BUSINESS STUDIES

GRADE 12
TERM ONE
CHAPTER 1
NOTES ON THE IMPACT OF RECENT LEGISLATION ON
BUSINESSES
2022

Page 1 of 89
 EXAM/TEST QUESTIONS:
 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.

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

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 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
 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.

2 LABOUR RELATIONS ACT/ethcs

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 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.

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  Strike actions always result in loss of production for which employers may not claim.
 Some trade unions may not promote the mandate of their members but embark on
industrial action, which is harmful to labour relations between employers and
employees.
 Some businesses may feel that the LRA gives employees too much power as it
creates lengthy procedures, e.g. consulting with workplace forums.
 Labour disputes and bargaining council processes become disruptive/ time
consuming and can lead to a decrease in productivity in businesses.

Discriminatory actions according to the LRA

 Unfair/Illegal dismissal of employees.
 Preventing employees from joining trade unions.
 Refusing the establishment of workplace forums.
 Forcing employees to give up trade union membership.
 Not allowing employees to take part in legal strikes( Employees’ rights)
 Cancellation of employees' contracts by a new employer when a
business is sold
 Refusing to give workplace forum members paid time off for attending meetings
during working hours.
 Refusing leave to trade union representatives to attend trade union activities.
 Breaching of collective agreements/resolution mechanisms by either
employer/employee.

Penalties for non-compliance with the LRA

 The employer may be forced to enter into a dispute resolution process.
 Businesses will be fined if they fail to comply with the agreements reached during the
dispute resolution process.
 Businesses that fail to comply with this Act may risk financial costs e.g. legal/CCMA
fees and fines.

Ways in which businesses can comply with the LRA

 Employees should not be unfairly/illegally dismissed
 Allow/Support the establishment of workplace forums.
 Employers should not breach/ignore any collective agreement
 Businesses must allow employees to form trade unions/participate in union
activities/legal strikes.
 Disclose all relevant information required by trade union representatives to do their
jobs effectively.

The rights of employers and employees according to LRA

Rights of employers
 Form employer organisations.
 Form a bargaining council for collective bargaining purposes.
 Employers have the right to lockout employees who engage in unprotected/illegal
strike/labour action.

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  Dismiss employees who are engaged in an unprotected strike/misconduct such as
intimidation/violence during a strike action.
 Right not to pay an employee who has taken part in a protected strike for
services/work they did not do during the strike.

Rights of employees
 Employees may join a trade union of their choice.
 Embark on legal strikes as a remedy for grievances.
 Refer unresolved workplace disputes to the CCMA.
 Refer unresolved CCMA disputes to the Labour Court on appeal.
 Request trade union representatives to assist/represent employees in the
grievance/disciplinary hearing.
 Trade union representatives may take reasonable time off work with pay, to attend to
trade union duties.

3 EMPLOYMENT EQUITY ACT /EEA

Purpose of the EEA
 The EEA allows employees who do the same work to be paid equally.
 Eliminates discrimination on grounds of gender/race/disability in the workplace.
 Promotes equal opportunity and fair treatment in the workplace.
 Promotes diversity in the workplace by ensuring that people of diverse backgrounds
are appointed
 Protects employees from victimisation if they exercise the rights given to them by the
EEA.
 Ensures equal representation in the workplace through the implementation of
affirmative action.
 Ensures equal representation of all population groups in the workplace

Impact of the EEA on business

Positives/Advantages
 Encourages consultation between employer and employees.
 Promotes equal opportunity and fair treatment in the workplace.
 Impacts positively on BEE ratings for businesses.
 Appointment process is clearly defined, so all parties are well informed.
 Motivates employees because the workforce is more diverse/representative/inclusive
 Motivates employees because everyone has the same employment opportunities.
 Promotes the implementation of affirmative action measures to redress the
imbalances in employment.
 Provides employees with legal recourse if they believe they have been unfairly
discriminated against.
 Provides all employees with an equal opportunity to be selected/appointed/ promoted
in a position.
 Prevents unfair discrimination as it ensures that the workforce represents the
demographics of the country.
 Creates a framework of acceptable employment practices/affirmative action
measures.

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  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.

Penalties for non-compliance with the BBBEE

 Businesses may face imprisonment for non-compliance and fronting practices.
 The penalty could be a fine of up to 10% of the company’s annual turnover.
 Government will cancel any contract awarded that was based on false information
regarding B-BBEE status.
 A business can be banned from participating in government contracts for a period
of 10 years.
 Business licenses may not be renewed and authorisations may not be issued
 Businesses that fail to achieve at least a minimum 40% of compliance with
ownership, skills development and new enterprise and supplier development will
be automatically downgraded the by one level.

Ways in which businesses can comply with the BBBEE

 Businesses must appoint black people in managerial positions
 Businesses must sell shares to black employees/people.
 Send black people for black for skill development training.
 Outsource their services to BEE compliant suppliers.
 Implement affirmative action when making appointments.
 Develop small business /SMME’s through ESD.
 Improve the standard of living of the communities in which they operate.

7 National Credit Act

Purpose of the NCA
 Promote a fair but competitive credit market.
 Makes provision for the establishment of the National Credit Regulator/NCR
 Promotes the social and financial interest of consumers.
 Ensure that consumers know what is included in their credit contracts.
 Ensure registrations of credit bureau and debt counselling services.
 Prevent discrimination and ensure credit is available to all consumers.

Impact of the NCA on businesses

Positives/Advantages
 Lower bad debts resulting in better cash flow.
 Protects businesses against non-paying consumers.
 Authorised credit providers may attract more customers.
 Leads to more customers through credit sales as they are now protected from
abuse.
 Prevents reckless lending and prevents businesses from bankruptcy.
 Increases cash sales as credit can only be granted to qualifying customer.
 The whole credit process is transparent e.g. both businesses and customers know
their responsibilities.

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  Businesses do thorough credit checks and receive up-to-date documentation from
the consumer as proof that they can afford the repayment.
 Credit bureau information is made available to businesses so that they can check
the credit worthiness of consumers before granting credit.

AND/OR

Negative/Disadvantages
 Businesses can no longer carry out credit marketing.
 Businesses struggle to get credit such as bank loans/overdrafts
 Businesses that do not comply with the NCA may face legal action.
 Debt collection procedures are more complex and expensive.
 Fewer customers buy on credit as it is more difficult to obtain credit.
 Increases the administration burden on credit providers.
 Leads to loss of sales as many consumers may no longer qualify to buy on credit.
 The paperwork and administrative process required by the act are costly and time
consuming.
 The business needs to appoint additional staff to deal with the extra administration.
 Should the credit agreement be declared reckless the business can forfeit the
outstanding debt and the goods.
 Businesses that are official credit providers, must submit a compliance report every
year.
 A business must make sure that all attempts have been made to recover the debt
before blacklisting the customer.
 Credit providers cannot collect from consumers who are under debt reviews.
 More working capital is needed as businesses cannot sell many goods on credit
due to stricter credit application processes.

Discriminatory actions according to the NCA

 Refusing credit to customers based on gender/race.
 Charging different interest rates to customers based on gender/race
 Blacklisting customers without making efforts to recover the debt

Penalties/consequences for non-compliance with the NCA

 The business may not demand payment, sue or attach the clients/consumers
salaries/assets.
 The business may not charge any fee/interest/other charges under that specific
credit agreement.
 The court may declare the granting of credit by the business reckless and may
order consumers not to repay the credit/or part thereof to the business
 The National Credit Regulator may impose a fine/penalty on the business for non-
compliance.
 The business will bear all costs of removing the negative information of clients/
consumers who were blacklisted as a result of reckless lending.

21
 Ways in which businesses can comply with the NCA
 Offer applicants pre-agreement statements.
 Disclose all costs of loan/No hidden costs should be charged/added
 Obtain credit records/checks of clients before granting loans.
 Businesses should be registered with the National Credit Regulator.
 Submit an annual compliance report to the National Credit Regulator.
 Conduct affordability assessment to ensure the consumer has the ability to meet
his/her obligation.
 Conduct credit check with a registered credit bureau and consult with National
Credit Register.
 Businesses must have procedures in place to comply with the provision of the
Financial Intelligence Centre Act (FICA).
 Credit providers must have procedures in place to comply with the provision of the
Financial Intelligence Centre Act (FICA).
 Verify the identity of clients, report suspicious transactions/train staff on their
obligations in terms of FICA.

