SUBJECT TEACHER EMMANUEL SARAH

BUSINESS STUDIES LESSON NOTES FOR SECOND TERM

2ND TERM UB1 SCHEME OF WORK

1. Factors of production: Factors of production- Land, Labour, Capital and

Entrepreneur

2 Occupation: Division of occupation (i) primary (ii) industrial (iii) commercial

and services

3. Occupation: (1) Factors which affect occupation (ii) Differences between

direct and indirect services.

4. Ethics in sourcing chemical: 1. Meaning of ethics (2) Ethics of sourcing

chemical (i) from licensed chemical vendors (ii) Good handling techniques

(iii) Proper disposal

5. Entrepreneurship: 1. Meaning of: (i) Entrepreneurship

(ii) Enterprise (iii) Self employment 2. Facilities available for self

employment

6. Successful Entrepreneurs: (i) Your locality (ii) Nigeria

(iii) International

7 Importance of Entrepreneurship: (I) Individual (ii) Family and Society

8. Forms of business organization: (1) meaning of business organization

(2) Types of business organization

9. Partnership, Limited liability Company.

10. Co-operative Societies – Advantages and disadvantages of each form of

business.

11. Revision

12 Examination.

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TOPIC FACTORS OF PRODUCTION

Meaning: Factors of production are those resources which make it possible for
goods and services to be produced. They are the basic requirements or resources that
must be present to enable production to take place. They are sometimes called agents
of production. OR Factors of production refers to the elements which when put
together makes a unit, production cannot take place unless these elements combine.
There are four factors of production, namely:

1. Land
2. Capital
3. Labour
4. Entrepreneur

LAND: Land is the resource provided by nature to aid the production of goods
and services. It is a free gift of nature to aid production. Land as a factor of
production, does not only means the surface of the earth, it also means all the natural
resources provided by nature and used by man in the process of production. Example
of land as a factor of production include: seas and rivers, minerals, forests,
mountains, farmland. The reward for land is rent

Features of land
1. It is a free gift of nature
2. It is not movable
3. The price and quality of land vary from one place to another
4. The reward for land is rent
5. The supply of land is fixed.

Importance of land
1. Land is useful for agriculture
2. Minerals resources are sourced from land
3. Movement of goods and people take place mainly on land and water
4. Residential and industrial buildings are sited on land.

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LABOUR
Meaning: Labour is all forms of human effort put into production of goods and
services. It is also the actual effort both physical and mental made by human beings
towards production activities. Labour differs from other factors of production
because, it involves human beings. Labour is supplied by man and the reward for
labour is wages and salaries. This means that, when a business or an individual
engages one in labour, he/she must be paid. Example, a doctor, a teacher, a farmer, a
lawyer, a taxi driver etc, all provide one type of labour or the other.

There are three types of labour;

1. Skilled labour
2. Semi-skilled labour and
3. Unskilled labour

Skilled labour
These are workers who have received training in a formal education. They are experts
and specialists in their chosen career. Examples of skilled labour are: doctors,
marketers, engineers, accountants, Lawyers and dentists etc.

Semi-skilled labour
These are people who have received a formal training but do not have formal
education. Examples are the guards, Messengers, office assistants.

Unskilled labour
They are those who have not received formal training. Examples are; grass cutters,
cleaners and labourer who carrier blocks at a construction site he does not require any
special training to be able to carry blocks.

Both land and labour are often referred to as primary factors of production.

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CAPITAL
Meaning: Capital can be defined as man-made wealth or goods used to produce
other goods and services It is the stock of goods or assets made by man not for
immediate consumption but set aside to produce more goods in future. Therefore,
anything which helps man to improve production or maximize the use of land and
labour can be called capital.

Capital includes money saved now to acquire assets for future use or meant for
running a business. Other examples of capital are: machines and equipment, tools,
factories, building, hoes, and airports. The reward for capital is interest.

