured by insurance companies?
A. Bad management
B. Accidents
C. Consequential losses
D. Fire outbreak
36. Trust insured his car valued at $40 000 with company A for $40 000 and with company B for
$40 000.
How much would Trust receive from B when his car is declared a write off after the accident?
A. $40 000
B. $20 000
C. $80 000
D. $120 000
37. A company insured goods in the warehouse against fire. A strong wind blew the warehouse down
and goods were stolen.
Which principle prevents the insurance company from paying the goods stolen?
A. Indemnity
B. Insurable interest
C. Proximate cause
D. Utmost good faith
38. The life assurance which the insured can use as an investment to buy long-term assets is the
A. funeral assistance.
B. health insurance policy.
C. endowment policy.
D. whole life policies.
39. Which is an intellectual property of a business?
A. Copyrights
B. Rentals
C. Shares
D. Retained profit
40. Which is not a feature of an entrepreneur?
A. Is a famous person in community
B. Is innovative
C. Is a risk taker
D. Is a hustler
211
PAPER 2
Time: 2 hours
SECTION A [40 Marks]

Answer all questions in this section.
1. (a) Define beneficiation. [1]

(b) State any three examples of secondary production . [3]
(c) Describe the concept of import trade. [2]
2. (a) State one interest of an employee in an organisation. [1]
(b) Identify any three features of small-scale retailers. [2]
(c) List any three business ethical considerations. [3]
3. (a) Define inflation. [1]
(b) State any three purposes of forming a trading block. [3]
(c) Explain what is meant by the balance of payments (B.O.P). [3]
4. (a) State any three factors considered when fixing premiums. [3]
(b) Explain the features of a bank draft. [4]
5. (a) State any three features of private bags. [3]
(b) Explain the features of niche marketing. [4]
6. (a) State any two types of warehouses. [2]
(b) List any two disadvantages of radio in advertising. [2]
(c) Briefly explain what is meant by containerisation. [3]
212
SECTION B [60 Marks]
Answer any three questions from this section.
7. (a) Describe the importance of the bill of exchange. [10]

