NSSCO Business Studies (6144) cheat sheet

Business activity combines inputs (land, labour, capital, enterprise) to produce goods or services that satisfy needs and wants, aiming at profit or, in the public sector, service delivery.

Need vs want: a need is essential for survival (food, shelter); a want is desirable but non-essential (smartphone, soft drink). Business activity is driven mainly by wants.

Three sectors: primary (extraction: mining, farming, fishing), secondary (manufacturing and processing), tertiary (services such as retail, banking, transport). Namibia's economy is primary-heavy (mining, fishing, agriculture).

Division of labour splits production into tasks; specialisation raises output per worker but creates interdependence, so a breakdown in one stage halts the chain.

Added value = selling price of output minus cost of bought-in inputs. A business survives by adding value; value rises with branding, processing and convenience.

Opportunity cost applies to business decisions: choosing to invest in machine A means forgoing the returns of machine B, the next best alternative.

Chain of production: primary → secondary → tertiary. Value generally increases at each stage; the final consumer pays for the whole chain.

Business activity creates employment, generates tax revenue, produces goods and services, and can create negative externalities such as pollution.

Sole trader: one owner, unlimited liability, no separate legal personality, profits taxed as personal income, easy to set up and to dissolve.

Partnership: 2–20 partners in most common-law jurisdictions, shared capital and skills, unlimited liability unless a limited-liability partnership form is registered; a partnership agreement governs profit sharing.

Private company (close corporation style): shares not offered to the public, limited liability, separate legal personality; usually requires registration with the registrar of companies and annual returns.

Public company: shares may be offered to the public and listed on a stock exchange (Namibia: NSX); subject to heavier disclosure and audit requirements.

Cooperative: owned and democratically controlled by members (one member, one vote), profit distributed as patronage dividends; common in Namibian agriculture and savings/microfinance.

Public sector: central government, state-owned enterprises and local authorities; funded mainly by taxes and user charges; objectives include service provision and equity rather than profit.

Private sector: individuals and companies owned by private shareholders; decisions driven by profit, competition and market demand.

Liability rule: owners of incorporated entities (companies) lose only their invested capital; sole traders and ordinary partners risk personal assets.

Common private-sector objectives: profit maximisation, sales growth, market share, survival, customer satisfaction, social/environmental responsibility.

Public-sector objectives: service delivery, affordability, universal access, cost recovery; profit is secondary or absent.

Stakeholders: owners/shareholders, employees, customers, suppliers, lenders, government, local community, pressure groups. Objectives of stakeholders often conflict (higher wages vs higher profit).

SMART objectives: Specific, Measurable, Achievable, Relevant, Time-bound. Vague goals ('do better') are not objectives.

Internal growth (organic): expansion through increased sales, new products or new markets using retained profit and borrowing.

External growth (integration): merger or takeover. Horizontal = same stage/same industry; vertical = forward (towards customer) or backward (towards supplier); conglomerate = unrelated industries.

Growth benefits: economies of scale, larger market share, greater bargaining power. Growth risks: diseconomies of scale, loss of control, culture clash in mergers.

Economies of scale: buying (bulk discounts), technical, financial (cheaper loans), managerial, marketing. Diseconomies arise from communication and coordination problems in large firms.

Market research types: primary (field: surveys, interviews, observation, experiments) and secondary (desk: government statistics, trade reports, company records). Primary is current but costly; secondary is cheap but may be dated.

Sampling: random, stratified, quota, convenience. Larger samples reduce sampling error; biased samples invalidate conclusions regardless of size.

Market segmentation divides buyers by demographics, geography, income, lifestyle or usage; targeting selects segments; positioning sets the brand image relative to competitors.

Marketing mix (4Ps): Product (design, quality, branding, packaging, product life cycle), Price (cost-plus, penetration, skimming, competitive, promotional), Place (channels, retailers, wholesalers, transport), Promotion (advertising, sales promotion, personal selling, publicity, public relations).

Services extend the mix to 7Ps: People, Process, Physical evidence.

Product life cycle: introduction → growth → maturity → decline. Strategy changes at each stage (e.g., skimming at introduction, price competition at maturity).

Pricing decision rules: penetration = low initial price to build share; skimming = high initial price to recover development cost from early adopters.

Marketing strategy links segmentation, targeting, positioning and the mix to a defined objective; effectiveness is judged by sales, market share and customer satisfaction, not by advertising spend alone.

