Commerce Lesson Note for SS2 Third Term
Commerce Lesson Note SS2 – Edudelight.com
THIRD TERM SCHEME OF WORK COMMERCE SS2
1. Revision /warehousing—–meaning, importance of warehousing functions of warehousing, types of warehousing
2. History of Nigerian Capital Market
—1994(Development loan stock)
—–1960(Lagos State Exchange Act)
—–1962(Capital Issue Commission)
——-1979((SEC Commission Decree 71) etc.
3. The Stock Exchange:
_Meaning, function, organization, set-up, procedure of transaction in the stock exchange, speculations in stock exchange
_Types of securities
_Importance of stock exchange
4. Second –tier Securities market:
_ Meaning, Listing of companies for the market
_Advantages companies and to the investing public, operating regulations.
5. Capital:
_Meaning
_Accountant point of view
_ Economist points of view
_Laymen understanding
_ Types of capital
6. Capital
_Importance of working capital
_calculation of working capital
_profit: Meaning
(A) Accountant point of view of profit
(B)Economist point of view of profit
(C)Laymen’s understanding of profit
(D)Definition profit
7. Profit—Types of profit
–items in the trading profit and loss account
—Uses of trading profit and Loss account
__Factors affecting profits
__Calculation of gross profit and net profit
8 Profit____(CONTINUED)
__Turnover, meaning factors affecting turnover
_Relation of capital to turnover, calculation of capital to turnover
_Rate of turnover
_Percentage of gross or net profit to turnover
_Explanation of variation in turnover in different types of business.
9 Communication:
Meaning, importance of communication, Nigeria traditional means of communication b
Barriers to effective communication
10 Communication _(Continued)
___Post office as a means of communication
___Telecommunication service
11&12 Revision &exam
WEEK 1
TOPIC: Warehousing
MEANING: This is concerned with all activities that help in storing goods until they are demanded in order to ensure uninterrupted and regular supply
Warehousing is the storage of goods until they are need
WAREHOUSE: This is a storehouse or place where goods are stored or kept until they are needed.
FACTORS TO BE CONSIDERED IN SITING A WAREHOUSE
1. Total operating cost
2. Nearness to the factory
3. Means of transportation
4. Availability of basic social amenities
5. Cost of rent age or construction of warehouse
6 Nearness to the consumers
7 Nature of the product
8 Distribution centres
IMPORTANCE OF WAREHOUSING
1. Provision of storage facilities
2 .Ensuring price stability
3 .Provision of employment opportunities
4 .Sources of revenue
5 .keeping goods ahead of demand
6 provision of security for goods
Checking of smuggling
8 .makes seasonally goods available
9 .Facilitates prepackaging
10 .Creates place utility
TYPES OF WAREHOUSE
1 .STATE WAREHOUSE: This is a government owned warehouse where seized goods are kept until they are sold. It is a store where smuggled goods seized by the customs authorities are kept.
2 MANUFACTURER WAREHOUSE: This is a ware house owned and equipped by the producer at the factory site or depot in order to store his products until they are sold.
3 .WHOLESALE WAREHOUSE: This type of warehouse is owned and managed by the wholesaler for storing wide range of products purchased from various producers.
4 .BONDED WAREHOUSE: This is a warehouse located beside the port and approved by the customs for the temporary storage of dutiable goods on which duties have not been paid.
NOTE: BONDED WAREHOUSE is under the supervision of the custom authority .
5 PULIC WAREHOUSE: This is owned and managed by individuals or firms who do not make use of their warehouse but rent it out to others for keeping their goods.
TERMINOLOGIES
1 .CUSTOMS DRAWBACK:It is a term ,which means refunding duty paid on re-exported goods .When duty has been paid on goods that are later to be re-exported .It is possible to claim a refund of duty known as customs draw back.
