business studies - western cape · business studies 3 preparatory examination september 2014...

Business Studies 1 Preparatory Examination September 2014 NSC-Grade 12

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MARKS : 300

TIME : 3 hours

N.B: This memorandum consists of 36 pages including this page.

Basic Education

KwaZulu-Natal Department of Basic Education REPUBLIC OF SOUTH AFRICA

BUSINESS STUDIES

MEMORANDUM

SEPTEMBER 2014

PREPARATORY EXAMINATION

NATIONAL

SENIOR CERTIFICATE

GRADE 12



SECTION A

QUESTION 1

1.1.1 C 1.1.2 B 1.1.3 B 1.1.4 B

1.1.5 C 1.1.6 A 1.1.7 B 1.1.8 B 1.1.9 B 1.1.10 C 10 x 2 (20)

1.2.1 Job specification 1.2.2 60% 1.2.3 Signs the contract 1.2.4 Tertiary sector 1.2.5 Unemployment insurance fund. 5 x 2 (10)

1.3.1 E 1.3.2 A 1.3.3 D 1.3.4 B 1.3.5 C 5 x 2 (10)

TOTAL SECTION A: [40]



SECTION B: QUESTION 2

2.1.1 Porter’s five forces model

The power of buyers

The power of buyers is the ability of the customers to purchase any product

of a certain price in any industry or market.

If Callan’s bed and breakfast is dealing with a few powerful buyers who have

strong buying power, then these clients are more likely to dictate terms to the

business.

When the clients have strong buyer power the bed and breakfast market has

more potential to offer their services because the potential clients are able to

utilise their services easily and have the power to do that.

Callan’s needs to conduct a market research so that he will know who his

clients are e.g. are they from local or abroad, what services do they expect?

how much are they prepared to pay for such services? etc.

Callan’s bed and breakfast will have to improve on the quality of his service

so that he can drive the prices and retain his customers.

Any other relevant answer related to the application of the power of buyers

in Callan’s bed and breakfast.

Max (4)

The power of suppliers

Every business needs reliable suppliers in order to compete in the market.

Callan’s bed and breakfast will need to buy bedding linen, cleaning material,

furniture and food from suppliers.

Callan also has to find the most suitable suppliers who are able to provide him

the right things at the right price and at the right time.

If Callan for example has few reliable suppliers who offer him unique products

for his business then these suppliers are more likely to drive the prices up

because they have power over Callan’s business.

Any other relevant answer related to the application of the power of suppliers

in Callan’s bed and breakfast. Max (4)

The power of competitors (level of rivalry)

Rivals are businesses selling the same or similar products or services.

Callan has are four rivals situated in the same area as his business.

Callan’s bed and breakfast can lower prices, offer a wider range of products

and services e.g. free internet services for his clients.



Callan’s bed and breakfast can also offer free shuttle services for his clients

to eliminate or decrease rivalry from the market.

Callans needs to analyse his competitors in terms of the quality and

uniqueness of their products so that he is able to improve on the quality of

his service.

Callan’s also need to draw up a competitors profile of each rival so that he

can get to know their strengths and weaknesses

Any other relevant answer related to the application of the power of

competitors in Callan’s Bed and Breakfast.

Sub Max (4)

THREAT OF SUBSTITUTES

Substitute products or services are different products that partly satisfy

the same needs of customers and can be used to replace one another

Threat of substitutes happens when the products demand is affected by the

change of price of the substitute product.

The threat of substitutes is more in case of Callans Bed and Breakfast

because there are many bed and breakfast businesses who offer similar

services at a lower price.

Substitutes are always available; if Callan’s Bed and Breakfast services are

too expensive his clients will start looking for alternatives.

If substitution is easy and viable then this weakens the power of Callan’s bed

and Breakfasts in the market.

Callan needs to conduct a market research to determine if his customers are

using substitute services and why are they using these alternatives.

Any other relevant answer related to the application of threat of substitutes in

Callan’s Bed Breakfast. Sub Max (4)

THREATS OF NEW ENTRANTS TO THE MARKET

The power the business in the market will depend on how easy it is for

new competitors (entrants)to enter the market.

New bed and breakfast businesses can quickly and easily enter a market

because there is a great opportunity for profits in this market.

Although bed and breakfast business do not have a high risk in terms of

lack of clients, this business depends on the location and marketing

strategies they use to attract more clients.

Any other relevant answer related to the application of threats of new

entrants to the market in Callan Bed and Breakfast

Sub Max (4)

[20]



2.1.2 DEFENSIVE STRATEGIES FOR CALLAN’S BED AND BREAKFAST

Retrenchment: Callan decreases the number of his employees

although he might lose skilled employees.

Divestiture: Callan can sell part of his assets that are not productive

and he can re-invest the capital in new opportunities (4)

2.2.1 Consumer Protection Act (2)

2.2.2 Advantages of the Consumer Protection Act

There is now only one law for protecting consumers and this makes it

easier to enforce and apply the law

Protects the consumers from unfair, exploitative and aggressive business

and marketing activities

Promotes consumer rights

Gives all consumers fair access to the market for goods and services

Educates consumers about how to participate in the goods and services

market responsibly

Enable consumers and business to resolve disputes fairly and in a way

that respects the rights of both parties through the National Consumer

Commission

Ensures that consumers do not buy goods of poor quality and those that

do not meet quality standards

Forces businesses to promote and provide consumer education

Forces consumers to make responsible and informed decisions

Any other relevant answer related to the advantages of CPA.

Any 5 x 2 (10)

2.2.3 ACTIONS REGARDED AS DISCRIMINATORY

Varying the quality of goods, e.g. when selling in different areas

Prioritising any consumer group over another when marketing or

selling the product

Charging unfair prices for the same goods and services

Treating customers differently based on age race gender etc.