Job production: one-off, customised output (e.g., a tailor's suit); high unit cost, high flexibility, labour-intensive.

Batch production: groups of identical items made in lots (e.g., bakery batches); moderate cost, some flexibility, changeover time between batches.

Flow/mass production: continuous high-volume standardised output (e.g., bottling plant); low unit cost, high capital cost, inflexible.

Productivity = output ÷ input (units per labour hour). Raising productivity lowers unit cost if quality is maintained.

Stock control: buffer stock protects against demand spikes; reorder level triggers replenishment; lead time is the delay between ordering and delivery. Just-in-time reduces stock-holding cost but requires reliable suppliers.

Quality: quality control inspects finished output and rejects defects; quality assurance builds quality into every process; total quality management involves all staff and continuous improvement.

Location factors: proximity to raw materials, market, labour supply, transport links, power and water, government incentives, cost of land. Bulk-gaining industries locate near the market; bulk-reducing industries near the raw material.

Break-even output = fixed costs ÷ (selling price per unit − variable cost per unit). Margin of safety = actual output − break-even output.

Accounting equation: Assets = Liabilities + Owners' equity. Every transaction keeps the equation balanced (double entry).

Income statement (profit and loss): gross profit = sales revenue − cost of sales; net profit = gross profit − expenses.

Statement of financial position (balance sheet): assets (non-current and current), liabilities (non-current and current), equity. Current assets − current liabilities = working capital.

Cash flow forecast records expected receipts and payments by period; closing balance = opening balance + receipts − payments. Profit is not cash: a profitable firm can fail from a cash shortage.

Internal sources of finance: retained profit, sale of unwanted assets, reducing working capital. External: bank loan, overdraft, trade credit, share issue, debenture, leasing, hire purchase, government grants.

Short-term finance (overdraft, trade credit) suits working capital; long-term finance (loan, shares, debentures) suits capital equipment and premises.

Ratio rules: current ratio = current assets ÷ current liabilities (around 2:1 often considered comfortable); return on capital employed = net profit ÷ capital employed × 100%.

Depreciation spreads the cost of a non-current asset over its useful life; it is a non-cash expense in the income statement.

HRM functions: workforce planning, recruitment and selection, induction, training, appraisal, reward, discipline and dismissal.

Recruitment: internal promotion (cheaper, motivating, limited pool) versus external advertising (wider pool, higher cost, longer induction). Selection tools: application forms, CVs, interviews, tests, references.

Training: induction (orientation), on-the-job (coaching, job rotation) and off-the-job (courses, simulations). On-the-job is cheaper and job-specific; off-the-job gives broader skills.

Motivation theories: Maslow's hierarchy (physiological → safety → social → esteem → self-actualisation); Herzberg's hygiene factors prevent dissatisfaction while motivators (achievement, responsibility) create satisfaction; Taylor's scientific management links pay to output.

Financial motivators: wages, salaries, piece rates, commission, bonuses, profit sharing. Non-financial: recognition, promotion, autonomy, good working conditions.

Employment contract sets duties, pay, hours, leave and notice; termination requires lawful grounds and fair procedure (warning, hearing, right of appeal).

Trade unions negotiate collective agreements on pay and conditions; industrial action includes strike, go-slow and work-to-rule; dispute resolution uses negotiation, conciliation, mediation, arbitration.

Staff turnover = (number leaving ÷ average number employed) × 100%. High turnover signals low morale or poor selection.

Communication process: sender → encoding → message → channel → receiver → decoding → feedback. Noise is any interference that distorts the message.

Channels: oral (meetings, telephone), written (letters, reports, email), visual (charts, posters). Rich channels suit complex or sensitive messages; lean channels suit routine data.

Formal (official chain of command) versus informal (grapevine) communication. Grapevine is fast but unreliable; managers can use it but not control it.

Barriers: jargon, language differences, physical distance, poor listening, emotional state, information overload, faulty equipment.

Communication flows: downward (instructions), upward (feedback, reports), horizontal (between departments), diagonal.

ICT applications: word processing, spreadsheets (financial modelling), databases, email, video conferencing, e-commerce, electronic point of sale, management information systems.

ICT benefits: speed, accuracy, lower communication cost, wider market reach. ICT costs/risks: capital outlay, training, downtime, data loss, security and legal compliance (data protection).

Networks: local area network (single site) versus wide area network (multiple sites); internet is public, intranet is internal and restricted, extranet extends access to selected partners.