ENTREPRENEUR
Meaning: An entrepreneur is a person who initiates a business idea or plan, starts a
business and gets the business functioning. In other words, an entrepreneur is
someone who has the ability to conduct a business successfully. He/she uses his/her
ability to organize and co-ordinate all the various factors of production in order to
ensure that goods and services are produced and made available to the consumers. The
entrepreneur takes business risk and the reward for the entrepreneur is profit

Note that:

All factors of production receive reward. For instance, Labour earns wages and
salaries, Land attracts rents, and capital receives interest, while the entrepreneur
receives profits.

Functions of the Entrepreneur:

1. He bears all the risks alone.
2. He provides the required capital for the business.
3. He combines other factors of production to achieve the desired objectives.
4. He decides what to produce and how to produce them.

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FACTORS OF PRODUCTION CORRESPONDING RETURE\REWARD.

Land Rent
Labour Wage/salary
Capital Interest
Entrepreneur/Management Profit

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TOPIC: OCCUPATION
MEANING: Occupation can be defined as any economic or productive activity
which people engage in to produce or provide goods and services and earn a living. It
can also mean what a person does for a living. It is a means of livelihood of a person.

There are many occupations a person may be engaged in to earn a living e.g.
Teaching, Law, Medicine, trading and Agriculture.

Professional occupation like Teachers, Medical doctors, engineers, Lawyers,

Marketers and accountants involves a long period of formal training etc. They earn
salaries; this enables them to live well in the society and rear families.

Divisions of Occupations
The following are the major divisions or classification of occupation

1. Primary Occupation
2. Industrial Occupation
3. Commercial Occupation and
4. Service Occupation

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Division of Occupation

Primary/extractive e.g. Industrial/Manufacturing e.g. Construction e.g. road Commercial e.g. warehousing, Services
mining, fishing, hunting, food production, printing, building, bridge building, insurance, banking,
oil-drilling, farming, production of goods. and house building. transportation, advertising,
quarrying, forestry and communication and tourism.
lumbering.

Direct service e.g. Indirect service e.g.

house maid, family police, arm force,
doctor etc teacher
Extractive Occupation
Extractive industry extracts raw materials and natural resources from the soil and
sea. Farming, fishing, hunting, quarrying forestry or lumbering and mining fall into
the extractive occupations. The workers in this division of occupation make raw
materials readily available to those who turn the raw materials into finished goods.
The extractive industry is also called the primary industry because it deals with the
early stages of production. Raw materials are in their primary forms. The fisherman,
for examples, catches fish which he sells to a buyer. The buyer cleans it and makes it
ready for cooking. The finished form of the fish is the cooking for consumption.

Manufacturing/industrial Occupation

Manufacturing is the making of finished goods. Manufacturing occupations involve

the process of turning raw materials produced in the primary occupation into finished
products or usable forms for satisfaction of human wants. For example, conversion of
crude oil into petrol, kerosene, Conversion of leather into shoes, bags, etc. Examples
of manufacturing occupation include: Shoes making, plastic processing, food
processing, and petroleum production. Etc

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Constructive occupation
Construction is the putting together of different finished materials to build roads,
railways, houses, etc. In the building of houses, cement, blocks and sand are put into
use. The individuals in constructive occupation are iron benders, road construction
workers, bricklayers, carpenters, civil engineers, builders, architects, mechanical
engineers, etc.

Commercial Occupation
Commercial occupation involves the marketing and distribution of products. It
includes the activities of individuals who are involved in the transportation of goods
from the factory for the purpose of wholesale, retail and warehousing. The people
engaged in commercial occupation ensure that goods get to the consumers
Commercial occupation also includes activities that aid trade such as communication,
insurance, finance, tourism and advertising.

Services occupation

These are occupations that render services or special type of help to the people other
than a product (which does not include produced goods) or visible items. This help or
work is then paid for. There are two divisions. They are the direct services and the
indirect services.

Direct Services
Direct Services: These are services for which the beneficiary pays the provider
directly. These services are services rendered to people who need them and are paid
for by the people. Some examples are tailoring, hairdressing, Doctors, Teachers,
Nurse, Singer, Gardener, House boy and girl, barber, lawyer, authors, security and
stewards etc.

