Teachers Guide - Consumo

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Contents:

Chapter 1: Business Environments Page 2

Chapter 2: Corporate Social Responsibility Page

Chapter 3: Management and Entrepreneurship Page

Chapter 4: Research and presenting of data and information formats Page

Chapter 5: Forms of Ownership Page

Chapter 6: Creative Thinking and Problem Solving Page

Chapter 7: Professionalism and Ethics Page

Chapter 8: Teamwork and Conflict Management Page

Chapter 9: Public Relations Page

Chapter 10: Financial Page

Chapter 11: Marketing Page

# Please note: The questions are VERY open-ended and the students must be

allowed to apply their answers by incorporating personal opinion and varied insight.

The answers in this book only serve as a guide to the teacher and are not the only

possible answers.

Teachers Guide

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Chapter 1: Business Environments (Page 1)

Activity 1: Page 8

Complete a SWOT analysis for Mr Price. Assess how the different elements of the SWOT analysis could lead to the

success of Mr Price.

There is no stipulation about the format - This SWOT has been put into a table in order to show how each

element needs an analysis of how it could lead to success.

SWOT analysis Of Mr Price (Mrp)

Aspect How it could lead to the success of Mr Price

Str

eng

ths:

Mrp has 1150 stores in total, which implies it

is an established, well-known brand.

These stores are located in a variety of

areas across Africa, making the brand

accessible to all Africans.

Mrp has launched its online store and has

successful result of R112.3 million in sales.

Online stores are more cost effective then

physical stores in malls and have seen a

growth of 107.3% for Mrp.

Mrp has a strong brand with a large

customer base which is echoed in the R18.1

billion turnover.

The strong brand has drawn customers to

the stores which has added to the 13.9%

growth on last year.


We

akne

sses:

Mrp‘s stores have been known to be

cluttered and untidy at times, which can

leave customers with the wrong impression

of the brand.

If management look at this ‗clutter‘ issue and

fix it, it will gain favour in the eyes of the

public and increase their market share.

Mrp offers low price items, which can place

the quality of the product in the spotlight.

Low quality is often associated with the

brand.

If Mrp adapts their marketing to combat this

perception, it will improve their image and

customers will be assured of quality.

Suppliers can also be consulted on the

required quality standards.


Op

po

rtu

nitie

s:

Mrp can continue expanding the brand, Mrp

can open ‗Mr Price food‘ which will take

them into a new market with new

competitors like Pick n Pay.

Considering the model of low prices, ‗Mrp

food‘ will possibly have a large customer

base purely because of the perception of the

market.

Mrp can look at an ‗expensive‘ brand within

the brand. They can have an exclusive

range that is of higher quality and higher

priced in a small section in all stores.

This could increase their market share by

adding a new segment to the market. It

could also kill the rumour which brings the

general quality into question.


Thre

ats

:

Inflation is at an all-time high and people are

left with less disposable income to spend at

Mrp stores.

Mrp needs to understand the struggles of

the consumers and needs to try and meet

their needs by offering lowest of low prices.

The Rand has weakened against other

currencies and Mrp imports a lot of its stock

from other countries. This is placing their low

price under pressure.

Mrp price needs to investigate the strength

of the Rand against all major currencies and

investigate different sources of supply. They

can also buy in large quantities when the

Rand strengthens.

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Activity 2: Page 10

Using the SWOT analysis in Activity 1. Complete a TWOS analysis for Mr Price. Also keep an eye on the values of Mr

Price and ensure that your strategies are in line with these values.

TOWS for Mrp Strengths:

1150 store - established brand

Successful online offering

Large customer base - R18 billion turnover

Weaknesses:

Cluttered and untidy stores

Quality questionable

Opportunities:

Possible brand expansion to ‗Food‘

Add an exclusive range

SO Strategies:

Add a small food section to all stores.

Healthy foods to the sport stores.

WO Strategies:

All stores can focus on better packing/displaying of products on shelves.

An exclusive store displaying pristine quality and tidiness.

Threats:

Inflation

Weak Rand

ST Strategies:

Source cheaper suppliers to continue to bring exceptionally low prices.

Look at increasing the options of customer accounts.

WT Strategies:

Find innovative ways of keeping stores tidy - not necessarily employing more staff.

Possibly cut down on the variety of clothing but buy larger quantities.

Activity 3: Page 14

1 Use the Porters Five Force model to help assess the market environment and develop strategies for Cell C to

improve the business.

2 Now add the sixth

force, complimentary products and discuss how Cell C can use this to improve the business.

1 Porters Five Force Model - Cell C

Level of Rivalry in the market:

A competitors profile will tell Cell C everything about their competition as it is important for any business to

know what their competitors are doing. Cell C needs to know their competitors and their every move! By

Cell C knowing their competition they can prevent them from stealing any market share, they can beat them

with new ideas and they can slowly take bits of the market away from Vodacom in order to get closer to

being the market leaders in the industry.

Strategy:

Cell C needs to develop strategies to improve and outperform competitors in the above mentioned factors,

as competitors have the power to "lure away" customers and thus profits. Competitor intelligence is

essential to be able to benchmark your position as a business in the market in which you operate. This

intelligence will allow Cell C to pre-empt actions that could maintain their own market share and allow them

to adapt their strategy to counter strategies from their competitors.

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Threat of New Entrants:

Not only current competitors "steal" customers, there may be a challenge from a new business that sees an

opportunity to make money by entering the market. An existing business will see any potential new

business as a threat to its market share and profits. The business therefore, tries to build "barriers"

(strategies) to prevent new businesses from entering the market successfully.

Strategy:

The idea of Cell C building its market share is to both gain more profit but also, the bigger its market share,

the less space there will be for a new entrant. If Cell C were to see a gap where its customers were leaving

because they were looking for a different type of cell phone package, it would be in their best interest to

revise their packages to include more variations. What could happen is that a ―NEW‖ business could see

the gap and then open up a cell phone company in South Africa. The fact that it is so expensive to create

the network infrastructure is a barrier, however, companies like Virgin mobile and now Mrp mobile have

overcome this by piggy-backing on other networks infrastructure.

Availability of substitute product: The difficulty with a substitute product is that it is the same need that is being satisfied with a different product. For example, when it comes to Cell C – the general need is communication and data. In the line of communication there is Telkom fixed lines (ADSL) as an option or even pay-phones which are provided to the public. Strategy: Cell C needs to investigate all options that Telkom offer their clients and assess whether there is an aspect that they need to include in their products to minimise the chance of customers using substitute products. Telkom is a parastatal and their infrastructure is paid for by the government. The infrastructure is huge and very costly which makes it difficult for Cell C to tap into their market. Power of Suppliers: A business in most cases is totally dependent on their suppliers and Cell C is no different. Cell C‘s suppliers include all the cell phone manufacturers like Apple, Samsung etc. They also have products like covers and screen protectors which come from different suppliers and if it does not arrive at the exact time, it will cause a huge disruption in business. In order to be successful, the business depends on the supplier to provide a good quality product when needed (timing) and to deliver the correct quantity to the place needed at a reasonable price. Consequently less successful. Consequently, it is critical that the business develops and maintains good relationships with suppliers.

Strategy:

Cell C must ensure open communication between suppliers and themselves. All correspondence must be in writing and both parties need to be clear about all expectations to ensure there is no disappointment. Cell C needs to ensure the suppliers are paid on time.

Power of the buyers:

The cell phone users are the most important, without the buyer Cell C is nothing. Cell C has spent a lot of

money on advertising to ensure customers know about them and that they know about the customer.

Strategy:

Cell C needs to continue putting the customers‘ needs first. Their strategy to buy out your existing contract

is a unique selling point that has already assisted in capturing a larger market share.

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2 Complementary Products (6th force)

The presence of the sixth force of Porter, can benefit or hurt the other companies competing in an industry,

depending on the circumstances. Complementary goods do not necessarily increase or decrease the

competitiveness of an industry, they merely add another layer to the structural complexity of the competitive

environment.

Strategy:

Complimentary products (referred to as value added services) on Cell C‘s site include:

Wifi-calling Facebook basics Thumbtom C surance Data transfer These services are additional to the contract you get and definitely strive to improve Cell C‘s market share.

Activity 4: Page 18

With the use of the PESTLE table below, complete a PESTLE analysis for Cell C.

It is important to provide the following strategies for Cell C:

How to take advantage of the impacts of the various PESTLE analysis elements

How to overcome the impacts of the various elements of the PESTLE analysis

When you complete the table, think about the impact of your suggestions/decisions on the market share, the brand,

the current competitive position of the business, but also the future existence of the business.

PESTLE Factor Understanding of this factor Potential

impact of

the factor

Implication and importance

Listing the different PESTLE

factors and the elements below

each one.

How these factors and elements, if not

dealt with, could have an impact on

your business / part of your business

High

Medium

Low

Unaffected

Type of effect:

P - Positive

N - Negative

U - Unknown

Impact: Increasing Decreasing Unchanging

Relative importance: Critical Important Unimportant Unknown

Political:

Political instability in certain countries.

Government changes may result in different regulations.

Cell C may be in business with these countries and trade restrictions might be imposed.

Political power may shift in the country causing changes to the country.

M

H

N

P

I U

I I

Economic:

The global economic slowdown has resulted in the slowing down of consumer‘s spending money.

The weakening of the Rand against other currencies.

Cell C will need sales of airtime and data to continue to grow. The slowdown will definitely hamper their growth and they will need strategies to be put into place.

Cell C purchase their phones from other countries and the weakening Rand will

H

H

N N

I I

C C

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mean Cell C needs to pay more money per device.

Social:

Social media platforms are leading forms of media.

Unemployment rates are on the increase in our country causing a ripple effect on crime

Cell C needs to utilise this ‗cheaper‘ way of marketing. It also needs to be careful that there is not negative publicity.

Cell C will definitely be affected by unemployment and crime - they have ‗Csurance‘ for their customers.

M

H

P N

I I

I I

Technological:

Technology surrounding cell phones and caballing is advancing at a rapid rate.

All electronic paying/till systems are run with electricity – constant load shedding is causing issues with interrupted work and breakages

Cell C needs to keep up with Vodacom who are the industry leaders. This means moving money from other priorities to keep technology ahead.

Cell C must not let the customer experience in their store be interrupted by load shedding. Alternate energy sources are expensive but a must.

H

H

P N

I D

I I

Legal:

BBBEE & Employment Equity

Basic condition of employment act

Cell C are under immense pressure to increase their scorecard ratings. This could affect current staff - leading to retrenchments.

Cell C need to treat their employees well and the BCEA should be the minimum they adhere to.

H

M

P P

U U

I I

Environmental:

Global warming and increasing carbon footprint have resulted in a drastic need for the environment to be protected.

The rules for disposal of oils and waste products which are harmful to the earth are clear and are punishable by law.

Cell C is a large company that will damage the environment if it is not intentional about being eco-friendly and its customers will question whether or not it they want to support a company which is damaging the environment - they might choose a different company which is more eco-friendly.

If they are not compliant, the directors will be punished by law and could face jail time due to their fiduciary duty.

M

H

N P

I I

I I

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Additional activities: Page 19

1 Explain how socio-economic factors could impact on a business, both positively and negatively.

Negatively: There are many socio-economic factors which affect the business, these include poverty,

unemployment, HIV Aids, crime and corruption etc. These issues could directly or indirectly affect the

business. Eg: Crime - the business would need to spend more money ensuring the customers experience

at the store is a safe one or else they will go elsewhere. Unemployment leads to poverty - if so many

people are unemployed, they do not have money to spend at your store, which will not allow your business

to grow as much as it would in a country with a lower unemployment rate.

Positively: The business could get involved in assisting the community in eradicating these socio-economic

issue, thus finding favour with the public and really making a difference in the lives of many.

2 Draw a mind map where you look at the interrelatedness of the different business environments. How do the

environments have an impact on each other?

(Students can draw any diagram, it must just include three environments and show an interrelatedness.)

Business adapts

to factors by

strategic

planning

Interrelatedness of Business

Environments

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3 Discuss how the different environmental scanning tools could be used in conjunction with each other (i.e.

using the tools simultaneously) to scan the business environment.

4 Discuss the power a buyer has over a business. Do you think a business is able to overcome this power and if

so, how? Give practical strategies.

The buyer has the power to demand a lower price, a higher level of quality, longer trading hours, delivery

of products, a wider variety of goods, etc.

If the buyer demands any of the above (and you can add some more demands to the list), the business

will have to decide if it is worthwhile to meet these demands.

Satisfying more consumer demands would mean lower profits for the business. Not meeting the

demands however, may mean no profits if consumers switch to competitors.

Remember the buyer does not have to be an individual consumer. Another business may also buy the

products to resell or manufacture something.

Yes the buyer can overcome this by creating a strong brand where customers become brand loyal and will

be more insistent on buying your product even if it costs more or they have to wait.

5 Name six factors which could be found under the economic element of a PESTLE analysis.

Political, Economic, Social, Technological, Legal, Environments……Physical and Ethical

6 Discuss the impact that three of these factors listed in question 5 could have on Famous

Brands.

Factor Possible challenge Strategies to address the challenge

Political

Political instability in certain countries.

Government changes may result in different regulations.

Be very careful where Famous Brands open international outlets.

Be very knowledgeable on any new regulations brought out by government.

Economic

The global economic slowdown has resulted in the slowing down of consumer‘s spending money.

Economic pressure is causing rapid development in all sectors to gain competitive advantage.

Continue to come up with special in stores, like in Steers - Wacky Wednesday and the latest special R49.90 King Steers burger and chips.

Continue to support individual stores by ensuring their

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advertising is effective.

Social

Social media platforms are leading forms of media

Unemployment rates are on the increase in our country causing a ripple effect on crime

Famous Brands needs to use other platforms like Instagram and Facebook to advertise

Famous Brands can offer forms of training to assist with unemployment by empowering or even assisting with feeding schemes.

Technological

Technology surrounding the food industry is advancing at a rapid rate – automation

All electronic paying/till systems are run with electricity – constant load shedding is causing issues with interrupted work and breakages

Famous Brands can use their expertise to source the machinery from all over the world.

Special plugs need to be installed so when the electricity goes on and off it does not damage the machinery. The individual outlets can also install generators to run the machinery in times of outages.

7 Name the tools which would be most appropriate for scanning each of the following environments:

A Micro environment B Market environment

C Macro environment

A SWOT analysis

B Porters Five Force Model

C PESTLE analysis

8 Define the term strategy.

A strategy is a plan of action on how a business can respond to challenges in order to create or defend

their competitive advantage.

9 Explain how you, as a manager, would use the information gained from an environmental scan as part of your

strategic planning process.

When we decide to travel to a new and unknown destination, we program our GPS with the address of

our destination. The GPS then calculates the best route to take and gives us directions to get there.

These directions may change depending on traffic patterns detected by the GPS and whether the

traveller wants the most direct route or the fastest route.

In business, management functions as the GPS. It has to take into consideration where the business

wants to go to (vision) and then formulate a mission and strategies that will give the business directions

on how to get to the destination.

Environmental scanning monitors the business environment to ―detect traffic jams‖ that should be

avoided and ―areas with limited traffic‖ where the business has the opportunity to get ahead of

competitors on the business road. It is no good if management scans the road ahead at the beginning of

the journey and then does not ―recalculate‖ (evaluation and control) based on problems detected.

10 Discuss the extent to which Famous Brands (FB) is able to minimise the influence of the elements of Porter‘s

Five Force model (market environment). Use practical examples to illustrate your answer.

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Level of Rivalry -

Because there are many competitors in the market, FB needs to know everything about the competition.

Because there is limited potential for the market to grow and all competitors have to compete for the

same market share - FB must ensure their customer service and menu offerings are much better than

competition to gain a greater market share.

FB must ensure that their restaurants offer option that can easily be substituted for example if you don‘t

get takeaways there is the option of sitting down at a restaurant.

FB must ensure a high level of customer loyalty so they can be assured of repeat buying and that their

customers won‘t easily move to competition.

Threat of New Entrants -

FB needs to understand who makes up their market share and then know exactly what it is that this

market requires.

If there is any additional need from the consumers they need to know by doing comprehensive market

research. Ideally, FB must know what the consumer needs BEFORE they know it themselves, in this

way they are able to foresee a gap in the market and if necessary try close the gap.

Availability of substitute products -

FB needs to establish what substitute products there are for their product range and then consider how

these substitutes can be provided for within their stores or it may even open up a new business

opportunity.

FB also needs to know exactly how much other businesses are selling the substitute products for.

Power of the supplier -

FB must create open communication channels with their suppliers in order to ensure delivery on time.

FB must ensure they are paid on time and in this way the supplier will not hesitate to give them the appropriate service.

FB must do what is necessary to ensure they get the best possible price and service from their suppliers.

Power of the buyer -

FB must know the customers‘ needs very well. They must engage in continuous market research in

order to establish the change in needs.

FB must ensure that customers are treated like ‗Kings‘, the customer always comes first and all

employees must treat them like this.

In this way they will be satisfied with the products and services of FB and will not eed to look at

competitors.

11 Find thee different articles that discuss the challenges The Post Office is facing and then complete the table

below.

http://www.news24.com/MyNews24/the-doomed-south-african-post-office-20160510

http://ewn.co.za/2016/05/10/Minister-appeals-with-workers-for-a-chance-to-redeem-post-office

http://af.reuters.com/article/southAfricaNews/idAFL5N1873LK

South African Post Office (SAPO)

http://www.news24.com/MyNews24/the-doomed-south-african-post-office-20160510

http://ewn.co.za/2016/05/10/Minister-appeals-with-workers-for-a-chance-to-redeem-post-office

http://af.reuters.com/article/southAfricaNews/idAFL5N1873LK

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Challenge/s Environment

(micro/market/macro)

Extent of control Post

Office has over the

challenge

Strategy to counter the

challenge

Inflation - There is a

general increase in the

price of items and

services.

Macro The SAPO can‘t control

the fact that there is

inflation or that their

expenses are increasing.

SAPO can increase their

prices for postage to bring in

more income.

They can also relook at their

suppliers to ensure they are

getting the lowest prices.