2. IMPORT DUTIES: These are taxes imposed on goods entering a country .
3 .DELIVERY ORDER: This is a document issued by the owner of goods stored in a warehouse entitling the person whose name appears on it to collect the goods specified
4 .DOCK WARRANT: It is a document issued by the custom authority to persons who deposit goods with them .It is issued only when duties have been paid.It is a document of title
5 .EXCISE DUTY: These are taxes imposed on home produced goods .It may be imposed either to raise revenue or to check the consumption of certain commodities.
ASSIGNMENT;
1 State and explain five(5) uses of Bonded warehouse in international trade
is
Commerce Lesson Note SS2 – Edudelight.com
WEEK 2
TOPIC: History of Nigerian Capital market
HISTORICAL DEVELOPMENT:The Ngerian capital market was born in 1946 with issuance of Nigerian first development loan stock and it achieved maturity with the establishment of the Lagos stock exchange in 1960 in order to mobilize fund for economy development ,a capital issuance committee was established in 1962 and upgraded to capital issuance commission in 1979 when the security and exchange commission (SEC) promulgated .With the success so far achieved and the need to expand capital market further ,the second Tier security market (SSM) was established in 1985 .The decree was re-enacted in 1988 as security and exchange commission decree number 29 so as to make provision for developing the capital market and also for potential investors .
The stock exchange decree of 1988 was replaced with the investment security act (ISA) no.45 of 1999 to provide a more effective and valuable capital market .The SEC decree of 1988 was replaced with investment security act(ISA) no.45 of 1999 to provide effective and valuable capital market that could meet economic Nigerian needs better .The ISA for 1999 re -established the securities and exchange commission (SEC) as body corporate with perpetual successor with common seal that can sue and be sued in it corporate name.
WEEK 3&4 THE STOCK EXCANGE MARKET
The stock exchange market is a specialized financial market where existing securities are traded .It is a market for buying and selling of shares and other financial securities .The market is highly organized and self-regulating. The securities are shares, debenture, gilt edges, and development etc.
COMPANIES QUOTED ON THE STOCK EXCHANGE MARKET
1 Nestle Plc
2.Afprint Nigeria Plc
3 Julius Berger Nig .Plc
4. Eko crop Plc
5 .Unilever Nig Plc
6 .Skye Bank Plc
7 .Access Bank Plc.
8 .AIICO insurance Plc.
FUNCTIONS OF THE STOCK EXCHANGE MARKET
The stock exchange performs the following functions
1. FACILITATES THE PURCHASES AND SALES OF SECURITIES
2 .PROVISION OF CORPORATE INFORMATION
3 .VALUATION OF PRICE OF SECURITIES
4 .PROVIDES INFORMATION ABOUT DAILY TRANSACTIONS
5 .PROVISION OF RULES AND REGULATIONS
6 .PROVIDES PROFESSIONAL ADVICE
7 .ENSURING THE LIQUIDITY OF SECURITIES
8 .HELP THE GOVERNMENT TO RAISE FUND
9 .TRANSFER OF SECURITIES
10 .ENABLES COMPANY TO RAISE FUND
11 .INCREASE IN THE VOLUME OF SECURITY
12 .PROVIDES MARKET FOR INVESTMENT
ORGANIZATIONAL SET UP
The stock exchange market is a highly organized market. Only licensed members are admitted and business is transacted according to prescribed set of rules. The council of the Nigerian Stock Exchange governs it and the administration is in the hand of the Director General
(A) .STOCK BROKERS: These are members of the stock market .Stockbrokers are key operators who buy and sell securities on behalf of investors for a commission called BROKERAGE .They professionals licensed by the security and exchange commission
FUNCTIONS OF STOCKBROKERS
1. Execute purchases and sales of securities on behalf of clients
2. Brokers provide advisory services
3. They participate in the pricing of securities in the primary and secondary markets
4. Brokers can also sponsor issues at the Stock Exchange market.
5. They facilitate liquidity of security
(B)JOBBERS: These are recognized members of the Stock Exchange market who buy and sell securities on their own behalf .He is a wholesale dealer in securities. Jobbers transact business only with the brokers who act on behalf of investors .They specialize in a particular group of securities. Jobber buys and sells at a profit called jobber’s turn.