Consumer rights in term of the NCA

Consumers have a right to:
 Apply for credit and to be free from discrimination.
 Receive Information in plain and understandable language.
 Receive documents as required by the Act.
 Receive pre-agreement documentation before concluding any credit transaction
 Obtain reasons for credit being refused.
 Fair and responsible marketing.
 Access and challenge credit records and information.
 Choose which goods they will buy and return such goods if they are not satisfied.

8 Consumer Protection Act

Purpose of the Consumer Protection Act
 Promotes responsible consumer behaviour.
 Establishes national standards to protect consumers.
 Establishes a National Consumer Commission (NCC)
 Establishes national standards to protect consumers.
 Promotes and protects the economic interests of consumers by providing access to
information.
 Promotes fair/accessible and sustainable places for people to sell their products.
 Promotes consistent laws relating to consumer transaction and agreement.
 Promotes the rights and full participation of historically disadvantaged individuals
as consumers.
 Promotes consumer safety by protecting them from hazardous products/services.
 Provides guidelines for better consumer information and to prohibit unfair business
practices.
 Ensures that consumers have access to information they need to make informed
choices
 Ensures that consumers are not misled/deceived by suppliers of goods/services

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  Empowers consumers to take legal action if their rights are not upheld.
 Strengthens a culture of consumer rights and responsibilities.
 Protects consumers against contracts that include unfair terms which limit the
liability of suppliers.
 Protects consumers against dishonest businesses such as fly-by-night franchisors
 Allows for consumers and businesses to resolve disputes fairly/effectively.

Impact of the CPA on businesses

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

Negatives/Disadvantages
 Confidential business information may become available to competitors.
 Penalties for non-compliance may be very high.
 Businesses may feel unnecessarily burdened by legal processes.
 They have to disclose more information about their products and
processes/services
 Staff need to be trained /Legal experts need to be consulted, which can increase
costs
 Many business documents need to be simplified /revamped at extra cost as
consumers have a right to receive contracts in simple/understandable language.
 Administration costs increase as legal contracts need to be worded in plain
language /pitched at the level of the consumer
 Businesses may need insurance against claims from consumers /provisions in the
Act increase risks for unforeseen claims and lawsuits.
 Businesses have to replace/repair faulty items/refund money if the fault occurs
within six months after purchase.
 Supply chain management in stock levels will have to change, as defective goods
have to be replace within six months at the request of the consumer.
 Information technology systems need to be improved as the retailer must keep
more detailed records of interactions with consumers /be able to report to the
National Consumer Commission.

Discriminatory actions according to the CPA

 Denying customers proper information about the product/services.
 Treating customers differently based on gender/age/race.
 Charging unfair prices for the same goods and services.
 Varying the quality of goods when selling in different areas.
 Prioritising any consumer group over another when marketing/selling

23
 Penalties for non-compliance with the NCA
 A contract may be rendered void or a fine or term of direct imprisonment may be
imposed.
 Businesses may face fines or imprisonment for a period not exceeding 10 years.
 Government agencies may conduct audits, enact fines or even dissolve your
business entirely.
 Businesses will be forced to compensate consumers in line with the extent to which
their rights have been violated.

Ways in which businesses can comply with the CPA

 Disclose prices of all products on sale.
 Provide adequate training to staff on the CPA.
 All agreements must provide for a five-day cooling off period.
 Ensure that goods/services offered are standardised/of the same quality.
 Comply with the requirements regarding promotional competitions.
 Comply with requirements regarding the display of information on labels/
packaging.
 Display the name of the business on all business documents, e.g.
invoices/contracts.
 Bundling of goods/services should benefit consumers, e.g. offering a cell phone
and a tablet at a special price.
 Implement measures that will facilitate complaints, e.g. suggestion boxes.

Consumer rights of the Consumer Protection Act

Right to choose
Consumers have the right to:
 choose suppliers and/or goods.
 shop around for the best prices.
 return goods that are unsafe/defective for a full refund
 reject goods that are not the same as the sample marketed.
 cancel/renew fixed term agreements.
 request written quotations and cost estimates.

Right to privacy and confidentiality

 Consumers have the right to stop/restrict unwanted direct marketing.
 They can object to unwanted promotional e-mails/telesales.
 They have the right to stop/lodge complaints about the sharing of their personal
details.

Right to fair and honest dealings

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

24
 Right to information about products and agreements/Right to disclosure and
information
 Contracts and agreements should be in plain language and easy to understand.
 Businesses should display prices which are fully inclusive disclosing all costs.
 Businesses should label products and trade descriptions correctly
 Consumers may request the unit and bulk price of the same product.
 If two prices for the same product are displayed, consumers should pay the lower
price.
 All information related to the country of origin, expiry dates/ingredients of the
products should be disclosed.√

Right to fair/responsible marketing/promotion

 Businesses should not mislead consumers on pricing, benefits/uses of goods.
 Consumers may cancel purchases made through direct marketing within five working
days/cooling off-period.
 All information related to the country of origin/expiry dates/ingredients of the products
should be disclosed/clearly labelled.

Right to accountability from suppliers

 Consumers have the right to be protected in lay-bye agreements.
 Businesses should honour credit vouchers and prepaid services.

Right to fair/just/reasonable terms and conditions

 Businesses should provide consumers with written notices of clauses that may limit
consumer rights.
 Businesses may not market/sell goods at unfair prices.

Right to equality in the consumer market place

 Businesses should not limit access to goods and services.
 Businesses may not vary the quality of their goods to different consumers.
 Businesses should not discriminate when marketing their products and services in
different areas/places.
 Businesses may not charge different prices for the same goods/services.
 Quality of goods may not vary when supplied to different consumers.

Right to return goods/have goods replaced/claim a refund

 Goods that are unsafe/ defective may be replaced by the supplier.
 Faulty items may be returned for a full refund.
 They may return faulty items if the fault occurs within six months after purchasing the
item.

Right to complain
 Consumers may use various methods/channels to complain about poor quality
goods/services.
 They can complain via customer care desks/consumer hotlines/ombudsman etc.

25
 Right to privacy/confidentiality
 Consumers have the right to stop/restrict unwanted direct marketing.
 They can object to unwanted promotional e-mails and telesales.
 They have the right to stop/lodge complaints about sharing personal details.

Right to fair value/good quality/safety

 Businesses should provide consumers with written notices of clauses that may limit
consumer rights.
 Businesses may not market/sell goods at unfair prices.

Right to fair/honest dealings

 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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TERM 1 ACTIVITY 1

TOPIC: IMPACT ON RECENT LEGISLATION

1.1 Choose the correct answer, e.g. 1.1.13 B

1.1.1 This Act makes it possible for consumers to access debt counselling:
A National Credit Act, 2005 (Act 34 of 2005)
B Consumer Protection Act, 2008 (Act 68 of 2008)
C Broad-Based Black Economic Empowerment Act, 2003 (Act 53 of 2003)
D Labour Relations Act,1995 (Act 66 of 1995)

1.1.2 This Act regulates the implementation of affirmative action when businesses make
new appointments:
A Consumer Protection Act, 2008 (Act 68 of 2008)
B Employment Equity Act, 1998 (Act 55 of 1998)
C Broad-Based Black Economic Empowerment Act, 2003 (Act 53 of 2003)
D Labour Relations Act, 1995 (Act 66 of 1995)

1.1.3 This Act ensures that a wider group of previously disadvantaged people have access
to ownership and management positions in a business:
A Consumer Protection Act (CPA), 2008 (Act 68 of 2008)
B Broad-Based Black Economic Empowerment Act (BBBEE),
2003 (Act 53 of 2003)
C Compensation for Occupational Injuries and Diseases Act
(COIDA), 1997 (Act 61 of 1997)
D Labour Relations Act (LRA), 1995 (Act 66 of 1995)

1.1.4 This Act prevents unfair marketing practices:

A Basic Conditions of Employment Act, 1997 (Act 75 of 1997)
B Consumer Protection Act, 2008 (Act 68 of 2008)
C Labour Relations Act, 1995 (Act 66 of 1995)
D National Credit Act, 2005 (Act 34 of 2005)

1.1.5 This Act protects employers from a financial burden should employees be involved in
an accident at the workplace:
A Consumer Protection Act, 2008 (Act 68 of 2008)
B Skills Development Act (SDA), 1998 (Act 97 of 1998)
C Compensation for Occupational Injuries and Diseases Act
(COIDA), 1997 (Act 61 of 1997)
D Labour Relations Act (LRA), 1995 (Act 66 of 1995)