Denying customers proper information about the product and services

Misleading customers through false advertising and communication

Any other relevant answer related to the actions regarded as

discriminatory Any 3 x 2 (6)



2.2.4 PENALTIES FOR NON-COMPLIANCE

The business will compensate the consumers in line with the extent to

which their rights have been infringed

The Act imposes fines of up to a R1 000 000 or 10% of turnover for

each offense

In special cases an employer will be held jointly and severally liable

with its employee for contravening the CPA

The business will have to replace the goods or complete the service as

specified by the Authority

Pay interest or damages that may be due to the consumer

Alter or discontinue any conduct that is not in line with the Act

Any other relevant answer related to penalties for no-compliance

Any 1 x 2 (2)

2.2.5 ADVANTAGES OF NCA TO THE CONSUMERS

Prevent consumers from getting credit too easily because too much credit

may lead to bankruptcy.

Prevent credit suppliers to take back the goods bought on credit if consumer

cannot pay.

More responsible credit supplying and gaining on credit.

The rights of both parties when a credit agreement is formed, is clearer than

in the old legislation.

Debtors may pay the outstanding balance, including interest and other levies,

without three months’ notice as required previously.

Credit suppliers MUST not FORCE consumers to agree to a credit agreement

by telephone or visit at home.

Interest rates must be clearly stipulated in advertisements for credit,

in the format prescribed by the National Credit Regulator.

Credit suppliers must ensure that the debtor will be able to repay the debt

before signing the agreement.

Debtors cannot be placed on a black list for bad payers, before the credit

suppliers have reffered them to a credit counsellor

Any other relevant answer related to the advantages of the NCA.

Any 5 x 2 (10)



2.2.6 DISVANTAGES OF THE BROAD BASED BLACK ECONOMIC EMPOWERMENT

FOR BUSINESS

Not all businesses take the codes seriously

Many BBEE Practices lead to only certain groups benefiting

Processes can lead to corruption and nepotism

Many companies have been disadvantaged due to the BEE rating

The process and procedures can be costly for a business

Business could experience large financial implications if they do not

adhere to the BEE process and procedures

Business need to make dramatic changes to the infrastructure of their

organisations

Business will have to spend money in the areas covered by the seven

elements of BEE to obtain a good BEE rating

Any other relevant answer related to the disadvantages of BBBEE for

business Any 3 x 2 (6)

(60)

QUESTION 3

3.1 Distinguish between leadership and management

MANAGEMENT LEADERSHIP

Demands respect, authority and wants to control.

Invites and motivates freedom of speech and inspires trust.

Gives orders/instructions. Seeks to empower/facilitates employees.

Thinks that they know all the answers.

Asks the right questions to get to the right answers.

Focuses on the task. Focuses on individuals/groups.

Focuses on the implementation of policies. Focuses on motivating workers to help with the implementation processes.

Follows/Implements the vision of the enterprise. Provides a vision for the enterprise.

Minimises and controls risk. Always on the lookout for business opportunities.

Ensures that profit targets are met. Strategises to increase profitability.

Administer Innovate

Have a short-term view Have a long-term view

Monitor people Inspire people

Implement plans Develop goals

Maintain and monitor Challenge staff and managers

Ask when, how, where and who Ask why

Any other relevant distinction between management and leadership. Any 5 x 2 (10)



3.2 Autocratic style

The leader gives directives and instructions as a way of communicating with subordinates.

He makes all decisions alone with little or no consideration of the needs of subordinates.

Subordinates are told what to do and how to do it without being given the opportunity to give inputs or make suggestions.

Any other relevant answer regarding autocratic style

Any 3 x 2 (6)

Democratic style

The leader involves subordinates in the decision –making, formulation of policies and problem solving.

The leader seeks the opinion and ideas of the subordinates, however the leader remains accountable and has the authority to make the final decision.

This leadership style improves employee motivation and helps the leader to win the support of the subordinates who are made to feel part of the team.

Any 3 x 2 (6)

3.3 Advantages and disadvantages of Autocratic style

Advantages Disadvantages

This style can be very useful to use when there are quick decisions to be taken.

Creates division between managers and staff

Works in large organisations where it is not practical to consult with everyone.

Lack of motivation and productivity from staff because of lack of two way communication

Good for managers with low skilled employees

Top down approach which can be seen in a negative way and create disrespect

Good for crisis situations

Very little input from all role players

Any 2 x 4 (8)

- Any other relevant answer regarding advantages and disadvantages of autocratic style



3.4 Difference between compulsory and non-compulsory insurance

Definition of compulsory insurance Compulsory insurance is insurance that is required by law before individuals or business may engage in certain activities

Examples of compulsory insurance according to South African law

Road Accident Fund (RAF)

PROVIDES COVER FOR ALL USERS OF THE South African roads

against injuries or death from accidents involving motor vehicle.

A levy is charged on fuel sold to motorist and is included in the price

of fuel.

The RAF protects negligent drivers against claims

Unemployment insurance fund (UIF)

UIF is a compulsory state scheme created by the government to provide

for the loss of employment.

Money is deducted from the employee’s remuneration and paid into the

UIF

Employers deduct 1% of the employee’s total gross remuneration to

contribute to the UIF on behalf of the employee

The fund pays out a proportion of the employee’s salary for up to 26

weeks or until new employment is found

Compensation for Occupational injuries and diseases act (coida)

COIDA states that employers must pay a certain amount of money into

a central fund each month

COIDA ensures that employers insure their employees against death or

disability due to accidents at work.

Any 4 x 2 (8)

NON COMPULSORY INSURANCE

Insurance that is not prescribed /compelled by law

Business/individuals may take a policy for protection of their property

or themselves

Insurance companies determine the probability of the risk that need

to be insured

Degree of risk influences the amount of insurance premium

Any 2 x 2 (4)



3.5 Criteria for a logical and effective presentation of information

Know your audience

Organise the content

Capture attention in the introduction

Organise the body

State the aims in your introduction

Put the most important information first

Use visuals effectively

Use your conclusion to summarise your key point

Any other relevant answer related to the criteria for a logical and effective presentation of information. Any 4 x 2 (8)

3.6 Differences between limited and unlimited liability

Limited liability means shareholders'/owners' possessions/ assets are protected in the event that the business becomes insolvent or is liquidated.

