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This document provides comprehensive notes on the impact of recent legislation on businesses, specifically for Grade 12 Business Studies. It covers various acts such as the Skills Development Act, Labour Relations Act, Employment Equity Act, and others, detailing their purposes, impacts, and compliance requirements. The document serves as a study guide for understanding the implications of these laws on employer and employee rights, as well as consumer protection.

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All notes

Business Studies (Jeppe High School for Boys)

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IMPACT OF RECENT LEGISLATION CHAPTER 1

PAPER 1

BUSINESS STUDIES

GRADE 12
TERM ONE
REVISED CHAPTER 1
NOTES ON THE IMPACT OF RECENT LEGISLATION ON
BUSINESSES

TABLE OF CONTENTS

TOPICS PAGES
Exam guidelines for legislation 2
Terms and definitions 2-3
Skills Development Act 3-5
Labour Relations Act 6-7
Employer and employee rights in terms of LRA 7-8
Employment Equity Act 8-10
Basic Conditions of Employment Act 10-12
Provisions of the BCEA 12-13
Compensation for Injuries and Diseases Act 14-15
Broad Based Black Economic Empowerment 16
Act (Purpose and revised pillars)
Implication of BBBEE pillars on businesses 16-18
Impact, discriminatory actions &compliance of
BBBEE 19-20
National Credit Act 20-22
Consumer rights in terms of NCA 22
Consumer Protection Act 22-24
Consumer rights in terms of the CAP 24-26
This chapter consists of 26 pages

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IMPACT OF RECENT LEGISLATION ON BUSINESSES CHAPTER 1

MPACT OF RECENT LEGISLATION ON BUSINESSES

REFER TO PAGE 7 AND 8 OF THE 2020 EXAM GUIDELINE

CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT PURPOSES

 Outline/Describe/Explain/Discuss the purpose of all EIGHT Acts
 Discuss/Explain/Evaluate the impact (positives/advantages and/or negatives/
disadvantages) of the Acts on businesses
 Outline/Discuss/Recommend the rights of the LRA on employers and employees/rights of
consumer rights according to the NCA and CPA.
 Explain the National Skills Development Strategy and the Human Resource Development
Strategy (i.e. Sector Education and Training Authorities).
 Outline/ Explain/Discuss the role/functions of SETA’s
 Explain how SETA’s are funded
 Discuss the impact of each Act on businesses
 Outline the BBBEE pillars
 Recommend/Suggest ways in which businesses could apply the revised FIVE pillars of
BBBEE in the workplace.
 Outline/Explain/Discuss penalties/consequences for non-compliance.
 Define/Elaborate on the meaning of learnerships
 Outline/Explain/Discuss actions regarded as discriminatory by the various Acts
 Suggest/Recommend ways in which businesses can comply with the Acts.
 Discuss Provisions of the BCEA

Term Definition

Skills Development The main aim of this Act is to improve the skill levels of people who are
Act/SDA already employed in the business.
Skills Development It was introduced to ensure that businesses contribute to the
Levy/SDL development of skills of employees.
PDI’s Previously Disadvantaged Individuals or designated group.
SETAs SETA’s were established in order to implement and monitor the
implementation of the Skills Development Act.
Labour Relations This Act was introduced to promote simple procedures for the resolution of
Act/LRA labour disputes in the workplace.
Negotiations between employers’ association and trade unions on
Collective bargaining matters such as wages/conditions of employment.
Collective agreement Agreement between the employer organisations and trade unions.

Dispute A disagreement between the employer and the employee

Bargain councils It is formed by registered trade unions and employer organisations in order
to prevent/resolve labour disputes.
Employment Equity The main aim of this Act is to ensure that equal job opportunities are given
Act/EEA to all people regardless of race/culture/language/age/religion/disability etc.
Affirmative Action It was designed to ensure that suitable and qualified previously
disadvantaged individuals are given equal job opportunities.
Affirmative action forms part of the Employment Equity Act.

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Basic Conditions This Act sets the minimum standard for employment in order to promote
of Employment fair labour practice.
Act/BCEA

Compensation for The Act gives employees who are injured or contract diseases while on duty
Occupational the right to claim compensation.
Injuries and
Diseases
Act/COIDA
Broad-Based Black The Act was introduced in order to ensure full economic participation of
Economic previously disadvantaged individuals.
Empowerment
Act/BBBEE
National Credit This Act was introduced to protect consumers against unfair and reckless
Act credit granting by businesses.
Credit providers All businesses that offer goods and services on credit

National credit The NCR is responsible for the regulation of the South African credit
Regulator/NCR industry. This means that all businesses that offer good and services on
credit must be registered with the NCR.
Debt review/ This is a debt solution targeted at South African consumers who are over
Debt counselling indebted and struggling to manage their finances.

Consumer The main aim of this Act is to promote/protect the economic interests
Protection Act of consumers by providing them information so that they make
informed choices.
Compliance Acting according to a set of rules
Penalties Punishment for doing something that is against a law.

Discriminatory Treating a person/people differently, from the way in which you treat other
actions people.

1 THE SKILLS DEVELOPMENT ACT

Purpose of the Skills Development Act
 Develops the skills of people in South Africa in order to improve productivity
 Invests in education and training of workers
 Improves the chances of getting a job for previously disadvantaged people
 Encourages workers to participate in learning programmes.
 Redresses imbalances of the past through education and training
 Encourages businesses to improve the skills of their workers

Impact of the SDA on businesses

Positives/Advantages
 Trains employees to improve productivity in the workplace.
 Promotes self-employment and black entrepreneurship
 Increases the return on investment in education and training
 Workplace discrimination can be addressed through training.
 Workplace is used as an active learning environment where employees can gain
practical job experience

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 Business could become globally more competitive.

 Increases the number of skilled employees in areas where these skills are scarce.

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 Encourages on-going skills development and learning to sustain the improvement of

skills development.
 Improves employment opportunities and labour movement of workers from previously
disadvantaged groups
 BBBEE-compliant businesses can improve their products/service delivery as they
employ more skilled workers.

AND/OR
Negative/Disadvantages
 Increases cost as the process requires a large amount of paper work.
 Implementation of the SDA can be difficult to monitor and control.
 Skills programmes may not always address training needs of employees.
 Skills Development Levy could be an extra burden to financially struggling
businesses.
 It may be monitored and controlled by government departments that do not have
education and training as their key priorities.
 The SETAs may not be well organised and many courses offered by companies may
not have unit standards that relate to the course content.
 Many service providers that offer training services are not SAQA accredited.
 Many businesses may not support this government initiative.
 Employees are expected to attend learnerships during work hours which could affect
the production process/productivity.
 Costly for businesses to employ a person to implement, manage and control
learnerships.
 The time and money spent on improving employee skills is wasted if they leave the
business.

Discriminatory actions according to the SDA

 Preventing employees from signing for a learnership due to their age or position in
the workplace.
 Unfair promotion of skills and development/training to certain employees.
 Providing employment services for gain without being registered as an employer.
 Furnishing false information in any prescribed document.

Penalties for non-compliance

 Businesses that do not pay the Skills Development Levy may not offer
learnerships/claim grants from the SDA.
 A labour inspector could order the business to stop operating should the business be
found guilty of illegal practices.

Ways in which businesses can comply with the SDA

 Employers who collect PAYE should register with SETAs.
 One per cent of an employer's payroll has to be paid over to the SETA.
 Businesses should register with SARS in the area in which their business is classified
(in terms of the SETA).
 Employers should submit a workplace skills plan and provide evidence that it was
implemented.
 Businesses with more than 50 employees must appoint a skills development
facilitator.
 Assess the skills of employees to determine areas in which skills development are
needed.

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 Encourage employees to participate in learnerships and other training programmes.

 Provide all employees with the opportunity to improve their skills.
 Businesses should register with the relevant SETAs.

Role/functions of SETAs
 Report to the Director General.
 Promote and establishes learnerships.
 Collect levies and pays out grants as required.
 Provide accreditation for skills development facilitators.
 Register learnership agreements/learning programmes.
 Approve workplace skills plans and annual training reports.
 Monitor/Evaluate the actual training by service providers.
 Allocate grants to employers, education and training providers.
 Oversee training in different sectors of the South African economy.
 Develop skills plans in line with the National Skills Development Strategy
 Draw up skills development plans for their specific economic sectors.
 Provide training material/programmes for skills development facilitators.
 Pay out grants to companies that are complying with the requirements of the Skills
Development Act.
 Promote learnerships and learning programmes by identifying suitable workplaces for
practical work experience.

Funding of SETAs
 Skills Development levies paid by employers e.g. 80% is distributed to the different
SETA and 20% is paid into the National Skills Fund.
 Donations and grants from the public
 Surplus funds from government institutions
 Funds received from rendering their services.

National Skills Development Strategy and the Human Resource Development

Strategy
National Skills Development
Human Resources Development Strategy
Strategy
- Encourages good quality training in the - Addresses skills shortages in the South
workplace to ensure on-going African workforce.
development of skills.
- Provides for the participation of - Aims at achieving faster economic
government, organised business and growth/higher employment levels and
labour. reduced levels of poverty.
- Improves social development - Promotes social development/social
through economic development. justice and helps to alleviate
poverty.
- Indicates how Sector Education and - Develops short term and long term
Training Authorities (SETAs) should use workforce skills.
the money allocated from the Skills
Development Levy.
- Increases/Improves access to training - Improves the supply of skills.
programmes.
- Builds/Provides career/vocational - Increases employee participation in
guidance/training centres. lifelong learning.

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2 LABOUR RELATIONS ACT/LRA

Purpose of the Labour Relations
 Promotes collective bargaining at the workplace.
 Establishes Labour Courts and Labour Appeal Courts.
 Promotes fair labour practice between the employers and employees.
 Promotes workplace forums to accommodate employees in decision making.
 Provides for the right to lock-out by the employer as a reaction to lengthy strikes.
 Promotes simple procedures for the registration of trade unions and employer
organisations
 Establishes the Commission for Conciliation, Mediation and Arbitration (CCMA) for
dispute resolutions.
 Provides a framework/structure for labour relations between employers and
employees.
 Clarifies the transfer of employment contracts between the existing and new
employers.
 Advances economic development/social justice/labour peace to ensure that the
workplace maintains the basic rights of employees.

Impact of the LRA on business

Positives/Advantages
 Promotes a healthy relationship between the employer and employees
 Protects the rights of businesses in labour related issues.
 Labour disputes are settled quicker and are less expensive.
 Workplace forums can add value to businesses if it functions properly.
 Protect employers who embark on lawful lock-outs when negotiations between
parties fail.
 LRA provides for the principles of collective bargaining and puts structures in place
with which disputes in the workplace can be settled.
 Provides specific guidelines for employers on correct and fair disciplinary procedures.
 Employers and employees have guidelines regarding correct and fair dismissal
procedures.
 Provides mechanisms such as statutory councils/collective bargaining/ CCMA.
 Employers are entitled to compensation from the Labour Court if they suffered
damages as a result of unprotected strikes.
AND/OR

Negatives/Disadvantages
 Reduced global competitiveness due to lower productivity
 Productivity may decrease if employees are allowed to participate in the activities of
trade unions during work time.
 Costs of labour increases because of legal strikes.
 Employers may not get a court interdict to stop a strike.
 Employers may have to disclose information about workplace issues to union
representatives that could be the core of their competitive advantage.
 Employers may not dismiss employees at will, as procedures have to be followed.
 Many employees take advantage of the right to strike without acknowledging their
responsibilities.
 Many employees and employers do not understand/respect the Labour Relations
Act.

IMPACT OF RECENT LEGISLATION ON BUSINESSES CHAPTER 1

 Encourages diversity in business by employing people from various racial

backgrounds.
 Businesses are in a better position to negotiate contracts with the
government/Impacts positively of BEE ratings of businesses
 Certified psychometric tests may be used to assess applicants/employees to ensure
that suitable.

AND/OR
Negatives/Disadvantages
 Expensive to train/employ someone who knows little about the Act.
 Fines/Penalties for non-compliant businesses may be expensive for the business.
 Diversity in the workplace may lead to conflict/unhappiness.
 Often positions go unfilled because there are no suitable EE candidates.
 Skilled people from designated groups may demand higher salaries which increase
salary expenses.
 Job hopping of skilled/trained EE appointees may increase staff turnover.
 Increased administration burden, as businesses must compile/submit employment
equity reports every two years.
 Employers have to appoint one or more senior managers to ensure the implementation
of the plan, which increases salary expenditure
 Businesses must submit a compliance certificate before they can conduct business
with state businesses
 Businesses are sometimes pressurised to appoint an unsuitable EE person to meet
EE requirements.
 Other groups may not respect the knowledge/skills/experience of an EEA
appointment and it may lead to conflict.

Penalties for non-compliance with the EEA

 Businesses may face heavy fines for non-compliance.
 They can be ordered to pay compensation and damages to the employee.
 Labour inspectors may investigate/inspect/ask questions about complaints
 Labour inspectors may conduct onsite visits, to interview employees which can
create a bad image for the business.
 A compliance order may be issued to businesses that do not comply with the EEA.
 Businesses may be brought before the Labour Court if compliance orders are not
adhered to/no efforts made to reach targets.
 The Department of Labour may block non-compliant companies from doing business
with the government.

Discriminatory actions according to the EEA

 Not employing a young woman because she would want to have children in future.
 Refusing to employ a person because he/she has strong religious beliefs/has a
disability
 Doing HIV testing unless justified by the Labour Court.
 Denying people access to the workforce based on gender/race/culture/etc. and
treating them unfairly.

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Ways in which businesses can comply with the EEA

 Businesses must guard against discriminatory appointments.
 Promote equal opportunities and fair treatment
 Implement an employment equity plan.
 Implement affirmative action measures to redress disadvantages experienced by
designated groups.
 Reasonable accommodation of people from designated groups
 Ensure that there is equal representation of all racial groups in every level of
employment.
 Compile employment equity plans that indicate how they will implement affirmative
action.
 Ensure that affirmative action measures promote diversity in the workplace.
 Prepare an employment equity plan in consultation with employees.
 Ensure that diversity/inclusivity in the workplace is achieved.
 Submit the employment equity plan to the Department of Labour
 Retain designated groups, including skills development of such groups.
 Assess the racial composition of all employees, including senior management.
 Clearly define the appointment process, so that all parties are well informed.
 Use certified psychometric tests to assess applicants/employees to ensure that
suitable candidates are appointed
 Conduct medical/psychological tests fairly to employees/when deemed necessary.
 Assign one or more senior managers to ensure implementation and monitoring of the
employment equity plan.
 Eliminate barriers that have an adverse impact on designated groups.
 Retain/Develop/Train designated groups, including skills development.
 Regularly report to the Department of Labour on progress in implementing the plan.
 Display a summary of the Act where employees can clearly see/have access to the
document.
 Restructure/Analyse current employment policies/practices/procedures to
accommodate designated groups.

4 Basic Conditions of Employment Act/BCEA

Purpose of the BCEA
 Provides clear terms and conditions of employment for employers and employees.
 Set minimum requirements/standards for the employment contract.
 Advance economic development and social justice
 Regulates the right to fair labour practices as set out in the Constitution.
 Regulates the variations of basic conditions of employment.
 Adheres to the rules and regulations set out by the International Labour Organisation

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Impact of the BCEA

Positives/Advantages
 Creates a framework of acceptable employment practices e.g., work hours, leave,
etc.
 Promotes fair treatment of employees in business.
 Encourages consultation between employers and employees.
 Outlines minimum requirements that form the basis of employment contracts.
 Work hours are specified so that the employer cannot exploit employees.
 The rules and regulations are very specific, which clearly guides the employer on
how to deal with employment issues.
 Employees are permitted to consult labour unions in cases where the BCEA
conditions are violated. (Relationship with LRA)
 Employees may submit complaints to labour inspectors who can address it.

AND/OR

Negative/Disadvantages
 Developing/Drafting a formal/legal employment contract may be time-
consuming/costly.
 Businesses may regard employment contracts negative and may not implement it,
which result in non-compliance/penalties.
 No employer may force an employee to work more than 45 hours in a week. This
may result in reduced productivity.
 Hiring cheap labour is no longer possible, so businesses cannot exploit workers.
 BCEA forces businesses to comply with many legal requirements, which may
increase labour costs.
 Businesses not complying with the Act, may be charged with high penalties, which
may affect their cash flow negatively.
 Businesses may consider the provisions of the BCEA as unimportant and an
unnecessary administrative burden that increase operating costs.

Discriminatory actions according to the BCEA

 Forbidding workers to discuss wages/salaries with co-workers.
 Preventing workers from having access to employment contracts.
 Refusing to accept a valid medical certificate of a sick worker.
 Refusing to grant a worker family responsibility leave to support a sick family member

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Penalties businesses may face for not complying with the BCEA
 Labour inspectors may serve a compliance order by writing to the Department of
Labour.
 Labour inspectors may investigate/inspect/ask questions about complaints and
remove records as evidence.
 Businesses may be taken to the labour court for a ruling.
 Businesses that are found guilty of non-compliance may face heavy fines/ penalties.
 They can be ordered to pay compensation and damages to the employee.
 The Director General may agree/change/cancel the compliance order.

Ways in which businesses can comply with the BCEA

 Workers should only work 9 hours per day in a 5 day work week./8 hours per day in a
6 day work week./Overtime should not exceed 10 hours per week.
 Workers can take up to six weeks paid sick leave during a 36-month cycle
 Workers must receive double if they work during public holidays/Sunday
 They must have a break of 60 minutes after five hours of work
 Businesses should not employ children under the age of 16.

Provisions of the BCEA

Hours of work/Work hours
 Workers may not work for more than 45 hours in any week.
 Workers may work nine hours a day if they work five days or less per week/eight
hours a day if they work more than five days a week.
 Night work performed after 18:00 and before 6:00 the next day by agreement, must
be compensated by allowance/reduction of work hours.
 Ordinary work hours may be extended by agreement by a maximum of 15 minutes per
day/maximum of sixty minutes per week to complete duties when serving the public.
 Ordinary work hours may be reduced to a maximum of 40 hours per week/8 hours per
day.

Overtime
 Workers must agree to work overtime.
 Workers cannot work more than three hours overtime per day/10 hours per week.
 Overtime must be compensated as follows:
 One and half times the normal rate of pay for overtime worked on week days and
Saturdays.
 Double the normal rate of pay for overtime worked on Sundays and public holidays.
 Overtime must be paid either at specified rate for overtime or an employee may
agree to receive paid time off.
 Minister of Labour may prescribe the maximum permitted working hours, including
overtime, for health and safety reasons for a certain category of work.

Leave
Types of leave

Annual leave
Workers are entitled to:
 21 consecutive days annual leave per year/One day for every 17 days worked√/One
hour for every 17 hours worked.
 An employer can only pay a worker in lieu of leave if that worker leaves the job.

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Sick leave
Workers are entitled to:
 Six weeks paid sick leave in a period of 36 months/1 day paid sick leave for every 26
days worked during the first six months of employment.
 A medical certificate may be required before paying an employee who is absent for
more than two consecutive days/who is frequently absent.

Maternity leave
 A pregnant employee is entitled to four consecutive months' leave.
 A pregnant employee may not be allowed to perform work that is hazardous to her
unborn child.
 The starting date is usually any time from four weeks before the expected date of
birth or on advice of a doctor/midwife.

Family responsibility leave

 Three to five (3 to 5) days paid leave per year on request in the event of the death of
the employee's spouse/life partner/parent/ adoptive parent/
grandparent/child/adoptive child/grandchild/sibling.
 An employer may require reasonable proof, before granting this leave.
 Male employees are entitled to a maximum of three/five day’s paternity leave when
his child is born.

Meal breaks and rest periods

 Workers must have a meal break of 60 minute after five continuous hours of work.
 This can be reduced to 30 minutes by written agreement, when working less than 6
hours per day.
 A worker must have a daily rest period of 12 continuous hours/a weekly rest period of
36 continuous hours which must include Sundays.

Public holidays
 Workers must be paid for any public holidays that fall on a working day.
 Work on public holidays is by agreement and paid at double the rate.

Termination of employment
 A contract of employment may only be terminated following one week’s notice, if the
worker has been employed for six months or less.
 A minimum of four weeks’ notice must be given, if the worker has been employed for
a year or longer.
 The employee must be given notice in writing.
 An employee who is retrenched/ dismissed for restructuring reasons is entitled to one
week’s severance pay for every year of service.

Child and forced labour

 It is illegal to employ a child younger than 15 years of age.
 It is also illegal to force someone to work.
 Businesses may employ children over the age of 15 years, if employment is not
harmful to their health/well-being/education/moral and social development/ minors
under 18 years of age may not do dangerous work/work meant for an adult.

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5 Compensation for Occupational Injuries & Diseases

Act/COIDA
Purpose of COIDA
 Provides a comprehensive protection to employees who injured in the course of
performing their duties.
 COIDA applies to all casual and full-time workers who become ill/injured/
disabled/killed due to a workplace accident/disease
 It excludes workers who are guilty of wilful misconduct/workers working outside
South Africa for at least twelve months/members of the SA Defence Force/Police
services.
 It provides for the establishment of a Compensation Board whose function is to
advise the Minister of Labour on the application/provisions of COIDA.

Impact of the COIDA on businesses

Positives/Advantages
 Promotes safety in the workplace.
 Employees do not contribute towards this fund.
 Claiming processes are relatively simple
 Eliminates time and costs spent on lengthy civil court proceedings
 Any compensation to an employee/the family is exempt from income tax.
 Employers are protected from financial burden should an accident occur in the
workplace provided that the employer was not negligent
 Makes businesses more socially responsible as they cannot just employ workers at
random in dangerous working conditions.
 Workers are treated with dignity and respect as businesses view them as
valuable assets and not just as workers.
 Covers all employees at the workplace if both parties meet all the necessary safety
provisions in the Act.
 Creates a framework for acceptable employment practices and safety regulations.
 Supply administrative guidelines/mechanisms for dealing with/processing claims.
 Employees are compensated financially for any injury/disability resulting from
performing their duties at their workplace.
 In the event of the death of an employee as a result of a work-related accident/
disease, his/her dependent(s) will receive financial support.
 Employees receive medical assistance provided there is no other medical
assistance option./Cannot claim medical assistance from the fund and medical aid.
 Medical expenses/Other types of compensation are paid to employees and/or their
families depending on the type/severity of the injuries.
 Employers have to pay a monthly amount to the Compensation Fund depending on
the number of employees/the level of risk they are exposed to.

AND/OR

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Negative/Disadvantages
 Claiming processes can be time consuming.
 Domestic/Military workers are not covered.
 Workers who are temporarily/permanently employed in foreign countries are not
covered.
 Employers may be forced to pay heavy penalties if they are found guilty of
negligence/not enforcing safety measures.
 Implementation processes/procedures required by the Act may be expensive.
 Procedures required by this Act may be costly as paperwork places an extra
administrative burden on businesses.
 Employers have to register all their workers/make annual contributions to COIDA,
which may result in cash flow problems.

Discriminatory actions according to COIDA

 Employers who bribe/prevent employees from reporting the accident/injury.
 Providing false information about previous, serious accidents/occupational
diseases.
 Employers who do not contribute to the Compensation fund.
 Employers who do not allow claims for injuries, discriminates against injured
employees.
 Employers that take too long to process claims/delay the claiming process.
 Compensation that is set off against any debt of the person entitled to the
compensation.

Penalties for non-compliance with COIDA

 Businesses can be fined for refusing to lodge the claim/contravening the Act.
 Businesses can be forced to make large payments if it did not take the necessary
precautions according to the Act.
 They may be forced to pay any recovery costs required by the Compensation
Fund.
 Employees may take businesses to court for not registering them with the
Commissioner of the Compensation Fund.
 If businesses are found guilty of any misconduct, they will have to pay large
penalties/face imprisonment.

Ways in which businesses can comply with the COIDA

 Businesses should provide a healthy/safe working environment
 Ensure that the premises/equipment/machinery is in good working condition.
 Register with the Compensation Commissioner and provide the particulars of the
business.
 Report all incidents causing death/injury/illness of employees.
 Levies must be paid to the Compensation Fund.
 Keep records of employees' income and details of work for four years.
 Submit returns of earnings by no later than 1 March annually.
 Allow regular assessment of the workplace by inspectors in order to determine the
level of risk their employees are exposed to.
 Employers may not make deductions for COIDA from employees' remuneration
packages.
 Businesses must ensure that claims are lodged within twelve months of the date of
the accident.

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6 Broad Based Black Economic Employment Act/BBBEE

Purpose of BBBEE
 Enable wealth to be spread more broadly across all population groups.
 Outline areas that would give the government a platform for bringing equitable
spread of wealth.
 Allows for the development of Codes of Good Practice.
 It aims at targeting inequality in the South African economy.

NOTE: You must first know the implications of BBBEE pillars so that you can
understand the impact BBBEE on businesses.

REVISED BBBEE PILLARS

 Management control
 Skills development
 Ownership
 Enterprise and supplier development (ESD)
 Socio-economic development/social responsibility

Implications of the revised BBBEE pillars on businesses

Management control
Implication of management control on businesses
 Business must ensure that transformation is implemented at all levels.
 Appoint black people in senior executive positions/to management.
 Involve black people in the decision-making processes.
 Ensure that black females are represented in management.
 Businesses score points in both management and ownership when selling more
than 25 % of their shares to black investors so that some of them can become
directors.
 Due to a shortage of skilled black managers/directors, some businesses find it
difficult to make appointments.
 Businesses are directly penalised for not implementing this pillar.

NOTE: The word “implication” in this context means “what businesses should
do in order to comply with this Act and what are the things that are preventing
them from implementing this Act.

NOTE that the last sentences of EACH pillar speak to things that prevent
businesses from implementing the pillar.

Ways in which businesses could apply management control in the workplace

 Business must ensure that transformation is implemented at all levels.
 Appoint black people in senior executive positions/to management.
 Involve black people in the decision-making processes.
 Ensure that black females are represented in management.
 Businesses score points in both management and ownership when selling more
than 25 % of their shares to black investors so that some of them can become
directors.

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Skills development
Implication of skills development on businesses
 Business must engage black employees in skills development initiatives.
 Provide learnerships and learning programmes to black employees.
 Business must contribute 1% of their payroll to fund the skills development
programmes.
 Business benefits from the increased pool of skilled/trained workers.
 Business must go the extra mile to train staff where learnerships are not offered.
 Productivity is compromised as mentors/coaches have to find the time to
participate in learnerships/training.

