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 A Practical Approach
to

Commerce
Form 1

David Mandikuwaza
 CONTENTS

Chapter 1: Production........................................................................................ 1
Unit 1.1 Stages of production............................................................................................. 1
Unit 1.2 Factors of production............................................................................................ 3
Unit 1.3 Ownership of the means of production......................................................... 5
Chapter 2: Trade.................................................................................................. 10
Unit 2.1 Introduction to trade............................................................................................. 10
Unit 2.2 Wholesale trade....................................................................................................... 14
Chapter 3: Consumer Protection....................................................................... 22
Unit 3.1 Reasons for consumer protection..................................................................... 22
Unit 3.2 Consumer rights and their responsibilities.................................................... 23
Examination I Paper 1 ....................................................................................... 27
Examination I Paper 2 ....................................................................................... 31
Chapter 4: Business Organisations.................................................................... 32
Unit 4.1 Importance of business organisations............................................................ 32
Unit 4.2 Business sectors....................................................................................................... 33
Chapter 5: Enterprise.......................................................................................... 40
Unit 5.1 Introduction to enterprise................................................................................... 40
Chapter 6: Finance and Banking........................................................................ 45
Unit 6.1 Personal finance...................................................................................................... 45
Unit 6.2 Money......................................................................................................................... 47
Chapter 7: Insurance and Assurance................................................................. 51
Unit 7.1 Nature and purpose of insurance and assurance........................................ 51
Unit 7.2 Communal systems of insurance and assurance......................................... 54
Examination ll Paper 1 ...................................................................................... 57
Examination ll Paper 2 ...................................................................................... 60
Chapter 8: Business Communication................................................................ 61
Unit 8.1 Importances of communication........................................................................ 61
Unit 8.2 Telecommunication............................................................................................... 64
Unit 8.3 Service providers..................................................................................................... 65
Chapter 9: Transport........................................................................................... 69
Unit 9.1 Importance of transport....................................................................................... 69
Unit 9.2 Modes of transport................................................................................................. 71
Chapter 10:.....................................................................................Warehousing 78
Unit 10.1 Introduction to warehousing.............................................................................. 78
Unit 10.2 Indigenous storage systems............................................................................... 80
Chapter 11:..........................................................................................Marketing 83
Unit 11.1 Marketing concepts............................................................................................... 83
Unit 11.2 Types of marketing................................................................................................. 86

Examination lIl Paper 1 ..................................................................................... 91

Examination Ill Paper 2 ..................................................................................... 94
 Chapter
PRODUCTION

1
Chapter objectives
By the end of this chapter, you should be able to:
•• explain the need for production.
•• classify goods and services.
•• explain primary, secondary and tertiary production.
•• describe factors of production.
•• explain the relationship between commerce and production.
•• explain why it is important for indigenous people to own means of production.
•• identify land as our heritage.
•• describe the importance of land reform and indigenisation of our economy.

Introduction
Production is the provision of goods and services to satisfy consumer wants and needs. Goods are tangibles
we can touch and see such as doors, chairs and asbestos. Services are intangibles we cannot touch for
example tourism, education and entertainment. The process involves businesses adding value to their
products. In our study of production in this chapter we will focus on the reasons for production, stages of
production, factors of production and ownership of the means of production.

UNIT 1.1 STAGES OF PRODUCTION

Production is the manufacture of goods from

raw materials and the provision of services. Many
production activities are needed to change raw
materials into goods that meet our needs and wants.
These activities are known as the chain of production
which is divided into three stages namely primary,
secondary and tertiary stages. The three stages
depend on each other. All industries depend on
the direct services of teachers, nurses and doctors
from the tertiary sector. The mining extracts raw
materials from the nature and they are processed at
the secondary stage then distributed at the tertiary
sector. Fig. 1.1 Production process of beer

1
Importance or need for production
•• For people to earn a living they need to engage in production.
•• In communities people use land to produce their own food for consumption.
•• Those in urban areas offer their services to a variety of employees so as to earn a living.
•• Production enables variety of goods and services which will improve the living standards of people.
•• Production creates employment there by reducing the unemployment rate of the country.
•• It increases the Gross Domestic Product (GDP) and Gross National Product (GNP).
•• It enables mass production then surplus is exported to other then foreign currency is obtained.
Goods and services (products)
Goods – these are tangible items with physical attributes for example a car.
Goods can be classified as;
1. Durable goods which last for a long time for example cars and furniture.
2. Non-durable goods these have a short life span for example perishable goods like fruits, cloths and
other types of foodstuffs.
3. Consumer goods these are finished and ready for use by the end user for example cloths, bread, chips.
4. Capital (Producer) goods these are used to produce other goods for example tractors.
Services are intangible items such as education and entertainment.
Needs and wants
•• Needs are things that we need in order to survive we cannot do without them. Basic human needs
include water, food, shelter, cloths, health and education.
•• Wants these are things that we can do without but required in order to live comfortable lives. For
example, LCD televisions, sofas, cars.
Stages of production

Production

Primary Secondary Tertiary

Fig. 1.2 Stages of production

Primary production
•• This is the first stage of production and is called the extractive stage.
•• In this stage, raw materials are extracted from the surface of the earth or from the sea.
•• Workers are employed in mining, fishing, quarrying, forestry and farming.
•• In this stage the raw materials are unusable and have to be sent to the manufacturing industries to
be changed in to goods that can be used.