Shareholders cannot lose more than what they have invested in a business. Any 1 x 2 (2)

Unlimited liability means that the owner's assets are attached to the business.

The owner or partners can lose everything and even more than what they have invested in a business.

Any other relevant answer related to the differences between limited

and unlimited liability. Any 1 x 2 (2)

3.7 Types of preference shares

Cumulative preference shares: Unpaid dividends in one year will accumulate/carried forward to the next year when dividends are paid out.

Non-cumulative preference shares:

The claim on unpaid dividends are not transferred/carried forward/ accumulated to the next financial year.

Participating preference shares

The shareholders will share in a second dividend in a year when significant/ surplus profits are realised.

Non-participating preference shares Shareholders only receive a fixed dividend

Redeemable preference shares

The company will buy back these shares after a specified period



Non-redeemable preference shares

These shares are only bought back when the company closes down for reasons other than bankruptcy.

Convertible preference shares

Shares may be converted to ordinary shares after a fixed period.

Non-convertible preference shares Shares may not be converted into ordinary shares

Any other relevant answer related to the types of preference shares NOTE: Mark first TWO (2) types only. Max (6)

QUESTION 4

4.1 How SA businesses should address environmental issues

Comply with laws and regulations put in place by SA government such as National Environmental Management Act, Environment Conservation Act and other strategies.

Promote environmental sustainability through minimising pollution.

Use alternative sources of energy with minimum impact on the environment.

Take an active role in environmental sustainability initiatives organised by government or communities, e.g. by funding those initiatives.

Any relevant answer related to how South African businesses should address environmental issues. Any 4 x 2 (8)

Benefits of addressing environmental issues.

Benefits for business

A higher rating/scores in terms BBBEE compliance may be obtained.

By complying with the Johannesburg Security Index (JSI), they will be allowed to be listed on the JSE, which can attract possible investors.

Market share and profitability may increase because customers associate themselves with businesses that protect the environment.

Any relevant answer related to benefits of addressing environmental issues for businesses. Any 2 x 2 (4) 4.2

An employee who has a grievance must first bring it to the supervisor's attention, who must attempt to resolve the issue within one working day since the issue was raised.

If the employee is not satisfied with the supervisor's decision, the employee will have a right to raise a formal complaint in writing.

This is done by completing a Formal Grievance Form and submitting it to the relevant level of management.

The relevant manager will arrange a meeting within one working day. The time period may be extended upon agreement by both parties.

This meeting shall be attended by the employee, a representative,



the supervisor or manager. The manager ensures that the minutes are kept and that decisions made are recorded on the Formal Grievance Form.

If the employee is not satisfied, he/she will be advised to take it to the next level of management.

The manager will advise top management who shall arrange the meeting, consisting of the parties named. Minutes shall be kept in writing/tape recording or electronically. The decision will be recorded onto the Formal Grievance Form.

Should the employee still be dissatisfied with the results, he/she may make use of the statutory dispute resolving procedures, which includes the Bargaining Council and the Council for Conciliation, Mediation and Arbitration (CCMA).

A worker can appeal if he /she is not satisfied with the outcome.

Any other relevant answer related to the steps in the grievance procedure 4 x 2 (8) 4.3

Acknowledge that there is conflict between employees.

Identify the cause of the conflict.

Arrange for a meeting between the conflicting parties and management

Analyse

Brainstorm

Choosing the best idea

Analyse strategies to resolve the conflict.

Find a way forward by requesting parties to adhere to a memorandum of understanding

OR

Approach the conflict directly

Bargaining

Mediation

Arbitration

Right to appeal. Any 5 x 2 (10)

4.4 Business enterprises are not compelled to rehabilitate employees e.g. where alcohol or drug abuse is applicable, but employers are compelled to consider offering rehabilitation to employees who need help.

Encourage the employee to talk about his/her problems with people he/she can trust.

Give him/her leave to sort out his/her problem.

To guide or direct employees to professional counsellors for assistance.

Employees can meet with counsellors to determine where their skills, knowledge and competencies can be best put to use in the business enterprise.

This will give employees a goal to work towards.

Send affected employee to rehabilitation centres.

If an employee agrees to rehabilitation, it is done under the terms and conditions of the employer contract/legislation.



Make contact with family.

Any other relevant answer related to the wellbeing of an employee who has an drug problem. (Max) (12)

4.5 Dealing with difficult employees

Be calm and in control of the situation to get the person to collaborate.

Understand the person's intentions and why they react in a certain way.

Get perspective from others who have experienced the same kind of situation.

Let the person know what your intentions and the reasons for your actions are, this will make them at ease.

Build rapport by re-establishing personal connection with colleagues' instead of relying on e-mails, messaging and computers.

Treat people with respect, not as if he/she is stupid/incapable/ incompetent.

Ask someone in authority for their input into the situation.

If you have already tried everything above and the person is still not responding, ignore them.

Any relevant answer related to ways of dealing with a difficult employee.

NOTE: Mark first FIVE (5) only. Any 5 x 2 (10)

4.6 Problems / challenges of CSI for the business

The community may not support the enterprise i.e. does not buy the product of the enterprise.

Difficulty in adherence to legislation governing the CSI.

Small and medium enterprises find it difficult to implement CSI programmes.

Distribution of scarce CSI resources to selected beneficiaries in the community may cause problems such as discrimination.

CSI activities can distract businesses from the core commercial functions.

Social involvement is paid from company's profit that could have been used to lower prices and this could benefit customers.

Detailed reports must be drawn up.

Any relevant answer related to problems of CSI for the business. Any 4 x 2 (8) (60)



QUESTION 5

5.1 Advantages of a Quality Management System

Effective customer services will be rendered, resulting in an increased customer satisfaction.