Ways in which businesses could apply skills development in the workplace

 Business must engage black employees in skills development initiatives.
 Provide learnerships and learning programmes to black employees.
 Business must contribute 1% of their payroll to fund the skills development
programmes.
 Business benefits from the increased pool of skilled/trained workers

Ownership
Implication of ownership on businesses
 Business should include black people in shareholding/partnerships/franchises.
 Encourage small black investors to invest in big companies and share ownership.
 Exempted Micro Enterprises (EMEs) with an ownership of 50% or more of black
people are promoted to level 3 of the BEE scorecard.
 More opportunities are created for black people to become owners/ entrepreneurs.
 Large businesses should form joint ventures with small black owned businesses
and share business risks.
 Businesses sometimes find it difficult to locate suitable black business partners/
shareholders.
 Many black people cannot afford shares in companies/contributions to
partnerships.

Ways in which businesses could apply ownership in the workplace

 Business should include black people in shareholding/partnerships/franchises.
 Encourage small black investors to invest in big companies and share ownership.
 Exempted Micro Enterprises (EMEs) with an ownership of 50% or more of black
people are promoted to level 3 of the BEE scorecard.
 More opportunities are created for black people to become owners/ entrepreneurs.
 Large businesses should form joint ventures with small black owned businesses
and share business risks

Enterprise and supplier development (ESD)

Implication of Enterprise and supplier development (ESD) on businesses
 Business must create jobs as ESD promotes local manufacturing.
 Identify black owned suppliers that are able to supply goods and services.
 Outsource services to suppliers that are BBBEE compliant.
 Businesses are encouraged to invest/support black owned SMMEs.
 Develop the business skills of small/black owned suppliers, e.g. sales techniques,
legal advice, etc.

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 Support the cash flow of small suppliers by offering them preferential terms of
payment.
 Businesses should invest in/support black owned SMMEs
 Contribution can be monetary, e.g. loans/investments/donations.
 Contribution can be non-monetary, e.g. consulting services/advice/entrepreneurial
programmes, etc.
 SMMEs will be encouraged to use their own business initiatives to make them
sustainable.
 Develop and implement a supplier development plan/supply chain.
 Small/Large businesses may not be able to afford enterprise development
investment/support.
 Black owned SMMEs may become too reliant on support from other businesses/
unable to take their own initiatives.
 BBBEE suppliers may be without good workmanship.
 Smaller businesses that are not BBBEE compliant lose business.
 Businesses are forced to choose from a smaller pool of suppliers.

Ways in which businesses could apply ESD in the workplace

 Business must create jobs as ESD promotes local manufacturing.
 Identify black owned suppliers that are able to supply goods and services.
 Outsource services to suppliers that are BBBEE compliant.
 Businesses are encouraged to invest/support black owned SMMEs.
 Develop the business skills of small/black owned suppliers, e.g. sales techniques,
legal advice, etc.
 Support the cash flow of small suppliers by offering them preferential terms of
payment.
 Businesses should invest in/support black owned SMMEs
 Contribution can be monetary, e.g. loans/investments/donations.
 Contribution can be non-monetary, e.g. consulting services/advice/entrepreneurial
programmes, etc.
 SMMEs will be encouraged to use their own business initiatives to make them
sustainable.
 Develop and implement a supplier development plan/supply chain.

Social responsibility/Socio-economic development

Implications of social responsibility/socio-economic development on
businesses
 Businesses should focus on critical areas which can affect growth and development
in the country e.g. environmental awareness/education/ housing,
poverty/unemployment etc.
 They should distribute scarce CSI resources to selected beneficiaries in the
community.

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Impact of the BBBEE on businesses

Positives/Advantages
 Encourages businesses to address the demands for redress/equity directly.
 Provides a variety of business codes to improve employment equity.
 Provides for human resources development through training and development.
 A good BEE rating improves the image of the business.
 Fronting is discouraged, as it may lead to the disqualification of a business's entire
scorecard/BBBEE status.
 Promotes enterprise development, by developing entrepreneurial skills of
designated people to start their own businesses
 Businesses that comply with BBBEE regarding the pillars will be rated high on the
BEE scorecard/may get government tenders/may attract other BBBEE business
partners/-suppliers.
 Businesses will have a good overview on how it is performing in comparison to
other businesses in the rest of the country.
 By focusing on BBBEE, the business will show commitment towards the
social/education/economic developments in the community/country.
 Once rated, the business will understand how to develop BBBEE strategies that
will increase its BBBEE ratings on an annual basis.
 Share prices of BBBEE compliant businesses are likely to increase as they attract
more business.
 Businesses that support Small, Micro, Medium Enterprises (SMMEs), may
increase their own BBBEE ratings
 Complying with BBBEE requirements gives businesses experience/exposure to be
able to provide better employment opportunities/staff development.

AND/OR

Negative/Disadvantages
 Businesses could experience large financial implications/penalties if they do not
comply with BBBEE.
 Processes may lead to corruption/nepotism if not monitored properly.
 Processes and procedures may be costly for a business as there are many legal
requirements for scoring enough points to be compliant.
 Investment/Ownership issues can cause unhappiness amongst existing share-
holders/owners.
 Provides for preferential procurement, so certain businesses may be excluded from
supplying goods/services.
 Businesses will have to spend money in areas covered by five BBBEE pillars to
obtain a good BBBEE rating.
 Businesses that want to do business with the government must have their BEE
status assessed annually.
 Businesses have to go through the process of having their BBBEE compliance
measured/verified by an independent BEE verification agency.
 Many businesses have been disadvantaged due to BBBEE ratings as they may not
be able to meet all the scoring.

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Discriminatory actions according to BBBEE

 Failing to implement affirmative action to meet BBBEE responsibilities.
 Promoting unsuitable people into a management positions at the expense of
qualified PDP’s.
 Refusing to award tenders to black suppliers who are BEE compliant.

Positives/Advantages
 Businesses may be safeguarded from dishonest competitors.
 Businesses may be protected if they are regarded as consumers.
 Prevents larger businesses from undermining smaller ones.
 May gain consumer loyalty, if they comply with CPA.
 Enables businesses to resolve disputes fairly through the National Consumer
Commission/Consumer Court/Industrial ombudsmen
 Businesses may build a good image if they ensure that they do not violate
consumer rights.

AND/OR

 Suppliers may not use physical force/harass customers.
 Businesses cannot promote pyramid/chain-letter schemes.
 They may not give misleading/false information about the product/service/
transaction.
 Businesses may not overbook/oversell goods/services and then not honour the
agreement.

Right to fair value/good quality/safety

 Consumers may demand quality services/goods.
 They may receive an implied/written warranty.
 Cancel /renew fixed term agreements
 To be informed about hazardous/dangerous products
 Reject goods that are not the same as the sample marketed
 Return faulty items if the fault occurs within six months after purchasing the item

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HUMAN RESOURCES FUNCTION CHAPTER 2

PAPER 1

BUSINESS STUDIES

GRADE 12
TERM ONE
REVISED CHAPTER 2
HUMAN RESOURCES FUNCTION

TABLE OF CONTENTS

TOPICS PAGES
Examination guidelines for human resources 2-3
Terms and definitions 3-4
Recruitment 4-7
Selection 7-10
Induction 10-11
Placement 11-12
Importance of training 12
Salary determination 12
Link between salary determination & BCEA 12
Fringe benefits 13-14
Implication of Acts on HR 14-15

This chapter consists of 15 pages

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CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT

PURPOSES

HUMAN RESOURCE ACTIVITIES: REFER TO PAGE 12-14 OF THE 2020 EXAM

GUIDELINES

RECRUITMENT
 Explain/Elaborate on the meaning of recruitment.
 Outline/Discuss/Explain the recruitment procedure.
 Explain the meaning of job a analysis.
 Differentiate/Distinguish between job description and job specification as
components of a job analysis.
 Identify job description and job specification from given statements/scenarios.
 Identify methods of recruitment
 (internal/external recruitment) from given scenarios/statements
 Explain/Discuss/Analyse the impact (positives/advantages and/or
negatives/disadvantages of the above mentioned methods of recruitment.
 Identify/Give examples of sources of internal/external recruitment from given
scenarios/statements.

SELECTION
 Outline/Discuss/Explain the selection procedure.
 Explain the meaning of screening as part of the selection procedure.
 Discuss/Explain the purpose of an interview.
 Outline/Explain/Discuss the role of the interviewer before and during the interview.
 Outline/Explain/Discuss the role of the interviewee during the interview.
 Define/Elaborate on the meaning of an employment contract.
 Name/Outline/Mention the details/aspects/ contents of an employment contract.
 Outline/Explain/Discuss the legal requirements legalities of the employment contract.
 Analyse an employment contract from given scenarios and make recommendations
for improvement.
 Outline/Explain/Discuss the reasons for the termination of an employment contract.

INDUCTION
 Define/Elaborate on the meaning of induction.
 Outline/Explain/Discuss the purpose of induction.
 Mention/Outline aspects that must be included in the induction programme.
 Evaluate an induction programme from given scenarios and make recommendations
for improvement.
 Discuss/Explain the advantages/benefits of induction for businesses.
 Identify the benefit of induction from given scenarios.

PLACEMENT
 Elaborate on the meaning of placement
 Outline/Explain/Discuss the placement procedure.
 Explain/Discuss/the importance of training/skills development in HR

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EXTERNAL RECRUITMENT
 Refers to the use of external sources to advertise vacancies outside the business.

Sources of external recruitment

 Recruitment agencies
 Bill boards
 Printed media, e.g. newspapers/flyers/magazines/posters
 Electronic media, e.g. radio/TV
 Social media/Social networks/Internet/Business websites
 Recruitment agencies
 Walk-ins
 Head hunting
 Professional associations
 Networking
 Educational/Training institutions
 Word of mount

1.4 IMPACT OF EXTERNAL RECRUITMENT

Positives/Advantages
 New candidates bring new talents/ideas/experiences/skills into the business.
 There is a larger pool of candidates to choose from.
 It may help the business to meet affirmative action and BBBEE targets.
 Minimises unhappiness/conflict amongst current employees who may have
applied for the post
 There is a better chance of getting a suitable candidate with the required
skills/qualifications/competencies who do not need much training/ development which
reduce costs.

AND/OR

 The employer and employee must both sign the contract.
 Employer and employee must agree to any changes to the contract.
 No party may unilaterally change aspects of the employment contract.
 The remuneration package/including benefits must be clearly indicated.
 It may not contain any requirements that are in conflict with the BCEA.
 The employment contract should include a code of conduct and code of ethics.
 Aspects of the employment contract can be renegotiated during the course of
employment.
 The employer must explain the terms and conditions of the employment contract
to the employee.
 Conditions of employment/duties/responsibilities of the employees must be
stipulated clearly.
 All business policies, procedures and disciplinary codes/rules can form part of the
employment contract.
 The employer must allow the employee to thoroughly read through the
contract before it is signed.

3.3 Reasons for terminating an employment contract

 The employer may dismiss an employee for valid reason(s), e.g. unsatisfactory job
performance, misconduct, etc.
 Employer) may no longer have work for redundant employees/cannot fulfil the
contract/is restructuring.
 The employer may retrench some employees due to insolvency/may not be able
to pay the employees.
 Employees decided to leave and resign voluntarily.

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 An employee may have reached the pre-determined age for retirement.

 Incapacity to work due to illness/injuries.
 By mutual agreement between the employer and employee.

4 INDUCTION
Meaning of induction
 New employees are familiarised with their new physical work environment/
organisational culture/products and services.
 New employees are informed about the processes/procedures of the
business.
 New employees should have a basic knowledge of what is expected in the job.
/Understand his role and responsibilities in his new job.
 New employees must be well conversant with the business safety regulations
and rules.

4.1 Purpose of induction

 Introduce new employees to management/colleagues to establish relationships with
fellow colleagues at different levels.
 Give new employees a tour/information about the layout of the building/office
 Make new employees feel welcome by introducing them to their physical work space.
 Improve skills through in-service training
 Familiarise new employees with the organisational structure/their supervisors
 Allow new employees the opportunity to ask questions that will put them at
ease/reduce insecurity/anxiety/fear.
 Create opportunities for new employees to experience/explore different departments.
 Explain safety regulations and rules, so that new employees will understand their
role/responsibilities in this regard.
 Ensure that employees understand their roles/responsibilities so that they will be more
efficient/productive.
 Communicate information about the products/services offered by the business
 Communicate business policies regarding ethical/professional conduct/
procedures/employment contract/conditions of employment, etc.

NOTE: Businesses use the purpose of induction to draw up the induction

programme.

4.2 Aspects to be included in an induction programme

 Introduction to key people and immediate colleagues.
 Safety regulations and rules.
 Overview of the business.
 Tour of the premises.
 Discussion of the employment contract and conditions of service.
 Discussion of employee benefits
 Information about the business products/services.
 Meeting with senior management who will explain the company's vision/value
descriptions/daily tasks.
 Conditions of employment, e.g. working hours/leave application process/disciplinary
procedures, etc.

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 Administration details on systems/processes/logistics.

 Discussion of personnel policies, e.g. making private phone calls/using the Internet,
etc.
 Corporate social responsibility programmes.

4.3 Benefits of induction

 Increases quality of performance/productivity
 Allows new employees to settle in quickly and work effectively.
 Ensures that new employees understands rules and restrictions in the
business.
 New employees may establish relationships with fellow employees at different
Levels.
 Employees will be familiar with organisational structures, e.g. who are their
supervisors/low level manager.
 Make new employees feel at ease in the workplace, which reduces anxiety/
insecurity/fear.
 New employees will understand their role/responsibilities concerning safety
regulations and rules
 Minimises/Decreases the need for on-going training and development.
 The results obtained during the induction process provide a base for focussed
training.
 Opportunities are created for new employees to experience/explore different
Departments
 New employees will know the layout of the building/factory/offices/where
everything is, which saves production time.
 Learn more about the business so that new employees understand their roles/
responsibilities in order to be more efficient.
 Company policies are communicated, regarding conduct and procedures/safety
and security/employment contract/conditions of employment/working hours/leave.
 Realistic expectations for new employees as well as the business are created.
 New employees may feel part of the team resulting in positive morale and
motivation.
 Employees may have a better understanding of business policies regarding
ethical/professional conduct/procedures/CSR, etc.

NOTE: Businesses must benefit from inducting new employees. Do not confuse the
purpose of induction with the benefits.

5 PLACEMENT

5.1 Meaning of placement

 Selected candidates are placed where they will function optimally and add value to
the business.
 A specific job is assigned to the selected candidate.
 The qualifications/skills/personality of the selected candidate is matched with the
requirements of the job.

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5.2 Placement procedure

 Employer should outline specific responsibilities/expectations of the employee new
position.
 The employer should determine the relationship/similarities between the expectations
of the position and the competencies of the employee.
 Determine the employee’s strengths/weaknesses/skills/ interests by subjecting him to
various psychometric tests.

5.3 The importance of training/skills development in HRM

 The employee who receives the necessary training is more able to perform in their
job.
 The investment in training that a company makes shows employees that they are
valued.
 An effective training program allows employees to strengthen their skills.
 Productivity usually increases when the human resources function implements
training courses.
 Ongoing training and up skilling of the workforce, encourages creativity.

6 SALARY DETERMINATION METHODS

DISTINCTION BETWEEN PIECEMEAL AND TIME-RELATED SALARY

DETERMINATION
PIECEMEAL TIME-RELATED
 Workers are paid according to the number  Workers are paid for the amount of time
of items/ units produced /action they spend at work/on a task.
performed.
 Workers are not remunerated for the  Workers with the same
number of hours worked, regardless of experience/qualifications are paid on
how long it takes them to make the items salary scales regardless of the amount
of work done.
 Mostly used in factories particularly in the  Many private and public sector
textile/technology industries. businesses use this method

7 LINK BETWEEN SALARY DETERMINATION AND THE BCEA

 BCEA outlines legalities, such as the employment contract, which may affect salary
determination.
 Payment of salaries should be based on whether the employee is permanent or
employed on a fixed contract
 The BCEA sets out conditions that ensure fair labour and human resources
practices.
 According to the BCEA, businesses may use different remuneration methods to pay
their employees.
 Businesses are supposed to deduct income tax (PAYE) from the employees' taxable
salaries.

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8 FRINGE BENEFITS
8.1 Examples of fringe benefits in the workplace
 Medical Aid Fund/Health Insurance Fund
 Pension Fund
 Provident Fund
 Funeral benefits
 Car/Travel/Housing/Cell phone/Clothing allowance
 Performance based incentives
 Issuing of bonus shares
 Staff discount/Free or low cost meal/Canteen facilities

8.2 BENEFITS REQUIRED BY THE LAW

Unemployment Insurance Fund (UIF)
 The employer and the worker each contribute 1%.
 Employers must pay unemployment insurance contributions of 2% of the value of
each worker’s salary per month
 The fund also assists the dependants of a contributing worker who has died.
 The fund offers short-term financial assistance to workers when they become
unemployed or are unable to work due to illness, maternity or adoption leave.
 Contributions are paid to the Unemployment Insurance Fund (UIF) or the South
African Revenue Services (SARS).

8.3 IMPACT OF FRINGE BENEFITS ON BUSINESSES

Positives/Advantages
 Improves productivity\ resulting in higher profitability
 Attractive fringe benefit packages may result in higher employee retention/reduces
employee turnover.
 Attracts qualified/skilled/experienced employees who may positively contribute
towards the business goals/objectives
 It increases employee satisfaction/loyalty as they may be willing to go the extra mile.
 Businesses save money as benefits are tax deductible.
 Fringe benefits can be used as leverage for salary negotiations.

AND/OR

Negatives/Disadvantages
 Businesses who cannot offer fringe benefits fail to attract skilled workers.
 It can create conflict/lead to corruption if allocated unfairly.
 Fringe benefits are additional costs that may result in cash flow problems.
 Errors/Mistakes in benefit plans may lead to costly lawsuits/regulatory fines.
 Decreases business profits, as incentive/package/remuneration costs are higher.
 Businesses who offer employees different benefit plans may create resentment to
those who receive less benefit resulting in lower productivity.
 Administrative costs increase as benefits need to be correctly recorded for tax
purposes
 Workers only stay with the business for fringe benefits, and may not be
committed/loyal to the tasks/business.

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 Businesses have to pay advisors/attorneys to help them create benefit plans that
comply with legislation.

9 IMPLICATIONS OF ACTS ON THE HUMAN RESOURCES FUNCTION

Implications of the Labour Relations Act on the Human Resources Function

 Promotes resolution of labour disputes.
 Protects the rights of employees/employers as outlined in the Constitution.
 Advances economic development/social justice/labour peace.
 Provides for unresolved disputes to be referred to Labour Courts/Labour Appeal
Courts.
 Promotes orderly negotiations and employee participation in decision making in the
workplace.
 Workers cannot be easily dismissed as bargaining council/Commission
for Conciliation, Mediation and Arbitration (CCMA) processes need to be followed.
 Provides a framework for bilateral meetings where employees, trade unions and
employers discuss matters relating to employment.
 The human resource manager should allow workers to form workplace forums/trade
unions to promote the interests of all employees.
 Clarify the transfer of contracts of employment/If a business is transferred to
another owner then the employee contracts are also transferred.

Implications of the Employment Equity Act on the Human Resources function

 Equal pay for work of equal value.
 Ensure that affirmative action promotes diversity in the workplace.
 The human resources manager must promote/provide equal opportunities in the
workplace.
 Retrain/Develop/Train designated groups through skills development programmes.
 Define the appointment process clearly to ensure all parties are well informed.
 Compile employment equity plans that indicate how they will implement
affirmative action.
 Assign a manager to ensure that the employment equity plan will be implemented/
regularly monitored.
 Display a summary of the Act where employees can clearly see it/have access to it.
 Report to the Department of Labour on the progress in the implementation of the
equity plan.
 Conduct medical/psychological tests fairly to employees/when deemed necessary.
 Ensure that the workplace represents the demographics of the country at all
levels.
 Restructure/Analyse current employment policies/practices/procedures to
accommodate designated groups.

Implication of the Skills Development Act (SDA) on the Human Resources function
 Contribute 1% of their salary bill to the Skills Development Levy/SDL.
 Ensure training in the workplace is formalised /structured
 Appoint a full/part time consultant as a Skills Development Facilitator.
 Assist managers in identifying skills/training needs to help them to introduce
learnerships.

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 The human resources manager should interpret the aims and requirements of the
SDA and adapt workplace skills training programmes accordingly.
 Identify the training needs of the employees and provide them with training
opportunities so that they will perform their tasks efficiently.
 Use the National Qualification Framework/NQF to assess the skills levels of
employees.
 Interpret/Implement the aims/requirements of the framework for the National Skills
Development Strategy.

Implications of the Basic Conditions of Employment Act (BCEA) on the Human

Resources function
 Workers must receive double if they work during public holidays/Sunday.
 They must have a break of 60 minutes after five hours of work.
 Businesses should not employ children under the age of 16.
 Workers can take up to six weeks paid sick leave during a 36-month cycle
 Workers should only work 9 hours per day in a 5 day work week./8 hours per day in a
6 day work week./Overtime should not exceed 10 hours per week.

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PROFESSIONALISM & ETHICS CHAPTER 3

PAPER 2

BUSINESS STUDIES

GRADE 12
TERM ONE
REVISED CHAPTER 3
NOTES ON ETHICS AND PROFESSIONALISM

TABLE OF CONTENTS

TOPICS PAGES
Exam guidelines ethics and professionalism 2
Terms and definitions 2-3
Definition of ethical behaviour 3
Examples of ethical & unethical business 3
practices
Examples of professional and unprofessional 4
business practices
Differences between professionalism and ethics 4
Application of King Code principles 4
Professional, responsible, ethical and effective 5-6
business practices
Types of unethical/business practices & 6
examples
Challenges posed by unethical business 6-7
practices and their strategies
Types of unprofessional business practices and 8
examples
Challenges posed by unprofessional business 8-9
practices and their strategies

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Refer to page 26 and 27 of the 2020 exam guidelines

Learners must be able to:
 Define/Elaborate on the meaning of ethical behaviour.
 Give practical examples of ethical and unethical behaviour, e.g. using fair vs.
unfair advertising techniques, etc.
 Define/Elaborate on the meaning of professional behaviour.
 Give practical examples of professional and unprofessional behaviour, e.g. good
use of work time and abuse of work time, etc.
 Outline the differences/Differentiate/Distinguish between ethical and professional
behaviour.
 Explain how businesses can apply the King Code principles of transparency,
accountability and responsibility for good corporate governance to improve ethical
business conduct.
 Suggest/Recommend ways in which professional, responsible, ethical and
effective business practice should be conducted, e.g. payment of fair wages,
providing quality goods and services, not starting a business venture at someone
else's expense, etc.
 Identify the following types of unethical business practices from given
scenarios/statements:
o Unfair advertising and examples
o Pricing of goods in rural areas
o Taxation/Tax evasion
 Explain how the above-mentioned types of unethical business practices pose
challenges to businesses.
 Identify the following types of un professional business practices from given
scenarios/ statements:
o Sexual harassment
o Unauthorised use of workplace funds and resources
o Abuse of work time
 Explain how the above mentioned types of unprofessional business practices
pose challenges to businesses.
 Recommend/Suggest ways in which businesses could deal with above mentioned
types of unethical business practices..
Term Definition
Business ethics Ideas about what is morally correct or not applied in a business
situation.
Ethical behaviour Acting in ways consistent with what society and individuals think
are good values.
Business practice A procedure/rule employed or followed by a business in the
pursuit of its objectives.
Professionalism Describes the internationally accepted standards/expectations
that society has of people’s conduct and levels of competence in
the workplace.
Tax evasion When a business does not declare all their income to SARS with
the aim of paying less tax.
Corporate governance The exercise of ethical and effective leadership by the board of
governors of a business towards achieving good performance/
effective control/sustainability and profitability.
Accountability Holding directors and officials responsible to stakeholders for their
decisions and action.
Transparency Directors and managers are expected to operate in a manner that

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is easy for stakeholders to understand what actions are

performed.
Responsibility The legal and moral obligation of the business in relation to the
economic, social and natural environment within which it
operates.

1 Meaning of ethical behaviour

 Refers to acting in ways consistent with what society and individuals think are good
values.
 Ethical behaviour is expected from every employee in the business.
 It means that the highest legal and moral standards are upheld when dealing with
stakeholders.

Meaning of ethics
 Set of standards of expected behaviour between the employer/ employee/business
partners.
 Set of values that are morally acceptable when conducting business.
 Business practices that are acceptable to society/group/ community.
 Inherently forms part of the employees' code of conduct.
 Focus is on developing a moral compass to use in decision making.
 Seeks to avoid harm while promoting benefit to others.

2 Examples of ethical and unethical business practice

Ethical business practices Unethical business practices

 Using fair advertising  Unfair advertising
 Not using child labour  Pricing of goods in rural areas
 Treating all employees equally  Taxation/Tax evasion
 Paying fair wages  Paying employees unfair wages
 Operating within the law  Disobeying the law
 Business deals are conducted openly  Using bribery to gain business
 Not engaging in illegal business  Engaging in illegal business practices
practices  Polluting the environment
 Ensuring that the environment is not  Starting a venture at the expense of
polluted. someone else
 Adopting codes of good ethical practice.
 Establishing corporative social
responsibility initiatives.
 Encouraging employees to adopt ethical
behaviour.
 Clients and employees information is not
disclosed/used for the benefit of the
business.
 Shareholders and employees personal
interest and business interest do not
conflict with one another.

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3 Meaning of professional behaviour

Strategies to deal with unfair advertising in the workplace

 Consumers must report unfair advertisements to the Advertising Standards Authority.
 Business should be encouraged to keep their advertising fair and in line with the
constitution.

Pricing in rural areas

Challenges posed by pricing in rural areas as an unethical business practice
 Some businesses in the rural areas exploit their customers by adding much more than
necessary to their prices.
 Some consumers in rural areas have little economic power and are vulnerable to
exploitation.
 Business may form monopolies in rural areas and increase their prices unilaterally.
 It may be common practice to pay higher prices for goods of inferior quality in rural
areas.
 Business may form monopolies in rural areas and increase their prices unilaterally.

Strategies to deal with pricing in rural areas in the workplace

 Work together with suppliers to share delivery costs to remote rural areas.
 Businesses can buy in bulk to get a discount to avoid charging high prices.
 Charge fair/market related prices for goods and services.
 Avoid unethical business practices to attract customer loyalty.
 A business may lobby with other businesses in the area to convince government to
improve infrastructure in the rural area
 Investigate cost-effective ways of transporting products/Hire a large truck to combine
deliveries to shop-owners in the same area.

Taxation/tax evasion
Challenges posed by taxation/tax evasion as an unethical business practice
 Businesses may pay heavy fines for evading tax.
 Tax evasion may negatively impact on the business image.
 The accountant may charge high fees for falsifying financial statements.
 Businesses may lose key stakeholders if the act of tax evasion is reported.
 Some businesses submit fraudulent/incorrect returns to SARS resulting to penalties
 Businesses may not be familiar with the latest changes in tax legislation.

