BUSM5111 LU1

1. What is a Business?
A business is an entity or organization that deals with the production, sale,
and distribution of goods and services to satisfy consumer needs. Its main
aim is to earn profit by adding value to customers. Businesses come in
different sizes and scope, ranging from small firms to multinational
corporations. They exist in a given industry or sector and sometimes try to
deliver products or services that satisfy unmet needs or solutions to
problems.

2. Factors of Production
Factors of production are the inputs used in the manufacture of goods and
services. They are:

Land: Natural resources employed in the manufacture of goods and services

(raw materials, agricultural land).

Labor: Human effort utilized during the production process, both manual and
mental effort.

Capital: Financial funds, machinery, equipment, and infrastructure utilized in

production.

Entrepreneurship: The innovation and willingness to take risk in bringing

together the other productive factors to generate a business and establish
economic activity.

3. Economic Systems
An economic system is the way in which a country organizes its resources,
production, and distribution of goods and services. There are several
economic systems, the most prevalent being:

Market Economy: Decisions regarding production and distribution are based

on demand and supply. Prices are determined by competition and consumer
preferences.

Command Economy: The government controls the production, price, and

distribution of goods and services.

Mixed Economy: A combination of both market and command economies,

with some part controlled by the government and the other by private
individuals.

4. The Four Main Elements of Business Organizations

Business organizations typically have four main elements:
Management: Organizing, planning, leading, and controlling resources to
achieve organizational goals.

Operations: The process of producing goods and services, including the

design, production, and delivery stages.

Marketing: Processes that go into selling and marketing products or services,

such as market research, advertising, and distribution.

Finance: Money and investment management, including budgeting, financial

reporting, and raising funds.

5. What is a Market Economy or Market System?

A market economy, also called a market system, is an economic system in
which investment, production, and distribution decisions are guided by the
price signals resulting from the supply and demand for goods and services.
In it:

Prices are determined through market competition.

Consumers and producers freely interact in the marketplace.

Government intervention is minimal, but there may be laws to ensure

competitive fairness and protect against monopolies.

6. How Does a Market Economy Function?

A market economy functions by allowing private companies or individuals to
own and have the means of production and make decisions based on market
signals (demand and price). This is how it works:

Supply and Demand: Prices rise when demand exceeds supply and fall when
supply exceeds demand.

Consumer Choice: Consumers determine what is produced by their buying.

Producers are encouraged to produce something that consumers need if
consumers desire it.

Competition: Different producers compete to make the best and sell it at the
best price, leading to innovation and efficiency.

7. Why is a Market Economy the Predominant System in South Africa?

South Africa has a market economy system because it allows greater
economic freedom, efficiency, and innovation. The government promotes
free markets and entrepreneurship, and it has put in place policies that
promote competition. The country's dependence on a market system is
based on the assumption that free-market capitalism will most effectively
stimulate economic growth, create jobs, and increase prosperity. South Africa
also includes elements of government regulation to address social
imbalances and provide fair business practices.

8. Factors Contributing to the Sustainability of a Business

Several factors play a role in the long-term sustainability of a business:

Effective management: Effective planning and leadership are crucial to guide

a firm towards its long-term goals.

Innovation: Firms need to adapt with shifting market forces by constantly

improving products and services or creating new ones.

Customer satisfaction: Firms with high customer satisfaction levels are likely
to retain customers and enjoy repeat business, which is extremely crucial for
sustainability.

Financial Sustainability: Sufficient cash flow, profitability, and available

capital is necessary to remain alive in the competitive market.

Compliance with the Law: Maintaining compliance with local and

international laws is essential to keep operating and avoid legal problems.

9. Why Do These Aspects Enable Businesses to Survive and Thrive Over Long
Horizons?
These factors help businesses by making them responsive, economically
secure, and capable of fulfilling customer needs. Market applicability and
competition are supported by innovation, while management helps
companies achieve their goals. Stability makes companies capable of
withstanding setbacks and reinvesting in growth, while customer loyalty
provides companies with a stable revenue stream. Regulatory compliance
maintains a positive image and places the company at arm's length from
legal danger.

10. How Business Organizations Offer Accessible Products and Services that
Society Needs?
Business organizations contribute to society by finding unserved needs and
creating products or services to meet such needs. This is accomplished by:

Market Research: Finding out what customers want, suffer from, and prefer.

Production: Utilizing the factors of production to create goods or render

services.
Distribution: Bringing products or services to consumers via efficient supply
chains, retailing, or direct-to-consumer delivery.

Marketing: Stimulating products or services to make them aware and raise

demand.

In short, corporations meet society's needs by always adapting to

accommodate market demands, providing solutions, and delivering value to
consumers.

NEEDS AND S
1. What is a Business?
A business is an organization or institution that produces, distributes, and
sells goods or services to satisfy the needs and wants of consumers and
make a profit. Businesses may vary in size and form but share one main
goal, which is to create value for customers and profit for owners.

### 2. **Formal and Informal Business**

- **Formal Business:** They are those that operate in the formal legal system
of a country. They are registered, taxable, and compliant with labor laws.
They normally have a more formal structure, employ professionals, and use
professional accounting techniques. Examples include large corporations,
small businesses, and franchises.
- **Informal Business:** These businesses operate without official
registration or government recognition. They are usually small-scale
operations and do not necessarily follow government regulations in terms of
taxation or labor legislation. Informal businesses usually operate in local
markets, such as street vendors or small family-run shops. They are
prevalent in most developing economies.

### 3. **Types of Need-Satisfying Organisations**

Need-satisfying organizations can be categorized into three broad
categories:
1. **Private Sector Organizations: ** These businesses are owned by private
groups or individuals. They are established primarily to generate profits
through selling goods or services that are demanded by consumers.
Examples are corporations, partnerships, and small business.
2. **Public Sector Organizations: ** These are government-owned and
government-controlled organizations. Their primary role is to provide goods
and services for the public good, not to generate profits. Examples are state-
owned enterprises, hospitals, and schools.
3. **Non-Profit Organizations (NPOs):** NPOs are formed with the purpose of
serving society without the desire to earn a profit. They are usually funded
by donations, grants, or the government. Examples include charities, NGOs,
and advocacy groups.
### 4. **The Four Elements of Business**
The four major elements of a business organization, as discussed in the
textbook, are:
1. **Management: ** The planning, directing, and controlling of resources to
attain business objectives.

2. **Operations: ** The routine tasks that entail the actual production of

goods or rendering of services.

3. **Marketing:** The functions that identify, anticipate, and fulfill customer

needs and desires. It encompasses market research, advertising, and
distribution.
4. **Finance:** Asset and money management in the organization to ensure
that the business has enough resources to enable operations and expansion.

### 5. **Factors of Production**

The **factors of production** are input resources used to produce goods and
services, and they are:
- **Land:** Natural resources used in production like raw materials like
minerals, water, and forests.
- **Labor:** Human effort (mental or physical) utilized in production.
- **Capital:** The money, machinery, equipment, and infrastructure needed
to produce.
- **Entrepreneurship:** The initiative to combine the other factors of
production and create a business and take correlated risks.