FUNCTIONS OF JOBBERS
I they deal in a particular type of securities
Ii Jobbers give advice to the brokers
Iii they buy and sell securities on their own for a profit called jobber’s turn
Iv Jobbers ensure ease of transaction for the brokers.
(C) ISSUING HOUSES: These are institutions which play pivotal roles in the packaging of issues for companies that want to source additional capital from the market .They are ordinary members of the Stock exchange market.
FUNCTIONS OF ISSUING HOUSE
1 .It arranges the issue of securities.
2 .Pricing of new issues
3 .Giving financial advisory services to investors.
4. It performs specialist activities .E.g. mergers.
5 .Issuing house brings new issue to the market.
6 .It determines the timing of issues.
(D) REGISTRARS: These are firms that are responsible for the administration of the company’s shares and keeping of register of members. They are also key operators in the stock market. Registrars are experts responsible for the successful completion of shares acquisition registration process.
FUNCTIONS OF REGISTRARS
1 .Acts as transfer agents of shares transactions
2. Dispatch of surplus monies to subscribers.
3 .keeping detailed registers of the shareholders
4 .They assist in the distribution of certificate to the investors.
EXAMPLES
1 .WEMA registrars
2 .Zenith registrars
3 .UBA securities
4 .Union registrars
(E)RECEIVING BANKS: These are banks designated by an issuer to receive proceeds of an issue on its behalf .Receiving banks can be merchants or commercial banks.
(F) AUTHORIZED CLERK: This is an employee of a stockbroker who is entitled to enter a Stock Exchange market and act on behalf of his employer.
(G) UNAUTHORIZED CLERK: This is an employee of a stockbroker who is a member of the Stock Exchange market and who although is permitted to assist his employer but he is not allowed to deal.
PROCEDURES OF TRANSACTIONS IN THE STOCK EXCHANGE MARKET
The dealing members of the market carry on transactions at the Stock Exchange market. Ordinary members are not permitted to transact business .The following steps should be followed
STEP1: An investor visits the stock broker and make his intention to purchase or buy shares known to the broker.
STEP2: He will deposit an amount of money in cash or cheque and ensure that it is backed by receipt.
STEP3: A transfer form is given to him to append his signature .The stock broker will go and bid for the required shares on the floor of the Stock Exchange Market.
STEP4: The stockbroker will make his intention to purchase a certain quantity of shares known to other brokers at the trading session of the exchange.
STEP5: The stockbroker will prepare a contract note which will be given to the investor. After the contract note has been sent for noting by the exchange and transfer form lodged with the registrar. The certificate or statement of shareholding will be made available to the investor.
CONTRACT NOTE This is a document sent by the stockbroker to his client stating the terms on which he has bought or sold stocks or shares on his behalf.
. CONTENTS OF CONTRACT NOTE
1. Name of the investor
2. Quantity of shares
3. Brokers commission 0r brokerage
4. Amount of value added tax paid.
5 Amount of stamp duty paid
CONTRACT SPECIMEN
MOLTEN TRUST LIMITED
MEMBER OF NIGERIAN STOCK EXCHANGE MARKET
PURCHASE CONTRACT NOTE
DATE: 20/07/2007
CSCS ACCOUNT NAME: FIKAYO ADEBISI
ADDRESS: #100, FLAT 8,ABESAN HOUSING ESTATE
LAGOS
TRANSACTION NUMBER: PCN 4095
STOCK CODE: WEMA BANK
PURCASE QUANTITY: 4000
UNIT PRICE IN NAIRA: 10.98
CONTRACT: 43920
SEC FEE: 263.52
CONTRACT STAMP: 32.94
BROKERS INCOME: 658.80
VAT ON INCOME: 32.94
CSCS FEE$VAT 46.12
—————-
44954.33
——————–
________________ ________________
AUTHORIZED BY AUTHORIZED BY
SPECULATION: This is the activity of buying and selling shares in a company in the hope of making a profit, but with the risk of loosing money. The speculators take risks in the hope of making profits by buying particular shares when the price is low with the anticipation of selling when the price is high. They are bulls, bears and stag.
a.BULLS: These are speculators on the Stock Exchange Market who buys securities
Now in expectation of a rise in their price in future. Bulls purchase shares with the intention of reselling them at a higher price for a gain.