Time and resources are used efficiently.

Productivity increase through proper time management and using high quality resources.

Products and services are constantly improved.

Vision and mission may be achieved.

The business may achieve a competitive advantage over its competitors.

Continuous training will continuously improve the quality of employees' skills and knowledge.

Employers and employees will have a healthy working relationship which results in happy workers.

Increased market share and profitability.

Any other relevant answer related to the benefits of a good quality control system

Any 5 x 2 (10)

5.2. Impact of Total Quality Management System on size of Business

5.2.1 Continuous Skills Development Small enterprise (Sole Trader)

It is essential to empower the employees and this comes through constant training and development so that they are able to critically look at the systems, processes and products during the process and reflect on the quality.

Continuous skills development is not always easy in a small company as there is often no time as everyone is involved in so many different aspects of the business.

There is a more holistic approach to the training as there is a smaller group of employees.

People employed in smaller businesses are often required to perform a wide range of tasks

Hence, skills development is vital to ensure survival of small businesses.

Smaller businesses can, however, find it more difficult to cope with their daily operations when staff is sent away for skills development training.

It is expensive to use training consultants. Sub max (4)



Large enterprise

Large businesses have a human resource department that is dedicated to skills training and development.

They need to make sure that the training is relevant to the product and will in fact result in improved customer satisfaction.

It is very difficult to get the same message out to everyone in the company.

Poor communication system may prevent effective training from taking place.

Trained employees may leave for better jobs after they gained more skills.

Demotivate employees, if they do not receive recognition for training.

Large businesses have access to a greater range of skills than smaller businesses, because they usually employ more people.

Large businesses can do skills training on a rotation basis – which limits the impact on the continuity of business operations.

Any other relevant responses related to the impact of continuous skills development on large businesses. Sub max (4)

5.2.2 Total Client Satisfaction

Small enterprise (Sole Trader)

Smaller companies often have a closer and more personal relationship with the client.

They are often more in contact with the client and are able to determine their ongoing satisfaction levels.

Smaller enterprises may find it difficult to find employees to run the business and to give their full attention to total customer satisfaction.

Small businesses often do not have enough staff to justify a customer service department.

Hence, staff members must divide their time between customer service and completing all their other tasks as well.

Any other relevant responses related to impact of total client satisfaction on small businesses. Sub max (4)

Large enterprise

The employees of larger companies very seldom come into any contact with their clients and often do not have a very clear idea of what will satisfy their needs.

Market research and customer surveys are essential and should be made available to all employees to see how the clients felt about the product.

In order to have total client satisfaction, a company needs total involvement and commitment to the total quality management system from all of the employees.

Any other relevant responses related to impact of total client satisfaction on small businesses. Sub max (4)



5.2.3 Continuous Improvements to Systems and Processes

Small enterprise (Sole Trader)

Improving systems and processes can become costly especially if it involves the purchasing of new machinery and equipment.

It is easier for the employees of a smaller staff to buy into the idea of a change in system or process than in a large company.

Employees in smaller businesses are often required to multitask.

This means that finding ways of improving a business is only one of many tasks needed to be performed by the same employees.

Quality work and good performance is often compromised when employees focus on many tasks at the same time.

Small business often do not enjoy the benefits of having on-site IT- specialists or engineers-if problems arise, time is wasted on waiting for outside specialists.

Any other relevant resources related to impact of continuous improvements to systems and processes on small business.

Sub max (4)

Large enterprise

Large companies often have a person dedicated to the improvement of systems and processes.

Systems and processes take time and effort to implement in a large company as the message takes a lot longer to spread.

Large companies have the capital for new equipment required for systems and processes.

Large companies are often more willing to take the risk or trying a new process and system.

Larger businesses usually employ a team of people to look for ways of improving processes and systems

Large businesses often have people like engineers and IT-specialists on site – this enables them to address problems immediately.

Any other relevant resources related to impact of continuous improvements to systems and processes on large business Sub max (4)

Max (24)



5.3.1

Career planning becomes a possible, in that individual employees see a future for themselves in the business.

This has a positive effect on morale.

Assessment of applicants is easier because the business already has considerable information on the possible candidates abilities, work performance and potential.

The cost of recruitment is low because advertising, travel, and board and lodging expenses are largely eliminated.

Any other relevant answer relating to advantages of internal recruitment. Any 4 x 2 (8) 5.3.2

Disadvantages

Recruiting costs are considerably higher for items such as advertising and expenses to enable applicants to come from elsewhere for the interview, and the reimbursement of successful applicants moving costs.

It is risky because the assessment of applicants can never be perfect, therefore a possibility exists that the successful applicant will not be successful in the job.

The morale of existing personnel can be negatively influenced, high potential employees will not be prepared to stay indefinitely at the same level and might

consider resigning.

The advertisement must be prepared with the relevant information e.g. Name of the company, contact details, name of the person to be contacted regarding the vacancy. Any other relevant answer relating to disadvantages of external recruitment

. Any 3 x 2 (6)

5.3.3 Selection process Receiving documentation

Applicant submit the application forms, curriculum vitae and certified copies of personal documents such as ID and proof of qualifications

Screening applicants

The business separate candidates who meet the requirements from those who do not.

Evaluate CV’s and create a shortlist

Applicants are evaluated and based on the evaluation, applicants are ranked from suitable to the best candidates

Candidates with the highest rank order are placed on a shortlist Check information supplied in CV’s The candidates qualifications and their employment history are checked and confirmed

Referees are contacted to verify or testify to the person’s character, abilities and skills

Any other relevant answer related to the selection process Max (12)



QUESTION 6

6.1.1 Under-insurance. (2)

6.1.2 Compensation = valueMarket

amountInsured x Loss/damage

m300

m200 x 60m

= R 40 million (6)

6.1.3 Principle

The insurance company has the right to rebuild, replace or pay for the losses in cash.