2
Secondary production
•• In this stage, the raw materials are transformed into semi-finished or finished products.
•• The goods are made ready for sale to the final consumers in this stage.
•• Textile industry, building and construction industry and chemical industry are examples of the
manufacturing work carried out in this stage.
Tertiary production
The transfer of goods from the factories to the final
consumers is the work that is carried out in the
tertiary stage. In this stage there are many activities
which are broadly divided in to two:
Commercial services – this includes workers
1. 
in communications, finance, insurance,
wholesaling and retailing. These workers are
involved in getting the goods to the final
consumer.
Direct services – people in this group work to
2. 
provide a direct service rather than delivering
goods to the consumers. Teachers, doctors,
nurses, lawyers, civil servants and policemen are
examples of people providing direct services. Fig. 1.3 Stages of milk production

Activity 1.1 Individual work

1. Explain the different production activities in your community naming the goods and services they are
producing. State and explain the stages of production for the local businesses.

Exercise 1.1
1. Define the following terms:
(a) goods. [2]
(b) services. [2]
(c) wants. [2]
(d) needs. [2]
2. Explain durable, non-durable and consumer goods. [6]
3. Explain the three stages of production. [10]
4. Distinguish between commercial and direct services. [4]

UNIT 1.2 FACTORS OF PRODUCTION

Factors of production are the key elements in the production process. They are the basic resources needed
by every business enterprise to produce goods and services. Economic activity is driven by production
which uses natural resources (land), labour, capital and enterprise. These are the resources that act as inputs
during the production process.

3
Commerce
It is a broad term used for trade and all the activities that help and support trade. Commerce is the distribution
of goods and services to satisfy human needs and wants. Commerce is crucial for a country and the growth
of its economy.
Economic growth means the increase in how much a country produces. If production increases more goods
and services are produced and more jobs are created. Commercial activities that assist and support trade
include the following:
•• advertising informs consumers about goods and services available for sale.
•• banking and finance allow payments to be made and received and also allows borrowing of money.
•• communication enables the business to contact its producers, suppliers, customers and also for
internal communications on how to run the business.
•• insurance provide compensation when a risk occurs to businesses.
•• transport enables the carrying of workers, raw materials, equipment and also the distribution of
finished and semi-finished goods.
•• warehousing allows goods to be stored.
Production
•• Production is the provision of goods and service to satisfy human needs and wants.
•• Production and commerce are closely related to each other.
•• Production cannot exist without commerce and commerce cannot exist without production.
•• This is because every manufacturer needs to find a market for his or her products to sell but the
manufacturer has no direct link or connection with the buyers or consumers hence industry needs
commerce.
•• Commerce is concerned with the sale, exchange or transfer of goods and services.
•• Commerce needs industry for the production of goods and services and the aids to trade assist to
link the producer and consumers.
•• Therefore production, trade and commerce are interrelated industry produces goods and
services and commerce arranges their sale and the actual sale is in the hands of trade.

Activity 1.2 Group work

1. In pairs explain how the factors of production assist the economy of Zimbabwe.

Exercise 1.2
1. Explain the term factors of production. [2]
2. List and explain the four factors of production and their rewards. [10]
3. Explain the relationship between commerce and production. [10]

UNIT 1.3 OWNERSHIP OF THE MEANS OF PRODUCTION

The means of production are all the physical non-human resources used for production. They are the factors
of production but primarily refer to land and capital. In a farming community the means of production is
soil. In an industry society the means of production are the mines and the factories and in knowledge
economy they are the offices and computers. The means of production also include distribution such
as warehouses, the internet and railroads. Ownership of the means of production and control over the
extra goods produced by them is what creates different types of economic systems such as capitalism,
communism and socialism.

5
 •• Land is a crucial factor of production because land itself and the resource on it are usually limited
and also many of the natural resources are non-renewable.
•• Labour refers to all the people available to transform resources into finished or semi-finished goods
and services that can be bought.
•• Capital these are all man-made aids to production including wealth put aside for the production
process.
•• Organisation (enterprise) is people who start new businesses and take risks that are necessary to
make profit.
•• Capitalism is an economy were individuals own and control the means of production such as land,
capital and industries without government intervention.
•• Communism is economies were the means of production is owned and controlled by the state or
government.
•• Socialism is economies were the whole community owns and control the means of production.