### 6. **How Would One Differentiate Between the Three Types of Need-
Satisfying Organisations?**
The three need-satisfying types of organisations are differentiated primarily
by the ownership, purpose, and the way they position themselves toward
society:
- **Private Sector Organizations:** Their main aim is to be profitable. They
are driven by market forces and competition, and their success depends on
offering products or services that consumers need and are willing to pay for.
- **Public Sector Organizations:** They are owned by the government and
are concerned with delivering basic services to the public, either at a
subsidized price or for free. They aim at enhancing the well-being of society,
not profitability.
- **Non-Profit Organizations:** They are formed to serve society's needs and
provide services or advocacy for a cause without the intent of making a
profit. They usually depend on donations, grants, and volunteers.
### 7. **What is the Purpose of Each of the Need-Satisfying Organizations?
**
- **Private Sector:** The purpose is to satisfy consumer needs while making
a profit. Private sector organizations help in economic growth, innovation,
and employment.
- **Public Sector:** The purpose is to fulfill the needs of the public, such as
health care, education, and infrastructure, without profitability. They are
funded by taxes and aim to advance the well-being of society as a whole.
- **Non-Profit Organizations:** Their function is to deal with social causes,
provide humanitarian aid, and raise causes. They are not profit-oriented but
attempt to create positive social impacts, typically through donations, fund-
raising, and volunteering.
### 8. **How are the Four Factors of Production Used in Each of the Need-
Satisfying Organizations?**
- **Private Sector Organizations:**
- **Land:** Used in factories, stores, and offices.
- **Labor:** Employed to create products, provide services, and manage
business operations.
- **Capital:** Invested in machinery, buildings, technology, and funds to run
the business smoothly.
- **Entrepreneurship:** Entrepreneurs assume the risk of starting and
running the business, introducing innovation, and directing the use of the
other factors.

- **Public Sector Organizations:**

- **Land:** For public works such as construction of infrastructure, parks,
schools, and hospitals.
- **Labor:** Applied in the provision of public services (e.g., teaching, health
care, public administration).
- **Capital:** Tied up in public infrastructure, government offices, and public
services.
- **Entrepreneurship:** Government efforts and management that do not
seek profit.

- **Non-Profit Organizations:**
- **Land:** Used for the setting up of premises like shelters, community
centers, and food banks.
- **Labor:** Contributed by volunteers and hired staff in terms of services
and support to society.
- **Capital:** Funded through donations, grants, and in some cases,
government assistance.
- **Entrepreneurship:** Social entrepreneurs initiate the process of creating
organizations that address social problems and operate them effectively.

### 9. **How Can Society's Limited Resources Be Described?**

There is only a limited amount of land, labor, capital, and entrepreneurship
available in society's resources. That is known as the **economic problem of
scarcity**. Resources are scarce in relation to society's unlimited demands
and desires, leading to the need for allocation and priority within economic
decision-making.

### 10. **Why Do Businesses Need These Resources?**

Companies require these resources to manufacture goods and services,
which are needed to meet the needs and desires of customers. In the
absence of natural resources (land), human labor (labor), investment
(capital), and business management and innovation (entrepreneurship),
companies would not be able to operate effectively, produce goods, or
deliver services that communities need.

### 11. **How Do Businesses Convert Resources to Meet the Multiple

Needs of Communities?**
Companies transform factors of production into resources to create goods
and services to satisfy the needs of society. They do this through:
- **Production and Innovation:** Companies convert raw materials (land) into
finished goods by adding labor and capital (equipment, instruments,
technology). Entrepreneurs guide the process to ensure the final product
addresses customers' demand.
- **Offering Employment:** Through labor, companies provide jobs, earning
employees income and skills.
- **Supplying Goods and Services:** Businesses take in inputs (inputs) and
deliver outputs (goods or services) that satisfy the needs of customers.
- **Facilitating Economic Growth:** As businesses grow and thrive, they
facilitate the overall economy through employment creation, wealth creation,
and improved living standards.

These shifts allow businesses to react to the needs of communities by

providing needed goods and services as well as spurring economic activity
and growth.

Using *Introduction to Business Management (11th edition, 2019)* by Barney

Erasmus as a guide, let’s dive into the key concepts you’ve asked about
related to economic systems and need-satisfying institutions.

### 1. **What is an Economic System?**

An **economic system** is the structure or arrangement by which a society
manages the production, distribution, and consumption of goods and
services. It is what the society chooses to produce, how to produce, and for
whom to produce, with available resources. Economic systems dictate what
people, business, and government do within the economy and how the
economy functions and allocates resources to meet the needs of society.
### 2. **How Can the Primary Economic Systems Observed by
Contemporary Communities Be Explained?**
Three primary types of economic systems observed by contemporary
communities, with each varying with regard to allocation of resources and
government intervention, are as follows:

- **Market Economy (Capitalism):**

In a market economy, investment, production, and distribution decisions are
determined by interactions among businesses and individuals in the
marketplace. Prices and production levels are determined by demand and
supply. The government plays a small role, often only enforcing law and
protecting property rights. Examples include the United States, United
Kingdom, and Australia.

- **Command Economy (Planned Economy):**

In a command economy, the government holds complete control over
production, prices, and distribution of goods and services. All economic
decisions are made by the government, and there is little or no private
business ownership or resource ownership. Such a system is predominantly
followed in socialist or communist countries. The examples are North Korea
and, historically, the Soviet Union.

- **Mixed Economy:**
A mixed economy incorporates elements of market and command
economies. While extensive private sector involvement and market
processes exist, the government also plays a significant role to regulate the
economy, provide public goods and services, and intervene to correct market
failures. Most modern economies, such as South Africa, Canada, and France,
are founded on a mixed economy.

### 3. **How Would One Be Able to Differentiate Between the Various

Need-Satisfying Institutions of the Market Economy?**
Need-satisfying institutions in a market economy can be broadly categorized
into the following categories:

- **Private Sector Institutions:**

These are organizations and private-owned businesses run by groups or
individuals. They are profit-motivated and attempt to satisfy the consumers'
wants through producing and offering goods and services. These comprise
individual service providers, small firms, and large companies. They are
autonomous without government interference but must remain within the
limits of the regulations and laws.

- **Public Sector Institutions:**

They are owned and operated by the government. Their underlying purpose
is to provide public goods and services to meet society's needs, often
without the intention of profit-making. Public hospitals, schools, and national
public works (such as roads and bridges) are some examples. Although they
don't compete with private businesses, they provide necessities such as
health care, education, and public safety.

- **Non-Profit Institutions:**
These organizations exist to attain social, educational, or philanthropic goals,
not for profit. They may be funded by donations, grants, or government
subsidies. Examples include charities, non-governmental organizations
(NGOs), and advocacy groups. Even though they are not profit-making, they
still have to be run efficiently in order to sustain their activities.