Strikes - over wages due

to an increase in inflation.

Macro SAPO has minimal control

over inflation, however,

depending on how they

deal with the Unions and

employees will determine

whether or not there are

strikes or not.

SAPO can negotiate with the

Unions to suspend strikes by

putting a future plan in place

so workers feel valued.

Past mismanagement of

company money and

poorly run parastatal

institutions.

Micro SAPO has a lot of control

of how future money is

spent and how the

business is managed.

SAPO (as the article explains)

can loan the money from

banks and incorporate a turn-

around strategy to try turn

SAPO into a profit

organisation.

12 Inflation is an element found in which environment:

A Micro B Primary

C Market D Macro

13 ____ is viewed as the 6th element of Porter‘s model.

A Substitutes B Globalization

C Complements D Product life cycle

14 Differentiate between the following elements in the micro environment:

A Business resources B Business functions

C Management

A Business resources - This includes Human, financial, physical, and knowledge factors that provide a

firm the means to perform its business processes.

B Business functions - A process or operation that is performed routinely to carry out a part of the

mission of an organisation. This could include any of the eight functional areas.

C Management - The organization and coordination of the activities of a business in order to achieve

defined objectives.

15 Assess how each of the following factors could have a positive and negative effect on the success of a

business.

A The market B Competitors

C Suppliers D Intermediaries

Positive effect on the success of the business Negative effect on the success of the

business

A - The market If the market has potential for high levels of If the market is unattractive and there is not

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profit and the business is able to achieve it, it

will add to the success.

much potential to make a profit, then it will not

lead to much success for the business.

B - Competitors If there is a low level of competition in the

market it will allow the business to gain a

great share of the market and then get greater

profits.

If there is a high level of competition in the

market, it will decrease the market share and

limit the profits of the business.

C - Suppliers If the suppliers and the business have a good

relationship, they will deliver the right quality

at the right price and time etc. this will allow

the business to give their customer a better

service and it will increase their all-round

success.

If the suppliers don‘t adhere to delivery times

and don‘t give good prices, the customers will

inevitably suffer and they will move to the

competition. This leading to loss in market

share and profits.

D - Intermediaries Often when you give your product to an

intermediary, they sell it on your behalf. You

need to know they are saying the correct

things about your product as well as giving

the customers the right service as the

customers will associate your product with

that intermediary. If this is done correctly, it

will lead to the success of the business.

If intermediaries don‘t market your product

well enough to customers or the customer

experience in their store is not positive, it will

lead to a decrease in sales.

16 Assess how each of the following socio-economic factors could have an impact (positively and negatively) on

the productivity of a business.

A Population growth B Illiteracy

C Lack of skills D Unemployment

E Crime

Socio-economic factor Impact on the productivity of the business

A Population growth Positive: considering there are now more people who will possibly utilise the

product or service you are providing will increase the need for productivity.

Negative: Your staff might need to take maternity leave and this causes a

disruption in your productivity.

B Illiteracy Negative: If your employees are illiterate, they will require assistance and

additional training. This then takes them away from their core responsibilities

and will reduce productivity.

C Lack of skills Negative: As above, employees will need to be trained before they can do their

job and therefore this will reduce levels of productivity. If they are not trained, the

quality of their work will be questionable.

D Unemployment Positive: Workers are under pressure to be productive in their jobs because they

are aware that there are many people out there that are desperate for work.

E Crime Negative: More money, effort and processes need to be put into security to

combat crime, therefore the resources (money, time) spent on security is taken

from productivity, so levels of productivity will decrease.

Chapter 2: Corporate Social Responsibility (Page 21)

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Activity 1: Page 23

Identify a business you are familiar with. Do some research about the business and its CSR programme. Present your

findings to the class for the purpose of discussing common grounds of CSR between businesses.

Students can choose any programme from any company - some examples of programmes include:

KFC Add hope campaign - R2 is optionally added to every meal to send as a donation to feed over 70000

children. The children are fed with porridge.

Pick „n Pay - Wind turbines Pick n Pay has wind turbines installed at our regional office in Port Elizabeth.

Although the wind turbines only generate 3% of daily energy usage at the moment, they are an important

way for us to learn about renewable energy. Worm farms are installed at all our regional offices and at our

Constantia store, where we make compost from fruit and vegetable waste, thereby decreasing the amount

of rubbish we throw away, and increasing our ability to recycle in an effective way.

Investec - Promaths and CSI bursary programmes

Together with the commitment of our partner organisations, we have given more time, more support and

more attention to promising students and learners in order to equip them for the bright future they deserve.

These initiatives have grown enormously in the last decade and have all the right elements to continue to

produce out of the ordinary results in the future.

Activity 2: Page 23

Use the same business that you used in Activity 1. Assess your business‘s level of responsibility according to the

elements discussed in the pyramid above. Make sure you have facts available to justify your findings regarding the

level of responsibility for the business.

KFC Add hope campaign - R2 is optionally added to every meal to send as a donation to feed over 70000

children. The children are fed with porridge.

http://addhope.co.za/wp-content/uploads/Add%20Hope%20Annual%20Report%202014.pdf (Annual

integrated report)

Blowfield and Murray pyramid:

o Economic Responsibility: At the most basic level, a business is responsible to ensure that it is

economically active, i.e. it produces goods / services that can be sold at a profit and from which

employees and shareholders will benefit.

KFC - They have a successful business. There are 736 KFC outlets in South Africa. They are well

established and have a successful turnover.

o Legal Responsibility: All businesses have the responsibility to ensure it is respecting the laws of the

country in which it operates. By obeying the laws of the country, the business is a responsible citizen in

the broader society.

KFC - On their website, they make many promises to their stakeholders. Their promise is that are

that they are engaged in is representative of sound governance.

o Ethical Responsibility: At this level the business has to ensure it is making ethically sound business

decisions that will not have a negative impact on stakeholders and the sustainable future of society and

the environment.

KFC - The Trustees are responsible for efficient and effective corporate governance for the Funds

collected and carry out their responsibility as Trustees with great care and in an accountable

manner. The appointed external auditors are responsible for the independent auditing and the fair

presentation of annual financial statements.

http://addhope.co.za/wp-content/uploads/Add%20Hope%20Annual%20Report%202014.pdf

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o Discretionary Responsibility: It is a higher level of responsibility than simply not harming others. The

business should consider how or what, and to whom or what, the business will give back. It is about

building a brand with values and ensuring that these values are being practised by the business in all its

business activities both internally and externally.

KFC - Their discretionary responsibility is their feeding scheme. Feeding over 70000 children is

more than just not harming others.

Activity 3: Page 27

Work with a partner and brainstorm the question ―does it pay to be good?‖ Once you have brainstormed the question

formulate an official response by referring to a minimum of two businesses and their CSR programmes, detailing

possible benefits / negative consequences.

Arguments for:

Businesses that are assisting the community in which they operate through CSR programmes, receive

greater support from the community. People see these businesses / brands as having a reputation for

caring; the community in turn supports the business and becomes brand loyal.

It is argued that businesses need to act on social issues in their communities or else customers will

move away. For example: Increased levels of poverty will lead to an increase in crime which could result

in customers avoiding the area. An increase in crime also results in the community having less money to

spend at businesses.

There are people debating the issue of whether government should enforce the King Code as a law. It is

argued that if businesses are doing CSR voluntarily there will be no need for the added pressure for a

law to enforce compliance, not to mention the red tape of policing it.

If business assists the community to increase its standard of living through education and health

programmes, it will benefit from a community that has a higher standard of living and a higher level of

disposable income.

By giving back to the environment through sustainability programmes, businesses are ensuring that

future generations will have resources needed to prosper.

Businesses that operate in sustainable ways are usually also innovative enough to identify additional

avenues of income.

Businesses that implement CSR initiatives are generally speaking, concerned about the impact that they

have on stakeholders and this in turn promotes more ethical business practice.

In many cases the business may already have suitable programmes in place to deal with social issues in

the community. For example, the business could have programmes in place that deal with leadership

and entrepreneurship that are used to empower its own employees. These programmes can then easily

be expanded to include the broader community.

Arguments against:

Many businesses have argued that CSR detracts from their core business activities.

Businesses and often shareholders as well, see the money spent on CSR as less profit in their pockets.

It is difficult to measure the benefits of CSR and as such it is difficult to measure if the business gains

anything from CSR.

15

Many businesses feel the pressure from the communities which have been helped via a CSR

programme, puts additional strain on them to keep on giving. If however, the business is not able to

meet all the needs of these communities, some communities may view the business in a negative light.

Some people argue that not all CSR projects are sustainable and that businesses are wasting time and

valuable resources on ―hit and run‖ programmes.

CSR sometimes leads to businesses misleading stakeholders regarding their environmental practices.

This is called Greenwashing.

Some critics argue that CSR is allowing the State to shift its responsibility.

Use the following rubric to mark your responses: (Optional)

0-2 3-5 6-8 9-10 TOTAL

Brainstorming the

concept

“does it pay to be good”

Demonstrates little to

no understanding of

the topic. Many

requirements of topic

are missing.

Demonstrates a fair

understanding of the

topic. All requirements

of topic are included

in the response.

Demonstrates

considerable



of topic are included.

Demonstrates

complete



of topic are correctly

applied and included.

Response:

Business 1

CSR programme with

positive and negatives


no understanding of

the topic. Many


are missing.

Demonstrates a fair




in the response.

Demonstrates

considerable




Demonstrates

complete





Response:

Business 2

CSR programme with

positive and negatives


no understanding of

the topic. Many


are missing.

Demonstrates a fair




in the response.

Demonstrates

considerable




Demonstrates

complete





TOTAL: (30 MARKS)

Activity 4: Page 28

Use the same business as in Activity 1 and 2. Identify the different stakeholders for your business and plot them on

the graph above. Motivate why you have plotted each stakeholder in a particular position on the graph.

Business Influence

LOW HIGH

Stak

eho

lder

s' in

tere

st

Insi

gnif

ican

t

Low priority for

attention

Medium

priority for

attention

Sign

ific

ant Medium

priority for

attention

High priority for

attention

1 2

3 4

16

The learner‟s response could differ, this is a suggested answer:

Staff - 4

The staff are a high priority because the objectives of the organisations success rest on their shoulders.

Customers - 4

The customer comes first and they are a priority to the business.

Shareholders - 4

Shareholders are important, however, if the business is conducted correctly according to the vision, the

shareholders will be happy with the results.

Regulators - 3

Regulators are important, however, they are a medium priority because if a business factors the regulators

needs into their planning, the business will be compliant.

Government - 2/3

Government are a medium priority for the business, however, if businesses abide by legislation there will

be no issues.

Media - 2

The media is an ongoing issue for the business as all media (as far as possible) needs to intentionally add

to the businesses good image.

Communities - 1

As much as the community can be seen as insignificant, they are the people affected by businesses the

most. CSR programmes can improve their standard of living drastically. They need to be looked after or

else it might become compulsory for

Suppliers - 4

Having the right supplier for the task and ensuring the relationship between them and the business is sound

is a top priority to ensure the business delivers the best service to the customers.

Unions - 3

Engaging in collective bargaining with trade unions is very important for a business if they want to maintain

a happy, productive workforce.

Activity 5: Page 31

Use any business of your choice and assess the business‘ compliance with / commitment to the seven principles

above.

The following extracts are from MR Price Group Ltd

Concept of Citizenship:

―We understand that stakeholders‘ perceptions affect our reputation in all the markets in which we operate,

and that we need to deal with these proactively, while ensuring that we maintain a balance in our treatment

of stakeholders. The Board retains oversight of stakeholder management, while the implementation and

monitoring of stakeholder engagement is devolved to the various management teams in the Group.‖

17

Strategic intent:

―The Foundation delivers programmes that respond to socio-economic challenges, including poverty,

unemployment, poor education and the skills gap of school leavers entering the job market. Impact has

been achieved through improved literacy and numeracy levels in the primary schools and by assisting

learners from selected high schools to consider job opportunities in retail. ―

Leadership:

―We believe that the best way to align the interests of the Company, our customers, associates and

shareholders is by relentlessly pursuing our long term vision, while daily living out the dreams and beliefs

that form the basis of our corporate DNA, as set out in significant detail in our annual integrated reports and

my Chairman‘s report over the past three years. Central thereto is an environment of passionate

partnership and teamwork.‖

Structure:

―MRP Foundation - the Group supports the national priorities of SA through its donation to the MRP

Foundation. This socioeconomic investment of 1% of net profit after tax, since the inception of the MRP

Foundation, now 10 years ago, continues to provide support to strengthen a sustainable local market.‖

Stakeholder Relationships:

―Sustainable relationships form the foundation of Mr Price Group‘s ability to create value over the short,

medium and long term.‖

Transparency:

―Some of the key principles on which we base our stakeholder approach are:

• Openness and transparency

• Mutual respect

• Supportive and responsive interaction‖

Activity 6: Page 31

Work with a partner. Go online and download a CSR Report (also known as sustainability report or integrated report)

of the business you chose in Activity 5. Work through the document with your partner and make notes of interesting

aspects that you have noted. Once you have worked through the report, comment on the CSR commitment of the

business to its stakeholders regarding sustainability.

Mr Price Group Ltd annual integrated report of 2015

http://www.mrpricegroup.com/MRPG/media/MRPG/AnnualReports/2015/42197_MRP_Online_AR_2015.pdf

Student‘s needs to assess whether their company has the following criteria:

o Business Profile:

Vision and mission of the business

The size and operations of the business

The markets in which the business operates

The overall brand of the business

The areas of impact - both internally and externally

o Board Commitment:

Statements from the CEO, key board members and employees at management levels have to

commit to CSR and business sustainability.

http://www.mrpricegroup.com/MRPG/media/MRPG/AnnualReports/2015/42197_MRP_Online_AR_2015.pdf

18

o Environmental and Social Business Policy:

These are statements from the business about its areas of impact.

This section will also look at targets the business has set to address certain social issues.

The business also has to indicate how performance will be measured.

o Management Systems:

The business will discuss its audit procedures for both internal and external auditing.

Activity 7: Page 32

Work in a group of four. Identify a business you feel which is not fully committed to CSR and motivate why this is

your opinion.

Design an internal Public Relations campaign to create complete buy-in for CSR in this business. It is important

that you align your PR campaign to the BRAND of the business. Your campaign can be in any format and may use

any medium (e.g. booklet, poster, promotions, and short movie).

Use the following rubric to mark your responses: (Optional)

0-2 3-5 6-8 9-10 TOTAL

An appropriate

business which is not

committed was

identified


no understanding of

the topic. Many


are missing.

Demonstrates a fair




in the response.

Demonstrates

considerable




Demonstrates

complete





PR Campaign:

Leads to complete buy-

in


no understanding of

the topic. Many


are missing.

Demonstrates a fair




in the response.

Demonstrates

considerable




Demonstrates

complete





PR Campaign:

CSR relates to the

brand


no understanding of

the topic. Many


are missing.

Demonstrates a fair




in the response.

Demonstrates

considerable




Demonstrates

complete





Presentation:

Media is effective and

informative


no understanding of

the topic. Many


are missing.

Demonstrates a fair




in the response.

Demonstrates

considerable




Demonstrates

complete





TOTAL: (30 MARKS)

19


1 Conducting business in an ethical manner, is known as:

A Corporate citizenship B Social investment

C Social responsibility D Corporate involvement

2 The three areas of social responsibility of a business are:

A Political, Economic, Environmental B Environmental, Social, Technological

C Economic, Social, Environmental D Economic, Environmental, Ethical

3 Sustainable business practice means:

A Assessing how present business practice affects the future

B Involving employees in decision making

C Considering the benefits of stakeholder over shareholder practices

D Developing BBBEE policies

4 Briefly explain the difference between the two concepts CSR and CSI.

CSR - is about the relationship between the business (corporate) and society (social) and the degree to

which the business impacts on society. The idea is that the business should not just focus on its own

profits, but that it has a responsibility towards the people and the environment as well.

CSI - these are the actual resources used to carry out the CSR. Eg: money, time and any other resources.

5 Discuss four advantages of sound CSR practices in the business.

Businesses that are assisting the community in which they operate through CSR programmes, receive greater support from the community. People see these businesses / brands as having a reputation for caring; the community in turn supports the business and becomes brand loyal.

It is argued that businesses need to act on social issues in their communities or else customers will move away. For example: Increased levels of poverty will lead to an increase in crime which could result in customers avoiding the area. An increase in crime also results in the community having less money to spend at businesses.

There are people debating the issue of whether government should enforce the King Code as a law. It is argued that if businesses are doing CSR voluntarily there will be no need for the added pressure for a law to enforce compliance, not to mention the red tape of policing it.

If business assists the community to increase its standard of living through education and health programmes, it will benefit from a community that has a higher standard of living and a higher level of disposable income.

By giving back to the environment through sustainability programmes, businesses are ensuring that future generations will have resources needed to prosper.

Businesses that operate in sustainable ways are usually also innovative enough to identify additional avenues of income.

Businesses that implement CSR initiatives are generally speaking, concerned about the impact that they have on stakeholders and this in turn promotes more ethical business practice.

In many cases the business may already have suitable programmes in place to deal with social issues in the community. For example, the business could have programmes in place that deal with leadership and entrepreneurship that are used to empower its own employees. These programmes can then easily be expanded to include the broader community.

20

6 Identify two stakeholders that potentially could be against the business conducting CSR initiatives. Briefly

explain why these two stakeholders would be against CSR, and suggest possible ways to convince these two

stakeholders of the benefits of CSR.

The students can motivate with any stakeholders, examples are:

Staff

Reason they are against: It will cost them time and is a distraction from their actual job.

Convincing them: Emphasising the good it will do, plus, offer time for time. If they assist with CSR, they can

get time off work.

Customers

Reason they are against: They know that the business could possibly offer a cheaper selling price but they

are involved in CSR and could feel like they are paying extra for the company to do good.

Convincing them: The business should constantly show the customers the difference the CSR programme

makes and ensure that the customers get by into the programme and know that they are contributing to the

community by buying from the business.

7 Assess how CSR practices within the business have positively contributed to human rights, inclusivity and

environmental issues within the workplace.

