Grade 12 Business Studies Revision Pack Summary PDF

Grade 12 Business Studies – Revision pack (summary/notes) 1  CHAPTER 1- Teamwork and Conflict Management Types of conflict: Functional conflict – non-aggressive stimulate creativity use to brainstorm to come up with a better solution Dysfunction...

Grade 12 Business Studies – Revision pack (summary/notes) 1  CHAPTER 1- Teamwork and Conflict Management Types of conflict: Functional conflict – non-aggressive stimulate creativity use to brainstorm to come up with a better solution Dysfunctional conflict - aggressive conflict people refuse to work together and the task is compromised Reasons for conflict due to workload ROLE OVERLOAD Occurs when one member (often willingly) takes on more work than they can cope with ROLE CONFLICT When more than one member wants a certain role often the leader role ROLE AMBIGUITY Occurs due to lack of clarity between roles that members play Advantages of conflict Disadvantages of conflict ü Creates an awareness of the û If not manages could lower staff problem morale ü Stimulates creative thinking û Could lead to inappropriate behaviour ü May help understand the problem better ü May lead to collaboration where the focus is on working together and not on the problem ü May motivate people to give input where thy previously felt apathetic TOOLS TO USE IN MANAGING CONFLICT 1. STIMULATING FUNCTIONAL CONFLICT / DEVIL’S ADVOCATE helps prevent a group think a person purposefully criticises a proposed plan in order to stimulate creative thinking 2. NEGOTIATION two people trying to talk through a problem to get to agreement 3. SMOOTHING Temporary method differences are ignored and focus is placed on what people have in common this may actually make to conflict worse over time. 4. FORCING A person in a position of power forces a solution to the conflict on subordinates this is done in an autocratic environment and can lead to resentment 5. AVOIDANCE Pretend the conflict is not happening or have the attitude that it is not worth the effort to argue Sending someone else to sort out the problem for you This often makes the conflict bigger 6. COMPROMISE Democratic style of handling conflict where both parties have equal power Situation of give and take Usually ends up with one person always giving into the other and this leads to resentment 2 Other reasons for conflict: Change Lack of communication Inclusivity and cultural diversity Resource allocation Personalities and emotions Values and ethics Inner conflict How to resolve inner conflict: 1. Identify the inner conflict 2. Refer person to the correct department 3. The extent of the intervention depends on the intensity of the problem. Skills a manager should have to deal with conflict: Ability to deal with change Tolerance regarding inclusivity and cultural diversity Communication skills Ability to act and think strategically Emotional intelligence to deal with different personalities and emotions Open communication and training to help overcome misunderstandings Conflict resolution steps: Negotiation -two parties sit down and try to come up to a compromise by themselves Conciliation – third person gets involved but only to facilitate the conflict Mediation – third person gives advice Arbitration – third person makes the final judgement THIRD PARTY INTERVENTIONS Conciliation: 3rd party facilitates so that both parties get their say Mediation: 3rd party gives advice and suggestions Arbitration: decision is take away from conflicting parties and 3rd party makes the decision. con-arb process: speedy one stop process of conciliation and arbitration that takes place in one day compulsory in: dismissals under probation unfair labour practice under probation CCMA :Commission of Conciliation Mediation and Arbitration Any labour dispute can be settled by the CCMA its main function is to prevent strikes. WPF: Work place forums a group of workers that are elected to represent the workers on issues with management. e.g., merit increases, restructuring, training issues Employer Organisation: provide the employer with experts on industrial relations when required. assist with ;contracts, discipline and grievances, dispute resolution, employment equity plans Trade unions: handle and reduce conflict between employer and employee allows for collective bargaining. 3  CHAPTER 2: Professionalism and Ethics Questions a manager would have to think about when decision making: 1. What is the law and do I agree with it? 2. What about choices regarding economic and social issues not covered explicitly by legislation or where the legislation is enforced? 3. Issue of self interest vs interest of the business? Code of Ethics versus code of conduct: Code of Ethics Code of Conduct Umbrella concept defining morals, principles and A more specific concept outlines values under which an organisation operates. behaviour for proper business practice.. Code of Ethical conduct: Ethics and values are difficult to prescribe, differ from cultures and people. Code of ethics explains values, ethics & beliefs of organisations policies, lays down standards of acceptable behaviour. Code gives consumer a sense of protection & confidence. Code of conduct includes professionalism, social justice, human rights etc. Ethical issues in the business world: 1. Employee conflict of interest – can occur if the employee faces a moral conflict which is when their personal beliefs clash with the ethical values of a business. OR a person is in a position to derive personal benefit from actions or decisions made in their official capacity. 2. Inappropriate gifts - given to a potential decision-maker with the intention of swinging his/her decision, commonly known as corruption. These gifts may also be linked to sexual harassment. 3. Sexual harassment - Unwelcomed and uninvited sexual advances, both physical or verbal; normally from an authority figure to a subordinate. 4. Unauthorised use of funds - includes fraudulent invoices or payment requisitions, forged signatures, unauthorized electronic payments, skimming accounts. 5. Stealing from the company – unsolicited taking or use of business items or funds 6. Firing an employee for whistle bowling – firing an employing for reporting unethical behaviour. 7. Insider trading- The illegal practice of buying and selling shares on the stock exchange with the advantage of having “insider” access to confidential information. 8. Piracy- The unauthorised and illegal duplication of products protected by patents or copyrights 9. Counterfeiting- the act of copying or imitating and trying to pass it off as the original. 10. Bootlegging – the illegal distribution of a product at a fraction of the genuine items price 11. Divulging confidential information or trade secrets 12. Terminating employment without following proper procedure 13. Unethical advertising 4 Ethical Theories: Consequence-based theories – (Look at the results) The consequence of the action determines whether it is right or wrong. E.g Robin Hood Principal-based theories – (Predetermined rules) One’s values will determine what is right or wrong. Strong personal and moral boundaries. Narrative-based theories – (Stories) Different stories are used to lead to an understanding of right and wrong. Utilitarian theory: What is right is that which is right for the greatest number of people. Virtue-based theory: A character of a person is judged rather than his actions. Why should business have business ethics? Employees are more productive and creative if they find their work meaningful and if they are able to maintain a healthy balance between a professional and personal life. Enable conditions are created when the business does more than merely stay within the law, which is not always enough. In the context of deregulation (removing restricting laws), businesses need to demonstrate that they can act as responsible citizens without being forced to do so. Increased globalisation leads to businesses operating across national boundaries. Levels of Business Ethics: 1 Individual Cheat on expense account, accept a bribe, plagiarism 2 Organisational Ask employee to perform unethical act, pressure groups to overlook wrong- doings. 3 Professional Accountant advising client to lie about taxes, Doc giving medication regardless of harmful side-effects. 4 Societal Laws, norms, customs differ between society, sport on religious holidays, bribes. 