The distinction among these types of institutions lies in their ownership,

objectives (profit versus public good), and fund sources. Private sector
institutions are designed to achieve profit, public sector institutions provide
public goods and services, and non-profit institutions have social or
humanitarian objectives.

### 4. **How Do Need-Satisfying Institutions Influence the Functioning of a

Market Economy?**
Need-satisfying institutions contribute significantly to the functioning of a
market economy by:
- **Private Sector Fuels Production and Innovation:** Private sector
institutions drive the production of goods and services that answer consumer
demands. They bring competition to the market, which leads to innovation,
improved products, and lower prices, benefiting consumers.
- **Providing Public Goods and Services:** Public institutions ensure that
basic services such as education, healthcare, and infrastructure are provided
to all citizens. Private companies may not find such services profitable to
provide and therefore the government steps in to offer these services to all
uniformly.

- **Fulfilling Social Needs:** Non-profits help address issues in society that

maybe the market or the government does not address well enough. They
engage in activities such as philanthropy, environmental preservation, and
public relations, and typically serve as a cushioning safety net for
marginalized communities.

In a market economy, institutions within each sector talk to one another and
produce an integrated system addressing the diverse demands of society. As
private sector institutions are engaged with profitability and competition, the
public and non-profit agencies ensure that fundamental services and societal
well-being are protected.

### 5. **How Can the Economic Principle Be Described?**

The **economic principle** is a basic principle where resources are limited
and human desires are virtually unlimited. This basic principle is the
foundation for the need for choice and rationing in all economies. Because
resources such as labor, capital, and land are limited, individuals, businesses,
and governments must choose how to use the resources most efficiently to
get maximum utility or happiness.

For the situation of a market economy:

- **Scarcity:** Not enough resources are available to meet all human wants,
so choice must be exercised as to how to make effective use of limited
resources.
- **Opportunity Cost:** All choices come with a cost—in using one's
resources to be devoted to an activity, the resource is unable to be put to
alternative purposes. Opportunity cost is the monetary value of next best
option being given up.
- **Supply and Demand:** Prices of goods and services are determined by
the supply of the goods (how much there is) and demand (how much people
want it). When demand is greater than supply, prices fall; when demand is
lower than supply, prices rise.

This rule is important as it serves to explain how businesses, governments,

and individuals make choices and assign resources. It supports the
operations of both market and mixed economies, where the supply and
demand balance determines the production, distribution, and consumption of
goods and services.

### Summary
In a market economy, the economic system functions through the interaction
of different institutions (private sector, public sector, and non-profits) that
react to the different needs of society. The economic principle, which focuses
on scarcity and the need for choice, helps in guiding the allocation of
resources efficiently, so that the needs of society are met through a mix of
production, distribution, and consumption. The differences between need-
satisfying institutions of different types and their functions serve to
guarantee the smooth operation of the market while satisfying the entire
spectrum of needs, ranging from private consumption to public welfare.

1. What is the Fourth Industrial Revolution (4IR)?

The Fourth Industrial Revolution (4IR) is the ongoing era of technological
transformation that is founded on a convergence of physical, digital, and
biological systems. It is marked by breakthroughs in technologies like:

Artificial Intelligence (AI) and Machine Learning: Technologies that can

analyze large data, make choices, and learn with time.
The Internet of Things (IoT): Internet-enabled devices that enable the sharing
of information and automation.

Automation and Robotics: Equipment and software carrying out tasks

previously done by humans.

Blockchain: An electronic accounting system offering secure transactions

through decentralization.

3D Printing: Printing materials in physical form from digital structures.

Nanotechnology, Biotechnology, and Advanced Materials: Scientific

advancements that are transforming industries like healthcare,
manufacturing, and energy.

Quantum Computing: Utilizing quantum mechanics to perform computations,

possibly revolutionizing data processing capability.

The Fourth Industrial Revolution is transforming the manner in which firms

conduct business, the manner in which goods and services are produced,
and the manner in which customers interact with goods and services.

2. How Can the Fourth Industrial Revolution Change the Way We Do

Business?
The Fourth Industrial Revolution is transforming businesses in various ways:

Digitization of Business Processes: Many legacy processes are being

automated, making them more efficient, reducing errors, and speeding up
production.

New Business Models: Platform-based models (e.g., Uber, Airbnb) and the
sharing economy are disrupting industries. Businesses are leveraging
technology to create new value propositions.

Personalization and Customer Experience: With big data and AI, businesses
can personalize products and services to individual preferences, improving
customer satisfaction and engagement.

Global Connectivity: Growing usage of the internet and virtual spaces allows
businesses to anchor their operations worldwide with minimal physical
presence, bringing new opportunities for growth and market penetration.

Supply Chain Optimization: Automation, artificial intelligence, and IoT are

streamlining supply chain management, making them more efficient and
dynamic in reacting to market changes.
Sustainability Focus: The Fourth Industrial Revolution encourages businesses
to become environmentally friendly through innovation in energy efficiency,
recycling, and clean production processes.

In general, the 4IR has the ability to revolutionize how businesses interact
with customers, produce goods, and conduct businesses.

3. How Would Organizations Have to Adapt to Take Advantage of the Fourth

Industrial Revolution?
Organizations would need to put in place various strategies in an effort to
reap the benefits of the Fourth Industrial Revolution:

Invest in Technology and Innovation: Digital technologies (AI, IoT, robotics,

blockchain) must be adopted in order to compete. Businesses must invest in
research and development to drive innovation and keep pace with
technological changes.

Develop Digital Skills and Talent: With AI and automation reshaping the
workplace, businesses need to upskill or reskill workers to deal with new
technology and sophisticated systems. Data science, AI, and digital strategy-
skilled employees are increasingly in demand.

Create Agile Business Models: The rapidity of technological change requires

organizations to be flexible and responsive. Businesses must construct agile
management methods that allow them to respond quickly to changes in the
market, technological advancements, and customer demands.

Data and Analytics Priority: Businesses need to collect and analyze data to
understand customer behavior better, simplify operations, and forecast
trends. Big data and AI can provide significant business intelligence to inform
decision-making.

Collaborate and Build Ecosystems: Businesses need to partner with

industries and technology companies to drive innovation. Connecting with
digital ecosystems can help businesses build new possibilities and reach
customers in new ways.

Adjusting to 4IR is not just embracing new technology—it also involves a

cultural shift to continuous learning, flexibility, and innovation.

4. How Will the Fourth Industrial Revolution Shape the Future of Work?
The Fourth Industrial Revolution will have a significant impact on the future
of work:

Automation of Repetitive Work: Jobs with repetitive activities (like data entry,
assembly line jobs) will be automated, leading to a reduction in certain
manual labor jobs. The transformation will demand more advanced and
creative jobs, particularly in the fields of technology, management, and
innovation.

Job Creation in Tech-Based Industries: As technology forms the backbone of

business operations, there will be increasing needs for workers with skill sets
in data analysis, coding for AI, cybersecurity, and other tech-based
professions.

