Chapter 1.
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Questions and Answers

What is one way to obtain money in the business world?

  • Start own business (correct)
  • Find employment (correct)
  • Win a lottery
  • Borrow money from friends

    • What is the primary aim of the private sector?

  • Plan for economic growth
  • Provide collective goods
  • Pay taxes
  • Satisfy wants and needs to generate profit (correct)

    • The informal sector contributes directly to GDP.

    False

    What is the extraction phase of the economic sector referred to as?

    <p>Primary</p> Signup and view all the answers

    What must businesses achieve to improve profitability?

    <p>Maximize output with minimum input</p> Signup and view all the answers

    The two primary objectives of a business are __________ and growth.

    <p>profitability</p> Signup and view all the answers

    Which sector is responsible for the distribution of final goods and services?

    <p>Tertiary Sector</p> Signup and view all the answers

    What is a characteristic of a successful business?

    <p>Strong leadership</p> Signup and view all the answers

    A business should disregard its social responsibility.

    <p>False</p> Signup and view all the answers

    What are the four functions of management as outlined in the document?

    <p>Planning, Organizing, Leading, Controlling</p> Signup and view all the answers

    What does POLC stand for in management tasks?

    <p>Planning, Organizing, Leading, Controlling</p> Signup and view all the answers

    What are the benefits of a positive business culture?

    <p>Increased teamwork</p> Signup and view all the answers

    What is synergy in a business context?

    <p>The interaction or cooperation of two or more organizations or agents to produce a combined effect that is greater than the sum of their separate effects.</p> Signup and view all the answers

    Which of the following are examples of organisational structures?

    <p>Matrix structure</p> Signup and view all the answers

    What are the four factors of production?

    <p>Land, Labour, Capital, Entrepreneurship</p> Signup and view all the answers

    What does the term 'fixed capital' refer to?

    <p>Long-term assets like land and vehicles</p> Signup and view all the answers

    Working capital refers to long-term investments in a business.

    <p>False</p> Signup and view all the answers

    Which of the following are key elements in a market environment?

    <p>Competitors</p> Signup and view all the answers

    What is the aim of conducting market research?

    <p>To determine demand for goods/services.</p> Signup and view all the answers

    A business must assess external elements that impact the business, including ______ and competitors.

    <p>suppliers</p> Signup and view all the answers

    Which of the following is a key characteristic of a dynamic environment? (Select all that apply)

    <p>Experiences constant change</p> Signup and view all the answers

    An Intrapreneur is an employee who is tasked with developing an idea or project within a company.

    <p>True</p> Signup and view all the answers

    What is a contingency plan?

    <p>A plan that outlines alternative courses of action to take if initial plans fail.</p> Signup and view all the answers

    Factors that could limit the success of a business if not dealt with are called ______.

    <p>weaknesses</p> Signup and view all the answers

    Which of the following are considered strengths in a SWOT analysis? (Select all that apply)

    <p>Brand</p> Signup and view all the answers

    Opportunities in a SWOT analysis refer to internal capabilities.

    <p>False</p> Signup and view all the answers

    Unfavorable external factors such as competitors are referred to as ______.

    <p>threats</p> Signup and view all the answers

    Study Notes

    Survival

    • Entrepreneurs may choose to find an existing job or start their own venture to earn income.
    • Both public and private sectors offer options for employment.

    Public Sector

    • Governments are responsible for providing public services and collective goods using funds collected from taxes.
    • Examples of public goods and services include infrastructure, police, education, and healthcare.

    Private Sector

    • Privately-owned businesses aim to generate profit by fulfilling the wants and needs of consumers.
    • Entrepreneurs can fund a business through personal savings or borrowed capital.
    • Intense competition exists between private businesses.

    Formal Sector

    • Formal businesses are registered with the government, pay taxes, and contribute to the Gross Domestic Product (GDP).
    • Formal sector businesses contribute significantly to economic growth.

    Informal Sector

    • Informal businesses operate outside legal regulations; they don't pay taxes or contribute to GDP.
    • Examples include vendors selling goods at traffic lights.
    • Informal businesses can indirectly affect GDP by purchasing materials from formal businesses.