BULLISH MARKET: A market is bullish when buyers predominate over sellers’ .In a bullish market the dealers are expecting price to rise.
FEATURES OF BULLS;
1. He is a speculator on the Stock Exchange Market
2. A bull does not buy with the intention of keeping them.
3. Bulls anticipate an increase in prices
4. He purchases at low price and sells at higher price for gain
b.BEAR: These are speculators on the Stock Exchange Market who sells shares now in anticipation of a fall in their prices in future.
BEARISH MARKET: The dealers in this market are expecting a fall in price
FEATURES:
1. They are pessimistic speculators.
2. Bear anticipates fall in prices
amount of a new issue of shares if he thinks the price is likely to rise above the offer price when effective dealing in it begin on the Stock Exchange Market.
FEATURES:
1. Stags subscribes for new issue of shares.
2. He expects price to rise and make profit.
3. He has no intention of taking the shares up personally.
TYPES OF SECURITIES:
MEANING OF SECURITY: These are financial instruments which are traded on the Stock Exchange Market. Financial securities are shares, debentures, bonds ,gilt edged and stocks etc.
1. SHARES: Shares can be defined as the unit of capital of a company allocated to individuals. It is the interest of the shareholders in a company measured by a sum of money .They are issued by quoted companies and are traded on the Stock Exchange Market.
2. Debentures: These are loans of long –term nature. Debenture represents the document which acknowledges the indebtedness of a company. They are secured on the assets of a company. It has a fixed rate of interest.
3.STOCK:It may be defined as a collection of shares into a bundle or consolidated shares .Stocks are usually quoted per #100 nominal value ,but fractions may be bought or sold.
4.BONDS:These are securities issued by the government as a way of raising fund from the stock exchange .Bonds are fixed interest investment securities issued for long –term duration and they have coupon rate.
FEATURES OF BOND
1. It has a fixed rate of interest.
2. Bond has coupon rate.
3. It is a long term debt.
5:GILT-EDGED:These are long- term securities issued by the government, which carry a minimum risk .Gilt-edged securities are interest –bearing securities that are considered relatively risk free.
SECOND TIER SECURITY MARKET
The Second Tier Security market is established for the buying and selling of shares of small –scale companies .It is set up to alleviate some of the problems of the 1st Tier thereby enhancing mobilization and allocation of resources in an economy. The main reason of this market is to encourage small scale business. Examples of companies are Adswitch and Capital oil
REQUIREMENT FOR ADMISSION INTO SSM
1. Public limited company: The Company must have been registered as public limited company.
2. Minimum of 10% equity capital: A minimum of 10% of its equity capital must be available to the public.
3 Number of shareholders must not be less than 100
4. Preparation of three years accounts
5. Fixed flat annual quotation fees
6. Limited capital: the amount of capital to be raised is limited to #20m
ADVANTAGES TO COMPANIES
1. Avenue for raising capital
2. Facilitates purchases and sales of shares
3. Cost savings
4, means of useful publicity
5 .No loss of control
6. Providing room for employee’s patronage
7. Possibility of full listing
8. Acceptance of shares as consideration in merger.
9. Provision of financial advice
10. Encouragement of small and medium scale business
ADVANTAGES TO THE INVESTORS
1. Marketability of shares.
2. Assessing profitability of companies.
3. Long-term investment: It provides opportunity for investors to have investment in companies listed on the SSM.
4. Protection of investors: All companies listed on the market are required to submit their financial statements to the exchange for scrutiny .The Security and Exchange commission monitors all their activities and are expected to follow the laid rules and regulation.