Telecommuting and Flexible Work Arrangements: Internet platforms, cloud

computing, and communications software enable greater telecommuting and
flexible work arrangements. The work environment can be more dispersed to
facilitate better work-life balance and global talent pools.

Ongoing Skills Building and Continuing Education: With the rapid pace of
technological advancement, workers will need to continually develop their
skills. Businesses will have to invest in training programs so that workers can
stay up-to-date in the evolving job environment.

Machines and Humans Working Together: With increasing AI and robotics

being implemented in workplaces, increasing numbers of humans will work
together with machines, requiring new management techniques and working
with cutting-edge technologies.

Ultimately, the future of work will require us to transform how we approach

careers, learning, and work culture—to embed flexibility, lifelong learning,
and collaboration using technology.

5. How Can Organizations Thrive in the Fourth Industrial Revolution?

Organizations must adapt and stay ahead of technology for them to thrive in
the Fourth Industrial Revolution. Here's how they can do it:

Innovation and Continuous Improvement: Continuous innovation should be

highlighted by organizations, using the latest technologies to improve
products, services, and internal processes. Competitiveness requires an
experimental culture and the acceptance of failure as a learning process.

Data-Driven Decision Making: Big data and analytics enable businesses to

make data-driven decisions on product development, marketing, and
customer engagement. Data-driven decision making can lead to more
efficient operations and better customer satisfaction.

Building a Digital Culture: A digital-first culture is essential for businesses to

succeed in the 4IR. Leaders must build agility, collaboration, and technology
literacy culture in their organizations at all levels.
Sustainability and Social Responsibility: The Fourth Industrial Revolution
offers opportunities for companies to make more sustainable production
choices. Firms that lead with environmental and social responsibility
considerations, while employing new technologies to produce cleaner and
more sustainable output, will be best placed to succeed in the long term.

Strategic Partnerships and Ecosystems: Collaborating with technology firms,

startups, and even competitors within a broader ecosystem can provide
access to new technologies, ideas, and markets. Firms can accelerate
innovation and develop new business opportunities together.

Companies with innovation combined with strategic vision, adaptability, and

a willingness for sustainability will best succeed in tackling the complexities
of the Fourth Industrial Revolution.

Conclusion
The Fourth Industrial Revolution presents challenges as well as opportunities
for businesses. With the new technologies, adapting to the changing nature
of work, and innovating, companies can thrive in this new reality.
Organizations that focus on flexibility, continuous learning, data-based
decision-making, and sustainability will be best equipped to thrive in the
rapidly evolving business environment.

1. The Role of the Entrepreneur in the Economy

Entrepreneurs play a critical role in any economy as they drive innovation,
create jobs, and fuel economic development. They do so by identifying
opportunities, taking risk, and creating new products or services that
respond to consumers' needs. Entrepreneurs often go against the norms and
push the boundaries of existing markets, which can lead to industry and
economy development. Apart from the instant economic impact,
entrepreneurs diversify the economy, create competition, and raise living
standards.

2. The Entrepreneurial Qualities and Skills

Effective entrepreneurs possess some fundamental skills and qualities that
enable them to manage challenges and grasp chances:

Characteristics:

Risk-taking: Entrepreneurs are willing to take well-planned risks to attain

business success.

Innovation: Entrepreneurs are innovative and willing to bring new ideas into
the marketplace.
Visionary: Entrepreneurs possess a vision towards the future and a definite
aim for the direction of their business and success.

Perseverance: Persistence in the face of problems and failure is required.

Leadership: Entrepreneurs usually possess leadership qualities with the

potential to inspire and coordinate teams towards common goals.

Skills:

Business Acumen: Proper understanding of market forces, finance, and

strategy planning is required.

Problem-solving: Entrepreneurs require the ability to solve problems and

evolve as problems occur.

Communication: They should be well-communicative to convey their ideas to

investors, customers, and workers.

Financial Literacy: Efficient management of finances is a talent that

entrepreneurs should master to survive.

Networking: Developing and nurturing relations with partners, suppliers, and

other stakeholders matters.

3. How Can the Concept 'Entrepreneur' Be Defined?

An entrepreneur is one who recognizes a business opportunity, undertakes
necessary risks, and mobilizes resources needed to start and manage
businesses. Entrepreneurs are perceived as being innovative, proactive, and
prepared to break conventional market rules in the pursuit of establishing
and maintaining businesses.

4. How Can the Concept 'Entrepreneurship' Be Described?

Entrepreneurship involves the process of finding, producing, and making
available new or better products or services. It is not just the establishment
of a business, but also constant management of risk, resources, and plans for
growth and keeping the business up. Entrepreneurship is marked by
innovation and ability to seize opportunity in the presence of obstacles.

5. What Is the Role of Entrepreneurs in South African Society?

In South Africa, entrepreneurs have a critical function to play in improving
socio-economic issues, such as unemployment and poverty rates.
Entrepreneurs are considered key job creators, particularly in a country with
a high percentage of youth seeking jobs. By starting companies,
entrepreneurs promote economic development and diversification. Besides,
the majority of South African businesspeople are involved in the creation of
small and medium-sized businesses (SMEs), which are significant to the
development of the economy. They also get involved in social upliftment by
providing services and products that improve the living of many South
Africans.

6. Differentiating Between Traits, Abilities, and Assets Needed to Be an

Entrepreneur
Traits are inherent abilities or characteristics which make one suited for being
an entrepreneur. These are abilities such as risk-taking, persistence, and
creativeness.

Competencies are competencies that one may learn and employ in the
running of business ventures. Some examples include the abilities to market,
manage finance, lead, and negotiate.

Resources consist of tangible and intangible assets used to start and grow a
business. They can consist of capital, equipment, human resources, and
access to networks, and also intangible resources including knowledge and
experience.

