teachers guide - consumo
TRANSCRIPT
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Contents:
Chapter 1: Business Environments Page 2
Chapter 2: Corporate Social Responsibility Page
Chapter 3: Management and Entrepreneurship Page
Chapter 4: Research and presenting of data and information formats Page
Chapter 5: Forms of Ownership Page
Chapter 6: Creative Thinking and Problem Solving Page
Chapter 7: Professionalism and Ethics Page
Chapter 8: Teamwork and Conflict Management Page
Chapter 9: Public Relations Page
Chapter 10: Financial Page
Chapter 11: Marketing Page
# Please note: The questions are VERY open-ended and the students must be
allowed to apply their answers by incorporating personal opinion and varied insight.
The answers in this book only serve as a guide to the teacher and are not the only
possible answers.
Teachers Guide
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Chapter 1: Business Environments (Page 1)
Activity 1: Page 8
Complete a SWOT analysis for Mr Price. Assess how the different elements of the SWOT analysis could lead to the
success of Mr Price.
There is no stipulation about the format - This SWOT has been put into a table in order to show how each
element needs an analysis of how it could lead to success.
SWOT analysis Of Mr Price (Mrp)
Aspect How it could lead to the success of Mr Price
Str
eng
ths:
Mrp has 1150 stores in total, which implies it
is an established, well-known brand.
These stores are located in a variety of
areas across Africa, making the brand
accessible to all Africans.
Mrp has launched its online store and has
successful result of R112.3 million in sales.
Online stores are more cost effective then
physical stores in malls and have seen a
growth of 107.3% for Mrp.
Mrp has a strong brand with a large
customer base which is echoed in the R18.1
billion turnover.
The strong brand has drawn customers to
the stores which has added to the 13.9%
growth on last year.
Aspect How it could lead to the success of Mr Price
We
akne
sses:
Mrp‘s stores have been known to be
cluttered and untidy at times, which can
leave customers with the wrong impression
of the brand.
If management look at this ‗clutter‘ issue and
fix it, it will gain favour in the eyes of the
public and increase their market share.
Mrp offers low price items, which can place
the quality of the product in the spotlight.
Low quality is often associated with the
brand.
If Mrp adapts their marketing to combat this
perception, it will improve their image and
customers will be assured of quality.
Suppliers can also be consulted on the
required quality standards.
Aspect How it could lead to the success of Mr Price
Op
po
rtu
nitie
s:
Mrp can continue expanding the brand, Mrp
can open ‗Mr Price food‘ which will take
them into a new market with new
competitors like Pick n Pay.
Considering the model of low prices, ‗Mrp
food‘ will possibly have a large customer
base purely because of the perception of the
market.
Mrp can look at an ‗expensive‘ brand within
the brand. They can have an exclusive
range that is of higher quality and higher
priced in a small section in all stores.
This could increase their market share by
adding a new segment to the market. It
could also kill the rumour which brings the
general quality into question.
Aspect How it could lead to the success of Mr Price
Thre
ats
:
Inflation is at an all-time high and people are
left with less disposable income to spend at
Mrp stores.
Mrp needs to understand the struggles of
the consumers and needs to try and meet
their needs by offering lowest of low prices.
The Rand has weakened against other
currencies and Mrp imports a lot of its stock
from other countries. This is placing their low
price under pressure.
Mrp price needs to investigate the strength
of the Rand against all major currencies and
investigate different sources of supply. They
can also buy in large quantities when the
Rand strengthens.
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Activity 2: Page 10
Using the SWOT analysis in Activity 1. Complete a TWOS analysis for Mr Price. Also keep an eye on the values of Mr
Price and ensure that your strategies are in line with these values.
TOWS for Mrp Strengths:
1150 store - established brand
Successful online offering
Large customer base - R18 billion turnover
Weaknesses:
Cluttered and untidy stores
Quality questionable
Opportunities:
Possible brand expansion to ‗Food‘
Add an exclusive range
SO Strategies:
Add a small food section to all stores.
Healthy foods to the sport stores.
WO Strategies:
All stores can focus on better packing/displaying of products on shelves.
An exclusive store displaying pristine quality and tidiness.
Threats:
Inflation
Weak Rand
ST Strategies:
Source cheaper suppliers to continue to bring exceptionally low prices.
Look at increasing the options of customer accounts.
WT Strategies:
Find innovative ways of keeping stores tidy - not necessarily employing more staff.
Possibly cut down on the variety of clothing but buy larger quantities.
Activity 3: Page 14
1 Use the Porters Five Force model to help assess the market environment and develop strategies for Cell C to
improve the business.
2 Now add the sixth
force, complimentary products and discuss how Cell C can use this to improve the business.
1 Porters Five Force Model - Cell C
Level of Rivalry in the market:
A competitors profile will tell Cell C everything about their competition as it is important for any business to
know what their competitors are doing. Cell C needs to know their competitors and their every move! By
Cell C knowing their competition they can prevent them from stealing any market share, they can beat them
with new ideas and they can slowly take bits of the market away from Vodacom in order to get closer to
being the market leaders in the industry.
Strategy:
Cell C needs to develop strategies to improve and outperform competitors in the above mentioned factors,
as competitors have the power to "lure away" customers and thus profits. Competitor intelligence is
essential to be able to benchmark your position as a business in the market in which you operate. This
intelligence will allow Cell C to pre-empt actions that could maintain their own market share and allow them
to adapt their strategy to counter strategies from their competitors.
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Threat of New Entrants:
Not only current competitors "steal" customers, there may be a challenge from a new business that sees an
opportunity to make money by entering the market. An existing business will see any potential new
business as a threat to its market share and profits. The business therefore, tries to build "barriers"
(strategies) to prevent new businesses from entering the market successfully.
Strategy:
The idea of Cell C building its market share is to both gain more profit but also, the bigger its market share,
the less space there will be for a new entrant. If Cell C were to see a gap where its customers were leaving
because they were looking for a different type of cell phone package, it would be in their best interest to
revise their packages to include more variations. What could happen is that a ―NEW‖ business could see
the gap and then open up a cell phone company in South Africa. The fact that it is so expensive to create
the network infrastructure is a barrier, however, companies like Virgin mobile and now Mrp mobile have
overcome this by piggy-backing on other networks infrastructure.
Availability of substitute product: The difficulty with a substitute product is that it is the same need that is being satisfied with a different product. For example, when it comes to Cell C – the general need is communication and data. In the line of communication there is Telkom fixed lines (ADSL) as an option or even pay-phones which are provided to the public. Strategy: Cell C needs to investigate all options that Telkom offer their clients and assess whether there is an aspect that they need to include in their products to minimise the chance of customers using substitute products. Telkom is a parastatal and their infrastructure is paid for by the government. The infrastructure is huge and very costly which makes it difficult for Cell C to tap into their market. Power of Suppliers: A business in most cases is totally dependent on their suppliers and Cell C is no different. Cell C‘s suppliers include all the cell phone manufacturers like Apple, Samsung etc. They also have products like covers and screen protectors which come from different suppliers and if it does not arrive at the exact time, it will cause a huge disruption in business. In order to be successful, the business depends on the supplier to provide a good quality product when needed (timing) and to deliver the correct quantity to the place needed at a reasonable price. Consequently less successful. Consequently, it is critical that the business develops and maintains good relationships with suppliers.
Strategy:
Cell C must ensure open communication between suppliers and themselves. All correspondence must be in writing and both parties need to be clear about all expectations to ensure there is no disappointment. Cell C needs to ensure the suppliers are paid on time.
Power of the buyers:
The cell phone users are the most important, without the buyer Cell C is nothing. Cell C has spent a lot of
money on advertising to ensure customers know about them and that they know about the customer.
Strategy:
Cell C needs to continue putting the customers‘ needs first. Their strategy to buy out your existing contract
is a unique selling point that has already assisted in capturing a larger market share.