Indirect Service
These are services rendered to the general public but paid for by the government
through taxes and levies from the citizen or its citizens (the government pays on
behalf of the beneficiaries). Examples of indirect services include services provided
by the police, the armed force, customs officers, and immigration. Security

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agents, fire brigade and services rendered by civil servants like Teachers, Doctors
and Nurses etc.

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TOPIC OCCUPATION (CONT)

Factors which Affect Choice of Occupation
The following factors should be taken into consideration in choosing an occupation

1. Individual interest: The interest a person has may influence him or her in
choosing an occupation. A person may not be able to perform well in an
occupation in which he does not have an interest. Students are advised to
choose any vocational study of their interest even while in school.

2 Parental influence: Many parents influence the type occupation their

children would choose. For instance, a medical doctor may advice his/her
children to study medicine, and an engineer may advise his children to study
engineering. Parents are advised t allow their children to select the occupation
of their choice.

3. The Level of pay/Salary and wages: People are attracted into some
occupations because of the high level of pay to the workers. For example;
young graduates now rush for work in the oil and gas industry and the banks
because of the high wages and salaries in the industry.

4. Education and skills/training: Having relevant educational back-

ground will go a long way to determine a person’s occupation. A person that
studied medicine will work in the hospital while a person that studied
accountancy will work in the bank.

Good educational level sometimes determines the level you start from in your
chosen career. Knowing the qualification or requirements that will lead one
into any occupation is very important.

5. Natural resources: Availability of natural resources does affect the choice

of the occupation of people. For example, miners will be many in areas where
there are mineral resources such as crude oil, iron ore etc. Also fishing would
naturally be the occupation of people who live in river line areas.

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6 Climatic and weather differences: The climate and weather conditions

of a place determine the nature of occupation available in a particular area. For
instance, fishermen will be many in river line areas. Also people who live in
Benue State are known to be yam farmers, whereas people who live in places
like Ekpoma and Abakaliki are known to be rice farmers. People who live in
Sokoto are known to grow onions etc.

7 Government policy: The Government of a Country may deliberately

encourage people to take a certain occupation. For instance, Nigerian
Government is encouraging the acquisition of entrepreneurial skills to develop
the private sector of the economy.

8 Talents: Talent is a rare God-given ability to excel in doing something. For

example, literary work is a product of God given ability. Music, film acting etc
are products of talent. Those who are successful in literary work like Chinua
Achebe possess the rare ability Michael Jacksons possessed a rare talent.
Hence, he excels in his field of music.

9 Social status and prestige: Some occupations enhance/improve the social

status and prestige of those who are in the occupations. Such occupations are the
legal profession, medical profession, architecture, accountancy, engineering etc.
Some people go into the occupation as a way to uplift their social status and
prestige.

DIFFERENCES BETWEEN DIRECT AND INDIRECT SERVICES:

Direct services are those services rendered by providers of such services to the person
that enjoys the service. For example, a house maid renders service directly to the
owner of the house. The owner of the house pays him/her directly while indirect
services are those services provided to the general public. We enjoy the services but
do not pay directly to the provider. The providers of the services are being paid by the
government through taxes collected from people who enjoy the services.

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TOPIC: ETHICS OF SOURCING CHEMICALS

Meaning of Ethics: Ethics are values, principles, rules and behaviour by which
people live. It is a set of principles and beliefs that guide people’s way of behaviour in
their various callings. Every profession or business has its own ethics which guides
the practice of the profession or business. For example, a teacher is not supposed to
ask students for money before passing them. Doing so is against teacher-pupil
relationship and will mean that the teacher is behaving in an unethical manner.

Ethics are important in the sourcing of chemicals to ensure health and welfare of
people involved in the activities as well as quality of the products.

Meaning of Ethics of sourcing chemicals: These are set of principles or beliefs that
guide people’s (Vendors, Manufacturers) behaviour in handling chemical and
chemical products. Chemicals are good substance that can make us live a good life if
well applied. It is used to produce things that sustain life. For example, it can be used
as detergents, toilet soap, preservatives, but at the same time, it can destroy plants and
human life if not properly handled.

