WAEC SSCE - Commerce - 1997 (Essay)

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(a) Reasons why a life assurance policy may be taken

• To provide for dependants: It gives financial security to the family of the assured in the event of his death.
• As a form of saving: An endowment policy enables the assured to save regularly and receive a lump sum at maturity.
• To provide for old age: It can serve as a source of income or pension after retirement.
• To meet future obligations: The proceeds can be used to pay for children's education, marriage or to settle debts.
• As security for a loan: A life policy can be assigned or used as collateral to obtain a loan from a bank.

(b) Insurance policies a large department shop owner may take

• Fire insurance: It covers loss or damage to the building, stock and fittings caused by fire and allied perils.
• Burglary and theft insurance: It covers loss of goods, cash and property arising from burglary or theft by outsiders.
• Fidelity guarantee insurance: It covers the shop against loss caused by the dishonesty or embezzlement of its employees.
• Employer's liability (workmen's compensation) insurance: It covers claims by employees who are injured, disabled or killed in the course of their work.
• Public liability insurance: It covers claims by customers or members of the public who suffer injury or damage on the shop's premises.

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(a) Services of courier firms

Courier firms are private organisations that offer fast, door-to-door collection and delivery of documents and parcels.

• They provide fast and reliable delivery of parcels, documents and packages from sender to receiver.
• They offer door-to-door pick-up and delivery, collecting items from the sender's address and delivering to the receiver's address.
• They provide tracking services that allow the sender to trace and monitor the movement of an item until it is delivered.
• They handle both local (within the country) and international delivery of goods and documents.
• They offer insurance and safe handling of fragile or valuable items, and give proof of delivery through the receiver's signature.

(b) Services of NITEL (telecommunications)

NITEL is the national telecommunications organisation that provides communication services.

• It provides telephone services enabling people to make and receive voice calls locally and internationally.
• It offers telex and facsimile (fax) services for the transmission of written messages and documents.
• It provides internet and data transmission services for the exchange of electronic information.
• It offers trunk (long-distance) and international call services linking subscribers within and outside the country.
• It provides directory and enquiry services and installs and maintains telephone lines and equipment for subscribers.

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(a) Environmental factors that affect business

1. Economic factors
2. Political and legal factors
3. Social and cultural factors
4. Technological factors

(b) How each factor affects business operations

• Economic factors: Conditions such as inflation, interest rates, taxation, income levels and unemployment affect the cost of production and the purchasing power of customers. High inflation and interest rates raise costs and reduce demand, while a booming economy increases sales and profit.
• Political and legal factors: Government policies, laws, regulations and political stability determine the rules under which a business operates. Favourable laws, incentives and stability encourage investment, while heavy regulation, unfavourable policies or unrest discourage business and increase risk.
• Social and cultural factors: The beliefs, values, tastes, religion and lifestyle of the people influence the type of goods demanded and how they are marketed. A business must produce and advertise in line with the culture and preferences of the society, otherwise its products will be rejected.
• Technological factors: The state of technology affects the methods, speed and cost of production and distribution. New technology enables a business to produce better quality goods more cheaply and efficiently, while failure to adopt it can make a firm uncompetitive and obsolete.

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(a) Factors that determine the span of control

Span of control is the number of subordinates that a manager can effectively supervise.

• Nature of the work: Simple, routine and similar tasks allow a wide span, while complex and varied tasks require a narrow span.
• Ability of the manager: A competent, experienced and energetic manager can supervise more subordinates than a weak one.
• Ability and training of subordinates: Well-trained, skilled and self-disciplined subordinates need less supervision, allowing a wider span.
• Availability and quality of communication: Where good communication and reporting systems exist, a manager can control more people effectively.
• Geographical location of workers: When subordinates are scattered over a wide area, the span must be narrow; when they are close together, the span can be wide.

(b) Functions of the personnel department

• Recruitment and selection: It advertises vacancies, interviews and selects suitable persons to fill positions in the organisation.
• Training and development: It organises training programmes to improve the skills, knowledge and efficiency of workers.
• Wages and salary administration: It fixes, computes and manages the payment of wages, salaries and other benefits to staff.
• Welfare and industrial relations: It looks after the welfare of workers and handles relations between management and employees, including grievances and disputes.
• Keeping personnel records and discipline: It maintains records of employees and handles promotion, transfer, discipline and termination of appointments.

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(a) Advertising medium

An advertising medium is the channel or vehicle through which an advertising message is carried from the advertiser to the target audience, for example a newspaper, radio or television.

(b) Factors to consider before choosing an advertising medium

• Nature of the product: Technical goods may need media that allow detailed explanation, while consumer goods may suit visual media.
• The target audience: The medium chosen must be one that reaches the particular group of people the advertiser wants to influence.
• Cost of the medium: The advertiser must choose a medium whose cost is within the advertising budget and gives value for money.
• Coverage or circulation: A medium that reaches a wide or appropriate area and a large number of the desired customers is preferred.
• Nature of the message: Where colour, sound or movement is needed to pass the message, television is suitable; for lasting reference, print media are better.

(c) Examples of advertising media

1. Television
2. Radio
3. Newspapers
4. Magazines
5. Posters and billboards (hoardings)
6. Handbills and leaflets
7. The internet and social media
8. Cinema advertisements

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Reasons for consumer protection and relevant laws

Consumer protection means safeguarding buyers against unfair, dishonest and harmful trade practices. The following are reasons for it, each with a relevant government measure.