5 International Int. companies involved in violation of human rights (sweat shops), Economic sanctions imposed on a country. Eg Businesses in the Government acts in the best interest of society. private sector are Government are humans therefore errors can creep in. expected to act ethically Government are trying to implement strict anti-corruption policies. according to industry Code of conduct aims at assisting gov officials when they are unsure. standards. “Disclosure” – distance yourself from process when decisions are made. 5  CHAPTER 3: CSR and Corporate Governance Difference between Corporate Social Responsibility (CSR) and Corporate Social Investment (CSI). CSR – managements obligation to protect and promote the welfare of all stakeholders. CSI – the actual resources that are invested in these stakeholders. Implications of CSR for BUSINESSES Positive Negative Can serve as a marketing strategy and The community that is being supported promote the image of the business may not actually be able to support the Can create a competitive advantage – business good publicity and improved reputation Smaller enterprises find it difficult to May attract experienced employees and implement CSI programmes help retain staff CSR can distract businesses from their May help to attract investors as core business functions investors are conscious on the Company loses out on profits as money importance of CSR is spent on CSR Government will enforce the issue It is difficult to accurately measure the through legislation if it is not effectiveness of social investment implemented voluntarily It is difficult to determine the exact Tax rebates needs of the communities Higher rating on the JSE SRI Managers may not be trained and lack experience to handle social programmes. ` Implications of CSR for the COMMUNITY Positive Negative Supports the business by purchasing its Distribution of scarce CSR resources products. may result in discrimination- who is Standard of living may increase worthy of getting these resources? Improves the welfare of society The benefits of the programme may not The quality of life of communities is filter to the intended persons within the improved community Involves employees in community Programmes may not satisfy all the projects needs of the community Better educational facilities are Creates dependency established in poor communities Sustaining projects is difficult Spending money on CSR means the business has to recover it somehow, which will lead to higher prices and inflation – affects the community. Factors that have contributed to the need for CSR in South Africa: Inequalities of the past have resulted in a large number of illiterate adults Cycle or poverty A large portion of the population is still living in third world circumstances Crippling effects of the HIV/AIDS epidemic 6  South Africa’s limited water supplies Technological advancements have left many unemployed Many business have had to close down and many people have lost their jobs as a result of Covid-19 and the associated lockdowns. Poverty This is the state of having little or no money and few or no material possessions. Extreme poverty – living under R25 per person per day. Battle to cope with daily life. Moderate or subsistence poverty- have some sort of meagre income but they face chronic financial hardship and lack many of the basic necessities of healthy living. Triple Bottom line reporting Profit should no longer be the only thing that businesses focus on. They should focus on the following: 1. Profits (economic prosperity) 2. Planet (environmental sustainability) 3. People (Social responsibility) Global reporting initiative An independent institution that have made it their mission to develop an acceptable guideline on sustainable reporting focusing on Economic, environmental and social activities of the business. The GRI is the most widely used sustainability-reporting model. KING CODE A code of guidelines /principles intended to emphasise good business practice. Need for the code Examines the company’s commitment to: How company has both positively and negatively affected the community. How the company is intending to sustain positive aspects and eliminate negative aspects A governance framework Set out as a code of principles and practices RSA has adopted a apply or explain approach It is the duty of the stakeholders to act in good faith toward decisions and actions. The JSE has made it compulsory for all listed companies to comply with the king code. Link between king code principles and the law. Good governance is not separate from the law All stakeholders need to comply legally with the way they do business It is important that structures and procedures are put in place with appropriate checkpoints to ensure and enable key stakeholders to act with legal responsibility. ü Duty to act with care, skill and diligence. ü Fiduciary duty – acting in good faith and honesty 7 Primary characteristics of good governance TRANSPARENCY: acting in a visible manner that will hold up to public scrutiny INDEPENDENCE: avoidance of any influence that will affect our decisions ACCOUNTABILITY; to take account with full details of an event FAIRNESS: treating with equality with no bias towards a particular group. INTEGRITY: how accountable are you for those affected by your actions / are you doing business in an honest and truthful way DISCIPLINE ü Self-discipline: personal level of integrity ü Market discipline: two main factors =willingness to invest in a company and sanctions for bad behaviour. ü Regulatory discipline: penalties for those who don’t do the right thing there to reinforce self-discipline and promote high levels of integrity. Promoting ethical and responsible business decisions: To make ethical and responsible decisions a company should not only comply to all legal obligation but should consider the reasonable expectations of all their stakeholders in the community in which they operate. Companies should look at: Clarifying the standards of ethical behaviour suitable for a board of directors and all other key stakeholders and to encourage conforming to these standards Complying with all legal requirements Have reasonable expectations of their stakeholders. Duties and responsibilities of directors: ü Act with skill and care when formulating policies ü Act in good faith and honesty (fiduciary duty) ü May not abuse power given to them, but have to use the power to enhance the interest of the business and never themselves ü Pre-empt risks ü Ethical leadership ü Set up audit committees ü Directors must disclose relevant information in integrated reporting SUSTAINABILITY as part of the King Code Set up structures to enable the community to start becoming self-sufficient. Teaching skills so the community can continue to run it themselves in the long term. The social sustainability pillar Fair treatment of society. Strives for Fair income distribution; access to income and education; distribution of costs and benefits; Accesses to prices; Chance for all generations. The environmental sustainability pillar Business activities that are concerned with the degradation of the environment. E.g. carbon footprints, soil depletion, air & water pollution etc.. 8 4PS of sustainable design: PRODUCT: finding less harmful ways to produce PROCESSES: assessing the value chain analysis PRACTICE: company practices of daily activities. eg waste disposal energy usage. PREMISES: way in which the building is designed. The economic sustainability pillar measures both growth and development. Growth = physical development in size Development = improvement or the unfolding of potential that could lead to success JSE – SOCIAL RESPONSIBILITY INDEX (SRI) Done to recognise the contributions of companies to social and economic reform. It supports the KING II report. Evaluates companies in terms of transparency, fairness and accountability plus economic, environmental and social sustainability. These principles must be implemented and managed. Key objectives of JSE SRI Identify companies that are listed that subscribe to triple bottom line reporting and conduct business with good corporate governance A sound tool to assess social responsibility To contribute to the development and growth of sound business practice in South Africa Benefits of good corporate governance ü Maintains investor confidence ü Minimizes wastage, corruption and risks. ü Helps with brand formulation ü Provides incentives to all stakeholders to achieve objectives ü Lowers capital acquisition costs ü Positive in pact on share price and SRI rating. ü Ensure corporate success and economic growth. 9  CHAPTER 4 : Creative thinking and Problem Solving Creativity Problem solving “Showing imagination and originality as well as routine skill” “Problems are challenges that are not yet “Thinking outside the box” conquered” Predictable problems – can be anticipated (growth Skills and techniques can be learnt to enhance creativity in a business) Creativity is a crucial skill in modern day business to: Unexpected problems – can’t be anticipated like a Cope with fast growing technological changes. natural disaster. To stay ahead in an increasingly competitive society. Value chain analysis Organisation is seen as a series of activities where inputs need to be converted into outputs which supply value to consumers. Ø Divide business into different activities Ø Describe each process starting with inputs and ending with after sales service. Ø Identify critical areas that are needed for a competitive advantage, then decide if these can be handled internally or outsourced. (See diagram in textbook) Pros and Cons Chart Weighing up your options using detailed information. Using Pros and Cons to prioritise your options before making a decision. You can allocate a ranking system rating most important to least and then tallying it up, however, you still need to look at it logically and make a final decision. S.W.O.T 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. Delphi Technique Participants do not have to be physically present in the same room. It is useful to use professionals from all over the world. A panel or single expert makes a forecast based on their superior knowledge. It can be interviews or questionnaires. The identity of the experts are normally kept anonymous. Decision Tree A complex decision making tool. Graphically compares different options when making decisions. Promotes rational decision making and clarify options. Each option is quantified so each decision can be calculated and valued to show the probability of success. P²E²STLE Analysis Identifies and analyses the challenges affecting the macro environment, which the business has no control over. 10  CHAPTER 5: Environments Micro environment is internal, while Market and Macro are external. General factors within the environments: Environmental scanning Environmental scanning is a 360° process which needs to be done internally and externally. Environmental scanning has the following benefits: Identifies threats before they are imminent Identifies possible opportunities and gaps in the market Keeps a finger on the pulse of the competitors Allows the entrepreneur to make both short and long-term strategies in order to protect their business. Scanning before starting a business Continuous environmental scanning Assists in looking at the following: This is done on an on-going basis using Viability of the product or service different tools: Strength of the competitors Micro – SWOT and Value Chain Size of the potential market Market – SWOT or Porters Stability of resources: suppliers, Macro – PESTLE financiers, investors. Sectors of the economy Primary Sector – Raw materials are extracted from nature. (Farming, mining, fishing etc.) Secondary sector – Raw materials are processed into semi-finished goods that need processing or finished goods ready to be sold on the market. Tertiary sector - Goods and services are sold. Essential steps when implementing a management strategy: 1. Define the business vision, mission and corporate objectives. 