1. Why Do Entrepreneurs Need to Use a Certain Process Before

Launching a New Enterprise?
Entrepreneurs need to use a certain process because it provides an
organized method of evaluating ideas, lowering risks, and increasing the rate
of success. Starting a new business is full of uncertainty, and utilizing a clear
plan helps entrepreneurs to break through challenges, properly invest
resources, and have a sense of direction towards long-term goals. Through
the step-by-step approach, business individuals are capable of finding out
about the target market, analyzing competition, and ensuring their products
or services will be suitable for the consumers. The process also helps with
financing, business plan development, and pilot testing of the venture prior
to full implementation.
2. Phases That an Entrepreneur Should Follow When Starting a Business
Entering business involves multiple distinct phases that help an entrepreneur
move from the idea stage to the operational stage of the venture. These
phases often include:
•Phase 1: Idea Generation and Opportunity Identification
oEntrepreneurs start by perceiving business opportunities. This may involve
recognizing opportunities in the gap in the marketplace or re-designing
already established products or services.
•Phase 2: Feasibility Study and Research
o\tCompleting extensive market research and feasibility tests to ensure that
the business idea is workable and sustainable. This phase allows for a check
on potential success in terms of demand, competition, and profitability.
•\tPhase 3: Business Plan Formulation
o\tOnce the business idea is checked, the following step involves creating a
solid business plan. This plan spells out the business goals, target market,
marketing plan, financial projections, and operations plan.
•\tPhase 4: Resource Accumulation
o Entrepreneurs need to obtain the resources they need to launch their
business at this stage, including funding, equipment, technology, and skilled
employees.
• Phase 5: Implementation
o This phase involves putting the business plan into action, for example, the
establishment of the company's physical or virtual space, launching
marketing campaigns, and opening operations.
• Phase 6: Monitoring and Evaluation
o\tAfter starting the business, entrepreneurs must monitor progress, review
performance, and make necessary adjustments to achieve business goals.
3. How Can Each of the Following Be Described in the Context of Starting a
Business?
•\tDecision to Become an Entrepreneur:
o
The decision to become an entrepreneur typically comes as a result of
personal factors, market opportunities, and a desire for autonomy from
financial constraints. This is a critical decision because it entails weighing the
risk and reward of going into business. Entrepreneurs must be willing to
invest their time, energy, and resources in the business, with an
understanding of the challenges entailed.
•
Entrepreneurial Activities and Skills
o Entrepreneurial activity includes the tasks and operations entrepreneurs
must perform in order to build and run a business, such as finding business
opportunities, accessing resources, marketing products or services,
managing finances, and overseeing teams. Entrepreneurial skills capture the
skill necessary to perform these operations effectively, including strategic
thinking, problem-solving, financial management, negotiating, and
leadership.
• Resources
o Entrepreneurial resources are physical and non-physical assets required to
establish and grow a business. They comprise:
 Financial resources (capital to invest in the business).
 Human resources (skills and expertise from employees or partners).
 Physical resources (properties, equipment, or inventory).
 Intellectual resources (information, patents, or trademarks).
o Availability of the right resources is extremely critical to the success and
survival of a business.
• Business Opportunities:
o\tA business opportunity is a thought or notion that has the potential to
satisfy a market requirement, solve a challenge, or capitalize on a void in the
marketplace. Identifying viable business opportunities involves market
analysis, customer demand awareness, and examination of the competitive
landscape. Entrepreneurs must examine these opportunities to determine
whether they should pursue them.
4. What Is a Feasibility Study?
Feasibility study is a detailed analysis that will establish whether the
business concept or opportunity is both feasible and sustainable. It involves
assessment of several aspects of the proposed venture like market demand,
competition, finances, and operational requirements. A feasibility study
typically entails:
•\tMarket Analysis: Analyzing the target market along with what the
consumers demand.
•\tTechnical Feasibility: Evaluating the technology, resources, and skill
necessary to implement the idea.
• Financial Feasibility: Reviewing the business's financials, including
startup costs, revenue potential, and profitability.
• Legal and Regulatory Feasibility: Reviewing any legal or regulatory
constraints that can affect the business.
A feasibility study provides an entrepreneur with a clear understanding of the
risks and advantages of the business idea prior to committing fully to it.
5. What Is the Value of a Feasibility Study to the Entrepreneur?
A feasibility study is beneficial to the entrepreneur on various counts:
•\tRisk Reduction: It identifies the risks and challenges that may arise before
the business is set up so entrepreneurs can make proper decisions and
minimize the chances of failure.
•\tFinancial Clarification: By assessing the financial factors, a feasibility study
informs entrepreneurs about the financing required and the expected
returns, which is essential for winning investors or loan providers.
• Market Insight: It provides a perspective on customer demand, trends
in the market, and competition, allowing the entrepreneur to mold the
business plan to fit for success.
• Decision-Making Tool: It is a decision-making tool, allowing
entrepreneurs to determine if to proceed with the business plan, change it,
or abandon it if found to be non-viable.
•\tAttracting Investors: A feasibility study conducted well can be a major
document to attract investors by highlighting the potential of the business
and the entrepreneur's careful preparation.

1. What Is The Business Plan?

The business plan is a written document that comprises the objectives of the
business, the method to be followed to achieve the objectives, and the
capital required to carry out the plan. It serves as a blueprint for the
entrepreneur, indicating the mission, vision, financial forecasts, marketing,
operations plan, and structure of the business. A business plan is a valuable
instrument for the entrepreneur and external stakeholders (e.g., investors or
lenders) to assess the feasibility and potential success of the business.
2. Business Incubator
A business incubator is an organization or program designed to help develop
and grow start-up businesses by providing them with the resources they
need, such as office space, mentorship, networking, funding advice, and
other business services. Incubators help start-ups avoid the traps of shared
issues and reduce the risk of failure by offering a nurturing setting for
business and innovation development.

3. Why Is It Important for an Entrepreneur Starting a New Company to

Prepare a Business Plan?
It is essential for an entrepreneur to prepare a business plan due to several
reasons:

Clarifies Vision and Strategy: The business plan forces the entrepreneur to
define the vision, mission, and strategy for the business, which helps to align
goals and objectives.

Secures Funding: Bankers and investors typically require a business plan in

order to determine the financial viability and potential of the business before
they approve funding.

Guides Decision-Making: A detailed business plan acts as a guide that directs

decision-making, keeps the entrepreneur on track, and allows for
adjustments in strategies where necessary.

Risk Reduction: By laying out the goals, market analysis, financial

projections, and business strategies, a business plan helps entrepreneurs
anticipate challenges and minimize risks.

4. What Are the Objectives of a Business Plan?

The most significant objectives of a business plan are:

Define the Business: To describe the mission, vision, and objectives of the
business.

Plan and Organize: To provide a systematic method of starting and operating

the business.

Secure Funding: To demonstrate to potential investors or lenders that the

business is viable and has a clear path to profitability.

Evaluate Performance: In order to create benchmarks for measuring

performance and monitor improvement over a period of time.

5. Who Are the Stakeholders in a Business Plan?

The stakeholders in a business plan are any individuals or organizations who
have an interest in the success of the business. The common stakeholders
are:

Entrepreneur/Founder: The person who establishes and operates the

business.

Investors: Individuals or organizations who put money into the business in

exchange for equity in the business.

Employees: Members of the team who labor to make contributions to the

daily operations and long-term success of the business.

Lenders: Banks or other financial institutions that may provide loans to the
business.

Suppliers and Partners: Organizations that provide goods or services vital to

the business operations.

Customers: The target market or consumers who use the business's products
or services.

6. What Are the Roles of Each of These Stakeholders?

Entrepreneur/Founder: The entrepreneur is the visionary and decision-maker
who takes charge of executing the business plan and driving the business
ahead.

Investors: Investors provide the capital necessary to start and grow the
business and may also offer strategic guidance or mentorship.

Employees: Employees carry out the day-to-day activities necessary for the
business to run and get products or services to customers.