Business ethics: moral principles guiding conduct beyond legal minimums - honest advertising, fair pay, safe products, no bribery or misleading accounts.

Corporate social responsibility: voluntary action benefiting stakeholders and community (environmental protection, community projects, employee welfare). It can raise costs but builds reputation and customer loyalty.

Legal obligations typically cover registration and licensing, taxation, health and safety, consumer protection, employment law, environmental rules and contract law.

Consumer protection: goods must be fit for purpose, as described, and of satisfactory quality; misleading advertising and false weights are prohibited.

Employment law sets minimum wage, maximum hours, leave, safety standards and protection against unfair dismissal and discrimination.

Environmental regulation covers waste disposal, emissions, water use and environmental impact assessment for major projects; non-compliance brings fines and reputational damage.

Ethical decision test: is the action legal, fair to all stakeholders, transparent, and would the business accept it if done to itself?

Regulators and bodies (e.g., competition authority, tax authority, sector regulators) enforce compliance; penalties include fines, licence withdrawal and prosecution.

PESTLE analysis: Political, Economic, Social, Technological, Legal, Environmental factors outside the firm's control.

Economic influences: inflation, interest rates, exchange rates, unemployment, taxation, business cycle (boom, recession, recovery). Rising interest rates raise borrowing cost and reduce demand.

Namibia specifics: small open economy dependent on mining (diamonds, uranium), fishing, agriculture and tourism; member of SACU (customs union with South Africa, Botswana, Lesotho, Eswatini) and SADC; currency pegged to the South African rand.

International trade: exports earn foreign currency, imports supply goods not produced locally. Balance of trade = value of exports − value of imports; a deficit means imports exceed exports.

Trade protection: tariffs (tax on imports), quotas (quantity limits), subsidies to domestic producers, embargoes. Arguments for protection: protect infant industries and jobs; against: higher prices, reduced choice, retaliation.

Free trade and regional integration widen markets and allow specialisation but expose local firms to stronger competition.

Globalisation: firms operate across borders through multinationals, foreign direct investment, outsourcing and offshoring; drivers include lower transport and communication costs.

Exchange rate rule: a weaker currency makes exports cheaper abroad and imports dearer at home; a stronger currency does the reverse.

Business activity combines inputs (land, labour, capital, enterprise) to produce goods or services that satisfy needs and wants, aiming at profit or, in the public sector, service delivery.

Need vs want: a need is essential for survival (food, shelter); a want is desirable but non-essential (smartphone, soft drink). Business activity is driven mainly by wants.

Three sectors: primary (extraction: mining, farming, fishing), secondary (manufacturing and processing), tertiary (services such as retail, banking, transport). Namibia's economy is primary-heavy (mining, fishing, agriculture).

Division of labour splits production into tasks; specialisation raises output per worker but creates interdependence, so a breakdown in one stage halts the chain.

Added value = selling price of output minus cost of bought-in inputs. A business survives by adding value; value rises with branding, processing and convenience.

Opportunity cost applies to business decisions: choosing to invest in machine A means forgoing the returns of machine B, the next best alternative.

Chain of production: primary → secondary → tertiary. Value generally increases at each stage; the final consumer pays for the whole chain.

Business activity creates employment, generates tax revenue, produces goods and services, and can create negative externalities such as pollution.

Sole trader: one owner, unlimited liability, no separate legal personality, profits taxed as personal income, easy to set up and to dissolve.

Partnership: 2–20 partners in most common-law jurisdictions, shared capital and skills, unlimited liability unless a limited-liability partnership form is registered; a partnership agreement governs profit sharing.

Private company (close corporation style): shares not offered to the public, limited liability, separate legal personality; usually requires registration with the registrar of companies and annual returns.

Public company: shares may be offered to the public and listed on a stock exchange (Namibia: NSX); subject to heavier disclosure and audit requirements.

Cooperative: owned and democratically controlled by members (one member, one vote), profit distributed as patronage dividends; common in Namibian agriculture and savings/microfinance.

Public sector: central government, state-owned enterprises and local authorities; funded mainly by taxes and user charges; objectives include service provision and equity rather than profit.

Private sector: individuals and companies owned by private shareholders; decisions driven by profit, competition and market demand.

Liability rule: owners of incorporated entities (companies) lose only their invested capital; sole traders and ordinary partners risk personal assets.

Common private-sector objectives: profit maximisation, sales growth, market share, survival, customer satisfaction, social/environmental responsibility.