5. Investors can take up 10% equity capital: The investors can enjoy 10% equity capital, which would be made available to the investing public.
LISTING ON THE STOCK EXCHANGE MARKET
Listing is the admission of a company, s capital or instrument on the trading floor of the Stock Exchange Market .Before the admission, the company must have complied with the listing requirements as embodied in the stock exchange green book .A company can be listed on the First Tier Security Market or Second Tier Security Market.
IMPORTANCE OF Stock Exchange Market
1. Provision of job opportunities
2. Transfer of securities.
3. Promotion of economic growth and development.
4. Attraction of foreign capital.
5. Enables company to raise funds
6. Efficient allocation of resources.
7. A source of public finance.
8. Creation of wealth.
9. Measurement of company’s performance.
TERMINOLOGIES
1. DIVIDEND WARRANT: This is a draft issued by a company and made payable to a shareholder for the amount of dividend owed to him for stated period.
2. SHARE CERTIFICATE: This is a document issued under the official seal of a company showing ownership of shares in that company.
3. RIGHT ISSUE: This is a means of raising new equity capital whereby the existing shareholders are invited to subscribe for the new issue in proportion to their existing shareholdings.
4. BONUS ISSUE: This is the capitalization of the reserve of a company by the issue of additional shares to existing shareholders in proportion to their holding.E.g one shares for three shares.
5 .BID PRICE: This is the price at which an investors acting through a broker is prepared to buy securities at the market.
6 .UNDERWRITING: The merchant bank making the issue arranges with financial institutions to underwrite a new share issue .If the shares are not fully subscribed, these institutions take up the surplus shares .if they are fully subscribed, the underwriters collect commission.
7. BACKWARDATION: This is a payment made by a speculator on the stock exchange to the customer when the speculator is unable to deliver stock on the required date
8. HEDGING: This is a method of buying security and selling another in order to reduce risk. A perfect hedge produces a risk less portfolio.
9. CONTANGO: This means carry over. A broker who wishes to postpone `settlement of a transaction to the following account may do so on payment of interest on the sum due.
10. ARBITRAGE: It simply refers to the switching process from one security to another in order to take advantage of either the prices or returns differential or both
11. EX –DIV: (EXCLUDING DIVIDEND) this means that the price quoted on the stock exchange does not entitle the purchaser for the next dividend, which is due for payment.
12CHURNING: This is used to describe a situation where the stockbroker persuades his client to sell shares unnecessarily in order to buy another share so that he can earn more commission.
11, BROKERAGE: This is the commission charged by brokers for the transactions carried out on behalf of an investor.
12. CUM-DIV (CUMMULATIVE DIVIDEND):The purchaser of a stock quoted dividend “Cum-div” will be entitled to receive the next dividend when due .It means “with dividend”
13. ACCUONT DAY: This is the day on which settlement has to be made for for transactions made during the previous account .It is also referred to as settlement day.
14 QUOTED SHARES: The shares of a company listed on the stock exchange for sale are referred to as quoted shares.
EVALUATION:
1. State and explain five importance of stock exchange market to companies and investing public.
ASSIGNMENT: State five factors that affect the price of securities.
2. State five advantages of second –tier foreign Exchange market (SFEM).
Commerce Lesson Note SS2 – Edudelight.com
WEEK 5
CAPITAL
MEANING OF CAPITAL:
1. ACCOUNTANT, S DEFINITION OF CAPITAL: He defines capital as the monetary value of the excess of business assets over its liabilities. This is the net worth of the business.
2. ECONOMIST, S DEFINITION OF CAPITAL: The economist regards capital as all manmade resources or assets that are used for the production of more wealth. Thus the economist regards capital as a factor of production.