2. Analyse the different environments in detail: Micro environment – SWOT Market environment – SWOT or Porters Macro environment – PESTLE 3. Possible issues that the business should consider when choosing a strategy: Return on investment (ROI) required and other financial issues. Risk factors Potential for business growth and the effect that it would have on the chosen strategies The image the business is trying to create or maintain The effect of decisions on ownership and control of the business Political or social issues 4. Identify the various strategic options available. Depending on the type and size of the business, as well as its aims and objectives, these options would vary significantly. 5. Evaluate and analyse the viability of each strategic option, prioritising them in order of importance. 6. Plan the implementation of the chosen strategy, ensuring that all factors are considered, especially the assumptions on which the chosen strategy is based. 7. Implement the chosen strategy ensuring that it is still in line with the organisational objectives. 8. Monitor and control the strategy with special attention given to managing changes. This is important because any strategy needs to be flexible enough to adapt to changing circumstances. 11  MICRO ENVIRONMENT [Internal Environment] 1. Vision – The dream of the business, reminds stakeholders of what is seen as important. It must be easily understood, ambitious and bridge the gap between present and future. 2. Mission statement – Sets the business apart from others, deals with the overall existence of the business and its values. It must change with the environment. 3. Objectives – Long & short term [To allow business to stay ahead of competitor. Include ROI, keeping costs low, employee development, social responsibility] Short-term [what the business would like to achieve in the immediate future, couple of months] 4. Choice of strategy – The choice of strategy is based on the competitive advantage of the business that was identified when an analysis of the micro, market and macro environments was undertaken. 5. Culture of the business - values and attitudes shared within the organisation, beliefs cause people to act in a certain way, culture can be changed if not in line with organisation strategy but this is difficult to change employee old habits. 6. Resources in the business: Business resources include assets like money, equipment etc. as well as human resources like labour and knowledge. Human resource managers as well as line managers need to ensure they look after the good staff members. This can be done through incentives, values and motivation. All of these are included in a performance management system. 7. Business functions/ Functional areas: Function Explanation General Management Function In charge of the overall running of the business and ensuring that both long and short term planning is done Financial function Controls all the money coming in and going out of the business. Human Resource Function Includes all activities and decisions that are intended to improve the effectiveness of the human resources (employees) and of the enterprise as a whole. Marketing function Responsible for all the activities that enable the product to get from the producer to the consumer. Production function Responsible for the actual making of a product or the actual providing of a service. Purchasing function Looks for suppliers outside the business that can provide the necessary raw materials, products and services that all other departments need in order to achieve their own goals. 12  Administrative function Responsible for collecting data from the business and the business environment. Data is processed into information that is stored till needed Public Relations Function Building the image of the business, both with customers and other stakeholders 8. Techniques used to identify and analyse challenges in the micro environment: SWOT analysis and environmental scanning are used. SWOT analysis leads to SWOT matrix. SWOT matrix is used to develop possible strategies to deal with issues raised in SWOT analysis. (details of SWOT matrix in book) 9. Resource based approach: An approach used to assess the strategic asset in a business. The idea is that the effective and efficient application of resources helps to determine the competitive advantage of the business. Resources can be tangible (raw materials, computers) or intangible (skills, reputation). Resources are inputs that facilitate the organisations ability to perform its activities. For a resource to be strategically relevant to the company it has to be: Valuable – when they have value they can add to the competitive advantage. Rare – They have to offer a unique strategy. It must be something the competition doesn’t have. Unique – Should not be easily copied by competition. Non-substitutable – It should not be able to be replaced by an equivalent product. 10. Value Chain Analysis – used to analyse the input of activities and raw materials in such a way that it adds value to the output and gives the business a competitive advantage. 11. Balance Score Card – this is a strategic management tool used to assess the performance of a business. The following perspectives are looked at: Financial perspective – profit, liquidity, other financial ratios and important indicators Customer perspective – focuses on issues relating to how customers see the business and what their expectations are from the business. Internal Business process perspective – This describes the internal business processes that are critical to success and include questions relating to: - Operations processes: supplier relationships, production of products/services - Social processes: complying with laws and statutory regulations, generating goodwill, environmental issues, diversity of employees, community investments. Learning and Growth Perspective: Describes intangible assets such as information and human capital in an organisation. 13  Market Environment [external environment] Elements of the market environment: THE BUSINESS CAN’T CONTROL THESE ELEMENTS, HOWEVER, IT CAN INFLUENCE THEM. This includes all elements the business interacts with on a regular basis. Customers, suppliers, Competitors, NGO’s, Strategic alliances, Intermediaries, Industry regulators, Trade Unions & Government Departments. PORTERS SIX FORCES MODEL The level of rivalry in the market This refers to competition in the market. How Many companies are competing for the same target market? You can do a competitor profile to find the most out about your competitors – their finances, products available, quality etc. The availability of substitute products A substitute is a different product that satisfies the same need. Eg: Chips and peanuts = snack food. What are the costs of substitutes? NB to find out as much as possible about the substitute products. Threat of new entrants It is not current competition only creating a challenge, new business that might open which takes your customers is also an issue. If there is lots of profit in a market, new business will open or if there are not enough suppliers to meet demands. This threat is diminished if there is brand loyalty, government policies or large sums of capital required, new entrants are less likely. Power of suppliers Relationship between supplier and business, in the interest of both parties to have strong relationship. Business can suffer financially or bad public relations if this is not done. Business needs right quality, quantity, time, place etc. from supplier, if not it can suffer loss of business, run out of stock and customers goodwill. Power of buyers (including intermediaries) Includes more than final consumer of product, can be wholesaler, retailer etc. Must know target market well. Market segmentation – how many potential buyers in a market. Buyers will consider alternatives if they are not satisfied. Complementors These are products that offer more value to the consumer together than apart E.g. hotdogs and bread rolls. Shampoo and Conditioner. 