Glossary of terms
Capital – t hese are all man-made aids to production including wealth put aside for the
production process like money, property plant and equipment,tractors.
Capitalism – is an economy were individuals own and controls the means of production such
as land, capital and industries without government intervention.
Commercial services – this includes workers in communications, finance, insurance, wholesaling and
retailing. These workers are involved in getting the goods to the final consumer.
Communism – is economies were the means of production is owned and controlled by the state
or government. The government has total control of the goods and services for
why, whom and how to produced.
Non-durable goods – these have a short life span like perishable goods like fruits, cloths and other types
of foodstuffs.
Production – is the provision of goods and services to satisfy consumer wants and needs.
Organisations – are people who start new businesses and take risks that are necessary to make
profit.
Services – are intangible items such as education and entertainment.
Socialism – is economies were the whole community owns and control the means of
production. All members of a community share equally on the work to be done
and the fruits of their labour.
Wants – these are things that we can do without but required in order to live comfortable
lives, like LCD televisions, sofas and cars.

Revision Exercises
Multiple Choice Questions
1. Which term describes the manufacture of goods and the provision of services?
A. Commerce. B. Industry.
C. Production. D. Trade.
2. In which part of production is constructing classified?
A. Direct services. B. Primary.
C. Secondary. D. Tertiary.
3. Doctors do not manufacture goods. In which sector of production are they classified?
A. Commercial services. B. Construction industry.
C. Direct services. D. Extractive industry.

7
Essay Questions
1. (a) Explain the three stages of production. [10]
(b) Explain the relationship between commerce and production. [10]
2. Explain the importance of the factors of production. [20]
3. Discuss why it is crucial for indigenous people to own the means of production. [20]
4. (a) How does the Indigenisation and Economic Empowerment Act of 2008 indigenise the economy?
[10]
(b) Explain the different economic systems of ownership of the means of production. [10]

9
 Chapter
TRADE

2
Chapter objectives
By the end of this chapter, you should be able to:
•• explain the need for trade.
•• describe barter and monetary trade.
•• compare home trade and foreign trade.
•• explain the services of wholesalers.
•• describe the different types of wholesalers.
•• explain why a wholesaler is by-passed in the distribution chain.
•• identify marketing boards.
•• describe the functions of commodity markets.

Introduction
Trade is the buying and selling of goods and services with the aim of making profit. Trade involves
transferring ownership of goods and services from one business or individual to another in exchange for
money. Trade is there to satisfy human needs and wants. Traders are those who do the buying and selling of
goods and services. Earliest form is barter trade, where a value of goods is difficult to decide, and a double
of coincidence of wants is needed. Money was introduced as medium of exchange.

UNIT 1.1 INTRODUCTION TO TRADE

Trade is the buying and selling of goods and services. Trade can happen between individuals, regions of
a country (that is between Manicaland and Mashonaland) and countries for example between Zimbabwe
and Mozambique. Trade involves transferring ownership of goods or services from one person or entity to
another business in exchange for money, goods or services. Trade takes place at every level in the chain of
production that is from primary production to tertiary production.
Reasons for trade
•• Trade allows ties between nations.
•• It provides employment locally.
•• It encourages people to socialise.
•• Some raw materials do not occur naturally in the country has to be imported.
•• It is cheaper to import some goods than to produce them.
•• Selling goods and services abroad provides the country with foreign currency.

10
Consumer responsibility
Consumer rights go together with consumer responsibilities. Consumer responsibilities mean things that
you are expected to do as a consumer which include the following:
1. Consumer unite
Consumers can join together and organise themselves so that their interests can be heard by those who
make policies.
2. Caring for the environment
•• Consumers must care for the environment in which they operate.
•• They must understand the effect they cause to the environment because of their actions.
•• There is need to conserve and protect the natural resources so that they can also be used by the
future generations.
3. Consumers need to be aware
•• It is the responsibility of the consumer to be aware or informed about a product.
•• They should question the quality and prices of the goods and services.
4. Consumer action
It is the responsibility of consumers to conserve the resources we have today so that the future generations
can benefit.

Activity 3.2 Case Study

Panashe owns a furniture shop. When he sees those coming to buy with cars (the haves) he doubles the price since
he sometimes do not put price tags on his furniture products. Anashe with her car goes to buy kitchen chairs in
the shop and she was doubled the price. He tells her that he does not accept any returns and doesn’t give any
refunds on goods purchased. After a day Anashe returns to say that one of the chairs had broken leg. On this day
prices were displayed and she get angry and accuses Panashe of unfair practices and she demanded a refund but
Panashe refuses.
1. Did Panashe acted ethically to Anashe?
2. List the unethical practices done by Panashe.
3. List the consumer rights that you think Panashe ignored.
4. How should have Anashe protected herself from unfair practices.