Ethical sourcing: It means ensuring that the products being sourced are made
in safe facilities by workers who are treated well. It also implies that the
suppliers/Manufacturers follow the environmental and local laws and regulations
during the production process of the chemicals.

Ethics of Sourcing Chemical from:

1. Licensed Chemical Vendors/Sellers
A licensed Vendor is someone that has been given a permit to import, buy and sell
chemicals. Licensed vendors ensure that they keep strictly to the ethics and rules for
trading in chemicals.

Ethics of sourcing chemicals

1. Vendors should not supply fake and adulterated chemicals.

2. Chemicals should be sourced through licensed Vendors with high integrity.
3. Vendors should supply chemicals in compliance or in line with local laws,
regulations and industrial standards.

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4. Delicate and hazardous chemicals like acids, pesticide should be sourced and
supplied only to users with high integrity.
5. Special permits should be obtained from the government etc before sourcing for
and supplying of hazardous, toxic and flammable chemicals.
6. Chemicals for educational purposes must be carefully packaged and supplied by
licensed Vendors/Sellers.
7. No Manufacturer or Vendor should engage in the production or supply of
chemicals that can be used to destroy life or property.

Good Handling Techniques

The way chemicals are handled is very important, as poor handling affects humans,
the environment, plants and animals.

Ethics that guide the handling of chemicals

1)The containers that hold chemicals must be securely covered.

2)Containers must be properly labeled.
3)Safety instructions must be obeyed.
4)First aid equipment must be made available.
5)Read labels of chemicals very well before use.
6)Ventilate the storage place well.
7)Chemical containers shall not be accepted without accompanying labels.
8)Workers must be trained on the handling of chemicals.
9)There should be no eating or bringing of food inside the storage area for
chemicals and other substances are kept.
10) Fire extinguishers should be provided in the storage or warehouse for
chemicals.

PROPER DISPOSAL
Chemicals can be a friend or a foe depending on what it is to be used for and the way
it is handled. It is very important that the proper way of doing away with chemicals
when you have finished using them be made known to you, so as to save our
environment and minimize the effects of poor waste disposal on humans, animals and
sources of water. This includes:

1) All containers containing chemicals to be disposed off must be clearly labelled.

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2) There should be no leak in the container.

3) Name of individual responsible for supervising the process of making the waste
and their signature must be on the container.
4) The department’s phone number or alternative contact is shown.
5) The waste disposal company must be notified to come and pick up the waste for
proper disposal.

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Topic: ENTREPRENEURSHIP
Meaning: Entrepreneurship is the process of creating a business enterprise capable
of producing new products or renovating old ones for monetary rewards or personal
satisfaction. It can also be defined as the willingness and ability of an individual or
group of persons to search for investment opportunities, establish and run a business
unit successfully. Entrepreneurship is about taking risks.

Enterprise:
Meaning: An enterprise is an organization created for commercial purposes. It is a
business set up by an individual, group or Government for providing goods and
services for a purpose or for the public. Enterprise describes the actions of someone
who shows some initiative by taking a risk of setting up, investing in and running a
business. The creation of an enterprise requires boldness, promptness, energy and
financial risk.

Types of enterprise
1. Private enterprise
2. Public enterprise
3. Voluntary agency enterprise

Private Enterprise:
It is a business organization set up either by an individual or a group of individuals for
producing goods and services for the purpose of making profit and providing
employment for the people. Examples include: Hair dressing, sewing, mechanic
workshop, handcraft, sachet water making, woodwork, coloring and printing,
consultancy, Transportation, poultry farm, Bakery, Globacom, African
Independent Television (A.I.T)

Public Enterprise
It is an organization or a Venture set up by either the Local, State or Federal
Government for the provision of essential social services for the people. Examples
include: Water Corporation, Nigeria Television Authority (N.T.A), Radio Kwara

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Voluntary Agency Enterprise

These are non-governmental organizations (N.G.O.) set up by willing individuals,
Religious groups and people with common ideals to provide social and welfare
services for the needs of the society.