    Economic Sectors

    • The primary sector extracts raw materials such as mining and fishing.
    • The secondary sector manufactures goods in factories.
    • The tertiary sector focuses on the distribution of finished goods and services.
    • The quaternary sector involves intellectual activities like research.
    • The quinary sector encompasses decision-making roles at the highest level of society.

    Productivity and Efficiency

    • Productivity aims to maximize output using minimal input.
    • Efficiency involves satisfying customer needs and wants at the right time, place, and price.
    • Constant planning and resource allocation are crucial to enhance profitability and improve both productivity and efficiency.

    Creating a Competitive Advantage

    • Dominating a specific market can boost profitability.
    • Methods to achieve a competitive advantage include:
    • Offering superior quality, price, technology, service levels, efficient resource utilization, and strategic location.

    Business Objectives

    • Survival: Businesses must adapt to market opportunities and threats while formulating short and long-term plans.
    • A clear vision guides strategic decisions for a business.
    • Profitability and Growth: Long-term profit generation is a key objective.
    • Resource allocation management is crucial for improving profitability.
    • A viable business idea has the potential for strong returns on investment.
    • Profit maximization, expansion of assets, employee development, and overall business growth are crucial.

    Characteristics of a Successful Business

    • Strong Leadership: Provides direction and inspires employees to achieve goals.
    • Competitive Advantage: Secures a loyal customer base in the target market.
    • Target Market: Identifying the segment of the market most likely to purchase the goods or services.
    • Meeting Needs/Wants: Providing goods and services to satisfy the needs and wants of the target market.
    • Resource Utilization: Sustainable use of resources including raw materials, financial capital, labor, and entrepreneurial skills.
    • Corporate Citizenship:
    • Responsible & Accountable: Sharing profits with owners and stakeholders.
    • Employee Development: Investing in employee growth through training and opportunities.
    • Community Uplift: Contributing to local communities.
    • Tax Obligations: Fulfillment of tax obligations.

    Social Responsibility

    • Fosters positive relationships between businesses and society.
    • Demonstrates good corporate citizenship through ethical and sustainable practices.

    Business Environment

    • Internal Environment: Factors within the direct control of the business, such as internal functions, resources, policies, culture, and structure.
    • External Environment:
    • Market Environment: Factors outside the business but directly related to its industry, with limited control over external influences.
    • Macro Environment: External factors impacting the entire economy beyond the business's direct control, including economic, political, social, technological, environmental legal, and demographic conditions.

    ###Micro Environment

    encompasses the factors the business has control over, such as its internal functions, resources, policies, culture, and structure.

    Employee Development

    • Employees are considered valuable assets for businesses.
    • Confident and motivated employees contribute to higher productivity.
    • Positive and functional relationships between employees lead to increased productivity, while dysfunctional relationships hinder performance.
    • Employees should be encouraged to embrace diverse perspectives, communicate constructively, and manage their time effectively.

    Technological Development

    • Businesses can leverage technology to differentiate themselves from competitors.
    • Adopting the latest technologies allows businesses to reach consumers through quick and user-friendly methods, including online shopping services.

    Management Tasks (POLC)

    • Planning: Anticipating future events to address potential issues and having contingency plans, also known as Plan B.
    • Organizing: Combines resources for production activities to achieve business objectives.
    • Leading: Explaining tasks and assisting employees to understand their roles.
    • Controlling: Monitoring performance through metrics, comparing it to standards, and taking corrective actions.

    Business Culture

    • Shared beliefs and values within a business.
    • Shapes the behavior of employees and stakeholders.
    • A positive business culture fosters teamwork and synergy.
    • Synergy: Combined effort of multiple entities producing a greater effect than individual efforts.

    Organisational Culture

    • Defines the structure of a business to facilitate understanding of roles by internal stakeholders
    • Types of organizational structures
      • Line and Staff Structure
      • Matrix Structure
      • Project Structure

    Jobbing/Inventory

    • Production of custom work tailored to specific customer needs.
    • Examples include:
      • Artist drawing a portrait
      • Architect designing a custom home plan
    • Products must meet specific criteria for quality and differentiation:
      • Safe
      • Reliable
      • Durable
      • After-sales service

    Marketing

    • Market research is crucial to determine the demand for goods and services.
    • Marketing techniques include:
      • Advertising
      • Sales promotions
      • Personal sales
      • Customer feedback

    Financial (Micro environment)

    • Types of capital:
      • Fixed Capital (long-term): land, buildings, vehicles
      • Working Capital (short-term): trading inventory, payments to creditors, salaries, wages, utilities
    • Sources of capital:
      • Own capital: Business owner's investment
      • Borrowed capital: Loans obtained with interest to be repaid.