1.1.6 The aim of this Act is to protect consumers against unfair reckless lending by
businesses:
A Consumer Protection Act (CPA), 2008 (Act 68 of 2008)
B Employment Equity Act (EEA), 1998 (Act 55 of 1998)
C National Credit Act (NCA), 2005 (Act 34 of 2005)
D Labour Relations Act (LRA), 1995 (Act 66 of 1995)

27
1.1.7 This Act makes provision for the functioning of the Commission for Conciliation,
Mediation and Arbitration (CCMA):
A Broad-Based Black Economic Empowerment Act, 2003 (Act 53 of 2003)
B Employment Equity Act, 1998 (Act 55 of 1998)
C Labour Relations Act, 1995 (Act 66 of 1995)
D National Credit Act, 2005 (Act 34 of 2005)

1.1.8 The main purpose of the Skills Development Act, 1998 (Act 97 of 1998):
A Ensures that businesses pay their skills development levy regularly
B Allocates grants to employers and training providers
C Provides for a system of credits that employees receive when
they complete their learnerships
D Encourages employers to use the workplace as a learning
Environment

1.1.9 The…oversees compliance with the National Credit Act, 2005 (Act 34 of 2005).
A debt counsellor
B National Credit Regulator
C credit enforcement agency
D credit counsellor

1.1.10 This Act encourages skills training for certain designated groups of people in one of
its pillars
A Occupational Health and Safety Act, 1993 (Act 85 of 1993)
B Unemployment Insurance Act, 2001 (Act 63 of 2001)
C Broad-Based Black Economic Empowerment Act, 2003 (Act 53
of 2003)
D Consumer Protection Act, 2008 (Act 68 of 2008)

1.2 Outline the role of SETAs in supporting the Skills Development Act, 1998 (Act 97 of
1998). (8)

1.3 Explain the purpose of the Skills Development Act (6)

1.4 Evaluate the impact of the Skills Development Act (SDA), 1998 (Act 97 of 1998) on
businesses. (8)

1.5 Recommend ways in which businesses could comply with the Skills Development Act
(SDA), 1998 (Act 97 of1998) (8)

1.6 Read the scenario below and answer the questions that follow.

JOKO TRENDY BAGS (JTB)

Joko Trendy Bags designs and manufactures fashionable handbags. They employ 50
workers, who are allowed to join a trade union of their choice. The management of JTB
resolves work-related disputes through statutory conciliation, mediation and arbitration.

1.6.1 Identify the Act that applies to JTB. Quote from the scenario above to support
your answer. (3)

1.6.2 Discuss the negative impact of the Act identified in QUESTION 1.6.1 on JTB
as a business. (8)

28
1.7 Read the scenario below and answer the questions that follow.

SPEEDY DRYCLEANERS (SD)

Speedy Drycleaners advertised a vacant post for a receptionist in the newspaper. People
with disabilities were encouraged to apply for this vacant position.

1.7.1 Identify the Act that was applied by Speedy Drycleaners. Motivate your answer
by quoting from the scenario above. (3)

1.7.2 Evaluate the impact of the Act, identified in QUESTION 1.7.1 on businesses. (8)

1.8 Read the scenario below and answer the questions that follow.

LEGEND PROJECTS (LP)

The management of Legend Projects provided the Commissioner with false information
regarding serious accidents that took place at Legend Projects. They also bribed one of
their employees not to report injuries sustained while performing his/her duties.

1.8.1 Identify the Act MGM violated in the scenario above. (2)

1.8.2 Quote TWO actions that are regarded as discriminatory from the scenario
above (2)

1.8.3 Outline other actions which are regarded as discriminatory according to the
Act identified in QUESTION 2.7.1. (6)

1.8.4 Discuss the impact of the Act, identified in QUESTION 2.7.1, on MGM as a
business. (8)

1.9 Advise MGM on how they could comply with the Act identified in QUESTION 1.8.1 (6)

1.10 Identify the provisions of the Basic Conditions of Employment Act (BCEA), 1997 (Act
75 of 1997) that Kajav Supermarket complied with in EACH statement below:

1.10.1 Employees are required to give due notice before they can end their
employment contracts.

1.10.2 Kajav Supermarket does not force its employees to work more than three
hours extra per day.

1.10.3 Employees are advised to produce a medical certificate if they are absent
from work for more than two consecutive days.

1.10.4 Kajav Supermarket does not allow employees who are younger than 18 to
perform dangerous duties.
(8)

1.11 Explain the purpose of the Basic Conditions of Employment Act (BCEA),

1997 (Act 75 of 1997). (8)

29
1.12 Explain the following provisions of the Basic Conditions of Employment Act:

1.12.1 Hours of work (4)

1.12.2 Over time (4)

1.12.3 Annual leave (4)

1.12.4 Overtime (4)

1.13 Outline actions which are regarded as discriminatory according to the BCEA (6)

1.14 Evaluate the impact of the BCEA on businesses (8)

1.15 Advise businesses on penalties they may face for non-compliance with the BCEA. (8)

1.16 Identify the pillar of the Broad-Based Black Economic Empowerment Act (BBBEE),
2003 (Act 53 of 2003) that Mpho Auditors has complied with in EACH statement
below:

1.16.1 Mpho Auditors uses Themba Shuttle services to transport their employees.

1.16.2 They have donated laptops to schools in rural areas.

1.16.3 Mpho Auditors has promoted two black females as heads of various
departments. (6)

1.17 Read the scenario below and answer the questions that follow.

MEAT MARKET LTD

Meat Market Ltd specialises in supplying fresh meat to customers. The company
gave some of its shares to their previously disadvantaged employees. They were
also offered learnership programmes.

1.17.1 Name the Act that Meat Market Ltd is complying with in the scenario above.
(2)

1.17.2 Identify TWO pillars of the Act identified in QUESTION 1.17.1 that Meat
Market Ltd implemented. Motivate your answer by quoting from the scenario
above. (6)

Use the table below as a GUIDE to answer QUESTION 1.17.2.

PILLARS MOTIVATION
1.
2.

1.18 Recommend ways in which businesses could apply the following pillars of BBBEE in
the workplace

1.18.1 Ownership (4)

1.18.2 Management (4)

1.18.3 Enterprise and supplier development (4)

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1.18.4 Justify the effectiveness of BBBEEE on businesses (6)

1.19 Identify the consumer right that is implemented by Carlio Ltd in EACH statement
below:

1.19.1 The salesperson allows customers to shop around for the best price.

1.19.2 Management does not share personal information of their employees with
clients.

1.19.3 Customers are charged the same price for the same goods/services in
different areas.

1.19.4 Consumers are given a written warranty for durable products.

(8)

1.20 Read the scenario below and answer the questions that follow.

MOHAMMED FINANCIAL SERVICES (MFS)

Mohammed Financial Services opened a money market department which grants loans to
their customers. The management of MFS always conducts a financial affordability
assessment of each client who applies for a loan.

1.20.1 Identify the Act that MFS is complying with. Motivate your answer by quoting
from the scenario above. (3)

1.20.2 Explain to Mohammed other ways in which businesses can comply with the
Act identified in QUESTION 1.20.1. (8)

1.21 ESSAY QUESTION

Many consumers have welcomed the introduction of the Consumer Protection Act (CPA),
2008 (Act 68 of 2008) and the National Credit Act (NCA), 2005 (Act 34 of 2005) as they
protect them against unfair business practices. Some businesses believe that the NCA
reduces their market share and therefore they do not want to comply with this Act.

As an expert on recent legislation, write an essay on the following aspects:

 Outline the purpose of the CPA.

 Discuss the impact of the CPA on businesses.
 Recommend ways in which businesses could promote the following consumer as
rights, as stipulated in the CPA:
o Right to privacy and confidentiality
o Right to information about products and agreements
o Right to fair value/good quality and safety
 Advise businesses on penalties that may be imposed for non-compliance with the
NCA. [40]

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QUESTION 1.22 ESSAY QUESTION

The relationship between employers and employees is guided by the Labour Relations
Act (LRA), 1995 (Act 66 of 1995). Businesses who do not comply with this Act may face
penalties.

As a labour relations expert, provide a detailed report on the following aspects of the Labour
Relations Act:

 Outline the rights of employers and employees according to the LRA.