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2 Complementary Products (6th force)
The presence of the sixth force of Porter, can benefit or hurt the other companies competing in an industry,
depending on the circumstances. Complementary goods do not necessarily increase or decrease the
competitiveness of an industry, they merely add another layer to the structural complexity of the competitive
environment.
Strategy:
Complimentary products (referred to as value added services) on Cell C‘s site include:
Wifi-calling Facebook basics Thumbtom C surance Data transfer These services are additional to the contract you get and definitely strive to improve Cell C‘s market share.
Activity 4: Page 18
With the use of the PESTLE table below, complete a PESTLE analysis for Cell C.
It is important to provide the following strategies for Cell C:
How to take advantage of the impacts of the various PESTLE analysis elements
How to overcome the impacts of the various elements of the PESTLE analysis
When you complete the table, think about the impact of your suggestions/decisions on the market share, the brand,
the current competitive position of the business, but also the future existence of the business.
PESTLE Factor Understanding of this factor Potential
impact of
the factor
Implication and importance
Listing the different PESTLE
factors and the elements below
each one.
How these factors and elements, if not
dealt with, could have an impact on
your business / part of your business
High
Medium
Low
Unaffected
Type of effect:
P - Positive
N - Negative
U - Unknown
Impact: Increasing Decreasing Unchanging
Relative importance: Critical Important Unimportant Unknown
Political:
Political instability in certain countries.
Government changes may result in different regulations.
Cell C may be in business with these countries and trade restrictions might be imposed.
Political power may shift in the country causing changes to the country.
M
H
N
P
I U
I I
Economic:
The global economic slowdown has resulted in the slowing down of consumer‘s spending money.
The weakening of the Rand against other currencies.
Cell C will need sales of airtime and data to continue to grow. The slowdown will definitely hamper their growth and they will need strategies to be put into place.
Cell C purchase their phones from other countries and the weakening Rand will
H
H
N N
I I
C C
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mean Cell C needs to pay more money per device.
Social:
Social media platforms are leading forms of media.
Unemployment rates are on the increase in our country causing a ripple effect on crime
Cell C needs to utilise this ‗cheaper‘ way of marketing. It also needs to be careful that there is not negative publicity.
Cell C will definitely be affected by unemployment and crime - they have ‗Csurance‘ for their customers.
M
H
P N
I I
I I
Technological:
Technology surrounding cell phones and caballing is advancing at a rapid rate.
All electronic paying/till systems are run with electricity – constant load shedding is causing issues with interrupted work and breakages
Cell C needs to keep up with Vodacom who are the industry leaders. This means moving money from other priorities to keep technology ahead.
Cell C must not let the customer experience in their store be interrupted by load shedding. Alternate energy sources are expensive but a must.
H
H
P N
I D
I I
Legal:
BBBEE & Employment Equity
Basic condition of employment act
Cell C are under immense pressure to increase their scorecard ratings. This could affect current staff - leading to retrenchments.
Cell C need to treat their employees well and the BCEA should be the minimum they adhere to.
H
M
P P
U U
I I
Environmental:
Global warming and increasing carbon footprint have resulted in a drastic need for the environment to be protected.
The rules for disposal of oils and waste products which are harmful to the earth are clear and are punishable by law.
Cell C is a large company that will damage the environment if it is not intentional about being eco-friendly and its customers will question whether or not it they want to support a company which is damaging the environment - they might choose a different company which is more eco-friendly.
If they are not compliant, the directors will be punished by law and could face jail time due to their fiduciary duty.
M
H
N P
I I
I I
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Additional activities: Page 19
1 Explain how socio-economic factors could impact on a business, both positively and negatively.
Negatively: There are many socio-economic factors which affect the business, these include poverty,
unemployment, HIV Aids, crime and corruption etc. These issues could directly or indirectly affect the
business. Eg: Crime - the business would need to spend more money ensuring the customers experience
at the store is a safe one or else they will go elsewhere. Unemployment leads to poverty - if so many
people are unemployed, they do not have money to spend at your store, which will not allow your business
to grow as much as it would in a country with a lower unemployment rate.
Positively: The business could get involved in assisting the community in eradicating these socio-economic
issue, thus finding favour with the public and really making a difference in the lives of many.
2 Draw a mind map where you look at the interrelatedness of the different business environments. How do the
environments have an impact on each other?
(Students can draw any diagram, it must just include three environments and show an interrelatedness.)
Business adapts
to factors by
strategic
planning
Interrelatedness of Business
Environments
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3 Discuss how the different environmental scanning tools could be used in conjunction with each other (i.e.
using the tools simultaneously) to scan the business environment.
4 Discuss the power a buyer has over a business. Do you think a business is able to overcome this power and if
so, how? Give practical strategies.
The buyer has the power to demand a lower price, a higher level of quality, longer trading hours, delivery
of products, a wider variety of goods, etc.
If the buyer demands any of the above (and you can add some more demands to the list), the business
will have to decide if it is worthwhile to meet these demands.
Satisfying more consumer demands would mean lower profits for the business. Not meeting the
demands however, may mean no profits if consumers switch to competitors.
Remember the buyer does not have to be an individual consumer. Another business may also buy the
products to resell or manufacture something.
Yes the buyer can overcome this by creating a strong brand where customers become brand loyal and will
be more insistent on buying your product even if it costs more or they have to wait.
5 Name six factors which could be found under the economic element of a PESTLE analysis.
Political, Economic, Social, Technological, Legal, Environments……Physical and Ethical
6 Discuss the impact that three of these factors listed in question 5 could have on Famous
Brands.
Factor Possible challenge Strategies to address the challenge
Political
Political instability in certain countries.
Government changes may result in different regulations.
Be very careful where Famous Brands open international outlets.
Be very knowledgeable on any new regulations brought out by government.
Economic
The global economic slowdown has resulted in the slowing down of consumer‘s spending money.
Economic pressure is causing rapid development in all sectors to gain competitive advantage.
Continue to come up with special in stores, like in Steers - Wacky Wednesday and the latest special R49.90 King Steers burger and chips.
Continue to support individual stores by ensuring their
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advertising is effective.
Social
Social media platforms are leading forms of media
Unemployment rates are on the increase in our country causing a ripple effect on crime
Famous Brands needs to use other platforms like Instagram and Facebook to advertise
Famous Brands can offer forms of training to assist with unemployment by empowering or even assisting with feeding schemes.
Technological
Technology surrounding the food industry is advancing at a rapid rate – automation
All electronic paying/till systems are run with electricity – constant load shedding is causing issues with interrupted work and breakages
Famous Brands can use their expertise to source the machinery from all over the world.
Special plugs need to be installed so when the electricity goes on and off it does not damage the machinery. The individual outlets can also install generators to run the machinery in times of outages.
7 Name the tools which would be most appropriate for scanning each of the following environments:
A Micro environment B Market environment
C Macro environment
A SWOT analysis
B Porters Five Force Model
C PESTLE analysis
8 Define the term strategy.
A strategy is a plan of action on how a business can respond to challenges in order to create or defend
their competitive advantage.
9 Explain how you, as a manager, would use the information gained from an environmental scan as part of your
strategic planning process.
When we decide to travel to a new and unknown destination, we program our GPS with the address of
our destination. The GPS then calculates the best route to take and gives us directions to get there.
These directions may change depending on traffic patterns detected by the GPS and whether the
traveller wants the most direct route or the fastest route.
In business, management functions as the GPS. It has to take into consideration where the business
wants to go to (vision) and then formulate a mission and strategies that will give the business directions
on how to get to the destination.
Environmental scanning monitors the business environment to ―detect traffic jams‖ that should be
avoided and ―areas with limited traffic‖ where the business has the opportunity to get ahead of
competitors on the business road. It is no good if management scans the road ahead at the beginning of
the journey and then does not ―recalculate‖ (evaluation and control) based on problems detected.
10 Discuss the extent to which Famous Brands (FB) is able to minimise the influence of the elements of Porter‘s
Five Force model (market environment). Use practical examples to illustrate your answer.