Memberships of such organizations are voluntary and their establishments are not for
making profit but for the provision of social and welfare services for the people.
Examples include: The Nigerian Girls Guide, the Boys’ Scout of Nigeria, and the
Nigerian Red Cross Society etc.

EMPLOYMENT AND SELF EMPLOYMENT

Meaning: Employment means working for somebody, a company, and government
for regular payment of wages or salary to sustain life.

Self-employment is a situation in which an individual works for himself or herself

instead of working for an employer that pays salary or wages. A self-employed
individual earns his/her income by providing goods and services for other. He/she
becomes an entrepreneur in small scale business, takes the risk of uncertainty and also
becomes a master who employs others rather than being a servant who is on wages
employment. Examples of self-employment are; traders, technicians, owners of
private schools, taxi drivers, artisans, bead makers, tailors, recharge card sellers, fruits
sellers etc.

Facilities Available for Self Employment

1. Loan facilities/provision of capital
2. Skills and Acquisition Centres
3. Provision of social Amenities
4. Government Agencies
5. Information Communication Technology
6. Provision of an enabling Environment

Loan facilities/provision of capital: Commercial banks provide a lot of

financial facilities for the self-employed. These include overdraft, short term loans,
etc

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Skills and Acquisition centres: Government has encouraged all schools at all
levels to teach and practice entrepreneurship education: This will enable students to
undertake any vocational skills of their choice; develop on it and become self-
employed.

Provision of Social Amenities: Availability of electricity, water and good roads

provide business opportunities for entrepreneurs.

Information Communication Technology: This creates self-employment for

those interested in ICT. These include those interested in phone repairs, computer
sales and installations, printing, typing and photocopies etc.

Provision of an Enabling Environment: These include political stability,

security, government policies and environmental support that encourage self-
employment.

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TOPIC: SUCCESSFUL ENTREPRENEURS

Who is an Entrepreneur? He is a person who is able to think of, see or identify
opportunities that do not yet exist, and who has the confidence and courage to
undertake or start up a business at great financial risks for a profit.

There are three major categories of successful entrepreneurs. They can be grouped
into:

1. successful entrepreneurs in our Locality

2. successful entrepreneurs in Nigeria
3. successful entrepreneurs in the world/ International

Successful Entrepreneurs in our Locality

These are individual business owners we can find around our community. They
include:

1. Chief Subomi Balogun: He is into banking business

2. Alhaji Ariselola Alao: He is into commerce, oil and gas and manufacturing
3. Chief Vincent Amaechi Obianodo of the Young Shall Grow Motors He is into
transportation and hospitality business
4. Chief Tony Ezenna: He is into pharmaceutical, oil and gas
5. Alhaji Aminu Dantata: He is into Commerce and manufacturing
6. Mr. Femi Otedola: He is into oil and gas.
7. Peace and Mass Transit: He is into Transport.
Other include: shop owners dealing in provisions and cosmetics, Local
butchers, Spare part dealers, Kerosene seller, restaurant owners, Welders,
Fashion designers, petty traders, chemists, and business centre owners etc

Successful Entrepreneurs in Nigeria

Entrepreneurs/Individuals that have contributed to the development of the Nigeria
economy at the National level include:

1. Alhaji Aliko Dangote of Dangote Group of Companies: He is into

manufacturing of Cement, sugar and flour etc.

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2. Dr. Mike Adenuga of Globacom world: His business include: Information

Technology, oil and gas, banking etc
3. Chief Cletus Ibeto of Ibeto Group of companies. He is into trading,
manufacturing oil and gas
4. Dr. Raymond Dokpesi: He is into communication Technology
5. Frank Nneji: He is into Transport Company called ABC transport.
6. Raxaq Okoya: He is a successful self employed worker in Nigeria. He is the
owner of Eleganza industry that produces biros, coolers/warmers and other
plastic products.
In the entertainment industries, we have some many self employed such as
Osita Osadebe, OluJacob. Zebureudi, Patience Ozokwe, Chika Okpala,
Nkem Owo and a host of others.