Strategies to deal with taxation/tax evasion in the workplace

 VAT needs to be charged on VAT-able items.
 Submit the correct tax returns to SARS on time.
 All products should be correctly invoiced and recorded.
 Disclose all sources of income for tax payment purposes.
 Keep abreast with the latest SARS regulations and tax laws.
 Businesses that have evaded tax should apply for amnesty and declare their income.
 Effective systems to determine the appropriate amount of tax to be paid should be in
place.
 Business should keep an accurate record of income statements/financial transactions.
 The employees' payroll needs to reflect accurate deductions according to the
progressive tax system

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10 Type of unprofessional business practices and examples

Type of unprofessional business Examples

practices
Sexual harassment -Manages who promise employees promotions if
they agree to have a relationship with them.
Unauthorised use of workplace funds -Employees who download music and movies
and resources using the business’s resources
-An employee who uses business resources for
his/her own personal gain.
Abuse of work time -Making personal calls during work hours.
-Taking extended lunch breaks
-Doing personal business during work hours
NOTE: You must be able to identify the above mentioned types of unprofessional
business practices from given statements and scenarios.

11 Challenges posed by the above mentioned types of unprofessional business

practice

Sexual harassment
Challenges posed by sexual harassment as an unprofessional business practice
 The affected party may stay away regularly from work.
 Businesses could lose female employees and attract/retain less female applicants.
 Sexual harassment causes discomfort/humiliation and negatively affects work relations
in the workplace
 A victim may be severely traumatised and this may affect other employees' emotionally.
 The affected party is normally reluctant to report the incident due to fear of victimisation
which can reduce productivity.

Strategies to deal with sexual harassment in the workplace

 Provide a framework for corrective action.
 Educate employees on sexual harassment matters.
 Formulate a policy regarding sexual harassment
 Implement internal complaints and disciplinary procedures.
 Ensure compliance with the law/business code of conduct
 Ensure that all employees are familiar with the code of ethics of sexual abuse.
 Create a good working environment where all employees' rights and dignity are
respected.
 Internal investigation should be done in order to determine the seriousness of the
harassment.
 Serious cases/matters on sexual harassment should be reported to the appropriate
institutions such as the South African Police Services (SAPS).

Unauthorised use of workplace funds and resources

Challenges posed by unauthorised use of workplace funds and resources as an
unprofessional business practice
 Fraud increases the cost of doing business and undermine the competitiveness of a
business
 Discourages investors as fraud and corruption increases the risk of investment.
 The business can experience substantial loss if it goes unchecked.

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Strategies to deal with unauthorised use of workplace funds and resources

 Conduct regular audits.
 Identify risk areas/ vulnerable areas
 Educate employees about the impact of fraud
 Implement/Introduce fraud prevention strategies
 Limit the number of employees having access to business funds/assets.
 Fraud prevention should be a collective responsibility of business and workers.
 Clear policies should be in place so that employees are aware of what is considered to
be fraud.
 Set up systems in the organisation for the reporting of fraud and corruption.

Abuse of work time

Challenges posed by abuse of work time in the workplace
 It may result in employees' often abusing work time.
 Abuse of work time could result in losing customers or not meeting deadlines.
 Wasting time costs the business money and affects productivity.
 Abuse of work time results in a decline in profits which could damage the financial
wealth of the business.

Strategies to deal with abuse of work time

 Speak directly to those employees who abuse work time.
 Monitor employees to ensure that tasks are completed on time.
 Remind employees that profit will decrease resulting to less incentives/bonus pay-outs.
 Code of conduct/ethics should contain clear rules about abuse of work time.
 Conduct training on the contents of the code of conduct/ ethics.
 Code of conduct/ethics should be signed by all employees so that they are aware of its
contents.
 Structure working hours in such a way that employees have free/flexible time for
personal matters.
 Create a culture of responsibility/strengthen team spirit in order for all employees to feel
responsible for what has to be achieved.

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CREATIVE THINKING & PROBLEM SOLVING CHAPTER 4

PAPER 2

BUSINESS STUDIES

GRADE 12
TERM ONE
REVISED CHAPTER 4
NOTES ON CREATIVE THINKING AND PROBLEM SOLVING

TABLE OF CONTENTS

TOPICS PAGES
Exam guidelines for creative thinking and 2
problem solving
Terms and definitions 2
Differences between problem solving and 3
decision making
Problem solving steps 3
Application of problem solving steps 3-4
Problem solving techniques 4
Application of the problem solving techniques 5-6
Impact of problem solving techniques 6-8
Meaning of creative thinking 8
Advantages/benefits of creative thinking 8-9
Ways in which businesses can create an 9
environment that promotes creative thinking.

This chapter consists of 9 pages

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CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT PURPOSES

Refer to page 28 and 29 of the 2020 exam guidelines

PROBLEM-SOLVING
Learners must be able to:
 Define/Elaborate on the meaning of problem-solving and decision making.
 Explain/Differentiate/Distinguish between problem-solving and decision making.
 Identify/Name/Outline/Explain/Discuss the problem solving steps.
 Apply the problem-solving steps from given scenarios/case studies.
 Identify/Name the following problem solving techniques from given scenarios/statements:
o Delphi technique
o Force field analysis
o Brainstorming
o Nominal group technique
 Explain/Advise businesses on how they can apply the above-mentioned problem-solving
techniques to solve complex business problems.
 Discuss/Evaluate/Analyse the impact (positives/advantage and/or negatives
disadvantages) of the above-mentioned problem-solving techniques.

CREATIVE THINKING
 Define/Elaborate on the meaning of creative thinking.
 Explain the benefits/advantages of creative thinking in the workplace.
 Explain/Recommend ways businesses can create an environment that promotes creative
thinking.

Terms and definitions

Term Definition
Creative To be original, inventive or resourceful.
Generate To produce or create.
Creativity/ Ideas featuring new and original methods.
Innovative
Creative thinking The ability to think of original, varied new ideas or new approaches
Decision-making Process of analysing a situation to identify strategies to bring about change.
Problem Experiencing uncertainty or difficulty in achieving what we want to achieve.
Problem-solving Gathering facts that include problem findings and problem shaping.
Problem-solving Various problem solving techniques which businesses used to solve
techniques business related problems.

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1 PROBLEM SOLVING
1.1 Meaning of problem solving
 It is the process of analysing a situation to identify strategies that can be used to
change the situation. Problem solving requires creative thinking.
 Problem solving is a mental process that involves problem finding, which is the ability
to identify the problem.
 It also involves problem shaping, which is the ability to break-down the problem in
such a way that a clear solution can be found.

1.2 Meaning of decision making

 Decision making is a choice made by using one's judgement.
 It is also aimed at finding a solution to a problem by choosing a best solution or
course of action.

1.3 Differences between problem solving and decision making

DECISION MAKING PROBLEM SOLVING

-It is often done by one person/a member of -Problems can be solved by a group/ team
senior management who makes it authoritarian. or an individual team member.
-Various alternatives are considered before -Alternative solutions are generated/
deciding on the best one. identified and critically evaluated.
-It is part of the problem solving cycle as -Process of analysing a situation to identify
decisions need to be taken in each step. strategies to bring about change.

1.4 Problem solving steps

 Identify the problem.
 Define the problem.
 Identify possible solutions to the problem.
 Select the most appropriate alternative.
 Develop an action plan.
 Implement the suggested solution/action plan.
 Monitor the implementation of the solution/action plan.
 Evaluate the implemented solution.
 Formulate strategy
 Implement strategy
 Evaluate strategy
NOTE: Steps can be in any order

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1.5 Application/Discussion of problem solving steps

Identify the problem
 Acknowledge that there is a problem
 Identify the exact problem
 Break down the problem into smaller parts that are easier solve separately

Define the problem

 Name the problem by stating exactly what the problem is.
 Find different ways of defining the problem.
 Define the possible causes of the problem
 The nature of the problem must be precise.
 Gather as much information as possible to establish the cause of the problem.

Identify alternative solutions

 Identify all different possible solutions
 Use creative thinking strategies to generate a wide range of solutions
 Focus on generating as many ways as possible through using creative thinking.
 Collect as many ideas as possible and find the best idea/decide on one strategy to
follow.

Evaluate alternative solutions

 Use critical evaluation and analytical skills to evaluate each solution.
 Consider the advantages and disadvantages of each alternative solution.

Choose the best solution

 Set criteria for the best solution, in terms of aspects such as time/cost/risk involved
 Identify which solution will be used
 The best solution should match the size and the resources of the business.
 If the solution is not appropriate, the business should go back to defining the
problem.

Formulate/Develop an action plan/strategy

 Arrange the necessary resources and delegate tasks.
 Establish a time line for implementation and set deadlines

Implement the action plan

 Carry out the planned actions/solution.
 Communicate delegated tasks/deadlines to employees.

Evaluate the solution/action plan

 Assess whether the problem has been solved partially or entirely
 Monitor/test the solution/action plan/strategy continuously.
 If problems emerge, they must recognise and re-formulate the problem for improved
solutions in the future.

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1.6 Problem solving techniques

 Delphi technique
 Force field analysis
 Brainstorming
 Nominal group technique
NOTE: You only need to focus on the above mentioned problem solving
techniques

1.7 Application of the problem solving techniques

Application of the Delphi technique
 Businesses must invite a panel of experts to research the complaints from
customers.
 Experts do not have to be in one place and will be contacted individually.
 Design a questionnaire consisting of questions on how to improve the quality of their
products and distribute it to the panel members/experts.
 Request the panel to individually respond to the questionnaire/suggest improve-
ments to the products and return it to the business
 Summarise the responses from the experts in a feedback report.
 Send the feedback report and a second set of questions/questionnaire based on the
feedback report to the panel members.
 Request panel members to provide further input/ideas on how to improve the quality
of products after they have studied the results/documentation.
 Distribute a third questionnaire based on previous feedback from the second round.
 Prepare a final summary/feedback report with all the methods to improve the quality
of the business’s products
 The business should choose the best solution/proposal after reaching consensus.

Application of Force-Field Analysis

 Describe the current situation/problem and the desired situation.
 List all driving/pros and restraining/cons forces that will support and resist change.
 Allocate a score to each force using a numerical scale, where 1 is weak and 5 is
strong.
 Weigh up the positives and negatives then decide if the project is viable.
 Choose the force with the highest score as the solution.
 If the project is viable, find ways to increase the forces for change.
 Identify priorities and develop an action plan.

Application of brainstorming
 State/Define the business problem clearly, so that all participants/stake-holders
understand the problem.
 Members state possible causes of the business problems.
 Set a time limit for each brainstorming session.
 Record/Write ideas down, where all participants can see it./Ideas may also be
shared online during an E-brainstorming session.
 Use each suggestion, to inspire new thoughts/ideas.

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 Do not judge/criticise/discuss the ideas, so that many ideas could be generated

as quickly as possible.
 All members of the group randomly make suggestions.
 The group rates ideas according to its usefulness/success/difficulty/cost to
implement.
 The group evaluates all ideas, and combines similar ones/draw up a refined list.
 Discuss a plan of action on how to implement the best ideas.

Application of nominal-group technique

 Encourage group to clearly define the problem/to improve the quality of their products
due to various complaints so that all the small groups can work on the same problem.
 The business must divide the employees into smaller groups.
 Request each employee to silently brainstorm /generate many ideas on his/her own,
on how the quality of the product can be improved and to write it down.
 Each employee in the small group has the opportunity to give one of his/her
idea/solution with a short explanation.
 Appoint one employee to write the ideas/solutions on a large sheet of paper/ capture
solutions electronically on computer for all to see.
 Allow each employee to give a second solution until all possible solutions have been
recorded.
 Encourage employees to ask clarity seeking questions.
 Discourage criticism of ideas/solutions as this may prevent others from giving their
solutions.
 The business must eliminate ideas that are duplicated/ similar.
 Each employee must read through all the suggestions and anonymously rate them
giving the highest points for the best solution.
 Collect the ratings and calculate total points.
 Small groups must present one solution to the large group that was deemed best
according to the scores/votes in their small groups.

1.8 Impact of problem solving techniques

Impact of the Delphi technique
Positives/Advantages
 Businesses may use a group of experts without bringing them together.
 The experts will give the business clear ideas/solutions on how to improve on
productivity/profitability.
 Information received from experts can be used to solve complex business
problems.
 Experts may give honest/credible opinions as they do not have a direct/personal
interest in the business.
 Conflict may be avoided especially if all employees are knowledgeable and well
qualified.
 Dominating employees may not take over the process as they do not form part of
the problem solving process.
 It reduces noise levels in an office environment since there is no group
discussion.

AND/OR

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Negatives/Disadvantages
 It is an expensive technique to use due to high administrative costs.
 Not all experts are willing/interested to give feedback/complete questionnaires.
 Some experts might not have an in-depth knowledge of certain topics.
 Experts' suggestions may not be considered by some employees so consensus may
not be reached.
 May be time consuming/complicated to analyse data received from experts.

Impact of the Force-Field Analysis

Positives/Advantages
 Employees feel included and understood.
 Employees develop and grow with the business.
 It provides a visual summary of all the various factors supporting and opposing a
particular idea
 Informed decisions can be made as forces for and against are critically
evaluated.
 Enables businesses to strengthen the driving forces and weaken the restraining
forces.
 Businesses are able to have an idea of the timeline required and the requirements of
additional resources.

AND /OR

Negatives/Disadvantages
 Requires the participation of all business units.
 It is time consuming since the business must stabilise before more changes can be
made.
 The analysis developed is entirely dependent upon the skill level and knowledge of
the group working on the analysis.

The impact of brainstorming

Positives/Advantages
 People get ideas from others and build on them.
 Stimulates creative thinking in the workplace.
 Better solutions are developed through collective contributions.
 Combinations of ideas/improvements can be chosen after all the ideas have
been written down.
 Employees are motivated as they are allowed to contribute to problem solving.

AND/OR

Negatives/Disadvantages
 Some team members may dominate discussion.
 Discussion may result in conflict due to differences in opinion.
 Fear of criticism may prevent full participation in brainstorming sessions.
 It may lead to 'group think'/some individuals may not give their opinions.
 Brainstorming is time consuming as all stakeholders/employees may generate too
many ideas which can delay decision making.

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The impact of the Nominal group technique

Positives/Advantages
 It provides time to think about the question in silence before responding.
 Voting on the ideas is anonymous and may be more reliable/honest.
 Strong technique for preventing conformity to group pressure.
 Each team member/director has a chance to participate without interference from
other team members.
 Everyone in the group is given an opportunity to contribute to the discussion, while
avoiding the likelihood of one person dominating the group process.
 Enables the group to generate and clarifies a large amount of ideas quickly, and
democratically prioritises them.
 It encourages participants to confront issues through constructive problem solving

AND/OR

Negatives/Disadvantages
 Small groups limit participation and are pre-selected.
 It is time consuming, as each member must make a presentation.
 Suggestions may not be as creative as when a group throws ideas around.
 Good ideas can be voted out because its potential cannot be developed further.
 It minimises discussion, and thus does not allow the full development of ideas.
 Ideas/Inputs made by members may not converge and cannot lead to the same
Solution (s).
 It is hard to implement it effectively with large groups unless very carefully planned
beforehand.
 Requires extended advance preparation, which means that it cannot be a
spontaneous technique.

2 CREATIVE THINKING

2.1 Meaning of creative thinking

 Creative thinking is the ability to think of original and innovative ideas.
 It focuses on exploring ideas/generating possibilities and looking for many
answers.

2.2 Advantages/Benefits of creative thinking in the workplace

 Better/Unique/Unconventional ideas/solutions are generated.
 Complex business problems may be solved.
 Improves motivation amongst staff members.
 Management/employees may keep up with fast changing technology.
 Creativity may lead to new inventions which improves the general standard of living.
 May give the business a competitive advantage if unusual/unique solutions/
ideas/strategies are implemented.

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 Productivity increases as management/employees may quickly generate multiple

ideas which utilises time and money more effectively.
 Managers/Employees have more confidence as they can live up to their full potential.
 Managers will be better leaders as they will be able to handle/manage change(s)
positively and creatively.
 Managers/Employees can develop a completely new outlook, which may be applied
to any task(s) they may do.
 Leads to more positive attitudes as managers/employees feel that they have
contributed towards problem solving.
 Managers/Employees have a feeling of great accomplishment and they will not
resist/obstruct the process once they solved a problem/contributed towards the
success of the business.
 Stimulates initiative from employees/managers, as they are continuously pushed out
of their comfort zone.

2.3 Ways in which a business can create an environment that

stimulates/promote creative thinking
 Encourage alternative ways of working/doing things.
 Encourage staff to come up with new ideas/opinions/solutions.
 Respond enthusiastically to all ideas and never let anyone feel less important.
 Place suggestion boxes around the workplace and keep communication channels
open for new ideas
 Emphasise the importance of creative thinking to ensure that all staff know that
management want to hear their ideas.
 Make time for brainstorming sessions to generate new ideas, e.g. regular workshops/
generate more ideas/build on one another's ideas.
 Train staff in innovative techniques/creative problem solving skills/mind-mapping/
lateral thinking.
 Encourage job swops within the organisation/studying how other businesses are
doing things.

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PAPER 1

BUSINESS STUDIES

GRADE 12
TERM ONE
REVISED CHAPTER 5
BUSINESS STRATEGIES

TABLE OF CONTENTS

TOPICS PAGES
Examination guidelines for human resources 2
Terms and definitions 2
Definition of a strategy 3
Steps in developing a strategy 3
The strategic management process 3
SWOT analysis 4
Example of a SWOT analysis 4
PORTERS’ FIVE Forces 5
Application of PORTERS Five Forces 5
PESTLE analysis 6
Challenges posed by the PESTLE factors and
recommendations 6-7
Types of business strategies 8-10
Steps in evaluating a strategy 10

This chapter consists of 10 pages

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CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT PURPOSES

Refer to page 9 and 10 of the 2020 exam guidelines
Learners must be able to:
 Outline/Explain/Discuss steps in developing a strategy.
 Outline/Describe/Explain/Discuss the strategic management process.
 Apply the strategic management process to solve business-related problems.
 Discuss the following industrial analysis tools:
o SWOT analysis
o Porter's Five Forces
o PESTLE analysis
 Explain how PESTLE factors pose challenges to businesses.
 Identify/Apply the above mentioned industrial analysis tools to analyse the challenges of
the business environment from given scenarios /statements.
 Describe/explain/discuss the different types of business strategies.
 Recommend/Suggest business strategies to deal with challenges identified from given
case studies/scenarios
 Discuss/Elaborate on the effectiveness (positives/advantages) of EACH type of business
strategy)
 Outline/Explain/Recommend/Advise businesses on the steps in strategy evaluation:
o Examine the underlying bases of business strategy.
o Look forward and backwards into the implementation process
o Compare expected performance (measure business performance).
o Take corrective action where necessary
o Set specific dates for control and follow up
o Decide on the desired outcome

Term Definition
Formulation of strategies To devise/develop a strategy.
Implementation of strategies This takes place after the formulation of the strategy and
involves all the activities that are required for putting the strategy
Evaluation of strategies into
Thisaction.
takes place after the implementation of the strategy and
determines whether the implemented strategy resolved the
challenge.
Industry analysis tools SWOT, Porter’s Five Forces and PESTLE analysis models are used
to analyse the challenges posed by business environments.

Suppliers Include factories/providers of goods/services that businesses

would obtain/buy from in order to operate their business.
Buyers The final users of the product/services.
Competitors All other businesses selling the same/similar products/services
Substitute product or service Different products/services that satisfy the same needs of
consumers and can be used to replace one another.
New Entrants New businesses that are selling the same/similar products entering
the market for the first time.

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1 Definition of a strategy
 A strategy is a long term plan of action to achieve a goal.
 A strategy is a plan of action to address an opportunity or to solve a problem.
 The business needs a strategy to achieve its vision and mission.

1.1 Steps in developing a strategy

 Application of SWOT analysis/PESTLE/Porter's Five Forces/environmental scanning
of the business environments.
 Formulate strategies to meet objectives/Develop measurable strategic
goals/ objectives.
 Implement strategies using action plans, etc.
 Evaluation of strategies/Compare the expected performance with the actual
Performance / Measure business performance in order to determine the reasons for
deviations and analyse these reasons, etc.

1.2 The strategic management process

Option 1
 Have a clear vision, a mission statement and measurable/realistic objectives in place.
 Identify opportunities/weaknesses/strengths/threats by conducting environmental
scanning/situational analysis.
 Tools available for environmental scanning may include a SWOT analysis/Porter's
Five Forces model/PESTLE analysis/industrial analysis tools.
 Formulate alternative strategies to respond to the challenges. (This involves
different types of business strategies)
 Develop (an) action plan(s), including the tasks to be done/deadlines to be
met/resources to be procured, etc.
 Implement selected strategies by communicating it to all stakeholders/organising the
business's resources/motivating staff.
 Continuously evaluate/monitor/measure strategies in order to take corrective action.
(This involves steps in evaluating a strategy)

Option 2
 Review the vision statement.
 Analyse/Re-examine mission statement.
 Conduct an environmental analysis using models such as PESTLE/
PORTER'S/SWOT.
 Formulate a strategy such as a defensive/retrenchment strategy.
 Implement a strategy, using a template such as an action plan.
 Control/Evaluate/Monitor the implemented strategy to identify gaps/deviations in
implementation.
 Take corrective action to ensure goals/objectives are met.
NOTE: The steps may be in any order.

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1.3 INDUSTRIAL ANALYSIS

1.3.1 COMPILATION OF A SWOT ANALYSIS

STRENGTHS WEAKNESSES
 What advantages does your  High cost infrastructure
organisation have and what do you do  High employee turnover
better than anyone else?  Weak brand portfolio
 What unique or lowest-cost resources  High debts level
can you draw upon that others can't?  What are people in your market likely to
 Do you have skilled employees and a see as weaknesses?
strong customer base?  What factors cause loss of sales
 Do you provide high quality product?  Are your competitors doing any better
 Do you have sufficient resources? than you?
 What is your core competency?
OPPORTUNITIES THREATS
 Market growth for the business product.  Corporate tax may increase
 New technology that will enhance quality  Rising pay levels.
services and products  Intense competition.
 Changing customer habits.  Increasing fuel price.
 Disposable income level will increase.  Aging population.
 Government’s incentives for ‘specific  Stricter laws regulating environment
industry pollution
 Growing number of people buying on  Currency fluctuations.
line (electronic marketing)  Changing technology.
 What good opportunities can you spot?
NOTE: The SWOT analysis is usually assessed in the form of a scenario as indicated
below:

Example of a scenario that requires learners to compile a SWOT analysis

DAVE DIGITAL SOUND (DDS)

DDS specialises in selling radios and car sound systems. They employ qualified sound
engineers. The business does not have sufficient capital to buy and sell sound systems that
cater for large events. Businesses in the same industry are closing down due to ineffective
marketing campaigns. DDS is located in a high crime area.

An example of a SWOT analysis of Dave Digital Sound DDS

STRENGTHS WEAKNESSES
 DDS employs qualified sound  The business does not have sufficient
engineers. capital to buy/sell sound systems that
 DDS specialises in selling radios cater for large events.
and car sound systems.
OPPORTUNITIES THREATS
 Businesses in the same industry are  DDS is located in a high crime area.
closing down due to ineffective marketing
campaigns.

NOTE: You need to quote verbatim (as is) from the scenario, otherwise you will lose
marks for writing incomplete quotes or for writing a summary of the scenario.

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1.3.2 PORTERS’ FIVE FORCES MODEL

 Power of suppliers
 Power of buyers
 Power of competitors/Competitive rivalry
 Threat of substitution/substitutes
 Threat/Barriers of new entrants to the market
NOTE: Ensure that you are able to correctly name the above mentioned
Porter’s Five Forces model to avoid losing marks.

1.3.3 APPLICATION OF PORTERS’ FIVE FORCES MODEL

Power of suppliers
 Assess the power of the suppliers in influencing prices
 Suppliers that deliver high quality product may have power over the business.
 The more powerful the suppliers, the less control the business has over them.
 The smaller the number of suppliers, the more powerful they may be as the choice of
suppliers may be limited.
 Identify the kind of power suppliers' have in terms of the quality of
products/services/reliability/ability to make prompt deliveries, etc.

Power of buyers
 Assess how easy it is for buyers/customers to drive prices down.
 Buyers buying in bulk can bargain for prices in their favour
 Conduct market research to gather more information about its buyers.
 Determine the number of buyers/the importance of each buyer to the business and
the cost of switching to other products.
 A few powerful buyers are often able to dictate their terms to the business.
 If buyers can do without the business's products then they have more power to
determine the prices and terms of sale.

Power of competitors/Competitive rivalry

 If competitors have a unique product/service, then they will have greater power.
 A business with many competitors in the same market has very little power in their
market.
 Draw up a competitor's profile so that they can determine their own strength as well
as that of competitors.
 Some businesses have necessary resources to start price wars and continue selling
at a loss until some/all competitors leave the market.

Threat of substitution/substitutes
 If the business's product can be easily substituted, it weakens the power of the
business in the market.
 Establish whether the sellers of substitute products have improved their product/sell
lower quality goods at lower prices.
 If the business sells unique products it will not be threatened by substitute products.
 Assess if customers are using substitute products/services and determine reasons
for using substitutes.

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Threat/Barriers of new entrants to the market

 If the barriers to enter the market are low, then it is easy for new businesses to
enter the market/industry.
 If there are a few suppliers of a product/service but many buyers, it may be easy to
enter the market.
 If the business is highly profitable, it will attract potential competitors that want to
benefit from high profits.
 New competitors can quickly/easily enter the market, if it takes little time/ money to
enter the market.

NOTE: The main aim of Porter’s Five Forces model is to analyse the business
position in the market. This is more of a research study done by
businesses. Do not focus on recommendations as this is not form part of
an analysis. You must also be able to identify Porter’s Five forces model
from given statements and scenarios.

1.3.4 PESTLE ANALYSIS

 Political factors
 Economic factors
 Social factors
 Technological factors
 Legal factors
 Environmental factors
NOTE: Ensure that you are able to name and identify the PESTLE factors from
given statements/scenarios.

1.3.5 CHALLENGES POSED BY THE PESTLE FACTORS AND

RECOMMENDATIONS
NOTE: You need to name the PESTLE factor, identify challenges of each factor
and recommend ways businesses can deal with the identified challenges as
explained in the table below:
FACTOR CHALLENGES RECOMMENDATIONS
Political  High inflation/Interest rate may  Research recent government policies
decrease the market share of  Network and lobby with the NGOs
businesses as customers cannot and all consumer rights
afford high prices/Increase in organisations.
taxes will result in lower customer  Trade only with countries that have
spending. favourable trade agreements with the
 Loans may be expensive due to government.
high interest rates.
 Fluctuations in foreign currency
may restrict imports.
 Trade agreements may prevent
businesses from importing some
medicine/products.
Economic  Inflation/Interest rates may  Consider decreasing profit margins
negatively impact on business. rather than increasing product
 Loans may be expensive due to prices.
high interest rates.  Borrow money from financial
 Fluctuations in foreign currency institutions when interest rates are

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may restrict import. favourable.