Exercise 3.2
1. (a) Explain the consumer rights. [10]
(b) Explain how consumers can act responsibly. [10]

Interesting facts
Governments control business activity by effecting consumer protection through the following acts:
(a) Weight Measurements Act.
(b) Consumer protection act.
(c) Sale of Goods Act.
(d) Consumer Credit Act.
(e) Trade Discrimination Act.

24
Summary of the chapter

•• The right to choose – consumers must have access to a variety of goods and services.
•• The right to be informed – consumers must be provided with correct information about goods and
services.
•• The right to basic needs – consumers must have access to basic necessities such as food, clothing
and shelter.
•• The right to consumer education – consumers must be provided with knowledge of their rights.
•• The right to be heard – consumers must be allowed to complain and express their views.
•• The right to redress – consumers must have fair settlement of just claims or return unfit goods.
•• Consumer rights go together with consumer responsibilities. Consumer responsibilities mean
things that you are expected to do as a consumer.
•• Consumers can join together and organize themselves so that their interests can be heard by those
who make policies.
•• Consumers must care for the environment in which they operate. They must understand the effect
they cause to the environment because of their actions.
•• It is the responsibility of the consumer to be aware or informed about a product.

Glossary of terms
Business malpractices – illegal, careless or unethical dealing by entrepreneurs.
Consumer – is the end user of a product or service.
Contract –  a written or spoken agreement between people, businesses or people and
businesses.
Exploitation – to take advantage of, cheat or mislead someone for money.
Heard – consumers must be allowed to complain and express their views.
Overpricing – charging much more than what the good or service is worth.
Redress – consumers must have fair settlement of just claims or return unfit goods.

Revision Exercises
Multiple Choice Questions
1. How can consumers protect themselves when buying goods?
A. Ask the Consumer Council of Zimbabwe do investigate their complaints.
B. Read and understand contracts before signing.
C. Report all cases of cheating to the police.
D. Take products to the Standards Association of Zimbabwe for testing.
2. “This product is harmful if swallowed.” The above statement is an example of the consumer’s
_____________.
A. right to be heard B. right to be informed
C. right to choose D. right to redress
3. How does a consumer protect himself from unfair trading practices?
A. By applying to the small claims court.
B. By exercising care in credit purchases.
C. By joining the consumer council of Zimbabwe.
D. By sen]ding goods for quality testing.
4. Which is not a way by which consumers can protect themselves?
A. Arbitration on behalf of other consumers. B. Carrying out a price survey.
C. Listening to advertisement carefully. D. Making a shopping list.

25
EXAMINATION 1
Paper 1: Multiple Choice Questions [40 marks]
Answer all questions and choose the most appropriate answer of your choice.
1. Commerce is ___________.
A. the distribution of goods and services B. the manufacturing of goods
C. the provision of direct services D. the satisfaction of human wants and needs
2. Which pair contains aids to trade?
A. Banking and wholesaling. B. Communication and exporting.
C. Insurance and retailing. D. Warehousing and transport.
3. Which of the following defines the term commerce?
A. Distribution of goods and services. B. Making goods and services.
C. Provision of goods and services. D. Selling of goods and services.
4. Direct production is producing goods ______________.
A. directly for the consumer B. in large quantities
C. to satisfy one’s own needs D. with the help of other people
5. What is the reward for enterprise?
A. Interest. B. Profit.
C. Rent. D. Wages.
6. Human needs are satisfied through _____________.
A. sourcing of resources B. people’s desires in life
C. factors of production D. production of goods
7. Which term describes the manufacture of goods and the provision of services?
A. Commerce. B. Industry.
C. Production. D. Trade.
8. Which of the following has been correctly paired?
A. Capital Rent
B. Labour Interest
C. Land Wages
D. Organisation profits
9. Which of the following is a consumer good?
A. Fertiliser. B. Plough.
C. Seeds. D. Vegetables.
10. In Zimbabwe the ownership of the means of production is a ____________.
A. free economy B. planned economy
C. capitalism D. mixed economy
11. Which of the following is a basic need?
A. A visit to the moon. B. Getting photographed.
C. Driving a car. D. Owning a house.
12. The production of goods for sake to other people is called _____________.
A. indirect production B. direct production
C. primary production D. subsistence production
13. The primary function of commerce is to ______________.
A. alter form and character of raw materials B. boost indirect production
C. distribute the products of inducts D. provide the factors of production