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Level of Rivalry -
Because there are many competitors in the market, FB needs to know everything about the competition.
Because there is limited potential for the market to grow and all competitors have to compete for the
same market share - FB must ensure their customer service and menu offerings are much better than
competition to gain a greater market share.
FB must ensure that their restaurants offer option that can easily be substituted for example if you don‘t
get takeaways there is the option of sitting down at a restaurant.
FB must ensure a high level of customer loyalty so they can be assured of repeat buying and that their
customers won‘t easily move to competition.
Threat of New Entrants -
FB needs to understand who makes up their market share and then know exactly what it is that this
market requires.
If there is any additional need from the consumers they need to know by doing comprehensive market
research. Ideally, FB must know what the consumer needs BEFORE they know it themselves, in this
way they are able to foresee a gap in the market and if necessary try close the gap.
Availability of substitute products -
FB needs to establish what substitute products there are for their product range and then consider how
these substitutes can be provided for within their stores or it may even open up a new business
opportunity.
FB also needs to know exactly how much other businesses are selling the substitute products for.
Power of the supplier -
FB must create open communication channels with their suppliers in order to ensure delivery on time.
FB must ensure they are paid on time and in this way the supplier will not hesitate to give them the appropriate service.
FB must do what is necessary to ensure they get the best possible price and service from their suppliers.
Power of the buyer -
FB must know the customers‘ needs very well. They must engage in continuous market research in
order to establish the change in needs.
FB must ensure that customers are treated like ‗Kings‘, the customer always comes first and all
employees must treat them like this.
In this way they will be satisfied with the products and services of FB and will not eed to look at
competitors.
11 Find thee different articles that discuss the challenges The Post Office is facing and then complete the table
below.
http://www.news24.com/MyNews24/the-doomed-south-african-post-office-20160510
http://ewn.co.za/2016/05/10/Minister-appeals-with-workers-for-a-chance-to-redeem-post-office
http://af.reuters.com/article/southAfricaNews/idAFL5N1873LK
South African Post Office (SAPO)
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Challenge/s Environment
(micro/market/macro)
Extent of control Post
Office has over the
challenge
Strategy to counter the
challenge
Inflation - There is a
general increase in the
price of items and
services.
Macro The SAPO can‘t control
the fact that there is
inflation or that their
expenses are increasing.
SAPO can increase their
prices for postage to bring in
more income.
They can also relook at their
suppliers to ensure they are
getting the lowest prices.
Strikes - over wages due
to an increase in inflation.
Macro SAPO has minimal control
over inflation, however,
depending on how they
deal with the Unions and
employees will determine
whether or not there are
strikes or not.
SAPO can negotiate with the
Unions to suspend strikes by
putting a future plan in place
so workers feel valued.
Past mismanagement of
company money and
poorly run parastatal
institutions.
Micro SAPO has a lot of control
of how future money is
spent and how the
business is managed.
SAPO (as the article explains)
can loan the money from
banks and incorporate a turn-
around strategy to try turn
SAPO into a profit
organisation.
12 Inflation is an element found in which environment:
A Micro B Primary
C Market D Macro
13 ____ is viewed as the 6th element of Porter‘s model.
A Substitutes B Globalization
C Complements D Product life cycle
14 Differentiate between the following elements in the micro environment:
A Business resources B Business functions
C Management
A Business resources - This includes Human, financial, physical, and knowledge factors that provide a
firm the means to perform its business processes.
B Business functions - A process or operation that is performed routinely to carry out a part of the
mission of an organisation. This could include any of the eight functional areas.
C Management - The organization and coordination of the activities of a business in order to achieve
defined objectives.
15 Assess how each of the following factors could have a positive and negative effect on the success of a
business.
A The market B Competitors
C Suppliers D Intermediaries
Positive effect on the success of the business Negative effect on the success of the
business
A - The market If the market has potential for high levels of If the market is unattractive and there is not
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profit and the business is able to achieve it, it
will add to the success.
much potential to make a profit, then it will not
lead to much success for the business.
B - Competitors If there is a low level of competition in the
market it will allow the business to gain a
great share of the market and then get greater
profits.
If there is a high level of competition in the
market, it will decrease the market share and
limit the profits of the business.
C - Suppliers If the suppliers and the business have a good
relationship, they will deliver the right quality
at the right price and time etc. this will allow
the business to give their customer a better
service and it will increase their all-round
success.
If the suppliers don‘t adhere to delivery times
and don‘t give good prices, the customers will
inevitably suffer and they will move to the
competition. This leading to loss in market
share and profits.
D - Intermediaries Often when you give your product to an
intermediary, they sell it on your behalf. You
need to know they are saying the correct
things about your product as well as giving
the customers the right service as the
customers will associate your product with
that intermediary. If this is done correctly, it
will lead to the success of the business.
If intermediaries don‘t market your product
well enough to customers or the customer
experience in their store is not positive, it will
lead to a decrease in sales.
16 Assess how each of the following socio-economic factors could have an impact (positively and negatively) on
the productivity of a business.
A Population growth B Illiteracy
C Lack of skills D Unemployment
E Crime
Socio-economic factor Impact on the productivity of the business
A Population growth Positive: considering there are now more people who will possibly utilise the
product or service you are providing will increase the need for productivity.
Negative: Your staff might need to take maternity leave and this causes a
disruption in your productivity.
B Illiteracy Negative: If your employees are illiterate, they will require assistance and
additional training. This then takes them away from their core responsibilities
and will reduce productivity.
C Lack of skills Negative: As above, employees will need to be trained before they can do their
job and therefore this will reduce levels of productivity. If they are not trained, the
quality of their work will be questionable.
D Unemployment Positive: Workers are under pressure to be productive in their jobs because they
are aware that there are many people out there that are desperate for work.
E Crime Negative: More money, effort and processes need to be put into security to
combat crime, therefore the resources (money, time) spent on security is taken
from productivity, so levels of productivity will decrease.
Chapter 2: Corporate Social Responsibility (Page 21)
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Activity 1: Page 23
Identify a business you are familiar with. Do some research about the business and its CSR programme. Present your
findings to the class for the purpose of discussing common grounds of CSR between businesses.
Students can choose any programme from any company - some examples of programmes include:
KFC Add hope campaign - R2 is optionally added to every meal to send as a donation to feed over 70000
children. The children are fed with porridge.
Pick „n Pay - Wind turbines Pick n Pay has wind turbines installed at our regional office in Port Elizabeth.
Although the wind turbines only generate 3% of daily energy usage at the moment, they are an important
way for us to learn about renewable energy. Worm farms are installed at all our regional offices and at our
Constantia store, where we make compost from fruit and vegetable waste, thereby decreasing the amount
of rubbish we throw away, and increasing our ability to recycle in an effective way.
Investec - Promaths and CSI bursary programmes
Together with the commitment of our partner organisations, we have given more time, more support and
more attention to promising students and learners in order to equip them for the bright future they deserve.
These initiatives have grown enormously in the last decade and have all the right elements to continue to
produce out of the ordinary results in the future.
Activity 2: Page 23
Use the same business that you used in Activity 1. Assess your business‘s level of responsibility according to the
elements discussed in the pyramid above. Make sure you have facts available to justify your findings regarding the
level of responsibility for the business.
KFC Add hope campaign - R2 is optionally added to every meal to send as a donation to feed over 70000
children. The children are fed with porridge.
http://addhope.co.za/wp-content/uploads/Add%20Hope%20Annual%20Report%202014.pdf (Annual
integrated report)
Blowfield and Murray pyramid:
o Economic Responsibility: At the most basic level, a business is responsible to ensure that it is
economically active, i.e. it produces goods / services that can be sold at a profit and from which
employees and shareholders will benefit.
KFC - They have a successful business. There are 736 KFC outlets in South Africa. They are well
established and have a successful turnover.
o Legal Responsibility: All businesses have the responsibility to ensure it is respecting the laws of the
country in which it operates. By obeying the laws of the country, the business is a responsible citizen in
the broader society.