Successful Entrepreneur/self employment in the world (International)

1. Bill Gates of Micro soft corporation: He is into information Technology (IT)
2. Dustin Moslovitz: Co- founder of facebook
3. Anton Lathrein Jr: Manufacture of radio and television broadcast antenna
4. Alice Walton: properties of crystal Bridges Museum of American Art
5. Tim Berners-lee: He is the inventor of world wide web(www) internet
6. Thomas Edison: An American inventor credited with many inventors
including the photography, the motion picture camera and the electric bulb. He
was one of the first inventors to apply the principle of mass production.

Importance of Entrepreneurship
The following are reasons why Entrepreneurship is important

1. Reduction in the level of unemployment

2. Reduction in Rural-urban migration
3. Creation of goods and services
4. Utilization of local Resources
5. Provision of income to the Government
6. Mobilization of Rural saving
7. It brings about personal growth and experience
8. Reduction and inflation

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Reduction in the level of unemployment: Entrepreneurship helps to reduce the

level of unemployment in the country. It brings about people being self-employed and
also the ability to employ others.

Creation of Goods and services: Through entrepreneurship, economic goods and

services are produced to satisfy human wants.

Utilization of Local Resources: Most entrepreneurs source their raw materials

from their local Communities. By using local resources, they encourage rural
production and minimization of waste.

Provision of income to the Government: Individuals and groups involved in

small businesses pay tax and levies to the government. This helps the Government in
provision of basic amenities such as pipe borne water, good roads etc.

Reduction and inflation: The activities of entrepreneurship help to reduce the rate
of inflation in the country. This is done as they make goods and services available in
sufficient quantities.

Reduction in Rural-Urban Migration: Entrepreneurship encourages the

establishment of enterprise in Local areas. By establishing business enterprises in the
rural areas which make people in the rural areas to get employed rather than going to
urban areas.

It brings about personal growth and experience: The individual has maximum
capacity for growth and opportunity if he/she is into entrepreneurship. He/she earns a
living and at the same time learns. This is a real motivating factor for any
entrepreneur, as the knowledge and skills they develop while managing the business
are theirs for life.

Reduction and inflation: The activities of entrepreneurship help to reduce the

rate of inflation in the country. This is done as they make goods and services
available in the sufficient quantities.

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TOPIC: FORMS OF BUSINESS ORGANIZATION

There are many forms of business organizations that exist in Nigeria and the world at
large. These businesses satisfy different economic requirements. The existence of
various businesses in any country improves the standard of living of its citizens.
These businesses very in the structure of their ownership, size of capital, legal
requirement, goals and objective

The common forms/ type of business organizations are as follow:

1. Sole proprietorship
2. Partnership
3. Co-operative societies
4. Limited liability companies

Sole Proprietorship
Definition: Sole proprietorship is a type of business owned and controlled by one
person. It is also known as one man-business or sole trader. This means a single
person is the owner of this form of business. The business is small in nature and
requires small capital to start it. It is the commonest, oldest and simplest form of
business which can be found in villages and towns. The owner provides both the
human and non-human resources e.g. capital, labour and land.

He enjoys the profit alone and if loss is incurred, he bears it alone. He owns all the
assets and liabilities. Some examples of sole proprietorship are: Ownership of a
business centre, privately-owned school, shoe making shop, barbing saloon etc.

Sources of Capital
The sole proprietor provides the initial capital to start business in the following ways:

1. Personal saving
2. Borrowing from friends/relations
3. Loans from banks
4. Credit facilities from wholesalers or other distributors

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Advantages of Sole Proprietorship

1. It requires small capital
2. It is easy to start and run
3. Quick decision making
4. The owner enjoys all the profits of the business
5. It encourages initiative and self-interest
6. Existence of privacy in the business
7. Attraction of lesser tax
8. The owners determine the location of the business.
9. Pride of ownership. The spirit of owing the business makes him happy and
encourages him to keep the business going.

Disadvantages of Sole proprietorship

1. He bears all the risks and losses alone.
2. He may not have experience in all the business activities
3. If the dies, the business may collapse
4. Lack of adequate capital for the expansion of the business
5. He works for long hours and has no time for rest or holiday for fear of losing his
customers.