Lenders: Lenders provide financial capital that must be repaid with interest,
and they monitor the financial health of the company to get the loan repaid.

Suppliers and Partners: Suppliers provide necessary materials and services,

and partners may provide complementary skills, assets, or access to
markets.

Customers: Customers are crucial to the success of the company, as their

purchase decisions create revenue and profitability.

7. What Are the Components of a Business Plan?

A business plan typically includes the following components:
Executive Summary: A summary of the business plan, business concept,
objectives, and key financial highlights.

Company Description: Business description, mission, vision, and products or

services of the business.

Market Research: Study of the target market, industry trends, competition,

and needs of the customers.

Organization and Management: Explanation of the business structure,

ownership, and the key management team.

Products or Services: Description of the products or services offered, and

how they meet customer needs and provide value.

Marketing and Sales Strategy: A plan for how to approach customers and
make sales, including pricing, promotion, and distribution strategies.

Funding Request: If funding is being requested, the entrepreneur needs to

indicate how much capital is needed, how it will be spent, and the return on
investment for investors.

Financial Projections: Detailed financial statements, including income

statements, cash flow projections, and balance sheets.

Appendices: Any supplemental documents, like resumes, legal documents, or

market research data.

8. How Can an Entrepreneur Assess a New Venture or Idea?

In order to assess a new venture or idea, an entrepreneur should:

Carry Out Market Research: Find out about the target market, demand, and
competition to determine whether there's really a demand for the product or
service.

Validate the Concept: Pilot test the concept based on surveys, pilot
programs, or prototypes in order to gather feedback and enhance the
concept further.

Assess Financial Feasibility: Evaluate the potential profitability by estimating

costs, revenues, and funding needs.

Evaluate Risks: Establish possible risks and problems and determine how to
alleviate them.
Seek Advice: Consult with mentors, industry professionals, and potential
consumers to gather knowledge and advice.

9. Why and How Must a Market Analysis Be Performed?

A market research makes the entrepreneur aware of the target market, the
customers' needs, and the competition. It has to be conducted in order to:

Identify Target Market: Recognize who the customers are, what they need,
and where they are.

Analyze Competition: Research competitors in order to understand their

strengths and weaknesses, and look for ways to differentiate.

Understand Market Trends: Stay updated on industry trends, economic

conditions, and technological changes that may impact the business.

Assess Market Demand: Determine whether there is sufficient demand for

the product or service to sustain the business.

In order to conduct a market analysis, an entrepreneur will need to gather

data from industry reports, surveys, customer interviews, and competitor
analysis.

10. What Is a Financial Analysis?

A financial analysis is the procedure of evaluating the financial health of a
business by examining significant numbers, including:

Startup Costs: Initial capital required to launch the business.

Revenue Projections: Estimated income from sales projections and prices.

Break-even Analysis: The point at which revenues equal expenses, and the
company starts to make a profit.

Profit and Loss Statement: An overview of income, expense, and profit over a
specified period.

Cash Flow Forecast: A projection of cash receipts and payments to ensure the
company has enough funds to meet its payments.

Balance Sheet: A snapshot of the company's financial position, listing assets,

liabilities, and equity.

11. What Location Factors Should an Entrepreneur Consider?

When choosing a location, an entrepreneur should consider:
Proximity to Target Market: Closeness to customers can reduce delivery costs
and improve accessibility.

Costs: Rent, utilities, and other operating expenses can vary widely by
location.

Competition: The presence of competitors in the area can affect market

share and prices.

Labor Availability: Access to skilled labor or employees for the company is

significant.

Logistics and Infrastructure: Consider the access to transport, supply chains,

and communications systems.

Regulatory Environment: Ensure the location complies with local regulations,

taxes, and industry regulations.
12. What Is the Role of Business Incubators?
Business incubators help startups grow through the supply of resources like
office space, mentorship, networking, and access to capital. Incubators help
entrepreneurs overcome the challenges of launching and expanding a
business by providing a nurturing environment. Incubators support the
growth of innovation and the provision of linkages between startups and
industry experts or potential investors.

13. How Can a Business Plan Help an Entrepreneur Gain Entry into a
Business Incubator Programme?
A good business plan is a requirement for entrepreneurs who want to join a
business incubator. It reflects the entrepreneur's commitment, vision, and
preparation to thrive. Incubators typically review business plans to determine
the feasibility and potential of the startup to succeed. A good business plan
increases the chances of being accepted into an incubator program by
demonstrating the business potential, the entrepreneur's understanding of
the market, and the intended actions for growth.

LU 3: Establishing a Business and the

Business Environments

Theme 1: Forms of ownership

Here’s a simplified summary based on Chapter 3 of Introduction to Business Management (11e,
2019) by Barney Erasmus:
Introduction

Starting a business needs planning. You must understand the environment

and the type of business you want to start.

Factors Influencing Business Formats

1. Money available – Some formats need more money.

2. Size of the business – Big businesses need formal setups.
3. Control – Do you want full control or to share it?
4. Legal rules – Some formats have more rules.
5. Risk – Some formats protect you from personal risk.

Types of Business Formats

1. Sole trader – One person owns it.

2. Partnership – Two or more people own it.
3. Close corporation (CC) – Small, simple business (not new ones
anymore).
4. Private company (Pty) Ltd – Separate legal person, needs rules.
5. Public company (Ltd) – Big, shares are sold to the public.
6. Co-operative – Owned by members who share benefits.

Business Location Factors

1. Target market – Be near your customers.

2. Access to suppliers – Close to where you get your goods.
3. Transport and roads – Easy to reach.
4. Cost – Rent and taxes in the area.
5. Competition – Not too many rivals nearby.
6. Labour – Skilled workers in the area.

Why Must Entrepreneurs Know About Ownership Types?

To choose the best one for control, taxes, rules, and risk. It helps avoid future
problems.
Impact of Companies Act 71 of 2008

 Makes it easier to start a business.

 Offers protection for owners.
 Says what rules companies must follow.
 Replaced old forms like CCs with better ones like private companies.

Things to Think About When Choosing Ownership Form

1. How much money you have.

2. How much control you want.
3. How much risk you’re willing to take.
4. How easy it is to manage.
5. The legal side and rules.
6. How you will pay tax.

Main Forms of Enterprise

1. Sole trader
2. Partnership
3. Private company (Pty) Ltd
4. Public company (Ltd)
5. Co-operative

Main Characteristics of Each Form

Legal
Form Owner(s) Risk
Status

Not Personal
Sole trader 1 person
separate risk

Not Shared
Partnership 2+ people
separate risk

Private Limited
1+ people Separate
company risk

Public Many Separate Limited

 Legal
Form Owner(s) Risk
Status

company people risk

Shared
Co-operative Members Separate
risk

Advantages and Disadvantages Summary

Form Advantages Disadvantages

Full personal risk, hard to

Sole trader Full control, easy to start
grow

Share profit, possible

Partnership Shared skills, more money
conflict

Limited risk, easier to get More rules, costs more to

Private company
loans run

Public company Can raise lots of money Very complex and costly

Shared profits, group Slow decisions, must

Co-operative
support share control

Theme 2: Overview of the business environment

Here’s a clear and simplified summary from Section 3.5 of Introduction to

Business Management (11e, 2019) by Barney Erasmus:

What Does ‘Environmental Change’ Mean?