3. LAYMAN, S DEFINITION:To a layman ,capital is the amount of money he has invested in his business.
TYPES OF CAPITAL;
1. AUTHORIZED, REGISTERED OR NOMINAL CAPITAL:This isthe total amount of capital in the form of shares which a company is authorized to issue out to the public.
NOTE:The capital is stated in the memorandum of Association submitted to the corporate affairs commission (CAC) i.e registrar of companies for approval and which has subsequently been approved.
2. ISSUED CAPITAL:This is part of the authorized or nominal capital that the company decides to issue out to members of the public for subscription.
3. CALLED UP CAPITAL: This is part of the issued capital that the shareholders have been asked to make payment which will form part of the issued capital.
4. PAID UP CAPITAL: It is the part of the called up capital which the shareholders have actually paid.
5. UNCALLED CAPITAL:It is the part of issued capital that has not been paid for.
6. CAPITAL OWNED: It is also referred to as equity .It is the total value of assets over the total value of liabilities (long and short term liabilities).It is the owner,s equity or financial interest in the company.
7 .FIXED CAPITAL:This is the durable property of the business organization which is used continuously for production of goods and services .It is the type of capital which does not change according to the volume of production .It is made up of durable goods such as motor vehicles ,equipment ,building etc
8 .CAPITAL EMPLOYED: It is the actual cash and assets of business used in running the the business .It is the assets (fixed and current) of business less its current liabilities.
LOAN CAPITAL :This is referred to as the total amount of money which the firm borrowed from external sources.
9 .WORKING CAPITAL:It is also referred to as circulating capital. It is the amount of money business organis organization use for the day to day running of the business.
IMPORTANCE OF WORKING CAPITAL.
1. It is used in measuring the firm’s capability in paying its debts.
2. It is used as basis for planning.
3. It is a sign of viability of business enterprises.
4. It is used in determining the circulating capital available for day to day running of the business organization.
5. It gives investors the inside strength of the business organization.
WEEK 7&8 PROFIT
WHAT IS PROFIT? Profit may be defined as the excess of selling price over cost price. In this case, the total revenue realized from goods bought exceeds the total expenditure on goods if reverse is the case , it is known as loss which indicates that the business concerned did not make profit .
Profit may also be termed as the reward a person gets for the risk he took in providing his capital in a business
NOTE: The main reason for establishing a business is to make profit because it increases the business capital and provides income to the owner of the business
ECONOMIST DEFINITION OF PROFIT: This is the payment to the entrepreneur for undertaking the risks of production. It is the total reward available to an entrepreneur i.e. returns on entrepreneurship.
ACCOUNTANT, S DEFINITION OF PROFIT: This is the difference between the revenue and the cost incurred in the course of a business .It takes into cognizance the relationship between revenue and cost
To an accountant, profit =Revenue –Expenses
TYPES OF PROFIT:
a. Gross profit This is the excess of sales revenue over the cost of goods sold .It shows the total profit before deducting all the expenses .Gross profit is determined in the trading account.
b. Net profit: This is the excess of gross profit over the total expenses of the business at a given period .This is the real profit of a business. It is determined by preparing the profit and loss account.
TRADING, PROFIT, AND LOSS ACCOUNT
DR——————————————————————————————————————————————CR
Opening stock x sales x
Less returns inwards x
Add purchases x xx
Carriage inward x
Less returns outward (x) x
Xx
Less closing stock (x)
Cost of goods sold xx
Gross profit xx
———– ——————-
Xx xx
—————— ——————-
Expenses
Discount allowed x gross profit b/d x
Lighting x discount received x
Telephone x
Legal charges x
Carriage outwards x
Sundry expenses x
Advertising x
Rent and rate x
Insurance x
Net profit xx
————— ——————
Xx xx
————— —————–
USES OF TRADING PROFIT AND LOSS ACCOUNT
a. To show the profit of an organization.