 Consider exchange rates when
trading with other countries
Social  Customers may not be able to  Sell substitute/generic products at
afford products due to low lower prices.
income levels/high  Learn local languages/Hire
unemployment. employees who are well conversant
 Businesses may not be with the local language.
conversant with the language of
their customers.
 Some customers may prefer to
spend their money on medical
bills for the treatment of chronic
illnesses.
 High crime rate may affect the
trading hours of businesses
resulting in decreased profit.
Technological  Businesses may not keep up  Continuous research on the latest
with/be aware of the latest available technology/equipment in the
technology. market.
 Employees may not be skilled to  Train existing/appoint new employees
operate/maintain new technology/ to maintain/use new equipment.
equipment.  Compare prices/Select suitable
 Businesses may not be able to suppliers for new equipment at
afford new technology. reasonable prices.
 May not be able to cater for/ afford  Businesses must be geared for online
online transactions/e-commerce. trading/e-commerce

Legal  Certain Acts may have a direct  Comply with all relevant legislation
impact on a business, e.g. the that may impact on businesses.
CPA/BCEA.  Comply with the legal requirements
 Legal requirements for operating for operating businesses, e.g.
certain types of businesses time- licence/trade mark
consuming. registration/patents.
 High legal costs involved in  Budget for high legal establishment
obtaining a licence/trade costs.
mark/patent may prevent some  Businesses must know the legalities
establishments. of business contracts so that they
 Legalities of business contracts comply with all the requirements.
may limit business operations
Environmental  Chemicals/Ingredients in business’ Chemicals/Ingredients should be
products may be harmful to clearly indicated on labels/packaging
customers to inform customers about possible
 Measures to dispose of business side effects/correct use of products.
waste may be expensive.  Implement cost effective measures to
 Packaging of some products may dispose of medical waste.
not be environmentally friendly  Implement recycling measures to
may not be recyclable. prevent pollution of the
environment/Use packaging that is re-
usable/recyclable.
NOTE: The industrial analysis tools (SWOT, PESTLE AND PORTERS’FIVE) and
business strategies form part of the strategic management process.

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2 Types of business strategies

2.1.1 Integration strategies
Forward integration
 The business combines business with or take over its distributors.
 Involves expansion of business activities to gain control over the direct distribution of
the products.
Backward integration
 The business combines business with or take over its suppliers.
 The aim is to decrease the business’s dependency on the supplier

Horizontal integration
 A business takes control of/ incorporates other businesses in the same
industry/which produce/sell the same goods/services.
 The aim is to reduce the threat of competition /substitute products/services.

2.1.2 Intensive strategies

Market penetration
 New products penetrate an existing market at a low price, until it is well known to the
customers and then the prices increases.
 It is a growth strategy where businesses focus on selling existing products to existing
markets.
 Focuses on gaining a larger share of the market by reducing prices to increase
sales/increasing advertising and promotion.

Market Development
 It is a growth strategy where businesses aim to sell its existing products in new
markets.
 This strategy involves finding new markets and new ways to distribute product.

Product Development
 It is a growth strategy where businesses aim to introduce new products into existing
markets/modifies an existing product.
 Businesses generate new ideas and develop new products/services

2.1.2 Advantages of intensive strategies

PAPER 2

Terms and definitions

Definition
Term
Investing/Saving money in order to yield better returns.
Investment
Is a formal market, trading in shares, comprising of all the public
JSE/Johannesburg
companies that have been listed.
Security Exchange
It gives investors the opportunity to obtain a part ownership of a
Share
company.
Capital Market / It is the market for securities/shares where companies and the
securities market government can raise long-term funds.
Short term investment An investment for a period shorter than one year.
Long term investment An investment for a period for longer than one year.

Fixed rate The rate of return stays the same for the period of time.
Accumulated Interest earned over the investment period.
Simple interest Calculated on the original/principal amount invested.
Compound interest Calculated each period on the original/principal amount including
all interest accumulated during past periods.
Risk Refers to the chance that the invested amount may reduce in
value/lost in total over a period of time, due to unforeseen
circumstances.

1 Functions of the JSE

 Gives opportunities to financial institutions such as insurance companies to invest their
funds in shares.
 Serves as a barometer/indicator of economic conditions in South Africa.
 Keeps investors informed on share prices by publishing the share prices daily.
 Acts as a link between investors and public companies.
 Shares are valued and assessed by experts.
 Small investors are invited to take part in the economy of the country through the
buying/selling of shares.
 Venture capital market is made available on the open market.
 Orderly market for securities serves as a disciplined market for securities.
 Encourages new investments.
 Mobilises the funds of insurance companies and other institutions.
 Raises primary capital.
 Regulates the market for dealing with shares.
 Plans, researches and advises on investment possibilities.
 Ensures that the market operates in a transparent manner.
 Provides protection for investors.
 Encourages short-term investment.
 Facilitates electronic trading of shares/STRATE.

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2 Factors that should be considered when making investment

decisions
o Return of investment (ROI)
o Risk
o Investment term/period
o Inflation rate
o Taxation
o Liquidity
o Personal budget
o Investment planning factors
o Volatility/Fluctuations on investment markets

2.1 Explanation of investment decisions

Return on investment
 Refers to income from the investment, namely interest/dividends/increased capital growth
on the original amount invested.
 High risk investments yield higher returns.
 Generally, there will be a direct link between risk and return.
 The return should be expressed as net after-tax gains on the investment.
 Returns can be in the form of capital gains where the asset appreciates in value over
time.

Risk
 Shares have low/medium risk over a longer investment period.
 Shares with higher risks have a greater potential for higher returns.
 Ordinary shares have the highest risk as the investor may lose the full/part of the
investment when the company is dissolved/bankrupt/liquidated.
 Preference shareholders' risk is lower, as they have preferential claims on the assets of
the liquidated company/may receive some compensation before ordinary shareholders.
 Share prices are linked to factors that investors cannot control, e.g. economic conditions/
operational success of the company, etc.
 Share prices are volatile/unstable/unpredictable/may increase/ decrease sharply within
hours which contribute to the uncertainty of the value of an investment in shares on the
short term.

Investment period
 This refers to the duration of the investment which may influence the return on
investment.
 The longer the investment period the higher the returns.
 The investment period will depend on an investor's personal needs.
 Short term investments enable investors to access their money on a short period if
needed.
 The investment period can be short, medium and/or long term depending on the
investors’ needs.

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Inflation rate
 People are affected by a high inflation rate, because their money/purchasing power
decreases.
 The return on investment should be higher than the inflation rate.
 Inflation has a positive effect on some investments such as property/shares where the
income will increase as inflation increases.

Personal budgets
 Investors can determine the amount of surplus money that can be invested.
 Investors must budget for unforeseen costs.
 Budget should provide for contingency plans/investments/savings.

Liquidity
 An amount could be invested in a type of investment that can easily be converted to cash.
 It is used to describe the ease and speed with which investors can convert an investment
into cash.
 Example: an investment in a savings account/unit trust will be easier to convert into cash
than an investment in a fixed deposit which is usually deposited for a fixed period of time.

Taxation
 A good investment will yield good after-tax returns.
 Income tax implications must be considered in order to ensure a high net after-tax return.
 Tax rates are not necessarily the same for different investments.

Investment planning factors

 Investors should always consider the safest possible investment opportunities.
 Some investments offer a low income on invested capital, but it could be a safer
investment than one that promises a higher income.
 Examine opportunities with a history of good return.
 Divide investments between various investment options.
 The method of calculating the interest/return on investment should be considered.

Volatility/Fluctuations on investment markets

 Fluctuation in national and international economic trends should be considered.
 The level of volatility will determine the amount of returns.

3 Types of investments opportunities and risk factors

Fixed Property
 Buying a house/piece of land is usually suitable as a long term investment only.
 Large fees/taxes are payable on these transactions, so property cannot be bought/sold
every year.
 Return on property is earned in the form of rental/sales/capital gains at a higher price
than what it was bought for (including the transfer costs and taxes).
 The location/size of the property may also influence the growth in value over time.

Risk
 Low risk over a long term.
 Risk may be determined by economic conditions and may influence the value of property.

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Mutual funds/Stokvels
 It is an informal savings scheme to which a relatively small group of people contribute.
 Each member takes a turn to draw from the scheme/fund/stokvels for their own personal
gain.
 No/Small return on investment, as contributions are distributed monthly to one of the
members.
 It encourages people to save each month for a specific reason.
 Banking fees are shared by the members, resulting in low cost of investment per
member.
 In times when it is hard to get bank loans, stokvel pay-outs may come in handy.
 A stokvel is usually managed by a trustworthy chairman/treasurer, who will be
responsible for keeping records and managing the bank account.
 Members usually discuss how the money will be invested and agree on the risks they are
willing to take.

Risk
 Schemers who claim to be running stokvels may actually be running illegal pyramid
schemes and pay-outs may not be possible as cash has run out/members may lose their
savings.
 Money in a savings account is a safe investment, but with low interest rates/the returns
are low.

Managed portfolio
 An investor instructs a financial institution/bank/financial advisor to manage his/her
various investments/assets in one portfolio.
 If the portfolio does not perform well/as expected, the portfolio/parts thereof may be
changed with/without informing the investor.

Risk
 Risk is lower over a longer term/period.
 Investments are made in various sectors/companies, therefore the risk is spread and
better managed by the portfolio manager.
 Money is usually invested in the capital market and unforeseen circumstances may
impact negatively on the value of the portfolio on the short term/High risk over the short
term.

Fixed deposit
 It is a very conservative method of investment at a fixed rate for a fixed period/at a
financial institution/bank.
 Money cannot be withdrawn/added during the period of the deposit.
 Investors have to be certain that they will not access/need the money for the period of the
deposit.

Risk
 Very low as the investor will receive what was promised.
 As the interest rate is usually fixed, the return will not be affected by market fluctuations.

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32-day notice accounts/Call Deposits

 Money is invested at a fixed rate, although withdrawals may be made provided the bank
is given 32 days' notice of the withdrawal.
 It earns more interest than a current/cheque/savings account, but less interest than a
fixed deposit.

Risk
 Low risk, as investment plus interest will be paid out on the maturity date of investment.
 Interest is calculated on the daily balance, accelerating the value/return on the
investment/lowering the risk.
 Interest rate may fluctuate with market conditions, increasing the risk.

Debentures
 It is issued to raise borrowed capital from the public.
 The lender/debenture holder agrees to lend money to the company on certain conditions
for a certain period.
 Debenture holders are creditors, as the company is liable to repay the amount of the
debentures.
 Most types of debentures can be traded on the JSE.
 Debenture holders receive annual interest payments based on the terms/ amount of
debentures held.

Risk
 Debentures have a low risk as they need to be paid pack.
 Companies are liable to repay the amount of the debenture plus interest, which decrease
the risk for the investor.
 Investors may earn a steady income in the form of interest while preserving their principal
amount.

Business Ventures/Venture capital

 Venture capital is given by an investor/businesses to start up/expand a business in return
to have a share in the new/expanded business.
 Investor(s) should know the type of business/market/economic conditions before a
business is bought/started.
 Buying a franchise/existing businesses will be successful, if the investors has done
proper research/understand exactly what he/she is investing in.

Risk
 High risk for the investor(s), if research is not properly done.
 Inexperienced business owners that make wrong business decisions may experience big
losses/closing down of an existing business.

Endowment/Life insurance policies/Retirement Annuities

 A monthly payment is paid to an insurance company with the expectancy of receiving a
pre-determined amount on a date in the future.
 To provide for a future expenses/give peace of mind to the dependants of the insured.

Risk
 Low risk, as the insured amount will be paid out regardless of circumstances.
 Only the closing down/bankruptcy of the insurance company may result in losing the
monthly contributions made up to the close down date.

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Unit trusts
 It is a collection of investment options/methods made up of shares in different companies.
 The investments of a number of investors are pooled together in a unit trust fund,
managed by a fund/portfolio manager/expert.
 Can be bought directly from the accredited service providers.

Risk
 Investment may be made in high and low risk shares, which spread the risk throughout
the fund and lowers the risk for all the investors/fund members.
 Fund managers are able to manage the risk level of the fund on behalf of the investors.

Shares
 Companies sell/issue portions of its ownership to shareholders in the form of shares on
the open market to obtain capital/funds to operate its core business.
 Shares give the holder one vote per share and the right to receive a dividend (portion of
the profit).
 Companies do not have to repay share capital and is therefore risk avoiding capital.
 Shares of listed companies are traded on the JSE.
 Shares can be bought/sold through stock/share brokers to whom a brokerage/fee will be
paid by the investor.
 Types of shares differ with respect to the claims to profits/dividends/voting rights/claims to
assets should the company be liquidated.
 Ordinary shares can be divided into different types, e.g. blue chip/bonus/
growth/income/defensive shares.
 Ordinary shares have no special rights or restrictions and may yield/earn higher
dividends, but also have higher risk.
 Types of preference shares are cumulative/non-cumulative/participating/non-
participating/redeemable/non-redeemable/convertible/non-convertible shares.
 Preference shareholders mostly receive a fixed dividend and are paid before other
shareholders.

Risk
 Shares have low/medium risk over a long term/investment period.
 Ordinary shares have the highest risk as the investor may lose the full or part of the
investment when the company is dissolved/bankrupt/liquidated.
 Preference shareholders' risk is lower, as they have preferential claims on the assets of
the liquidated company/may receive some compensation before ordinary shareholders.
 Share prices are linked to factors that investors cannot control, e.g. economic conditions,
operational success of the company, etc.
 Share prices are volatile/unstable/unpredictable/share values may increase/ decrease
sharply within hours which contribute to the uncertainty of the value of an investment on
the short term.

RSA Retail Savings Bonds

 To encourage saving, the SA Government offers SA citizens the opportunity to invest in
saving bonds.
 Two different types of bonds are available, i.e. fixed rate/inflation linked retail savings
bonds.

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 A market related interest rate is determined when investment is made and remains fixed
for the whole term of the investment.
 Interest is earned half-yearly on 31 March and 30 September and paid out into the bond
holder's/investor's bank account.
 It cannot be used as security to obtain loans, so creditors cannot have any claim on it.
 It can be inherited by a nominated beneficiary/when the investor dies.

Risk
 Risk is very low, as an investment is made in the government who cannot disappear/go
bankrupt.
 It is a safe investment, as it cannot be sold on the open market/not exposed to market
risks.

4 Forms of investments
o Government/RSA retail savings bonds
o Unit trusts
o Shares
o Fixed deposit

4.1 Impact of FOUR forms of investments

4.1.1 Impact of RSA Retail Savings Bonds/Government Retail

Bonds
Positives/ Advantages
 Guaranteed returns, as interest rate is fixed for the whole investment period.
 Interest rates are market related and attract more investors.
 Interest can be received twice a year.
 Interest is usually higher than on fixed deposits.
 Retail bonds are listed on the capital bond markets/on the JSE.
 Low risk/Safe investment, as it is invested with the South African Government which
cannot be liquidated
 No charges/costs/commissions payable on this type of investment.
 Investment may be easily accessible, as cash may be withdrawn after the first twelve
months.
 It is an affordable type of investment for all levels of income earners including pensioners.
 Retail bonds are easily/conveniently obtained electronically/from any Post Office/directly
from National Treasury.
 Investors younger than 18 years/Minors may invest with the help of a legal guardian,
which encourages saving from a young age.

AND/OR

Negatives/ Disadvantages
 Retail bonds cannot be ceded to banks as security for obtaining loans.
 A minimum of R1 000 must be invested, which may be difficult for some small investors to
accumulate.

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 Retail bonds are not freely transferable amongst investors.

 Investors need to have valid SA identification/should be older than 18 years which may
discourage foreigners/young people to invest.
 Penalties are charged for early withdrawals, if the savings is less than 12 months old.

4.1.2 Impact of unit trusts

Positives/ Advantages
 Managed by a fund manager who buys shares on the stock exchange/JSE.
 Easy to cash in when an investor needs money.
 A small amount can be invested per month.
 Generally beats inflation on the medium/long term.
 Safe investments, as it is managed according to rules and regulations.
 The investor has a variety to choose from/a wider range of shares from lower to higher
degrees of risk.
 Easy to invest in, as investors simply complete a few relevant forms or invest online.
 Fluctuations in unit trust rates of return are often not so severe because of diversity of the
investment fund.
 Offer competitive returns in the form of capital growth and dividend distribution.
 Fund managers are knowledgeable/experts/reliable/trustworthy as they are required to be
accredited to sell unit trusts.
AND/ OR

Negatives/ Disadvantages
 Share price may fluctuate
 Unit Trusts are not allowed to borrow, therefore reducing potential returns.
 Not good for people who want to invest for a short period
 Not good for people who want to avoid risks at all costs.
 If blue chip companies do not continue on their growth path, the growth of unit trusts will
also be affected and will not render the expected returns.
 Bid/Ask prices exist with the price that you can buy a unit for usually higher than the price
you can sell it for - making investment less liquid.

4.1.3 Impact of shares/Ordinary shares

Positives/ Advantages
 Can be freely transferred/traded on the JSE.
 Shareholders' liability to the debt of the company is limited to what was
invested/Shareholders have limited liability for company debts
 Shareholders have voting rights at the annual general meeting (AGM).
 Investing in shares provides protection against inflation.
 Investing in shares can provide solid returns at retirement age.
 Rate of return on investment (ROI) is linked to the performance of the company.
 Ordinary shares are usually cheaper than preference shares on the open market
 Holding a higher number of shares may result in higher proportional dividend pay-outs.

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AND/OR
Negatives/ Disadvantages
 Shareholders may receive less dividends/no dividends when company profits are low.
 Companies have no legal obligation to pay dividends to shareholders.
 Risk may be high, as investment may be lost when companies are liquidated.
 Dividends declared may be determined by the management/directors of the
company/business.

4.1.4 Impact of fixed deposits

4.4 Differences between ordinary and preference shares

ORDINARY SHARES PREFERENCE SHARES
 Ordinary shares only receive dividends  Some of these types of shares receive
when profit is made. dividends regardless of profit made.
 Normally the higher the profit, the higher  A fixed rate of return is paid on this type
the dividend. of shares
 Shareholders are the last to be paid, if  Shareholders have a preferred claim on
the company is declared company assets in the event of
bankrupt/liquidated. bankruptcy/liquidation.
 Ordinary shares are standard shares  These shares enjoy preferential rights to
with no special rights or restriction. dividends/repayment over ordinary
shares.
 Dividends vary from year to year  Dividends are payable according to the
according to profits made as type of preference share.
determined by the company.  Non-cumulative preference shareholders
will not receive any outstanding dividends
from previous years.
 Cumulative shareholders will receive
outstanding dividends from previous
years.
 Shareholders have a right to vote at the  Voting rights are restricted to particular
Annual General Meeting. circumstances/resolutions.

5 Investments concepts
o Debentures
o Dividends
o Capital gain
o Simple interest
o Compound interest.

5.1 Description of investment concepts

5.1.1 Debentures
 It is issued to raise borrowed capital from the public.
 The lender/debenture holder agrees to lend money to the company on certain conditions
for a certain period.
 Debenture holders are creditors, as the company is liable to repay the amount of the
debentures.
 Most types of debentures can be traded on the JSE.
 Debenture holders receive annual interest payments based on the terms/ amount of
debentures held.

5.1.2 Dividends
 The return on an investment in shares which is paid regularly by a company to its
shareholders.
 Dividends are decided and managed by the company’s board of directors and approved
by the shareholders through their voting rights.

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5.1.3 Capital gain

 The return on property/fixed assets/investments.
 Capital gains tax is payable when you sell an asset that has increased in value since you
bought it

5.1.4 Simple interest

 The interest is calculated on the original/principal amount invested.
 The principal amount remains the same over the entire period of investment.
 The interest is kept separate unless it is reinvested
 Yields less return on investment.

5.1.5 Compound interest

 Interest is calculated in every period on original/principal amount plus interest.
 Interest is added to the original/principal amount and interest is earned on interest for
each defined period.
 As interest is added to the investment, the capital increases.

6 Distinction between compound and simple interest

COMPOUND INTEREST SIMPLE INTEREST

Interest earned on original amount invested, Interest earned on the original amount and
as well as interest earned in previous not on the interest accrued.
period(s).

The principal amount grows with the addition The principal amount remains the same
of interest to it. over the entire period of investment.

Interest is calculated on the higher principal The interest is kept separate unless it is
amount and again added to it. reinvested.

Yields high return on investment. Yields less return on investment.

Total amount of interest earned on Total amount of interest earned on

investment is high. investment is less.

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7 Examples of how to calculate the simple and compound interest

Ronnete wants to invest R30 000 in a fixed deposit for two years. She approached two
banks. Saints Bank offered her 12% simple interest per annum and Caprica Bank 12%
compounded interest per annum.

7.1 Calculate the interest amount Ronnete will receive after two years if she invests with
Saints Bank.

7.2 Calculate the interest amount Ronnete will receive after two years if she invests with
Caprica Bank.

7.3 Recommend the best investment option for Ronnete. Motivate your answer.

7.1 Calculation of simple interest of the above scenario

FORMULA: Interest = PxRxT

R30 000 x 12% x 2 years = R7200

7.2 Calculation of Compound interest of the above scenario

Option 1
Year 1: R30 000 x 12% = R3600
Year 2: R33 600 x 12% = R4032
Total interest = R7632
OR
Option 2
FORMULA: P x (1 + r)n
R30 000 x (1+12/100)2
R30 000 x (1.12)2 =R37 632
Total interest = R37 632- R30 000
= R7632

7.3 Recommendation on the best investment option based on the

calculations
Compound interest is the best option based on the calculations above.

Motivation
Compound interest yields a higher interest of R7 632 than the simple interest/
Ronnete earns interest on interest accrued.

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INVESTMENT INSURANCE CHAPTER 7

PAPER 2

BUSINESS STUDIES
GRADE 12
TERM 2
CHAPTER 7
NOTES ON INVESTMENT: INSURANCE
REVISED

TABLE OF CONTENTS

TOPICS PAGES
Exam guidelines on investment: Insurance 3
Terms and definitions 4
Meaning of insurance 5
Meaning of insurance concepts 5-6
Differences between under-insurance and 7
over-insurance.
Differences between insurance and assurance 7
Examples of short term and long term 7
insurance
Principles of insurance 8
Advantages/Importance of insurance for 8-9
businesses.
Meaning and examples of insurable and non- 9
insurable risks
Meaning of compulsory insurance 10
Types of compulsory insurance and benefits of 10-12
UIF
Differences between compulsory and non-
compulsory insurance 12

This chapter consists of 11 pages

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CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT PURPOSES

Learners must be able to:

 Define/Elaborate on the meaning of insurance

NON-COMPULSORY INSURANCE
 Explain/Elaborate on the meaning of non-compulsory insurance
 Explain/Elaborate on the meaning of the following insurance concepts:
o Over-insurance
o Under-insurance
o Average clause
o Reinstatement
 Explain the differences between over and under insurance
 Differentiate/Distinguish between insurance and assurance. Give examples.
 Name/Give examples of short term and long term insurance.
 Name/Mention/Explain/ Discuss the following principles of insurance:
o Indemnification/Indemnity
o Security/Certainty
o Utmost good faith
o Insurable interest
 Apply the average clause to calculate the compensation in the case of under-insurance.
 Discuss/Explain the advantages/importance of insurance.
 Explain the meaning of insurable and non-insurable risks.
 Outline/Mention/Give examples of insurable and non-insurable risks

COMPULSORY INSURANCE
 Explain/Elaborate on the meaning of compulsory insurance.
 Discuss/Explain types of compulsory insurance e.g. Unemployment Insurance Fund
(UIF), Road Accident Fund (RAF)/Road Accident Benefit Scheme (RABS)/
Compensation for Occupational Injuries and Diseases Fund (COIDA).
 Explain the types of benefits paid out by the UIF
 Identify types of compulsory insurance from given scenarios/statements.
 Explain/Differentiate/Distinguish between compulsory and non- compulsory insurance
and give examples.
 Keep abreast of the changes in legislation from time to time e.g. the RAF is currently
changing to the RABS (Road Accident Beneficiary Scheme).

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TERMS AND DEFINITIONS

Definition
Term
It is a contract between a person/business/insured requiring
Insurance insurance cover and the insurance company/insurer bearing the
financial risk.
An agreement whereby the insurer undertakes to indemnify the
Insurance contract insured in the event of a specified loss in exchange for a
premium.
An insurance company that will take over specified risks
Insurer
Individual/Business that takes out insurance coverage.
Insured
Indemnify To compensate, protect or re-pay the insured in the event of a
loss or damage.
Insured value The amount of money agreed to by the insured and insurer to
insure assets/life of a person when the contract is signed.
Book value The purchase price of an asset , less depreciation

Risk Possibility of losses/damages

Premium The payment made by insured to be covered in the event of

losses/damages.
Life insurance It is a long term insurance and is taken out on the life of a
human being and cover for the loss of life.

Public liability Damage caused by business operations to the public

Insurable interest Is expressed in financial terms and is the interest that the
insured stand to lose if there are losses or damages.

Unemployment Insurance This fund provides benefits to workers who have

Fund (UIF) been working and are now unemployed for reasons
such as retrenchment.
Road Accident Fund This fund pays compensation when a person is disabled/injured
(RAF) in a road accident and to dependents of the individual if killed in
Road Accident Benefit a road accident.
Scheme (RABS)
Compensation for This fund compensates workers financially for disability that may
Occupational Injuries and arise as a result of accidents while performing duties in the
Diseases (COIDA) workplace.

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1 Meaning of insurance
 Insurance refers to cover for a possible event that may cause a specified loss/ damage.
 An agreement whereby the insurer undertakes to indemnify the insured in the event of a
specified loss/damage.
 The insured has to pay a premium for specified losses/damages covered.
 A contract between a person/business/insured requiring insurance cover and the
insurance company/insurer bearing the financial risk.

2 NON-COMPULSORY INSURANCE

2.1 The meaning of non-compulsory insurance

 Non-compulsory insurance is voluntary/the insured has a choice whether to enter into an
insurance contract.
 It is not required by law, but it can provide protection for businesses and individuals.
 It is taken out in order to transfer the risk of something happening onto the insurance
company.
 These risks include theft, damaged cars, damaged buildings/ premises/injuries on
premises etc.
 Non-compulsory can be divided into:
o Short-term insurance e.g. fire, theft etc.
o Long-term insurance e.g. retirement/death etc.