By businesses getting involved in CSR it is uplifting the lives of the community. In this way peoples basic

human rights can be met because government is struggling to meet these commitments on their own.

CSR covers a wide variety of programmes and business that channel their resources into skills

development of previously disadvantaged people assist with ensure all people are capable and are

included for certain employment positions. CSR programmes also covers environmental issues which is

creating an awareness of acceptable practices as well as accountability among businesses.

8 Henry Ford was quoted as saying ―Businesses that grow by development and improvement do not die‖.

Discuss how this quote could be applicable to CSR business practice.

In general growth and development requires continuous learning and constant improvement. The

entrepreneur and employees must be constantly open to learning and adapting and improving. No matter

how big a company gets, continuous improvement is required.

With regards to CSR, continuous improvements in their programmes and ability to help the community

sustainably, will lead to an increase in peoples standard of living and these good deeds can be the

company‘s best advertising.

9 What are the drivers behind sustainable business practices?

• Making Operations Environmentally Sustainable

• Making Operations Socially Sustainable

• Making Society Sustainable

• Influencing Suppliers

10 How could a business and its brand contribute to a healthy supply chain? And what impact would this have on

the business‘s environmental and social responsibilities?

Supply chain sustainability is the management of environmental, social and economic impacts, and the

encouragement of good governance practices, throughout the lifecycles of goods and services.* The

21

objective of supply chain sustainability is to create, protect, and grow long-term environmental, social and

economic value for all stakeholders involved in bringing products and services to market.

This will impact positively on the community and it will force businesses to make a meaningful…sustainable

difference in the lives of the community and the environment and not just window dressing for the sake of

publicity.

11 Assess the link between a business‘s financial performance and its Corporate Social performance.

Students can argue that there is a link or there is not, however, it must be substantiated!

There are arguments which propose that financial performance also depends on good or socially

responsible performance. Meeting stakeholder expectations before they become problematic indicates a

proactive attention to issues that otherwise might cause problems or litigation in the future. Furthermore,

socially responsible companies have an enhanced brand image and a positive reputation among

consumers; they also have the ability to attract more accomplished employees and business partners.

Socially responsible companies also have less risk of negative events. Companies that adopt the CSR

principles are more transparent and have less risk of bribery and corruption. In addition, they run less risk

of having to recall defective product lines and pay heavy fines for excessive polluting. They also have less

risk of negative social events, which could damage their reputation and costs millions in information and

advertising campaigns or litigation.

12 Many businesses have started to ―think green‖: Does this make a business credible? Motivate your answer.

‗Green businesses‘ adopt principles, policies and practices that improve the quality of life for their customers, employees, communities, and the planet. Green businesses are environmentally responsible and consider sustainability. Being ‗green‘ doesn‘t necessarily make your business credible. This is because there are different levels of ‗green‘ compliance. Just because you have one solar panel, doesn‘t make you a credible business, however, if you are truly invested in making the environment a better place and filtering this ‗green thinking‘ throughout the company and the community, then your business could be seen as credible.

13 It has often been said that there is a blurring of lines between CRS and marketing; discuss this blurring from

an ethical point of view.

Businesses claim to engage in CSR for the ‗right‘ reasons, namely to make a real difference in the

community and our environment. Doing CSR for that reason would mean that as much as a business is

grateful for the publicity that might come with the CSR, it is not doing it for the publicity or recognition.

Therefore, it is imperative that CSR programmes are sustainable because businesses who are interested in

a once off ‗thing‘ are not ensuring sustainability and therefore there their motives for CSR can be

questioned.

22

Chapter 3: Management and Entrepreneurship (Page 33)

Activity 1: Page 34

Explain the tasks management would perform at each level in the business. Use practical examples to help illustrate

your discussion.

Top management:

Plan - Where the entire business needs to move towards (Goals)

Lead - Ensure that middle management is motivated to achieve what top management has set out to

accomplish.

Organise - Organise bigger, strategic activities which involve the entire company.

Control - Assess the middle managements performance against what was intended.

Middle management:

Plan - They need to plan for their specific functional area or section of responsibility within the business.

Lead - They need to ensure that their employees and lower management who report into them are

accomplishing their objectives.

Organise - All activities relating to their department that should be undertaken to meet business objectives

need to be established and followed through.

Control - Check performance areas of lower management and employees in their area of responsibility.

Lower management:

Plan - This would entail planning for smaller specific targets set out by middle management.

Lead - They would take the role of supervisors and therefore will need to possibly motivate the lower skilled

workers.

Organise - Activities relating to the workers and their rate of production will need to be organised.

Control - Levels of production, absenteeism are only a few issues that lower management would need to

control.

Activity 2: Page 38

Imagine you have just become the manager of the production department of a regional Coca-Cola bottling plant. You

have assessed the internal environment and have decided there is insufficient and ineffective planning to ensure the

sustainability of the plant. Develop a short presentation, in which you critically evaluate the importance of sound

planning. You will present your planning assessment at the next meeting.

The students need to include the steps in the planning process in a practical way.

Step 1: Establishing objectives Top management will set the overall direction for the business. In doing so, the vision, mission and long-term objectives will be developed, keeping external factors (economic conditions, market trends, competitor and consumer behaviour, etc.) and internal resources in mind. Once these objectives have been clearly defined, it is important that the management communicates these objectives to the different functional managers (middle management). Each of these managers has to be aware of his/her responsibility in achieving these objectives. Step 2: Deciding on the planning period Some plans will be aimed at achieving long-term objectives, while others may have a much shorter time period. The rule of thumb is that the business will usually plan for a period that is reasonably anticipated. Step 3: Considering alternatives The business will also identify several alternative plans to evaluate which objectives are achievable. The business will assess each alternative from a feasibility and viability point of view to identify the plan with the

23

best cost-benefit ratio. It is always important to have a contingency plan (plan B) in case the original plan does not yield the desired results. Step 4: Implementing the plan Once the most suitable alternative has been selected, the business will need to decide on the implementation of the plan. The business will need to allocate the necessary resources to support the plan. Step 5: Controlling process The business will need to put the necessary controlling mechanisms in place to ensure that the objectives that were set, are achieved according the benchmark set and in the time period decided upon.

Activity 3: Page 40

Draw a mind map to examine the need for effective organising in a business like Famous Brands.

Activity 4: Page 44

Assess the importance of being in control of all aspects of a business. Justify your response by providing well-

reasoned examples.

Once proper planning, organising and leading has taken place, it is important for control to then happen

efficiently for the following reasons: (There are none in particular and students can make up their own

response, these are simply examples)

Your customers are expecting a certain standard or quality product/service and if there is not proper

control, it will not be achieved.

If control is not done correctly, and there were possible errors in the process, then you will not be able

to make corrective steps to ensure it does not happen again.

Effective organisation

at Famous Brands

Organise people logically

providing clear

communication structures -

Kevin Hedderwick CEO plus

all other executives etc.

Identify key internal stakeholders to which

responsibility and authority should be allocated.

(Helping each person understanding the roles in

the business) - Famous Brands have a clear

organisational structure which highlights lines of

authority

It creates balance when

activities are grouped in

relation to levels of

management the business

Stimulates creative thinking

when people are forced into

problem solving task teams.

Framework is put into place

in different functional areas

to encourage growth.

24

Proper control allows for flexibility when plans change and need to be adapted to.

Good control measures will be supported by all staff and it will keep them motivated.

Control allows a business to possibly predict future problems by constantly monitoring progress.

Control adds to the economic efficiency in the business as waste is minimised.

Activity 5: Page 48

Discuss how a leader/manager would use Maslow‘s hierarchy of needs to motivate his/her workforce and ensure

optimal output from the workforce.

Management can assess at which level all their staff member are at, namely:

Physiological Needs: These are the basic needs to ensure sustained life. Examples of these needs include food, water, shelter and sleep. Maslow states that until these needs have sufficiently been met other needs will not motivate a person.

Security Needs: This is the need to feel safe, but it also related to the fear of losing a job and in the process not meeting physiological needs.

Social Needs: At this level people need to feel they belong and are accepted by the group of which they are part.

Esteem Needs: Once the first three needs have been met, a person would like to be held in high esteem. Desire for esteem often results in people‘s need for power, prestige and status.

Self-actualisation: This level of need looks at a person‘s desires to achieve his/her full potential. Once this has been established, management can ‗feed‘ each level accordingly to ensure development until staff are striving for Self-actualisation. Management will also not be able to expect workers to perform on a higher level if they know basic needs aren‘t being met - It will assist in establishing fair expectations.

Activity 6: Page 49

As an HR specialist, you have been asked to help the managers of Pick n Pay understand the value of Adam‘s Equity

Theory. Draft a few notes to use, when you do an oral presentation to the class to explain the value that this theory

has for managers in Pick n Pay.

Some info on Adam‘s Equity Theory:

Adams' equity theory helps explain why pay and conditions alone do not determine motivation. It also

explains why giving one person a promotion or pay-rise can have a demotivating effect on others. When

people feel fairly or advantageously treated they are more likely to be motivated; when they feel unfairly

treated they are highly prone to feelings of disaffection and demotivation. Employees seek to maintain

equity between the inputs that they bring to a job and the outcomes that they receive from it against the

perceived inputs and outcomes of others. The belief in equity theory is that people value fair treatment

which causes them to be motivated to keep the fairness maintained within the relationships of their co-

workers and the organization. Words like efforts and rewards, or work and pay, are an over-simplification -

hence the use of the terms inputs and outputs. Inputs are logically what we give or put into our work.

Outputs are everything we take out in return.

25

This activity can be marked using the following rubric:

0-2 3-5 6-8 9-10 Total QUALITY OF DELIVERY

Presentation -

Communication

[LOT]

(0) Not. (1&2)Partially

meeting the standard of

correct articulation, proper

preparation, eye contact etc.

(3)Adhering to presentation

criteria of public speaking (4)

in a business environment (5)

and dynamic

Good to very good meeting

the criteria of public

speaking(6), good posture

and eye contact(7), The use

of visual aids and correct

language use(8).

Superbly meeting the criteria

of public speaking, good

posture and eye contact (9),

The use of visual aids and

correct language use (10).

QUALITY OF CONTENT

Adam’s Equity

Theory

[LOT]

(0) None (1&2) limited detail

of Adam’s Equity theory.

(3) Adequate to (4 &5) good

detail of Adam’s Equity

theory.

(6) Satisfactory to (7 &8)

good detail of Adam’s Equity

theory.

Excellent detail of Adam’s

Equity theory. (9&10)

Relating theory to

Pick n Pay

[HOT]


on Pick n Pay.


detail on Pick n Pay.


good detail on Pick n Pay. Excellent detail on Pick n Pay.

(9&10)

TOTAL: (30MARKS)

Activity 7: Page 50

Use the above entrepreneurial competencies to complete the table below:

Competencies Explain the activity the entrepreneur would perform.

Initiative An entrepreneur takes action before he/she is forced to do so by an event in the market. The entrepreneur will develop new ideas, products/ services or improve current products or services.

Risk taker An entrepreneur challenges the status quo, recognises opportunities, takes risks and empowers others to take risks, supports them when things go wrong and encourages them to learn from set-backs and failures.

Information gatherer An entrepreneur who is able to retrieve information from a variety of sources. Then after gathering relevant information, individuals with information competency skills must be able to put it to use effectively

Planner An entrepreneur who is able to identify and integrate all the critical elements of a situation into a plan, which is flexible.

Self-confidence An entrepreneur has faith in their own ideas and capability to succeed, they have a willingness to take an independent position in the face of opposition.

Problem solver An entrepreneur who is all about using logic, as well as imagination, to make sense of a situation and come up with an intelligent solution.

Persistence An entrepreneur who always finishes what has been started, who keeps on going despite any obstacles and stays on task no matter what the disruptions.

Assertiveness An entrepreneur who has the ability to maturely express one’s feelings and opinions in spite of disagreement. Accurately communicating to others regardless of their status or position.

Credibility An entrepreneur demonstrates concern that one be perceived as responsible, reliable and trustworthy. They also do what they commit to doing.

Concern for quality An entrepreneur who accomplishes tasks through concern for all aspects of the job, no matter how small and accurately checks processes and tasks by constantly following up to assure quality.

Experience An entrepreneur who is able to incorporate a skill, but are MORE than the skill, they include abilities and behaviours, which is all acquired through experience.

26

Activity 8: Page 52

Explain how an Intrapreneur, through the activities that he/she performs, could ensure sustainable growth for a

business like Coca-Cola.

The student needs to apply the following to Coca-Cola:

• Generating viable and feasible business ideas is probably one of the most difficult activities.

• Coca-Cola will need to conduct the necessary market research to determine the success of the idea by

assessing the potential market, demand and competition.

• All the business activities to implement the idea will be dependent on the availability of funds. Coca-

Cola will need to evaluate the different avenues to obtain funds (own and borrowed capital)

• Recruiting the right workforce to assist with the implementation of the idea is crucial and the employees

should have the necessary skills, knowledge and experience needed to change the idea into a reality.

• Procurement of other factors of production (raw materials, machines, equipment, inventory, etc.) has to

be done while keeping costs and quality in mind.

• Coca-Cola will need to develop the necessary action plans for the implementation of new ideas. In

addition to planning and organising resources, Coca-Cola will also need to lead and motivate staff

members and control the various elements of implementing the idea.


1 Explain in your own words: What makes a good manager?

A good manager is someone who is able to plan, organise, lead and control his employees. He is also

equipped with many competencies, including: Initiative, Risk taker, Information gatherer, Planner, Self-

confidence, Problem solver, Persistence, Assertiveness, Credibility, Concern for quality, Experience.

2 As a managing director of a business producing ice-makers, you have become concerned about your

departmental managers‘ ability to work together. You have become increasingly concerned about:

a. The production department deciding to produce a new ice-maker, without talking to the marketing

department.

b. The marketing department deciding to spend R100 000 on a new promotional strategy, for the old ice-

maker range. The marketing department has not consulted with any other department.

c. The HR department has agreed to pay the workforce a higher wage per hour, without obtaining the

permission of the financial department or any other department.

Write an email, that is to be sent to all departments, to explain how the above three decisions would have

serious consequences for the business, resulting in dysfunctional conflict in the business. It is vital that you

stress the importance of the interdependence of all departments in your email.

27

To: [email protected]

From: [email protected]

Subject: Concerns regarding interdependence of all departments.

Good morning all,

It is important for all to know that good communication is important for the daily operation of the company.

Without good business communication, the internal and external structures of a business can face

numerous challenges that can ultimately lead to conflict between departments and employees.

Certain incidents occurred that need to be addressed:

a) The production department deciding to produce a new ice-maker, without talking to the marketing

department - We must remember that the marketing department will assess if there is a market or

need for a new machine. IT will be useless to produce a product not required by customers. The

marketing department needs to carefully consider the 7P‘s of marketing and give the production

department a full report.

b) The marketing department deciding to spend R100 000 on a new promotional strategy, for the old

ice-maker range. The marketing department has not consulted with any other department - If the

finance department has not been consulted, how can the budgeted amounts be assessed? We just

heard the production department is producing a new machine and will also need marketing. How

can an old and new machine be promoted at the same time?

c) The HR department has agreed to pay the workforce a higher wage per hour, without obtaining the

permission of the financial department or any other department - due to tough economic times, our

business is experiencing an increase in expenses and don‘t have the money to increase wages. If

the finance department was consulted this would have been made clear.

Accurate and efficient communication between departments builds trust within the organisation. When

departments trust each other to deliver accurate information, this eliminates the slowing down of

productivity. Departments should ensure that the information they are giving to other departments in the

organization is reliable to help improve operational efficiency.

Please adhere to the communication guidelines and ensure your departments work in conjunction with

others. WE ARE ALL IN ONE TEAM!

Regards,

Managing director: Ice-makers

mailto:[email protected]

mailto:[email protected]

28

3 Use the diagram below, to help explain how sound management leads to a successful business.

Decision making:

In order to solve problems, the manager has to make decisions about the most appropriate course of action. There are a variety of external factors that may influence the decision-making process. These may include, but are not limited to: • Political factors such as laws implemented by the ruling party • Economic factors such as inflation, taxes, the economic growth rate (or maybe lack thereof) that bring

about a recession and high/low exchange rates • Social factors such as religious movements, cultural differences, unemployment rates and crime levels • Technological developments such as communication methods (the increased use of social media) and

improved methods of transportation • The behaviour of competitors or potential new competitors • External stakeholders such as suppliers of businesses involved in the distribution process • Expectations of customers Delegation: The process of delegation refers to the allocation of responsibility and authority to subordinates. It is

important for a manager to delegate to ensure a more meaningful distribution of work. The employee

responsible for performing a designated task must in turn be empowered to perform his/her work. If need

be, the employee should be trained to develop the required skills. Continuous monitoring by the manager of

the process is required to assess its effectiveness, because regardless of the fact that the task was

delegated, the manager ultimately remains responsible.

Communication:

Communication is the process of exchanging information, opinion, views and ideas between staff

members and management.

The aim of clear top-down communication is to help employees to understand what, why and how they

should be doing to help the business to achieve its objectives.

Please refer to the chapter on Research and Presenting of Information to find out more about

communication within the business.

Head Office

Authority given to

departments

Decision making

Delegation

Communi-

cation

29

4 Why are well-motivated employees good for a business?

• A well-motivated employee is determined to succeed and often is very intrapreneurial within the

workplace.

If a manager ―pushes‖ employees to perform according to certain expectations, it is vital that the

employees are motivated to achieve their goals.

• The employees have to feel they have a special interest in the work and that they want to fulfil this

responsibility.

• Performance in the work place depends on two variables: the ability to do the work and the willingness

to complete the activities.