Justification

- The insured cannot make a profit out of the claim. - This is only applicable to over insurance and this case study is about under- insurance where a penalty can be levied. - As the house was under-insured the full amount of the damages will not be paid for. - Any other relevant answer for exclusion of reinstatement clause.

NOTE: Principle and justification could be integrated.

Any 2 x 2 (4)

Max (2)

(6)

6.2.1 Return on Investment = investedAmount

Return x 100%

= 000R200

000R40 x 100%

= 20% (6)

If answer is incorrect allocate a maximum of 2 marks for understanding of concept, method and procedure. Allocate maximum marks if only the answer of 20% is given Max (6)



6.2.2. Yes. The return on his investment in shares is much higher than on alternative forms of investment, e.g. fixed deposits and notice deposits at commercial banks.

OR

No. Returns fell below similar shares in the market. Accept relevant options that relate to returns. yes/no only without motivation, no marks allocated. (4)

6.3.

Criteria for team performance Interpersonal attitudes and behaviour

Has a positive attitude of support and motivation towards co-team members.

Has a positive attitude and passion to achieve team objectives.

There must be clear objectives and agreed goal.

Team members must be committed to achieve the team objectives.

Shared values

Shows loyalty and respect towards team members despite differences.

Perform team tasks with integrity, responsibility and meeting team deadlines with the necessary commitment to team goals.

Communication

Speaks clearly and listens attentively.

Communicates with team members and allows for feedback.

Encourage discussions about problems so that solutions can be found.

Co-operation

Willing to co-operate in the team to achieve team objectives.

Willingness to co-operate with management to achieve team and business objectives.

Any other relevant answer related to criteria that individuals can use to assess themselves against team performance. Any 4 x 3 (12)



6.4.1 Identification Primary sector Reason Extraction of raw material from nature (4)

6.4.2 Identification Tertiary sector Reason

Financial industry providing a financial service to the public. (4)

6.5 6.5.1 Quality of performance within the public relations function Description/nature: -Creating a favorable image of the business by liaising with the relevant stakeholders.

-Being involved corporate social investment programmes. -Delivering of quality goods and services. -Any other relevant description/nature related to public relations function. Sub max (2)

Contribution to profitability/success or failure -Improved relations with clients through effective after sales, e.g. handling complaints. -Phones to be answered promptly and receptionists to act professionally. -Ensuring that internal publicity, e.g. appearance of correspondence is up to standard. -Negative publicity is countered by releasing regular press statements. -Non compliance of relevant legalization, e.g. the Basic Conditions of the Employment Act.

-Improve the positive image of the business through good publicity. -Any other relevant contribution related to public relations function. Sub max (6) Max (8)

6.5.2 Quality of performance within the finance function Description /nature: -Obtain capital from the most suitable source available. -Funds must be effectively allocated in the business. -Financial statements must be correct, up to date and presented to top management and relevant stakeholders.

-Any other relevant description/nature related to finance function. Sub max (2)

Contribution to profitability/success or failure: -Financial control measures/systems to eliminate fraud. -Investing strategies to increase profitability. -The financial department must determine the profitability, gearing and liquidity on a regular basis. -Implementing credit granting and collecting policies. -Accurately analyzing and interpreting financial information. -Any other relevant contribution related to finance function. Sub max (6) Max (8)



QUESTION 7

Introduction: -

A strategy is a plan of action to achieve a goal and serves as an enterprise’s overall plan for development.

A strategy guides the allocation of resources in a business enterprise.

A business enterprise needs to develop strategies in response to challenges and changes in the business environment. Any 1 x 2 (2)

Formulation of strategies Strategies can be formulated by making use of the following steps/factors to consider when developing strategies:

Determine a vision or mission or adapt the existing vision or mission.

Identify opportunities, threats and critical challenges that could affect the business enterprise.

Generate several strategies to address all strategic issues in the business environment.

Identify the enterprise’s strengths and weaknesses.

Set long-term goals that will enable the enterprise to achieve its mission and vision.

Choose the strategy that will best resolve the strategic issue at hand. Max (6)

Types of business strategies.

Integration strategies An integration strategy is defined as the action taken by a company to expand the scope of its business by taking control of activities previously performed by some other business. If a company purchases one of its suppliers or one of its competitors for strategic reasons this is an example of an integration strategy. Vertical integration

Involves an enterprise taking control over either its suppliers or distributors.

Vertical integration can either be forward or backward.

Forward vertical integration Forward vertical integration combines a business with its buyers. Involves expansion of business activities to gain control over the direct distribution of the enterprise’s products. E.g. an abattoir purchasing a number of butcheries, or a tyre manufacturing company purchasing a tyre fitment centre.



Backward vertical integration A backward vertical integration combines a business with its suppliers. Involves distributors owning the suppliers in order to reduce the business’s dependency on the supplier. E.g. a bakery buys a wheat farm to reduce the risk associated with the bakery’s dependency on flour.

Horizontal integration

Involves taking over similar organizations. This strategy gives access to new markets and gets rid of competition. E.g. A large bookseller purchases a number of small independent bookstores.

Intensive strategies.

Intensive strategies are aimed at increasing sales and market share by using available resources.

Market penetration:

A growth strategy where the business focuses on selling products in existing markets.

New business enterprises can use the market penetration strategy to gain entrance to the market by initially selling their products very cheap. Example a grocery store chain offers meat at below the average price of other grocery stores.

This strategy often focuses on capturing a larger share of an existing market by for e.g. Reducing the price to increase sales, increasing the number of sales persons, increasing advertising and promotion.

Market development

This is a growth strategy where the business aims to sell its existing products in new markets for e.g. By exporting its products.

This strategy involves finding new markets, new distribution channels, changing product dimensions or packaging etc.

Product development

Involves the development of new products for the existing market or the adaptation of existing products to fit the needs of consumers. E.g. A bakery starts to add new recipe’s to the existing popular baked items to keep consumers interested.