KFC - On their website, they make many promises to their stakeholders. Their promise is that are
that they are engaged in is representative of sound governance.
o Ethical Responsibility: At this level the business has to ensure it is making ethically sound business
decisions that will not have a negative impact on stakeholders and the sustainable future of society and
the environment.
KFC - The Trustees are responsible for efficient and effective corporate governance for the Funds
collected and carry out their responsibility as Trustees with great care and in an accountable
manner. The appointed external auditors are responsible for the independent auditing and the fair
presentation of annual financial statements.
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o Discretionary Responsibility: It is a higher level of responsibility than simply not harming others. The
business should consider how or what, and to whom or what, the business will give back. It is about
building a brand with values and ensuring that these values are being practised by the business in all its
business activities both internally and externally.
KFC - Their discretionary responsibility is their feeding scheme. Feeding over 70000 children is
more than just not harming others.
Activity 3: Page 27
Work with a partner and brainstorm the question ―does it pay to be good?‖ Once you have brainstormed the question
formulate an official response by referring to a minimum of two businesses and their CSR programmes, detailing
possible benefits / negative consequences.
Arguments for:
Businesses that are assisting the community in which they operate through CSR programmes, receive
greater support from the community. People see these businesses / brands as having a reputation for
caring; the community in turn supports the business and becomes brand loyal.
It is argued that businesses need to act on social issues in their communities or else customers will
move away. For example: Increased levels of poverty will lead to an increase in crime which could result
in customers avoiding the area. An increase in crime also results in the community having less money to
spend at businesses.
There are people debating the issue of whether government should enforce the King Code as a law. It is
argued that if businesses are doing CSR voluntarily there will be no need for the added pressure for a
law to enforce compliance, not to mention the red tape of policing it.
If business assists the community to increase its standard of living through education and health
programmes, it will benefit from a community that has a higher standard of living and a higher level of
disposable income.
By giving back to the environment through sustainability programmes, businesses are ensuring that
future generations will have resources needed to prosper.
Businesses that operate in sustainable ways are usually also innovative enough to identify additional
avenues of income.
Businesses that implement CSR initiatives are generally speaking, concerned about the impact that they
have on stakeholders and this in turn promotes more ethical business practice.
In many cases the business may already have suitable programmes in place to deal with social issues in
the community. For example, the business could have programmes in place that deal with leadership
and entrepreneurship that are used to empower its own employees. These programmes can then easily
be expanded to include the broader community.
Arguments against:
Many businesses have argued that CSR detracts from their core business activities.
Businesses and often shareholders as well, see the money spent on CSR as less profit in their pockets.
It is difficult to measure the benefits of CSR and as such it is difficult to measure if the business gains
anything from CSR.
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Many businesses feel the pressure from the communities which have been helped via a CSR
programme, puts additional strain on them to keep on giving. If however, the business is not able to
meet all the needs of these communities, some communities may view the business in a negative light.
Some people argue that not all CSR projects are sustainable and that businesses are wasting time and
valuable resources on ―hit and run‖ programmes.
CSR sometimes leads to businesses misleading stakeholders regarding their environmental practices.
This is called Greenwashing.
Some critics argue that CSR is allowing the State to shift its responsibility.
Use the following rubric to mark your responses: (Optional)
0-2 3-5 6-8 9-10 TOTAL
Brainstorming the
concept
“does it pay to be good”
Demonstrates little to
no understanding of
the topic. Many
requirements of topic
are missing.
Demonstrates a fair
understanding of the
topic. All requirements
of topic are included
in the response.
Demonstrates
considerable
understanding of the
topic. All requirements
of topic are included.
Demonstrates
complete
understanding of the
topic. All requirements
of topic are correctly
applied and included.
Response:
Business 1
CSR programme with
positive and negatives
Demonstrates little to
no understanding of
the topic. Many
requirements of topic
are missing.
Demonstrates a fair
understanding of the
topic. All requirements
of topic are included
in the response.
Demonstrates
considerable
understanding of the
topic. All requirements
of topic are included.
Demonstrates
complete
understanding of the
topic. All requirements
of topic are correctly
applied and included.
Response:
Business 2
CSR programme with
positive and negatives
Demonstrates little to
no understanding of
the topic. Many
requirements of topic
are missing.
Demonstrates a fair
understanding of the
topic. All requirements
of topic are included
in the response.
Demonstrates
considerable
understanding of the
topic. All requirements
of topic are included.
Demonstrates
complete
understanding of the
topic. All requirements
of topic are correctly
applied and included.
TOTAL: (30 MARKS)
Activity 4: Page 28
Use the same business as in Activity 1 and 2. Identify the different stakeholders for your business and plot them on
the graph above. Motivate why you have plotted each stakeholder in a particular position on the graph.
Business Influence
LOW HIGH
Stak
eho
lder
s' in
tere
st
Insi
gnif
ican
t
Low priority for
attention
Medium
priority for
attention
Sign
ific
ant Medium
priority for
attention
High priority for
attention
1 2
3 4
16
The learner‟s response could differ, this is a suggested answer:
Staff - 4
The staff are a high priority because the objectives of the organisations success rest on their shoulders.
Customers - 4
The customer comes first and they are a priority to the business.
Shareholders - 4
Shareholders are important, however, if the business is conducted correctly according to the vision, the
shareholders will be happy with the results.
Regulators - 3
Regulators are important, however, they are a medium priority because if a business factors the regulators
needs into their planning, the business will be compliant.
Government - 2/3
Government are a medium priority for the business, however, if businesses abide by legislation there will
be no issues.
Media - 2
The media is an ongoing issue for the business as all media (as far as possible) needs to intentionally add
to the businesses good image.
Communities - 1
As much as the community can be seen as insignificant, they are the people affected by businesses the
most. CSR programmes can improve their standard of living drastically. They need to be looked after or
else it might become compulsory for
Suppliers - 4
Having the right supplier for the task and ensuring the relationship between them and the business is sound
is a top priority to ensure the business delivers the best service to the customers.
Unions - 3
Engaging in collective bargaining with trade unions is very important for a business if they want to maintain
a happy, productive workforce.
Activity 5: Page 31
Use any business of your choice and assess the business‘ compliance with / commitment to the seven principles
above.
The following extracts are from MR Price Group Ltd
Concept of Citizenship:
―We understand that stakeholders‘ perceptions affect our reputation in all the markets in which we operate,
and that we need to deal with these proactively, while ensuring that we maintain a balance in our treatment
of stakeholders. The Board retains oversight of stakeholder management, while the implementation and
monitoring of stakeholder engagement is devolved to the various management teams in the Group.‖
17
Strategic intent:
―The Foundation delivers programmes that respond to socio-economic challenges, including poverty,
unemployment, poor education and the skills gap of school leavers entering the job market. Impact has
been achieved through improved literacy and numeracy levels in the primary schools and by assisting
learners from selected high schools to consider job opportunities in retail. ―
Leadership:
―We believe that the best way to align the interests of the Company, our customers, associates and
shareholders is by relentlessly pursuing our long term vision, while daily living out the dreams and beliefs
that form the basis of our corporate DNA, as set out in significant detail in our annual integrated reports and
my Chairman‘s report over the past three years. Central thereto is an environment of passionate
partnership and teamwork.‖
Structure:
―MRP Foundation - the Group supports the national priorities of SA through its donation to the MRP
Foundation. This socioeconomic investment of 1% of net profit after tax, since the inception of the MRP
Foundation, now 10 years ago, continues to provide support to strengthen a sustainable local market.‖
Stakeholder Relationships:
―Sustainable relationships form the foundation of Mr Price Group‘s ability to create value over the short,
medium and long term.‖
Transparency:
―Some of the key principles on which we base our stakeholder approach are:
• Openness and transparency
• Mutual respect
• Supportive and responsive interaction‖
Activity 6: Page 31
Work with a partner. Go online and download a CSR Report (also known as sustainability report or integrated report)
of the business you chose in Activity 5. Work through the document with your partner and make notes of interesting
aspects that you have noted. Once you have worked through the report, comment on the CSR commitment of the
business to its stakeholders regarding sustainability.