27
14. Which one of the following is an advantage of specialisation?
A. New and more efficient techniques are developed.
B. There is less unemployment.
C. Workers cannot concentrate on one task.
D. Work is monotonous.
15. Goods required for personal use are called ________________.
A. agricultural goods B. capital goods
C. consumer goods D. producer goods
16. Which of the following is not an economic system?
A. Capitalism. B. Racism.
C. Socialism. D. Communism.
17. Which term describes the manufacture of goods and the provision of services?
A. Commerce. B. Industry.
C. Production. D. Trade.
18. In which part of production is constructing classified?
A. Direct services. B. Primary.
C. Secondary. D. Tertiary.
19. An example of a perishable good is _________________.
A. chair B. motor vehicle
C. milk D. clothes
20. Under barter trade goods are exchanged without the use of _________________.
A. money B. goats
C. cattle D. scotch carts
21. Which factor is not considered when establishing a retail outlet?
A. Brands of goods. B. Management skills.
C. Competition from other retailers. D. Nearness to consumers.
22. Which is not a function of a retailer?
A. Buying goods from retailers. B. Giving advice to customers.
C. Enabling traders to order goods easily. D. Selling in bulk to wholesalers.
23. What is trade?
A. Donations to those who need. B. Indirect production of goods and services.
C. Buying and selling of goods and services. D. Provision of goods and services.
24. Which one is a problem of barter?
A. There is scarcity of services. B. Goods are expensive.
C. It causes shortage of money. D. Goods are difficult to value.
25. Consumers need protection when they _________________.
A. are educated B. are undercharged
C. have a lot of money D. are overcharged
26. The right to information means that consumers must ______________.
A. be given facts needed to make informed choice of decision
B. be protected against congestion, noise, water and air pollution
C. have access to a variety of products and services at competitive prices
D. have basic necessities such as health and education
27. According to the consumer law, the consumer’s responsibility is to ___________.
A. discharge profiteering B. fix the retailers prices
C. inspect and test products D. set the recommended sale price

28
28. Mr Biggie buys a refrigerator from Greatermans stores. He later discovers that the refrigerator is faulty.
According to consumer law in Zimbabwe, what should he do?
A. Repair the refrigerator himself. B. Report the matter to the police.
C. Re – sell it to recover his money. D. Take it back for a repair or refund.
29. Customers who do not know their rights could be cheated by unscrupulous traders government
organizations provide ___________________.
A. competition among traders B. consumer protection
C. financial assistance D. free choice by the consumer
30. An organisation aims to protect the interest of consumers. Which activity should it not do?
A. Persuade the government to improve consumer protection.
B. Provide consumers with information about the performance of products.
C. Receive grants from producers to pay for its works.
D. Test products to find out if they are safe.
31. Which development mighty help to protect the consumers when shopping for food?
A. Increased use of bar coding. B. Persuasive advertising by manufacturers.
C. Retailers use of loss leaders. D. Sell by dates on packaging.
32. A law saying that goods should be fit for purpose would assist a customer when ________________.
A. he became ill after a meal at a local hotel
B. he bought two kilograms of apples and received one kilogram
C. the heels fell off a pair of shoes bought last week
D. the local shop overcharged for a loaf of bread
33. Which question should a customer consider before buying goods on credit?
A. Are the goods fit for the purpose?
B. Do the goods represent value for the money?
C. What discount will be given by the retailer?
D. What is the difference between the cash and the credit price?
34. An organisation aims to protect the interest of consumers. Which activity should it not do?
A. Persuade the government to improve consumer protection.
B. Provide consumers with information about the performance of products.
C. Receive grants from producers to pay for its works.
D. Test products to find out if they are safe.
35. Which development mighty help to protect the consumers when shopping for food?
A. Increased use of bar coding. B. Persuasive advertising by manufacturers.
C. Retailers use of loss leaders. D. Sell by dates on packaging.
36. A law saying that goods should be fit for purpose would assist a customer when ________________.
A. he became ill after a meal at a local hotel
B. he bought two kilograms of apples and received one kilogram
C. the heels fell off a pair of shoes bought last week
D. the local shop overcharged for a loaf of bread
37. What is a function of the Standards Association of Zimbabwe (SAZ)?
A. Recommending appropriate consumer legislation.
B. Make follow – up checks on approved products.
C. Conducting research into consumer exploitation.
D. Prohibiting the sale of harmful goods.

29
38. Consumer legislation can protect consumers against _____________.
A. efficient manufacturers B. fair trading practices
C. price control D. unscrupulous traders
39. Which is not a way by which consumers can protect themselves?
A. Arbitration on behalf of other consumers. B. Carrying out a price survey.
C. Listening to advertisement carefully. D. Making a shopping list.
40. A sale of Goods Act requires the seller to supply goods that are ______________.
A. fat for purpose B. not overpriced
C. of reasonable quality D. tested before use