1. To protect consumers against sub-standard and dangerous goods: Some traders sell fake, expired or harmful products that endanger health and life. Relevant law: The Standards Organisation of Nigeria (SON) Act, which sets and enforces quality standards for goods.
2. To protect consumers against unwholesome food and drugs: Consumers may be sold adulterated, counterfeit or unregistered food and drugs. Relevant law: The National Agency for Food and Drug Administration and Control (NAFDAC) Act, which regulates the manufacture, importation and sale of food and drugs.
3. To protect consumers against exploitation and unfair trade practices: Traders may cheat consumers through hoarding, overpricing and misleading claims. Relevant law: The Federal Competition and Consumer Protection Act (formerly the Consumer Protection Council Act), which handles consumer complaints and prohibits unfair practices.
4. To ensure correct weights and measures: Some sellers give short weight or false measures to buyers. Relevant law: The Weights and Measures Act, which prescribes and enforces standard units of weight and measurement.
5. To protect consumers against false and deceptive advertising and price exploitation: Advertisers may make false claims, and prices may be arbitrarily fixed. Relevant law: The Price Control Act and advertising regulations that check deceptive advertisements and excessive pricing.

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Commerce covers trade and the aids to trade (transport, banking, insurance, warehousing, advertising and communication). Its importance to the life of a nation includes the following:

1. It makes goods available where and when they are needed. Through trade, transport and warehousing, commerce moves goods from areas of surplus production to areas of scarcity and stores them until required, thereby removing the problems of place and time and ensuring a steady supply of goods to consumers.
2. It creates employment. Commercial activities such as wholesaling, retailing, banking, insurance, transportation and advertising provide jobs for large numbers of people, reducing unemployment and raising the standard of living in the nation.
3. It encourages specialisation and division of labour. Because commerce guarantees a market for goods, producers can concentrate on what they produce best while relying on others for other needs. This specialisation increases output, efficiency and the quality of goods and services.
4. It promotes international trade and earns foreign exchange. Commerce enables a nation to export its surplus goods and import what it cannot produce. The foreign exchange earned strengthens the economy and helps finance national development.
5. It raises government revenue and aids development. Governments earn revenue through customs duties, excise duties, licences and taxes levied on commercial activities. This revenue is used to provide infrastructure and social services that promote national growth.

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(a) Ways commercial banks aid international trade

• Provision of foreign exchange: Banks buy and sell foreign currencies, enabling importers to pay foreign suppliers and exporters to receive payment in usable currency.
• Documentary letters of credit: A bank guarantees payment to the exporter on presentation of the shipping documents, giving both buyer and seller confidence to trade.
• Bills of exchange and acceptance: Banks accept, discount and collect bills of exchange, allowing exporters to obtain immediate cash and giving importers time to pay.
• Transfer of funds: Through telegraphic and electronic transfers, banks move money quickly and safely between countries to settle international debts.
• Provision of trade information and status enquiries: Banks supply information on the creditworthiness of overseas customers and on market conditions abroad, reducing the risk of trading with strangers.

(b) Functions of the Nigerian Export Promotion Council (NEPC)

The NEPC is the government agency established to promote the development and diversification of non-oil exports.

• Promotion of non-oil exports: It encourages the production and export of non-oil products in order to diversify the country's export base and earn more foreign exchange.
• Provision of information and advice: It supplies exporters with information on foreign markets, prices, buyers and export procedures.
• Organising trade fairs and missions: It arranges international trade fairs, exhibitions and trade missions to showcase Nigerian products and find buyers abroad.
• Training of exporters: It conducts seminars, workshops and training programmes to build the capacity and competence of exporters.
• Administering export incentives: It administers export grants, incentives and schemes that reduce the cost and risk of exporting for Nigerian firms.

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(a) Features of a public company

(i) It has a separate legal status from its members; therefore, it can sue and be sued in its own name.

(ii) The liability of its shareholders is limited to the amount unpaid on their shares.

(iii) It can invite the general public to subscribe for its shares and debentures.

(iv) Its shares are freely transferable, usually through the stock exchange.

(v) It may issue debentures, which may be secured on the assets of the company.

(vi) It must file and publish its annual reports and audited accounts as required by law.

(vii) It must have a minimum of seven members, while there is no maximum limit to the number of shareholders.

(viii) It must obtain a trading certificate before it can commence business.

(b) Reasons for winding up a public limited company

(i) The shareholders may pass a resolution for voluntary winding up where the company can no longer pay its debts, is no longer profitable, or the purpose for which it was formed has been achieved.

(ii) A court may order the winding up of the company where it is unable to pay its debts or honour its financial obligations.

(iii) The company may be wound up if it was formed for illegal purposes or if its objects have become unlawful or impossible to achieve.

(iv) The Corporate Affairs Commission may strike the company’s name off the register where it fails to comply with legal requirements.

(v) The company may be wound up if it does not commence business within the period prescribed by law after incorporation.

(vi) Winding up may occur where the number of members falls below the statutory minimum of seven.

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(a) Objectives of establishing ECOWAS

The Economic Community of West African States (ECOWAS) was formed in 1975 to promote economic co-operation among West African countries.

• To promote co-operation and integration in the economic activities of member states.
• To remove trade barriers such as tariffs and quotas, creating a common market and free trade among members.
• To allow free movement of persons, goods, capital and services within the sub-region.
• To raise the standard of living and promote economic development of the people of member states.
• To promote joint development of infrastructure, industries and resources, and to maintain peace and stability in the region.

(b) Reasons the Lake Chad Basin Commission was established

The Lake Chad Basin Commission was set up by the countries surrounding Lake Chad to jointly manage the resources of the basin.

• To regulate and control the use of the water resources of the Lake Chad basin among member states.
• To prevent disputes and conflicts among member countries over the shared water and land resources.
• To promote joint development of agriculture, fishing and livestock in the basin.
• To co-operate in the fight against the shrinking of the lake and environmental problems such as drought and desertification.
• To promote economic co-operation and the overall development of the member states in the basin.