Mr Price Group Ltd annual integrated report of 2015
http://www.mrpricegroup.com/MRPG/media/MRPG/AnnualReports/2015/42197_MRP_Online_AR_2015.pdf
Student‘s needs to assess whether their company has the following criteria:
o Business Profile:
Vision and mission of the business
The size and operations of the business
The markets in which the business operates
The overall brand of the business
The areas of impact - both internally and externally
o Board Commitment:
Statements from the CEO, key board members and employees at management levels have to
commit to CSR and business sustainability.
18
o Environmental and Social Business Policy:
These are statements from the business about its areas of impact.
This section will also look at targets the business has set to address certain social issues.
The business also has to indicate how performance will be measured.
o Management Systems:
The business will discuss its audit procedures for both internal and external auditing.
Activity 7: Page 32
Work in a group of four. Identify a business you feel which is not fully committed to CSR and motivate why this is
your opinion.
Design an internal Public Relations campaign to create complete buy-in for CSR in this business. It is important
that you align your PR campaign to the BRAND of the business. Your campaign can be in any format and may use
any medium (e.g. booklet, poster, promotions, and short movie).
Use the following rubric to mark your responses: (Optional)
0-2 3-5 6-8 9-10 TOTAL
An appropriate
business which is not
committed was
identified
Demonstrates little to
no understanding of
the topic. Many
requirements of topic
are missing.
Demonstrates a fair
understanding of the
topic. All requirements
of topic are included
in the response.
Demonstrates
considerable
understanding of the
topic. All requirements
of topic are included.
Demonstrates
complete
understanding of the
topic. All requirements
of topic are correctly
applied and included.
PR Campaign:
Leads to complete buy-
in
Demonstrates little to
no understanding of
the topic. Many
requirements of topic
are missing.
Demonstrates a fair
understanding of the
topic. All requirements
of topic are included
in the response.
Demonstrates
considerable
understanding of the
topic. All requirements
of topic are included.
Demonstrates
complete
understanding of the
topic. All requirements
of topic are correctly
applied and included.
PR Campaign:
CSR relates to the
brand
Demonstrates little to
no understanding of
the topic. Many
requirements of topic
are missing.
Demonstrates a fair
understanding of the
topic. All requirements
of topic are included
in the response.
Demonstrates
considerable
understanding of the
topic. All requirements
of topic are included.
Demonstrates
complete
understanding of the
topic. All requirements
of topic are correctly
applied and included.
Presentation:
Media is effective and
informative
Demonstrates little to
no understanding of
the topic. Many
requirements of topic
are missing.
Demonstrates a fair
understanding of the
topic. All requirements
of topic are included
in the response.
Demonstrates
considerable
understanding of the
topic. All requirements
of topic are included.
Demonstrates
complete
understanding of the
topic. All requirements
of topic are correctly
applied and included.
TOTAL: (30 MARKS)
19
Additional activities: Page 32
1 Conducting business in an ethical manner, is known as:
A Corporate citizenship B Social investment
C Social responsibility D Corporate involvement
2 The three areas of social responsibility of a business are:
A Political, Economic, Environmental B Environmental, Social, Technological
C Economic, Social, Environmental D Economic, Environmental, Ethical
3 Sustainable business practice means:
A Assessing how present business practice affects the future
B Involving employees in decision making
C Considering the benefits of stakeholder over shareholder practices
D Developing BBBEE policies
4 Briefly explain the difference between the two concepts CSR and CSI.
CSR - is about the relationship between the business (corporate) and society (social) and the degree to
which the business impacts on society. The idea is that the business should not just focus on its own
profits, but that it has a responsibility towards the people and the environment as well.
CSI - these are the actual resources used to carry out the CSR. Eg: money, time and any other resources.
5 Discuss four advantages of sound CSR practices in the business.
Businesses that are assisting the community in which they operate through CSR programmes, receive greater support from the community. People see these businesses / brands as having a reputation for caring; the community in turn supports the business and becomes brand loyal.
It is argued that businesses need to act on social issues in their communities or else customers will move away. For example: Increased levels of poverty will lead to an increase in crime which could result in customers avoiding the area. An increase in crime also results in the community having less money to spend at businesses.
There are people debating the issue of whether government should enforce the King Code as a law. It is argued that if businesses are doing CSR voluntarily there will be no need for the added pressure for a law to enforce compliance, not to mention the red tape of policing it.
If business assists the community to increase its standard of living through education and health programmes, it will benefit from a community that has a higher standard of living and a higher level of disposable income.
By giving back to the environment through sustainability programmes, businesses are ensuring that future generations will have resources needed to prosper.
Businesses that operate in sustainable ways are usually also innovative enough to identify additional avenues of income.
Businesses that implement CSR initiatives are generally speaking, concerned about the impact that they have on stakeholders and this in turn promotes more ethical business practice.
In many cases the business may already have suitable programmes in place to deal with social issues in the community. For example, the business could have programmes in place that deal with leadership and entrepreneurship that are used to empower its own employees. These programmes can then easily be expanded to include the broader community.
20
6 Identify two stakeholders that potentially could be against the business conducting CSR initiatives. Briefly
explain why these two stakeholders would be against CSR, and suggest possible ways to convince these two
stakeholders of the benefits of CSR.
The students can motivate with any stakeholders, examples are:
Staff
Reason they are against: It will cost them time and is a distraction from their actual job.
Convincing them: Emphasising the good it will do, plus, offer time for time. If they assist with CSR, they can
get time off work.
Customers
Reason they are against: They know that the business could possibly offer a cheaper selling price but they
are involved in CSR and could feel like they are paying extra for the company to do good.
Convincing them: The business should constantly show the customers the difference the CSR programme
makes and ensure that the customers get by into the programme and know that they are contributing to the
community by buying from the business.
7 Assess how CSR practices within the business have positively contributed to human rights, inclusivity and
environmental issues within the workplace.
By businesses getting involved in CSR it is uplifting the lives of the community. In this way peoples basic
human rights can be met because government is struggling to meet these commitments on their own.
CSR covers a wide variety of programmes and business that channel their resources into skills
development of previously disadvantaged people assist with ensure all people are capable and are
included for certain employment positions. CSR programmes also covers environmental issues which is
creating an awareness of acceptable practices as well as accountability among businesses.
8 Henry Ford was quoted as saying ―Businesses that grow by development and improvement do not die‖.
Discuss how this quote could be applicable to CSR business practice.
In general growth and development requires continuous learning and constant improvement. The
entrepreneur and employees must be constantly open to learning and adapting and improving. No matter
how big a company gets, continuous improvement is required.
With regards to CSR, continuous improvements in their programmes and ability to help the community
sustainably, will lead to an increase in peoples standard of living and these good deeds can be the
company‘s best advertising.
9 What are the drivers behind sustainable business practices?
• Making Operations Environmentally Sustainable
• Making Operations Socially Sustainable
• Making Society Sustainable
• Influencing Suppliers
10 How could a business and its brand contribute to a healthy supply chain? And what impact would this have on
the business‘s environmental and social responsibilities?
Supply chain sustainability is the management of environmental, social and economic impacts, and the
encouragement of good governance practices, throughout the lifecycles of goods and services.* The
21
objective of supply chain sustainability is to create, protect, and grow long-term environmental, social and
economic value for all stakeholders involved in bringing products and services to market.
This will impact positively on the community and it will force businesses to make a meaningful…sustainable
difference in the lives of the community and the environment and not just window dressing for the sake of
publicity.
11 Assess the link between a business‘s financial performance and its Corporate Social performance.
Students can argue that there is a link or there is not, however, it must be substantiated!
There are arguments which propose that financial performance also depends on good or socially
responsible performance. Meeting stakeholder expectations before they become problematic indicates a
proactive attention to issues that otherwise might cause problems or litigation in the future. Furthermore,
socially responsible companies have an enhanced brand image and a positive reputation among
consumers; they also have the ability to attract more accomplished employees and business partners.