2.2 Meaning of insurance concepts

2.2.1 Over insurance

 Over insurance is when the item is insured for more than the actual market value.
 Businesses will not receive a pay-out larger than the value of the loss at market value.
 This means that the extra money paid for the premiums will not be paid out to the insurer
if there is a claim for a loss.

2.2.2 Under-insurance
 Occurs when property or assets are insured for their full market value.
 The property/asset is insured for less than the current/actual value of the property/assets
 If a business is insured for an amount that is under the actual market value of goods or
service, the insured/business will only be paid out for the amount that the goods/assets
are insured for.
 The insurer usually applies the average clause to calculate the amount of money that
must be compensated to the insured if the goods/assets are under insured.

2.2.3 Average clause

 A stipulation set by the insurer which is applicable when property/goods is under
insured/insured for less than its market value.
 The insurer will pay for insured loss/damages in proportion to the insured value.
 This means that the insured is responsible for a part of the risk that is not insured.
NOTE: The average clause applies when goods/assets are under insured.

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Formula for calculating the average clause

 The insured amount is divided by the market value of the insured item and multiplied by
the total value/amount of the damages/loss.
 Insurance companies apply the following formula to determine the amount to be paid out
to the insured:

FORMULA: (Amount insured ÷ Market value) x damages

Amount insured x Amount of damages/loss

Value of insured item
Example of calculating the average clause
Peter owns a thatched house valued at R100000. He insured his house with Pro-Cover
Insurers for R800000. Afire in the kitchen caused damages of R30000.

1 Calculate the amount that Pro-Cover Insurers will pay Peter to cover damages. Show
ALL calculations.
2 Explain to Peter the reason why he did not qualify for the full amount of damages
sustained.
R800000 x R30000
R1000000

=R24000

PAPER 2

Maternity benefits
 Pregnant employees receive these benefits for up to 4 consecutive months.
 If an employee had a miscarriage, she can claim for up to six weeks/42 days.

Adoption benefits
 Employees may receive these benefits if they adopt a child younger than two years.
 Employees who take unpaid leave/may receive part of their salary while caring for the
child at home.
 Only one parent/partner may claim.

Dependants' benefits
 Dependants may apply for these benefits if the breadwinner, who has contributed to UIF
dies.
 The spouse of the deceased may claim, whether he/she is employed or not.
NOTE: Do not confuse the benefits of UIF with types of leaves

9.2.2 Road Accident Fund (RAF)/Road Accident Benefit Scheme (RABS)

 RAF/RABS insures road-users against the negligence of other road users.
 The RAF/RABS provides compulsory cover for all road users in South Africa, which
include South African businesses.
 Drivers of business vehicles are indemnified against claims by persons injured in vehicle
accidents.
 RAF/RABS is funded by a levy on the sale of fuel/diesel/petrol.
 The amount that can be claimed for loss of income is limited by legislation.
 The next of kin of workers/ breadwinners who are injured/killed in road accidents, may
claim directly from RAF/RABS.
 Injured parties and negligent drivers are both covered by RAF/RABS.
 The injured party will be compensated, irrespective of whether the negligent driver is
rich/poor/insured/uninsured.
 RABS aims to provide a benefit scheme that is reasonable/equitable/affordable/
sustainable, etc.
 RABS aims to simplify/speed up the claims process as victims of road accidents no
longer have to prove who caused the accident.
 RABS enables road accident victims speedy access to medical care as delays due to
the investigation into accidents has been minimised.
NOTE: You will be awarded a mark if you write the word “third party” instead of
RAF.

9.1.3 Compensation Fund/Compensation for Occupational Injuries and

Diseases/COIDA
 The fund covers occupational diseases and workplace injuries.
 Compensates employees for injuries and diseases incurred at work.
 Compensation paid is determined by the degree of disablement.
 The contribution payable is reviewed every few years according to the risk associated
with that type of work.
 All employers are obliged to register with the compensation fund so that employees may
be compensated for accidents and diseases sustained in the workplace.
 The fund covers employers for any legal claim that workers may bring against them.

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 Employers are required to report all accidents within 7 days and occupational diseases
within 14 days to the Compensation Commissioner.
 Employers are responsible for contributing towards the fund and may not claim money
back from employees/deduct contributions from wages.
 In the event of the death of an employee as a result of a work related accident/ disease,
his/her dependant(s) will receive financial support.
 Employees do not have to contribute towards this fund.
 Employees receive medical assistance provided there is no other party/medical fund
involved.

10 Differences between compulsory and non-compulsory insurance

COMPULSORY INSURANCE NON-COMPULSORY INSURANCE
Required by Law/there are legal obligations Is voluntary/the insured has a choice whether to
for it to be taken out and paid for. enter into an insurance contract.
It is regulated by Government and does not Insured will enter into a legal insurance contract
require insurance contracts/brokers with the insurer, who may be represented by an
insurance broker.
Payment is in the form of a levy/contribution Monthly/Annual payments/premiums that must
paid into a common fund from which benefits be paid in order to enjoy cover for a nominated
may be claimed under certain conditions. risk.

Examples Examples
UIF, RAF and Compensation Fund/COIDA Short term insurance/Multi-peril insurance
(theft, fire, etc.) Long term insurance/Life
insurance

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TEAM PERFORMANCE & CONLICT MANAGEMENT CHAPTER 8

PAPER 2

BUSINESS STUDIES

GRADE 12
TERM TWO
CHAPTER 8
NOTES ON TEAM PERFORMANCE &
CONFLICT MANAGEMENT
REVISED

TABLE OF CONTENTS

TOPICS PAGES
Exam guidelines for team performance and 2
conflict management
Terms and definitions 3
Criteria for successful team performance 4
Characteristics of successful team 4-5
performance
Stages of team development 5-6
The importance of team dynamic theories 6
Causes of conflict & explanation 6-7
Conflict resolution steps/techniques 7
Differences between grievances and conflict 8
Correct procedure to deal with grievances in 8
the workplace
Types of difficult personalities 8
Dealing with difficult personalities 9
Dealing with difficult employees in the 9-10
workplace
Difficult personalities and strategies to deal 7-8
with them
This chapter consist of 10 pages

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PAPER 2

CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT PURPOSES

Learners must be able to:

TEAM PERFORMANCE ASSESSMENT

 Outline/Explain/Discuss the criteria for successful team performance: interpersonal
attitudes and behaviours, shared values, communication and collaboration.
 Identify the above-mentioned criteria from given scenarios/statements.
 Outline/Explain/Discuss the characteristics of successful team performance.
 Identify/Name the following stages of team development from given
scenarios/statements:
o Forming
o Storming
o Norming
o Performing
o Adjourning/Mourning
 Explain/Describe/Discuss the above-mentioned stages of team development.
 Describe/Explain/Discuss/Elaborate on the importance of team dynamic theories in
improving team performance e.g. allocating tasks according to the roles of team
members.

CONFLICT RESOLUTION
 Mention/Outline/Explain/Describe/Discuss causes of conflict in the workplace.
 Identify causes of conflict from given scenarios/statements
 Explain/Advise businesses on how they should handle conflict in the workplace (Conflict
resolution steps/techniques)

DEALING WITH GRIEVANCES AND DIFFICULT PEOPLE/PERSONALITIES

 Differentiate between grievance and conflict.
 Explain/Discuss the correct procedures to deal with grievances in the workplace.
 Identify/Name the following difficult people/ personalities from given
scenarios/statements:
o Complainer
o Indecisive
o Over-agree
o Negativity
o Expert
o Quiet
o Aggresibve
 Suggest/Recommend ways in which businesses can deal with the above mentioned
difficult people/personalities in the workplace.
 Explain/Suggest ways in which businesses can deal with difficult employees in the
workplace.

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TERMS AND DEFINITIONS

TERMS DEFINITION
Team Group of people who work together to achieve a common goal.
Conflict A disagreement/a clash of opinions in the workplace.
Task/Work Activity/function performed by an individual or team members.
Teamwork Interactions with team members to achieve a common goal.
Team dynamics A way in which team members work together in a group.
Forming Team members get to know each other and accept their roles in the team.
Storming Team members confront each other with their different ideas.
Norming Team members accept each other and set common goals and values for
the team.
Performance An accomplished task measured against pre-set known standards.
Adjourning Team members have to leave a team after completion of the tasks.
Team dynamic theories Assist to allocate tasks according to the roles of individual members.
Grievance A formal complaint laid by an employee when he/she feels that he/she has
been ill-treated by the employer.
Co-operation/ Willingness to co-operate in the team to achieve objectives.
Collaboration
Mutual Two people share the same feeling

Commitment Keeping to a promise/arrangement/cause

Accountability When someone is held responsible for his/her actions

Interpersonal The personality that a person continuously develops

attitudes
Interpersonal How two or more people interact with one another
behavior
Shared values A group of people with the same set of standards and beliefs.

Assess Check how well something has been done

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TEAM PERFORMANCE ASSESSMENT

1 Criteria for successful team performance

1.1 Interpersonal attitudes and behaviour
 Members have a positive attitude of support and motivation towards each other.
 Good/Sound interpersonal relationships will ensure job satisfaction/increase productivity
of the team.
 Members are committed/passionate towards achieving a common goal/ objectives.
 Team leader acknowledges/gives credit to members for positive contributions.

1.2 Shared values/ Mutual trust and support

 Shows loyalty/respect/trust towards team members despite differences.
 Shows respect for the knowledge/skills of other members.
 Perform team tasks with integrity/pursuing responsibility/meeting team deadlines with
necessary commitment to team goals.

1.3 Communication
 A clear set of processes/procedures for team work ensures that every team member
understands his/her role.
 Efficient/Good communication between team members may result in quick decisions.
 Quality feedback improves the morale of the team.
 Open/Honest discussions lead to effective solutions of problems.
 Continuous review of team progress ensures that team members can rectify mistakes/act
pro-actively to ensure that goals/targets are reached.

1.4 Co-operation/ Collaboration

 Clearly defined realistic goals are set, so that all members know exactly what is to be
accomplished.
 All members take part in decision making
 Willingness to co-operate as a unit to achieve team objectives.
 Co-operate with management to achieve team/business objectives.
 Agree on methods/ways to get the job done effectively without wasting time on conflict
resolution.
 A balanced composition of skills/knowledge/experience/expertise ensures that teams
achieve their objectives.
NOTE: You must be able to identify the above mentioned criteria for successful team
performance from given statements/scenarios

2 Characteristics of successful team performance

 Successful teams share a common goal as team members are part of the process of
setting goals for the group.
 There is a climate of respect/trust and honesty
 Share a set of team values and implement group decisions.
 Successful teams have sound intra-team relations
 Teams value the contributions of individual members and reach consensus on
differences.
 Team members enjoy open communication and deal with items of conflict immediately.
 Teams are accountable and members know the time frame for achieving their goals.
 Teams pay attention to the needs of the individual team members.

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 Creates an environment where team members are given opportunities to develop so that
team members grow and learn from the experience of working in a team.
 Regular reviews of team processes and progress may detect/solve problems sooner.
 Balance the necessary skills/knowledge/experience/expertise to achieve the objectives.

3 The stages of team development

 Forming
 Storming
 Norming
 Performing
 Adjourning/Mourning

DESCRIPTION OF EACH STAGE OF TEAM DEVELOPMENT

3.1 Forming stage

 Individuals gather information and impressions about each other and the scope of the
task and how to approach it.
 Teams are comfortable and polite with each other during this stage.
 People focus on being busy with routines, such as team organisation e.g. who does
what, when to meet each other, etc.

3.2 Storming
 Teams go through a period of unease/conflict after formation.
 Different ideas from team members will compete for consideration.
 Team members open up to each other and confront each other's ideas/ perspectives.
 Tension/struggle/arguments occur and upset the team members/there may be power
struggles for the position of team leader.
 In some instances storming can be resolved quickly; In others, the team never leaves
this stage.
 Many teams fail during this stage as they are not focused on their task.
 This phase can become destructive for the team/will negatively impact on team
performance, if allowed to get out of control.
 This stage is necessary/ important for the growth of the team.
 Some team members tolerate each other to survive this stage.

3.3 Norming/Settling/reconciliation
 Team members come to an agreement and reach consensus.
 Roles and responsibilities are clear and accepted.
 Processes/working style and respect develop amongst members.
 Team members have the ambition to work for the success of the team.
 Conflict may occur, but commitment and unity are strong.

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3.4 Performing stage/Working as a team towards a goal

 Team members are aware of strategies and aims of the team.
 They have direction without interference from the leader.
 Processes and structures are set.
 Leaders delegate and oversee the processes and procedures.
 All members are now competent, autonomous and able to handle the decision-
making process without supervision.
 Differences among members are appreciated and used to enhance the team's
performance.

3.5 Adjourning/Mourning stage

 The focus is on the completion of the task/ending the project.
 Breaking up the team may be traumatic as team members may find it difficult to
perform as individuals once again.
 All tasks need to be completed before the team finally dissolves.
NOTE: You must be able to identify the above mentioned stages of team development
from given scenarios/statement.

4 Importance of team dynamic theories in improving team performance

 Team dynamic theories explain how effective teams work/operate.
 Businesses are able to allocate tasks according to the roles of team members.
 Team members can maximise performance as tasks are allocated according to their
abilities/skills/attributes/personalities.
 Team members with similar strengths may compete for team tasks/responsibilities that
best suit their abilities/competencies.
 Theories assist team leaders to understand the personality types of team members so
that tasks are assigned more effectively.
 Conflict may be minimised when team members perform different roles.

5 CONFLICT RESOLUTION

5.1 Causes of conflict in the workplace

 Differences in backgrounds/cultures/values/beliefs/language
 Limited business resources
 Different goals/objectives for group/individuals
 Personality differences between group/individuals
 Different opinions
 Unfair workload
 Ill-managed stress
 Unrealistic expectations
 Poor organisation/leadership/administrative procedures and systems
 Confusion about scheduling/deadlines
 Ignoring rules/procedures
 Misconduct/Unacceptable behaviour
 High/Intense competition/Competitiveness
 Poor communication
 Unclear responsibilities

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 Distracted by personal objectives

 Constant changes in the workplace
 Unfair treatment of workers/Favouritism by management/Discrimination
 Lack of trust amongst workers
NOTE: You must be able to identify causes of conflict from given scenarios/statement

5.2 Explanation of causes of conflict in the workplace

 Lack of proper communication between management and workers.
 Ignoring rules/procedures may result in disagreements and conflict.
 Management and/or workers may have different personalities/ backgrounds.
 Different values/levels of knowledge/skills/experience of managers/workers.
 Little/no co-operation between internal and/or external parties/stakeholders.
 Lack of recognition for good work, e.g. a manager may not show appreciation for extra
hours worked to meet deadlines.
 Lack of employee development may increase frustration levels as workers may repeat
errors due to a lack of knowledge/skills.
 Unfair disciplinary procedures, e.g. favouritism/nepotism.
 Little/no support from management with regards to supplying the necessary resources
and providing guidelines.
 Leadership styles used, e.g. autocratic managers may not consider worker inputs.
 Unrealistic deadlines/Heavy workloads lead to stress resulting in conflict.
 Lack of agreement on mutual matters, e.g. remuneration/working hours.
 Unhealthy competition/Inter-team rivalry may cause workers to lose focus on team
targets.
 Lack of commitment/Distracted by personal objectives which may lead to an inability to
meet pre-set targets.
 Constant changes may cause instability
 Lack of clarity regarding employees' roles and responsibilities.

5.3 Handling conflict in the workplace/Conflict resolution steps/techniques

 Acknowledge that there is conflict in the workplace.
 Identify the cause of the conflict.
 Arrange pre-negotiations where workers/complainants will be allowed to state their
case/views separately.
 Arrange time and place for negotiations where all employees involved are present.
 Arrange a meeting between conflicting employers/employees.
 Make intentions for intervention clear so that parties involved may feel at ease.
 Each party has the opportunity to express his/her own opinions/feelings
 Conflicting parties may recognise that their views are different during the meeting.
 Analyse/Evaluate the cause (s) of conflict by breaking it down into different parts.
 Blame shifting should be avoided and a joint effort should be made.
 Direct conflicting parties towards finding/focusing on solutions.
 Devise/Brainstorm possible ways of resolving the conflict.
 Conflicting parties agree on criteria to evaluate the alternatives.
 Select and implement the best solution.
 Provide opportunities for parties to agree on the best solution.
 Evaluate/Follow up on the implementation of the solution(s).
 Monitor progress to ensure that the conflict has been resolved.
 Source experts on handling conflict from outside the business.

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6 DEALING WITH GRIEVANCES AND DIFFICULT PEOPLE/PERSONALITIES

6.1 Differences between grievance and conflict

GRIEVANCE CONFLICT
When an employee is unhappy/ has a Clash of opinions/ideas/view points in the
problem/complaint in the workplace. workplace.
It is when an individual/group has a work Disagreement between two or more parties in
related issue. the workplace.
Examples that can cause a grievance: Examples that can cause conflict:
Discrimination, unfair treatment, poor A lack of trust/miscommunication/ personality
working conditions. clashes/different values.

6.2 Correct procedures to deal with grievances

 An aggrieved employee must verbally report the incident/grievance to his/her
supervisor/manager, who needs to resolve the issue within 3 to 5 working days.
 Should the employee and supervisor not be able to resolve the grievance, the employee
may take it to the next level of management.
 The employee may move to a more formal process where the grievance must be lodged
in writing/completes a grievance form.
 The employee must receive a written reply in response to the written grievance.
 A grievance hearing/meeting must be held with all relevant parties present.
 Minutes of the meeting must be recorded and any resolution passed must be recorded
on the formal grievance form.
 Should the employee not be satisfied, then he/she could refer the matter to the highest
level of management.
 Top management should arrange a meeting with all relevant parties concerned.
 Minutes of this meeting should be filed/recorded and the outcome/decision must be
recorded on the formal grievance form.
 Should the employee still not be satisfied, he/she may refer the matter to the CCMA who
will make a final decision on the matter.
 The matter can be referred to Labour Court on appeal if the employee is not satisfied
with the decision taken by the CCMA.

6.3 Types of difficult personalities

 Complainer
 Indecisive
 Over-agree
 Negativity
 Expert
 Quiet
 Aggressive

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6.4 Ways in which businesses can deal with difficult personalities

TYPE OF PERSONALITY STRATEGY TO DEAL WITH A PERSONALITY

 Listen to the complaints but do not acknowledge them
Complainer  Interrupt the situation and move to the problem-solving
process
 Guide them through alternatives.
 Stay in control and emphasise the importance of making a
Indecisiveness decision.
 Help them make the decision or solve the problem
 Be firm and do not let them make promises that they cannot
Over-agree keep.
 Follow up on their actions
 Be firm with them and do not let them draw the supervisor
Negativity into their negativity.
 Listen to them but do not agree with them
 Be firm and assertive.
 Do not accuse them of being incorrect/Do not get caught in
Expert their game.
 Know your facts.
 Do not fill their silence with words
 Wait for their response
Quiet  Prompt them through the process so that they can give
input
 Restrict the time of the discussion
Aggressive  Allow them time to speak and blow off
 Be firm, but do not attack them
 Do not allow them to be hostile toward others
NOTE: You must be able to identify difficult personalities from given scenarios/
statements and suggest strategies to deal with EACH type of difficulty
personalities.

6.5 Ways in which businesses can deal with difficult employees in the
workplace
 Get perspective from others who have experienced the same kind of situation to be able
to understand difficult employees.
 Act pro-actively if possible, as a staff/personnel problem is part of a manager's
responsibilities.
 Regular meetings with supervisors/departmental heads should help to identify
difficult/problem behaviour.
 Ask someone in authority for their input into the situation.
 Identify the type of personality which is creating the problem.
 Meet privately with difficult employees, so that there are no distractions from other
employees/issues.
 Make intentions and reasons for action known, so that difficult person/people feel at
ease.
 Employees should be told what specific behaviours are acceptable by giving details
about what is wrong/ unacceptable and also an opportunity to explain their behaviour.
 A deadline should be set for improving bad/difficult behaviour.

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 The deadline date should be discussed with the difficult employee and his/her progress
should be monitored/ assessed prior to the deadline.
 Guidelines for improvement should be given.
 Do not judge the person, but try to understand him/her/Understand his/her intentions and
why he/she reacts in a certain way.
 Keep communication channels open/Encourage employees to communicate their
grievances to management.
 Build rapport/sound relations by re-establishing personal connection with colleagues,
instead of relying on e-mails/messaging/social media.
 Help difficult employees to be realistic about the task at hand.
 Remain calm and in control of the situation to get the person(s) to collaborate.
 Treat people with respect, irrespective of whether they are capable/ competent or not.
 Sometimes it may be necessary to ignore and only monitor a difficult person.
 Identify and provide an appropriate support program to address areas of weakness.

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BUSINESS SECTORS AND THEIR ENVIRONMENTS CHAPTER 9

Paper 1

BUSINESS STUDIES

GRADE 12
TERM TWO
CHAPTER 9
NOTES ON BUSINESS SECTORS AND THEIR
ENVIRONMENTS
REVISED

TABLE OF CONTENTS

TOPICS PAGES
Exam guidelines for business sectors and their 2
environments
Terms and definitions 2
Types of business sectors 3
Possible challenges, their environments & 4
extent of control
Example of a scenario on the primary sector 5
Example of a scenario on the secondary 5
sector
Example of a scenario on the tertiary sector 5-6
Example of a direct question on business
environments and the extent of control 6

This chapter consists of 6 pages

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CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT PURPOSES

Learners must be able to:
 Name THREE types of business sectors: primary, secondary and tertiary.
 Identify/Name a business sector from given scenarios/statements.
 Identify business challenges from given scenarios/case studies and classify them
according to the THREE business environments.
 State/Explain the extent to which a business (operating in any of the three sectors)
can control the three business environments from given scenarios and case studies.

TERMS AND DEFINITIONS

TERM DEFINITION
Business Sector A business sector is a sub division/subset of the economic activities, e.g.
Primary sector primary,
This secondary
sector and
deals with tertiary. of raw materials and natural resources.
extraction
Secondary sector This sector processes raw materials into finished goods.
Tertiary sector This sector renders services to other businesses/provides auxiliary
Business Environments services.
All the internal and external factors that affect the functioning of a
Micro environment business,
This e.g. micro,
environment market
is the and macro
business itself, itenvironments.
consists of all the elements
Market environment insideenvironment
This the business.
exists immediately outside the business.
Macro environment This environment exists outside the micro and the market environments.
Extent of control The amount of influence that a business has on the business
environments.

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Introduction
Learners are supposed to select a business from each sector and describe the three
environments related to these sectors and the extent to which a business can control these
environments.

They are supposed to describe the three business environments related to the three
business economic sectors and give an explanation of the extent to which a business can
control these environments.

Business sectors
Business sectors are sub divisions/subsets of economic activities, e.g. primary, secondary
and tertiary.

1 Types of business sectors

1.1 Primary sector

 This sector deals with extraction of raw materials and natural resources.
 Natural resources which are not man made like coal, gold, fish and livestock are
extracted from this sector.
 Examples the primary sector industries; mining, mining, fishing, agriculture, forestry and
farming

1.2 Secondary sector

 This business sector is responsible for changing the raw materials acquired from the
primary sector into useful products.
 It includes the manufacturing factories, construction and energy generation
 Examples of the secondary sector industries; manufacturing, clothing, food processing,
building and construction are found in this sector.

1.3 Tertiary sector

 This sector renders services to the public and businesses.
 It includes services from transport, banking, legal and health.
 Examples of the tertiary sector industries; distribution, banking, insurance, tourism,
transportation, entertainment, retail and legal services.
NOTE: You must be able to name the above mentioned business sector from given
scenarios/statements

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2 Possible business challenges, their environments and extent of control

Possible challenges Business environment Extent of control
 Difficult employees/ High rate
of absenteeism
 Lack of vision and mission Full control
 Lack of adequate Micro environment
management skills
 Unions, strikes and go-slows

 Competition Market environment Partial/Some/Limited/Less

 Shortages of supply control
 Demographics and
psychographics
 Socio-cultural factors
 Change in income levels Macro environment No control
 Contemporary legislation
 Labour restrictions
 Political changes
 Interest rates
 Socio-economic issues
 HIV and AIDS
 Globalisation and International
challenges

NOTE: You will only be able to do the following:

 Quote business challenges from the scenario
 Classify these challenges according to the business environments
 The challenge must be linked to the business environments
 State the extent of control businesses have over each business environment.
 The extent of control must be linked to the business environment

Examples of how the business sectors and their business

environments can be assessed

Example 1: Business in the primary sector

1 Read the scenario below and answer the questions that follow:

DUKA MINES (DM)

Duka Mines specialises in the extraction of platinum. Their suppliers of mining equipment
have increased their prices by more than 20%. The supervisor does not have a good
working relationship with his employees. DM can no longer export their products due to an
increase in the exchange rate.

You need to identify the business sector in which Duka Mines operates and motivate
your answer by quoting from the scenario.

Duka Mines is operating in the primary sector becauses the business specialises in the
extraction of mines.

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You need to quote challenges from the above scenario, classify EACH challenge
according to business environment and state the extent of control DM has over EACH
business environment

BUSINESS EXTENT OF CONTROL

CHALLENGES
ENVIRONMENTS
1 Their suppliers of mining Market environment Partial/Some/Limited/Less
equipment have increased their control
prices by more than 20%.
2 The supervisor does not have a Micro environment Full control
good working relationship with his
employees.
3 DM can no longer export their Macro environment No control
products due to an increase in the
exchange rate.

Example 2: Business in the secondary sector

1 Read the scenario below and answer the questions that follow:

SUPER ENERGY ENTERPRISE (SEE)

Super Energy Enterprise produces maize meal and instant soft porridge. They buy their raw
material from Early Bird Maize Farm which is out of stock sometimes. SEE employees are
regularly absent from work. The local government has instructed the management of SEE
to register their products with the South African Bureau for Standards.

1.1 Name the business sector in which Super Energy Enterprise is operating

SECONDARY SECTOR

Identify THREE challenges for SEE's business and classify EACH challenge according to
the business environment.

CHALLENGE BUSINESS ENVIRONMENT

(a) SEE employees are regularly absent from Micro environment
work
(b) They buy their raw material from Early Market environment
Bird Maize Farm which is out of stock
sometimes.
(c) The local government has instructed the Macro environment
management of SEE to register their
products with the South African Bureau of
Standards.

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Example 3: Business in the tertiary sector

Read the scenario below and answer the questions that follow:
TIMOTHY LEGAL SERVICES (TLS)

Timothy Legal Services (TLS) is situated at the Pretoria CBD. TLS’s assistant lawyers
are not trained to handle criminal cases. Another law firm, Mbuzi Inc. has set up a law
practice in the same office block as TLS. TLS can no longer pay their bank loan due to an
increase in interest rates.