(b) Outline the challenges faced by traders in international trade. [10]
8. (a) Explain the following terms in a limited company:
(i) Annual General Meeting (AGM), [4]
(ii) Prospectus. [6]
(b) Outline the factors considered when selecting a retail outlet. [10]
9. (a) Describe the procedures taken when making a claim. [10]
(b) Explain reasons why businesses are encouraged to insure on the following
insurance policies:
(i) Public liability, [5]
(ii) Pluvious policy. [5]
10. (a) Explain the process included when clearing a cheque of the two different banks. [10]
(b) Outline the ways of reducing inflation in a Zimbabwean economy. [10]
11. (a) Outline the importance of oral communication. [10]
(b) Explain the importance of the following modes of communication:
(i) Business reply, [5]
(ii) Fax. [5]
12. (a) Outline the advantages of an entrepreneur in trading of goods and services. [10]
(b) Describe factors considered when choosing an advertising media. [10]
13. (a) Outline the advantages of bonded warehouse to an importer. [10]
(b) Explain the following types of ships:
(i) Roll-on Roll-off (Ro-Ro) ships, [5]
(ii) Oil-Bulk Ore (OBO) ships. [5]
213
EXAMINATION 1 PAPER 2
EXAMINATION SOLUTIONS
• Their goods are displayed on
SOLUTIONS movable tables and cardboard
boxes.
SECTION A • They make use of short term
1. (a) State the two forms of production. [2] licences from local authorities.
• Direct production (b) Outline the importance of a bill of
• Indirect production exchange. [3]
(b) Give the reward for the following • It is a method of settling debts
factors of production: used mainly in international trade.
Factor Reward • It forms part of a documentary
(i) Capital Interest credit.
(ii) Enterprise Profit [2] • It can be discounted before it
(c) List any two types of wholesalers. [2] matures to enable the exporter to
• cash and carry wholesalers. obtain early payment.
• general wholesalers. • It enables imported goods to be
• specialist wholesalers. sold before the bill matures.
• cooperative wholesale. • It is evidence of a debt when
(d) Identify any two contents of a accepted and signed by an
Partnership Deed. [2] importer.
• Discounting the bill prevents
• The amount of capital to be
contributed by each partner. working capital being tied up in
• Rate/percentage in which profit debt.
and losses will be shared. • It allows an importer period of
• Management responsibilities of credit before making payment.
each partner. • It enables trade to exist among
• Maximum drawings of cash by Companies of different countries.
each partner. (c) Describe a Post Office box. [3]
• Interest rate to be credited to • It is rented at the post office.
partners’ capital accounts. • It is found on the wall outside each
• Terms under which the partnership post office.
will be terminated. • Each owner has a key.
• Voting rights for partners. • Letters are collected any time of
• Procedure to be followed in the day.
resolving disputes. 3. A trader provides the following balances
2. (a) State the characteristics of road side Sales $4 500
traders. [2] Cost of goods sold $2 500
• They are located in busy roads Expenses $800
where people pass by hence the (a) Calculate
name road side vendors. (i) Gross profit. [1]
• They normally sell fast moving Gross profit = Sales- Cost of
goods such as sweets, vegetables goods sold
and fruits. = $4 500–$2 500
= $2 000
235
(ii) Net profit [2] 4. (a) State any two trends in communication.
Net profit = Gross profit – [2]
Expenses • WhatsApp
= $2 000 – $800 • Facebook
= $1 200 • Skype
(b)
What are the advantages of a tramp • Twitter
over a liner? [3] (b) Outline disadvantages of advertising.[4]
• They have flexible timetables. • It leads to impulse buying and
• The freight charges may be overspending.
negotiated. • It increases prices of goods.
• They can be hired to any • Might undermine social standards.
destination. • It misleads consumers.
(c)
Explain any two benefits of e-insurance. (c) Give any two functions of merchant
[2] banks. [2]
• They arrange for shares to be
• ICT has helped insurance
issued.
companies to open up new local
• They assist limited companies
and regional markets.
to raise capital by arranging for
• Clients can now access current
shares to be issued.
information from insurance
• They sell shares to the public on
websites.
behalf of companies.
• Insurance companies are now
• They provide financial advice.
selling their policies on internet.
• They act as financial advisors to
• Clients now can complete and
companies.
submit documents online to the
• They can advise firms on
insurance companies.
investments and arrange mergers
• Advertising and marketing costs
and acquisitions.
incurred by insurance companies • They act as underwriters; they buy
are now reduced. all the unsold shares after a share
• The number of brokers and agents issue.
in insurance companies has • They accept deposits from both
reduced. individuals and companies for
• The commission paid to insurance safekeeping.
brokers and agents have reduced. • They operate saving accounts and
• There is reduction on the number other types of accounts.
of employees working in offices for • Merchant banks lend money. They
insurance companies. offer loans to both government and
• The paper work has reduced due to private individuals or companies.
increase online transactions. • They finance exporters and
• The use of email and other importers by arranging letters on
telecommunication methods has credit.
reduced Telephone bills.
236
EXAMINATION 7 PAPER 2
• The lines may be through top left
hand of the cheque. SOLUTIONS
• Parallel lines signifies that the
cheque may be deposited directly SECTION A
into bank account.
1. (a) Define beneficiation. [1]
• The parallel lines increase its
• It is the transformation of a
security.
mineral to a higher value of
• The parallel lines indicates that the
product.
cheque cannot be cashed but must • It is the value addition in the
be paid into bank account. mining sector.
• Cash is paid after clearance of the (b) State any three examples of secondary
cheque. production. [3]
(c) The advantages of using cheques as the • Processing
method of payments. [10] • Assembling
• It is faster to write a cheque than • Manufacturing
to count notes and coins. • Construction
• It can be safe to use if crossed. (c) Describe the concept of import trade.
• Saves time and travelling costs to [2]
• Is the buying of goods or services
the bank.
from other countries.
• Can be drawn at any time by the
• It results into outflow of foreign
drawer.
currency.
• The use of cheque enables the • An example is buying fuel from
client to receive a bank statement South Africa.
on a monthly basis. 2. (a) State one interest of an employee in an
• It is safe to carry cheques than to organisation. [1]
carry hard cash. • Job security
• The drawer has the capacity to • Receiving of salaries and wages
stop the payment to be made by constantly
the bank. • Training
• It is convenient than carrying cash. • Fringe benefits
• Provides a proof of payment or (b) State any three features of small-scale
transaction made. retailers. [2]
• Can be endorsed in favour of a • Found in the private sector
• Sell goods in smaller units to
third person.
consumers
• Can be traced if lost.
• Operate from small premises
• Can be cheaply posted than cash.
• Are easy to start
• It may be post dated. • Have very few legal formalities
• Have less capital
• Serve small markets
• Usually are located close to their
customers
• Owned by individuals
273
(c) List any three business ethical • The chances (probability) for
considerations. [3] occurring of risk
• Obeying business regulations • The profit made by the insurance
• Be loyal to the company company
• Treat customers and suppliers (b) Explain the features of a bank draft. [4]
honestly • It is a cheque drawn by a bank on
• Treat customers fairly itself in favour of a customer.
3. (a) Define inflation. [1] • It is used when large sums are
involves.
Is the continuous increase in the price
• It is the bank’s own cheque.
levels of the goods and services.
• Is commonly known as a counter
(b) State any three purposes of forming a
cheque.
trading block. [3]
• It is a secured method of payment
• To share ideas because it cannot be dishonoured.
• To share technology • Payment is guaranteed.
• To promote trade between or • Is also used when the debtor is not
among members known to the creditor.
• To increase investment 5. (a) State any three features of private bags.
opportunities in the region. [3]
• To promote peace in the region • Are used by people without street
• To reduce trade barriers addresses.
• To make it easier on clearance in • Mails are send and collected
international trade during working hours.
(c) Explain what is meant by the balance of • Use the canvas bag which is
payments (B.O.P). [3] supplied by the Post Office.
• It is the difference in the total (b) Explain the features of niche marketing.
value of exported and imported [4]
goods or services. • Is the marketing strategy for
• Excess exports of goods or a particular segment usually
services over imports of goods or neglected by the firm
services is favourable. • There is no still competition
• There is few sales
• Is calculated as exports of goods or
• It caters for customers with similar
services minus imports of goods or
needs
services.
6. (a) State any two types of warehouses. [2]
• Can be deficit (unfavourable) if
• Public warehouses
imports exceeds exports of goods • Bonded warehouses
or services. • Wholesalers warehouses
4. (a) State any three factors considered when • Retailers’ warehouses
fixing premiums. [3] (b) List any two disadvantages of radio in
• The nature of the risk advertising. [2]
• The number of people insuring • The advertisement has a short life.
against a certain risk • No demonstrations are shown as
• The value of the property compared to the TV.
• Size of loss to be covered against • Some areas do not have
transmission.
274