Socially responsible companies also have less risk of negative events. Companies that adopt the CSR
principles are more transparent and have less risk of bribery and corruption. In addition, they run less risk
of having to recall defective product lines and pay heavy fines for excessive polluting. They also have less
risk of negative social events, which could damage their reputation and costs millions in information and
advertising campaigns or litigation.
12 Many businesses have started to ―think green‖: Does this make a business credible? Motivate your answer.
‗Green businesses‘ adopt principles, policies and practices that improve the quality of life for their customers, employees, communities, and the planet. Green businesses are environmentally responsible and consider sustainability. Being ‗green‘ doesn‘t necessarily make your business credible. This is because there are different levels of ‗green‘ compliance. Just because you have one solar panel, doesn‘t make you a credible business, however, if you are truly invested in making the environment a better place and filtering this ‗green thinking‘ throughout the company and the community, then your business could be seen as credible.
13 It has often been said that there is a blurring of lines between CRS and marketing; discuss this blurring from
an ethical point of view.
Businesses claim to engage in CSR for the ‗right‘ reasons, namely to make a real difference in the
community and our environment. Doing CSR for that reason would mean that as much as a business is
grateful for the publicity that might come with the CSR, it is not doing it for the publicity or recognition.
Therefore, it is imperative that CSR programmes are sustainable because businesses who are interested in
a once off ‗thing‘ are not ensuring sustainability and therefore there their motives for CSR can be
questioned.
22
Chapter 3: Management and Entrepreneurship (Page 33)
Activity 1: Page 34
Explain the tasks management would perform at each level in the business. Use practical examples to help illustrate
your discussion.
Top management:
Plan - Where the entire business needs to move towards (Goals)
Lead - Ensure that middle management is motivated to achieve what top management has set out to
accomplish.
Organise - Organise bigger, strategic activities which involve the entire company.
Control - Assess the middle managements performance against what was intended.
Middle management:
Plan - They need to plan for their specific functional area or section of responsibility within the business.
Lead - They need to ensure that their employees and lower management who report into them are
accomplishing their objectives.
Organise - All activities relating to their department that should be undertaken to meet business objectives
need to be established and followed through.
Control - Check performance areas of lower management and employees in their area of responsibility.
Lower management:
Plan - This would entail planning for smaller specific targets set out by middle management.
Lead - They would take the role of supervisors and therefore will need to possibly motivate the lower skilled
workers.
Organise - Activities relating to the workers and their rate of production will need to be organised.
Control - Levels of production, absenteeism are only a few issues that lower management would need to
control.
Activity 2: Page 38
Imagine you have just become the manager of the production department of a regional Coca-Cola bottling plant. You
have assessed the internal environment and have decided there is insufficient and ineffective planning to ensure the
sustainability of the plant. Develop a short presentation, in which you critically evaluate the importance of sound
planning. You will present your planning assessment at the next meeting.
The students need to include the steps in the planning process in a practical way.
Step 1: Establishing objectives Top management will set the overall direction for the business. In doing so, the vision, mission and long-term objectives will be developed, keeping external factors (economic conditions, market trends, competitor and consumer behaviour, etc.) and internal resources in mind. Once these objectives have been clearly defined, it is important that the management communicates these objectives to the different functional managers (middle management). Each of these managers has to be aware of his/her responsibility in achieving these objectives. Step 2: Deciding on the planning period Some plans will be aimed at achieving long-term objectives, while others may have a much shorter time period. The rule of thumb is that the business will usually plan for a period that is reasonably anticipated. Step 3: Considering alternatives The business will also identify several alternative plans to evaluate which objectives are achievable. The business will assess each alternative from a feasibility and viability point of view to identify the plan with the
23
best cost-benefit ratio. It is always important to have a contingency plan (plan B) in case the original plan does not yield the desired results. Step 4: Implementing the plan Once the most suitable alternative has been selected, the business will need to decide on the implementation of the plan. The business will need to allocate the necessary resources to support the plan. Step 5: Controlling process The business will need to put the necessary controlling mechanisms in place to ensure that the objectives that were set, are achieved according the benchmark set and in the time period decided upon.
Activity 3: Page 40
Draw a mind map to examine the need for effective organising in a business like Famous Brands.
Activity 4: Page 44
Assess the importance of being in control of all aspects of a business. Justify your response by providing well-
reasoned examples.
Once proper planning, organising and leading has taken place, it is important for control to then happen
efficiently for the following reasons: (There are none in particular and students can make up their own
response, these are simply examples)
Your customers are expecting a certain standard or quality product/service and if there is not proper
control, it will not be achieved.
If control is not done correctly, and there were possible errors in the process, then you will not be able
to make corrective steps to ensure it does not happen again.
Effective organisation
at Famous Brands
Organise people logically
providing clear
communication structures -
Kevin Hedderwick CEO plus
all other executives etc.
Identify key internal stakeholders to which
responsibility and authority should be allocated.
(Helping each person understanding the roles in
the business) - Famous Brands have a clear
organisational structure which highlights lines of
authority
It creates balance when
activities are grouped in
relation to levels of
management the business
Stimulates creative thinking
when people are forced into
problem solving task teams.
Framework is put into place
in different functional areas
to encourage growth.
24
Proper control allows for flexibility when plans change and need to be adapted to.
Good control measures will be supported by all staff and it will keep them motivated.
Control allows a business to possibly predict future problems by constantly monitoring progress.
Control adds to the economic efficiency in the business as waste is minimised.
Activity 5: Page 48
Discuss how a leader/manager would use Maslow‘s hierarchy of needs to motivate his/her workforce and ensure
optimal output from the workforce.
Management can assess at which level all their staff member are at, namely:
Physiological Needs: These are the basic needs to ensure sustained life. Examples of these needs include food, water, shelter and sleep. Maslow states that until these needs have sufficiently been met other needs will not motivate a person.
Security Needs: This is the need to feel safe, but it also related to the fear of losing a job and in the process not meeting physiological needs.
Social Needs: At this level people need to feel they belong and are accepted by the group of which they are part.
Esteem Needs: Once the first three needs have been met, a person would like to be held in high esteem. Desire for esteem often results in people‘s need for power, prestige and status.
Self-actualisation: This level of need looks at a person‘s desires to achieve his/her full potential. Once this has been established, management can ‗feed‘ each level accordingly to ensure development until staff are striving for Self-actualisation. Management will also not be able to expect workers to perform on a higher level if they know basic needs aren‘t being met - It will assist in establishing fair expectations.
Activity 6: Page 49
As an HR specialist, you have been asked to help the managers of Pick n Pay understand the value of Adam‘s Equity
Theory. Draft a few notes to use, when you do an oral presentation to the class to explain the value that this theory
has for managers in Pick n Pay.
Some info on Adam‘s Equity Theory:
Adams' equity theory helps explain why pay and conditions alone do not determine motivation. It also
explains why giving one person a promotion or pay-rise can have a demotivating effect on others. When
people feel fairly or advantageously treated they are more likely to be motivated; when they feel unfairly
treated they are highly prone to feelings of disaffection and demotivation. Employees seek to maintain
equity between the inputs that they bring to a job and the outcomes that they receive from it against the
perceived inputs and outcomes of others. The belief in equity theory is that people value fair treatment
which causes them to be motivated to keep the fairness maintained within the relationships of their co-
workers and the organization. Words like efforts and rewards, or work and pay, are an over-simplification -
hence the use of the terms inputs and outputs. Inputs are logically what we give or put into our work.
Outputs are everything we take out in return.
25
This activity can be marked using the following rubric:
0-2 3-5 6-8 9-10 Total QUALITY OF DELIVERY
Presentation -
Communication
[LOT]
(0) Not. (1&2)Partially
meeting the standard of
correct articulation, proper
preparation, eye contact etc.