1.1 Name the business sector in which TLS is operating. Motivate your answer by
quoting from the scenario above.

Business sector: Tertiary sector

Motivation: Timothy Legal Services (TLS) is situated at the Pretoria CBD

1.2 Identify THREE challenges for TLS business and classify EACH challenge
according to the business environment. State the extent of control TLS has over
EACH business environment

CHALLENGE BUSINESS EXTENT OF CONTROL

2 Leadership styles
 Democratic
 Autocratic
 Liassez-Faire/Free Reign
 Charismatic
 Transactional
NOTE: The explanation of EACH leadership style is embedded in the
advantages of each style below.

3 Situations in which each leadership style can be applied in the workplace

and the impact of each leadership style on businesses

3.1 Democratic leadership style

This leadership style can be applied when:
 Group members are skilled and eager to share their ideas.
 The leader does not have all the information needed to make a decision and employees
have valuable information to contribute.
 Cooperation is needed between a leader and a team.
 Decisions need to be looked at from several perspectives
Impact of the democratic leadership style on businesses
Positives/Advantages
 The leader allows the employees to participate in the decision making process, so they
feel empowered/positive.
 Staff gives a variety of ideas/inputs/feedback/viewpoints that can lead to
innovation/improved production methods/increased sales.
 Clear/Two way communication ensures group commitment to final decision(s).
 Authority is delegated which can motivate/inspire workers to be more productive.
 Complex decisions can be made with inputs from specialists/skilled workers.

AND/OR

Negatives/Disadvantages
 Incorrect decisions may be made if staff is inexperienced/not fully informed.
 Decision making may be time consuming because stakeholders have to be consulted.
 Employees may feel discouraged if their opinions/inputs are not considered.
 Leaders can rely too much on the input of the followers and fail to make a final decision.
 Not effective in times of crisis/when quick decisions need to be made.
 Some employees only pretend to participate in decision making and their feedback may
not always be accurate.

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3.2 Autocratic leadership style

This leadership style can be applied when:
 In crisis situations, e.g. in the case of unforeseen challenges/accidents.
 When all the information is available to solve the problem.
 In a crisis/urgent situation, e.g. after an accident/meeting tight deadlines
 When employees are motivated and the leader has already earned the trust of the
followers.
 When dealing with employees who are not cooperative.
 When employees are new/not fully trained.

Impact of the autocratic leadership style on businesses

Positives/Advantages
 Quick decisions can be taken without consulting/considering followers/ employees.
 Work gets done in time/on schedule.
 Line of command/communication is clear as it is top-down/followers know exactly what to
do.
 Direct supervision and strict control ensure high quality products/service.
 Provides strong leadership which makes new employees feel confident and safe.
 Works well in large companies where consultation with every employee is impractical.
 Clear guidance can be given to low-skilled/inexperienced/new staff.

AND/OR

Negatives/Disadvantages
 Leaders and followers may become divided and may not agree on ways to solve
problems.
 Workers can become demotivated if their opinions/ideas are not considered.
 De-motivated workers impact negatively on productivity.
 New/Creative/Cost reducing ideas may not be used/implemented/never be considered.
 Followers may feel that they are not valued resulting in high absenteeism/high employee
turnover.
 Experienced/Highly skilled workers will resist an autocratic leadership style because it
results in slow growth/low participation/less creativity.

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3.3 Laissez-faire/ Free reign

This leadership style can be used when:
 Subordinates are experts and know what they want/can take responsibility for their
actions.
 The leader is very busy and delegation of tasks will increase productivity.
 Team members need to improve/develop leadership skills.
 Suitable when employees are highly experienced and know more about the task than
the leader.

Impact of the Laissez-Faire leadership style on businesses

Positives/ Advantages
 Workers/Followers are allowed to make decisions on their own work/ methods.
 Subordinates have maximum freedom and can work independently.
 Leader motivates workers by trusting them to do things themselves/on their own.
 Authority is delegated, which can be motivating/empowering to competent
workers/increase productivity.
 Subordinates are experts and know what they want/can take responsibility for their
actions.
 Suitable for coaching/mentoring to motivate employees to achieve more/better things.
 It can be empowering for competent followers as they are completely trusted to do their
job.
 Individual team members may improve/develop leadership skills.

AND/OR
Negatives/ Disadvantages
 Lack of clear direction/leadership may be demotivating to employees.
 Employees can be held responsible for their own work which may lead to
underperformance.
 Could lead to conflict when some team members act as leaders and dictate to other team
members.
 Workers are expected to solve their own conflict situations.
 Productivity may be compromised with a lack of tight control over workers not meeting
deadlines.
 Productivity might be low, if employees lack the necessary knowledge or skills.

3.4 Charismatic leadership style

This leadership style can be used to:
 Sell vision and achieve excellent results.
 Motivate employees as the leader is energetic/ inspiring.
 Inspire loyalty/hard work among employees.

Impact of charismatic leadership styles on businesses

Positives/Advantages
 Expert at selling vision and achieve excellent results.
 Employees are motivated as the leader is energetic/ inspiring.
 Inspires loyalty/hard work among employees.
AND/OR
Negatives/Disadvantages
 Leader believes more in him/her than the team.
 Projects can collapse if the leader leaves the team.
 Leaders are intolerant of challenges and regard themselves as irreplaceable.

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3.5 Transactional leadership style

This leadership style can be applied when:
 When the business wants to maximise employee performance.
 When deadlines have to be met on short notice/under pressure.
 When workers have a low morale.
 When the strategies/business structures do not have to change.
 When productivity levels are very low/not according to targets.

Impact of the transactional leadership style on businesses

Positives/Advantages
 Encourages employees to work hard because they will receive rewards.
 Improves employees' productivity and morale.
 The goals and objectives of the business can be achieved as workers are motivated.
 Employees know what are expected of them.
 Disciplinary action procedures are well communicated.

AND/OR

Negatives/Disadvantages
 Employees may become bored/lose creativity as they have to follow rules/ procedures.
 A transactional leader will have to monitor the work performance of employees to ensure
that expectations are met.
 Managing/controlling employees may be time-consuming.
 Some employees may be demoralised/ unmotivated if they fail to reach/meet targets
despite having worked very hard.
 Not suitable for team work as all team members can be punished for poor performance
caused by one team member.
NOTE: You must be able to identify the above mentioned leadership styles from
given scenarios/case studies

Differences between the democratic and autocratic leadership styles

DEMOCRATIC AUTOCRATIC
 The leader involves employees in the  A leader takes all decisions alone without
decision making process. involving employees.
 Clear/Two way communication ensures  Line of command/communication is clear as
group commitment to final decision(s). it is top-down/followers know exactly what
to do.
 People-oriented, as employee's feelings and  Task-orientated as the opinions of
opinions are considered. employees are not considered.
 Workers feel empowered as they are  New employees feel confident/safe as
involved in the decision-making process. strong leadership is provided.
 Useful when the leader depends on the inputs  Useful in a crisis/urgent situation, e.g. after
of experienced followers. an accident/meeting tight deadlines.
 Handles conflict situations by involving  Handles conflict situations by telling
followers in finding the best solution. followers what they should do.

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4 Leadership theories
 Situational leadership
 Transformational leadership
 Leaders and followers
 Transitional leadership

4.1 Situational leadership theory

 Different leadership characteristics are needed for different situations.
 The task/situation dictates the leadership style that should be applied, so leaders are
adaptable/flexible/self-assured.
 Effective application of this theory may enable leaders to accomplish their goals.
 Relationships between leaders and employees are based on mutual trust/
respect/loyalty/integrity/honesty.
 Leaders have the ability to analyse the situation/get the most suitable people in the right
positions to complete tasks successfully.
 Leaders analyse group members/objectives/time constraints, to adopt a suitable/relevant
leadership style.
 May lead to conflict when leaders use different leadership styles/when managing
employees in different situations.
 The success of this theory depends on the kind of relationship that exists between the
leader and followers/subordinates/employees.

4.2 Transformational theory

 Suitable for a dynamic environment, where change could be drastic.

 The passion/vision/personality of leaders inspire followers√ to change their
expectations/perceptions/motivation to work towards a common goal.
 Strategic thinking leaders develop a long term vision for the organisation and sell it to
subordinates/employees.
 Leaders have the trust/respect/admiration of their followers/subordinates.
 Promotes intellectual stimulation/creative thinking/problem solving which result in the
growth/development/success of the business.
 Followers are coached/led/mentored/emotionally supported through
transformation/change so that they can share their ideas freely.
 Encourages followers to explore/try new things/opportunities.
 Leaders lead by example and make workers interested in their work.
 Leaders have strong, charismatic personalities√ and are very good at motivating staff to
achieve results.
 Enable employees to take greater ownership for their work and to know their strengths
and weaknesses.
NOTE: The transitional theory has been left on purpose as it is covered by the
transformational theory, as both speak to change.

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4.3 Leaders and followers

 Teams achieve great results when there is a sense of understanding between the leader
and the team of followers.
 Followers listen to what is expected of them and are willing to work as a team.
 Followers easily accept responsibility when something doesn’t work out.
 Leaders lead by example and reward positive behaviour.
 Leaders motivate employees to devise alternative strategies to find more efficient ways to
use available resources.
 Followers might just trail along depending on leaders and other followers to pull them
through the task.

5 The role of personal attitude in successful leadership

 Positive attitude releases leadership potential.
 A leader's good/bad attitude can influence the success/failure of the business.
 Leaders must know their strengths and weaknesses to apply their leadership styles
effectively.
 Great leaders understand that the right attitude will set the right atmosphere.
 Leaders' attitude may influence employees'/teams' thoughts/behaviour.
 Leaders should model the behaviour that they want to see in team members.
 Successful leaders consider the abilities/skills of team members to allocate tasks/roles
effectively.
 Enthusiasm produces confidence in a leader.
 A positive attitude is critical for good leadership because good leaders will stay with the
task regardless of difficulties/challenges.
 Successful employees and leaders have a constant desire to work and achieve
personal/professional success.
 Leaders with a positive attitude know that there is always more to learn/space to grow.
NOTE: You must be able to identify the role of personal attitude in successful leadership
from given scenarios/case studies.

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QUALITY OF PERFORMANCE CHAPTER 11

PAPER 1

BUSINESS STUDIES

GRADE 12
TERM 2
CHAPTER 11
NOTES ON QUALITY OF PERFORMANCE
REVISED

TABLE OF CONTENTS

TOPICS PAGES
Exam guidelines for quality of performance 3
Terms and definitions 4
Definition of quality concepts 5
Differences between quality control and quality 6
assurance
Differences between quality management and 6
quality performance
Benefits/Advantages of good quality 6
management system
Contribution of business functions to the 7-9
success of a business/Quality indicators
Meaning of TQM 10
Impact of TQM elements on large businesses 10-12
Application of the PDCA model/cycle 13
Role/Importance of quality circles 13
Impact of TQM if poorly implemented by 14
businesses
Ways in which TQM can reduce the cost of 14
quality

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CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT PURPOSES

Learners must be able to:

QUALITY
 Define the following concepts:
o Quality
o Quality control
o Quality assurance
o Quality management
o Quality performance
o Quality management systems
 Explain/Differentiate/Distinguish between quality control and quality assurance.
 Explain/Differentiate/Distinguish between quality management and quality performance.
 Explain/Discuss the advantages/benefits of a good quality management system.
 Explain/Discuss how quality of performance can contribute to the success and/or failure of
each business function.
 Outline the quality indicators for each business function.
TOTAL QUALITY MANAGEMENT (TQM)
 Elaborate on the meaning of TQM.
 Identify the following TQM elements from given scenarios/statements:
o Continuous skills development/ Education and training
o Total client/customer satisfaction
o Continuous improvement to processes and system
o Adequate financing and capacity
o Monitoring and evaluation of quality processes
 Explain/Discuss/Analyse/Evaluate the impact of the above mentioned TQM elements on
large businesses.
 Explain how businesses can apply the PDCA model/steps to improve the quality of
products.
 Explain the role/importance of quality circles as part of continuous improvement to
processes and systems.
 Explain/Discuss the impact of TQM if poorly implemented by businesses.
 Explain/Recommend/Suggest ways in which TQM can reduce the cost of quality.

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TERMS AND DEFINITIONS

TERMS DEFINITIONS
Quality Products and services that satisfy needs and exceeds customer
Total Quality expectations on a continuous
It is a management basis. that focuses on continuous quality
approach/system
management improvement throughout the business.

Management Planning and management of quality through strong leadership and

Business functions commitment from topofmanagement.
The various aspects the business that perform different roles e.g.
SABS marketing, production, administration,
South African Bureau of Standards, body financial, human
that sets resources,
quality standards and
ISO 9001 evaluates quality of final products.
Provides the guidelines for quality management. A company may not
export any products unless it registers as an ISO 9001 company.
Standards The specification of what is acceptable in terms of technical
requirements.

Total client satisfaction It is a measure of how products and services supplied by a company
Continuous skills meet or surpass
Developing customer
employees’ expectation.
skills that will add value for the organisation and
development career development.
Continuous It is an on-going effort to improve products, services, or processes
improvement to
Monitoring and A process that helps to improve performance and achieve results.
evaluation Its goal is to improve current and future management of outputs,
Quality circles outcomes
A group ofand impact.
workers who do the same or similar work, who meet regularly
to identify, analyse and solve work-related problems.
Inspections A method in which only a selection of products from a batch is measured
and tested against required standards.
Deviations When the product differs from the standard.

Tolerance limit The extent in which a product is allowed to differ from the standard
without affecting quality

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5.7 Contribution of the administration function to the success of a

business/quality indicators
 Fast and reliable data capturing and processing systems.
 Make reliable information available to management on time.
 Make relevant information available for quick decision-making.
 Handle complaints quickly and effectively.
 Use modern technology efficiently
 Implement effective risk management policies to minimise business losses.
 Quality assurance/Control/Evaluation is recorded accurately
 All documentation is kept neatly and orderly in a safe place.
 Easy to recall/find information/documentation.
 Financial documents are kept up to date and recorded accurately.
 All systems and processes are documented.

5.8 Contribution of the human resources function to the success of a

business/quality indicators
 Makes sure there is a good recruitment policy that attracts best candidates.
 Ensures fair and equitable selection process
 Fair remuneration packages that is aligned to the industry.
 Offer performance incentives for staff to enhance productivity.
 Good relationship with employees.
 Low rate of staff turnover in the business

NOTE: You will either be asked to explain/discuss how quality of performance can
contribute to success or failure of each business functions or explain/suggest
the quality indicators of business functions.

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6 TOTAL QUALITY MANAGEMENT (TQM)

6.1 Meaning of total quality management (TQM)

 TQM is an integrated system/methodology applied throughout the organisation, which
helps to design/produce/provide quality products/services to customers.
 It is a thought revolution in management, where the entire business is operated with
customer orientation in all business activities.
 TQM enables businesses to continuously improve on the delivery of products/ services
in order to satisfy the needs of customers.
 Management ensures that each employee is responsible for the quality of his/her
work/actions.
 TQM focuses on achieving customer satisfaction and looks for continuous
improvement in all the business’s processes, products and services.
 TQM takes steps to ensure the full involvement and co-operation of all employees in
improving quality.

6.2 TQM elements

 Continuous improvement to processes and system
 Continuous skills development/ Education and training
 Total client/customer satisfaction
 Adequate financing and capacity
 Monitoring and evaluation of quality processes

6.3 Impact of total quality management elements on large business

6.3.1 Impact of continuous improvement to processes and systems on large

businesses

Positives/Advantages
 Large businesses have more resources to check on quality performance in each unit.
 Enough capital resources are available for new equipment required for processes and
systems.
 Large businesses have a person dedicated to the improvement of processes and
systems.
 Willing to take risk on/try new processes and systems because they are able to absorb
the impact of losing money.
 They can afford to use the services of the quality circles to stay ahead of their
competitors.
AND/OR

Negatives/ Disadvantages
 Large scale manufacturing can complicate quality control.
 Systems and processes take time and effort to implement in large businesses as
communication/buy-in may delay the process.
 Risk of changing parts of the business that are actually working well.
 Not all negative feedback from employees and customers is going to be accurate,
which may result in incorrect/unnecessary changes to systems and processes.

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6.3.2 Impact of continuous skills development/Education and training on

large businesses
Positives/Advantages
 Large businesses have a human resources department dedicated to skills training and
development.
 Human resources experts ensure that training programmes are relevant to increased
customer satisfaction.
 Ability to afford specialised/skilled employees.
 Large businesses could conduct skills audits to establish the competency/education
levels of staff performing work which could affect the quality of products/processes
positively.
 May be able to hire qualified trainers to train employees on a regular basis.

AND/OR
Negatives/Disadvantages
 Poor communication systems in large businesses may prevent effective training from
taking place.
 Trained employees may leave for better jobs after they gained more skills.
 De-motivates employees, if they do not receive recognition for training.
 Employees who specialise in narrowly defined jobs may become frustrated/
demotivated.
 Employees may not be aware of the level of competency they should meet in order to
achieve their targets.
 It may be difficult to monitor/evaluate the effectiveness of training.

6.3.3 Impact of total client/customer satisfaction on large businesses

Positives/Advantages
 Large businesses uses market research/customer surveys to measure/ monitor customer
satisfaction/analyse customers' needs.
 Continuously promote a positive company image.
 May achieve a state of total customer satisfaction, if businesses follow sound business
practices that incorporate all stakeholders.
 Strive to understand and fulfil customer expectations by aligning cross-functional teams
across critical processes.
 Ensures that cross-functional teams understand its core competencies√ and
develop/strengthen it.
 May lead to higher customer retention/loyalty and businesses may be able to charge
higher prices.
 Large businesses may be able to gain access to the global market.
 May lead to increased competitiveness/profitability.
AND/OR

Negatives/ Disadvantages
 Employees who seldom come into contact with customers often do not have a clear idea
of what will satisfy their needs.
 Monopolistic companies have an increased bargaining power√ so they do not necessarily
have to please customers.
 Not all employees may be involved/ committed to total client satisfaction.

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6.3.4 Impact of adequate financing and capacity on large businesses

Positives/ Advantages
 Large businesses have sufficient financing to test everything before implementing.
 They can afford to have systems in place to prevent errors in processes/defects in raw
materials/products.
 Able to afford product research/market researchers to gather information.
 Can afford to purchase quality raw materials and equipment.

AND/OR

Negatives/ Disadvantages
 If the demand for company’s product increases, orders begin coming in faster than
expected, and the company lacks the capital required to fund the production of the stock
to fill the orders.
 These rapidly growing companies can consume large amounts of capital as they try to
balance normal operations and expansion.

6.3.5 Impact of monitoring and evaluating quality processes on large

businesses

Positives/ Advantages
 Prevents product defects and minimises wastage/customer complaints.
 Good quality checks/procedures minimises the replacement/breakdown of
equipment/machinery on a regular basis.
 May be equipped to get things done right the first time.
 Improve performance and maintain high quality standards.
 Improve current and future management of quality outputs/outcomes/impact.
 Provide clear indication about quality aspects that are contributing to the achievement of
goals/targets.
 Modify interventions that may improve the efficient use of resources.
 Support management to acquire information needed to make informed decision about
processes.
 Cost of production is reduced as deviations from set standards can be corrected.
 Strategies are revised in order to improve the quality of the product and
services/business image.
 Allows for quality control checks and procedures at key points.
 Key performance indicators are carefully selected to monitor and evaluate the outcome.
 Benchmarking is used to find best practices in order to determine the competitive
position of the business.
 Quality circles meet on regular basis to evaluate the progress in terms of quality.
 Continuous research is conducted on latest developments to ensure that TQM planning
is up to date.
AND/OR
Negatives/ Disadvantages
 Large businesses are often divided and the departments work in compartments, it is
difficult to get everyone to communicate.
 It often takes longer to detect problems or respond to weaknesses
 It is not viable to check quality of all the products

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7 Application of the PDCA model/cycle in improving the quality of products

Plan
o The business should identify the problem.
o Develop a plan for improvement to processes and systems.
o Answer questions such as 'what to do' and 'how to do it'.
o Plan the method and approach.

Do
o The business should implement the change on a small scale.
o Implement the processes and systems

Check/Analyse
o Use data to analyse the results of change.
o Determine whether it made a difference.
o Check whether the processes are working effectively.
o The business should assess, plan and establish if it is working/if things are going
according to plan

Act as needed
o Institutionalise the improvement.
o Devise strategies on how to continually improve.
o If the change was successful, implement it on a wider scale.
o Continuously revise the process.
NOTE: The PDCA model forms part of the TQM element continuous
improvement to processes and systems

8 Role/Importance of quality circles as part of continuous improvement to

processes and systems
 Solve problems related to quality and implement improvements.
 Investigate problems and suggest solutions to management.
 Ensure that there is no duplication of activities/tasks in the workplace.
 Make suggestions for improving systems and processes in the workplace.
 Improve the quality of products/services/productivity through regular reviews of quality
processes.
 Monitor/Reinforce strategies to improve the smooth running of business operations.
 Reduce costs of redundancy in the long run.
 Increase employees' morale/motivation.
 Quality circles discuss ways of improving the quality of work/workmanship.
 Contribute towards the improvement and development of the organisation.
 Reduce costs/wasteful efforts in the long run.
 Increase the demand for products/services of the business.
 Create harmony and high performance in the workplace.
 Build a healthy workplace relationship between the employer and employee.
 Improve employees’ loyalty and commitment to the organisation and its goals.
 Improve employees’ communication at all levels of the business.
 Develop a positive attitude/sense of involvement in decision making processes of the
services offered.

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9 Impact of TQM if poorly implemented by businesses

 Setting unrealistic deadlines that may not be achieved.
 Employees may not be adequately trained resulting in poor quality products.
 Decline in productivity, because of stoppages.
 Businesses may not be able to make necessary changes of products/services to satisfy
the needs of customers.
 Business reputation/image may suffer because of poor quality/defective goods.
 Customers will have many alternatives to choose from and the impact could be
devastating to businesses.
 Investors might withdraw investment, if there is a decline in profits.
 Decline in sales as more goods are returned by unhappy customers.
 High staff turnover, because of poor skills development.
 Undocumented/Uncontrolled quality control systems/processes could result in errors/
deviations from pre-set quality standards.

10 Ways in which TQM can reduce the cost of quality

 Introduce quality circles to discuss ways of improving the quality of work/ workmanship.
 Schedule activities to eliminate duplication of tasks.
 Share responsibility for quality output amongst management and workers.
 Train employees at all levels, so that everyone understands their role in quality
management.
 Develop work systems that empower employees to find new ways of improving quality.
 Work closely with suppliers to improve the quality of raw materials/inputs.
 Improve communication about quality challenges/deviations, so that everyone can learn
from experience.
 Reduce investment on expensive, but ineffective inspection procedures in the
production process.
 Implement pro-active maintenance programmes for equipment/machinery to
reduce/eliminate breakdowns.

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HUMAN RIGHTS, INCLUSIVITY & ENVIRONMENTAL ISSUES CHAPTER 12

PAPER 2

BUSINESS STUDIES

GRADE 12

TERM 3

CHAPTER 12

NOTES ON HUMAN RIGHTS, INCLUSIVITY & ENVIRONMENTAL ISSUES

TABLE OF CONTENTS

TOPICS PAGES
Exam guidelines for human rights, inclusivity and 2
environmental Issues
Terms and definitions 3
Human rights & dealing with human rights in the 4-5
workplace
Economic rights of employees in the workplace 5
Social rights and ways businesses can promote social 5
rights in the workplace
Ways to promote cultural rights in the workplace 5
Implications of equality, respect and dignity 6
on businesses
Meaning of diversity 6
Diversity issues in the workplace 6
Ways in which businesses can deal with diversity in 6-8
the workplace
8
Benefits of diversity in the workplace
The responsibilities of employers in promoting human 9
health and safety in the workplace
9
Roles of Health and Safety Representatives
in protecting the workplace environment
9
The responsibility of workers in promoting human
health and safety in the workplace
10
Strategies businesses may use to protect the
environment and human health.

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PAPER 2

CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT

PURPOSES Learners must be able to:

HUMAN, ECONOMIC, SOCIAL AND CULTURAL RIGHTS

 Outline/Name the following human rights in the workplace:
o Privacy
o Dignity
o Equity
o Freedom of speech and expression
o Information
o Safety, security and protection of life
 Identify the above-mentioned human rights from given scenarios /statements.
 Recommend ways in which businesses could deal with the above-
mentioned human rights in the workplace.
 Outline/Mention the economic rights of employees in the workplace.
 Outline/Mention the social rights of employees in the workplace.
 Recommend ways in which businesses could promote social rights and
cultural rights in the workplace.
 Explain the implication of equality, respect and dignity on businesses.

DIVERSITY
 Define/Elaborate on the meaning of diversity in the workplace.
 Identify/Name the following diversity issues from given
scenarios/statements:
o Poverty,
o Race
o Gender,
o Language,
o Age,
o Culture/religion and
o Disability.

 Recommend/Suggest ways in which businesses could deal with the above-

mentioned diversity issues in the workplace.
 Discuss the benefits of diversity in the workplace.

ENVIRONMENTAL FACTORS
 Explain the responsibilities of employers in promoting human health and
safety in the workplace.
 Outline/Explain/Discuss the roles of the health and safety representatives in
protecting the workplace environment, e.g. checking on the effectiveness of
health and safety measures/identifying potential dangers in the work
environment/ investigating workers’ complaints, etc.
 Identify the roles of health and safety representatives from given scenarios.
 Explain the responsibilities of workers/employees in promoting human health
and safety in the workplace.
 Identify the responsibilities of employers and employees/workers in promoting
human health and safety in the workplace from given scenarios.
 Recommend/Suggest strategies businesses may use to protect the
environment and human health.
 Assess a business venture on human rights, inclusivity, and environmental
issues, using informal surveys, interviews, etc.

2
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PAPER 2
TERMS AND DEFINITIONS

TERM DEFINITION
Human rights The rights of all human beings irrespective of their gender/race/nationality
or any other status.
Rights that everyone must enjoy by mere fact that they are human beings
Inclusivity Means that no one should be excluded because of their
gender/age/race/ language/disability.
Environmental Relate to preserving a clean/safe/sustainable environment.
issues
Diversity It means the workforce must include groups of a variety of people
who are different in race/gender, class etc.
Poverty Being unable to satisfy basic needs due to lack of income to buy
Inequality Unfair differences between groups of people in society/When some
have access to more wealth/status/opportunities than others.
Race Classification of people according to their physical differences e.g. colour of
their skin.
Gender Refers to being male or female.
Disability A physical or mental condition that limits a person's
movements, senses, or activities.
Religion A belief in and worship of a superhuman controlling
power, especially a personal God.
Age The length of time that a person has lived or a thing has existed.

Culture The ideas, customs, and social behaviour of a particular people or society.

Equality The fact of being equal in rights, status, advantages etc.