Public-sector objectives: service delivery, affordability, universal access, cost recovery; profit is secondary or absent.

Stakeholders: owners/shareholders, employees, customers, suppliers, lenders, government, local community, pressure groups. Objectives of stakeholders often conflict (higher wages vs higher profit).

SMART objectives: Specific, Measurable, Achievable, Relevant, Time-bound. Vague goals ('do better') are not objectives.

Internal growth (organic): expansion through increased sales, new products or new markets using retained profit and borrowing.

External growth (integration): merger or takeover. Horizontal = same stage/same industry; vertical = forward (towards customer) or backward (towards supplier); conglomerate = unrelated industries.

Growth benefits: economies of scale, larger market share, greater bargaining power. Growth risks: diseconomies of scale, loss of control, culture clash in mergers.

Economies of scale: buying (bulk discounts), technical, financial (cheaper loans), managerial, marketing. Diseconomies arise from communication and coordination problems in large firms.

Market research types: primary (field: surveys, interviews, observation, experiments) and secondary (desk: government statistics, trade reports, company records). Primary is current but costly; secondary is cheap but may be dated.

Sampling: random, stratified, quota, convenience. Larger samples reduce sampling error; biased samples invalidate conclusions regardless of size.

Market segmentation divides buyers by demographics, geography, income, lifestyle or usage; targeting selects segments; positioning sets the brand image relative to competitors.

Marketing mix (4Ps): Product (design, quality, branding, packaging, product life cycle), Price (cost-plus, penetration, skimming, competitive, promotional), Place (channels, retailers, wholesalers, transport), Promotion (advertising, sales promotion, personal selling, publicity, public relations).

Services extend the mix to 7Ps: People, Process, Physical evidence.

Product life cycle: introduction → growth → maturity → decline. Strategy changes at each stage (e.g., skimming at introduction, price competition at maturity).

Pricing decision rules: penetration = low initial price to build share; skimming = high initial price to recover development cost from early adopters.

Marketing strategy links segmentation, targeting, positioning and the mix to a defined objective; effectiveness is judged by sales, market share and customer satisfaction, not by advertising spend alone.

Job production: one-off, customised output (e.g., a tailor's suit); high unit cost, high flexibility, labour-intensive.

Batch production: groups of identical items made in lots (e.g., bakery batches); moderate cost, some flexibility, changeover time between batches.

Flow/mass production: continuous high-volume standardised output (e.g., bottling plant); low unit cost, high capital cost, inflexible.

Productivity = output ÷ input (units per labour hour). Raising productivity lowers unit cost if quality is maintained.

Stock control: buffer stock protects against demand spikes; reorder level triggers replenishment; lead time is the delay between ordering and delivery. Just-in-time reduces stock-holding cost but requires reliable suppliers.

Quality: quality control inspects finished output and rejects defects; quality assurance builds quality into every process; total quality management involves all staff and continuous improvement.

Location factors: proximity to raw materials, market, labour supply, transport links, power and water, government incentives, cost of land. Bulk-gaining industries locate near the market; bulk-reducing industries near the raw material.

Break-even output = fixed costs ÷ (selling price per unit − variable cost per unit). Margin of safety = actual output − break-even output.

Accounting equation: Assets = Liabilities + Owners' equity. Every transaction keeps the equation balanced (double entry).

Income statement (profit and loss): gross profit = sales revenue − cost of sales; net profit = gross profit − expenses.

Statement of financial position (balance sheet): assets (non-current and current), liabilities (non-current and current), equity. Current assets − current liabilities = working capital.

Cash flow forecast records expected receipts and payments by period; closing balance = opening balance + receipts − payments. Profit is not cash: a profitable firm can fail from a cash shortage.

Internal sources of finance: retained profit, sale of unwanted assets, reducing working capital. External: bank loan, overdraft, trade credit, share issue, debenture, leasing, hire purchase, government grants.

Short-term finance (overdraft, trade credit) suits working capital; long-term finance (loan, shares, debentures) suits capital equipment and premises.

Ratio rules: current ratio = current assets ÷ current liabilities (around 2:1 often considered comfortable); return on capital employed = net profit ÷ capital employed × 100%.

Depreciation spreads the cost of a non-current asset over its useful life; it is a non-cash expense in the income statement.

HRM functions: workforce planning, recruitment and selection, induction, training, appraisal, reward, discipline and dismissal.