 Discuss the purpose of the Labour Relations Act.
 Evaluate the impact of this Act on businesses.
 Recommend ways in which businesses can comply with the LRA. [40]

32
 BUSINESS STUDIES

GRADE 12
TERM ONE
CHAPTER 2
HUMAN RESOURCES FUNCTION
2022

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BUSINESS STUDIES TERM 1 Chapter 1 -5

EXAM/TEST QUESTION:

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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FRINGE BENEFITS
 Explain/Differentiate/Distinguish between piece meal and time-related salary
determination methods.
 Explain the link between salary determination and the Basic Conditions of
Employment Act.

COMPULSORY BENEFITS
 Name/Mention/Give examples of employee benefits e.g.
o Pension
o Medical aid
o Provident fund
o Allowances
 Compulsory benefits:
 Benefits required by law, e.g. UIF, etc.
 Explain/Discuss/Evaluate advantages/positives and/or disadvantages/negatives of
fringe benefits to business.

LEGISLATION
 Discuss the implications of the LRA/ BCEA/EEA/SDA on the human resources
function.

TERMS AND DEFINITIONS

Term Definition
Job analysis The term “job analysis” refers to the components of job description and job
specification as it relates to employees within an organisation.
Job description Describes the duties and responsibilities of a specific job.

Job specification Describes the minimum acceptable personal qualities/skills/ qualifications

needed for the job.
Recruitment Recruitment is the process used by business to identify vacancies in the
business and attract suitable candidates for it.
Internal recruitment Refers to the use of internal sources to advertise vacancies within an
organisation.
External recruitment Refers to the use of external sources to advertise vacancies within an
organisation.
Interview Refers to a conversation between a job applicant and a representative of an
employer which is conducted to assess whether the applicant should be hired
for a vacancy.
Interviewer Refers to the representative of an employer conducting the interview.

Interviewee Refers to the job applicant who made himself available for the interview after
being shortlisted.
Induction Refers to the process of introducing new employees to the business and its
related aspects.
Placement Process whereby a new employee is placed in a vacant position.

Training/Skills Refers to the acquisition of new skills and knowledge.by employees.

development
Retrenchment Process whereby an organisation reduces the number of employees for
operational reasons.

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Employment Oral or written agreement specifying terms and conditions under which a
contract person consents to perform certain duties in return for an agreed upon wage
or salary.
Piece-meal salary Workers are paid according to the number of items/units produced.
determination
Time-related salary Workers are paid for the amount of time they spend at work/on a task.
determination
Fringe benefits Compensation beyond a regular wage or salary to an employee, which are
exempt from taxation as long as certain conditions are met.
Compulsory benefits Refers to benefits that businesses are legally required to offer its employees.
UIF The fund offers short-term financial assistance to workers when they become
unemployed or are unable to work because of illness, maternity or adoption
leave.
BCEA This Act regulates labour practices and sets out the rights and duties of
employees and employer.
LRA Ensures social justice by establishing the rights and duties of employers and
employees in the workplace.
EEA Requires employers to engage in proactive employment practices to increase
the representation of designated groups in the workplace.
SDA This act regulates the improvement of the skills of workers by promoting
education and training in the workplace.

1 HUMAN RESOURCES ACTIVITIES

1.1 RECRUITMENT
Meaning of recruitment
 Recruitment is the process used by businesses to identify vacancies in the business and
attract suitable candidates for it.
 It aims at finding candidates who have the necessary knowledge/ experience/
qualification to fill the vacancy.
 Businesses may choose to use an internal or external method of recruitment depending
on the nature/requirements of the vacancy.
 It is an on-going process as employees leave their jobs for other jobs/get promoted
/retire/as new technological skills are required.

Recruitment procedure
 The human resource manager should evaluate the job/prepare a job analysis, that
includes the job specification/job description/in order to identify recruitment needs.
 The human resource manager (HRM) should prepare the job description in order to
identify recruitment needs.
 HRM should indicate the job specification/description/key performance areas to attract
suitable candidates.
 Choose the method of recruitment, e.g. internal/external, to reach/target the suitable
applicants/candidates.
 Vacancies can be internally advertised via internal email/word of mouth/ posters/staff
notices.
 If the external recruitment is chosen, the relevant recruitment sources should be
selected, e.g. recruitment agencies/tertiary institutions/ newspapers, etc
 If internal recruitment is unsuccessful, external recruitment should be considered.
 If the external recruitment is done, the relevant recruitment source should be selected,
e.g. recruitment agencies, tertiary institutions, newspapers,

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 The advertisement should be prepared with the relevant information, e.g. the name of
the company, contact details, contact person, etc.
 Place the advertisement in the appropriate media that will ensure that the best
candidates apply.
NOTE: The procedure can be in any order

1.2 Differences between job description and job-specification

JOB DESCRIPTION JOB SPECIFICATION
 Describes duties/responsibilities of a  Specifies the minimum acceptable
specific job/summary of the nature personal qualities/ skills/ qualifications
/type of the job. needed for the job.
 Written description of the job and its  Written description of specific
requirements qualifications/ skills/ experience needed
for the job.
 Describes key performance areas/  Describes key requirements of the person
tasks for a specific job, e.g. job who will fill the position, e.g. formal
title/working conditions/relationship of qualifications/willingness to travel/work
the job with other jobs in the business, unusual hours, etc.
etc.

1.3 TYPES/METHODS OF RECRUITMENT

INTERNAL RECRUITMENT AND EXTERNAL RECRUITMENT

INTERNAL RECRUITMENT
 Refers to the use of internal sources to advertise vacancies inside the business.

Sources of Internal recruitment

 Internal e-mails/Intranet/web sites to staff
 Word of mouth
 Business newsletter/circulars
 Internal/management referrals
 Notice board of the business
 Internal bulletins
 Recommendation of current employees
 Head hunting within the business/organisational database.

IMPACT OF INTERNAL RECRUITMENT

Positives/Advantages
 Cheaper/Quicker to fill the post.
 Provides opportunities for career paths within the business.
 Reduces the chances of losing employees, as future career prospects are available
 Placement is easy, as management knows the employees' skills/personality/
experience/strengths.
 The employee already has an understanding of how the business operates./
Induction/Training is not always necessary.
 Detailed, reliable information can be obtained from the supervisors/
Employee records.
AND/OR

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Negative/Disadvantages
 It may close the door to new ideas from outsiders.
 Employees who are not promoted may feel demotivated
 The promotion of an employee could cause resentment among other employees.
 The number of applicants from which to choose is limited to existing staff only.
 It is possible to promote certain employees who do not really have the required skills
for the new job.
 The business has to spend more money on training/developing existing
employees on the new position.

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

Negatives/Disadvantages
 Information on CV's/referees may not be reliable.
 Many unsuitable applications can slow down the selection process.
 New candidates generally take longer to adjust to a new work environment.
 External sources can be expensive, e.g. recruitment agencies' fees/advertisements
in newspapers/magazines.
 The selection process may not be effective and an incompetent candidate may
be chosen.

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 Recruitment process takes longer/is more expensive as background checks

must be conducted.
 In-service training may be needed which decreases productivity during the time
of training.

2 SELECTION
2.1 Selection procedure
Option 1
 Determine fair assessment criteria on which selection will be based.
 Applicants must submit the application forms/curriculum vitae and certified copies
of personal documents/IDs/proof of qualifications, etc.
 Sort the received documents/CVs according to the assessment/selection criteria.
 Screen/Determine which applications meet the minimum job requirements and
separate these from the rest.
 Preliminary interviews are conducted if many suitable applications were
received.
 Reference checks should be made to verify the contents of CV's, e.g. contact
previous employers to check work experience.
 Compile a shortlist of potential candidates identified.
 Shortlisted candidates may be subjected to various types of selection tests e.g.
skills tests, etc.
 Invite shortlisted candidates for an interview.
 A written offer is made to the selected candidate.
 Inform unsuccessful applicants about the outcome of their application./Some
adverts indicate the deadline for informing only successful candidates.
NOTE: The procedure can be in any order

Option 2
 Receive documentation, e.g. application forms and sort it according to the criteria
of the job.
 Evaluate CVs and create a shortlist/Screen the applicants.
 Check information in the CVs and contact references.
 Conduct preliminary sifting interviews to identify applicants who are not suitable
for the job, although they meet all requirements.
 Assess/Test candidates who have applied for senior positions/to ensure the best
candidate is chosen.
 Conduct interviews with shortlisted candidates.
 Offer employment in writing to the selected candidate(s).