Respect A polite behaviour towards or care for somebody/something that you think is
important.
Dignity A calm and serious manner that deserves respect.
Economic rights The rights each person has to be economically active.
Social rights Right to welfare benefits.
Cultural rights A right to participate in cultural activities and events of your choice.

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1 HUMAN, ECONOMIC, SOCIAL AND CULTURAL RIGHTS

1.1 HUMAN RIGHTS IN THE WORKPLACE

The following human rights are applicable in the workplace:
o Privacy
o Dignity
o Equity
o Freedom of speech and
expression Information
o Safety, security and protection of life

1.1.1 Ways in which businesses could deal with the above-mentioned

human rights in the workplace
Privacy
 Businesses may not violate the rights of the employees and clients.
 They should not provide personal information about employees to anyone
else.
 Information on employees who have disclosed their HIV/Aids status/any
chronic illness must be kept confidential.
 It is illegal to read other people's emails/record conversations unless stated
clearly and upfront.

 Dignity
 Businesses must treat all employees with dignity/respect regardless of
their socio-economic status.
 They should not force workers to do embarrassing or degrading work.

Equity
 Equal pay for work of equal value
 Managers should ensure that no employee suffers because of discrimination.
 Businesses must give equal opportunities against their employees on the
basis of gender/race/religion/sexual orientation, etc.
 They should apply relevant legislation fairly on all levels.

 Freedom of speech and expression
 Businesses should allow open communication channels between
management and employees.
 An employee should not be punished/discriminated against for voicing their
opinion
 They should give employees a platform to raise their grievances
without any victimisation.

 Information
 Employees should be informed/updated as new information becomes
available.
 Business needs to be transparent in their financial
statements/Employees may request to see these statements with
motivation.
 Workers should have access to information, including all information held by
the government, e.g. policies/work schedules/employment contracts/labour
laws such as BCEA/EEA/SDA, etc.

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incorporating Adult Basic Education and Training (ABET) into training
 programmes of the business.
 Ensure that the prices of products are affordable for the identified consumer
market.
 Sponsor learnerships for unemployed people/use grants received from
SETAs to train more unemployed people from local communities.

 Race
 Implement affirmative action policies as required by law.
 No discrimination should be made based on skin colour.
 Ensure that the workplace is diverse by employing people from
different race groups.
 When appointments are made, previously disadvantaged people
should get preferential treatment.
 Comply with the Employment Equity Act and BBBEE when appointing people.

 Gender
 Males and females should be offered equal employment opportunities.
 Business directors should promote both men and women in managerial
positions.
 Women should be employed to comply with EEA.
 Targets may be set for gender equity in the business.
 New appointments should be based on skills and ability.
 Introduce affirmative action by ensuring that male and female
employees are remunerated fairly/equally.

 Language
 Provide training in the official language of the business.
 No worker should feel excluded in meetings conducted in one language only.
 Employ an interpreter so that everyone can fully understand what is being
said in a meeting.
 All business contracts should be in an easy-to-understand language and
should be available in the language of choice for the relevant parties
signing the contract.
 Business may specify that all communications should be in one specific
language only and would expect employees to have a certain level of fluency
in that language.

 Age
 A business may not employ children aged 15 or younger
 The ages of permanent workers should vary from 18 to 65 to include
all age groups.
 Young employees must be advised to respect and learn from older
employees.
 Businesses must encourage older employees to help young employees to
develop their potential.
 Promotions should not be linked to age, but rather to a specific set of skills.
 A business may employ a person who is older than the normal
retirement age, provided that person is the most suitable candidate.
 The business should encourage employees to be sensitive to different
perspectives of various age groups.

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Culture/Religion
 Cater for special food/preparation methods in the workers' canteen.
 Businesses should acknowledge/respect cultural differences of employees.
 The business may not discriminate against employees on the grounds
of their cultural background.
 Business must not force employees to do work that could be against their
 religion
 Business must be sensitive to special requests from different cultural
groups, e.g. allow day(s) off for cultural holidays/festivals.

 Disability/Physically challenged/People living with disability
 Business should provide employment opportunities for people who are
physically challenged.
  Employees should be trained on how to deal with colleagues with disabilities.
  Business should be well informed on how to deal with disabled employees.
 Accommodate people who are physically challenged by providing
facilities/ramps for wheel-chairs, etc.
 Ensure that workers with special needs are not marginalised/feel
excluded from workplace activities.
 Policies and programs should accommodate the needs of people with
disabilities.
 Create an organisational culture/climate that is conducive for people with
disabilities.
 Business should bring in external experts to help with disability and
accommodation issues.
 Focus on skills/work performance of the disabled worker, rather than
his/her disability/possible problems he/she may pose in future.
2.4 Benefits of diversity in the workplace
 Diversity in the workforce improves morale/motivation.
 Businesses with a diverse workforce are more likely to have a good public
image and attract more customers.
 Diversified workforce can give businesses a competitive advantage, as
they can render better services.
 Workforce diversity improves the ability of a business to solve problems
innovate /cultivate diverse markets
 A diversified workforce stimulates debate on new/improved ways of
getting things done.
 Employees demonstrate greater loyalty to the business because
they feel respected/accepted/understood.
 Employees value each other's diversity and learn to connect/communicate
across lines of difference.
 Employees from different backgrounds can bring different
perspectives to the business.
 Employees represent various groups and are therefore better able to
recognise customer needs and satisfy consumers.
 Being respectful of differences/demonstrating diversity makes good
business sense/improves profitability.
 Diverse businesses ensure that its policies/practices empower every
employee to perform at his/her full potential.
 Stakeholders increasingly evaluate businesses on how they manage
diversity in the workplace.

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3 Environmental issues
3.1 Responsibilities of employers in promoting human health and safety in
the workplace
 Provide and maintain all the equipment that is necessary to perform the work.
 Equipment must be used under the supervision of a designated trained
worker
 Keep the systems to ensure that there will be no harmful impact on the
health and safety of workers.
 Reduce/Remove dangers to workers and provide personal protective clothing
 Employers must know where potential dangers might be and take
measures to eliminate or limit the harm
 Ensure that the workers’ health is not damaged by hazards resulting from
production /processing/storage/transportation of materials or equipment
 Workers must be informed /instructed/and supervised to limit potential
dangers to them/Emergency exit door signs should be visible to all
employees
 Comply with safety laws which seek to promote a healthy working
environment

3.2 Roles of health and safety representatives in protecting the workplace

environment
 Identify potential dangers in the workplace
 Investigating workers’ complaints
 Ensure that employers comply with COIDA
 Ensure that protective clothing is provided /available to all workers.
 Promote safety training so that employees may avoid potential
dangers/act pro-actively.
 Ensure that all equipment that is necessary to perform work are provided
 /maintained regularly.
 Ensure that dangerous equipment is used under the supervision of
trained/qualified workers.
 Check/Monitor the effectiveness of health and safety measures with
management
 Initiate/promote/Maintain /Review measures to ensure the health and
safety of workers.
 Ensure that workers’ health and safety is not endangered by hazards
resulting from production /processing/storage/transportation of
material/equipment.
 Work together with the employer to investigate any accidents/complaints
 from the workers concerning health and safety in the workplace.
NOTE: (Health and Safety Representatives are elected by co-workers to
act on their behalf in resolving health and safety issues in the
workplace.)
3.3 Responsibility of workers in promoting human health and safety in
the workplace
 Use prescribed safety equipment
 Report accidents to the employer by the end of the shift
 Report unsafe/unhealthy working conditions to the relevant authorities/ management.
  Inform the employer of any illness that may affect the ability to work.
 Workers should take care of their own health and safety in the workplace.
 Co-operate and comply with the rules and procedures, e.g. wear prescribed safety
clothin

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3.4 Strategies businesses may use to protect the environment and

human health.
  Machines must be serviced/maintained regularly.
 Educate people about hygiene issues.
 Encourage employees to do regular health checks
 Minimise pollution, by re-using, reducing and recycling.
 Become involved in environmental awareness programmes.
 Water for human consumption should be tested before it is used.
 Promote nature conservation by looking after natural resources.
 Physical working conditions should always be worker friendly, safe and
promote occupational health.
 Physical working conditions, e.g. adequate lighting/ventilation should be
available and functional.
 Reduce consumption of goods/services which are environmentally unfriendly.
 Laws and regulations should be adhered to so that profits are not
generated at the expense of the environment.
 Pollution and other environmental issues should always be considered in all
business activities, e.g. safe disposal of waste/dumping of toxic waste, etc.
 The environment can be protected by altering production techniques in
favour of cleaner and greener technologies.
 Register/Engage with recognised institutions/bodies that promote green
peace.

NOTE :( The focus should on “HOW/STRATEGIES” businesses should

protect the environment and promote human health)

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Social Responsibility Chapter 13

Paper 2

BUSINESS STUDIES

GRADE 12
TERM 3
CHAPTER 13
NOTES ON SOCIAL RESPONSIBILITY
REVISED

TABLE OF CONTENTS

TOPICS PAGES
Exam guidelines for social responsibility 2
Terms and definitions 3
Meaning of social responsibility 3
Meaning of tripple bottom line 4
Relationship between social 4
responsibility and triple bottom line
Ways in which a business project can 4
contribute towards the community
Socio-economic issues 4
Strategies to deal with HIV/Aids, 5-6
unemployment and poverty
Ways in which businesses can contribute 6
time and effort in improving the well-being of
employees
Ways in which businesses can contribute 6
time and effort in improving the well-being of
communities
This chapter consists of 6 pages

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CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT PURPOSES

Learners must be able to:

 Define/Elaborate on the meaning of social responsibility.
 Explain the relationship/link between social responsibility and triple bottom line.
 Suggest ways in which a business project can contribute towards the
community: charitable contributions to NGOs involvement in community
 education and employment, employee volunteer programmes.
 Identify/Name the following socio-economic issues from
 given scenarios/statements:
o HIV/Aids
o Unemployment
o Poverty
 Recommend/Suggest ways in which businesses can deal with the
above-mentioned socio-economic issues.
 Explain/Recommend/Suggest ways in which businesses can contribute time and
effort in improving the well-being of employees and communities.

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TERMS AND DEFINITIONS

TERM DEFINITION
Social responsibility An ethical view point that says every individual/organisation
has an obligation to benefit society as a whole.
Corporate Refers to businesses/firms/organisations.
Corporate citizenship A company’s obligation to conduct itself as a person by
doing what people would do to help other people or the
environment.
Triple bottom line Refers to the 3Ps that businesses should always consider in
their operations, namely; PROFIT, PEOPLE and PLANET.
NGO A non-governmental organisation that is non-profit oriented.
Contemporary Current societal and economic factors that impact on
Socio-economic the business.
Issues
Sustainability Using the resources in such a manner that future
generations will be able to use them.
Well being Caring for the needs of employees and the communities.
Staff turn-over Rate at which the employer has to replace their employees.

1.1 Meaning of social responsibility

 It is an obligation to work towards improving the welfare of society.
 An ethical view point that says every individual/organisation has an obligation to
benefit society as a whole.
 The responsibility of every citizen individual/organisation to contribute
towards the well-being of the community and the environment in which they
 live. This responsibility can take the form of:
o Avoiding any actions that could harm the environment and the society.
o Acting in ways that improve other people’s quality of life
 It is the duty of all businesses to maintain a balance between the economy and
the environment.

1.2 Meaning of triple bottom line

 A triple bottom line means that businesses should focus on profit/economic
/people/social and planet/environment.
 The triple bottom line is an accounting framework consisting of the
above mentioned three elements.
 Many businesses have adopted this framework to evaluate their performance to
create greater business value.
 It is a way to measure business performance by evaluating its social,
environmental and economic successes.

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1.3 Relationship/Link between social responsibility and

Triple bottom line
Profit/Economic
 Triple Bottom line means that businesses should not only focus on
profit/charge high prices, but should also invest in CSI projects.
 Businesses should not make a profit at the expense of its community.

 People/Social
 Business operations should not have a negative impact on/exploit people/
employees/customers/community.
 Businesses should engage/invest in sustainable community programmes/
projects that will benefit/uplift communities.
 Improve the life style/quality of life of their human resources/employees.

 Planet/Environment
 Businesses should not exhaust resources/harm the environment for
production/profit purposes.
  They may support energy-efficient/eco-friendly products/production methods.
 Recycle/Re-use waste, e.g. packaging from recycled material.

1.4 Ways in which a business project can contribute towards

the community
 Business projects aimed at social responsibility can contribute towards
 the community in the following ways:
o Charitable contributions to NGOs focused on the needs of the community.
o Employee volunteer programmes where employees contribute to the
community without getting paid e.g. visiting elderly people in an old age
home/renovating classrooms at a local disadvantaged school etc.
o Involvement in the community education/homeless/health and other
programmes.
o Train people within the community, especially the unemployed.
o Management could mentor new business owners to improve their efficiency
and increase their profits.

1.5 Socio-economic issues

 The focus will only be based on the identification of the negative impact of the
 following socio-economic issues from given scenarios/statements:
o HIV/Aids
o Unemployment
o Poverty
NOTE: You may also be required to suggest strategies to deal
with the above mentioned socio-economic issues.

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Social Responsibility Chapter 13

Paper 2

Example of socio-economic issues from the scenario

SBAA CHICKEN FARM ( SCF)
Sbaa Chicken Farm specialises in selling live and slaughtered chickens in the local
township. Some SCF employees stay absent from work on a regular basis due to
illnesses caused by not taking ARV treatment as prescribed. The majority in the
community are not economically active. Some are unable to satisfy basic needs.

Identification of socio-economic issues from that have a negative impact on

SCF with motivation quoted from the scenario above.
SOCIO-ECONOMIC MOTIVATION
ISSUE HIV/AIDS Some SCF employees stay absent from work
on a regular basis due to illnesses caused by
not taking ARV treatment as prescribed.
Unemployment The majority in the community are not
economically active.
Poverty Some are unable to satisfy basic needs.

NOTE: 1 Remember to quote as is from the scenario.

2 You will not be awarded marks for the motivation if socio-
economic issues were incorrectly identified in the scenario.

1.6 Strategies to deal with HIV/Aids, unemployment & poverty

1.6.1 Strategies to deal with HIV/Aids
 Counselling programmes/train counsellors to provide infected and affected
persons/employees.
 Develop counselling programmes for infected/affected persons/employees.
 Conduct workshops on HIV/Aids programmes/campaigns.
 Roll out anti-retroviral (ARV) treatment programmes (ART) for the
infected employees.
 Encourage employees to join HIV/Aids support groups.
 Develop strategies to deal with stigma and discrimination.
 Participate in the HIV/Aids prevention programmes implemented in
the community.
 Support non-governmental organisational/community based organisation/NPC
HIV/Aids initiatives.

1.6.2 Strategies to deal with unemployment

 Provide skills development programmes through learnerships.
 Offer bursaries to the community to improve the level of education.
 Create jobs for members of the community.
 Provide entrepreneurial programmes that can promote self-employment.
 Support existing small businesses to create more employment opportunities.

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Social Responsibility Chapter 13

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1.6.3 Strategies to deal with poverty

 Invest in a young starting SME that can be a business competitor, buyer
or supplier.
 Attract the best employees by being socially responsible and offering the
best volunteering programmes.
 Support poverty alleviation programmes that are offered by the government.
 Donate money/food parcels to local NGOs.

1.7 Ways in which businesses can contribute time and effort

in improving the well-being of employees
  Provide recreational facilities for employees.
 Allow flexible working hours to enhance productivity.
 Provide transport for employees who work unusually long hours.
 Provide for employees' participation in decision making that affects them.
  Conduct team-building sessions to improve employees' morale.
 Offer annual medical assessments to workers.
 Offer support programmes for employees infected and affected by HIV/Aids.
 Offer financial assistance in the case of any hardship caused by unexpected
medical costs.
 Pay fair wages/salaries to the workers based on the nature of their work.
 Pay fair bonuses, based on business earnings, as acknowledgement for hard
work and commitment.
 Establish coaching and mentoring programmes for junior employees.
 Working conditions should include safety/medical/canteen facilities/benefits like
housing/leave/retirement, etc.
 Make trauma debriefing/counselling/assistance available to any employee
who requires these services.
 Make childcare facilities available on the premises for working mothers in the
business.
 Start a nutritional programme so that employees can enjoy one meal per day
to keep them in a healthy condition.
 Give time to staff to get involved in projects they choose/Allow staff to use
 some of the working hours to participate in the projects of their choice.
 Encourage employees to stay fit and healthy by getting them involved in health
activities to minimize stress/substance abuse/obesity.
 Encourage employees to attend capacity-building workshops/training
programmes /staff-development programmes/team-development programmes.
1.8 Ways in which businesses can contribute time and effort
in improving the well-being of communities
 Business should improve the general quality of life of their community, e.g.
invest in education, etc.
 Ensure that the products they supply do not harm consumers/the environment.
 Refrain from engaging in illegal/harmful practices such as employing children
under the legal age/selling illegal substances, etc.
 Make ethically correct business decisions, e.g. not engage in unfair/misleading
advertising, etc.
 Donate money to a community project/run a project to uplift the community.
 Provide recreational/sport facilities to promote social cohesion/healthy activities.
 Participate in community projects involving HIV/AIDS/education/counselling/
other meaningful causes

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CSR AND CSI CHAPTER 14

PAPER 2

BUSINESS STUDIES

GRADE 12
TERM 3
CHAPTER 14
NOTES ON CSR AND CSI

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CSR AND CSI CHAPTER 14

PAPER 2

TABLE OF CONTENTS

TOPICS PAGES
Exam guidelines for CSR and CSI 3
Terms and definitions 4
Meaning of CSR 4
Purpose of CSR 4
Components of Corporate Social 5
Responsibility
Impact of CSR/CSI on 5-6
businesses &communities
The meaning of CSI 7
Purpose of CSI 7
CSI Focus areas 7
Examples of CSI projects 7
Differences between CSR and CSI 8

This chapter consist of 8 pages

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CSR AND CSI CHAPTER 14

PAPER 2

CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT

PURPOSES Learners must be able to:

COOPERATE SOCIAL RESPONSIBILITY/CSR

 Define/Elaborate on the meaning of CSR
 Describe/Explain the purpose of CSR
 Identify/Name/Outline the components of CSR: environment, ethical corporate social
investment, health and safety.
 Identify CSR programmes from given scenarios/statements.
 Explain/Discuss/Evaluate/Analyse the impact
(positives/advantages and/or negatives /disadvantages)
of CSR on businesses and communities.
COOPERATE SOCIAL INVESTMENT/CSI
 Define/Elaborate on the meaning of CSI.
 Describe/Explain the purpose of CSI.
 Outline/Name CSI focus areas, e.g. community, rural development, employees,
environment
 Explain/Distinguish/Differentiate between CSR and CSI.
 Explain/Discuss/ Evaluate/Analyse the impact (advantages/positives and/or
disadvantages/negatives of CSI on business and communities.

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CSR AND CSI CHAPTER 14

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TERMS AND DEFINITIONS

TERMS DEFINITION
Corporate social A continuous commitment from a business to act ethically
responsibility and contribute to economic development.
Corporate social Projects that are not part of normal business activities and are
investment designed and aimed to benefit and aimed to benefit the community.
JSE SRI The Johannesburg Exchange Social Responsibility Index informs
investors about corporate sustainability policies and practices of
listed companies
Initiative Important new plans undertaken as solution to a problem
Stakeholders Include any individual/organisation that relate to the business in
some way or that are directly/indirectly affected by the activities
of the business.

1 COOPERATE SOCIAL RESPONSIBILITY/CSR

1.1 Meaning of CSR
 The way businesses manage their process to affect their stakeholders in a positive
way.
 The continuing commitment by business to behave ethically and contribute to
economic development while improving the quality of life of the local community and
 society at large.
 Corporate Social Responsibility/CSR is the way a business conducts its operations
 ethically and morally regarding the use of human, physical and their funds.
 A business voluntarily takes steps to improve the quality of life for employees and
their families and communities.
 Corporate Social Responsibility is an obligation required by law and benefits both
business and society.

1.2 Purpose of CSR

 CSR aims at creating a safe working environment for employees.
 CSR programmes are internal programmes that businesses use to comply with laws
and ethics.
 Businesses seek to promote public interest and do away with harmful practices
without the need for any formal legislation.
 Business operations address Triple bottom line through CSR programmes by
considering its impact on people, profit and planet
 Key areas of concern are protecting the environment, the wellbeing of
employees from the community and civil society in general.
 CSR programmes and activities the business undertakes to contribute positively
to the community in which the business operates.
 CSR may take the form of a monetary donation to support local organisations

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1.3 Components of Corporate Social Responsibility (CSR)

 Environment
 Ethical corporate social investment
 Health and safety
 Corporate governance
 Business ethics
 Employment equity
 Supply chain/Distribution channel
 Employees and customers
 Community
1.4 Impact of CSR/CSI on businesses
Advantages/Positives of CSR/CSI on businesses
 Promotes customer loyalty resulting in more sales.
 CSI projects promote teamwork within businesses.
 The business enjoys the goodwill/support of communities.
 CSI helps to attract investors because of increased profits/income.
 Improves the health of its employees through focused CSI projects.
 Assists in solving socio-economic issues like poverty/unemployment, etc.
 CSI projects may be used as a marketing strategy to promote their products.
 Gives businesses tax advantages such as tax reduction/rebates.
 Employees feel as if they are making a difference in working for the business.
 May attract experienced employees/increase the pool of skilled labour which could
increase productivity.
 Positive/Improved image as the business looks after employees/conducts itself in a
responsible way.
 A business may have a competitive advantage, resulting in good publicity/an
improved reputation.
 The government is less likely to enforce issues through legislation
to businesses that voluntarily participate in CSI projects.
 It helps to retain staff/lower staff turnover as employees' health and safety are
considered.
 Businesses become more community-based by working closely with the
community to roll out skills development projects.
AND/OR
Negatives/Disadvantages
 It is difficult to accurately measure the effectiveness of social investment.
 Most managers are not trained/lack experience to handle social programmes.
 Businesses find it difficult to adhere to legislation governing CSI.
 Detailed reports must be drawn up, which can be time consuming.
 CSI activities distract business focus from its core business functions.
 Shareholders may receive less dividends, as some profits are spent on CSI.
 Business may not be supported/Customers may not buy their
products/services resulting in a decrease in sales.
 Small and medium enterprises find it difficult to implement CSI programmes.
 Social spending reduces business/economic efficiency which makes it
less competitive.

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 Social involvement is funded from business profits which could have been used
to the benefit of customers/reduce prices.
 It can increase financial risk, as programmes cost money and may impact
negatively on profits.
 It is not easy to determine the exact needs of the communities, which may result in
fruitless expenditure on CSI.
 Employees may spend more time working on CSI projects instead of focusing on
their core duties.
 Providing goods/services that meet the needs of consumers is, according to some
stakeholders, already socially responsible.
 Some shareholders/stakeholders might withdraw their support from the business as
they feel that social issues should be the government's responsibility.
NOTE: that the impact of CSR and CSI on business are the same

1.5 Impact of CSR/CSI on the communities

Positives/Advantages
 Provision of bursaries encourages communities to improve their skills.
 Better educational facilities are established in poor communities.
 The standard of living of the community is uplifted/quality of life of communities is
improved.
 The provision of medical infrastructure improves the health of communities.
 Socio-economic issues are attended to which will improve the welfare of the
community.
 Training opportunities in the community increase the possibility of appointments of
members of the community.
 Implementing developmental programmes in the community improves
entrepreneurial skills of communities.

AND/OR
Negatives/Disadvantages
 Businesses are not always equipped to address social problems.
 Communities tend to be dependent on CSR programmes and struggle to take their
own initiatives.
 Businesses tend to focus on CSR programmes that does not directly benefit the
community.
 Some businesses only participate in CSR initiatives to raise profit and do not really
care for the community in which they operate.
 Businesses cannot meet the longer term needs of the society/Business cannot
deliver sustainable CSR programmes.
 Distribution of scarce resources to selected beneficiaries in the community may
cause problems such as discrimination.
 The benefits of the programmes may not filter to the intended persons within the
community.
 Spending money on CSR programmes means the business has to recover expenses
through higher prices which have a negative impact on the economy.
 Less money is available for community projects during unfavourable economic
conditions.

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 Consumers are not easily convinced that a business is acting in the best interest of
the community and the environment.
 A business often appears to benefit more from the CSR expenditure than the
 perceived benefits to the communities.
NOTE: that the impact of CSR and CSI on the community are the same

2 COOPERATE SOCIAL INVESTMENT /CSI

2.1 Meaning of CSI
 It is when a business commits money, resources and time to a specific project
that will improve the lives of people.
 The projects are not directly for purposes of increasing company profits.
 It is the money that the business spend on the community to improve the standard
of living of the community.
 These projects have a strong developmental approach and utilise company
resources to benefit and uplift communities.
2.2 Purpose of CSI
 CSI aims at contributing towards sustainable development of its
immediate communities.
 CSI is enforceable by law and government requires business to make CSI
contributions.
 CSI projects play a positive role in the development of communities.
 CSI reveals a business’s attitude towards the community in which it operates.
 CSI projects are long-term investment
 It is relevant to the South African context where socio-economic upliftment is such
a priority.
2.3 CSI focus areas
 Community
 Rural development
 Employees
 Environment

2.4 Examples of CSI projects

 Donation to support local organisations
 Being involved in conversation projects
 Delivering services that government is unable/slow to deliver/ Building infrastructure
 Investing in job creation projects
 Providing adult basic education
 Teaching entrepreneurial skills
 Sponsoring arts and culture programmes
 Establishing programmes to promote early childhood development

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CSR AND CSI CHAPTER 14 POST COVID

2.5 Differences between Corporate Social Responsibility (CSR)

and Corporate Social Investment (CSI)
Corporate Social Responsibility Corporate Social Investment
- The intention is to change business - Actively committing money and resources
practices. to uplift the community.
- Focus is on increasing image and profits. - Focus is on the upliftment of community
without return on investment.
- Ensure that all internal CSI policies/ practices - Ensure that CSI projects are relevant to the
include stakeholders' interests/environmental needs of communities.
issues.
- Often intended as a marketing initiative. - Intended to benefit and uplift
communities through social development.
- Projects are usually linked to the business, - Projects are external to the business and
e.g. a manufacturing business offering to have a strong developmental approach.
train the unemployed.

2.6 Impact of CSI on business and communities

NOTE: This is the same as the impact of CSR on businesses and
communities as mentioned on page 5 -7.