Partnership
Definition: Partnership is a form of business organization in which two or more
individuals/people come together to own and manage (run) a business for the purpose
of making profit. The minimum number is two people and the maximum is twenty (it
is formed between 2 to 20 people)

Formation of partnership business:

Partnership is formed by mutual agreement. Such agreement may be oral or written
and signed by all partners. Where the agreement is to be a written one, partners
usually get the help of a lawyer to avoid unforeseen misunderstanding in the future.
The written agreement is called partnership Deed. After the agreement, the
partnership must choose a name by which it will be known. The internal operations of
a company are regulated by Articles of Association.

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Sources of capital
1. Membership contribution
2. Loans and overdrafts from the bank
3. Loans from known private individuals
4. Credit purchases from companies or individuals
5. Undistributed profit

Advantages of partnership
1. More capital/ money is available for business
2. New talents, ideas and loans can be brought into the business by the partners
3. There is division of labour and specialization in management.
4. They enjoy privacy.
5. The liability or losses of the business are shared among the members.
6. Partnership has a longer life span

Disadvantages of partnership business

1. Unlimited liability: This means that the individuals in partnership may have to
use their family wealth to pay the debt owed by the company.
2. Disagreements or Quarrels among the partners may lead to the end of
partnership
3. Death or withdrawal of an active partner may lead to the end of partnership
4. Any action taken or any contract entered into by a partner is binding on other
partners.
5. Slow in decision making.
6. Introduction of a new partners a new partner, if not managed well, may end the
company

Co-operative societies
A co-operative society is a voluntary or type of business organization in which people
with common interest pool their resources together to promote the welfare and interest
of their members. It is open to all persons irrespective of their religion or political
beliefs. It is also owned and controlled by members.

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Types of cooperative societies

1. Producer’s cooperative societies
2. Consumer’s cooperative societies
3. Multi-purpose cooperative societies
4. Credit and Thrift cooperative societies

Characteristics of cooperative Societies

1. Membership is open to all those who fulfill the required conditions.
2. The initial capital is obtained from members’ contribution.
3. A member can own only one share in the society.
4. Management of the societies is by the elected member of the societies.
5. Profits are shared according to each member’s contribution (i.e. value of sales,
purchases or loans taken by each member from the society).
6. The objective of co-operative societies is to provide service to members.
7. They are registered with limited liability.
8. Co-operative societies promote education and other social activates among their
members.

Advantages
1. The societies encourage saving habit among their members.
2. They give loans to their members at very low interest rates.
3. They provide and sell consumer goods to members at low prices.
4. Each member has a say in the affairs of the society.
5. It teaches members to be self-reliant.
6. Membership is open to anybody who is ready to contribute money
7. They are democratic in nature
8. Each member is entitle to only one vote
9. Co-operative society helps in setting members disputes and encourage peace
among members
10. Co-operative societies educate their members by providing them with technical
and managerial skills needed in business operations

Disadvantages
1. Inadequate capital
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SUBJECT TEACHER EMMANUEL SARAH

2. The members elected to manage the society may have little or no experience
about managing a business.
3. Indiscriminate admission of members often leads to failure.
4. Success of the enterprise depends upon member’s patronage.
5. Decision on critical issues is low as the executive or the entire members may
have to meet to approve it.
6. Any misunderstanding between the members and the management committee
may affect the smooth running of the co-operative business.
7. Some members of co-operative society are illiterate and cannot participate
actively in the activities of the business.
8. Most members do part-time work in the co-operative.

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SUBJECT TEACHER EMMANUEL SARAH

TOPIC: LIMITED LIABILITY COMPANY

A limited liability company is a type of business formed by people who contribute to a
common purse for the purpose of running a business enterprise in order to make
profit. Public Limited Liability Company is also called Joint Stock Company. The
contribution made to the capital of the company by each person is known as shares.
A person who has shares in such a company is called shareholder. The profits of the
company are distributed as dividends to shareholders in proportion to the number of
shares held by a shareholder. Losses are similarly shared among the shareholders.
That is, each shareholder will lose only the amount (the value of shares) he has
contributed to the business as capital. Unlike the sole trader or partnership, a
shareholder cannot be asked to sell his personal property to pay the debt of the
company. This is because the company has limited liability. Limited Liability means
that a shareholder can lose only the amount of money he has invested in the company
if the business fails.