Recruitment: internal promotion (cheaper, motivating, limited pool) versus external advertising (wider pool, higher cost, longer induction). Selection tools: application forms, CVs, interviews, tests, references.

Training: induction (orientation), on-the-job (coaching, job rotation) and off-the-job (courses, simulations). On-the-job is cheaper and job-specific; off-the-job gives broader skills.

Motivation theories: Maslow's hierarchy (physiological → safety → social → esteem → self-actualisation); Herzberg's hygiene factors prevent dissatisfaction while motivators (achievement, responsibility) create satisfaction; Taylor's scientific management links pay to output.

Financial motivators: wages, salaries, piece rates, commission, bonuses, profit sharing. Non-financial: recognition, promotion, autonomy, good working conditions.

Employment contract sets duties, pay, hours, leave and notice; termination requires lawful grounds and fair procedure (warning, hearing, right of appeal).

Trade unions negotiate collective agreements on pay and conditions; industrial action includes strike, go-slow and work-to-rule; dispute resolution uses negotiation, conciliation, mediation, arbitration.

Staff turnover = (number leaving ÷ average number employed) × 100%. High turnover signals low morale or poor selection.

Communication process: sender → encoding → message → channel → receiver → decoding → feedback. Noise is any interference that distorts the message.

Channels: oral (meetings, telephone), written (letters, reports, email), visual (charts, posters). Rich channels suit complex or sensitive messages; lean channels suit routine data.

Formal (official chain of command) versus informal (grapevine) communication. Grapevine is fast but unreliable; managers can use it but not control it.

Barriers: jargon, language differences, physical distance, poor listening, emotional state, information overload, faulty equipment.

Communication flows: downward (instructions), upward (feedback, reports), horizontal (between departments), diagonal.

ICT applications: word processing, spreadsheets (financial modelling), databases, email, video conferencing, e-commerce, electronic point of sale, management information systems.

ICT benefits: speed, accuracy, lower communication cost, wider market reach. ICT costs/risks: capital outlay, training, downtime, data loss, security and legal compliance (data protection).

Networks: local area network (single site) versus wide area network (multiple sites); internet is public, intranet is internal and restricted, extranet extends access to selected partners.

Business ethics: moral principles guiding conduct beyond legal minimums - honest advertising, fair pay, safe products, no bribery or misleading accounts.

Corporate social responsibility: voluntary action benefiting stakeholders and community (environmental protection, community projects, employee welfare). It can raise costs but builds reputation and customer loyalty.

Legal obligations typically cover registration and licensing, taxation, health and safety, consumer protection, employment law, environmental rules and contract law.

Consumer protection: goods must be fit for purpose, as described, and of satisfactory quality; misleading advertising and false weights are prohibited.

Employment law sets minimum wage, maximum hours, leave, safety standards and protection against unfair dismissal and discrimination.

Environmental regulation covers waste disposal, emissions, water use and environmental impact assessment for major projects; non-compliance brings fines and reputational damage.

Ethical decision test: is the action legal, fair to all stakeholders, transparent, and would the business accept it if done to itself?

Regulators and bodies (e.g., competition authority, tax authority, sector regulators) enforce compliance; penalties include fines, licence withdrawal and prosecution.

PESTLE analysis: Political, Economic, Social, Technological, Legal, Environmental factors outside the firm's control.

Economic influences: inflation, interest rates, exchange rates, unemployment, taxation, business cycle (boom, recession, recovery). Rising interest rates raise borrowing cost and reduce demand.

Namibia specifics: small open economy dependent on mining (diamonds, uranium), fishing, agriculture and tourism; member of SACU (customs union with South Africa, Botswana, Lesotho, Eswatini) and SADC; currency pegged to the South African rand.

International trade: exports earn foreign currency, imports supply goods not produced locally. Balance of trade = value of exports − value of imports; a deficit means imports exceed exports.

Trade protection: tariffs (tax on imports), quotas (quantity limits), subsidies to domestic producers, embargoes. Arguments for protection: protect infant industries and jobs; against: higher prices, reduced choice, retaliation.

Free trade and regional integration widen markets and allow specialisation but expose local firms to stronger competition.

Globalisation: firms operate across borders through multinationals, foreign direct investment, outsourcing and offshoring; drivers include lower transport and communication costs.

Exchange rate rule: a weaker currency makes exports cheaper abroad and imports dearer at home; a stronger currency does the reverse.