(3)Adhering to presentation
criteria of public speaking (4)
in a business environment (5)
and dynamic
Good to very good meeting
the criteria of public
speaking(6), good posture
and eye contact(7), The use
of visual aids and correct
language use(8).
Superbly meeting the criteria
of public speaking, good
posture and eye contact (9),
The use of visual aids and
correct language use (10).
QUALITY OF CONTENT
Adam’s Equity
Theory
[LOT]
(0) None (1&2) limited detail
of Adam’s Equity theory.
(3) Adequate to (4 &5) good
detail of Adam’s Equity
theory.
(6) Satisfactory to (7 &8)
good detail of Adam’s Equity
theory.
Excellent detail of Adam’s
Equity theory. (9&10)
Relating theory to
Pick n Pay
[HOT]
(0) None (1&2) limited detail
on Pick n Pay.
(3) Adequate to (4 &5) good
detail on Pick n Pay.
(6) Satisfactory to (7 &8)
good detail on Pick n Pay. Excellent detail on Pick n Pay.
(9&10)
TOTAL: (30MARKS)
Activity 7: Page 50
Use the above entrepreneurial competencies to complete the table below:
Competencies Explain the activity the entrepreneur would perform.
Initiative An entrepreneur takes action before he/she is forced to do so by an event in the market. The entrepreneur will develop new ideas, products/ services or improve current products or services.
Risk taker An entrepreneur challenges the status quo, recognises opportunities, takes risks and empowers others to take risks, supports them when things go wrong and encourages them to learn from set-backs and failures.
Information gatherer An entrepreneur who is able to retrieve information from a variety of sources. Then after gathering relevant information, individuals with information competency skills must be able to put it to use effectively
Planner An entrepreneur who is able to identify and integrate all the critical elements of a situation into a plan, which is flexible.
Self-confidence An entrepreneur has faith in their own ideas and capability to succeed, they have a willingness to take an independent position in the face of opposition.
Problem solver An entrepreneur who is all about using logic, as well as imagination, to make sense of a situation and come up with an intelligent solution.
Persistence An entrepreneur who always finishes what has been started, who keeps on going despite any obstacles and stays on task no matter what the disruptions.
Assertiveness An entrepreneur who has the ability to maturely express one’s feelings and opinions in spite of disagreement. Accurately communicating to others regardless of their status or position.
Credibility An entrepreneur demonstrates concern that one be perceived as responsible, reliable and trustworthy. They also do what they commit to doing.
Concern for quality An entrepreneur who accomplishes tasks through concern for all aspects of the job, no matter how small and accurately checks processes and tasks by constantly following up to assure quality.
Experience An entrepreneur who is able to incorporate a skill, but are MORE than the skill, they include abilities and behaviours, which is all acquired through experience.
26
Activity 8: Page 52
Explain how an Intrapreneur, through the activities that he/she performs, could ensure sustainable growth for a
business like Coca-Cola.
The student needs to apply the following to Coca-Cola:
• Generating viable and feasible business ideas is probably one of the most difficult activities.
• Coca-Cola will need to conduct the necessary market research to determine the success of the idea by
assessing the potential market, demand and competition.
• All the business activities to implement the idea will be dependent on the availability of funds. Coca-
Cola will need to evaluate the different avenues to obtain funds (own and borrowed capital)
• Recruiting the right workforce to assist with the implementation of the idea is crucial and the employees
should have the necessary skills, knowledge and experience needed to change the idea into a reality.
• Procurement of other factors of production (raw materials, machines, equipment, inventory, etc.) has to
be done while keeping costs and quality in mind.
• Coca-Cola will need to develop the necessary action plans for the implementation of new ideas. In
addition to planning and organising resources, Coca-Cola will also need to lead and motivate staff
members and control the various elements of implementing the idea.
Additional activities: Page 52
1 Explain in your own words: What makes a good manager?
A good manager is someone who is able to plan, organise, lead and control his employees. He is also
equipped with many competencies, including: Initiative, Risk taker, Information gatherer, Planner, Self-
confidence, Problem solver, Persistence, Assertiveness, Credibility, Concern for quality, Experience.
2 As a managing director of a business producing ice-makers, you have become concerned about your
departmental managers‘ ability to work together. You have become increasingly concerned about:
a. The production department deciding to produce a new ice-maker, without talking to the marketing
department.
b. The marketing department deciding to spend R100 000 on a new promotional strategy, for the old ice-
maker range. The marketing department has not consulted with any other department.
c. The HR department has agreed to pay the workforce a higher wage per hour, without obtaining the
permission of the financial department or any other department.
Write an email, that is to be sent to all departments, to explain how the above three decisions would have
serious consequences for the business, resulting in dysfunctional conflict in the business. It is vital that you
stress the importance of the interdependence of all departments in your email.
27
From: [email protected]
Subject: Concerns regarding interdependence of all departments.
Good morning all,
It is important for all to know that good communication is important for the daily operation of the company.
Without good business communication, the internal and external structures of a business can face
numerous challenges that can ultimately lead to conflict between departments and employees.
Certain incidents occurred that need to be addressed:
a) The production department deciding to produce a new ice-maker, without talking to the marketing
department - We must remember that the marketing department will assess if there is a market or
need for a new machine. IT will be useless to produce a product not required by customers. The
marketing department needs to carefully consider the 7P‘s of marketing and give the production
department a full report.
b) The marketing department deciding to spend R100 000 on a new promotional strategy, for the old
ice-maker range. The marketing department has not consulted with any other department - If the
finance department has not been consulted, how can the budgeted amounts be assessed? We just
heard the production department is producing a new machine and will also need marketing. How
can an old and new machine be promoted at the same time?
c) The HR department has agreed to pay the workforce a higher wage per hour, without obtaining the
permission of the financial department or any other department - due to tough economic times, our
business is experiencing an increase in expenses and don‘t have the money to increase wages. If
the finance department was consulted this would have been made clear.
Accurate and efficient communication between departments builds trust within the organisation. When
departments trust each other to deliver accurate information, this eliminates the slowing down of
productivity. Departments should ensure that the information they are giving to other departments in the
organization is reliable to help improve operational efficiency.
Please adhere to the communication guidelines and ensure your departments work in conjunction with
others. WE ARE ALL IN ONE TEAM!
Regards,
Managing director: Ice-makers
28
3 Use the diagram below, to help explain how sound management leads to a successful business.
Decision making:
In order to solve problems, the manager has to make decisions about the most appropriate course of action. There are a variety of external factors that may influence the decision-making process. These may include, but are not limited to: • Political factors such as laws implemented by the ruling party • Economic factors such as inflation, taxes, the economic growth rate (or maybe lack thereof) that bring
about a recession and high/low exchange rates • Social factors such as religious movements, cultural differences, unemployment rates and crime levels • Technological developments such as communication methods (the increased use of social media) and
improved methods of transportation • The behaviour of competitors or potential new competitors • External stakeholders such as suppliers of businesses involved in the distribution process • Expectations of customers Delegation: The process of delegation refers to the allocation of responsibility and authority to subordinates. It is
important for a manager to delegate to ensure a more meaningful distribution of work. The employee
responsible for performing a designated task must in turn be empowered to perform his/her work. If need
be, the employee should be trained to develop the required skills. Continuous monitoring by the manager of
the process is required to assess its effectiveness, because regardless of the fact that the task was
delegated, the manager ultimately remains responsible.
Communication:
Communication is the process of exchanging information, opinion, views and ideas between staff
members and management.
The aim of clear top-down communication is to help employees to understand what, why and how they
should be doing to help the business to achieve its objectives.
Please refer to the chapter on Research and Presenting of Information to find out more about
communication within the business.
Head Office
Authority given to
departments
Decision making
Delegation
Communi-
cation
29
4 Why are well-motivated employees good for a business?
• A well-motivated employee is determined to succeed and often is very intrapreneurial within the
workplace.
If a manager ―pushes‖ employees to perform according to certain expectations, it is vital that the
employees are motivated to achieve their goals.