APA To Commerce O-Level Revision

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Commerce

‘O’ Level Revision

A Practical Approach to Commerce | ‘O’ Level Revision Book

First Published in January 2023

Copyright © Secondary Book Press

Editor in Chief: Munyaradzi Gunduza

Topic 3: Consumer protection..............................................................................................................50

Topic 4: Business organisations...........................................................................................................55

Topic 6: Finance and banking..............................................................................................................77

Topic 7: Insurance and assurance....................................................................................................... 103

Topic 8: Business communication........................................................................................................119

Topic 10: Warehousing.........................................................................................................................149

Topic 11: Marketing.............................................................................................................................152

Specimen Examination Papers

Specimen Examination 1.......... ...........................................................................................................169

Overview of the exam for Commerce O-Level Study Guide

How to use this study guide

• An explanation of terms and concepts.

Question words to help you answer questions

State – express something definitely or clearly in writing.

Comment – express an opinion or reaction in writing.

Identify – establish or indicate who or what (someone or something) is.

Compare and contrast – discuss similarities and differences.

In your own opinion – what you think or believe about something.

Study skills to boost your learning

How to make your own mind maps:

Top 10 exam tips

Topic objectives Production

There are two groups of services. These include

(a) Direct services - these refer to personal

Human needs • It is the second stage of production.

Extraction Manufacture Assembly

Transport Advertising Warehousing Selling

• It promotes automation and

unit which consequently results in low

Figure 1.9 Pickled fruits

Technological • Interest refers to the cost of borrowing

Topic objectives Trade

Topic objectives • Conditional buying of goods, whereby

Right to be heard • To redress means consumers have a

Right to safety • Consumers must be protected against

Topic objectives • describe the features of Small to

Suggested answer Required

• Is the value which represents the cost of $

Topic objectives • It deals with the transmission of

Topic objectives The importance of warehouses

Topic objectives The need for marketing

• Customers purchase goods online. (d) Black market

(b) Demographical segmentation

Reasons for market segmentation

Answer all questions

1. Raw materials turned into finished goods at which stage of production?

10. What can be done to correct an unfavourable balance of payment?

33. What does a code of advertising practice guard against?

SECTION A [40 Marks]

1. (a) State the two forms of production. [2]

SECTION B [60 Marks]

6. (a) Differentiate between home trade and foreign trade. [14]

Answer all questions