5 The four basic tasks of a manager are:

A Planning, leading, communication, organising

B Leading, communication, organising, motivation

C Planning, organising, leading, controlling

D Planning, leading, controlling, delegating

6 Top managers make this type of decision

A Operational B Day-to-day

C Strategic D Tactical

7 The process of comparing actual results, with those set in the planning phase.

A Controlling B Feedback

C Communicating D Development gaps

8 This type of leadership style is used when a crisis occurs and there is insufficient time for discussions.

A Free rein B Autocratic

C Democratic D Laissez faire

9 Explain the difference between strategic and tactical decisions, using your own examples.

o Top Management is responsible for the strategic decision of the business, i.e. planning for the future of

the business to ensure the business has a sustainable future. Top management looks at integrating

demands of the different interest groups, while taking responsibility for the overall business results and

performance within the market place.

o Middle Management is responsible for tactical decisions in the business, i.e. medium- term decisions.

They interpret top management‘s decisions in terms of the demands and impact on each business

function/department. The overall business plan is then implemented by each department, while ensuring

there is synergy between the different functional areas in the business.

10 List four entrepreneurial qualities; discuss how each of these qualities can be used to help achieve business

success.

Students may give any qualities, you can refer to the competencies for guidelines:

Initiative - An entrepreneur takes action before he/she is forced to do so by an event in the market. The

entrepreneur will develop new ideas, products/ services or improve current products or services.

Risk taker - An entrepreneur challenges the status quo, recognises opportunities, takes risks and

empowers others to take risks, supports them when things go wrong and encourages them to learn from

set-backs and failures.

Information gatherer - An entrepreneur who is able to retrieve information from a variety of sources. Then

after gathering relevant information, individuals with information competency skills must be able to put it to

use effectively

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Planner - An entrepreneur who is able to identify and integrate all the critical elements of a situation into a

plan, which is flexible.

Self-confidence - An entrepreneur has faith in their own ideas and capability to succeed, they have a

willingness to take an independent position in the face of opposition.

Problem solver - An entrepreneur who is all about using logic, as well as imagination, to make sense of a

situation and come up with an intelligent solution.

Persistence - An entrepreneur who always finishes what has been started, who keeps on going despite any

obstacles and stays on task no matter what the disruptions.

Assertiveness - An entrepreneur who has the ability to maturely express one‘s feelings and opinions in

spite of disagreement. Accurately communicating to others regardless of their status or position.

Credibility - An entrepreneur demonstrates concern that one be perceived as responsible, reliable and

trustworthy. They also do what they commit to doing.

Concern for quality - An entrepreneur who accomplishes tasks through concern for all aspects of the job,

no matter how small and accurately checks processes and tasks by constantly following up to assure

quality.

Experience - An entrepreneur who is able to incorporate a skill, but are MORE than the skill, they include

abilities and behaviours, which is all acquired through experience.

11 If a person is said to have entrepreneurial qualities, do you think they should automatically go into business?

Justify your response.

Not necessarily. An entrepreneur might not possess all the qualities. They might also lack funds so it is

possible for them to be an intrapreneur as well.

12 Identify a business in your community you believe is entrepreneurial; motivate why you consider this business

to be entrepreneurial.

Students need to identify any business using the following criteria:

Motive - An entrepreneur‘s primary motivation is to build his/her own business, to gain personal

gratification and to ensure that he/she is successful.

Status - Owner of the business

Risk - The entrepreneur assumes all the risk involved in the business.

Rewards - The entrepreneur receives profits from the business

Innovation - An entrepreneur is the person who innovates through creative thinking and creative problem

solving.

13 Explain what an ultrapreneur is.

o Ultrapreneurs usually identify a viable business opportunity and then establish a business. The ultrapreneur then procures a super management team of highly competent individuals who then develop, produce and market the idea.

o The ultrapreneurs often sell a large number of shares in the business as soon as the business is established. The aim of the ultrapreneur is to achieve a maximum return in the shortest possible time and then repeat the process over and over again.

o Although Richard Branson does not sell his shares in his businesses once they are successful, he is probably one of the best known ultrapreneurs who loves the thrill of establishing new businesses again and again and again…

o In the South African context, Brian Joffe is, like Branson, an ultrapreneur that does not sell his shares in the business, but that just keeps building his business empire by constantly adding new successful ventures.

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Chapter 4: Research and presenting of data and information formats (Page 55)

Activity 1: Page 56

Google the concept of ―language barriers in a business situation‖. Choose two examples of real problems that have

been experienced and explain what could have been done to avoid these problems.

Development of Cliques

A diverse workforce could lead to the formation of cliques where workers of similar cultural backgrounds or

who speak the same primary language bond together. Individuals may have little social interaction with

those outside of their clique, engaging them only out of business necessity. In culturally integrated work

groups, some members may choose to speak their primary language with each other instead of the primary

workplace language, leaving others to feel they are being excluded from the conversation.

The employer can be intentional on the way the set up communal areas by not allowing cliques to

form. Teams within the company need to be carefully structured so everyone has an opportunity to

interact with other staff, where possible.

Communication Challenges

Cultural and language differences can hinder effective communication. Workers who are not fluent in the

primary language used in the workplace may have difficulty expressing their needs or responding to

requests from colleagues. If their job involves customer contact, they may have difficulty understanding a

customer inquiry and provide incorrect or misleading information. A customer who is unable to clearly

understand the worker due to a heavy accent or lack of command of the language may become frustrated

and take his business elsewhere.

All correspondence needs to be simple and clear. It needs to be carried over in writing and verbally.

Management also needs to continually follow up.

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Activity 2: Page 60

In groups of three to four, formulate at least THREE different introductions for the above question. Then read your

group‘s introductions to the rest of the class to critique.

Question:

David has just celebrated his 50th birthday and has decided it is time to retire. He has saved a substantial

amount of money while he was working and when his grandmother passed away a few years ago, she left

him about R3 million. After careful consideration David decided to open a Guesthouse, which he will call

Guesthouse on Groovy Street (GOGS).

David has never owned his own business and although he loves the idea of being an entrepreneur, he is

realistic and knows he will face a number of challenges to establish a successful guesthouse.

ASKED:

David has asked you to help him in your capacity as a business consultant. Your first task is to analyse the

environment in which GOGS will operate and to warn him about possible ethical pitfalls that he may face in

his new business.

______________________________

A possible introduction:

Many an entrepreneur has failed in establishing a successful new business because of a lack of research

regarding the business environment in which the undertaking will compete. The SWOT-analysis is a useful

tool to identify internal strengths and weaknesses, as well as external opportunities and threats that may be

faced. It also allows the entrepreneur to consider different strategies to overcome the negative (which may,

amongst others, include ethical dilemmas), while capitalising on the positives.

Students to write three in groups and discuss.

Activity 3: Page 61

Let‘s assume what follows is an extract from the business report written by one of your friends in the class. How will

marks be allocated on the LOT (lower order thinking) and HOT (higher order thinking) rubric? Your teacher will hand

out the rubrics so you can see what marks are allocated for. Now go ahead and mark this business report. Discuss the

marks allocated by the different pupils in the class in order to come to some sort of understanding of which criteria on

the rubric were met/ not met.

General comments on the report:

The report is answered very well.

LOT: Format 2/2

Terminology 3/3

Contents 25/25

For the lower order thinking part - 30/30

HOT: Substantiation 3 or 4/4

Application 4/4

Problem Solving 5 or 6/6

Synthesis 5/6 (there is no conclusion)

For the higher order thinking part - between 17 and 19/20

Business report totals: 47 to 49/50

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BUSINESS STUDIES PAPER II: LOWER ORDER THINKING RUBRIC (60% WEIGHTING) CRITERIA 0 1 2 Question 1 Question 2

Format Not meeting the correct standard Partially correct format Correct format

0 1 2 3

Terminology No use of business terminology Isolated / limited use of business terminology

Good use of business terminology Outstanding use of business terminology

Content (number of relevant facts)

Maximum 50 facts. Divide by 2 to get mark out of 25. Marks are inter alia given for mentioning the fact, explanations of facts or statements, relevant examples; expansion of acronyms. NOTE: Listed facts that are not explained = max 4 marks (8 facts

Sub-Total: (30 marks)

1A 2A

BUSINESS STUDIES PAPER II - HIGHER ORDER THINKING RUBRIC (40% WEIGHTING) If all SECTIONS have not been completed, the judgment is based on the amount of expected information. E.g. A candidate substantiating one section well, but not answering the other cannot qualify for a ―majority of statements‖ mark.

CRITERIA 0 1 2 3 4 Question 1 Question 2

Substantiation (justification for

statements made)

No attempt at Substantiation.

Very limited Substantiation.

Less than half of the statements are substantiated.

The majority of the statements are substantiated.

The majority of the statements are thoroughly substantiated showing

breadth and / or depth of understanding.

0 1 2 3 4

Application to context/ industry

Superficial reference based on the case study / context given

(Just keep mentioning the name of the business repeatedly without

relevant examples)

Continuous reference is made to the case study / context given with some

applicable examples given.

Continuous reference is made to the case study / context given with several examples that are fully

integrated into the answer.

Examples are relevant to the case study / context given and fully

integrated into the response showing understanding of the issues at hand. Reference is made to current affairs.

Examples are relevant to the case study / context given and fully

integrated into the response showing understanding of the issues at hand. Current affairs is fully integrated into

the response.

0 1 2 3 4 5 6

Creative Problem Solving

No understanding of the problem and no solution

given.

Identification of the problem and an

incorrect/poor solution suggested.

Identification of the problem with breadth but

no depth (superficial).

Good insight and understanding of half the problem with solutions

offered showing depth of understanding OR less than half in breadth and

depth

Good insight and understanding of the

majority of the problem(s) with solutions offered

showing depth of understanding OR half in

breadth and depth.

Good insight and understanding of the holistic problem with

solutions offered which are fully discussed, showing

understanding on all aspects OR the majority in

breadth and depth.

Good insight and understanding of the holistic problem with

solutions offered which are fully discussed, showing

breadth and depth of understanding

0 1 2 3 4 5 6

Synthesis None of the criteria as listed below are met

At least one of the criteria fulfilled

Any two of the criteria fulfilled

Any three of the criteria fulfilled

Any four of the criteria fulfilled

Any five of the criteria fulfilled

All six of the criteria are fulfilled

1 Introduction – don‘t just re-write question, but shows an understanding of the ―link‖ between the topics

2 Conclusion – this should be a logical affirmation of the points raised

3 Flow of thought, i.e. paragraphs leading into one another

4 Integration of topics given in the question

5 Integration of question with other Business related topics to enhance the quality of the answer

6 Arguments are developed

Sub-Total: (30 marks)

1B 2B

TOTAL

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Activity 3 continue: Page 67

Did you think there was sufficient:

Substantiation?

Good substantiation - example:

―Because the government realises how much foreign currency flows into the country from foreign tourists, it

creates certain structures that will protect our national heritage (such as national parks).‖

Verse….

―Government realises how much currency flows into the country!‖

Problem solving?

Good problem solving - example: (The issue has been stated, with a full solution)

―The inflation rate and interest rates are relatively high (October 2014). Both these factors make it

expensive for South Africans to go on holiday. If this is combined with the high price of petrol, GOGS may

have to come up with a creative promotion to make it attractive to people to consider it as a tourist

destination. One such strategy could be to give special discounts out of season to encourage more visitors

by making the price of accommodation cheaper. ―

Application to context?

Good application because if you change GOGS with Steers or Standard bank, it does not make sense.

Examples are relevant to the case study / context given and fully integrated into the response showing

understanding of the issues at hand.

Current affairs?

Current affairs is fully integrated into the response. They are not just dropped randomly in the answer.

Example:

―Problems such as crime that is not brought under control by the government, may pose a threat to the

tourism industry. From time to time foreign governments warn their citizens against visiting certain tourist

attractions due to incidents of crime taking place in the area. For example: The USA government warned

American travellers in September 2014 to not visit the Pretoria zoo, due to a number of armed robberies

occurring in the area.‖

Integration of topics?

Integration of topics given in the question: Continually refer back to the question but incorporating the

―Scenario‖ in your response. If the question is regarding the war in Israel and Pick n Pay, then continually

go back to this topic in your links examples etc. It is important that you mould your theoretical knowledge to

the question being asked and continuously integrate topics asked.

Integration of questions with other business related topics to enhance the quality of the answer:

There are marks allocated in a report for these additional topics (10 marks per paper over and above the

other factual marks). This refers to a report which asks for Investments and Labour Legislation – while you

are answering you realise that good management would need to apply the utilitarian theory in this particular

case, so you include the theory and a short description. Even though it was not directly asked, it relates

well and has been incorporated successfully so the necessary marks will be allocated for the facts as well

as on the rubric.

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How will you improve on the extract from the business report?

A conclusion would need to be added and as an extract this report is very long, I would see where facts can

possibly be reduced to ensure you finish within an hour.

Activity 4: Page 67

Complete the following table to indicate the type of message and the target audience when the following methods of

communication are used in your school:

Method of

communication

Message From whom to whom?

E mail Can be more personal e-mail to parents regarding a specific student. Can be a longer more detailed general email to staff or parents

From school to parent or parents to school

Whatsapp

Short, quick notices

Teacher to parents Teacher to class Between class mates Between teachers

Magazine Long articles, photos and news of positive experiences over a year period at the school

From school to all stakeholders.

Statement Financial message or summary School to parents

Activity 5: Page 73

Look at each of the following Primary research questions and identify the type of error:

Research question: Type of error:

Why is butter tastier than margarine? Halo effect

Do you like to go to the movies or read a book and while doing that, do you

prefer popcorn or chips? Double barrelled question

Indicate your income levels:

Under R20 000 R20 000 – R30 000 R30 000 – R50 000

Income per day? Week? Month?

Year?

How old are you? Sensitive question - give a range

Why do old people go to bed early? Leading question

36


1 ... is a horizontal bar chart that is used during project management to shows time allocated to different tasks.

A Gannt

2 If Wimpy undertakes research to determine if people are enjoying a new item on the menu, it is …

A primary research B secondary research

C industrial espionage D plagiarising customer ideas

3 Jargon is a … barrier to effective communication.

A cultural B language

C research D behavioural

3 Use the table below to indicate in which category each scenario fits:

Scenario Plagiarism Unethical

research

Poor research

design

Copying homework from a friend X

Not asking permission to observe people when

conducting research X

Asking ambiguous questions to determine

people‘s opinions on a topic X

Not acknowledging a source in the text of your

assignment X

Getting your mom/dad/ … to do your research X

Completing all the research questionnaires

yourself instead of getting real research subjects

to give their opinions.

X

5 Muslims and Jewish people may find if inappropriate for a man and woman to shake hands when they are

introduced to each other. This is a … issue that may lead to problems, because it may be seen as

disrespectful.

Cultural

6 Uncomfortable chairs in a meeting room would be considered a … barrier to effective communication.

Physiological

37

Chapter 5: Forms of Ownership (Page 77)

Activity 1: Page 78

1 Explain the concept unlimited liability?

2 Define continuity of existence.

3 What is meant by the concept legal entity?

1 The owner‘s liability for debts is also directly related to the issue of legal persona. If the business was

registered as a separate legal entity, it is responsible for its own debt and the owner cannot be held

liable for any debt of the business. This means the owner has limited liability and his/her personal

belongings cannot be used to repay the debt of the business. But if the business was never registered

as a separate legal entity, the owner would have entered into business contracts in his/her own name

and will, therefore, be liable for the debts of the business, i.e. unlimited liability. This means the owner‘s

personal belongings may be used to pay for the debt of the business.

2 If the business was registered as a legal persona, it will automatically have continuity of existence. This

means the business exists as an entity and functions independently of the owner. Therefore, if the

owner dies or there is a change in ownership, the business is not affected.

3 Legal persona – If the law requires the business to be registered, it means the business becomes a

separate legal person from the owner. The legal person (either the owner in some forms of ownership

or the business in others), enters into contracts, will sue or be sued if the contractual stipulations are

not adhered to.

Activity 2: Page 80

Jack‘s Spaza Shop has been operating as a sole trader for the past 15 years. Jack, however, feels that he

is getting a bit old and he would like his daughter, Jill, to take over from him.

Jack is not sure if it is a good idea for the business to continue as a sole trader. The profit the previous year

was R150 000.

Recommend to Jack whether he should offer Jill a partnership in the business, or if it would be better if she

took over the business and continued to run it as a sole trader.

Ensure you motivate your answer fully.

There should be no reason why Jack can‘t enter into a partnership with his daughter, it has many positives and negatives.

Advantages:

No legal requirements – quick and low cost. A partnership agreement may be entered into in writing, but

it is not a requirement according to the law. It is possible to raise more capital through a partnership, because there are more people who can

contribute capital to the business.

38

A good employee may be retained if he/she is offered part ownership in the business. The quality of

decision making may be better than in a sole trader, because there are a number of people to give input,

i.e. synergy through the combination of skills and knowledge. Division of labour is a possibility, i.e. each

partner can specialise in an aspect of the business where he/she has expertise.

Disadvantages:

If there is no partnership agreement in writing, it may complicate issues if there is a disagreement and

the matter needs to be settled in a court of law.

The owners are the legal entities and they enter into contracts in their own names. This means the

owner carries all the risks.

The business has no continuity of existence. If one of the partners dies, retires or if a new partner joins,

a new partnership agreement has to be signed and this means (on paper at least) it is a new business.

Partners have unlimited liability. In addition, they are also jointly and severally liable for the debt of the

business. This means if one partner gets the business into debt; all partners are responsible in their

personal capacities for the debt.

It depends on the profit generated by the business. Refer to the tax scales above for this discussion. If the

profit is below R272 701 per annum, the owners will pay tax at a maximum rate of 25% on profits and this is

below the rate charged to companies. If the net profit exceeds R272 701 the owners will be taxed at a rate

higher than 28% and then it becomes a disadvantage.

Activity 3: Page 84

1 Why do you think the law specifies that the name of a company may not pretend to be linked to the

government?

2 What is meant by the concept fiduciary duty?

3 Why is it an advantage that the business is the legal entity when we refer to a company?

1 People might think the business is a government institution and gain undue benefit from it. A

government organization will not follow the same laws as a private companies so it would need to

be clearly identified.

2 A fiduciary duty is a legal duty to act solely in another party's interests. Parties owing this duty are

called fiduciaries.

3 Legal persona – If the law requires the business to be registered, it means the business becomes a

separate legal person from the owner. The legal person (either the owner in some forms of

ownership or the business in others), enters into contracts, will sue or be sued if the contractual

stipulations are not adhered to. This means that the owners are not personally responsible for the

debt of the business.