Evaluation of Strategies - After implementation of the abovementioned strategies, these must be evaluated to determine whether the strategies were successful or not. - Review those strategies that were not successful by implementing alternatives. - Set specific dates to conduct feedback on market research. - Examine the underlying basis of business strategy.

- Compare expected performance and take corrective action.

- Conduct market research and prepare report.

(Any other relevant answer related to evaluation of strategies.) Max (6)

Conclusion - Strategic planning and implementation is a continuous process that needs to be revised by top management on an ongoing basis in order to ensure success and sustainability of the business. - In order for the strategic plan to be successful, workers must adopt a positive attitude

- Any other relevant answer related to conclusion. Any 1 x 2 (2)

QUESTION 7: BREAKDOWN OF MARK ALLOCATION Details

Maximum Total

Introduction 2

Max 32

Formulation 6

Types of business strategies

58

evaluation 6

Conclusion 2

INSIGHT

Layout 2

Analysis, interpretation 2

Synthesis 2

Originality, examples 2

TOTAL MARKS 40



QUESTION 8

INTRODUCTION - The following factors must be carefully considered because they contribute to the success or failure of the business enterprise. - There are many legal procedures and requirements that these friends must comply with when forming a public company. - The correct division of profits creates more income and is important for the success of the business. Any 1 x 2 (2)

Forms of ownership Criteria

Partnership Personal-liability Company (PLC)

Capacity Success factors - Easy and inexpensive to start.

- Shows potential for growth because partners contribute skills.

- Expansion is possible because more partners can join partnership.

- Could have a financial capacity to benefit from good discounts for bulk purchases.

Failure factors - In large partnership, the partners may struggle to agree on business issues.

- The more partners in the partnership, the more difficult it is to control expenses and partners' drawings.

- Any other relevant answer on capacity. Max (6)

Success factors - PLC can attract more shareholders because ownership is controlled by the new Companies Act.

- As the PLC becomes more successful, the value of shares will increase and the PLC may approach more investors.

- Directors are geared to improve business prospects in the market place.

Failure factors - It does not have a capacity to draw on large financing sources therefore cannot grow into financially strong companies.

- It is expensive to run the company and profits may not be sustainable resulting in liquidation.

- Any other relevant answer on capacity. Max (6)



Legislation Success factors

- Easy and expensive to establish/ partners must draw up partnership agreement.

- Partnerships may apply for local tenders.

- Partners are more motivated to make a success because their personal possessions are at risk.

Failure factors - Unlimited liability/partners are jointly and severally liable for the debts of the business.

- If one partner dies or retires, the remaining partners need to draw up a new agreement.

- Any other relevant answer on legislation. Max (6)

Success factors - The rights and duties of shareholders are stipulated in the Companies Act, therefore minimising unethical and corrupt behaviour.

- May obtain government tenders, as PLC is properly registered according to Companies Act.

- Shareholders have limited liability.

Failure factors - Expensive and complicated to register the business.

- PLC and its directors, past and present, are jointly liable for any debts and liabilities incurred.

- An audit is required only if PLC meets the requirements test as stipulated in the Act.

- Any other relevant answer on legislation. Max (6)

Division of profits

Success factors -Partners receive all profits from the business -Profits are divided between partners as stated in the partnership article/agreement. -Because all the profit is divided between the partners, this will motivate them to be successful. Failure factors -Because the profit is divided according to the partnership agreement, one partner may be

Success factors -Profits belong to the company and can be used to expand the business -A part of the profit can be kept in a reserve fund for future needs. -Profit after taxation is divided between shareholders in the form of dividends according to the number & types of shares held by the shareholder. Failure factors -The market value of



working harder than other partners who are earning higher profits. -This may lead to this partner losing motivation and interest in the business. -Any other relevant answer on division of profits Max (6)

shares can be decreased when the dividend paid out to shareholders is low. -Shareholders might not make an income from their investment. -Dividends are not always paid out. -Any other relevant answer on division profit

Max (6)

RECOMMENDATION Answer 1 Partnership– easy and inexpensive

Any other relevant motivation related to partnership OR Answer 2 Personal liability Company – PLC can attract more shareholders because ownership is controlled by the new companies act.

Any other relevant motivation related to PLC OR

Type of ownership must include motivation of success factors.

CONCLUSION - From the above discussion it is clear that these factors may contribute to the success or failure of the business - Management must have this in mind whenever they make a decision. - Any other relevant conclusion. 1 x 2 (2) [40]


Maximum Total

Introduction 2

Max 32

Forms of ownership

Capacity 12

Legislation 12

Division of profit 12

Recommendation 2

Conclusion 2

INSIGHT

Layout 2


Synthesis 2


TOTAL MARKS 40



QUESTION 9: BUSINESS ROLES

INTRODUCTION - Enterprises realise that they cannot exist in isolation, and have to interact with the various environments.

- Many institutions in South Africa have their own code of conduct and code of ethics and a commitment to ethical and professional behaviour.

- A code of practice usually addresses professional behaviour/professionalism, whereas a code of ethics contains ethical actions/what is right and acceptable in a business.

- Any other relevant introduction on the relevant introduction on the relationship between business ethics and professionalism. Any (2 x 1) (2)

Differences between professionalism and unprofessionalism Aspect

Professionalism Unprofessionalism

Respect(1) - Use polite language towards colleagues.

- Help others and listen to advice from others.

- Acknowledge differences in back- ground/culture/religion.

- Any other relevant example of respect to show professionalism. Max (2)

- Use rude/impolite language - Swearing at a colleague

- Nasty remarks about other people's ideas/opinions

- Ridiculing differences in language, culture or religion

- Inappropriate, offensive clothing

- Any other relevant example of respect to show unprofessionalism. Max (2)

Integrity (1) - Looking after equipment. - Keep to the working hours.

- Not bending the law to suit oneself.

- Engage in open dealings.

- Any other relevant example of integrity to show professionalism. Max (2)

- Use business's resources for private purposes.