    Public Relations

    • Aims to:
      • Establish a strong brand image for the business.
      • Ensure the business contributes to society ethically and sustainably.
    • Fosters improved relationships between internal and external stakeholders.

    Business Policy (micro)

    • Established with the business vision, mission, goals, and objectives in mind.
    • Provides direction for various business functions.
    • Originates from top management.
    • Ensures consistency in various policies to avoid confusion.
    • Regularly revised to maintain relevance due to internal and external changes.
    • Implemented and monitored for effectiveness.

    Internal Resources = 4 factors of production

    • Land = Rent
    • Labour = Salaries & Wages
    • Capital = Interest
    • Entrepreneurship = Profit

    Instrument for Business Management

    • Covers aspects of running and managing a business, including:
      • Financial management
      • Administration
      • Human resources

    Financial Planning

    • Determining capital needs for the business:
      • Start-up costs (machines, raw materials)
      • Running costs (salaries, rent, etc.)
    • Developing budgets and planning tools to prevent overspending.

    Administration

    • Collecting and processing data into meaningful and accurate information.
    • Ensuring information is presented in an easy-to-understand format.

    Human Resources (HR)

    • Responsible for managing all aspects of the business's labor force.
    • Determining worker needs:
      • Number of workers required
      • Specific skills needed
    • Recruiting and training employees to meet specific needs.
    • Assessing employee qualifications:
      • Knowledge
      • Skills
      • Experience
    • Ensuring compliance with labor legislation, including:
      • Labour Relations Act
      • Basic Conditions of Employment Act
      • Broad-Based Black Economic Empowerment Act
      • Skills development Act

    Market Environment

    • Includes all external elements beyond a business' control that can influence its operations.
    • Businesses must:
      • Assess the impact of external elements.
      • Develop strategies to manage these elements proactively.

    Elements of the Market Environment

    • Suppliers
    • Consumers
    • Competitors
    • Strategic alliances
    • Intermediaries
    • Non-governmental organizations (NGOs)
    • Industry regulators

    Suppliers

    • Businesses rely on suppliers for raw materials.
    • Suppliers must provide materials of the right quality, quantity, and price, delivered on time and at the right location.
    • A strong relationship between businesses and suppliers is crucial.
    • Suppliers have some power over businesses.
    • Supplier price increases can lead to business price increases.
    • Delays in supplier deliveries negatively impact business operations.

    Consumers

    • Individuals who purchase and/or use products or services provided by businesses.
    • The buyer is not always the consumer (e.g., a mother purchasing a toy for her child).
    • Businesses track consumer trends to stay relevant and meet dynamic demands.
    • Consumer buying power:
      • If consumers perceive prices as too high, businesses may need to adjust prices to avoid losing customers.

    Competitors

    • Businesses selling similar or substitute products in the same target market.
    • Example: KFC vs. Chicken Licken

    Dynamic Environments

    • Businesses operate in environments that are consistently changing.
    • Businesses must adapt to these changes through flexible strategies and contingency plans (Plan B).
    • Understanding competitor activities and developing innovative strategies is crucial for success.
    • Intrapreneurs, employees who develop ideas or projects within a company, can be valuable in fostering innovation.

    SWOT Analysis

    • A SWOT analysis examines a company's internal strengths and weaknesses, as well as external opportunities and threats.

    Strengths

    • Strengths are internal capabilities that give a business a competitive edge.
    • Examples include strong branding, intellectual property, and a skilled workforce.

    Weaknesses

    • Weaknesses are internal factors that could hinder business success if not addressed.
    • Examples include poor marketing, inadequate resources, and a lack of skilled employees.

    Opportunities

    • Opportunities are favorable external factors that a business can leverage.
    • Businesses can use a mix of resources to increase demand for their products and services, and enhance customer loyalty.

    Threats

    • Threats are unfavorable external factors that can negatively impact a business.
    • Competitors pose a significant threat as they can erode market share and profitability.

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    Explore the dynamics between public, private, formal, and informal sectors in the context of employment.

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