39


1 Shares in a … are freely transferable.

Public company

2 A … is automatically dissolved if one of the owners sells his/her part of the business and this may hamper the

success of the business.

Partnership

3 The name of a … ends in ―Proprietary Limited‖.

Private company

4 The ownership of Travel Management Ltd. is restricted to a maximum of ... and this may contribute to the

success of the business.

A seven B fifty

B unlimited D twenty

5 What does it mean to ―float a company‖?

The term "float" refers to the regular shares that a company has issued to the public that are available for

investors to trade. This figure is derived by taking a company's outstanding shares and subtracting from it

any restricted stock.

It happens when a firm ie, sole owners get bigger and want to expand. They then with an accountant form a

company with shares, of which they will retain at least 51% for safety. Then they will apply for a listing on

the stock exchange. Having secured the listing they will then decide how many shares they will make

available for investors to subscribe to by floating those shares on the open market. Those people then have

a say in the running of the company. That is the reason the (owners) retained 51% of the stock to have a

majority vote.

6 Explain the relationship between legal persona, liability and continuity of existence.

If a business has legal persona, they then automatically have limited liability for the debt of the business

and a continuity in existence.

If a business does not have a legal persona, then they automatically have unlimited liability for the debt of

the business and no continuity in existence.

7 Explain the concept that partners are jointly and severally liable for the debts of the business.

Jointly and severally is a legal phrase that means two or more persons are fully responsible equally for the

liability.

8 Explain the registration procedure for a Company.

In order to register a company, the person / people who want to register the company have to pay the required fee, complete a Notice of Incorporation and register a Memorandum of Incorporation (MOI). The Memorandum of Incorporation:

is the founding document to start a company

stipulates different types of shares that will be sold and the associated rights, duties and responsibilities of the shareholders

40

describes the duties, responsibilities and liabilities of directors

may impose stricter or more rigorous requirements on directors than what is described in the Companies Act, but may in no other way contravene the Act

may be changed by means of a Special Resolution accepted by shareholders The minimum number of shareholders for both Private and Public Companies is one. A public company has to have at least three directors, while a private company has to have at least one director. It is possible for all shareholders in a private company to be a director at the same time. As soon as the Registration Certificate is issued, the company becomes a legal entity.

9 What are dividends?

A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a

class of its shareholders.

10 Tabulate five differences between a Partnership and a Company.

Partnership Company

Has no legal personality Has a legal personality

Has unlimited liability for the debt of the business Has limited liability for the debt of the business

Has no continuance of existence Has a continuity of existence

Has 2 or more partners Has 1or more shareholders

Has little to no promotion procedures which are not

costly

It is more complicated and expensive to form.

11 Look at the following table that has been partially completed for you. Complete the missing elements and

explain if each element will contribute to the success or failure of the business.

Ensure you motivate your answers.

Characteristic: Sole trader Partnership Private co Public co

Number of

owners One owner

2 – 20 1 – unlimited 1 – unlimited

Who has limited /

unlimited liability?

Owners have

unlimited liability

Partners have

unlimited liability

AND are jointly

and severally liable

Shareholders have

limited liability

Shareholders

have limited

liability

Who is the legal

entity?

Owner Partners

Business Business

Name?

No special

requirements

No special

requirements

Name has to end

with (Pty) Ltd.

Name has to end

with Ltd.

Continuity of

existence?

No

No Yes

Yes

Who pays tax? Owners pay tax in

personal capacity

on profits received

Partners pay tax in personal capacity on

profits received

Company pays tax Company pays tax

Managed by?

Usually the owner One or more of the

partners

Board of

directors

Board of directors

41

Chapter 6: Creative Thinking and Problem Solving (Page 87)

Activity 1: Page 89

1 Fluency: Your teacher will choose a colour. Make a list of everything you can think of that is that colour. See who

comes up with the most things in 10 minutes.

2 Flexibility: Make a list of everything that has wheels. Do not limit yourself to vehicles! Now eliminate all those

items and think of items without wheels, but which would work better if they had wheels.

3 Originality: Come up with as many original uses as possible for an eraser.

4 Elaboration: Take a good look at your school desk. Add innovative details (elaborate) to improve the design of

the desk. Ensure you describe every addition in detail, try to draw the additions as well. Your teacher will

randomly choose four designs, photocopy them and give these four learners the opportunity to present their ―new

and improved school desk‖ design to the class. There is no limit to the improvements you may suggest, but it may

not be fewer than five.

Teacher may choose any colour.

An example with the colour ‗Red‘

1 Fluency:

Tomatoes Strawberries Raspberries Socks Trousers Hats T-Shirts IPod‘s Fire Cushions Plates Bowls Bowling Balls Walls Carpet Camera

Nail Polish Earphones Drinks Bottles Paper Crayons Pencils Pens Felt-tips Flags Race Cars Cars Motorbikes Bike-Helmets Bikes Scooters Handbags

Lipstick Chairs Sofa's Crisp Packets Packets Stickers Crystals Necklaces Bracelets Rings Belts Posters Duvet Covers Rugs

2 Flexibility: With wheels: airplane, ambulance, bike, bus, car, Ferris wheel, gas grill, golf cart, mine, cart, moster truck, motorcycle, roller coaster, scooter, shopping carts, skate, board, skate, stroller, toy cars, tractor, train, truck, van, wagon, water wheel, wheel chair. Without wheels: (That could use wheels) Guitar case Lamp on wheels Fan on wheels Couch on wheels

42

3 Originality: Uses for an eraser:

Glue pieces of eraser to the bottom corners of frames. The erasers will protect your wall from scratches and keep the frames from tilting.

Remove sticker gunk from products and packaging with an eraser.

Make custom stamps from erasers.

Clean marks off piano keys with an eraser.

Use wedged shaped pencil erasers and replacement caps on glue bottles.

Extend the life of rechargeable batteries by rubbing the contact points with an eraser. Dirty contact points are a primary source of charging problems. This works on flashlights as well!

You can repair scratch marks on a flat screen TV with a clean, soft eraser. Gently rub the eraser on the scratch and wipe with a clean cloth. Repeat until the scratch disappears.

Use a large eraser as a make-shift pin cushion.

A small piece of eraser makes a great temporary earring backing. 4 Elaboration: Some ideas that were googled to help stimulate the group. Pinterest.com decomorth.com yankodesign.com Wehearit.com

Activity 2: Page 90

Explain how the following factors could affect the creativity within the business

o Fluency

o Flexibility

o Elaboration

o Originality

Fluency: looks at the ability to produce several different ideas, which can be developed through the

use of creative thinking and brainstorming sessions within teams, but also between teams

Flexibility: being able to look at concepts from different points of view and to consider the

implications of small changes made to current products / services

Originality: refers to the ability to develop unique ideas that have the edge of newness and

creativeness

Once a number of different ideas have been tabled, elaboration follows. This is about adding detail

and depth to different solutions.

43

Activity 3: Page 91

Imagine you are the manager at a local fast food franchise. Identify a problem with the product or service offered by

the business. Use the SCAMPER method to solve this problem.

The example used was a pizza franchise: # Customers complaining about too little cheese on the pizza.

(This is due to inflation and costs of cheese)

Substitute Look at cheaper alternatives like processed cheese or a cheese flavouring.

Combine Mix the expensive mozzarella cheese with a cheaper processed or cheddar cheese.

Adapt Pizzas have adapted to breakfast pizza or dessert pizza or even many layers

Modify Pizza shapes could differ instead of the traditional round pizza, you could have square or animal shapes for kids.

Put to a new use

Cutting of the extra dough can be made into cheese bites and sold as an accompanying product.

Eliminate or Elaborate

Reduce certain toppings that aren‘t selling very well.

Reverse Topping then chees or chees then topping…

Activity 4: Page 92

Imagine you are the current CEO of your favourite brand, you have decided that it is time that the brand expands into

Africa. Many of your department managers, however, are not in favour of this idea. You have agreed to complete a

Force Field analysis as a team, before making a final decision on the expansion of the brand.

Complete a force field analysis for your brands expansion.

Use the different steps in this analysis to help you decide if the expansion should go ahead.

Brand: Local coffee company

Whether or not to expand the coffee into African countries

Step 1 - Define the problem

There are already well-know, established companies in Africa.

Technical support for the machines is limited.

Border control and restrictions makes it difficult.

Step 2 - Define the change objective

To get the coffee to African countries at a reasonable price in order to build the brand and market share.

Step 3 - Identify driving forces

Our company‘s machines are more technologically advanced so we have a lot to offer.

There is a better quality in the blending and roasting of coffee.

Africa is a new, huge market to penetrate.

We have existing group customers that may make entry easier.

Step 4 - Identifying restraining forces

Import/export laws (Legislation) are very strict and stock and equipment taken from SA can‘t easily be

brought back.

There are other well-known brands that could come in at a cheaper price.

The Rand is not very strong against other currencies and competing with local product might be difficult.

44

Step 5 - Develop a change strategy

Looking at the driving and restraining forces, it is clear that the driving forces are stronger and it will be a

good idea to carry on with moving operations into Africa.

Activity 5: Page 93

Discuss the concept of indigenous thinking. Explain when and under which circumstances a business would use

indigenous thinking.

Indigenous thinking (knowledge) is about the local knowledge and way of thinking that is unique to a culture

or to a particular society. The indigenous knowledge, includes the skills, know how, experience and insight

of a particular group of people, which can be applied to develop a sustainable product/service.

Being aware of the concept of Indigenous thinking may help the business to create a competitive

advantage by offering a unique product or service to a group of people who may not have thought about

this, because it is not part of their way of living.

On the other hand, indigenous thinking may also pose a threat to a business that wants to compete in a

market that is unfamiliar to them.

Technologically

advanced

Quality

Large market

Legislation

Competitors

are well-

known

Weaker Rand

Driving Forces Restraining forces

Change/Problem

Have existing

customer

45


1 Define the term creativity.

Seeing the same thing as other people, but thinking about it in a different manner.

Breaking down and then rebuilding concepts in order to gain a better understanding and insight into

business-related problems.

Organising thought processes and available resources in such a way that they lead to viable and feasible

solutions to problems.

A process of discovery to gain insight into a problem and then considering different ways to deal with the

problem.

Rejecting the obvious to find a solution that has not yet been considered and to then make this work for the

business.

Differentiating the business from competitors in order to gain a competitive edge for the business.

2 Discuss the importance of creative thinking in a business.

Students can give their own ideas, however, some examples include:

3 Assess how creativity could assist a business with change.

4 Discuss how the SCAMPER method could be used as part of the different management tasks of a manager.

Many businesses find it difficult to come up with new ideas when they are trying to develop and improve on

a current product and/or service offering of the business. SCAMPER helps a business to generate new ideas by encouraging a business to think about how it could

go about improving the existing product and service offering.

5 Draw a mind map which could be given to the members of the class that would help them understand the

force-field analysis method used in the decision making process.

Force Field analysis

Step 1: Define the problem The business needs to look at what/who in the current situation has to change to help the business reach its objectives. It is important that the business separates the problems from those elements that are working well.

Step 2: Define the change objective The business will define and describe the desired outcome or the goal that it will be working towards. This description has to be as specific as possible.

Step 3: Identify driving forces Once the business knows what the goal is, it has to identify the factors that support the change by stipulating what the strengths of these factors are and how change would add value to the business. It is important to place these forces on the force field diagram (shown below) by labelling each arrow. It is also very important that the business assess the interrelationships between the different driving forces.

Step 4: Identify restraining forces

The factors which are resisting the change must now be considered. The business will plot these factors on the diagram in exactly the same way as the positive forces. Yet again, it is important to look at the interrelationship between these factors.

Step 5: Develop a change strategy By this stage there will be a visual representation of all factors both pushing and resisting change. Arrows will be close to the line (change) if they are strong forces, and further away from the line if they are weak forces. This will give the business a clear indication of whether or not change is a good idea. If there are more forces pushing for change closer to the line than there are forces resisting change, the business will need to implement strategies for change.

1 2

3 4

5

46

6 Define the term indigenous thinking.

Indigenous thinking (knowledge) is about the local knowledge and way of thinking that is unique to a culture

or to a particular society. The indigenous knowledge, includes the skills, know how, experience and insight

of a particular group of people, which can be applied to develop a sustainable product/service.

7 Think of three examples where it is possible a business used indigenous thinking as part of its business

strategy. Explain why you think the business opted for this approach.

In SA: solving labour relations issues, government to resolve housing and education problems.

8 Explain how each of the following methods could also be seen as creative problem-solving tools:

a. SWOT analysis

This Tool is used to identify the strengths, weaknesses which are within the business. And the opportunities and threats outside the business. Once issues have been identified, the problems can be solved and decisions can be made on how to correct them.

b. Porters Five Force Model

A Porter analysis can be used to assess the attractiveness of a market. A market will be attractive if it has

the potential of high profits. You use the following headings: Threat of new entrants in the market,

Availability of substitute products, Level of rivalry in the market, power of the buyer and power of the

suppliers.

c. PESTLE analysis

Identifies and analyses the challenges affecting the macro environment, which the business has no control over. POLITICAL, ECONOMICAL, SOCIAL, TECHNOLOGICAL, LEGAL & ENVIRONMENTAL (PHYSICAL AND ETHICAL)

9 We often hear that entrepreneurs need to be creative if they wish to make their mark in the market place.

Justify this statement, by providing sound examples.

There is so much competition in the business world, it is necessary for entrepreneurs to be creative in the

ideas and the approach to business. Look at ‗Facebook‘ it was a unique idea that made the founders so

successful.

There will also be many problems that arise in the day to day running of the business, it will therefore be a

useful skill to have to be able to combat these problems creatively.

10 Think of your favourite brand and explain how this brand has possibly used creativity to gain a share of the

market place.

Students to choose their own brands.

Example:

Burger King offer their customers who eat at the store the opportunity to refill their drinks from the soda

fountain. (Bottomless) This is different from other similar stores who offer you one drink, not bottomless.

47

Chapter 7: Professionalism and Ethics (Page 95)

Activity 1: Page 95

1 Ask five teachers, five grade 8s and five grade 12s what they see as the core values of your school.

2 Work in groups of three to four and decide which of the core values the teachers / other learners mentioned

should be used to determine if your school is successful.

(Students will have their own core values)

Ideas of core values that can be named:

Thinking skills, Research skills, Communication skills, Social skills, Self-management skills

Activity 2: Page 97

1 True or false: People change the ethical theory that they adhere to according to the circumstances they are

faced with.

2 Consider your reaction to each of the following scenarios and then reflect on the ethical theory you would

apply in each of the following instances. You need not show your answers to anybody, but be honest with

yourself.

2.1 Your friend does not look good in a particular outfit and asks your opinion. You know she has had a bad

day at school and, because you feel sorry for her, you tell her …

2.2 You see a short YouTube clip where someone is painting graffiti all over a wall. Your immediate thought

is …

2.3 You see your friend being dishonest in a test. What do you do and why?

1 True

2.1 …that she looks fine - Consequence-based theory (Students to give their own feedback)

2.2 …that they are doing something illegal - Principle-based theory (Students to give their own

feedback)

2.3 …after class go tell the teacher or tell your friend what they did was wrong - Virtue-based theory

(Students to give their own feedback)

Activity 3: Page 98

Look at the criteria of how a professional person should act. How many of those do you uphold?

ensure his/her knowledge and skills relating to the job at hand are current and that he/she is committed to lifelong learning in the field to make sure a superior outcome is achieved

be prepared to share his/her knowledge to develop other employees

exercise good judgement when doing the job (related to ethics)

be reliable by honouring commitments to clients, but also to other stakeholders and where possible, exceed expectations

accept accountability if a mistake was made and not to lie or try to shift the blame onto someone else ensure that his/her appearance matches the above-mentioned high standards

be punctual, because being late is a sign of disrespect towards the person / people with whom you are meeting

use appropriate language and not swear - it is often expressed and perceived that swearing indicates a lack of vocabulary

Avoid falling into the trap of gossiping about colleagues: Remember, if someone is prepared to say horrible things about a colleague to you, what does that person say behind your back about you?

Personal issues are best left at home. Avoid spending company time telling everybody about personal matters. Not only does this waste time and reduce productivity; it may also negatively affect general employee morale by being exposed to constant complaints and negativity.

48


1 A document that describes expected behaviour for employees is a/an...

A code of conduct B unit trust

C appraisal form D memorandum of incorporation

2 An unethical practice could be...

A Wimpy advertising on billboards close to Nandos

B Debonairs employing unskilled workers

C Tasha‘s requiring new waiters to undergo HIV/AIDS testing when it is prohibited by law.

D McDonalds selling fast foods that are unhealthy

3 Sue is a manager at Pick n Pay and she subscribes to the 'principle-based theory'. This means …

A a person‘s character is judged, rather than his/her actions

B Sue will tell new employees about business-related incidents to help them to understand what

acceptable behaviour is

C actions are measured against common values to determine if the action is right or wrong

D employees get warnings if they disagree with one another

4 The Famous Brand Code of Ethics will …

A be used to determine when workers are allowed to strike

B guide customers to determine which items on the menu are unhealthy

C guide management‘s actions when a Famous Brands franchise is sold

D helps employees to understand the values and beliefs on which Famous Brands has based its

policies

5 … is a document that defines the principles and values of Famous Brands.

