CCP Foundation Level
Business Environment cheat sheet
Every chapter's key points, formulas and definitions on one page, for the last week before the exam. Each heading links to the chapter that explains it.
Introduction to the business environment
- The business operating environment is the sum of internal and external factors, economic, social, political, technological, legal and competitive, that shape how an organisation operates, and most of them lie outside any single business's control.
- Kenya runs a mixed, market-based economy built on agriculture, a growing manufacturing base and a services sector that has increasingly become the largest contributor to output.
- Each part of the Kenyan financial system answers to its own regulator: CBK for banks and mortgage finance companies, SASRA for deposit-taking SACCOs, IRA for insurance, CMA for capital markets and RBA for pension funds.
- The primary sector extracts raw materials from nature, the secondary sector turns them into finished or semi-finished goods, and the tertiary sector provides services.
- Population size, geographical distribution, gender, ethnicity and age composition shape demand and labour supply, and through them the demand for credit and the risk of default across the market.
Key terms
- Central Bank of Kenya (CBK)
- The regulator of banks and mortgage finance companies, and the authority responsible for monetary policy (see the chapter on macroeconomic influences) and currency issue.
- Commercial banks
- CBK-licensed institutions offering the widest range of financial products, including the bulk of formal lending (CCP Credit Management, under consumer credit).
- SACCOs
- Member-owned savings and credit cooperatives, deposit-taking ones regulated by the SACCO Societies Regulatory Authority (SASRA).
- Microfinance institutions
- Institutions serving customers underserved by mainstream banks; deposit-taking microfinance banks are CBK-licensed.
- Insurance industry
- Regulated by the Insurance Regulatory Authority (IRA), covering life, general and specialised insurance, including the credit insurance CCP Credit Management covers.
- Capital markets
- Regulated by the Capital Markets Authority (CMA); the Nairobi Securities Exchange (NSE) is Kenya's securities exchange for equities and bonds.
- Pension funds
- Regulated by the Retirement Benefits Authority (RBA), a major source of long-term savings and institutional investment in the economy.
- Primary sector
- Extracts or produces raw materials directly from nature: agriculture, mining, fishing, forestry.
- Secondary sector
- Transforms raw materials into finished or semi-finished goods: manufacturing, construction.
- Tertiary sector
- Provides services rather than physical goods: banking, retail, transport, education, tourism.
The rest of the sheet covers
- Business structure and business growth
- Company and industry analysis
- The market environment
- Market structures and the competitive environment
- Inflation
- Macroeconomic influences on the organisation
- Introduction to international trade
- The international business environment
- Exam technique and revision
- Glossary