Types of limited liability companies

1 Private Limited Liability Company

2 Public Limited Liability company

The Private Limited Liability Company

A private limited liability company is a joint stock company formed between 2 to 50
people. A private limited company should be registered with the corporate Affairs
Commission (CAC)

A public Limited Liability Company

A public company must have a minimum of seven (7) shareholders and no maximum
number (To infinity). The word public does not mean that the company belongs to the
government; it simply means that any member of the public is free to buy shares in the
company. Shares of the public company are easily transferred from one person to the
other. They can obtain loan easily from the banks than other forms of business
organization. Examples of public limited liability companies include:

1 Lever Brothers Nigeria Limited

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SUBJECT TEACHER EMMANUEL SARAH

2 United African Company Limited (UAC)

3 United Bank for Africa (UBA)

4 Guinness Nigeria Limited and so on and First bank plc etc

Sources of capital
1. Value of shares sold to the public
2. Bank loans and overdrafts
3. Credit facilities from suppliers

Management and control of Limited Liability Companies

Both the private and the public companies are run by a body known as the Board of
Directors. The board members are elected by the shareholders from among
themselves.

Advantages Limited Liability Companies

1. Adequate capital
2. The shareholders enjoy Limited Liability
3. The death or withdrawal of a shareholder does not lead to the end of the
company
4. The risk of the business is shared among many shareholders
5. They enjoy large scale production

Disadvantages
1. Ownership is always separated from management of the company
2. Workers do not always have direct personal contact with the owners
(shareholders) of the company
3. The statement of account of the company must be made public, i.e. there is no
privacy in the affairs of the company.

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SUBJECT TEACHER EMMANUEL SARAH

TOPIC: PUBLIC ENTERPRISES/CORPORATIONS

Meaning: Public Enterprises are business organizations set up and financed by the
government not necessarily to make profit but to provide essential services to the
people. They may be set up by the Federal government, State government or Local
government. Public enterprises in Nigeria include:

(i) The Nigerian Railway Corporations, NRC

(ii) The Nigerian Television Authority, NTA

(iii) The Nigerian Airways

(iv) Property Development Corporation of Oyo State

(v) The Water Corporation

(vi) The Nigerian Telecommunications Limited (NITEL) and hospitals etc.

Sources of capital
1. Government grant from the taxpayers money

1. Loans and Overdraft from banks

2. Credit facilities from their suppliers

Characteristics of public Enterprises /Corporations

1. Public enterprises are set up by acts of parliament or decrees
2. They do not have shareholders
3. Public enterprises may make profits which they must return to the government
4. Losses have to be paid for by the government from the public fund

Advantages of public Corporations

1. Public corporations provide essential services efficiently without the profit
motive.
2. Capital is made available to corporations by the government at little or no
interest rate/ Government provides the capital.
3. They are a means of controlling monopolies.

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SUBJECT TEACHER EMMANUEL SARAH

4. Public corporations can produce on a large scale and therefore take the
advantage of large scale production.
5. By providing the essential goods and services at low prices, they tend to raise
the living standard of the people.

Disadvantages of Public Corporations

1. Many public corporations are inefficient due to lack of competition.
2. Poor management of company’s resources.
3. Appointment of incompetent management term.
4. Government interference usually badly affects the efficient management of the
corporations.
5. Most decisions are based on politics.
6. Employees are usually uncommitted to the goals of the organization.

BUSINESS ORGANIZATIONS NUMBER OF OWNERS

1. Sole Proprietorship One person
2 Partnership Between 2 and 20
3. Limited Liability Companies
(i) private 2 and 50 shareholders
(ii) Public Minimum of 7 but no limit to the
maximum.
4 Cooperative Societies Many People
5 Public corporation

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