14 MACRO ENVIRONMENT [External] 15 Physical Environment Natural Resources: Businesses need natural resources to produce goods People need natural resources to survive Some natural resources really expensive and scarce: oil, coal Solutions Recycling is good way of saving energy and conserving environment (converting waste products into useful goods) Infrastructure Refers to the availability of roads, railways, water, electricity, communication links and support services. If a business is located far from these services, consumers may have trouble reaching the business. Pollution It is inevitable that some pollution will take place during the production process. Businesses should try to minimise pollution Ethical Environment This refers to morals, values and good corporate governance Why do you think its important for businesses to take this into consideration? 16  Challenges in the Various Environments MICRO ENVIRONMENT MARKET ENVIRONMENT MACRO ENVIRONMENT Difficult employees: Competition Changes in income levels - may lack skills or be unproductive - Threat if there are too many - Occurs due to the global economy and - not able to work in a team businesses offering products or government financial policies. - this affects morale and productivity services which are not differentiated Political changes Lack of vision and mission enough - Lead to economic instability which has negative - causes a business to have no Shortages of Supply effects on people's confidence and causes them to direction - Can be devastating for a business be more cautious about spending - vision and mission must be shall should never be empty or Legal legislation communicated to staff regularly. service is unavailable due to shortage - Business’ need to keep track of changes and Lack of adequate management skills of supply customers will go elsewhere comply with the new laws - cause conflict in a business Changes in Consumer Behaviour Globalisation - affects productivity & profitability as - Occurs frequently as people's needs - Means more competition of businesses were well as morale wants values tastes and attitudes already under pressure to compete locally Unions change due to Global influences Socio - Economic issues - Can have agendas which are caused by access to technology - Poverty unemployment inadequate education skills unknown to the business Demographics shortages crime and HIV and AIDS are all major - they can be very powerful - The target market must be studied challenges to businesses Strikes and Go Slows and understood in order to make the - are a threat to a business because correct decisions about what products are effective in forcing them to and services to offer negotiate Socio - Cultural Factors - Must be taken into account when producing and marketing products 17  Strategies as tools Advantages of having a strategy: It gives direction to the business through the precise definition of aims and objectives and therefore helps management to understand long-term consequences of current decisions It ensures consistency in decision-making and the manner in which problems are addressed It differentiates management roles and areas of responsibilities It puts the business and its role in the broader economy, involving a variety of stakeholders into perspective. It anticipates changes in the internal and external environment and links the environments to ensure resource allocation is aligned with changes in these environments, Types of Business Strategies 1. Corporate Strategies a. Growth strategies Refers to a plan of action intended to increase the market share (target market) of the business. This can happen through: 1. Internal growth: Emphasising existing products/ services in existing markets and channels. Increased customer retention New product development New market and channel development 2. External growth Adjusting the businesses core objectives and surroundings Existing products/services, markets and distribution channels b. Decline Strategy This strategy occurs after a business has experienced difficult times or the management have decided to decline in one area in order to grow or take advantage of a more viable opportunity in a different area. Diversture- selling assets or parts of the business Harvest – limiting a businesses exposure in a market by withdrawing large amounts of cash or assets from the industry in which the demand is declining. c. Corporate Combination strategies 1. Joint Venture - Used when businesses or stakeholders come together to achieve the business goals and gain a competitive advantage - Each business maintains its own identity - E.g. Engine and Woolworths 18  2. Merger - Used when two or more business combine by mutual consent to form a completely new entity. - Usually done to combine resources (e.g. finances, skills or know how) 3. Takeover - Occurs when one company buys sufficient shares in another company, in order to take control of the management or decision making of that entity. 2. Generic Strategies Low Cost Strategy Aimed at gaining a competitive advantage by having the lowest possible cost. This can be achieved in 2 ways: - Increasing profits by reducing costs, while charging industry related prices - Increasing the market share of the business by offering a lower prices to the customer Differentiation strategy Involves making your product/service different and more attractive than those of your competitors. Focus Strategy This entails focusing on a particular segment of the market (niche market). 3. Intensive Strategies Market Penetration Used when businesses find themselves in a situation where there is no new market to explore or a new product to develop or promote These businesses are then forced to grow through market penetration which is aimed at giving the business a greater percentage of the market share. Product Development Attempts to develop new products for an existing market or a market you are already familiar with, instead of pioneering a new market with existing products. Market Development Attempts to develop a new market for an existing product or service. Diversification Involves entering a new market with a new product or expanding their present market or product offering Takes place in order to improve the growth of the business or increase market share and become more competitive and profitable,. May include - Adding new products to new markets - Adding a new product to an existing market 19  - Adding complementary/ related products - Adding unrelated products to an existing market (see examples in textbook) 4. Other Strategies: Revised Business Mission This involves the management of a business going back to relook at the business mission, and looking at whether or not the current mission will lead to a competitive advantage. Establish or revise objectives This involves management analysis the set objectives of a business, determining if they are leading to the businesses vision and adjusting these objectives as needed. Allocate resources effectively/differently Finding the best possible way to utilise the resources in a business effectively. 20  CHAPTER 6: Entrepreneurship, Management and Leadership Intrapreneurs: Same qualities as entrepreneurs, with 2 distinct differences: More cautious and less likely to take risks that may involve personal assets Circumstances often force them into a stable job unable to go on their own. Therefore: Intrapreneurs are employees who work within a business, but use their unique talents of innovation and leadership to change and improve their department or take the business to new heights. Entrepreneurs: See a gap in the market and start a business providing the products/services to fill this gap. Entrepreneurial qualities: Passionate visionaries – ability to do what no one else would have thought of and plan for the future Creative thinkers – allows them to create and maintain a competitive advantage Risk takers Good leaders- need to be able to persuade others to buy into their dream and help realise it. Independent spirits Perseverance and commitment Opportunists – need to be able to see an opening and take it. Entrepreneurial skills: Need to have the necessary knowledge and expertise to run a business successfully Planning, Leading, Organising & Controlling Communication skills Personal attitudes of Entrepreneurs: Results driven Ability to formulate a vision whilst being flexible Ability to work in a team Influencing followers Honesty and integrity Emotional intelligence (EQ) Self-motivation MANAGEMENT AND LEADERSHIP Difference between a manager and a leader A manager is appointed to a position VS a leader natural take on the role A manager has power due his position VS a leader has respect and influence over others due to his qualities 21 Different Management and Leadership Styles AUTOCRATIC *One person making all the decisions (second wave management) *Could be used for a turn around strategy or to restore discipline *On a long term basis it may demotivate workers and be self-destructive to the business DEMOCRATIC/PARTICIPATIVE *Cannot go from autocratic to democratic in one step as this would result in chaos *allows for more involvement by workers in the decision making process which in return will approve “buy in” from workers *ranges from allowing feedback to giving suggestions *fully democratic = leaders and followers have equal power in decisions *fully participative = all have full control to make decisions LAISSEZ FAIRE *No interference *Inform workers WHAT must be achieved but don’t get involved in tell workers HOW it should be achieved TRANSACTIONAL *based on an exchange between leaders and workers *Give and take transaction *Offers something of value in return for services and following TRANSFORMATIONAL *A shift from what people can get in return to what people can achieve