WAEC SSCE - Commerce - 1990 (Essay)

(a) Types of cheque

1. Bearer cheque: A cheque payable to whoever presents (bears) it at the bank. It is written "pay ... or bearer" and can be cashed by anyone holding it, so it is risky if lost or stolen.
2. Open cheque: A cheque that is not crossed and can be cashed over the counter by presenting it at the bank on which it is drawn. It can be paid in cash directly to the payee.
3. Order cheque: A cheque payable to a named person or to his order, written "pay ... or order." It can be transferred to another person only by endorsement (signing at the back).
4. Crossed cheque: A cheque with two parallel lines drawn across its face. It cannot be cashed over the counter but must be paid into a bank account, which makes it safer than an open cheque.

(b) Six factors a bank manager considers before granting a loan

1. Character of the applicant: The honesty, integrity and past record of the borrower in repaying debts.
2. Capacity to repay: The applicant's income and the profitability of the venture, showing his ability to repay the loan.
3. Collateral security: The value and quality of the security or assets offered to back the loan in case of default.
4. Purpose of the loan: Whether the loan is for a genuine and viable project that is likely to succeed.
5. Amount and period of the loan: The size of the loan requested relative to the applicant's stake, and the length of time it will run.
6. Existing relationship and economic conditions: The applicant's past dealings with the bank, his existing account, and the general economic climate at the time.

(a) What is the marketing concept?

The marketing concept is a business philosophy which holds that the key to achieving organizational goals lies in identifying the needs and wants of the target customers and satisfying them more effectively and efficiently than competitors. It puts the customer at the centre of all business decisions, so that the firm produces what it can sell rather than trying to sell what it produces, and earns its profit through customer satisfaction.

(b) The four elements of the marketing mix (the 4 Ps)

1. Product: This is the good or service offered to satisfy customer needs. It covers decisions on quality, design, brand, packaging, features and after-sales service.
2. Price: This is the amount of money customers pay for the product. It covers pricing methods, discounts, and credit terms; the price must be attractive to buyers yet profitable to the firm.
3. Place (distribution): This refers to the channels and methods used to make the product available to customers at the right place and time, including wholesalers, retailers, transport and warehousing.
4. Promotion: This covers all the activities used to inform, persuade and remind customers about the product, such as advertising, personal selling, sales promotion and publicity.

(a) What is delegation of authority?

Delegation of authority is the process by which a superior (manager) entrusts part of his authority and duties to a subordinate to carry out on his behalf, while the superior still remains responsible (accountable) for the final result. It involves assigning tasks, granting the authority needed to perform them, and creating accountability from the subordinate to the superior.

(b) Four advantages of delegation of authority

1. Reduces the workload of managers: It relieves top managers of routine duties, giving them time to concentrate on more important policy matters.
2. Ensures quick decision-making: Subordinates on the spot can take decisions promptly without waiting for approval from above.
3. Trains and develops subordinates: It gives subordinates experience, initiative and confidence, preparing them for higher responsibilities in future.
4. Improves efficiency and motivation: It makes work go faster, promotes specialization, and raises the morale and job satisfaction of subordinates who feel trusted.

(a) Functions of NIPOST (Nigerian Postal Service)

1. Collection, sorting and delivery of letters, parcels and printed matter within and outside the country.
2. Provision of money transfer services through postal orders and money orders.
3. Operation of the post office savings bank for small savers.
4. Renting out of post office boxes and private mail bags for the safe receipt of mail.
5. Sale of postage stamps and provision of registered, express (EMS) and courier services for valuable items.
6. Acting as agent for government by selling revenue stamps, collecting certain fees and paying pensions.

(b) Functions of NITEL (Nigerian Telecommunications Limited)

1. Provision of telephone services for local, national (trunk) and international calls.
2. Provision of telex, telegram and facsimile (fax) services for fast written communication.
3. Installation and maintenance of telecommunication lines, exchanges and equipment.
4. Provision of internet and data transmission services.
5. Linking the country with the outside world through satellite and international telecommunication networks.
6. Provision of directory (enquiry) and other value-added telephone services to subscribers.

(a) How the partnership would be to their mutual benefit

Akani should explain to Sule the following advantages of merging their two sole proprietorships into a partnership:

1. Larger capital: The pooling of their resources will bring in more capital, enabling the business to expand and take on bigger contracts.
2. Combined skills and ideas: They will benefit from each other's knowledge, experience and abilities, leading to better decisions and management.
3. Sharing of risks and losses: Any risk or loss suffered by the business will be shared between them instead of being borne by one person alone.
4. Greater borrowing power: A larger business with more owners can obtain loans and credit more easily than a single trader.
5. Division of labour and continuity: They can share duties according to ability, and the business can continue when one partner is ill or absent, giving it more stability than a one-man business.

(b) Five reasons why Sule might be reluctant to accept the proposal

1. Loss of sole control: Sule will no longer make decisions alone; he must now consult and agree with Akani.
2. Sharing of profits: The profits he formerly kept entirely to himself must now be shared with Akani.
3. Liability for a partner's actions: Under unlimited liability, Sule can be held responsible for debts and mistakes caused by Akani.
4. Possibility of disagreement: Differences in opinion between the partners could lead to quarrels that disrupt the business.
5. Loss of independence and identity: Sule loses the freedom and personal identity of running his own business, and the partnership may break up on the death or withdrawal of a partner.