30
Paper 2: Structured Questions
(2 Hours)
Section A: [40 marks]
Answer all questions in this section.
1. (a) Define the following terms:
(i) Production. [2]
(ii) Means of production. [2]
(b) List two types of wholesalers. [2]
(c) Identify and explain the three stages of production. [6]
(d) Explain the term barter trade. [2]
2. (a) Differentiate between home trade and foreign trade. [4]
(b) Explain the need for trade. [4]
(c) List any four types of wholesalers. [4]
(d) Outline any four reasons for by passing a wholesaler. [4]
3. (a) State any two reasons for consumer protection. [2]
(b) State any four consumer responsibilities. [4]
(c) List any four consumer rights. [4]

Section B: [60 marks]

Answer any three questions from this section.
4. (a) Describe the factors of production. [10]
(b) Explain why it is important for indigenous people to own means of production. [10]
5. (a) Explain the relationship between commerce and production. [10]
(b) Explain the need for production. [10]
6. (a) Explain the need for trade. [10]
(b) Explain the services of wholesalers. [10]
7. (a) Describe barter and monetary trade. [10]
(b) Describe the functions of commodity markets. [10]
8. Explain the different types of wholesalers. [20]
9. (a) Discuss areas where consumers need protection. [10]
(b) Explain the reasons for consumer protection. [10]

31
 Chapter
BUSINESS
ORGANISATIONS

4
Chapter objectives
By the end of this chapter, you should be able to:
•• justify the importance of business organisations.
•• describe private and public sectors.
•• identify types of business units under private and public sectors.

Introduction
Zimbabwe is a mixed economy that has both private and public business enterprises operating at the
same time. The private sector involves individuals and companies. The public sector has the government
and local authorities such as municipalities. The business units under private sector includes sole trader,
partnership, private and public limited companies and under public sector includes public corporations
and municipalities. The main aim of the private sector is to make profit whilst for public sector is to
provide a service.

UNIT 4.1 IMPORTANCE OF BUSINESS ORGANISATIONS

These are entities that operate with the aim to maximise profit or providing a service. They are divided
into private sector and public sector business units. Private sector businesses start their businesses with
the aim to make profit while public sector businesses aim at providing services to its citizens. Business
organisations are very important to the economy of Zimbabwe.
Business organisations are very crucial to the economy of Zimbabwe since they assist in:
•• providing goods and services to various types of consumers.
•• creating employment in the communities they are situated.
•• helping the economy to grow through creativity and innovation.
•• improving the literacy rate by providing training and further education to their workers.
•• creating entrepreneurial opportunities to all citizens.
•• converting raw materials or inputs into finished goods needed by consumers.
•• bringing goods and services near the final users (consumers).
•• facilitating the exchange of goods and services.
•• obtaining foreign currency through the exporting of goods and services to other countries.
•• improving the economy by investing in new technology.

32
 •• assisting communities through cooperate social responsibility.
•• infrastructure development like road construction, good network system, building of hospitals,
schools and clinics.
•• improves the Gross Domestic Product (GDP) and Gross National Product (GNP).

Activity 4.1 Group work

In groups of five explain how business organisations assist in developing the economy of Zimbabwe.

Exercise 4.1
1. Discuss the importance of business organisations to the country and its citizens.

UNIT 4.2 BUSINESS SECTORS

Business units produce goods and services that are
required to satisfy human needs and wants.
Corporations
Many different business types and sizes exist which
belong to the private sector or public sector of the
economy.
Business
Business units are very crucial in our country they
create employment, provide government with Organizations
revenue through paying taxes, those involved in Sole
Partnerships
Proprietorship
export trade brings foreign currency to the country
and also there will be variety of goods of quality
which will improve people’s living standards.
Fig. 4.1 Business organisations

Table 4.1 Classification of business units

Public sector Private sector

Public Corporations Sole traders
Nationalised industries Partnerships
Municipalities Limited Companies (Private and Public)
Joint ventures
Franchise
Cooperatives

Private sectors
Comprises of businesses owned and controlled by individuals or a group of individuals, with the objective
of profit maximisation for example Delta Corporation, Unilever Brothers and others. Business enterprises in
this sector are owned, operated and controlled by private individuals.

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 Chapter
FINANCE AND
BANKING

6
Chapter objectives
By the end of this chapter, you should be able to:
•• explain the different sources of income.
•• state methods of saving income.
•• justify the need to save income.
•• identify methods for personal investment.
•• analyse reasons for investing.
•• trace the origins of money.
•• describe the characteristics of money.
•• outline the functions of money.
•• discuss the causes and effects of inflation.

Introduction
Barter trade was the form used for trading before the introduction of money. The problems of barter resulted
to the introduction of money. Barter trade is the exchange of goods or services without the use of money
as a medium of exchange. Barter trade is still being used when doing business transactions but money
has taken the precedence of being the medium of exchange. Money acts as a form of investment through
buying of property and shares or depositing it into the bank that earns interest.