A a grievance procedure

B a code of ethics

C a CSR program

D an induction plan

6 Explain the difference between Professional and Ethical behaviour.

There is often insufficient clarity of what the difference is between being Professional and acting in an

ethical manner. The easiest way to illustrate this is probably as follows:

From this it should be clear that ethical behaviour is just a component of being a professional. Ethical

behaviour means the person will:

be honest and act with integrity

act in a manner acceptable to society

do what is right rather than what is easy or financially rewarding

Professionalism

Ethical behaviour

49

7 Why is the Batho Pele framework important in the South African context?

The Batho Pele principles were developed to ensure professional and ethical behaviour by Public Servants

in order to support the Constitutional values of:

Using and applying state resources efficiently and effectively during service delivery

Not subscribing to discrimination or bias, but rather to be impartial and fair to all citizens of the country

All state departments respecting the needs of the people of the country

Acting in a transparent manner and accepting accountability for actions

8 Why is Corporate Governance important?

Albert Einstein said, ―If people are good only because they fear punishment, and hope for reward, then we

are a sorry lot indeed.‖ Businesses should be good citizens of the country in which they operate, because it

is the right thing to do.

a good image and therefore a much easier task for the Public Relations team

improved relations with stakeholders such as:

o a healthier workforce with easier recruiting, because people want to work at a place regarded

as responsible towards all stakeholders

o investor confidence makes it easier to raise capital

o an increased market share because of a higher satisfaction levels amongst customers because

the business contributed to a better environment by helping others

50

Chapter 8: Teamwork and Conflict Management (Page 105)

Activity 1: Page 106

1 We can differentiate between formal and informal teams. Formal teams are those that have been established to

achieve a formal goal. E.g. the school management team has to make sure the school is managed in a manner

that will ensure success. Identify five other formal teams in your school.

2 A group of friends sitting together during break will be classified as an informal team. What are the aims (give at

least three) of an informal team?

1 Suggested answers include: Outreach committee, 1st Netball team, Swimming team, Public speaking

teams, prefect body, Mathematics department.

2 To have fun, socialize, for enjoyment, mutual benefit, pursue common interests and not to have

stress.


Think of a team that you belong to. Describe important incidents that took place when the team went through the

different stages as listed above.

A team was put together for the schools JSE challenge

Forming All the grade 9‘s were called together to decide on a team of 8 students to play the JSE shares game. The 8 members were uncertain of their place in the team.

Storming There was a bit of turmoil when they were deciding on a captain or leader. Some girls paired up and withdrew, some boys were very domineering and overpowering.

Norming Once clear roles were decided and accepted, everyone calmed down and started understanding each other‘s personalities and getting along.

Performing The task of trading shares and who will be buying/selling and who will be investigating businesses is established and members get on with the task.

Adjourning In September, when the game is over, the team members will go their separate ways.


1 Now think of your circle of friends. Make a list of people and decide who plays the different roles.

2 Next think of the teachers at your school. If you have to take a guess, try to put one or two names next to

each of the above mentioned roles. Once you have done this, discuss it as a class. REMEMBER, if you can‘t

say anything positive about someone else, rather keep quiet.

The aim is not to say nasty things about your teachers, but to see if some of them are clearly fulfilling certain

roles in the school.

Students will attach names of friends and teachers to the following roles:

Consider the different roles:

Thinkers: 3 roles

The Evaluator monitors situations to look for opportunities and then thinks strategically about the optimal

utilisation of these opportunities.

51

The Plant: This is a creative type of person who can think out of the box and contribute towards solving

problems in imaginative ways.

The Specialist is the person with a valuable skill that is not commonly available and he/she shares this

knowledge with the group.

Task orientated: 3 roles

The Finisher is very conscientious and will proactively look for mistakes or omissions to ensure the end

product is delivered on time.

The Implementer will try to convert ideas into practical actions in a conservative and disciplined manner.

The Shaper loves pressure and will challenge people and push hard to overcome obstacles.

People orientated: 3 roles

The Resource Investigator is an extrovert who loves talking to others. This person will network and

establish connections that may help with the task at hand.

The Team Worker is a diplomat who listens to others and who tries to keep everybody calm to avoid

conflict.

The Coordinator is a natural leader who knows when to delegate. This person will ensure all members

understand the goal, but he/she is not afraid to make a decision if intervention is required.


1 Describe different situations where the source of conflict was:

1.1 Poor communication

1.2 Cultural differences

1.3 Unfair resource allocation

1.4 Team members not performing their roles

1.5 Any three other conflict situations where you were involved.

2 Now discuss how the above mentioned situations were handled to resolve the conflict. Was it successful?

3 How would you have handled the situation differently? Why?

These are fictitious examples to assist with ideas:

1.1 Two girls were fighting because one thought the other one said she was overweight, she never said

that. All that was said was the tracksuit pants were a flattery style.

1.2 During a class party the only Jewish student in the class was offended when all the snacks

contained pork. She thought it was in poor taste that no one thought of her. She stormed off.

1.3 The netball team was angry because the rugby boys all got new tracksuits and new training

equipment from the school. They got nothing.

1.4 In Business Studies, the teacher gave the class a task to run a little business during school to see

which group could raise the most money. The group had to contain 4 members. I the one group

there were three that worked and the 4th was absent for most the planning and had every excuse

under the sun.

1.5 Other conflict could be caused by: Stereotyping, not respecting rules, power struggles, uncertain of roles, different personality types, priorities.

2 1.1 - the girls sent terrible messages via their phones to each other - the situation got worse.

1.2 - the Jewish students left the party and everyone didn‘t know what they did to upset them.

52

1.3 - the netball girls moaned about the situation and parents phoned in and wanted to know what

was happening. The headmaster responded to them, however, they were still angry and one girl left

the school.

1.4 - The group‘s parents complained because they all got the same mark. The parents were

unhappy, the teacher was called in by the headmaster and she had to explain what happened. The

boy who did nothing, ended up getting 0/20 for his contribution and the boys are not friends

anymore.

3 1.1 - I would have made the girls sit down together and each say what was on their hearts. I would

have forced them both to listen and speak.

1.2 - I would have explained to the class what the different students eat and don‘t eat due to cultural

reasons before the party so there was a better understanding from each one.

1.3 - I would have looked at who needed what resources, checked budgets and then spread it more

evenly or sat the teams down and explained where we were thinking of spending the money before

it was spent.

1.4 - I would have made sure all group members outlined their contributions to the task and followed

up regularly to see if they are doing their part.


1 Peter and Jane have been arguing over how to advertise a new computer game to teenagers. Peter

thinks the best way to do it, will be to give it to a group of teenagers to play the game and then tell

their friends. Jane agrees that this is a good idea, but thinks it will take too long to advertise the new

game in this way. Peter left the room mumbling: ―Females always think they know better!‖ The

source of conflict is …

A stereotyping.

B role overload.

C cultural differences.

D resource allocation.

2 When people in a conflict situation agree to disagree to solve the problem, it is known as ... conflict.

A synergistic

B role

C behavioural

D functional

3 According to the Bellbin theory, the … is a natural leader that is prepared to delegate to sub-

ordinates.

A Thinker

B Plant

C Shaper

D Co-ordinator

4 … will result in a lower staff morale and compromise productivity.

A Synergy

B Dysfunctional conflict

C Team development

D A devil‘s advocate

53

5 A type B personality is …

A highly strung

B moody

C relaxed

D always looking for excuses

6 Explain how the following factors could lead to conflict in a fast food franchise such as Wimpy.

6.1 The appointment of a new supervisor.

Employees can be nervous of changes the new supervisor might make. They might also be insecure about

the stability of their future at the company.

6.2 Insufficient products to meet customer orders.

They customers might be rude to front of store staff and then they in turn might lash-out at other employees

unnecessarily.

6.3 A waiter that does not understand English.

Customers might get frustrated trying to explain their order over and over and the waiter then orders the

wrong food. This will cause frustration on both parties.

7 Why is it important for a manager to know how to solve conflict?

If one can learn how to manage stress caused by issues such as tight deadlines, too much work and fellow

team members not always doing their jobs, etc., the degree of interpersonal conflict in the workplace will be

minimised.

8 How could dysfunctional conflict in the workplace have a negative impact on the brand / corporate

image of Mug & Bean?

If customers see employees arguing or even getting physical, it will chase them away. Customers will then

tell their friends about the negative experience and it will damage the brand. Employees will also be

unhappy about the situation and will not portray a good vibe to the customers. All this will damage the

brand for Mugg & Bean.

54

Chapter 9: Public Relations (Page 114)

Activity 1: Page 119 Identify a business that has recently been faced with a social or environmental issue; collect as much information

about this issue.

Once you have assessed all your information, decide if the business has handled the ―issue‖ in the most suitable

manner. Motivate your answer by looking at the Research, Action, Communication and Action the business took.

Students need to investigate their own business by using the following principles:

Research: This is where the Public Relations function assesses all the factors that contributed to the

PR problem or opportunity. The different contributing factors are investigated and analysed before a

decision is made about the most appropriate action to take.

Action: Before the PR department decides what action should be taken, they have to refer to the

policies and procedures of the business and then decide what it is that the business is going to do

about the situation. Top management should at all times be kept up to date with developments and

how the PR department is going to respond.

Communication: The question arises about what the relevant stakeholders are going to be told about

the problem / situation? Once this has been determined, the message will be communicated to all

relevant stakeholders through appropriate channels such as newsletters, websites, speeches and

special events to name a few. Remember, however, we already said PR is not a one-way

communication. The business should gather and analyse feedback from the stakeholders regarding

the problem / situation.

Evaluation: The success of the PR-drive needs to be evaluated in order to make adjustments if and

where necessary. Some of the questions that the PR department will ask are:

o Did the stakeholders respond to the communication and if so, which stakeholders responded?

o Was the reaction of the stakeholders positive or negative?

o Did the stakeholder/s take action based on the message that was communicated and if so,

what was the effect that it had on the business?


Work with a partner. Select a business familiar to you and your partner. Research the Public Relations department

of this business.

Identify possible PR issues the business has dealt with recently and assess whether or not you believe the

business effectively dealt with these issues. Motivate your response.

Present your findings to the class in a 5 minute presentation.

Students to do their own investigation, however, the following rubric can be used to assess the task.

55

0-2 3-5 6-8 9-10 Total QUALITY OF DELIVERY

Presentation -

Communication

[LOT]

(0) Not. (1&2)Partially

meeting the standard of

correct articulation, proper

preparation, eye contact etc.

(3)Adhering to presentation

criteria of public speaking (4)

in a business environment (5)

and dynamic

Good to very good meeting

the criteria of public

speaking(6), good posture

and eye contact(7), The use

of visual aids and correct

language use(8).

Superbly meeting the criteria

of public speaking, good

posture and eye contact (9),

The use of visual aids and

correct language use (10).

QUALITY OF CONTENT

PR issues were

identified

[LOT]


of PR issues.


detail of PR issues.


good detail of PR issues.

Excellent detail in the

Research of PR issues. (9&10)

How the business

has dealt with these

issues

[HOT]


in dealing with the issue.


detail in dealing with the

issue.


good detail in dealing with

the issue.

Excellent detail in dealing

with the issue. (9&10)

TOTAL: (30MARKS)


Identify a situation where PR failed in a business or business situation. Discuss why this was the case and suggest

an alternative approach the Public Relations department could have adopted.

Student will research their own businesses, however, here are some interesting examples:

Toyota (International)

Toyota recalled 5.2 million cars on January 28, 2010. The No.1 car manufacturer in the

world was accused of being aware of the safety problems and a cover-up meant to

save the company the costs of repairs. Toyota CEO Akio Toyota appeared before

Congress to explain the reasons for the malfunctions of brake and steering systems.

Later in 2010 and early this year, it became clear that many of the problems with

Toyota cars were due to driver error and not manufacturing defects. That analysis

came too late to spare Toyota from the lion's share of the harmful media coverage.

The Deepwater Horizon incident may be the largest public relations disaster in corporate

history. The explosion killed 11. The spill let out 206 million gallons of crude. Corporate shares

fall from $60 to $27 in one month, wiping out $100 billion in shareholder value. BP is forced to

establish a $20 billion fund to cover costs of the leak.

Limpopo textbook crisis

When the Limpopo government failed to deliver textbooks to its schools at the

beginning of 2012 it triggered a national outcry. Even when the national government

and the Zuma got involved, textbooks were still not delivered to some schools and

evidence of dumping and destroying of textbooks emerged. It was a public example of

the extent to which the ANC‘s cadre deployment policies, and possibly corruption,

have undermined the capacity of the civil service. The consequences of such

mismanagement would have resonated in poor communities around the country.

56


Identify a situation where a Marketing-drive has failed and discuss how Public Relations department was used to turn

the situation around.

Here are some examples to assist the teacher:

1. Malaysia Airlines: My Ultimate Bucket List

The first of our worst marketing campaigns for 2014 has to go to Malaysia Airlines, who at the centre of 2

tragic lost airlines in 2014, should‘ve been more conscious of their marketing.

In a competition, the airline asked their audience to answer the question ―What and where would you like to

tick off on your bucket list, and explain why?‖ The competition was open to participants in New Zealand and

Australia, who would be eligible to win IPads or economy class tickets on the airlines.

But what Malaysia Airlines didn‘t take into account was the concept of a ―bucket list‖ and its connection with

death. With its recent tragic history, Malaysia Airlines showed a crude lack of empathy and sensitivity

towards the situation, and people were quick to call them out. The links to the competition were cancelled,

and people were asked to describe destinations and activities on their ―to-do‖ list instead.

2. U2 & Apple: Forced Download

There‘s nothing more cringe-worthy than someone trying to get rid of

your product – especially when you‘ve given it away for free. This year‘s

biggest marketing fail campaign has to be from U2 and Apple‘s

collaboration when it forced U2s new album onto 500 million desktops

and iPhones, regardless of whether each user wanted it or not.

The criticism was swift and merciless, and Bono later admitted that they

―might have gotten carried away with [themselves]‖.

3. Huggies: “Have Dads Put Huggies to the Test”

In 2014, we can pretty much safely assume that the majority of our target demographic are

modern thinkers, and as such, have a more modern view on what a ―typical‖ family looks like.

One stereotype in particular that‘s been challenged is that it‘s the mother who‘s the main

caregiver for the children of the family, and that the father is simply the ―breadwinner‖.

Unfortunately, Huggies missed the memo. In the campaign ―Have Dads Put Huggies to the

Test,‖ dads were shown as being inattentive to babies with full diapers… but not to worry!

Because Huggies diapers can handle anything. Even neglectful fathers.

The backlash against the ad was so severe that a petition was launched called, ―We‘re Dads,

Huggies. Not Dummies‖ to remove the ads. Huggies eventually removed the ads.

57


1. Public Relations is …

A a tool to assist the business to generate trust and confidence among customers.

B a handy instrument to make people feel better when they are unhappy about the quality of the

product/service.

C not a reliable best tool to convince shareholders to invest in the business.

D a contingency plan that is implemented when the business experiences a crisis.

2. Public Relations requires the purchase of media?

A True B False

3. The potential audience of Public Relations is:

A Local Authorities B Financial groups

C Suppliers D All of the above

4. Traditionally, PR and Marketing functioned as … units?

A Separate B United

C Merged

5. The main objective of the PR activity is…

A Sponsorship and publicity B Publicity and event management

C Exhibitions and publicity D Event management and exhibitions

6. Discuss the role that ethics plays in the Public Relations function of a business.

If PR promotes open communication channels with all stakeholders then there must be a strong emphasis

on honesty. This goes hand in hand with ethical behaviour because wrong doings of a business will always

come back to them in some way.

7. Explain the possible links between Public Relations and Marketing.

Although there are distinct differences between the role of the Marketing function and the Public

Relations function, there is an increased awareness of how these two functions should support each

other through an integrated approach to achieving the business‘s objectives.

Although Marketing still uses advertising as one of the communication tools, it has lost some of its

impact due to the increase in cluttered advertising, and the general lack of loyalty among customers and

the fast rate at which business developments take place. To succeed, the business has to use all

methods and resources available to get the message across to the stakeholders.

A new approach to getting the message across is known as the Integrated Marketing Communication

Function. The value of communication through traditional marketing communication mix (advertising,

personal sales, sales promotion and publicity) is now combined with Public Relations. By combining

these activities of marketing Communication and Public Relations, clarity and consistency in the

message is a greater certainty for the business which will maximise the impact on relevant stakeholders.

Business should look at integrated tactics that are able to:

o Launch products / services

o Sell the product / service to a given segment

o Reinforce a consistent message regarding the image and brand of the business

58

8. Discuss how a manager could use PR to help motivate the business workforce.

Employees and the trade unions that represent them are seen as internal stakeholders or brand

ambassadors of the business. The business cannot always control what employees say about the

business, and therefore, it is important to ensure that employees ―buy into the brand and live the

brand‖. If employees are treated in a fair manner, this will hopefully translate into positive messages

being communicated about the business. Also refer to point 4 below where internal marketing is

discussed.

Shareholders are the owners of the business. Although they are probably not active in the business on

a daily basis, they are also considered to be internal stakeholders. It is important that shareholders are

kept up to date with important developments and/or changes in the business that may affect the share

price.

9. Show why clear policies and proper planning are important in any Public Relations program.

Planned:

Public Relations communication should be clear and unambiguous. The PR function should be aware of all

internal and external factors that could affect communication (such as public perception or employees‘

attitudes and behaviour) and then plan the communication activities to generate positive change.

Deliberate:

Communication with stakeholders does not take place ―by accident‖. It is intentional and carries a specific

message. The message should be put together to ensure that:

It gains an understanding of stakeholders‘ perceptions

It influences the desired group of people by providing the correct information

Feedback can be collected so that the business knows what needs to be done to achieve its

objectives

Public Relations should be systematic (a step-by-step approach) to ensure all necessary research is

undertaken before the communication process starts and that feedback is analysed in order to inform the

next phase of the communication process.

A Management function:

PR should be part of a business‘s strategic planning, because it is a tool that can assist management with

problem solving. Public Relations can help the business deal effectively with conflict in order to ensure the

day-to-day functioning of the business creates a positive image of the business, both internally and

externally.

Involve two-way communication:

It is vital that the business listens to stakeholders‘ concerns or demands and that the business responds in

an effective manner.

Promote Performance:

The Public Relations department ensures that the business policy is properly communicated and

understood by everybody. People are usually more prepared to ―buy-into an idea‖ if they understand the

logic and reasoning behind it.

Be in the interest of the public:

PR ensures stakeholders understand that business activities are of mutual benefit to the business and

themselves.

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10. How can a business ensure that the PR activities make a positive contribution to the functioning of the

business?

The Marketing function deals with the product / service position and sales in the market.