(a) Functions of the Nigeria Export Promotion Council (NEPC)

1. To promote and develop the export of non-oil products from Nigeria.
2. To provide export information, advice and guidance to exporters on markets, prices and procedures.
3. To organize training, seminars, and trade fairs and exhibitions to encourage exporters.
4. To administer export incentives, grants and duty drawback schemes to exporters.
5. To help exporters find foreign markets and link them with foreign buyers.
6. To advise government on export policies and to help improve the quality and packaging of export products so that they meet international standards.

(b) Steps an exporter takes from receipt of an indent to shipment of goods

1. Receipt of indent: The exporter receives the indent (order) from the overseas buyer, stating the goods, quantity and terms required.
2. Acknowledgement and assembling of goods: He acknowledges the order, then obtains or manufactures and assembles the goods ordered.
3. Packing and marking: The goods are properly packed, marked and labelled according to the buyer's instructions.
4. Obtaining export documents and licence: He obtains the necessary documents such as the export licence, certificate of origin, and consular or commercial invoice.
5. Booking shipping space and customs clearance: He books freight space with a shipping company, completes customs (export) entry forms and clears the goods with customs, paying any dues.
6. Insurance and shipment: He insures the goods, delivers them to the docks, obtains the bill of lading after loading, and dispatches the shipping documents to the importer for collection of the goods.

(a) Explanation of terms

1. Chamber of Commerce: A voluntary association of business people, traders, manufacturers and firms in a town, region or country, formed to protect and promote the common commercial and industrial interests of its members.
2. Trade Association: An organization formed by firms or persons engaged in the same trade or industry to protect and advance the particular interests of that trade, for example an association of bakers or of textile manufacturers.

(b) Four functions of a Chamber of Commerce

1. It protects and promotes the general commercial interests of its members.
2. It provides trade information and advice to members on markets, prices and business opportunities.
3. It represents the views of the business community to government and negotiates on their behalf.
4. It organizes trade fairs and exhibitions and settles disputes among members through arbitration.

Four functions of a Trade Association

1. It regulates and maintains standards of quality within the particular trade.
2. It fixes common prices and guards against unhealthy competition among members.
3. It bargains collectively with government, workers and suppliers on behalf of members.
4. It provides technical advice, research and information for the improvement of the trade, and settles disputes among its members.

(a) Distinction between nationalization and indigenisation

(b) Five advantages of nationalization

1. It brings essential and strategic industries under public control for the benefit of all.
2. It prevents exploitation of consumers by private monopolists.
3. It enables government to undertake capital-intensive projects that private investors cannot afford.
4. It ensures the provision of essential social services such as water and electricity even where they are not very profitable.
5. It helps to prevent foreign domination of the economy and keeps profits within the country.

Two objectives of indigenisation

1. To increase the participation and ownership of businesses by citizens of the country.
2. To reduce foreign control and domination of the nation's economy and retain profits at home.

(a) Meaning of the terms

1. Balance of trade: This is the difference between the total value of a country's visible exports and its visible imports (physical goods) over a given period. It is favourable when exports exceed imports and unfavourable when imports exceed exports.
2. Balance of payments: This is a systematic record of all economic transactions (both visible and invisible) between a country and the rest of the world over a given period, usually one year. It includes the balance of trade, invisible trade in services, and capital movements.

(b) Four ways by which a balance of payments deficit can be corrected

1. Devaluation of the currency: Reducing the value of the home currency makes exports cheaper and imports dearer, thereby raising exports and cutting imports.
2. Import restriction: Imposing tariffs, quotas and bans on non-essential imports reduces the amount of foreign exchange spent on imports.
3. Export promotion: Encouraging exports through incentives, subsidies and improved quality increases the country's foreign exchange earnings.
4. Deflationary and exchange-control measures: Reducing domestic demand through higher taxes and interest rates, and rationing the use of foreign exchange, cuts spending on imports and improves the balance of payments.

(a) What is marketing?

Marketing is the process of identifying, anticipating and satisfying customers' needs and wants profitably. It embraces all the business activities involved in moving goods and services from the producer to the final consumer, including product planning, pricing, promotion and distribution.

(b) Six reasons why a manufacturer may sell directly to consumers

1. To reduce the cost of distribution: By cutting out wholesalers and retailers, the manufacturer saves the profit margins that middlemen would take, and can charge lower prices.
2. To earn higher profit: Selling directly allows the manufacturer to keep the middlemen's profit for himself.
3. Nature of the goods: Goods that are perishable, bulky, fragile, or highly technical are better sold directly to reach consumers quickly and in good condition.
4. To have direct contact with customers: Direct selling enables the manufacturer to obtain first-hand information and feedback about consumers' needs and complaints.
5. To control price and quality: The manufacturer can fix his own prices and ensure that customers get genuine products of the right quality and standard.
6. Where goods are made to order or middlemen are unwilling: Custom-built goods, or products that middlemen are reluctant to stock, must be sold directly, especially where the market is small or few in number.