.b. For income tax assessment
c. for planning by management
d. it is used for comparison of results actually achieved against those expected.
e. it can be used to obtain loan by an organization .
f. it is used for comparison between companies.
EVALUATION:1. Define profit according to an economist
2. Mention 5 items each;
a. credited to trading profit and loss account.
b. debited to trading profit and loss account
ASSIGNMENT; XYZ limited is a trading company .the following transactions took place in the month of February
Purchase of goods
32 suitcases at #3500 each
42 shirts at #800 each
ADDITIONAL INFORMATION:
1. The cost of transporting goods to firm’s premises was #2500
2. Two workers of the firm were paid wages and salaries of
#4500 each
3. total sales revenue was #180000
You are required to calculate:
a. Gross profit
B.net profit
WEEK TURNOVER
This is the the total net sale during a period of time .It is calculated as the total gross sales of a business less returns inwards. Formula=sales-returns inwards
Rate of turnover: This is the rate (number of times) stocks are replaced during a given period .Rate of turnover is the speed at which stock change hands within a certain period.
Formula =cost of goods sold/average stock
Average stock=opening stock +closing stock/2
FACTORS AFFECTING TURNOVER
1. Price of goods
2Granting of discounts
3. Provision of credit facilities
4. The location of goods
5. Types of goods.
6. The variety of goods made available by the seller
7. Goodwill and reputation of the seller
8. Advertising strategy
9. Availability of goods.
CLASS ACTIVITY:
A company has an authorized share capital of #450000.It offered #200000 for subscription .The Company was able to collect #75000.
Required: Calculate the
1. Nominal capital
2. Issued capital
3. Un-issued capital
4. Paid up capital
GROSS PROFIT PERCENTAGE:
Gross profit/salesx100
NET PROFIT PERCENTAGE:
Net profit/salesx100
RETURNS ON CAPITAL EMPLOYED
Profit/capital employedx100
EXPENSES TO SALES
Expenses/salesx100
LIQUIDITY RATIO: The ratio helps in measuring the ability of the firm in meeting its obligation when they are due.
a. Current or working capital ratio
Current assets/current liabilities
b. Liquid or acid ratio
Current assets –stock/current liabilities
C. debtor’s ratio
Debtors/credit salesx365days
D .creditors ratio=creditor/credit purchasesx365days
Commerce Lesson Note SS2 – Edudelight.com
WEEK 9 COMMUNICATION
DEFINITION:
This is the process by which thoughts, messages, facts, and information are transferred from one person to another in an organization using a language code jointly understood by all the parties involved in the communication process with a view to achieve desired feedback
PRINCIPLES OF EFFECTIVE COMMUNICATION
1. Completeness: All information that is required to produce the entire effect of the message should be provided
2 .clarity: one of the principles of effective communication is that, it should be clearly presented.
3. Concreteness: Abstract and vague use of words is not acceptable.
4. Correctness: Information should be accurate and authentic
5. Timely: It is necessary to deliver message according to dictates of time.
IMPORTANCE OF COMMUNICATION TO COMMERCE
1. Quick dissemination of information
2. Facilitates payment.
3. Advertisement of goods and services
4. Facilitates international trade
5. Risk and cost reduction
6 .Settlement of international debt through international banking
7. Improvement in trade.
8. Facilitates air and sea transport
9. Enhances home delivery services
10. Ensures quick delivery of documents.
BARRIERS TO EFFECTIVE COMMUNICATION
a. lack of interest
b. Information overload
c. lack of knowledge
d. Misunderstanding
e. Distrust.
TRADITIONAL MEANS OF COMMUNICATION
There are various traditional means of conveying information in Nigeria .It varies from place to place the major means are;
Talking drum
Town crier
Metal gong
Flute
Trumpets
Palm fronds
Blast of gun
NIGERIAN POSTAL SERVICES
The Nigerian postal services department known as NIPOST was established to provide postal and payment services to the people .NIPOST performs the following functions.