- Take without permission/Steal business resources.

- Make feeble excuses for work not done.

- Accept bribery.

- Any other relevant example of integrity to show unprofessionalism. Max (2)



Competency(1) - Doing the best possible job. - Work overtime if necessary.

- Going beyond job descriptions.

- Coach and mentor colleagues.

- Any other relevant example of competency to show professionalism. Max (2)

-Take shortcuts with tasks. - Not meeting deadlines.

- Refuse to work overtime although colleagues are doing it.

- Not taking pride in completing tasks thoroughly

- Any other relevant example of competency to show unprofessionalism. Max (2)

Confidentiality(1) - Keep clients' information private and confidential.

- Refrain from criticising clients in front of colleagues and vice versa.

- Not using clients' information to own advantage.

- Any other relevant example of confidentiality to show professionalism. Max (2)

- Gossip about clients. - Discuss confidential client information with colleagues.

- Use client information for own advantage

- Any other relevant example of confidentiality to show unprofessionalism. Max (2)

Objectivity (1) - Treat people equally. - Apply laws/rules consistently and properly.

- Remain objective at all times.

- Any other relevant example of objectivity to show professionalism. Max (2)

- Have special preferences for own benefit.

- Have one-sided views.

- Support destructive ideas.

- Any other relevant example of objectivity to show unprofessionalism. Max (2)

Development (1) - Attend skills development programmes

- Learn from senior/experienced colleagues

- Improve knowledge through reading and conducting research

- Any other relevant example of development to show professionalism. Max (2)

- Refuse to attend skills development programmes.

- Have a 'know it all' attitude.

- Refuse to work in teams.

- Disregard the experience of senior workers.

- Any other relevant example of development to show unprofessionalism. Max (2)



Name: (1) Example of professionalism: (2) Example of unprofessionalism: (2) Max (15) Pricing of goods in rural areas - It is good business practice and professional to have the same price for goods in urban and rural areas.

- Big businesses are reluctant to open outlets in rural areas because of poor returns on their investment.

- It is common practice to pay higher prices for goods of inferior quality in rural areas.

- Prices of goods in these areas are generally based on the personal characteristics of the consumers.

- People in rural areas do not have the means to check and compare prices (via the Internet) and are often forced to buy from the one and only local stores.

- Some businesses exploit consumers by adding much more than necessary to their prices.

- Any other relevant answer related to pricing of goods in rural areas. Max (6) Business Studies 34 DBE/2014 NSC – Grade 12 Exemplar – Memorandum Copyright reserved Please turn over

Unfair advertising - The Advertising Standards Authority (ASA) regulates advertising and protects the interests of the public.

- Businesses can make unwise advertising choices when they are under pressure.

- Advertisements should be honest and not abuse consumers' trust or lack of knowledge.

- Advertisements can contain discriminatory conditions that exclude some sections of the population, e.g. a job advertisement that says 'this job is not suitable for women'.

- Misleading advertising is used to make consumers believe that they can get - more value for money if they support certain products.

- Consumers are encouraged to lodge written complaints to the ASA regarding unethical advertising practices.

- Businesses that advertise an item at an extremely low price to attract consumers but when the customer reaches the store, the item is no longer available.

- Advertisements that advertise 'free' products do not always reveal the hidden costs payable by the consumer.

- Examples of unethical practice: advertise second-hand goods as new.

- Any other relevant answer related to unfair advertising. Max (6)



Professional, responsible, ethical and effective business practice methods Businesses should not be started at the expense of someone else

- The aim should never be profit at all cost, as it will always be to the disadvantage of others.

- Businesses should not use other's ideas to enrich themselves.

- Putting someone else out of business for own gain, is unethical and a poor moral choice.

- Any other relevant answer related to starting business at the expense of someone else. Sub max (4)

Payment of fair wages/salaries

- Workers must not be exploited with low salaries just because it is difficult to find a job.

- Workers' rights and dignity should be respected.

- Employees make a contribution to the success and profitability of the business, therefore they must be remunerated fairly.

- Remunerate workers for working overtime and on public holidays.

- Any other relevant answer related to payment of fair remuneration. Sub max (4)

Hiring honest and trustworthy accountant/financial officers with good reputations

-Businesses should appoint accountants who are known for their ethical and professional reputation and who can prove it with documentation.

- Any other relevant answer related to hiring honest accountants. Sub max (4)



Regular payment of taxes - Businesses should complete tax returns in detail and on time. - Businesses should not evade tax and honestly declare all income earned - Business should pay tax to avoid government penalties and fines. - Any other relevant answer related to regular tax payments. Sub max (4)

Transparent processes and procedures - Staffing and other processes should be open and transparent - Employees should be aware of the employment policy of the business. - All laws that govern employment should be communicated to workers. - Any other relevant answer related to transparent processes and procedures. Sub max (4)

Draw up a code of ethics - Ethical codes of conduct should be communicated to workers, so that they know what is expected and what the company stands for. - Employees should buy into the expectations for ethical norms/conduct as set out in company's code of ethics. - Any other relevant answer related to drawing up a code of ethics. Sub max (4)

On-going development and training for all employees - Continuous and regular training is necessary to explain the importance of ethical and professional conduct. - Employees should understand that certain conduct/actions have certain consequences. - Employees should be encouraged to attend training courses and upgrade their skills. - Employees promote their own career development and also contribute to an increase in productivity - Any other relevant answer related to on-going training and development. Sub max (4)

Performance management system should be in place - Business should evaluate employees' performance against the job description. - Employees should be acknowledged for good performance. - Training needs can be based on the results obtained from conducting performance appraisals. - Management systems should ensure that employees are treated equally to prevent conflict. - Workers' rights should also be considered when management systems are introduced. - Any other relevant answer related to performance management systems.

Sub max (4)



Managers must set the tone and example - Senior management members must act as role models by ensuring that their actions and decisions are in line with the code of ethics.