together *Motivate through transformation and understanding and creative social transformation *This type of leader helps workers satisfy followers higher needs while at the same time reaching the goals of the business *Motivate workers to do more than they originally intended to do and often achieve more than they thought possible *Extremely creative and flexible leader *Empowers workers SITUATIONAL APPROACH *The leaders behaviour varies from situation to situation making use of different leadership styles based purely on the situation at hand. May be influenced by: - The organisational culture -Abilities of the leader -Relationship between the leader and followers 22  Management Tasks: planning (4 w 1 h)* plan * communicated clearly * preferably in writing Organising All resources available to execute the plan Leading Encourage team members to implement plan Control Setting clear goals, constantly measuring the actual performance to desired performance and introducing corrective measures Motivation Diff people motivated in different ways *money * promotion * time off * rewards Communication Conveying ideas, instructions and queries as well as feedback. * improves relationship with management and workers * can be horizontal, vertical Co ordination Ensure all sections of the business work together in order to reach the set goal * management of all the factors of production Delegation Manager cannot do everything alone *tasks delegated to other staff * can delegate authority to do task but responsibility remains his,hers.* effective tool for empowering staff by trusting them with task and giving them the opportunity to show their skills Discipline Essential in maintaining order and optimum working conditions * makes sure workers uphold code of conduct and rules * enforced informally and formally Decision To complete tasks decisions must be made. *Must be confident as well as have skill and knowledge to be making able to make good decisions Complete Managerial Competencies: Strategic Action Understanding the strategic direction of the business (mission and vision) and ensuring that all Competency goals and objectives are aligned to the overall performance of the business. Global Awareness Ability to obtain the necessary resources from other countries and having a sensitive approach and Competency necessary knowledge to deal with cultural differences. Teamwork Ensuring work can be done effectively in teams by establishing training, performance goals and Competency other systems that enhance effective teamwork. Organisational Understanding different aspects of the business, such as the operations, structure, as well as the Awareness organisational structure. Competency Analysis as a Ability to break information down into smaller parts, by sorting and looking for cause and effect Competency relationships, or finding themes or patterns/trends in the data. Empowerment and Measures put into place to attract, extend, motivate and retain productive and engaged employees. Talent Development Competency Initiative as a Showing initiative by evaluating, selecting and acting on strategies to solve problems and meet Competency objectives, before being asked to do so. Judgement as a Making decisions based on facts that are relevant. Competency Customer service Ability to think of the customer first. The customers’ needs and feedback are taken seriously. Orientation Negotiation An interpersonal decision making process in which two or more people agree on new terms. Motivational Factors: Monetary motivation: monetary reward profit share bonus salary hikes, commission Non-Monetary motivation: flexible working hours, sabbaticals, awards, recognition differs according to *income group * age *Career stage 23 Problems with monetary motivation: encourages compliance of task rather than risk taking. Employees are discouraged from being creative and become performance driven. Team members tend to compete against each other. Motivational factors must be tailored to the needs of the employee; Maslow’s hierarchy of needs could be used to decide the most appropriate for specific employees Environmental scanning Benefits *Identifies threats before they are imminent *Identifies possible gaps in market to take advantage of * Finger on the pulse of competitor *Allows short and long term decision making 360° processes Before starting Continuous environment scanning *viability of product *ongoing process use tools *strength of competitor *SWOT *P²E²STLE * PORTERS * size of potential market 24  CHAPTER 7: Marketing and Branding What is marketing? Responsible for identifying, anticipating and satisfying customer needs Develop the necessary tools to optimise the businesses market position Right product/services at right time, place at the right price 7P’s of Marketing 1. Product *Delivering a product that the consumer is willing and able to buy by developing according to customers’ needs *product must be created that adds value to consumers lives *products do not need to be tangible *put systems in place to consistently evaluate and monitor consumer behaviour *keep up to date with changes in the markets so you can adapt and provide new products *packaging is important to the consumer, most recognise the product by the packaging 2. Price *Product are only worth what customers are willing to pay for them *The price charged could be your competitive advantage, not the cheapest but the best value *Need to provide the business with a profit *Helps position business in the market the higher the price the higher the quality the consumer expects *Price sensitivity needs to be considered. New customers need to see value before purchasing *The price reflects what the customer is expecting of your business in all areas- service; packaging; promotions *Can price at (competitive pricing),above( prestige pricing )or below market value (discounted pricing) *A business could use e.g. psychological pricing Odd pricing R1999 instead of R2000 prestige pricing upmarket luxury goods *superficial discounting or price discrimination 3. place *the place where the customer will buy the product *available at right place time and be the correct quality *decide whether the product will be made available intensively, selectively or exclusively *franchising has become a popular form of distribution *also includes the way a product is displayed 4. promotion *business communicate what it is selling *branding, advertising, personal sales, public relations, exhibitions, specials *Message must be consistent and appealing to give the customer reason to choose your product over a competitor 5. people *need to have the correct level of training for staff as your product is judged by all are connected to it *the employee is the face of the business *most people do not separate the product from the person that provide the service *Aftersales service is vital to add value 6. process *process or f the service is crucial to the customer *correct systems that work * design system around what is best experience for the customer 7. physical evidence *buying intangible product or good over the internet you need to provide evidence of quality *physical evince helps demonstrate and confirm *The location and physical appearance of business premises also indicate quality to the customer 25  Marketing plan vs Marketing strategy Marketing Plan Marketing Strategy Defines the objectives, helps determine targets This is a specific plan of action, which is flexible and performance measures are then developed to allow for consistent review and updates. It to help understand budgets. needs to be in line with the business’ overall corporate strategy. CONSUMER PROTECTION ACT (CPA) *based on fairness and equality for all ü CPA looks at the following ü Promotion of fair accessible marketplace for consumers ü Norms and standards to protect consumer ü Prohibits unfair marketing ü Promotes responsible consumerism ü Lays down laws for agreements. The act applies to all transaction in South Africa Right of the consumer under the CPA right to equality- all consumers need to be treated the same, consumers may not be unfairly discriminated against right to privacy – Consumers have the right to have all unwanted correspondence restricted right to choose – Consumers are not obligated to purchasing additional products and services right to disclosure of information -Consumers have the right to receive all information in plain and understandable language right to fair and responsible marketing – Consumers have the right to be protected against bait and negative marketing, misleading or deceptive representation. right to fair and honest dealings – protection against false, misleading or deceptive representation right to fair, just and reasonable terms and conditions right to fair value, good quality and safety right to accountability from suppliers Branding A unique character a name, a term, logo or design or combination of off used to identify good or service from it competitors Advantages of a strong brand Inspires customer loyalty Usually sell for higher price Retailers want to stock item as it attracts customers Helps with businesses image and appearance Add credibility and increases business confidence Some retailer use their own brand on product these brands tend to be cheaper than the normal brands some market goods under their own names as a superior product but they do not manufacture them. A strong brand has the following brand elements: Memorable Meaningful Likable Transferable Adaptable Protectable 26 Factors that help build a strong brand Quality: vital part of the brand it’s what the consumers expect from the brand Positioning: is achieved through: ü Packaging ü Brand name ü Image ü service standards ü product guarantees ü delivery Repositioning: brand changes its market position to reflect customer choice, brand could have become old, no longer appeals to customer. Communication: all element of marketing mix clearly thought through Long term prospectus: developing and investing and creating brand loyalty Internal marketing: developing brand internally as well as externally, getting employees to live the brand and be brand ambassadors Credibility: business promise to deliver on its promise at the right place.time, right quality and price Brand extension and brand stretching Strong brand deliver higher sales and have the potential to be used on other products Brand extension the use of a successful brand to launch a new product may enter new product category Brand stretching use of a established brand in an unrelated market -advantage of brand extension and stretching distributers perceive it as less risk products likely to gain customer loyalty easily and quickly attract customer and they more willing to sample or trial the product promotional cost are lower market mapping identify the appropriate segment and then the challenge is to position the product so that it meets the needs of the consumer high price vs low price / high quality vs low quality / luxury vs necessity / young vs old / male vs female *Factors that influence a buyers decision: See page 125 in textbook Stimulus Response Model of Buyer’s Behaviour Product Buyer Characteristics Product choices other Stimulus Buyers responses Marketing and Buyers Black Box Price Buyer Decision Brand choices Place Process Dealer choices Promotion Purchase timing Economic Purchase amount Technological Political Cultural 27  Service Marketing – People, Process and Physical Evidence People the businesses brand and reputation rests in the hands of people that the customer comes into contact with (person actually providing the service). Therefore, the business needs to ensure the correct level of training and motivation are given to employees. Process HOW the service is provided Includes issues such as waiting times, information given and helpfulness of staff Correct systems need to be put into place When designing systems do not only concentrate on what makes the business more effective in the running, but how the consumer will experience that system too. Physical Includes maintaining an environment that is clean, tidy, friendly and well decorated Evidence Helps demonstrate and confirm the assumptions of the customer Location and physical appearance of the business premises gives the customer a sense of quality Ethical Versus Unethical Marketing Principles of ethical marketing: All marketing communication should be based on honesty and truth Consumers should be treated fairly based on the nature of the product Marketers should comply with regulations and standard as established by governments and industries Codes of practice for industry and in South Africa should be adhered to Comply with international standards and best practice Privacy of the consumer should not be compromised Advertising should be distinguished from news or entertainment Types of unethical marketing: Exaggeration – false claims about the products quality, features, performance etc False brand comparison Surrogate advertising – finding ways of reminding consumers of a certain product without directly referring to the product, due to the law preventing the marketing of this specific product., Using subject rather than objective claims Children in adverts Materialism – creating false needs Deceptive names which create confusion or false expectations Selling second hand goods as new Unacceptable language or discrimination 28  Franchise Marketing: Ø Most franchisors have a comprehensive marketing plan in place for the OVERALL franchise. Ø Marketing is usually consistent throughout all stores. However, some contracts make provision for stores to do local promotions Advantages and Disadvantages of Franchising Advantages Disadvantages Franchisee Franchisee has access to advice from the The cost to establish the franchise is franchiser usually very high The franchise agreement offers the Monthly royalties still need to be paid franchisee legal protection Entrepreneur is limited – needs to stick It is easier to raise borrowed capital from the prescriptions of the franchisor. banks and financial institutions Some franchisers may not continue to Franchisees often work together to solve give the support initially promised problems The entrepreneur who wants a challenge may become bored with the franchise. Franchisor The franchiser can expand his/her The franchiser can find it very difficult business quickly without a large capital to keep training and giving assistance outlay to all franchisees Franchisees will be more committed to The franchisor does not have direct making a success of the business than control over franchisees, yet the they would if they were just managers success of the franchiser. running a branch is dependant on the success of the There are no staff problems for the franchisees franchisor because each entrepreneur Administrative duties involved in running his franchise is responsible for his collecting royalties and controlling the own recruitment. brand. 29  CHAPTER 8: Human Resources / Human Capital Management Definition: HR aims to improve the effectiveness of the employees and the enterprise. Purpose: Bridge the gap between management goals and the employee’s needs. Maximise their potential to achieve business goals. Function: Interpret employee’s & employer’s needs. Coordinate management and staff requirements. Implementing various activities [recruitment, selection, etc.] HUMAN RESOURCES ACTIVITIES 1. MANPOWER PLANNING Purpose: Determine the following: ü How many employees the business needs. ü What skills employees must have? ü When will these employees be needed? Workload analysis: How many people are required for the amount of work that must be done? Job analysis: Obtain all relevant information about the job. Identify the job, describe tasks of the job accurately, demands placed on the worker. Job description: A summary of information collected through job analysis. Show the jobs duties, responsibilities, level of authority of workers etc. Everything about the job! Job specification: Minimum ability a worker must possess. Things like experience, education, physical requirements. Everything about the worker! Manning table: Shows how many people required at which level of skill and the position they are needed for E.g. in textbook.. Determining employee requirements: Manning table specifies total amount needed, therefore, Recruiting plan takes away what you already have and equals what you still need 2. RECRUITING (FINDING EMPLOYEES) Sources of new employees: ü Within the business – people are appointed to new positions by means of transfers or promotions. ü Outside the business – Appointing people from other businesses, schools & varsities. 30 Internal recruiting: ü Job posting – employer notifies all current employees about the position and invites them to apply. ü The business searches its files of the employees and then invites certain employees to apply for the position. ü Recommendations from current employees about people outside the business – combination of internal and external recruiting. If the business cannot find the right person in the business they then look outside. Employing internally creates a positive morale among the employees. External recruiting: ü Advertising in newspapers, trade journals, radio, window displays & notice boards. ü Educational institutions like schools, varsities, etc. ü Private & public employment agencies. ü ‘Walk-ins’. ü Internet recruiting. Depending on the position needing to be filled will depend on the type of external recruitment used. 3. SELECTION – (Screening and choosing employees) Recruiting is positive while selection is a negative process. ü Selection aims at excluding unsuitable candidates – skill & experience don’t match job specification. ü Good selection results in lower staff turnover, lower production costs, less training & higher productivity. STANDARD SELECTION PROCEDURES: 1-Receipt Of applicant’s forms & C.V HR manager must be available to answer any questions regarding job. After closing date, list drawn up of all applicants. Submitted docs should be checked against required docs. 2-Initial screening Identify applicants who don’t meet requirements. Unsuccessful applicants are notified in some way. Successful applicants – next step! 3-CV/Job application evaluation (draw up a short list) Panel goes through successful CV’s and evaluates them according to minimum requirements of the job. Measured against predetermined set of criteria. Short list is drawn up according to these scores. 4-Check references and backgrounds Are potentially new employees. HR needs to confirm their references. Ask references questions about applicant’s abilities. 5-Interview candidates on short list. Interview panel one person or group of people. Aim is to get info from applicant and give more info to applicant about the business. 6-Tests & examinations Different tests can be done by applicant: Ability/trade test; Psychometric tests; work sample tests. 7-Medical examination May not be given unless it is required for the job. HIV/Aids testing laws are strict. 31  Employee can be given health questionnaire and if there are concerns then a medical examination can be requested. 