It means things around a business are always changing. This includes the
economy, laws, technology, and customer needs.

Why Is It Important to Pay Attention to These Changes?

 So businesses don’t fall behind.

  To find new chances to grow.
 To avoid problems before they get big.

Impact of Environmental Change on Business

 It can make business harder or easier.

 It may bring risks or new opportunities.
 Businesses must adapt or they may close.

How Can Changing Environmental Variables Be Described?

These are things outside the business that always change, like:

1. Economic trends – e.g. inflation or recession.

2. Technology – new ways of doing things.
3. Laws and rules – government changes.
4. Social values – what people care about.
5. Competition – new or better rivals.
6. Natural environment – weather, climate issues.

What Is the Business Environmental Model?

It’s a way to understand everything that affects a business from the outside.

What Are the Components of the Model?

1. Internal environment – inside the business.

2. Micro-environment – close partners like suppliers and customers.
3. Market environment – competitors, buyers, and others.
4. Macro-environment – broad things like the economy or technology.

How Is It Structured?

The model has layers, like an onion:

 The business is in the centre.

  Around it is the micro and market environment.
 Outside is the macro-environment.

How Are Variables Classified?

 Internal – business resources, workers, culture.

 Micro – suppliers, customers, competitors.
 Market – trends and market players.
 Macro – politics, laws, economy, society, tech, nature.

Characteristics of the Business Environment

 Complex – many parts.

 Dynamic – always changing.
 Uncertain – hard to predict.
 Interconnected – one change affects others.

How Can a SWOT Analysis Be Used?

SWOT helps a business look at:

 Strengths – what it does well.

 Weaknesses – what it needs to fix.
 Opportunities – chances to grow.
 Threats – risks or problems coming.

This helps in planning and making smart choices.

The micro-environment

Here is a simple and clear summary of Section 3.5.1: The Internal

Business Environment from Introduction to Business Management (11e,
2019) by Barney Erasmus:
How Can the Micro-Environment (Internal Environment) Be Described?

This is what happens inside the business. It includes everything the

business controls, like people, money, and planning.

What Variables Are in the Micro-Environment?

1. Vision, mission, and goals

2. Management – how the business is run
3. Organisational structure – how jobs are set up
4. Resources – people, money, equipment
5. Business culture – beliefs and values
6. Technology used by the business

How Are Micro-Environment Variables Linked to the External Environment?

 They must respond to changes outside.

 For example: if customers change their needs, the business must
change its products.
 Inside decisions are often affected by outside factors (e.g.
economy, laws, trends).

How Do Vision, Mission, and Objectives Help a Business Succeed?

 Vision – shows where the business wants to go.

 Mission – explains what the business does.
 Objectives – are clear goals to reach.
Together, they give direction and help workers focus.

What Role Does Management Play in the Micro-Environment?

Management:

 Leads people and gets work done.

 Plans and organises tasks.
 Controls how well goals are met.
 Makes sure resources are used well.
How Are Micro-Environment Resources Affected by External Environments?

 Economic change can make money or materials hard to get.

 New laws can affect how workers are used.
 Technology from outside can change how work is done.
 Natural events (like floods) can damage equipment or stop
production.

The market environment

Here is a clear and easy-to-understand summary of Section 3.5.2.1:

Market Environmental Factors from Introduction to Business
Management (11e, 2019) by Barney Erasmus:

How Can the Market Environment (Task Environment) Be Described?

It is just outside the business and includes people and groups that the
business works with to sell products. The business cannot control this
environment, but it can respond to it.

What Business Variables Are in the Market Environment?

1. Customers (consumers)
2. Suppliers
3. Competitors
4. Intermediaries (like shops and agents)
5. Trade unions
6. Regulators (like health inspectors or licensing bodies)

What Does the Term ‘Market’ Mean?

A market is where buyers and sellers come together to exchange goods

or services.
What Is the Consumer Market?

It includes individual people or households who buy things for personal

use, not for selling again.

How Can Consumer Market Products Be Classified?

1. Convenience goods – bought often, like bread.

2. Shopping goods – compared before buying, like clothes.
3. Speciality goods – unique items, like luxury cars.
4. Unsought goods – not planned for, like insurance.

How Is the Market Environment Influenced by the Macro-Environment?

 Economic changes affect how much people spend.

 Social trends change what people want.
 Technology changes how products are sold.
 Legal changes affect how products must be made or advertised.

What Is the Role of Suppliers in the Market Environment?

Suppliers give raw materials, products, or services a business needs. A

strong link with suppliers helps keep the business running smoothly.

How Do Intermediaries Bridge the Gap Between Manufacturers and

Consumers?

Intermediaries like retailers, wholesalers, and agents help:

 Move products to customers.

 Advertise or promote products.
 Store goods until they are sold.

What Factors Affect the Nature and Intensity of Competition?

1. Number of competitors
 2. Product differences – are products similar or unique?
3. Market size and growth
4. Barriers to entry – how easy it is for new competitors to join
5. Customer loyalty
6. Prices – strong competition often leads to lower prices

The macro-environment

Here’s a simple and clear summary of Macro Environmental Factors from

Introduction to Business Management (11e, 2019) by Barney Erasmus:

How Can the Macro-Environment (External Environment) Be Described?

It is the outermost layer of the business environment.

Businesses cannot control it.
It includes broad forces that affect all businesses.

How Can the Variables in the Macro-Environment Be Described?

1. Political – government decisions, policies, and stability.

2. Economic – inflation, interest rates, unemployment.
3. Social/Cultural – beliefs, values, age, lifestyle.
4. Technological – new inventions, digital changes.
5. Environmental/Natural – climate, natural resources.
6. Legal – laws and rules affecting businesses.

This is sometimes called the PESTLE model.

What Are Mega-Trends?

Mega-trends are big, long-term global changes, like:

 Climate change
 Ageing populations
 Globalisation
 Digital transformation
They slowly shape how businesses work.
How Do Macro-Variables Relate to the Market Environment?

 Macro changes influence customers, suppliers, and competitors.

 For example, new laws may change how products are sold.
 A weak economy may reduce customer spending.

How Do Macro-Variables Affect and Cause Change in the Business

Environment?

 They can create risks or opportunities.

 A new law might force a business to adapt.
 Economic shifts may change prices or demand.
 Tech advances might require new skills or tools.

How Should Managers Handle the Uncertainties from Macro-Variables?

1. Stay informed – read news and watch trends.

2. Plan for change – be ready with backup plans.
3. Be flexible – adapt quickly.
4. Use SWOT and PESTLE – to understand risks and chances.
5. Get expert advice when needed.