Screening as part of the selection procedure

 Check application documents against the requirements of the job.
 Candidates who meet the minimum requirements are separated from others.
 Do background/credit/reference checks of applicants who qualify for the job.
 Prepare a shortlist of suitable candidates after screening.

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2.2 Purpose of an interview

 To determine a candidate's suitability for the job.
 Obtains information about the strengths and weaknesses of each candidate.
 Evaluate the skills and personal characteristics of the applicant
 Helps the employer in choosing/making an informed decision about the most
suitable candidate.
 Matches information provided by the applicant to the job requirements.
 Creates an opportunity where information about the business and applicant can
be exchanged.

Role of the interviewer when PREPARING/BEFORE the interview

 Book and prepare the venue for the interview.
 Inform all shortlisted candidates about the date and place of the interview.
 Set the interview date and ensure that all interviews take place on the same date, if
possible.
 Notify all panel members conducting the interview about the date and place of the
interview.
 The interviewer should develop a core set of questions based on the skills/knowledge/
ability required.
 Check/read the application/verify the CV of every candidate for anything that may
need to be explained.
 Plan the programme for the interview and determine the time that should be allocated
to each candidate.
 Allocate the same amount of time to interview each candidate on the program.

Role of the interviewer and interviewee DURING the interview

Role of the INTERVIEWER during the Role of the INTERVIEWEE during the
interview interview
 Allocate the same amount of time to  Greet the interviewer by name with a
each candidate. solid handshake and a friendly smile.
 Introduce members of the interviewing  Listen carefully to the questions before
panel to each candidate/interviewee. responding.
 Make the interviewee feel at ease.  Make eye contact and have good
 Explain the purpose of the interview to posture/body language.
the panel and the interviewee.  Show confidence and have a positive
 Record interviewees' responses for attitude/be assertive.
future reference.  Be inquisitive and show interest in the
 Do not misinform/mislead the business.
interviewee.  Ask clarity seeking questions.
 Avoid discriminatory/controversial types  Show respect and treat the interview
of questions, e.g. asking a female with its due importance.
candidate about family planning/having  Be honest about mistakes and explain
children. how you dealt with it.
 Provide an opportunity for the  Know your strengths and weaknesses
interviewee to ask questions. and be prepared to discuss it
 Close the interview by thanking the  Thank the interviewer for the
interviewee for attending the interview opportunity given to be part of the
interviews.

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3 Meaning of an employment contract

 Employment contract is an agreement between the employer and the employee and
is legally binding.

3.1 Aspects that should be included in an employment contract

 Personal details of the employee.
 Details of the business/employer e.g. name/address, etc.
 Job title/Position
 Job description e.g. duties/ working conditions
 Job specification e.g. formal qualifications/willingness to travel.
 Date of employment/commencement of employment.
 Place where employee will spend most of his/her working time.
 Hours of work, e.g. normal time/overtime.
 Remuneration, e.g. weekly or monthly pay.
 Benefits/Fringe benefits/Perks/Allowances.
 Leave, e.g. sick/maternity/annual/adoption leave.
 Employee deductions (compulsory/non-compulsory).
 Period of contract/Details of termination.
 Probation period.
 Signatures of both the employer and employee.
 List of documents that form part of the contract, e.g. appointment letter/code of
conduct/ethics.
 Disciplinary policy, e.g. rules and disciplinary procedure for unacceptable behaviour

3.2 Legal requirements of the employment contract

 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 program

 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  Workers are paid for the amount of
number of items/ units produced /action time 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  Many private and public sector
the 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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TERM 1 ACTIVITY 2
TOPIC: HUMAN RESOURCE FUNCTION

2.1.1 The filling of vacancies in a business with existing employees is known as ...

A advertising.
B internal recruitment.
C external recruitment.
D job specification.
2.1.2 A human resources activity where the competency of the employee is matched with
his/her position:

A Interview
B Induction
C Placement
D Screening

2.1.3 The process of matching a new employee's skills and abilities with the requirements
of a job:

A Selection
B Job analysis
C Placement
D Recruitment

2.1.4 The role of the interviewer is to ...

A know the job specification and job description.

B explain how he/she has dealt with past mistakes.
C know his/her strengths and weaknesses and be prepared to
discuss it.
D ask the same candidates different questions.

2.1.5 The procedure where all CVs received are evaluated against pre- determined criteria:

A Training
B Selection
C Placement
D Recruitment

2.1.6 The process of choosing the five most suitable candidates for the job is known as ...
A interview.
B recruitment.
C reference checking.
D shortlisting.

2.1.7 The human resources activity which ensures that the skills and competencies of
newly appointed employees match the requirements of the job:
A Selection
B Placement

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C Recruitment
D Training

2.1.8 Sara Designers used ... to recruit possible candidates amongst existing employees.

A employment agencies
B educational institutions
C notice boards
D local newspapers

2.2 Elaborate on the meaning of recruitment (4)

2.3 Name TWO components of job analysis (2)

2.4 Read the scenario below and answer the questions that follow.

Khan Private Hospital has advertised a vacancy for a nurse. The advertisement
includes the following aspects regarding the position:

 Applicants must have a diploma in nursing as a minimum requirement.

 Responsible for observing patients and giving medication.
 Two years' experience in nursing will be an advantage.
 Compiling daily reports on the progress of the patients.

The advertisement indicates that only shortlisted candidates will be contacted for
an interview.

2.4.1 Quote TWO examples of job description and TWO examples of job
specification in the scenario above. (2)

Use the table below as a GUIDE to answer QUESTION 2.4.1

JOB DESCRIPTION JOB SPECIFICATION

1.
2.

2.4.2 Explain the differences between job description and job specification (8)

2.5 Name FOUR sources of external recruitment. (4)

2.6 Read the scenario below and answer the questions that follow.

Wilbur Clothing Designers specialise in men's wear but want to introduce

ladies' wear too. The business is looking for a fashion designer who specialises
in ladies' wear. They have advertised the vacant position in the local
newspapers and on the Internet.

2.6.1 Identify the method of recruitment used by Wilbur Clothing Designers.

Motivate your answer by quoting from the scenario above. (3)

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2.6.2 Analyse the impact of the method of recruitment mentioned in QUESTION

2.6.1. (8)

2.7 Advise businesses on the recruitment procedure as a human resources activity. (8)

2.8 Elaborate on the meaning of screening as part of the selection procedure (4)

2.9 Read the scenario below and answer the questions that follow.

SHAKEEL CATTLE FARM (SCF)

Shakeel Cattle Farm advertised a vacancy in a newspaper. Many applicants

submitted their application forms. SCF conducted preliminary interviews to select
suitable candidates and compiled a shortlist of five candidates. A written offer was
made to the best candidate.

2.9.1 Quote the selection procedure that SCF applied in the scenario above. (3)

2.9.2 Advise the management of SCF on the other steps of selection procedure that
they may consider. (8)

2.10 Describe the purpose of interview (6)

2.11 Read the scenario below and answer the questions that follow.

ELZETTE TRADING (ET)

Elzette shortlisted five suitable candidates and invited them for interviews. Candidates
were allocated the same amount of time and their responses were recorded. All
candidates showed confidence and asked clarity-seeking questions.

2.11.1 Quote from the scenario above the role of the interviewer and
interviewee/candidate during the interview. (4)

Use the table below as a guide to answer QUESTION 2.11.1

ROLE QUOTES
Interviewer/Elzette 1.
2.
Interviewee/Candidates 1.
2.

2.11.2. Explain other roles of the interviewee during the interview (8)

2.12 Elaborate on the meaning of employment contract (4)

2.13 Read the scenario below and answer the questions that follow.

JULIA CLOTHING MANUFACTURERS (JCM)

Tudo recently started working at JCM as a forklift operator. He was requested to read
and sign the employment contract, which included his remuneration and details on the

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termination of the contract.

2.13.1 Quote TWO aspects that JCM included in the employment contract. (2)

2.13.1 Recommend any TWO other aspects that JCM must include in their
employment contract. (4)

2.14 Read the scenario below and answer the questions that follow.

SKY LTD

Helen has been working for Sky Ltd for the past 30 years. The management terminated
her employment contract when she reached the age of 65.