8-Letter of appointment The decision of who to appoint is now made. Applicants are listed in order of preference. 1st on the list is given an offer in writing, if they decline 2nd is given the offer etc. Letter of appointment needs to be signed if it is legally binding. 4. EMPLOYMENT CONRACTS Labour relations Act now requires employee and employer to draw up a contract and both sign. Must contain at least the Basic Condition of the employment act. Contract should include things like: Employer details, employee details, employment details, salary issues, leave details, termination of service, other issues deemed necessary. 5. PLACEMENT OF STAFF This takes place when a large number of people are appointed at the same time.. This requires that the abilities of the individuals are compared with the requirements of the vacant positions and each individual is then placed in the position where the best match is achieved. 6. REMUNERATION OF EMPLOYEES Salaries and wages are addressed in the Basic conditions of employment act. Ø JOB EVALUATION: The importance of a job is investigated to create a set of levels from least important to most important. A job is then paid according to its JOB GRADE. Ø PERFORMANCE EVALUATION: An individual’s performance is evaluated in a particular job and it determines the annual increase. Therefore ones salary range is adjusted according to your performance. METHODS OF JOB EVALUATION IN S.A: Patterson – levels according to decision making responsibility. Hay job evaluation method – levels according to knowledge required, accountability & problem solving. Ø SALARIES: Payments made to permanent employees, fixed amount paid monthly. Ø COMMISION: A percentage of the sales the person can make over and above their salary. Ø PERFORMANCE BONUS: Managers commonly get performance bonuses over and above their salaries as an incentive. Ø PROFIT SHARE: Also seen as a type of incentive where part of the annual net profit is shared among the directors/managers. Ø WAGES: Employees providing less skill, payment is generally on a weekly basis. Can be paid for time worked or at a fixed rate. Ø OVERTIME: Payment for working after normal working hours or public holidays etc. All payments must comply with the Basic conditions of employment Act. 32  Ø BENEFITS: Different companies offer different benefits to their employees. Some are compulsory deductions like tax, UIF and pension fund. The balance is not. Other benefits include: Housing allowance, car allowance, study allowance, meals, discounts, loans, uniform allowance, 13th cheque, entertainment allowance. Ø TAX DEDUCTIONS: If you earn less than R80 000 you pay SITE (Standard income tax on employees). Over R80 000 you pay PAYE (Pay as you earn) – this is progressive, the more you earn, the more you pay. Ø BASIC PLUS BENEFITS: Your basic salary is paid and then any optional benefit the company may offer is over and above your salary. If you don’t make use of it, it falls away. Ø COST TO COMPANY: The business gives you one amount and in that amount is the additional amount for different benefits, if you use the benefits or not the money remains yours. 7. INDUCTION OF STAFF - ORIENTATION v Purpose is to inform the employee of how the business runs, the do’s and the don’ts etc. AND to help the employee fit in to existing teams and structures in the work place. v New employees experience high levels of anxiety which needs to be calmed by the induction programme. v Induction programme topics include: Company policies, expectations, staff introductions and responsibilities, mentors are allocated sometimes etc. 8. TRAINING OF STAFF AND SKILLS DEVELOPMENT ü TRAINING: A job specific process intended to raise the employee’s performance and efficiency. Changing or improving on knowledge, skill, behaviour, and attitude. ü SKIILS DEVELOPMENT ACT: Workplace must be a place of learning; businesses must invest more in good quality training, improve employment opportunities for the disadvantaged, and encourage employee involvement in programmes. TRAINING PROCESS 1 – identify problems needing training. 2 – what skills are needed for the job? (job analysis shows this) 3 – job performance must be analysed. 4 – training needs are determined. 5 – training objective need to be set up. (smarter goals) 6 – trainig programme is now developed. 7 – train staff! On-the-job: training in real work situation. Off-the-job: in the form of a course. Apprenticeship training: work for 6 months, attend lectures for 6 months. Workshops: promote interaction, update skills. Job rotation: multi-skilling expands employee experience. Self study: employee goes through material at own pace. Mentorship/buddy system: working together with senior employee. Learnership: person works for the business while studying. 8 – evaluate training results. 33  9. EVALUATION, RETENTION AND SUCCESSION PLANNING – (PERFORMANCE APPRAISAL) It is important to monitor the efficiency of the staff and there performance. This is to check whether training goals have been met and the level of skill of the workers. Appraisals are generally done by management only; however, peer evaluation is also common. The function of performance appraisal is to give employee feedback on their past performance, look at strengths and weaknesses and discuss any employment issues that have arisen. 10. RETENTION ü High staff turnover is not good for the company image, staff morale or productivity levels. ü It is costly and time consuming to recruit and train new employees. ü Production may slow and plans may need to be altered if employees leave. ü Try retain your staff but understand it is normal for staff to leave for certain reasons like spouse transfers, health reasons etc. 11. SUCCESSION PLANNING This is a process whereby key personnel are recruited, developed and trained to full key positions in the enterprise. Personnel are prepared for future advancement and promotion Succession planning steps: Ø Identify critical positions Ø Determine the skills, knowledge and competencies needed by the people in these positions Ø Identify succession management strategies Ø Implement the chosen success plan Ø Evaluate the effectiveness of the plan 34  CHAPTER 9: INDUSTRIAL RELATIONS AND LEGISLATION The constitution This applies to all citizens of South Africa and all law must uphold and not infringe on any right laid out in the constitution. Three areas of the constitution that affect business are: Human rights Inclusivity Environmental issues Limitation clause: Seems contradictory to granting rights but also necessary to limit if rights conflict. Inclusivity: the right to include everyone in giving equal rights and no one may be excluded for any reason. Labour relations act 66 of 1995 Provides the basic legal framework for South African labour relations Contains the basic rules and mechanisms that can be used to control communication, bargain or negotiate relationships between employers and employees Applies to every employer and employee, except for members of the following: û National Defence force û National Intelligence Agency û South African Secret Service Purpose of the LRA ü To enforce the fundamental rights of the Constitution ü To enforce South Africa’s international obligations as a member of the International Labour Organisation ü To provide a framework for collective bargaining between trade unions and employers ü To promote effective resolution of labour disputes through employee participation in decision- making in the workplace. Trade Unions and Employer Organisations Trade unions: any number of employees in a particular industry associated together for the purpose of regulating relations in that industry. Main aim is to engage in collective bargaining with employers on behalf of the members of the union. Employer organisation: serves the same purpose as a trade union but enable employers to negotiate with trade unions of their specific industry South African constitution guarantees freedom of association that allows employees the right to belong to a trade union and employers the right to join an employer’s organisation. Functions of a Trade Union ü Protect the rights of workers ü Improve conditions of employments e.g. Salary benefits, working hours & Conditions ü Represent members in negotiations with employers ü Represent employees in disciplinary issues ü Advise employees on labour relations issues ü Stive to achieve industrial peace while influencing policies and decisions regarding labour issues 35 Requirements to register a Trade Union: A proper constitution The constitution must be consistent with the LRA The union should not be formed to evade any law, nor should it be affiliated to any political party. Collective Bargaining Collective bargaining is the foundations of Industrial Relations and includes two broad issues: û Contract negotiations between employers and Trade Unions û The handling of grievances Forms of Industrial Action ü Strike is a temporary refusal to work in order to put pressure on the employer to agree to the demands of the worker ü Go slow is when workers continue to work but slow down to reduce the productivity this often comes before a strike ü Work to rule is when the worker only does what is stated in their contract and nothing extra. ü Picketing is when unhappy workers demonstrate outside the premises of the business to show the public and customer their dissatisfaction, work is not disrupted. ü A lock out is when the EMPLOYER refuses to let the employees on the business premises to continue to work unless they accept certain conditions. Three collective bargaining councils Bargaining council: establish collective agreement for business in certain industry’s Statutory councils in sectors that don’t have bargaining councils ü Solve disputes within their area of jurisdiction ü Establish training and education schemes ü Administer pension funds, provident funds, medical aid and unemployment schemes. Workplace Forums: solves problem at business level for each business similar to a student council NEDLAC: NEDLAC = National Economic Development and Labour Council Developed to ensure government, organised labour and employers are in agreement prior to labour policies that will impact on social and economical levels, are submitted to government. 