UNIT 6.1 PERSONAL FINANCE

This is a financial decisions and activities of individuals which include savings, mortgage, and retirement
planning and investing. Income can be earned in many different ways. The main source of income in
Zimbabwe is the sale of agricultural produce and salaries and wages.
Sources of personal income
•• Employment
•• Trading
•• Personal savings
•• Leasing
•• Rentals

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Methods of saving income
•• Banking of money.
•• Short term investments such as shares.
•• Pension funds.
•• Forming money saving clubs.
Reasons for investing
•• To get interest.
•• Growth of investments.
•• To get capital invested at maturity.
Methods of personal investment
1. Starting a business
•• The capital (money or assets) used to start a business is an investment.
•• Production of goods and services to sell to consumers makes entrepreneur to make a lot of personal
finance.
2. Real estate/Letting buildings
Any houses or apartments that you buy to rent out or resell are personal investments.
3. Reserves of minerals
These are the precious objects that are bought with the intention to resell them for profit such as diamond,
gold and steel.
4. Cash equivalents
These are investments that are as good as cash meaning they can be easily changed into cash.
5. Buying fixed assets
These include the purchase for non-current assets that will bring future economic benefits for example
machinery, motor vehicles and buildings.
6. Selling shares
This involves the selling of shares which can be ordinary or preference shares which can be sold to the
public (for public limited companies) or privately (for private limited companies).

Activity 6.1 Group work

In groups, carry out a research at your school to find out the sources of personal income and their methods of
saving the income.

Exercise 6.1
1. State any 4 methods of saving income. [4]
2. List the sources of finance. [4]
3. Outline the methods for personal investment. [2]
4. Outline the reasons for investing. [2]

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5. (a) Explain the different sources of income. [10]
(b) Justify the need to save income. [10]
6. (a) Identify methods for personal investment. [10]
(b) Explain the reasons for investing. [10]

UNIT 6.2 MONEY

Money is anything that is generally accepted as payment for goods and services and repayment of debts. It
is a medium through which goods and services can change hands.
Origins of money
•• Money originated as a result of the problems
of barter trade.
•• Before the introduction of money barter
was used.
•• Barter transactions involves the exchange of
goods and services for goods and services.
for example, 2kg of sugar with a bucket of
maize.
Fig. 6.1 Money
Characteristics of the money
•• Acceptability money should be acceptable.
•• Durability money should restore its value.
•• Divisible can be separated into different
denominations.
•• Scarcity money should not be found
anytime.
•• Uniformity should be similar for example,
$5 notes.
•• Portable should be carried around easily.
Fig. 6.2 Features of money
Functions of money
•• Medium of exchange – it can be exchanged for goods and services.
•• A measure of value – value of goods and services is expressed in monetary terms e.g. 2kg of sugar
worth $5.
•• A store of value – surplus goods can be sold and stored as money and the money can be saved in
savings or deposit accounts.
•• A standard for deferred payments – goods and services are valued and paid for later for example
paying debts at some future date.
•• A unit of accounts – all transactions are expressed in monetary terms.
Problems of barter
1. Storage facilities - goods are stored for long periods and it creates problems for perishables.
2. Long distances - are involved in searching for the goods.
3. Some goods are heavy - to carry looking for goods to exchange.
4. Lack of divisibility - some goods are difficult to divide because dividing goods may result in wastage.

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 Chapter
TRANSPORT

9
Chapter objectives
By the end of this chapter, you should be able to:
•• explain the importance of transport in commercial activities.
•• trace the developments that took place in transport systems.
•• list the modes of transport.
•• examine the advantages and disadvantages of each mode of transport.

Introduction
Transport is very crucial in any business enterprise because it helps in the distribution of goods. The goods
are moved from the producers to consumers the final users of the goods. Transports also enable production
by moving in raw materials and carrying of workers to and from the workplace where they are producing
goods and services.

UNIT 9.1 IMPORTANCE OF TRANSPORT

Transport is a medium that can be used by individuals and business organisations to carry goods, raw
materials, workers, equipment from one place to another. Transport enables efficient and effective running
of business entities without transport day to day activities of a business cannot be done. The modes of
transport that can be used by business organisations include road, air, sea and rail transport.
Transportation
It is the movement of people and goods from one place to another.
Importance of transportation
•• Transport is necessary to provide for the physical movement of people and goods from where
they are abundant (such as plantations, mines, farms) to the factory where they are needed as raw
materials for the manufacture of finished goods, or where they are processed.
•• Transport is again necessary to send these processed or finished goods to their markets, and
ultimately, to the final consumers, both domestic and foreign.
•• Assists trading.
•• Improves standard of living.
•• Provides necessities of live and minimises shortages.
•• International trade is not possible without transportation.
•• Efficient transportation system is important for distribution of goods in right form.