2.14.1 Identify the reason for the termination of Helen’s employment contract.
Motivate your answer by quoting from the scenario above. (3)

2.14.2 Explain other reasons for the termination of an employment contract. (6)

2.15 Read the scenario below and answer the questions that follow.

TOM FLOORING (TF)

Mr Du Preez is the newly appointed financial manager at Tom Flooring. His

employment contract only bears his signature. The contract states that he
may be required to work 12 hours overtime per week. He is expected to
perform other duties which are not listed in his contract.

2.15.1 Quote THREE errors in Mr. Du Preez's employment contract. (3)

2.15.2 Advise the management of TF how they can correct the errors quoted in
QUESTION 2.15.1. (6)

2.15.3 Explain the legal requirements of the employment contract. (6)

2.16 Elaborate on the meaning of induction (4)

2.17 Outline the purpose of induction (8)

2.18 Read the scenario below and answer the questions that follow.

TOMMY'S INDUCTION PROGRAMME

Tommy has developed an induction programme for newly appointed

employees. They are usually taken on a tour of the premises and introduced to
senior management and colleagues.

2.18.1 Quote TWO aspects that Tommy included in his induction programme. (2)

2.18.2 Advise Tommy on THREE other aspects that should be included in an

induction programme. (6)

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2.18.3 Discuss the benefits of induction. (8)

2.19 Elaborate on the meaning of placement (4)

2.20 Discuss the placement procedure (4)

2.21 Read the scenario below and answer the questions that follow.

SMART CONSTRUCTION (SC)

Gail and Chris are employees of Smart Construction. Gail is remunerated according to
the number of hours spent at work and Chris according to the number of houses built.
Gail's employment contract has recently been terminated due to regular absence from
work.

2.21.1 Identify TWO salary determination methods of remuneration applicable to

Gail and Chris. Motivate your answer by quoting from the scenario above.
(6)

Use the table below as a guide to answer QUESTION 2.21.1

SALARY DETERMINATION MOTIVATIONS

METHODS
1.
2.

2.21.2 Distinguish between the salary determination methods identified in

QUESTION 2.21.1. (8)

2.22 Name FOUR the examples of employee fringe benefits (4)

2.23 Evaluate the impact of fringe benefits on businesses. (8)

2.24 Explain the implication of the following Acts on the human resources function:

 Labour Relations Act (6)

 Basic Conditions of Employment Act (6)
 Skills Development Act (6)

2.25 ESSAY

TOMMY FINANCIAL SERVICES (TFS)

Tommy Financial Services are looking for an experienced accountant within

the business. The new employee is expected to sign an employment contract
and to be placed where he/she will function effectively. The new employee will
have to undergo in-service training as well.

Write an essay on the following aspects:

 Outline the legal requirements of an employment contract

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 Explain placement procedure as a human resources activity

 Evaluate the impact of internal recruitment on businesses.
 Advise TFS on the implications of the Skills Development Act, 1998 (Act 97 of 1998)
for the human resources function. [40]

2.26 ESSAY

Human resources managers invest a lot of time, effort and funds to recruit and select the
best employees. They realise that their goals and objectives can only be achieved by
employing skilled and qualified employees. They are also mindful of the fact that their
recruitment policies need to comply with the Employment Equity Act (EEA), 1998 (Act 55
of 1998).

Write an essay on the following aspects:

 Explain the meaning of recruitment.

 Analyse the impact of external recruitment on businesses.
 Discuss the role of the interviewer and the interviewee during the interview.
 Suggest ways in which the human resources function could comply with the EEA.
[40]

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BUSINESS STUDIES

GRADE 12
TERM ONE
CHAPTER 3
NOTES ON ETHICS AND PROFESSIONALISM
2022

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EXAM/TEST QUESTIONS:
 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 The exercise of ethical and effective leadership by the board of
governance 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
is easy for stakeholders to understand what actions are

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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

 Professionalism is the term used to describe a certain standard of behaviour/ a
specific level of competence and adherence to an ethical code of conduct.
 It is a behaviour suitable for a job/profession done for payment.
 It includes showing respect for others/take responsibility for your work/performing
according to a job description etc.

Meaning of professionalism
 Refers to what is right/wrong/acceptable in a business
 Set of standards of expected behaviour.
 Applying a code of conduct of a profession or business.
 Focuses on developing a moral compass for decision making
 Includes guidelines on employees’ appearance/communication/attitude/responsibility,
etc.

4 Examples of professional and unprofessional business practice

Professional business practice Unprofessional business practice
 Good use of work time  Using rude/impolite language
 Treating all people the same.  Abuse of work time.
 Using polite language to colleagues.  Giving some people special favours.
 Keeping clients details confidential/Not  Overstating the number of hours
using clients’ information for personal worked.
gain.  Unauthorised use of business
resources.
 Discussing clients’ information/using
clients’ information for personal gain.

5 Differences between ethical behaviour and professional behaviour

Ethical behaviour Professional behaviour
 Refers to the principles of right and  Refers to what is
wrong/acceptable in society. right/wrong/acceptable in a business.
 Conforms to a set of values that are  Set of standards of expected
morally acceptable. behaviour.
 Forms part of a code of conduct to guide  Applying a code of conduct of a
employees to act ethically. profession or business.
 Focuses on upholding the reputation of a  Focuses on developing a moral
business/profession. compass for decision making.
 Involves following the principles of right  Includes guidelines on employees’
and wrong in business appearance/communication/attitude/re
activities/practices/dealings. sponsibility, etc.

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6 Ways in which businesses can apply King Code principles for good corporate
governance

Transparency
 Decisions/Actions must be clear to all stakeholders.
 Staffing and other processes should be open and transparent.
 Employees/Shareholders/Directors should be aware of the employment policies of
the business.
 Auditing and other reports must be accurate/ available to shareholders/employees.
 Regular audits should be done to determine the effectiveness of the business.
 Business deals should be conducted openly so that there is no hint/sign of
dishonesty/corruption.
 Businesses should give details of shareholders' voting rights to them before/at the
Annual General Meeting (AGM).
 The board of directors must report on both the negative and positive impact of the
business on the community/environment.
 The board should ensure that the company's ethics are effectively implemented.

Accountability
 There must be regular communication between management and stakeholders.
 Businesses should be accountable/ responsible for their decisions/actions
 Company should appoint internal and external auditors to audit financial statements.
 The board should ensure that the company's ethics are effectively implemented.
 Businesses should present accurate annual reports to shareholders at the
Annual General Meeting (AGM).
 Top management should ensure that other levels of management are clear
about their roles and responsibilities to improve accountability.

Responsibility
 The business/ board should develop and implement programmes that should be
aimed at protecting the communities in which they operate.
 The business/ board should develop remedial programmes to protect the
environment for example, reduce air and water pollution.

7 Ways in which professional, responsible, ethical and effective business practice

should be conducted
 Mission statement should include values of equality/respect.
 Treat workers with respect/dignity by recognising work well done.
 Treat all their employees equally, regardless of their race/colour/age/gender/disability
etc.
 All workers should have access to equal opportunities/positions/resources.
 Plan properly and put preventative measures in place.
 Pay fair wages/salaries which is in line with the minimum requirements of the
BCEA/Remunerate employees for working overtime/during public holidays.
 Ensure that employees work in a work environment that is conducive to safety/
Fairness/free from embarrassment.
 Refrain from starting a venture using other businesses' ideas that are protected by
law.

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 Engage in environmental awareness programmes/Refrain from polluting the

environment, e.g. by legally disposing of toxic waste.
 Employers and employees need to comply with legislation with regard to equal
opportunities/human rights in the workplace.
 Businesses should develop equity programmes/promote strategies to ensure that all
employees are treated equally regardless of status/rank/power.
 Training/Information/Business policies should include issues such as diversity/
discrimination/harassment.
 Employers should respond swiftly and fairly to reported incidents of discrimination in
the workplace.
 Orders/Tasks should be given respectfully and allow the recipient/employee to
have a say in the manner in which the task should be performed.