36 Grievance Procedure Conflict Resolution according to the LRA 1. Conciliation: two parties in dispute get together with a neutral third party. 2. Mediation: 3rd party (mediator) makes a recommendation to the parties, but the decision is still up to the original parties 3. Arbitration: the dispute is referred to a neutral 3rd party who will make a decision that is binding on both parties (Labour Court) 4. Appeal: if a party is unhappy about the decision that was made, they can then appeal against the decision with the Labour Appeal Court. Industrial action: Strikes, Lockouts and other forms of industrial action Strikes ü it is considered a strike if two or more workers participate the reason must be to resolve a grievance or dispute. protected strikes employees enjoy certain protection during a protected strike procedure need to be followed for a strike to be protected must follow the dispute resolution procedures: 1. Issue must be referred in writing to the CCMA, a bargaining council or a statutory council 2. The CCMA or council must try to settle the dispute through conciliation within 30 days 3. If this fails, the CCMA or council must issue a certificate saying that the dispute has not been resolved. 4. At least 48 hours’ notice in writing of the proposed strike must be given to a private employer or seven days’ notice if the state is the employer A strike will not be protected if: ü A collective agreement specifically states that workers may not strike over the issue at hand ü The correct procedures have not been followed or if the arbitration decision is ignored ü The parties are engaged in an essential service. 37 During a protected strike: employee may not be dismissed for going on strike employee may be dismissed for misconduct or violence during the strike The employer may not apply for a court interdict to stop the strike The refusal to work is not seen as breach of contract and the employee may not clam damages for loss of production from workers An employer does not have to pay employees participating in a protected strike. The “no work no pay” rule can apply. Reasons for strikes/lockouts: û Wage increases û A demand to recognise a trade union û Unhappiness regarding unilateral changes that the employer made to working conditions û In sympathy with a protected strike by another party û Issues of common national interest Secondary action: Ø This refers to employees striking in support of a strike by other employees Ø Secondary action will be protected if: The main strike is protected The secondary strikers give seven’ days’ notice to their employer; Unfair treatment in the workplace Unfair discrimination: Ø The LRA state you may not discriminate against employees or applicant on an arbitrary reason e.g. Sex, religion, race Two exceptions Affirmative action Excluding applicants or employees due to inherent requirements of the job Unfair Conduct: Ø Relating to the promotion, demotion or training of an employee or the provision of benefits Unfair suspension: Ø Refers to any disciplinary action short of dismissal. Failure or refusal of an employer to reinstate or re-employ a former employee in terms of any agreement. Ø not giving a position back to a retrenched worker or unfairly dismissed worker According to the LRA an employee is regarded as unfairly dismissed when: o An employer ends a contract of employment without notice to the employee o An employer refuses to allow an employee to return to work after maternity leave o Constructive dismissal takes places – the employer makes the working environment impossible for the employee to tolerate, which forces the employee to resign. o An employee is dismissed because he took part in the activities of a trade union or work place forum o An employee is dismissed when taking part in a protected strike or protest action o An employee is dismissed due to pregnancy, or any reason related to her pregnancy o The employee is dismissed on arbitrary grounds- race, age, religion, sexual orientation etc. 38 Remedies for unfair dismissal: Ø Reinstatement - giving the worker his job back, unless special circumstances exist: û The dismissed employee does not wish to return to work û The dismissal was only procedurally unfair û The working relationship between the parties has become intolerable û It is not practical to do so Ø Compensation – the employer may be required to pay the employee either a set amount or a specified number of months salaries. Ø A combination of reinstatement and compensation may be ordered by the CCMA. Discipline in the workplace: The purpose of discipline in a work environment is to: ü Maintain order and ensure cooperation ü Avoid future problems by ensuring employees know what acceptable and unacceptable behaviour is ü Motivate employees to change their behaviour where necessary. Reasons for Dismissal: Misconduct – A situation where transgression of a rule took place e.g. theft, dishonesty, substance abuse, intimidation, assault or fighting. For incapacity – if an employee cannot perform duties properly owing to (a) Illness or Ill health (b) Inability Poor performance implies that work standards have not been met. However, disciplinary action can only be taken once it is established that the employees was aware of: Expectations How failure to meet these standards will be dealt with. As well as: - The employee was given a fair opportunity to improve performance - The reason for failing to meet the standard was investigated and that there is no other appropriate sanction i.e. dismissal if the only option. Probation refers to a period where the new recruit works in the business and only after this period has been completed is the appointment confirmed. This allows the employer the opportunity to assess the performance of the employee. For operational reasons – e.g. retrenchment - The employer needs to avoid this as far as possible The employer needs to notify (in writing) employees and their trade unions of: û The reasons for the proposed retrenchment û The alternatives considered û The number of employees who are likely to be affected û The proposed methods of selection of jobs involved û The timing of the proposed retrenchment û Offers of severance pay û Assistance offered/ prospects of re-employment in the future Substantive fairness: A dismissal for misconduct is only considered substantively fair if: ü The employee broke a rule of conduct in the workplace ü The rule was valid or reasonable 39  ü The employee knew of the rule or should have known of the rule ü The employer applied the rule consistently ü Dismissal is the appropriate step to take against the employee Procedural fairness: Refers to the correct procedure being followed when an employee is disciplined. It includes amongst other things: o The employee must be notified of the reason for the disciplinary action o The employee must be given sufficient time to prepare himself for the disciplinary hearing o The employee has the right to state his case at the disciplinary hearing or can be represented by a fellow employee, trade union representative or a lawyer o The employee has the right to an interpreter o Any witness may be cross examined o The employee has the right to be informed of the outcome of the disciplinary hearing o To appeal should he wish to do so Implications of the LRA on general retail stores: Positive implications Negative implications Promotes a healthy relationship between Employers may not dismiss employees as there employers and employees are procedures to be followed. Provides specific guidelines for employers on Employees may take advantage of their right to correct and fair disciplinary procedures. strike without taking into consideration their responsibilities Labour disputes are settled quicker and are less Labour disputes and bargaining council expensive processes become disruptive/ time consuming and can lead to a decrease in productivity. Provides mechanisms such as statutory Some business may feel that the LRA gives councils/collective bargaining/CCMA employees to much power as it creates length procedures. 40  Basic Conditions of Employment Act, 1997 (BCEA) Aims to positively impact the working condition of South African workers Specifically addresses the problems of inadequate protection for vulnerable workers (part time, farm workers and domestics) Lack of mechanisms to set minimum wage Child labour Exclusively long working hours especially in transport industry 1) Working hours 45 hours per week with a break after 5 hours max 9 hours a 5 day week and 8 hours per day for a 6 day week Overtime should be organised max 3 hours per day paid at 1.5 time normal pay 2) Leave 21 consecutive day per 12 months employment leave may not be converted to cash 3) Maternity leave 4 months consecutive leave for 12 months of employment 3 day family responsibility leave 4) Sick leave