Business Environment — PREVIEW Course: CPA — Certified Public Accountant | Level: Foundation Level 1 This is a free preview covering the introduction and Section 1–2 only. Table of contents (full paper) 1. Nature and scope of business — *included in this preview* 2. Forms of business organisation — *included in this preview* 3. The business environment: PESTEL analysis — full version only 4. The internal environment and stakeholder analysis — full version only 5. Entrepreneurship and small business — full version only 6. Business ethics and corporate governance — full version only 7. Corporate social responsibility and sustainability — full version only 8. Government, law, and business — full version only 9. The international business environment — full version only 10. Business communication essentials — full version only 11. Full worked case-study question — full version only 12. Self-assessment question bank, 10 original questions with model answers — full version only 13. Exam technique and revision checklist — full version only 1. Nature and scope of business A business is an organisation that combines resources — land, labour, capital, and enterprise — to produce goods or services with the aim of satisfying customer needs, usually in pursuit of profit (though not-for-profit and public-sector entities pursue non-financial objectives with the same resource- combination logic). 1.1 Factors of production | Factor | Description | Reward | |---|---|---| | Land | Natural resources used in production | Rent | | Labour | Human physical and mental effort | Wages/salaries | | Capital | Man-made resources used to produce further goods (machinery, buildings, finance) | Interest | | Enterprise | The risk-taking, organising, and decision-making function | Profit | 1.2 Why businesses exist • To convert inputs into outputs more efficiently than individuals could alone (division of labour, economies of scale). • To bear risk on behalf of society in exchange for the prospect of profit. • To create employment and generate government revenue through taxation. 2. Forms of business organisation | Form | Legal status | Liability | Key feature | |---|---|---|---| | Sole proprietorship | Not a separate legal entity | Unlimited | Owner keeps all profit, bears all risk, simplest to start | | Partnership | Not a separate legal entity (in most common forms) | Unlimited (general partners) | Governed by a partnership agreement; partners share profit/loss and management | | Limited liability partnership (LLP) | Separate legal entity | Limited to capital contributed | Combines partnership flexibility with limited liability | | Private limited company | Separate legal entity | Limited to unpaid share value | Shares not offered to the public; restricted transferability | | Public limited company | Separate legal entity | Limited to unpaid share value | Can offer shares to the public, may list on a stock exchange (e.g. Nairobi Securities Exchange) | | Co-operative society | Separate legal entity | Limited (member shares) | Owned and controlled by members for mutual benefit, one-member-one-vote | | State corporation / parastatal | Separate legal entity, government-owned | Limited | Established by statute to deliver a public service or strategic function | Unlock the full paper The complete version includes 13 sections, a full worked case-study question, and a 10-question original self-assessment kit with model answers — covering PESTEL analysis, stakeholder mapping, entrepreneurship, corporate governance, CSR, government/law, international business, and communication. Purchase the full paper to continue. CPA Foundation Level 1 — Business Environment (Preview) — Page 1 of 2 CPA Foundation Level 1 — Business Environment (Preview) — Page 2 of 2