8 Types of unethical business practices and examples

Type of unethical/business Examples
practices
Unfair advertising  Giving goods deceptive names/False labelling.
 Selling second hand goods as new goods.
 Exaggerating the merits of the product/False
promises
 Using fine print to conceal important information.
 Criticising competitor's goods.
 Exploitations of children's lack of understanding.
 Misuse of people with disabilities in advertisements.
 Advertising that encourages violence.-Advertising
goods at a very low price to attract customers but
when the customer reaches the store the item is no
longer there/Bait and switch.
 Advertising a product showing additional items, but
do not clearly state that these items are excluded.
Pricing of goods in rural areas  Inflating prices
 Charging higher for goods of inferior quality in rural
areas.
Taxation/Tax evasion  Businesses that do not declare all their income to
SARS.
 Falsifying the business financial statements.
NOTE: You must be able to identify the above mentioned types of unethical
business practices from given statements and scenarios

9 Challenges posed by the above mentioned types of unethical business practices

Unfair advertising
Challenges posed by unfair advertising as an unethical business practice
 Unfair advertisements could be harmful to consumers.
 The use of false or misleading statements in advertising leading to misrepresentation
of the concerned product, which may negatively affect consumers.
 Businesses can make unwise advertising choices when they are under pressure to
increase their profits.
 Some advertisements may be regarded as discriminatory because they
exclude/target some sections of the population.

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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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TERM 1 ACTIVITY 3

TOPIC: ETHICS AND PROFESSIONALISM

3.1 Name THREE unethical business practices that may pose challenges to businesses.
(3)
3.2 Identify the unprofessional business practices illustrated in EACH statement below:

3.2.1 The director of KNZ Consulting uses the business credit card to pay for
personal expenses.

3.2.2 Employees of Zamu Attorneys spend more time on social networks during
office hours than on their duties. (4)

3.4 Read the scenario below and answer the questions that follow

NATASHA DÉCOR (ND)

The management of Natasha Décor treats their employees with respect by

recognising work well done. ND ensures that all employees have access to equal
opportunities. They engage in environmental awareness programmes.

3.4.1 Quote THREE ways in which ND conducts business professionally,

responsibly, and ethically (3)

3.4.2 Advise ND on other ways in which professional, responsible, ethical, and

effective business practice should be conducted. (6)

3.5 Explain the differences between ethical and professional behaviour. (8)

3.6 Read the scenario below and answer the questions that follow

DORFS FINANCIAL SERVICES LTD (DFS)

Dorfs Financial Services Ltd is failing to attract potential investors due to the
company's poor performance. The shareholders discovered from whistle-blowers
that the company's poor performance is the result of a lack of competency in the
board of directors. The directors of DFS are denying this allegation.

3.6.1 Quote TWO examples of poor corporate governance from the scenario
above. (2)

3.6.2 Identify the TWO King Code principles for good governance that DFS did not
apply. (4)

3.6.3 Advise DFS on how to apply EACH KING code principle identified in
QUESTION 3.6.2 to improve their corporate governance (8)

Use the table below as a guide to answer QUESTION 3.6.1-3.6.3.

POOR CORPORATE KING CODE APPLICATION OF KING

GOVERNANCE PRINCIPLES CODE PRINCIPLES
(Q3.6.1) (Q3.6.2) (Q3.6.3)
1.
2.

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3.7 ESSAY

Ethics and professionalism are good for the business and involve demonstrating respect
for others in the workplace. How to be professional, responsible and ethically effective in
business practice should constantly be evaluated.

 Distinguish between ethical and professional behaviour.

 Explain how businesses can use transparency and accountability as part of the King
Code principles
 Advise businesses on how the following unethical businesses pose a challenge to
business operations:
o Unfair advertising and examples
o Pricing of goods in rural areas
o Taxation/Tax evasion
 Suggest ways in which businesses could deal with above mentioned types of
unethical business practices. (40)

3.8 ESSAY

According to the King Code principles, businesses are expected to conduct their
operations in an ethical and professional manner. Many businesses develop strategies to
address unethical business practices remain competitive and sustainable.

Write an essay on ethics and professionalism in which you address the following aspects:

 Elaborate on the meaning of ethical behaviour.

 Explain how the following unprofessional business practices can pose a challenge to
businesses:
o Sexual harassment
o Unauthorised use of workplace funds and resources
o Abuse of work time
 Recommend ways in which businesses could deal with above mentioned types of
unprofessional business practices.
 Suggest ways in which professional, responsible, ethical and effective business
practice should be conducted. (40)

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BUSINESS STUDIES

GRADE 12
TERM ONE
CHAPTER 4
NOTES ON CREATIVE THINKING AND PROBLEM SOLVING
2022

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EXAM/TEST QUESTIONS:

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
Negatives/Disadvantages

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 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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TERM 1 ACTIVITY 4

TOPIC: CREATIVE THINKING AND PROBLEM SOLVING

4.1 State FOUR steps in problem-solving. (4)

4.2 Identify the problem-solving technique represented by EACH statement below:

4.2.1 Carl gives his employees the opportunity to suggest ideas randomly which
are then written on a flip chart.

4.2.2 The management of Tony's Consulting have listed the advantages and
disadvantages of changing their business structure.

4.2.3 The employees of Shoba Fashion Design have been requested to generate
quietly as many ideas as possible and then to share them with other
employees. (6)

4.3 Explain how businesses can apply the problem-solving technique identified in
QUESTION 4.2.2. (8)

4.4 Read the scenario below and answer the question that follow.

SMOOTH FURNITURE LTD (SF)

Smooth Furniture Ltd wanted to change the designs of some of their furniture.
Employees were requested to suggest new ideas in a large group without working
individually. These ideas were used to inspire new thoughts. The management of
SF evaluated the advantages and disadvantages of each idea.

4.4.1 Identify TWO problem-solving techniques used by Smooth Furniture Ltd.

Motivate your answer by quoting from the scenario above. (6)

Use the table below as a GUIDE to answer QUESTION 10.11.

PROBLEM SOLVING MOTIVATIONS
TECHNIQUES
1.
2.

4.4.2 Discuss the impact of ONE of the problem-solving techniques identified in

QUESTION 4.4.1 on businesses. (6)

4.5 Distinguish between decision making and problem solving. (8)

4.6 Discuss the advantages of creative thinking in the workplace. (6)

4.7 Evaluate the Delphi technique in solving business problems. (6)

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4.8 ESSAY

MOJO PAINTS

The management of Mojo Paints wants to improve the quality of their paints because of
various complaints from their customers. They have requested employees to generate
new, creative ideas on how to improve their products to satisfy customers' needs.

Write an essay in which you include the following aspects:

 Distinguish between decision making and problem solving.

 Explain how Mojo Paints may apply the Delphi and Nominal techniques to solve
their business problems
 Discuss the advantages of creative thinking.
 Recommend practical ways in which Mojo Paints may create an environment that
stimulates creative thinking. [40]
4.9 ESSAY

PAK TILES SUPPLIER (PTS)

The management of Pak Tiles suppliers has received complaints from their retail outlets.
PTS has decided to apply the force field analysis and brainstorming problem-solving
techniques to solve their problem. PTS wants to create an environment that stimulates
creative thinking.

Write an essay in which you include the following aspects:

 Explain the problem-solving steps that Pak Tiles Supplier can apply to solve
business problem
 Discuss the advantages of creative thinking in the workplace.
 Advise Pak Tiles Supplier on how they should apply the force-field analysis and
brainstorming problem-solving techniques to solve their business problem.
 Recommend ways in which PTS may create an environment that stimulates
creative thinking in the workplace. [40]

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BUSINESS STUDIES

GRADE 12
TERM ONE
CHAPTER 5
BUSINESS STRATEGIES
2022

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EXAM/TEST QUESTIONS:
 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  Rising pay levels.
quality 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 high prices.
interest rates.  Borrow money from financial
Fluctuations in foreign currency may institutions when interest rates are
restrict import. favourable.

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 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.
Technologica Businesses may not keep up with/be Continuous research on the latest
l aware of the latest technology. available technology/equipment in the
Employees may not be skilled to market.
operate/maintain new technology/ Train existing/appoint new employees
equipment. to maintain/use new equipment.
Businesses may not be able to Compare prices/Select suitable
afford new technology. suppliers for new equipment at
May not be able to cater for/ afford reasonable prices.
online transactions/e-commerce. Businesses must be geared for online
trading/e-commerce
Legal Certain Acts may have a direct Comply with all relevant legislation that
impact on a business, e.g. the may impact on businesses.
CPA/BCEA. Comply with the legal requirements for
Legal requirements for operating operating businesses, e.g.
certain types of businesses time- licence/trade mark
consuming. registration/patents.
High legal costs involved in obtaining Budget for high legal establishment
a licence/trade mark/patent may costs.
prevent some establishments. Businesses must know the legalities of
Legalities of business contracts may business contracts so that they
limit business operations comply with all the requirements.
Environment Chemicals/Ingredients in business’ Chemicals/Ingredients should be clearly
al products may be harmful to indicated on labels/packaging to
customers inform customers about possible side
Measures to dispose of business 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.