FUNCTIONS OF A POST OFFICE AS A MEANS OF COMMUNICATION
1. Ordinary letters: These are official or personal letters, which must be enclosed inside envelopes and appropriate stamps affixed on them. They are posted by placing in a postal box and are suitable for less valuable items. They can be sent by road or air.
2 Registered letters: These are letters registered with the post office upon payment of a fee. It enables letters to be safe and secure .This requires extra cost over ordinary letters.
Note: Registered letters are handed over to the postmasters at the counter and receipts are obtained
3. Parcel post: Parcels up to specified weights are delivered and dispatched through the post office.
4. Poster restante: This is a service provided by the post office, which enables travelers, especially businessmen without fixed address to receive their corresponding wherever they travelled to transact business.
5. Recorded delivery: This is provided by the post office when letters or parcels are sent through them and receipts are given as evidence or proof of delivery.
6. Business reply service: Potential buyers are able to respond to business advertisement by post without paying for postage .The firm will supply them with printed reply cards and licenses to do so must be obtained from the post office.
7. Provision of letter boxes and private mailbags: Individuals and companies can obtain letter boxes or private mailbags from where they can collect their letters and documents at any time.
8. Provision of franking machine: Franking machine are used to facilitate the stamping of letters and postage fees have to be prepaid .Envelopes are franked , that is ,stamp impressions are used on envelopes. It avoids the use of normal postage stamps.
FUNCTIONS OF A POST OFFICE AS A MEANS OF PAYMENT.
1. Cash on delivery: It is used to assist mail order business .Cash on delivery enables cash to be collected immediately goods or parcels are delivered to the buyer’s .The cash collected is remitted to the seller of the goods.
2. Postage stamps: Stamps are affixed on the letters or parcels .They are sold at the post office .They are also occasionally used to settle small amount of payment by post such as catalogue.
3. Postal orders: Is a means of payment provided by the post office , which are available in various denominations and are used to settle small debts .poundage or commission are paid on each postal order purchased .
4. Money order: This is a means of payment provided by the post office for people wishing to transmit sums of money. It provides a useful means whereby a sum of money can be sent by post to a person who has no current account with a bank
5. Telegraphic money Order: Sometimes money order can be dispatched by telegraph. In this case, an addition fee is paid .It is a means of by which a sum of money can be expeditiously sent from one place to another.
6. Sales[E1] of forms: Post office sell forms for examination bodies like JAMB, WAEC AND NECO.
NIGERIAN TELECOMMUNICATION LIMITED (NITEL)
The Nigerian Telecommunication limited was established to provide the following services; telephone, telex, telegram and satellites e.t.c.As a result of the privatization policy of the government, NITEL has been sold to transcorp PLC
1. Telephone Services: This service enables businessmen and others to send verbal messages across to their customers and relations instantly wherever they may be in the whole world.
2. Telegram services :These are messages sent by telegraph and then printed and given to somebody.It enables written messages to be sent quickly from one place to another. It is more costly than the normal telephone service
3. Telex services: This is a service which enables users to transmit and receive printed messages over telecom line. It makes use of teleprinters to send messages from one subscriber to another at any time of the day or night even after an office has closed.
4. Fax services: This involves the transmission of data exact duplicate copies of the document. The original documents is fed into the fax machine, which needs it and converts it into electronics form so that it can be transmitted over the telecommunication line.
5. Global system of Mobile Telecommunication: NITEL provides mobile telecommunication services through Mtel.Other companies providing G.S.M services are M.T.N, Globacom and AIRTEL.
6. Transmission through satellites: NITEL provides satellites for life transmission of events.
EVALUATION: 1. what is communication?
2. Briefly explain the following terms
A. money order
B. postal order
C. postal restante
d. Recorded delivery
3. Mention four (4) barriers to effective communication
ASSIGNMENT: Briefly discuss the following traditional means communication.
1. Talking drum.
2. Town criers.
3. Palm frond.
4. Blast of gun.