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BUSINESS STUDIES

GRADE 12

TERM 3

CHAPTER 15

PRESENTATION AND DATA RESPONSE

TABLE OF CONTENTS
TOPICS PAGES
Exam guidelines for presentation and 2
data response
Terms and definitions 2
Factors to be considered when preparing for 3
a presentation
Factors to be considered when making 3-4
a presentation
Responding to questions in a professional and 4
non-aggressive manner
Areas of improvement in the next presentation 4
Aspects to be considered when designing 4-5
a multimedia presentation
Examples of non-verbal presentation methods 5
Examples of visual aids 5
Impact of PowerPoint/Data projector 5-6
Impact of overhead projectors/transparencies 6
Impact of handouts/flyers/brochures 6-7
Impact of video conferencing/Skype 7
Impact of flipcharts 7
Impact of interactive whiteboard/Smart boards 8
Impact of posters/signs/banners/portable 8
advertising stands/flags

This chapter consists of 8 pages

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CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT

PURPOSES Learners must be able to:

DATA RESPONSE
 Outline/Explain/Discuss factors that must be considered when preparing for
a presentation. (Before the presentation)
 Outline/Explain factors that must be considered by the presenter while presenting,
e.g. maintain eye contact/use visual aids effectively/move/do not speak fast/use
 pauses effectively, etc. (During the presentation)
 Identify factors that must be considered when preparing for a presentation and during the
presentation from given scenarios/case studies.
 Explain how to respond to questions about work and presentations/handle feedback after
a presentation in a non-aggressive and professional manner. (After the presentation)
 Explain/Suggest/Recommend areas of improvement in the next presentation.

 DATA RESPONSE
 Discuss/Explain how to design a multimedia presentation, e.g. start with the text,
select the background/choose relevant images/create graphs, etc.
 Give examples of non-verbal presentations, e.g. written reports, scenarios, types of
graphs (e.g. line, pie, bar charts etc.) as well as other non-verbal types of information
 such as pictures and photographs.
 Explain/Discuss /Evaluate the impact (positives/advantages and/or
negatives /disadvantages) of each visual aid.
 Analyse the effectiveness (positives/advantages and/or negatives/disadvantages)
of EACH visual aid.
 Identify visual aids from given
scenarios /statements.
TERMS AND DEFINITIONS
TERM DEFINITION
Presentation The act of communicating information/data to an
audience/stakeholders in an organisation.
Data Response Interpretation and analysis of information provided.
Feedback Information about a presentation by an audience which is used as a
basis for improvement.
Non-verbal Presentation of information to an audience without using spoken
presentation words.
Visual aids Refers to charts/pictures/images that help to clarify a point/enhance a
presentation.
Tables A set of facts/figures systematically displayed, especially in columns.
Graphs Two-dimensional drawing showing a relationship between two set of
variables by means of a line/curve/bars.
Diagrams A drawing showing the appearance/structure/workings of data in a
schematic representation.
Flipchart A large pad of paper, bound so that each page can be turned over at
the top to reveal the next page, used on a stand.
Hand-outs Printed information provided to the audience to accompany a
presentation.

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1 PRESENTATION

1.1 Factors to be considered when preparing for a presentation

(Before the presentation)
 Clear purpose/intentions/objectives and main points of the presentation.
 Fully conversant with the content/objectives of the presentation.
 Main aims captured in the introduction/opening statement of the presentation.
 Prepare a rough draft of the presentation with a logical structure/format with an
 introduction, body and conclusion.
 The conclusion must summarise the key facts and how it relates to the objectives/shows
that all aspects have been addressed.
 Information presented should be relevant and accurate.
 Consider the time frame for presentation, e.g. fifteen minutes allowed
 Rehearse to ensure a confident presentation/effective use of time management
 Find out about the venue for the presentation, e.g. what equipment is
available/appropriate/availability of generators as backup to load shedding.
 Create visual aids/graphics that will consolidate the information/facts to be conveyed to
 the board of directors.
 Background/diversity/size/pre-knowledge of the audience to determine the appropriate
visual aids.
 Prepare for the feedback session, by anticipating possible questions/comments.

1.2 Factors that must be considered by the presenter while

presenting (during the presentation)
 Establish credibility by introducing yourself as the presenter at the start.
 Mention/Show most important information first.
 Make the purpose/main points of the presentation clear at the start of the presentation.
 Use suitable section titles/headings/sub-headings/bullets.
 Keep the presentation short and simple
 Do not ramble on at the start, to avoid losing the audience/their interest.
 Maintain eye contact with the audience.
 Be audible to all listeners/audience.
 Pace yourself/Do not rush or talk too slowly.
 Avoid hiding behind equipment.
 Speak with energy and enthusiasm
 Use appropriate gestures, e.g. use hands to emphasize points.
 Stand in a good position/upright, where the audience can clearly see the
Presenter/presentation.
 Manage time effectively to allow time for questions.
 Capture listeners' attention/Involve the audience with a variety of methods, e.g. short
 video clips/sound effects/humour, etc.
 Make the presentation interesting with visual aids/anecdotes/examples/Use visual aids
effectively.

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 Summarise the main points of the presentation to conclude the presentation.

 Conclude/End with a strong/striking ending that will be remembered.
 Ensure that the audience will leave with/take away specific information/benefits.
 Include a statement/quote that will allow a professional/striking ending.

1.3 Responding to questions in a non-aggressive and professional

manner (Handling feedback after a presentation)
 The presenter should stand throughout the feedback session.
 The presenter should first listen and then respond.
 Be polite/confident/courteous when responding to questions.
 Ensure that each question/comment is clearly understood before responding/re-phrase
questions if uncertain.
 Keep answers short and to the point.
 Be direct/honest/sincere when responding to questions.
 Always address the questions and not the person
 Encourage questions from the audience/investors.
 Acknowledge good questions to motivate audience to ask more questions.
 Provide feedback as soon as possible after the question was asked or after the session.
 Use simple language to support the examples used in the presentation.
 Apologise/acknowledge his errors/mistakes if pointed out by the audience.
 The presenter should not involve himself in a debate when responding to questions.
 The presenter should not avoid the questions if he/she does not know the answer,
but rather promise feedback on it.
 Address the full audience/investors and not only the person who posed the question.

1.4 Areas of improvement in the next presentation

 The presenter should revise objectives that were not achieved.
 Use humour appropriately.
 Always be prepared to update/keep the information relevant.
 Reflect on any problem/criticism and avoid it in future presentations.
 Reflect on the time/length of the presentation to add/remove content.
 Reflect on the logical flow of the format/slides/application of visual aids.
 Increase/Decrease the use of visual aids or replace/remove aids that do not work well.
 Any information that the presenter receives as feedback from a presentation should be
analysed and where relevant, incorporated/used to update/amend his presentation.

2 DATA RESPONSE

2.1 Aspects to be considered when designing a multimedia

presentation
 Start with the text/headings.
 Use legible font and font size.
 Select the background
 Include/Create graphics.
 Keep slides/images/graphs simple.

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  Limit the information on each slide.

  Use bright colours to increase visibility
  Make sure there are no grammatical/spelling errors.
  Use pictures to make it interesting for the audience
  Add special effects/sound/animation.
  Structure information in a logical sequence.
  Choose images that may help to communicate the message.
 Create hyperlinks to allow quick access to other files/documents/video clips.

2.2 Examples of non-verbal presentation methods

  Tables
  Graphs/bar graph/line graph/histogram/pie graph
  Diagrams
  Illustrations/Pictures/Photographs/Scenarios
  Written/Business reports
  Flip charts
  Handouts
 Slide shows

2.3 Visual aids

The following visual aids will be covered:
  PowerPoint/Data projector
  Overhead projectors/Transparencies/
  Hand-outs/flyers/brochures
  Video conferencing/ Skype
  Flip charts
  Interactive whiteboard/Smart boards
 Posters/signs/banners/portable advertising stands/flags

2.3.1 Impact of PowerPoint/Data projector

Positives/Advantages
 Graphic programmes have the capacity to convey ideas and support what the presenter
 says.
 Easy to combine with sound/video clips.
 Simple/Less cluttered slides may capture the interest of the audience.
 Video clips can provide variety and capture the attention of the audience.
 Variation of colour/background/sound immediately captures the attention of the
audience and retain their interest throughout the presentation.
 Slides should only be used where they can enhance the facts or summarise information.

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AND/OR
Negatives/Disadvantages
 Less effective to people with visual impairments.
 Unable to show slides without electricity/data projector.
 May lead to irritation/may result in the audience losing interest.
 Simply reading off the slides makes a presentation boring/meaningless
 Unprofessional handling of the data projector/PowerPoint presentation material.

2.3.2 Impact of Overhead projectors/Transparencies

Positives/Advantages
 OHP transparencies can be used to reflect colour images.
 It can be prepared manually (OHP pens) or electronically on computer/copier.
 It may be an effective/useful reminder to the presenter of all the points to be covered.
 Summaries/Simple graphics/Diagrams/Processes may be explained easily on
transparencies.
 A useful replacement/back-up if computer/electronic equipment fail or are not available.
 Effective transparencies/projections should be clear and visible, e.g. large print, few
words/lines.
 Effective transparencies/projections should be clear and visible, e.g. large print, few
words/lines.

AND/OR
Negatives/Disadvantages
 Not easy to combine with sound/audio.
 It can be easily replaced by a PowerPoint presentation.
 Used most effectively when lights are dimmed/switched off which make it difficult for the
 audience to make their own notes.
 Transparencies that are not well ordered/ organised, may convey an unprofessional
image.

2.3.3 Impact of hand-outs/flyers/brochures

Positives/Advantages
 Meaningful hand-outs may be handed out at the start of the presentation to
attract attention/encourage participation.
 Notes/Hard copies of the slide presentation can be distributed at the end of the
presentation as a reminder of the key facts of the presentation.
 It is easy to update hand-outs with recent information or developments.
 Notes may be compared with electronic slides to validate the accuracy.
 Extra information, e.g. contact details/price lists may be handed out to promote the
services of the business.
 Useful information for improving the next presentation may be obtained, when the
audience completes feedback questionnaires after the presentation.

AND/OR

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Negatives/Disadvantages
 Handing out material at the start of the presentation may distract/lose audience attention.
 As it only summarises key information, some details might be lost/omitted.
 Printed material is expensive and it is easy to lose hard copies.
 Increases the risk of unauthorised duplication/use of confidential information.
 Hand-outs cannot be combined with audio material, so it only focuses on the visual
aspects of support material.

2.3.4 Impact of video conferencing/ Skype

Positives/Advantages
  Can be used for international meetings.
  People can see and hear each other during their communication.
  There is no need to spend time and money travelling to meetings.
  Documents can be viewed on the screen at the same time.
 Can be used when a presenter wants to refer to documents such as
graphs/relationships/diagram and process steps.
 Ideas and knowledge can be communicated between all those at the meeting very
quickly and responses gathered.
AND/OR
Negatives/Disadvantages
  Takes away from the personal aspect of the conversation.
  It may be difficult to get everyone at the same time when scheduling a session.
  The environment/surrounding may limit people to retain information effectively.
  People who use this equipment must be properly trained on how to use the equipment.
 Conferencing facilities can be expensive and everyone who is going to attend the
meeting needs access to suitable hardware and software.
 There might be a slight delay between responses especially from one side of the planet
 to the other.
 The video camera might not be able to see all parts of the room at the same time, some
people might not be easy to see at the meeting.

2.4.5 Impact of flip charts

Positives/Advantages
  Mainly used for a small audience to note down short notes/ideas.
  Very effective in brain storming sessions as suggestions are summarised or listed.
 In a sales pitch it may be useful during the feedback session to summarise main
facts/aspects that the presenter needs to follow up.

AND/OR
Negatives/Disadvantages
 There may not be enough time during the presentation to make written notes, so some
 ideas may not be listed.
 Handwriting may be illegible/ untidy which may not contribute to a professional
 image/presentation.
 It may not always be possible to prepare flip charts before the presentation, so it can
become cluttered/ chaotic.

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2.5.6 Impact of interactive whiteboard/Smart boards

Positives/Advantages
  Easy to combine with sound/other visual aids.
  Useful to capture feedback and new ideas.
 Can be controlled by the touch of a finger, so the presenter can move away from the
 computer during the presentation.
 Special pens allow the presenter to write on the board while prepared images are
displayed
 Additional notes that was added during the presentation can be captured on computer
 after the presentation
 Images can be projected directly from a computer, so no external projector/devices
necessary.

AND/OR
Negatives/Disadvantages
 Can only be used by a presenter who knows the unique features of the interactive
whiteboard/smart boards and uses it to its full potential.
 Cannot be connected to any computer as special, licensed software is needed to be
 able to use it.
 Cannot be connected to any computer as a special software license is needed to be
 able to use it.
 Technical challenges may render it ineffective, e.g. loss of signal while using it.

2.5.7 Impact of posters/signs/banners/portable advertising

stands/flags
Positives/Advantages
  Useful in promoting the logo/vision of the business.
 It should be colourful/eye-catching/creative to support the core message of the
 presentation.
  Can make impact when placed strategically in/outside the venue
 May contain large illustrations/pictures/features of the products/key concepts to
emphasise detail, e.g. creative jewellery/unique features of the jewellery.

AND/OR
Negatives/Disadvantages
 May not always be useful in a small venue/audience as it can create a 'crowded'
 atmosphere.
 May overpower/draw attention away from the presentation if it is too big/not placed
 correctly.
 Only focuses on visual aspects as it cannot always be combined with sound/audio.

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FORMS OF OWNERSHIP CHAPTER 16

PAPER 2

BUSINESS STUDIES
GRADE 12
TERM 4
CHAPTER 16
NOTES ON FORMS OF OWNERSHIP
CHARACTERISTICS/ADVANTAGES & DISADVANTAGES
REVISED

TABLE OF CONTENTS
TOPICS PAGES
Exam guidelines for forms of ownership 2
Terms and definitions 3
List of the forms of ownership 4
Meaning of limited liability and unlimited liability 4
Characteristics and impact of a sole trader 4-5
Characteristics and impact of a partnership 5-6
Characteristics and impact of a Close Cooperation 6-7
Characteristics and impact of a private company 7-8
Characteristics and impact of a personal liability company 8-9
Characteristics and impact of a public company 9-10
Characteristics and impact of a state owned company 11
Difference between the private and public company 12
Difference between the private and a personal 12
liability company
Characteristics and impact of a non-profit company 12-13
Characteristics and impact of co-operatives 13-14

This chapter consists of 14 pages.

CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT PURPOSES

Learners must be able to:
  Discuss/Explain the characteristics of each form of ownership.
  Explain the meaning of limited liability and unlimited liability.
 Discuss/Explain/Evaluate the impact (positives/advantages and/or
negatives /disadvantages) of the different forms of ownership.

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FORMS OF OWNERSHIP CHAPTER 16

PAPER 2
TERMS AND DEFINITIONS

TERM DEFINITION
Form of ownership The legal position of the business and the way it is owned.
Continuity Continue to exist even if a change of ownership takes place, e.g a
member or shareholder dies or retires.
Surety If a person or business accepts liability for the debt of another person
or business.
Securities Shares and bonds issued by a company.
Limited liability Loses are limited to the amount that the owner invested in the business.
Unlimited liability The owner’s personal assets may be seized to pay for the debts of the
business.
Memorandum of The document that sets out the rights, responsibilities and duties of
Incorporation (MOI) shareholders and directors.(serves as a constitution of a company).
Sole Trader /Sole A business is owned and controlled by one person who takes all the
Proprietor decisions, responsibility and profits from the business they run.
Partnership An agreement between two or more parties that have agreed to finance
and work together in the pursuit of common business goals.
Co-operative society Autonomous association of persons united voluntarily to meet their
common economic/ social needs/aspirations through a jointly owned and
democratically controlled enterprise.
Company A company is a legal person who has capacity and powers to act on its
own.
Profit Companies A company incorporated for the purpose of financial gain for its
shareholders.
Non-profit company
A non-profit company is an association incorporated not for gain.

Public company
A public company is a voluntary association of ONE or more persons,
governed by the company Act 71 of 2008, incorporated in terms of the
Memorandum of Incorporation.
Private company
A private company is a voluntary association of one or more persons.
Personal liability
A personal liability company is a voluntary association of one or more
Company
person.
State-Owned A state-owned company (SOC) is a legal entity that is created by the
company government in order to participate in commercial activities on its
behalf.
Partnership
A document that contains exhaustive provisions with regards to the
Article
matters concerning the business and the partners.
Prospectus Prospectus is a document inviting the public to buy securities/shares.
Annual General A meeting held once a year where the shareholders receive a report
Meeting (AGM) stating how well the company has done.
Directors People elected to the board of a company by the shareholders to
represent the shareholders’ interests.
Audit
Process where an organization’s accounts are checked to make sure
its financial operations are honest

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FORMS OF OWNERSHIP CHAPTER 16

PAPER 2
FORMS OF OWNERSHIP
The following forms of ownership will be dealt with in detail in this chapter:
  Sole trader/Proprietor
  Partnership
  Close Co-operation
  Private company
  Personal liability company
  Public company
  State-owned company
 Co-operatives

1 Meaning of limited liability and unlimited liability

1.1 Meaning of limited liability
 This is when shareholders are only liable for the amount that they invested in the
company.
 Example: If the business is bankrupt, the personal possessions of shareholders
cannot be used to pay for the debt of the business.

1.2 Meaning of limited liability

 This is when the owner(s) are personally responsible for all the debts of the
 business.
 Example: If the business is declared bankrupt, the personal possessions of the
sole trader and partners may be sold to pay off the debts of the business.

CHARACTERISTICS OF EACH FORM OF OWNERSHIP

2 SOLE TRADER/ PROPRIETOR

2.1 Definition
 A sole trader is a business that is owned and managed by one person.
 The business owner handles everything including the activities of the business, its
processes and decisions.
 It is most suitable for service businesses such as a doctor/hairdresser/electrician
etc.

 It needs a minimum of one shareholder and there is no limit on the number
of shareholders
 Requires one or more directors and one or more shareholders.
 Raises capital by issuing shares to its shareholders.
 The company name ends with letters (PTY) Ltd.
 Investors put capital in to earn profit from shares.
 The company has a legal personality as well as unlimited continuity
 The auditing of financial statements is optional.
 A private company is not allowed to sell shares to the public.
 Shareholders have limited liability and a separate legal entity.
 Profits are shared in the form of dividends in proportion to the number of shares held.
 Register with the registrar of companies by drawing up Memorandum of
Incorporation.
 Shareholders have a limited liability and will not lose their initial capital invested if
the business goes bankrupt.

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FORMS OF OWNERSHIP CHAPTER 16

PAPER 2

5.3 Impact of a private company Positives/Advantages

and/or Negatives/ Disadvantages

Positives/Advantages Negatives/Disadvantages
-Shareholders can vote for/ appoint the most -Requires a lot of capital for establishment
capable directors to manage their company.
--A company has continuity of existence -Large management structures can result in
decision-making taking time
-Own legal identity and shareholders have -The private company is not allowed to sell
no direct legal implications/ limited liability. shares to the public.
-Managed at least by one competent - Directors may sometimes act in their own
highly skilled director. interest, not in the company's best interest.
- Large amount of capital can be raised -Annual financial statements must be
since there is no limit on the number of reviewed by a qualified person, which is
shareholders. an extra expense to the company.
-The company can access long term -Difficult and expensive to establish as
capital and therefore has good long term the company is subjected to many legal
growth opportunities. requirements
-Even though shares are not freely -Pays tax on the profits of the business and
transferable, large private companies can on declared dividends/Subject to double
raise considerable amount of capital. taxation.
-Not required to file annual financial -Financial statements must be reviewed
statements with the commission. by a qualified person, which is an extra
expense to the company.
-It is possible to sell a private company as -Directors will be held personally
it is a legal entity in its own right. responsible for debts if it can be proven
that that they committed fraud.
-The management of the company can - Some shareholders may not exercise their
improve since directors are accountable to voting rights resulting in choosing the
shareholders. wrong person as a director.

Positives/Advantages and/or Negatives/Disadvantages
Positives/Advantages Negatives/Disadvantages
-Profits may be used to finance other state -May result to poor management as
departments government is not always as efficient as the
private sector.
-Offer essential services which may not -Inefficiency due to the size of the business
be offered by the private sector
-Prices are kept reasonable/Create sound -Often rely on government subsidies which
competition with the private sector to make may not cover all the company’s expenses
services affordable to more citizens.
-Wasteful duplication of services -A lack of incentive for employees to perform
is eliminated if there is no absence of other motivator such
as productivity bonuses.
-Planning can be coordinated through -Government can lose money through
central control. the business.
-Generates income to finance social -A lack of incentive for employees to perform
programmes. if there is no share in the profit.
-Jobs are created for all skills levels. -Losses must be met by the tax payer.
-Shares are not freely tradable making it
difficult to raise capital.
-SOC must follow strict regulations for
operations to raise capital.
-Financial statements must be audited

10
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FORMS OF OWNERSHIP CHAPTER 16

Memorandum of The document that sets out the rights, responsibilities and duties of shareholders
Incorporation (MOI) and directors.(serves as a constitution of a company).
Sole Trader /Sole A business is owned and controlled by one person who takes all the decisions,
proprietor responsibility and profits from the business they run.
Partnership An agreement between two or more parties that have agreed to finance and
work together in the pursuit of common business goals.
Co-operative society Autonomous association of persons united voluntarily to meet their common
economic/ social needs/aspirations through a jointly owned and democratically
controlled enterprise.
Company A company is a legal person who has capacity and powers to act on its own.

Profit Companies A company incorporated for the purpose of financial gain for its shareholders.

Non-profit company A non-profit company is an association incorporated not for gain.

Public company A public company is a voluntary association of ONE or more persons,

increases the value of shares -Dividends are not always paid out
-Profits generated can be re- which may discourage new
invested to expand business investors.
operations
-Shareholders receive profits
according to the type and
number of their shares.
Legislation -The company and its owners -Formation procedures are time
(shareholders) are separate consuming/complicated/
entities, which expensive, as many legal
may encourage more people documents need to be
to join the company prepared/submitted
-Limited liability allows for -High formation/establishment
greater risk taking, which may expenses require large start-up
lead to growth of the business capital.

-Auditing of financial -Annual audit of financial

statements, gives statements is costly.
shareholders the assurance -If a public company does not
that the business is being comply with legislation, its licence
properly managed and maybe withdrawn by the
supports raising additional Companies and Intellectual
finance. Property Commission (CIPC).

1.5 Criteria that contribute to the success and/or failure of a

personal liability company
Factor Success AND/OR Failure
Capacity There is no limit to the -It cannot grow into a very large
number of shareholders, business since it cannot invite the
this may lead to expansion public to buy shares
Management -PLC is managed by a -Directors may not have a direct
competent board of directors interest in the company, which can
who may be experts in their hamper growth and profit
fields. maximization
-Quick decisions can be -PLC and its shareholders are
made even if there is only compelled to budget a larger
one director. amount for directors' remuneration
-Shareholders can vote to attract the best directors.
for/appoint the most capable -Directors' fees increase the
directors to manage their company's expenses which reduces
company. net profit
Taxation -Can obtain tax rebates if -Subject to double taxation e.g.
they are involved in SCI shareholders pay secondary tax this
projects. can have a negative impact to a
-Can obtain government company that is already financially
tenders and renew their struggling.
licenses if they do not evade
tax.
-PLC only pays tax after
business expenses have
been deducted.
-Companies and
shareholders are taxed
separately/double taxation.

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FORMS OF OWNERSHIP CHAPTER 17

PAPER 2

-The company pays tax at a

fixed rate which can be lower
than that of partnerships.
-Image of the business is
promoted and attracts
investment when companies
comply with tax
regulations/laws.
Capital -Capital can be increased by -It cannot grow into a very large
getting more shareholders. business since it cannot invite the
public to buy shares.
-Restrictions on transferability of
shares may not attract financially
strong investors.
-Large amount of capital cannot be
obtained as capital contribution is
only limited to private shareholders.
Division of profits -High profits and good -Shareholders may sell their shares
returns to shareholders when dividends are low, resulting in
indicate the success of a a drop in share prices
company, which increases -Dividends are not always paid out
the value of shares which may discourage new
Profits generated can be re- investors.
invested to expand business
operations.
Legislation -The company and its -Lengthy registration requirements
owners (shareholders) are may delay the actual operation of
separate entities, which the business and shareholders can
may encourage more people loose on profitable opportunities
to join the company -It is expensive to register this form
-Directors are forced (by the of ownership which increases
Act) to act responsibly and business expenses hence reducing
work harder towards the profit
success of the company to -The drafting of directors'
protect their personal assets performance contracts may be time
-Directors sign performance consuming, expensive and increase
contracts which will motivate costs
them to perform -Auditing is required only if the
professionally and ethically PLC meets the requisite tests for
-Rights and duties of solvency and liquidity, which leads
shareholders are stipulated in to extra auditing costs.
the Companies Act,
which minimises unethical
and corrupt behaviour
-May obtain government
tenders as the PLC is
properly registered in
compliance with the
Companies Act

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FORMS OF OWNERSHIP CHAPTER 17

PAPER 2

1.6 Criteria that contribute to the success and/or failure of a non-

profit company
Factor
Success AND/OR Failure
Capacity -Many donors may be willing to -Limited capacity as funds may be
donate NPC activities are for a difficult to raise.
good cause/ beneficial to the -May not attract investors due to its
community. nature as a NPC as they are not
-More shareholders may become profit driven
involved/join the company as they
contribute positively to society.
Management -A NPC may be well managed as -Large management structure can
it requires a minimum of three complicate/delay decisions.
directors. -Directors may mismanage business
-More directors may be appointed funds as they may not have a direct
to bring more skills/ideas/ interest in the NPC.
innovations/expertise to the NPC.
-The legally prescribed Directors are liable for any loss/
management structure ensures a damage/cost sustained by the
well-organised company company.
Directors may not have skills to
manage resources.
Taxation -May qualify for tax exemption -Required to pay income tax if
if certain criteria are met engaged in activities that are
-They may receive certain tax unrelated to their business purpose -
benefits/rebates when actively Must meet certain tax requirements
involved in community projects. to be exempted, e.g. operations
must be exclusively for charitable,
scientific or public safety purpose
Capital -Unlimited number of founders -Founders may contribute limited
may contribute more capital to the capital/may not contribute capital
company. which may not be sufficient for the
-More capital may be raised establishment/operation of the
through donations/ sponsorships company.
for operation -The company depends/relies on
/expansion. donations as their main source of
- It is easy to raise funds/capital, capital which may hamper its
as donors enjoy tax benefits. operation/expansion.
-NPC may struggle to raise enough
capital/funds if they fail to convince
donors/donations are misused.
Division of -The profits of the company are -May discourage potential investors
profits used finance other needs of the from investing in the company as
company. this is a non-profit company.
Legislation -The company and its owners -Formation procedures are time
(shareholders) are separate consuming/complicated/ expensive,
entities, which as many legal documents need to
may encourage more people to be prepared/submitted.
join the company
-Financial statements are audited
this may result to effective use of
resources.

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