2 Types of business strategies

2.1.1 Integration strategies
Forward integration

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 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.

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

 Increase in sales/income and profitability.
 Regular sales to existing customers may increase.
 Gain customer loyalty through effective promotion campaigns.
 Improved service delivery may positively impact/increase sales.
 Eliminate competitors and dominate market prices.
 Decrease in price could influence customers to buy more products.
 Businesses can have more control over the prices of products/services.

 Enables the business to focus on markets/well researched quality products that

satisfy the needs of consumers.
 Increased market share reduces the business’s vulnerability to actions of
competitors.

2.2 Diversification strategies

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Concentric diversification
 The business adds a new product or service that is related to existing products and
which will appeal to new customers.
 Occurs when a business wants to increase its product range and markets.

Horizontal diversification
 The business adds new products or services that are unrelated/ different to existing
products, but which may appeal to existing/current customers.
 Occurs when a business acquires or merges with a business that is at the same
production stage, but it may offer a different product

Conglomerate diversification
 The business adds new products or services that are unrelated to existing products
which may appeal to new groups of customers.
 Occurs when a business wants to increase its product range and markets.
 Conglomerate diversification means that a business grows into new products,
services and markets.

2.2.1 Advantages of diversification strategies

 Increase sales and business growth.
 Improves the business brand and image.
 Reduces the risk of relying only on one product.
 More products can be sold to existing customers and additional more new markets
can be established.
 Businesses gain more technological capabilities through product modification
 Diversification into a number of industries or product line can help create a balance
during economic fluctuations.
 Business produce more output using less inputs as one factory may be used to
manufacture more products.

2.3 Types of defensive strategies

Divestiture/ Divestment
 The business disposes/sells some assets/divisions that are no longer profitable/
productive.
 Businesses may sell off divisions/product lines with slow growth potential.
 The business sells ownership by decreasing the number of shareholders.
 Unproductive assets are sold to pay off debts.
 Process used to withdraw its investment in another business (divesting).

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Retrenchment
 Terminating the employment contracts of employees for operational reasons.
 Decreasing the number of product lines/Closing certain departments may result in
some workers becoming redundant.

Liquidation
 All assets are sold to pay creditors due to a lack of capital/cash flow.
 Selling the entire business in order to pay all liabilities/close down the business.
 Companies in financial difficulty may apply for business rescue to avoid liquidation.
 Creditors may apply for forced liquidation in order to have their claims settled.
NOTE: You must be able to identify the types of business strategies from given
scenarios/statement.

3 Steps in evaluating a strategy

 Examine the underlying basis of a business strategy.
 Look forward and backwards into the implementation process.
 Compare the expected results in order to determine the reasons for deviations and
analyse these reasons.
 Take corrective action so that deviations may be corrected.
 Set specific dates for control and follow up.
 Draw up a table of the advantages and disadvantages of a strategy.
 Decide on the desired outcome.
 Consider the impact of the strategic implementation in the internal and external
environments of the business.
NOTE: The steps can be in any order

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TERM 1 ACTIVITY 5
TOPIC: BUSINESS STATEGIES
5.1
5.1.1 The process whereby a business stops operating and sells all assets to pay off
debts:
A Retrenchment
B Market development
C Divestiture
D Liquidation

5.1.2 An industrial analysis tool used to analyse the challenges of the macro environment:

A Porter's Five Forces model

B PESTLE
C SCAMPER
D Balanced Scorecard

5.1.3 Hombi Ltd has sold some of their assets to improve their cash flow. This business
strategy is known as ...

A liquidation.
B retrenchment.
C divestiture.
D diversification.

5.2 Identify the type of business strategy illustrated in EACH of the statements below.
5.2.1 Alex Clothing Manufacturers took over Class Clothing Retailers for efficiency
and profitability.
5.2.2 Moyeni Supermarkets in Potchefstroom reduced the prices of their products
to increase sales.
5.2.3 Exclusive Books expanded their business by selling stationery to
attract new customers. (6)

5.3 Explain steps in developing a strategy (6)

5.4 Distinguish between product development and market development (8)

5.5 Describe THREE types of diversification strategies. (9)

5.6 Explain the advantages of intensive strategies in addressing business challenges (6)

5.7 Read the scenario below and answer the questions that follow.

GLEN SHUTTLE SERVICE (GSS)

Glen Shuttle Service transports clients to and from the airport. Some clients have
requested GSS to sell soft drinks while travelling. GSS has decided to merge with Clear
Beverages to be able to satisfy the needs of their clients.

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5.7.1 Identify the type of integration strategy that GSS applied in the scenario
above. Motivate your answer by quoting from the scenario (3)
5.7.2 Describe any other TWO integration strategies. (6)
5.7.3 Explain the advantages of integration strategies. (6)
5.8 Name the SIX components of the PESTLE analysis. (6)

5.9 Read the scenario below and answer the questions that follow.

MARTHA & JANE FURNITURE (MJF)

Martha & Jane Furniture specialises in selling office furniture. The profitability of the
business has decreased due to high inflation rates and low-income levels of
customers. MJF had to pay a hefty (heavy) fine because they did not renew their
trading licence in time.

5.9.1 Quote THREE challenges for MJF from the scenario above. (3)

5.9.2 Identify the PESTLE element that links to EACH challenge, as quoted in
QUESTION 5.9.1. (3)

5.9.3 Recommend ONE way in which MJF can deal with EACH challenge, as
identified in QUESTION 5.9.1. (6)

Use the table below as a guide to answer QUESTION 5.9.1-5.9.3

CHALLENGE PESTLE ELEMENT RECOMMENDATION

(Q5.9.1) (Q5.9.2) (Q5.9.3)
1.
2.
3.

5.10 Read the scenario below and answer the questions that follow.

The management of Royal Star Hotel want to improve their strategic management
process. They conducted an environmental scan and identified the following challenges:
 Many workers are late for work.
 The new Dawn Hotel charges lower prices for similar services.
 RSH is located in an area where the unemployment rate is high.

5.10.1 List the THREE industrial analysis tools that could be applied during
the environmental scan. For EACH tool, quote ONE challenge from
the scenario above. (9)

5.10.2 Advise RSH on how to conduct their strategic management process. (6)
5.11 Read the scenario below and answer the questions that follow.

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.

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5.11.1 Compile a SWOT analysis for DDS. (4)

5.12 Name THREE business environments and state the extent of control that businesses
have over each environment. (9)

5.13 Identify the element of Porter's Five Forces model that applies to each of the
following statements:
5.13.1 Customers prefer fashionable sneakers to more expensive, formal shoes.

5.13.2 Mpho’s Stores has a few regular customers who always place large orders.

5.13.3 Ayisha Ltd wants to start an exclusive fashion boutique that requires huge
capital investment to cover high establishment costs and expensive stock.

5.13.4 Sam's Millers is the only place where bakeries can buy flour.

5.13.5 Jack Hardware attracts more customers than Tim Hardware. (10)
5.14 Explain how businesses could apply the following forces from the Porter's Five
Forces model:

 Power of buyers (4)

 Power of competitors/Competitive rivalry (4)
 Threats/Barriers to entrance to market (4)

3.15 ESSAY

ZYL MANUFACTURERS (ZM)

ZM specialises in the manufacturing of men's clothing. The business is struggling to pay its
creditors due to a high inflation rate. ZM needs to conduct the strategic management
process in order to devise the best strategy that will assist them to overcome the challenges
of the macro environment.

Write an essay on the strategic management process. Include the following aspects in your
response:

 Outline TWO aspects that should be considered during the initial stages of the
strategic management process.
 Explain how ZM can apply the PESTLE model to deal with the challenges of the
macro environment.
 Describe THREE types of defensive strategies that businesses may use to deal with
challenges in the business environment.
 Advise ZM on the steps that they should consider when evaluating strategies. [40]

QUESTION 5.16

Businesses realise the importance of the strategic management process when devising
suitable business strategies. Some businesses maintain that Porter's Five Forces model
plays an important role in remaining competitive in the market environment.

Write an essay on business strategies in which you include the following aspects:

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 Describe the strategic management process.

 Discuss the THREE types of intensive strategies that businesses may use to
 address challenges in the macro environment
 Explain how businesses could apply Porter's Five Forces model to analyse the
market environment.
 Advise businesses on the effectiveness of the diversification strategies. [40]

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