LU 4: General Management
Theme 1: Management in Business

Here is a simplified and easy-to-understand summary of Chapter 4:

Managerial Tasks from Introduction to Business Management (11e, 2019)
by Barney Erasmus:

Introduction

Managers help businesses achieve their goals by planning, leading,

organising, and controlling people and resources.
The Evolution of African Management Theory

 African management focuses on Ubuntu – "I am because we are".

 It values community, respect, teamwork, and human dignity.
 It brings local culture and values into how businesses are managed
in Africa.

Functional Activities

These are the main areas of business work:

1. Production – making goods or services.

2. Marketing – selling and promoting products.
3. Finance – handling money and budgets.
4. Human Resources (HR) – working with people and staff needs.
5. Purchasing – buying materials and goods needed for the business.

The Role of Management

Managers help to:

 Set goals
 Plan how to reach them
 Organise resources
 Lead people
 Control if goals are being met
They make sure work is done the right way, at the right time.

How Can the Term ‘Management’ Be Defined?

Management is the process of working with people and resources to

reach business goals effectively and efficiently.

Why Is Management Important in Organisations?

 It gives the business direction.

  Helps organise resources and tasks.
 Solves problems and deals with change.
 Makes sure the business survives and grows.

What Are the Main Causes of Business Failure?

1. Poor management
2. Bad planning
3. Weak financial control
4. Lack of experience
5. Not understanding the market
6. Poor customer service

How Can the Management Functions Be Described?

There are four main management functions:

1. Planning – setting goals and how to reach them

2. Organising – arranging people and resources
3. Leading – guiding and motivating people
4. Controlling – checking if goals are met and fixing problems

What Does the Management Process Entail?

It’s the step-by-step use of the four functions (planning, organising,

leading, controlling) to reach the business’s goals

Levels and functional areas of management

Here is a clear and simplified summary of Chapter 4: General

Management from Introduction to Business Management (11e, 2019) by
Barney Erasmus:

What Are the Different Levels of Management in Organisations?

There are three main levels of management:

1. Top management
 2. Middle management
3. Lower (or first-line) management

How Would One Differentiate Between the Three Levels of Management?

Level Focus Area Main Responsibility

Long-term goals & Planning the future and big

Top
strategy decisions

Linking top & lower Implementing plans and

Middle
levels supervising teams

Managing workers and daily

Lower Day-to-day tasks
operations

How Can Each of the Levels Be Described?

 Top Management – Includes CEOs and directors. They decide the

direction of the company.
 Middle Management – Includes department or division heads. They
connect plans from the top to the lower levels.
 Lower Management – Includes supervisors and team leaders. They
make sure daily work is done well.

What Is the Purpose of Each of the Levels?

 Top: Make the big picture plans.

 Middle: Translate plans into action.
 Lower: Carry out tasks and guide workers.

What Is Functional Management?

Functional management means managing a specific part (function) of a

business.
Examples of Functional Areas of Management:

1. Human Resources (HR) – Hiring and staff development

2. Marketing – Promoting and selling products
3. Finance – Managing money and budgets
4. Operations/Production – Making the product or service
5. Purchasing – Buying materials and equipment

How Can the Function of General Management Be Described?

General management is responsible for the overall performance of the

business. It oversees all departments and ensures everything works
together smoothly.

How Does General Management Differ from Other Specialised Management

Functions?

 General managers look at the whole business, not just one part.
 They coordinate all functional areas.
 Specialised managers focus only on their area (like HR or Finance).

Management skills and roles

Here is a simplified summary of Chapter 4: General Management

focusing on “The Role of Management” and “The Skills Required at
Different Management Levels” from Introduction to Business
Management (11e, 2019) by Barney Erasmus:

What Are the Three Key Skills That All Managers Need?

1. Technical Skills
2. Human (Interpersonal) Skills
3. Conceptual Skills
How Can Each of the Skills Be Described?

 Technical Skills:
Knowing how to do specific tasks (e.g. using tools, working with
systems).
 Human Skills:
The ability to communicate, lead, and work with people.
 Conceptual Skills:
The ability to see the big picture, plan for the future, and solve
problems.

How Are These Skills Used at Different Management Levels?

Management Most Important
Level Skills

Top
Conceptual skills
Management

Middle
A mix of all three
Management

Lower Technical and human

Management skills

What Are the Three Main Groups of Managerial Roles? (Based on Mintzberg’s
theory)

1. Interpersonal Roles
2. Informational Roles
3. Decisional Roles

How Can Each Group of Roles Be Described?

 Interpersonal Roles:
Involve leading and building relationships (e.g. leader, figurehead,
liaison).
 Informational Roles:
Involve collecting and sharing information (e.g. monitor,
spokesperson).
  Decisional Roles:
Involve making choices and solving problems (e.g. entrepreneur,
negotiator, disturbance handler).

How Do Managers Fulfil These Roles?

 By interacting with staff, other managers, and the public.

 By gathering and sharing information through meetings, reports,
or digital tools.
 By making decisions to keep the business running and solving
problems.

What Are the Main Supplementary or Supporting Management Activities?

1. Decision-making – Choosing the best course of action.

2. Communication – Sharing ideas clearly.
3. Delegation – Giving tasks to others.
4. Coordination – Making sure parts of the business work together.
5. Discipline – Handling rule-breaking or performance issues.

LU 5: Planning in the Business

Theme 1: Planning as management
function
The importance of planning
What is planning?
Planning means thinking ahead and deciding what needs to be done to reach
a goal.

What is the purpose of planning?

Planning helps a business set goals and decide on the steps to reach them.

Why is good planning important?

Good planning helps a business stay organised, use resources wisely, and
avoid mistakes.

What happens if a business does not plan properly?

The business can waste money, miss opportunities, and even fail.
What are the benefits of planning?
Planning gives direction, helps with better decisions, and prepares the
business for risks.

How can a lack of planning hurt a business?

Without planning, the business may face confusion, poor results, or unhappy
customers.

How has the Fourth Industrial Revolution (4IR) affected planning?

4IR forces businesses to plan for new technology, fast changes, and the need
for digital skills.

Theme 2: The planning process

Steps in the planning process
What does the planning process mean?
It is the step-by-step way a business uses to set goals and decide how to
reach them.

What are the five variables that guide planning?

Vision
Mission
Goals
Objectives
Strategy

How do these five variables affect planning?

 Vision gives a big picture of what the business wants in the future.
 Mission tells what the business does now and why it exists.
 Goals are long-term targets the business wants to reach.
 Objectives are short-term steps to reach the goals.
 Strategy is the plan of action to achieve the goals and vision.

What are the steps in the planning process?

1. Set the goals
2. Gather information
3. Develop possible plans
4. Choose the best plan
5. Put the plan into action
6. Check progress and adjust if needed

How do these steps link to management levels?

 Top managers plan the vision and strategy.
 Middle managers plan how to apply strategy in departments.
 Lower managers plan daily tasks and help staff follow the plan.