- Employees should have a desire to exhibit the behaviour of their managers.

- Any other relevant answer related to the example set by management. Sub max (4)

Adequate internal controls

- Effective monitoring systems should be in place to monitor usage of all resources.

- Regular meetings/discussions should identify and address potentials problems, in order to be pro-active or re-active.

- Workers should understand the purpose and the processes of internal control.

- Any other relevant answer related to internal control measures. Sub max (4)

Honesty, accountability and transparency in relationships and transactions

- Transactions/Relationships with all stakeholders, e.g. suppliers, staff, etc. should always be honest and open.

- If transactions are properly documented, a paper trail is created that supports accountability.

- Systems should protect customers, suppliers and employees, especially when dealing with financial transactions.

- Information technology should never be used to manipulate the database or make transactions look so complicated that they are not properly inspected.

- Any other relevant answer related to honest, accountable and transparent transactions/relationships. Sub max (4)

Protection of the environment

- All laws and regulations applicable to environmental protection should be taken seriously.

- Laws and regulations should be adhered to so that profits are not generated at the expense of the environment.

- Pollution and other environmental issues should always be considered in all business activities, e.g. safe disposal of waste/ dumping of toxic waste, etc. - Become involved in environmental awareness programs.

- Physical working conditions should always be worker friendly, safe and should promote occupational health. - Physical working conditions, e.g. adequate lighting, ventilation should be taken care of.

- Any other relevant answer related to the protection of the environment. Sub max (4) Max (16)



Conclusion - Ethics and professionalism form an integral part of business operations and practices.

- It is important that a business's dealings and behaviour are in line with its code of ethics and professionalism.

- Businesses who behave professionally and ethically are usually sustainable and have a good public image.

- Any other relevant conclusion related to business ethics and professionalism. Any 1 x 2 (2) [40]


Maximum

Total

Introduction 2

Max 32

Differences 15

Pricing of goods 6

Unfair advertising 6

Ways 16

Conclusion 2 INSIGHT

Layout 2


Synthesis 2


TOTAL MARKS 40

LASO - For each component: Allocate 2 marks if all requirements are met. Allocate 1 mark if some requirements are met. Allocate 0 marks where requirement are not met at all.



QUESTION 10

Introduction

- Human resources management involves the process of finding the appropriate worker with the relevant skills to fill a particular vacancy to meet the goals of the enterprise. - This process involves recruitment, selection, interviews, induction and placement. - Human Resources Management is an ongoing management function. - Any other relevant introduction relating to human resource management.

Any 2 x 1 (2)

CONTENTS OF CONTRACT OF EMPLOYEMENT

A contract of employment contains the following information

The job title.

Brief description of work duties.

Date when employment commences.

Working hours.

Wage/salary payable.

The different kinds of leave the employee is entitled to.

The notice period needed to terminate employment. (Any other answer relating to contracts) Max (8)

INDUCTION

Induction is a formal method of introduction of the employee to his new

work environment.

How, what, where, when, and why must be communicated to the new

employee in a formal way

Newly appointed employees learn to function efficiently within a new

organisational culture.

The new employee's obtain information, behavioural/technical skills and

values associated with the new role in the business.

Any other relevant meaning related to induction. Sub max (4)



Objectives/Purposes/Advantages of induction

Make new employees more productive.

Reduce fear

Reduce insecurity.

Acquaint the new employee with work procedures.

Establish relationships with fellow employees at different levels.

Create a sense of belonging.

Employee gets used to the objectives, policies and rules of the

business.

Create realistic employee expectations.

Employee is more positive towards the employer.

Any other relevant answer related to objectives/purposes/ advantages of

induction.

Sub max (4)

Disadvantages/Challenges/Lack of proper induction processes

The employee may/will:

take much longer to settle down.

regret taking up the post.

feel uncertain and unwelcome.

take a long time to become productive.

resign.

Any other relevant answer related to disadvantages/ challenges/lack of proper

induction processes. Sub max (4)

Induction programme is the responsibility of:

Supervisors.

Heads of departments.

The Human Resource Practitioners.

Mentors and coaches.

Shop Stewards.

Staff representatives Sub max (4)

Factors to be considered in planning induction programmes

The induction policy and design.

Budget constraints.

Time needed for effective implementation.

Materials, personnel and facilities to be used.

Training needed by the new employee.

Flexibility on education, intelligence and work experience. Any other relevant answer related to the planning of the induction programmes Sub max (4)

NOTE: Take particular note of the repetition of facts. (20)



Employment Equity Act (Act 55 of 1998)

This Act states that there must be no discrimination on the basis of race, age, gender, religion or disability in the workplace.

Affirmative Action is used as a mechanism to correct the imbalances of the past with respect to access to employment, training, promotion and equitable remuneration especially for blacks, women and the disabled.

Employers who employ 50 or more workers must develop specific affirmative action plans in consultation with the workers.

Business enterprises must submit employment equity plans every two years to the Department of Labour.

This Act also forces businesses to employ more people from disadvantaged groups and promote the same to managerial positions.

The employment equity plan of the business must be built into its recruitment and selection process.

(Any other relevant answer related to employment equity act.) Max (12) Conclusion - An effective human resources recruitment process will ensure a low

employee turnover for the company. - This activity must ensure that the appropriate candidate with the relevant

skills and experience is appointed to the post to enable the company to achieve its goal.

Any 1 x 2 (2) BREAKDOWN OF MARK ALLOCATION

DETAILS Maximum Total

Introduction 2

Max 32

Contract of employment 8

Induction 20

Employment Equity Act (Act 55 of 1998)

12

Conclusion 2

INSIGHT

Layout 2


Synthesis 2


TOTAL MARKS 40

LASO – For each component

Award 2 marks if all requirements are met.

Award 1 mark if only some of the requirements are met.

TOTAL SECTION C: (80)

GRAND TOTAL: [300]

business studies - western cape · business studies 3 preparatory examination september 2014...

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