Public Relations tries to ensure that the business is successful by monitoring the brand in the market

place and ensuring that all actions are in line with the way it expects to be perceived by stakeholders. In

short it can be said that Public Relations is involved in shaping and promoting the business‘s core

values, both internally and externally

11. Explain John Marston‘s acronym RACE, and apply this acronym to a PR-related issue in a business of your

choice.

Research: This is where the Public Relations function assesses all the factors that contributed to the PR

problem or opportunity. The different contributing factors are investigated and analysed before a

decision is made about the most appropriate action to take.

Action: Before the PR department decides what action should be taken, they have to refer to the

policies and procedures of the business and then decide what it is that the business is going to do about

the situation. Top management should at all times be kept up to date with developments and how the

PR department is going to respond.

Communication: The question arises about what the relevant stakeholders are going to be told about

the problem / situation? Once this has been determined, the message will be communicated to all

relevant stakeholders through appropriate channels such as newsletters, websites, speeches and

special events to name a few. Remember, however, we already said PR is not a one-way

communication. The business should gather and analyse feedback from the stakeholders regarding the

problem / situation.

Evaluation: The success of the PR-drive needs to be evaluated in order to make adjustments if and

where necessary. Some of the questions that the PR department will ask are:

o Did the stakeholders respond to the communication and if so, which stakeholders responded?

o Was the reaction of the stakeholders positive or negative?

o Did the stakeholder/s take action based on the message that was communicated and if so, what

was the effect that it had on the business?

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Chapter 10: Finance (Page 122)


1 What is the new name for:

1.1 The Income Statement?

1.2 The balance sheet?

2 Explain the difference between cash flow and profit.

3 The difference between Non-current and current liabilities is the repayment period. Which one of the two must be

repaid within 12 months (1 year)?

1.1 Statement of Comprehensive income

1.2 Statement of financial position

2 Cash flow = Cash flow is the net amount of cash and cash-equivalents moving into and out of a

business / Income from sales, selling other assets or owner giving capital or borrowing money.

Profit = a financial gain, especially the difference between the amount earned and the amount spent

in buying, operating, or producing something.

3 Current liabilities


1 What is the difference between fixed costs and variable costs?

2 Why is break-even an important calculation for the business?

1 Fixed costs remain the same, irrespective of the output (units produced), namely - when fixed costs

include insurance and rent expense, if a worker is paid a fixed salary irrespective of what the

production is, it is also a fixed cost. Salaries of workers are usually fixed if they are not directly

involved in the production process, such as the cleaner, manager and secretary.

Variable costs vary according to the output (units produced). Variable cost will increase when

production increases. Examples of variable costs include Water and Electricity, raw materials used to

make the product and the wages of workers who are paid according to their output.

2 The break-even point is the point where the income generated from sales is exactly equal to the total

costs. In other words this is the point where neither a profit nor a loss is made. This means as soon

as the business exceeds this point in sales, a profit will be generated.


1 What is a feasibility study?

2 Why is a feasibility study important when Wimpy wants to open a new franchise?

1 A feasibility study is the process of assessing the potential of a new business idea. It is important to

know as soon as possible whether a project has the potential to succeed or not – preferably before

large amounts of time and money are invested.

2 A feasibility study helps to determine the possibility of success if a new idea is implemented, before a

business plan is developed.

61

It forces the entrepreneur to take all emotion out of the equation and to focus solely on the facts by

answering certain questions in an objective manner.

The feasibility study forces the entrepreneur to THINK critically about what it is that he/she wants to

do and if there is an opportunity to make money from this idea. It is not good enough merely to think

about all these aspects.

The feasibility study should be put in writing to add to, to refer to at a later stage if need be, to use as

a guide to develop a business plan.


1 Explain the concept ROI.

2 Discuss TWO investment options if someone wants to generate a monthly income from the investment.

1 The return on investment is:

The additional money generated by the investment x 100

The original amount invested 1

In a business context this formula will measure the profitability of the business. If a business can only

generate a 4% return on investment, it will not be a good idea to invest money in that particular

business, because even banks pay about 4% interest on fixed deposits (and there is no risk or the

trouble of running a business associated with the investment in the bank). The entrepreneur will have

to calculate the business return on investment and then evaluate it in terms of risks taken in the

business and other effort invested in the business. There is no hard and fast rule that can be applied

to say ―if the ROI is less than …% the entrepreneur should invest his/her money elsewhere‖. But

comparing ROI in the business with ROI of other investment opportunities will give some indication of

what the better option may be.

2 Investing in property and you receive rental income from the tenants on a monthly basis.

Notice deposit at a bank where you can invest in a fixed deposit or money market account and

receive a steady flow of interest income.


1 How does insurance help a business to reduce certain risks?

2 Why do you think is it expensive to take out insurance against bad debt?

3 If the business decides not to take out insurance against bad debt, how can they manage the risk of bad debt in

the business?

1 There are many events that may occur which could have a serious impact on the business. Think

about fire, burglary, robberies, floods, or a customer slipping and falling in the store, a car accident or

an employee being injured while on duty. Any of these events will cost the business money to recover

from the consequences or possible claims made by injured parties. Sometimes it may be impossible

to recover from a big disaster! - If your business is insured, you can transfer the risk to the insurance

company and you will be put in the same position as you were before the incident occurred.

2 It possess a high risk and your premiums are established on the amount of risk the insurance

company is taking on. Ie: There is a very strong chance that your customers won‘t pay. Also if you

know you will get a pay-out from insurance if they don‘t pay, what is pushing you to go through all the

effort of trying to get the customers to pay?

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3 You need to ensure proper credit checks are done before credit is granted to the customer.

Background checks according to the Credit agreements act need to be followed.


Are the following statements true or false? If false, motivate your answer by correcting the statement.

1 Overhead expenses consist of variable cost only.

False - it can include fixed and variable costs

2 The break-even point is the point at which the undertaking shows neither a profit nor a loss.

True

3 It is a sound financial policy to finance fixed assets with long-term funds.

True

4 Enterprises in sound financial positions can obtain loans at better rates.

True

5 The relationship between own capital and borrowed capital is known as liquidity.

False - it is known as gearing

6 A life assurance contract provides the insured with indemnity in the case of death.

True

7 The premium payable according to an insurance contract increases as the risk gets smaller.

False - It increases at the risk gets higher.

Provide the correct term for each of the following:

8 A debt that the business is unable to collect and that will have to be written off

Bad debt

9 The maximum amount that a person may buy for from a business undertaking

Credit limit

10 The ratio which indicates the income generated as a percentage of the investment

ROI

11 The money that the owner gives to start a business

Own capital (Owners‘ equity)

12 The remuneration paid to the insurance company for the risks which it bears

Premiums

13 When goods are taken from a property after forced entry

Burglary

14 An employer can take out this insurance which will protect him against losses because of an employee‘s

dishonesty.

Fidelity insurance

Choose the correct alternative:

15 Which one is NOT an example of a source of working capital?

A Bank drafts

B Bank overdrafts

C Factoring of debtors

D Bank acceptances

16 Which one is an example of current assets?

A Bank overdraft

B Production stock

C Cash

D Debtors

Which one does not fit?

17 Sources of fixed capital are:

A Sale of shares

B Retained income

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C Long-term loans with a bond as security

D Short-term loans with security

18 Discuss five criteria which a potential investor may consider when a choice is made between investing in two

different businesses.

He will compare the financial statements of the two business.

Do any of the two of the businesses use special technology to produce its merchandise for sale?

Ask for a copy of the lease agreements of both building if the business is renting premises.

Stock must be checked and reasonably valued. Old or damaged items must not be taken over.

The value of the stock must be calculated at cost price.

The equipment must be checked by a knowledgeable person for faults, and wear and tear

Check with local authorities for licensing requirements, permits and zoning.

19 Describe three steps that need to be followed when a feasibility study is undertaken.

Step 1: Describe the business or project idea

Write down a detailed description of what it is that will be sold, i.e. the product/service.

o Will the business manufacture the product? Is there a patent that can be used to protect the

intellectual property?

o If the product is bought from a supplier, who will be the supplier? Where is the supplier? Are

there alternative suppliers?

o What distribution channels will be used to get the product to the consumer?

Clearly state how the project idea is different from businesses already selling something similar or

identical, i.e. why will the consumer want to buy THIS product/service as opposed to that of a

competitor? Describe why this will be more successful than other products/services.

Step 2: Describe the market (by doing market research, if need be… )

Is there a market for the proposed idea? Who is the target market?

Does the market have the potential to absorb another competitor? The business thus has to assess

its potential position in the market.

Is there potential for growth in the market?

Is the market sensitive in terms of price? Does the target market expect a product/service that sells

for less than existing products or should the product/service be sold at a premium, i.e. more

expensive than existing products/services because it offers more?

Who will be the competitors? What are their strengths and weaknesses?

Step 3: If it is a viable idea, what next?

How much capital is needed to get the business off the ground? How will capital be raised? It is

prudent to ensure enough working capital is available for at least the first six to eight months of the

business‘s operations.

Where will the business be located? Why that specific location? Advantages and/or disadvantages

of the location? What are the municipal requirements in terms of business zoning?

What special equipment will be required in the business? Can it be sourced? At what cost?

What special skills are needed to proceed? Where will the business get people with these special

skills?

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Chapter 11: Marketing (Page 133)


Choose three very different products/ services and describe the market segment for which your chosen products/

services cater. Share your ideas with a partner to see if your partner agrees with you.

What is a 'Market Segment‘ (http://www.investopedia.com/terms/m/market-segment.asp?)

A group of people that share one or more characteristics. Each market segment is unique and marketing

managers decide on various criteria to create their target market(s). They may approach each segment

differently, after fully understanding the needs, lifestyles, demographics and personality of the target.

Sports energy drinks - a thirst quencher for sporty on the go people needing that extra boost.

Super bike - For younger adults who have a ‗need for speed‘ and a need for

transportation.

Mac book laptop - a technologically advanced group that is willing to pay a large amount

on a specialised laptop.


Decide on a product of your choice. Describe the market segment that the particular product is aimed at. Motivate

your response by looking at the characteristics of the market segment.

Briefly discuss the marketing mix of your product by describing the:

product/service

price

place where the product/service is distributed activities to promote the product/service

A market can be segmented based on a variety of criteria. The ideal is to ―create a market‖ that is big

enough to achieve sufficient returns on investments by combining some of these characteristics. For

example:

Debonairs will focus its marketing resources on getting the message to people in an income bracket

who can afford to eat takeaways.

In addition, they will look at people with a lifestyle who would find takeaways attractive and enjoyable.

65

Debonairs will then frequently remind these consumers of the convenience of the product, because it

is delivered to their doorstep.

Should a particular Debonairs franchise be located in a geographical area where there is a large

number of people of a certain cultural grouping (e.g. Jewish community), they will make sure their

advertisements emphasise that all pizzas are Kosher.

The Product component includes the characteristics of the product/service, packaging, logo and trade

mark.

Price looks at the money the target market is prepared to exchange for the product/service. When

setting the price it has to be kept in mind that the cost of production needs to be covered. In addition the

business will have to consider what competitors are charging for the same or similar products/services.

Place refers to the different channels that could be used to ensure that the product/service reaches the

desired market segment.


Identify an example of each of the following types of products:

o Consumer goods

o Consumer services

o Producer goods

o Producer services

o Consumer goods - goods bought by consumers, e.g. food, clothing, furniture and computers, etc.

o Consumer services - purchased by the consumer for personal use, such as education, hairdressing

and banking, etc.

o Producer goods - sold to other businesses to use in the day-to-day running of the business or for

further manufacturing. These goods include machinery or components that are used in manufacturing

such as oil, nuts and bolts, etc.

o Producer services - assist the business with its daily operations, e.g. insurance, banking and

accounting services.


Identify a brand of your choice. Discuss how advertising has been used to communicate the values that the brand

represents.

Students to identify their own brands, and example:

According to Group Head of Marketing for Multichoice South Africa, Nomsa Chabeli Mazibuko, ―With Gabriel Macht as the new Brand Ambassador for DStv Premium, we are bringing our subscribers closer to

66

the international stars of their favourite series. As a DStv subscriber, you will always know best as we continue to bring you the best curated entertainment, the best of international talent." (http://www.channel24.co.za/TV/News/All-the-deets-on-why-the-star-from-Suits-is-in-SA-20150901)

The DSTV brand is being portrayed as ‗international‘ due to the prominent (good-looking) star. In his suit,

he is also very professional and on his show he is extremely confident and a go-getter. This is a good

brand for viewers to associate with DSTV.


Assess how Apple Inc. has ensured that its products are more successful than those of its competitors. Use the

criteria of ―making a successful product‖ to help you motivate your response.

Students to use:

The business must ensure that the product/service satisfies the needs and wants of the consumer. This

process, however, does not stop once the needs/wants have been met. The business has to continue to

monitor needs/wants in order to change or reinvent the offering if there is a change in consumer taste or

when trends in the market segment changes.

The design of the product not only refers to the quality, consistency, performance and the appearance

of the product, but also to the brand image of the overall business. It is important that the target market

looks at the product design which must create or cultivate a desire by the consumer to own the product.

It is important that the product should be differentiated from the offering of competitors and/or substitute

products. This will help the customer to identify the product amongst other similar products. A product

that is unique will help the business to create and build a competitive advantage.

Cost is an important factor to consider when the product is produced or when the service is rendered,

because not only does the business want to recover costs, it also has to make a profit. Consumers will

expect to pay more for certain products and less for others. It is, however, not only the price of the

product that will influence the decision to buy the offering, but also opportunity cost when the purchase

is made. Opportunity cost refers to the fact that the consumer will have to sacrifice another item if the

product is purchased. A practical example illustrates this: Peter may think that R30 is not too much to

spend on a movie ticket, but considering that he only has R50 in his pocket, he realises if he goes to the

movies, he will only have R20 left. He also wants to buy a computer game from his friend for R35. So

even though he is prepared to pay R30 for a movie ticket, he will then have to sacrifice the computer

game, so he decides not to go to the movies.

This is an interesting article from ―TIME‖ on Apples success -

(For the full article: http://techland.time.com/2012/05/07/six-reasons-why-apple-is-successful/)

6 Reasons Apple Is So Successful

1. For any product that Apple creates, the people who create it have to want it themselves

So many times with projects I do with other tech companies, the goal is almost always based around the

technology first, followed by whether or not people really want to use it. Geeky engineers are dazzled by

the technology at their disposal and often create something because they can. But Apple‘s approach is

quite different. The engineers who are creating Apple products actually make them for themselves. And

Jobs was the chief ―user‖ of Apple products when he was alive. All of Apple‘s products are based on the

fact that Jobs represented the real customer. And his engineers had to come to grips with that when

designing a product. It has to be something that they personally couldn‘t live without.

2. The products have to be easy to use

Jobs was a stickler on this point. While industrial design is a critical component of any product Apple

http://techland.time.com/2012/05/07/six-reasons-why-apple-is-successful/

67

makes, if it is not easy to use, it is considered worthless to the consumer. This is what drove the company‘s

user-interface designs from Day 1 and is still the mantra pushed to the software and hardware engineers

every day they go to work. All of the products they create have to be intuitive and easy to understand and

learn. As technology has become more intricate and users want more features, the task of keeping things

simple is sometimes difficult. And Apple creates tools for power users and rookies, which can mean a

broad range of ease-of-use issues. But even with that, Apple is the only company I deal with where ease of

use is more important than the product itself. Apple makes this a critical goal of its approach to creating

anything for the market.

3. Keep things simple

Apple only has one iPhone model, and anyone who has gone into an Apple store understands that every

staff member there knows a great deal about each of the four major products carried in its stores. Apple

doesn‘t have five iPhone models to choose from; it has only one. While this may seem limiting given the

amount of smart phones available to users, the truth is the reverse. Our company has done consumer

research for over 30 years, and consumers constantly tell us that while choice is nice, in reality they want

the process of choosing a tech product to be simple and not complicated by a plethora of choices.

4. Offer great customer service and in-store experiences

Because it keeps product SKUs simple, the salespeople inside the stores know the products really well.

Notice that when you go into an Apple store and are greeted by one of the sales staff, you‘re not asked,

―How can I help you?‖ Instead they ask, ―What would you like to do today?‖ They go right to the heart of

any technology user‘s question, a question that‘s always related to what they want to do with the

technology the user is interested in. And once you explain your needs, they take care of it on the spot in

most cases. Or if you need more hand holding, they turn you over to the Apple Geniuses. No wonder 50%

of people buying Apple products are new to Apple. Apple‘s products are simple to understand and use, but

if you do have a problem, Apple can take care of it at their stores or over the phone quickly.

5. Apple only makes a product if Apple can do it better

Apple normally doesn‘t invent a new product or product category. Sure, the company did invent the first

commercial PC with the Apple II, and the Mac improved on PCs with a graphical user interface and mouse

input. But since then, all of Apple‘s other products have been recreations of existing products. Apple did not

invent the MP3 player; Apple reinvented it and made it better. Apple did not invent the smart phone; Apple

reinvented it and made it better. And Apple did not invent the tablet; Apple reinvented it and made it better.

As Apple designer Jonathan Ive said recently, ―Our goals are very simple — to design and make better

products. If we can‘t make something that is better, we won‘t do it.‖ Clearly, Apple applied that thinking first

to iPods, then smart phones and more recently, to the iPad.

6. Apple stays at least two years ahead of its competitors

This is the one that scares Apple‘s competitors the most. While those competing with Apple are just getting

products to market that are competitive, Apple is already working on the products at least two years out.

For example, the new iPhone that will most likely go to market in October was designed and signed off on

two years ago. And the iPhone the company is working on now is for the fall of 2014. The same goes for

the iPad. The new iPad that we will most likely see next March was signed off on two years ago. The one

that‘s being worked on now we will probably see in 2015. This is a nightmare for Apple‘s competitors and

will continue to be for some time.

These six principles may seem a bit simplistic given the fact that Apple also has great software, industrial

design and a powerful ecosystem of content, apps and services as part of the company‘s success

equation. However, I can tell you that from my three decades of following Apple, it‘s these six key principles

that are what really makes it successful. And as long as it adheres to them, it‘s pretty likely that Apple will

continue to grow and command a relatively large share of the market in the company‘s product categories

where it competes.

http://www.idownloadblog.com/2012/03/12/jony-ive-explains-products/

68


Choose a product and identify the current point/place of your product in its life cycle. Justify why you believe your

product is at the particular point which you identified.