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Evolution of transport systems
A brief history of the wheel
The first wheels were invented in ancient
Mesopotamia. They were not used for transportation.
Potters used them to create pottery. It took 300 years
before someone realized that they could be used
for transportation purposes in chariots. Over 2 400
years ago, the Greeks developed the wheelbarrow
to help them in their work. Fig. 9.1 Evolution of road transport
Four hundred years later wheelbarrows were used in China and then made their way to medieval Europe
(about 1 500 years ago). It is believed that the Egyptians developed the wheel into the spoke for their
chariots. Over a number of years this evolved into the round tension spoke that we see know on bicycles.
Human and animal powered transport
Human powered transport system remained a popular traditional mode of transport because there is
reduced cost (cost effective). It is used in areas where there are few roads. Animal powered transport is the
use of animals to transport people and goods. Humans may ride some of the animals directly; use them
as pack animals for carrying goods or to pull vehicles. Horse/donkey drawn carts are still popular in many
parts of Zimbabwe for example Masvingo Ngundu area they are still using donkey drawn carts to carry their
goods. This is a cheaper mode of transporting people or goods.
Evolution of rail transport in Zimbabwe
The railway system in Zimbabwe was built during
the British colonial era it was called the Rhodesia
Railways (RR). Today it is now called the National
Railways of Zimbabwe (NRZ) and it’s a parastatal
owned, controlled and operated mostly by the
government. It offers both passenger and freight
services.
In 1997 Grindrod Rail’s Zimbabwean freight business
Beitbridge Bulawayo Railways (BBR) was formed in
partnership with the National Railways of Zimbabwe.
The purpose was to manage the railway enterprise
between Beitbridge and Bulawayo since National
Railways of Zimbabwe is a key transport player in Fig. 9.2 Evolution of rail transport
Southern African.
Evolution of air transport
In 1967 on 1 September the government of
Zimbabwe created the Air Rhodesia Corporation. It
became Air Zimbabwe in 1980 that is when we get
our independence. The airline is owned, controlled
and operated by the government of Zimbabwe. It
carries both passengers and cargo.

Fig. 9.4 Evolution of air transport

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 Activity 9.1 Group work
Discuss in groups of two the importance of transport to a business enterprise.

Exercise 9.1
1. Define the word transportation. [2]
2. Outline five importance of transport to the production department. [5]

UNIT 9.2 MODES OF TRANSPORT

Businesses can use different modes of transport to do the day to day operations of its activities which include
carrying raw materials to the production site, carrying finished goods to the warehouse, ferrying workers to
and from work and also ferrying equipment. The modes of transport include road, rail, sea, air and pipeline.
Models of transportation

Road Rail Sea Air Pipeline

Tramps Passenger liner Cargo liner Oil, bulk,ore ships Roll-on, roll off ships
Fig. 9.5 Modes of transport
Road transport
Road transport is mostly used to carry both small
and large goods. Many different companies are in
the transport business. Rood transport is suitable
to carry goods of unique sizes, shapes, weights and
nature.
Advantages of road transport
•• Cheap for shorter distances.
•• Quick for shorter distances compared to
other modes of transport.
•• Door to Door delivery of goods and this
reduces risk of damages and theft. Fig. 9.6 Road transport
•• Minimum documents involved.
•• It is flexible. Smaller and larger quantities can be transported to most of regions.
•• Does not have a fixed timetable like a business a hire a truck any time.

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Disadvantages of road transport
•• Expensive for long distances and heavy loads.
•• Slow for long distances.
•• Affected by topography.
•• Affected by climate.
•• Affected by weather conditions.
•• Affected by traffic congestions.
•• Creates pollution.
•• Creates traffic congestions.
Rail transport
Rail transport is commonly used to carry bulky goods
and passengers. The National Railways of Zimbabwe,
a government owned company is responsible for rail
transport services in the country.
Advantages of rail transport
•• Cheap for long distances.
•• Quick for long distances.
•• Good to carry bulky cargo.
•• Not effected by traffic.
•• Does not create pollution in cities.
Fig. 9.7 Passenger train
•• Special transporters may be provided for
different specialised items.
•• Especially suitable for low value and high-volume cargo.
Disadvantages of rail transport
•• Involves documentation.
•• Need for loading and unloading cargo many times.
•• Trains cannot go anywhere.
•• Move only according to schedule.
•• High costs for short distances and small quantities.
•• Located out of cities so depends on road transportation.
•• High capital cost of maintenance of tracks and trains.
Air transportation
Air transport carries goods and passengers in
Zimbabwe and other countries. In Zimbabwe,
the major air transport firm is Air Zimbabwe. It is
responsible for carrying goods and passengers
within and outside the country.
Advantages of air transport
•• It is a quick or faster mode of transport which
is suitable for perishable products.
•• Safe handling of cargo.
•• Not effected by topography.
•• It has fewer accidents compared to road Fig. 9.8 Aeroplane
transport.

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