Students need to choose their own product and justify with the following phases:

Phase 1 - Developing a product:

Businesses are constantly looking at the need to adapt existing products or to develop new products to

stay competitive.

Phase 2 - Introduction

During this phase the product is introduced to or launched onto the market.

At first sales will usually increase slowly, with only the early adopters buying the product.

As the business, however, starts to apply more promotional strategies, sales tend to increase.

During this phase there is usually very little (or no) profit, because the business first has to recover

all the research and development costs.

Phase 3 - Growth

When aggressive promotional strategies start to attract the attention of the customers, sales usually

increase.

The business will try to engage with the customer through frequent interaction to generate loyalty.

The business needs to be aware of how competitors are reacting to the introduction of its product in

order to adapt its promotional and pricing strategies to remain competitive.

At this stage the business usually starts to make a profit, as the development costs are being

recovered.

Phase 4 - Maturity

During the maturity phase sales volumes are either maintained or sales decrease and the business

has to be innovative to retain optimal customer loyalty and ensure repeat purchases.

Phase 5 - Decline/Withdrawal

As trends and technology change in the market place, new products are introduced and this places

pressure on existing products.

The introduction of a new product may lead to customers losing interest in ―out-dated‖ products.

69

During this decline/withdrawal phase, the business will usually put products on sale (reduce the

price) to get rid of the final stock before a new product is introduced.


Identify a product you believe is currently in the decline phase. Suggest strategies that could be used by the business

to extend the life of this product.

Students to identify their own products, however, here is an interesting article on the iPod, which is in the

decline stage…

(For the full article: http://www.bbc.com/news/technology-25927366)

Apple's iPod: is the end nigh? By Dave Lee - Technology reporter, BBC News

…But 12 years, and 26 devices later, the generation-defining iPod range looks like it's about to fade into

history without as much as a whimper.

"I think all of us have known for some time that iPod is a declining business," said Apple boss Tim Cook

earlier this week, speaking during a conference call discussing the company's latest earnings report.

He announced massive profits - as ever - but noted that iPod sales had dipped: 52% down on this time last

year, with further drops expected.

That's not bad, or even surprising, news for the company. The people who would have previously bought

iPods are now more likely to buy iPhones or iPads.

But it's bad news for the humble iPod - a tiny-but-mighty device that many say was the catalyst that

propelled Apple into its boom era of iPhones and iPads.

Possible strategy to extend the life need to be based on these principles:

Variation: The Business could offer the same product in different sizes, colours, flavours, etc. with the

aim of increasing sales.

New markets: The business is looking to create a ―new demand‘ for the product to increase sales. This

can either be done by entering a new geographical market where the product has not been sold before,

or the business could try to appeal to a different market segment.

Development: The business could redesign the product to make it more modern or to improve the

functionality of the product. The aim is to ensure that the product is attractive to customers whose needs

and wants may have changed.

Distribution channels are improved or expanded to make the product accessible to customers or to

get the product to customers in a faster and more effective manner.

Promotion: The business could use different promotional strategies, such as ―buy one get one free‖, to

promote sales.

Price: The business could use different pricing strategies such as discounting to generate greater

demand.

Extending the life cycle of the iPod:

For Apple to bring it out the decline stage it will need music downloading capabilities OR

It can be pre-loaded with children‘s books or a type of encyclopaedia OR

http://www.bbc.com/news/technology-25927366

70


Identify products / services where each of the different pricing strategies is applied. Motivate why you think the

business would have adopted this particular pricing strategy for this particular product / service.

Pricing strategy Product or service using the strategy

Why did they adopt this strategy

Cost-plus pricing A store with home-baked cakes and sweets.

All that is taken onto account is the manufacturing costs and an amount is added as a mark-up. The competitor‘s price is not taken into account.

Price skimming Apple iPhone Because there is excitement when the company launches a new product, everyone wants one and will pay the inflated price.

Penetration pricing Burger King have launched these burger at a very low price to increase their market share, however, with time the price will increase.

Competitive pricing McDonalds is using competitive pricing by responding to the Burger King prices. This is in an effort to stop customers going to Burger king. The R10 difference is justified by an extra patty.

Promotional pricing

This promotion, Edgars is getting rid of certain clothing ranges.

Psychological pricing

All these prices are made to look as cheap as possible, however, if you add R1 it looks substantially more in some instances.

71


Why is it important to ensure products are distributed to the correct place?

It is important to get the product to the consumer (correct place and time) and for this reason it is vital

that the business decides on the correct distribution channel/s.

A distribution channel looks at the different structures (places) the product will pass through to get to the

targeted market segment.

It must be kept in mind that the more intermediaries (middle-men) that are involved in distributing the

product, the higher the cost will be for the end consumer, because each intermediary will add a mark-up

to the product, to cover their costs and ensure a profit.


Critically assess the success of the promotion mix of your favourite brand.

Students to assess their own brands keeping the following in mind:

Promotion is about giving the customer the necessary information about new and existing

products/services offered by the business.

The business will focus the message on the advantages of the product, the price and the place where

the product/service will be sold.

The aim is to formulate the marketing message in a manner that will convince the consumer he/she

cannot do without the product/service and that it is great value for money. If the message is successfully

communicated, it will lead to higher sales, customer loyalty and thus a competitive advantage.

Promotion is an important tool to create and support a particular brand image for the business.

Here is an interesting article to read on the marketing mix of Coca-Cola and the media they use:

http://research-methodology.net/coca-cola-marketing-communications-a-critical-analysis/

Activity 11: 154

Find an article that discusses Facebook as a medium to attract the consumer. Bring your article to class and discuss

what you have read with the rest of the class. Identify the strong points (highlight these).

Assess how a small business in your community could use these strong points to help grow and create a sustainable

business through Facebook.

An interesting article on:

http://research-methodology.net/coca-cola-marketing-communications-a-critical-analysis/

72

How Coca-Cola uses Facebook, Twitter, Pinterest and Google+

https://econsultancy.com/blog/62548-how-coca-cola-uses-facebook-twitter-pinterest-and-google/

Students need to discuss a small business using the following points:

Social Media such as Facebook, Twitter, Blogs and YouTube

Facebook and Twitter are inexpensive ways in which the business is able to interact with the

customer.

The business is also able to create its own Blog where it communicates with the customer in an open

forum. This gives the customer an opportunity to voice any concerns, but also to compliment the

business.

The business is also able to produce short promotional messages for customers to watch on

YouTube.


Compile a presentation (not power-point, be creative with your presentation skills) in which you share the following

information with your class. You may work with a partner to complete this activity.

Identify a brand of your choice, motivate your choice.

Research your brand in full. What does your brand stand for, what are the brand values?

Identify how your brand has positively or negatively affected the social and environmental environments in

which it operates or is marketed.

Assess the CSR strategy of your chosen brand.

Identify how the business could strengthen the CSR strategy of the brand and thus its customer loyalty with the use of

the 7P‘s of marketing,

Students to present their tasks and the teacher can use the following rubric:

0-2 3-5 6-8 9-10 TOTAL

Has an appropriate brand

been identified?


no understanding of

the topic. Many


are missing.

Demonstrates a fair




in the response.

Demonstrates

considerable




Demonstrates

complete





Has the brand been

researched:

What does it stand for?

What are the brand

values?


no understanding of

the topic. Many


are missing.

Demonstrates a fair




in the response.

Demonstrates

considerable




Demonstrates

complete





Positive and negative

impact of the brand


no understanding of

the topic. Many


are missing.

Demonstrates a fair




in the response.

Demonstrates

considerable




Demonstrates

complete





CSR strategy of brand


no understanding of

the topic. Many


are missing.

Demonstrates a fair




in the response.

Demonstrates

considerable




Demonstrates

complete





https://econsultancy.com/blog/62548-how-coca-cola-uses-facebook-twitter-pinterest-and-google/

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Presentation: as the

student used colour,

balance graphics and

words and does the

poster attract your

attention?


no understanding of

the topic. Many


are missing.

Demonstrates a fair




in the response.

Demonstrates

considerable




Demonstrates

complete





TOTAL: (50 MARKS)


Discuss the impact, both positive and negative, that trade regulations and restrictions had on the fruit and vegetable

industry in South Africa over the past five years. You might have to do a little research to support your arguments.

These are some facts off SARS website:

The main difference between prohibitions and restrictions is that -

prohibited goods are never allowed to enter or exit South Africa under any circumstances

Restricted goods are allowed to enter or exit South Africa only in certain circumstances or under

certain conditions, for example on production of a permit, certificate or letter of authority from the

relevant government department, institution or body.

Restricted goods:

Food, plants, animals and biological goods: All plants and plant products, such as seeds, flowers, fruit,

honey, margarine and vegetable oils. All animals, birds, poultry and products thereof, for example, dairy

products, butter and eggs.

Some additional articles:

SA gets tough on fruit imports - http://www.sanews.gov.za/south-africa/sa-gets-tough-fruit-imports

TRENDS IN SOUTH AFRICA VEGETABLE IMPORTS - http://www.pma.com/~/media/pma-files/fc-south-africa-

2014/marianna-theyse.pdf?la=en

South Africa: Fresh Produce - Imports and Exports - http://www.pma.com/~/media/pma-files/research-and-

development/south-africa.pdf?la=en


The Proudly South African Brand was created as a vehicle to promote goods and services which are produced locally.

Identify a product which is Proudly South African.

Assess the success of the product. Motivate your response by looking at the value the Proudly South African

brand has added to your product.

Students can identify any brands, some examples of brands include:

http://www.sanews.gov.za/south-africa/sa-gets-tough-fruit-imports

http://www.pma.com/~/media/pma-files/fc-south-africa-2014/marianna-theyse.pdf?la=en

http://www.pma.com/~/media/pma-files/fc-south-africa-2014/marianna-theyse.pdf?la=en

http://www.pma.com/~/media/pma-files/research-and-development/south-africa.pdf?la=en

http://www.pma.com/~/media/pma-files/research-and-development/south-africa.pdf?la=en

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(http://www.mediaclubsouthafrica.com/images/stories/september2015/Brands_infographic_big.jpg)

75


1 Does the market of a business need to be in one place? Motivate your answer.

A market is any place where goods and services are bought and sold (exchanged for money).

Goods are bought by the target market, i.e. that portion of the population that feels the product or service

will satisfy a need.

In modern times, the market could exist electronically (e.g. via the internet) or as the conventional face-

to-face interaction.

2 What is the difference between market orientated and product orientated?

A Product-Orientated approach to Marketing:

When a Product-orientated approach is followed, the business concentrates on the skills,

knowledge and systems needed to produce a specific product.

When research is conducted, the focus is on the product and the characteristics of the product.

A Market-Orientated approach to Marketing:

A market-orientated approach demands that the business focusses on satisfying the needs and

wants of the customers.

The emphasis is on market research on an on-going basis to ensure changes in consumer needs

and wants are timeously identified.

3 Explain three different factors that could affect the length and shape of a product life cycle?

Any three of the following:












promote sales.


demand.

4 What is meant by the term ―demand‖?

Demand is a buyer's willingness and ability to pay a price for a specific quantity of a good or

service. Demand refers to how much (quantity) of a product or service is desired by buyers at various

prices.

5 Explain, using of examples, how ―product‖ as part of the marketing mix is able to influence the demand of a

product or service.

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The product/service is seen as the most essential element of the marketing mix, because without a

product/service, a business cannot function. For this reason the product/service is the main focus of the

marketing mix; all other marketing mix elements as a result, are directed towards ensuring that the

product/service is successful.

Just a quick reminder about a discussion earlier in the chapter:

o Some businesses are product orientated. This type of business will develop a product and then look

for a market for the product.

o Other businesses are market orientated. These businesses invest large amounts of time and money

trying to understand the behaviour of consumers and how best they would be able to meet the

needs/wants of these consumers. A product/service is then developed to satisfy these needs/wants.

It is important that the business monitors the life cycle of the product/service in order to the

product/service offering new and relevant to the consumer.

6 Assess the importance of a clear promotional strategy as part of the business‘s overall marketing strategy.

Promotion is about giving the customer the necessary information about new and existing

products/services offered by the business.

The business will focus the message on the advantages of the product, the price and the place where

the product/service will be sold.

The aim is to formulate the marketing message in a manner that will convince the consumer he/she

cannot do without the product/service and that it is great value for money. If the message is successfully

communicated, it will lead to higher sales, customer loyalty and thus a competitive advantage.

Promotion is an important tool to create and support a particular brand image for the business.

7 Examine how a ―brand‖ Like Pick n Pay could lead to the competitive advantage of the business.

Their trademark could assist in creating a competitive advantage because:

o A Trademark is any symbol and/or word(s) that are legally registered to be used by the business on its

product and service.

o The trademark is ―the face of the business‖.

o A Trademark helps customers to distinguish one business‘s products and services from that of

competitors and this may help the business to get a competitive advantage in the market. This is

especially true if a new product is added to a range using an established trademark that is already

known for its good quality.

8 Pick n Pay is always looking to expand into new markets; assess how Pick n Pay could use different prices

strategies in order to capture the attention of a new market and develop a sustainable customer base.

Because of their wide range of products and the wide LSM group of 4-10, Pick n Pay can use the pricing

strategies to their advantage.

Pricing strategy Product or service using the strategy

Why did they adopt this strategy

Cost-plus pricing Pick n Pay bakery

All that is taken onto account is the manufacturing costs and an amount is added as a mark-up. The competitor‘s price is not taken into account.

Price skimming There sale of DSTV explorers

Because there is excitement when the company launches a new product, everyone wants one and will pay the inflated price.

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Penetration pricing A new brand of toilet paper

They introduce the unknown brand of toilet paper at a low affordable price, then it slowly gets more expensive as customers become hooked on the brand.

Competitive pricing Cleaning materials Look at the brand leaders with cleaning materials. The advertised prices take into account at what competitors are selling it for. Eg: Checkers and Shoprite.

Promotional pricing Brand match

Pick n Pay are ensuring that customers receive discount prices and promotions throughout their shopping experience.

Psychological pricing

All these prices are made to look as cheap as possible, however, if you add R1 it looks substantially more in some instances.

9 Briefly explain to the management of Pick n Pay, the need to do market research before attempting to enter a

new market environment.

Market research and development: Marketing starts with doing market research in order to understand

the behaviour patterns of the consumer and the way in which the consumer expects the product/service to

be delivered. This could involve testing the product/service in the market, collecting feedback from the

customer to improve on the product/service or further develop the product/service. The research process

helps the business to understand the expectations of consumers in terms of:

o the product/service and the demands in terms of the packaging

o the price people are prepared to pay

o where the target market wants to have access to the product/service (place) and

o preferential channels of communications to receive information about the product/service

offering

10 Help the management of Pick n Pay by examining different ways in which they could create value not only for

their product but for the brand as a whole. Adding value to the brand should create a competitive advantage for

Pick n Pay in the retail sector.

The business must ensure that the product/service satisfies the needs and wants of the consumer. This

process, however, does not stop once the needs/wants have been met. The business has to continue to

monitor needs/wants in order to change or reinvent the offering if there is a change in consumer taste or

when trends in the market segment changes.

The design of the product not only refers to the quality, consistency, performance and the appearance

of the product, but also to the brand image of the overall business. It is important that the target market

looks at the product design which must create or cultivate a desire by the consumer to own the product.

It is important that the product should be differentiated from the offering of competitors and/or substitute

products. This will help the customer to identify the product amongst other similar products. A product

that is unique will help the business to create and build a competitive advantage.

Cost is an important factor to consider when the product is produced or when the service is rendered,

because not only does the business want to recover costs, it also has to make a profit. Consumers will

expect to pay more for certain products and less for others. It is, however, not only the price of the

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product that will influence the decision to buy the offering, but also opportunity cost when the purchase

is made. Opportunity cost refers to the fact that the consumer will have to sacrifice another item if the

product is purchased. A practical example illustrates this: Peter may think that R30 is not too much to

spend on a movie ticket, but considering that he only has R50 in his pocket, he realises if he goes to the

movies, he will only have R20 left. He also wants to buy a computer game from his friend for R35. So

even though he is prepared to pay R30 for a movie ticket, he will then have to sacrifice the computer

game, so he decides not to go to the movies.

11 Pick n Pay has over the last few years developed its own product range. Assess how this could lead to a

competitive advantage for Pick n Pay. It is also important that you discuss how Pick n Pay could reintroduce

products as they reach a decline phase within the product life cycle.

Pick n Pay have different brands of their own:

House brand: ―The PnP range offers you quality products at lower prices than you'd expect. For almost

everything on your list there's a great value PnP product to try. So look out for our colourful PnP branded

products on shelf.‖

No name: ―Keep within your budget with PnP no name™ products. All of your household essentials and

everyday basics are priced just right, with no frills. Look for our blue and white products on the shelf.‖

Finest: ―The experience of PnP Finest is a journey to be relished. We have taken flavour influences from all

around the world, and blended combinations from the world‘s richest traditions, so we can bring the best of

fine dining flavour home for our customers. The premium ingredients for our PnP Finest products are very

carefully selected at only the most authentic sources, such as Kalamata olives from the Greek

Peloponnese, organic coffee from Antigua, fine Belgian chocolate and real South African Rooibos. So you

can be sure that every item in the range is incredibly special, and extremely superior in every aspect.‖

Organic: ―This all means that when you buy PnP Organic, you know it is good for you and your

environment. The range is constantly evolving and expanding to offer you more to choose from. Look for

them by name.‖

All the above brands cater for a totally different market segment, as well as LSM.

When a product is reaching the end of its life cycle, Pick n Pay can utilise the following to extend it:












promote sales.


demand.

12 The four marketing policy instruments that Pick n Pay makes use of in its marketing department.

A Product, price, place, promotion

B Product, price, distribution, communication

C Product, price, publicity, advertising

D Advertising, personal selling, sales promotion, publicity

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