• The employees have to feel they have a special interest in the work and that they want to fulfil this
responsibility.
• Performance in the work place depends on two variables: the ability to do the work and the willingness
to complete the activities.
5 The four basic tasks of a manager are:
A Planning, leading, communication, organising
B Leading, communication, organising, motivation
C Planning, organising, leading, controlling
D Planning, leading, controlling, delegating
6 Top managers make this type of decision
A Operational B Day-to-day
C Strategic D Tactical
7 The process of comparing actual results, with those set in the planning phase.
A Controlling B Feedback
C Communicating D Development gaps
8 This type of leadership style is used when a crisis occurs and there is insufficient time for discussions.
A Free rein B Autocratic
C Democratic D Laissez faire
9 Explain the difference between strategic and tactical decisions, using your own examples.
o Top Management is responsible for the strategic decision of the business, i.e. planning for the future of
the business to ensure the business has a sustainable future. Top management looks at integrating
demands of the different interest groups, while taking responsibility for the overall business results and
performance within the market place.
o Middle Management is responsible for tactical decisions in the business, i.e. medium- term decisions.
They interpret top management‘s decisions in terms of the demands and impact on each business
function/department. The overall business plan is then implemented by each department, while ensuring
there is synergy between the different functional areas in the business.
10 List four entrepreneurial qualities; discuss how each of these qualities can be used to help achieve business
success.
Students may give any qualities, you can refer to the competencies for guidelines:
Initiative - An entrepreneur takes action before he/she is forced to do so by an event in the market. The
entrepreneur will develop new ideas, products/ services or improve current products or services.
Risk taker - An entrepreneur challenges the status quo, recognises opportunities, takes risks and
empowers others to take risks, supports them when things go wrong and encourages them to learn from
set-backs and failures.
Information gatherer - An entrepreneur who is able to retrieve information from a variety of sources. Then
after gathering relevant information, individuals with information competency skills must be able to put it to
use effectively
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Planner - An entrepreneur who is able to identify and integrate all the critical elements of a situation into a
plan, which is flexible.
Self-confidence - An entrepreneur has faith in their own ideas and capability to succeed, they have a
willingness to take an independent position in the face of opposition.
Problem solver - An entrepreneur who is all about using logic, as well as imagination, to make sense of a
situation and come up with an intelligent solution.
Persistence - An entrepreneur who always finishes what has been started, who keeps on going despite any
obstacles and stays on task no matter what the disruptions.
Assertiveness - An entrepreneur who has the ability to maturely express one‘s feelings and opinions in
spite of disagreement. Accurately communicating to others regardless of their status or position.
Credibility - An entrepreneur demonstrates concern that one be perceived as responsible, reliable and
trustworthy. They also do what they commit to doing.
Concern for quality - An entrepreneur who accomplishes tasks through concern for all aspects of the job,
no matter how small and accurately checks processes and tasks by constantly following up to assure
quality.
Experience - An entrepreneur who is able to incorporate a skill, but are MORE than the skill, they include
abilities and behaviours, which is all acquired through experience.
11 If a person is said to have entrepreneurial qualities, do you think they should automatically go into business?
Justify your response.
Not necessarily. An entrepreneur might not possess all the qualities. They might also lack funds so it is
possible for them to be an intrapreneur as well.
12 Identify a business in your community you believe is entrepreneurial; motivate why you consider this business
to be entrepreneurial.
Students need to identify any business using the following criteria:
Motive - An entrepreneur‘s primary motivation is to build his/her own business, to gain personal
gratification and to ensure that he/she is successful.
Status - Owner of the business
Risk - The entrepreneur assumes all the risk involved in the business.
Rewards - The entrepreneur receives profits from the business
Innovation - An entrepreneur is the person who innovates through creative thinking and creative problem
solving.
13 Explain what an ultrapreneur is.
o Ultrapreneurs usually identify a viable business opportunity and then establish a business. The ultrapreneur then procures a super management team of highly competent individuals who then develop, produce and market the idea.
o The ultrapreneurs often sell a large number of shares in the business as soon as the business is established. The aim of the ultrapreneur is to achieve a maximum return in the shortest possible time and then repeat the process over and over again.
o Although Richard Branson does not sell his shares in his businesses once they are successful, he is probably one of the best known ultrapreneurs who loves the thrill of establishing new businesses again and again and again…
o In the South African context, Brian Joffe is, like Branson, an ultrapreneur that does not sell his shares in the business, but that just keeps building his business empire by constantly adding new successful ventures.
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Chapter 4: Research and presenting of data and information formats (Page 55)
Activity 1: Page 56
Google the concept of ―language barriers in a business situation‖. Choose two examples of real problems that have
been experienced and explain what could have been done to avoid these problems.
Development of Cliques
A diverse workforce could lead to the formation of cliques where workers of similar cultural backgrounds or
who speak the same primary language bond together. Individuals may have little social interaction with
those outside of their clique, engaging them only out of business necessity. In culturally integrated work
groups, some members may choose to speak their primary language with each other instead of the primary
workplace language, leaving others to feel they are being excluded from the conversation.
The employer can be intentional on the way the set up communal areas by not allowing cliques to
form. Teams within the company need to be carefully structured so everyone has an opportunity to
interact with other staff, where possible.
Communication Challenges
Cultural and language differences can hinder effective communication. Workers who are not fluent in the
primary language used in the workplace may have difficulty expressing their needs or responding to
requests from colleagues. If their job involves customer contact, they may have difficulty understanding a
customer inquiry and provide incorrect or misleading information. A customer who is unable to clearly
understand the worker due to a heavy accent or lack of command of the language may become frustrated
and take his business elsewhere.
All correspondence needs to be simple and clear. It needs to be carried over in writing and verbally.
Management also needs to continually follow up.
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Activity 2: Page 60
In groups of three to four, formulate at least THREE different introductions for the above question. Then read your
group‘s introductions to the rest of the class to critique.
Question:
David has just celebrated his 50th birthday and has decided it is time to retire. He has saved a substantial
amount of money while he was working and when his grandmother passed away a few years ago, she left
him about R3 million. After careful consideration David decided to open a Guesthouse, which he will call
Guesthouse on Groovy Street (GOGS).
David has never owned his own business and although he loves the idea of being an entrepreneur, he is
realistic and knows he will face a number of challenges to establish a successful guesthouse.
ASKED:
David has asked you to help him in your capacity as a business consultant. Your first task is to analyse the
environment in which GOGS will operate and to warn him about possible ethical pitfalls that he may face in
his new business.
______________________________
A possible introduction:
Many an entrepreneur has failed in establishing a successful new business because of a lack of research
regarding the business environment in which the undertaking will compete. The SWOT-analysis is a useful
tool to identify internal strengths and weaknesses, as well as external opportunities and threats that may be
faced. It also allows the entrepreneur to consider different strategies to overcome the negative (which may,
amongst others, include ethical dilemmas), while capitalising on the positives.
Students to write three in groups and discuss.
Activity 3: Page 61
Let‘s assume what follows is an extract from the business report written by one of your friends in the class. How will
marks be allocated on the LOT (lower order thinking) and HOT (higher order thinking) rubric? Your teacher will hand
out the rubrics so you can see what marks are allocated for. Now go ahead and mark this business report. Discuss the
marks allocated by the different pupils in the class in order to come to some sort of understanding of which criteria on
the rubric were met/ not met.
General comments on the report:
The report is answered very well.
LOT: Format 2/2
Terminology 3/3
Contents 25/25
For the lower order thinking part - 30/30
HOT: Substantiation 3 or 4/4
Application 4/4
Problem Solving 5 or 6/6
Synthesis 5/6 (there is no conclusion)
For the higher order thinking part - between 17 and 19/20
Business report totals: 47 to 49/50
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BUSINESS STUDIES PAPER II: LOWER ORDER THINKING RUBRIC (60% WEIGHTING) CRITERIA 0 1 2 Question 1 Question 2
Format Not meeting the correct standard Partially correct format Correct format
0 1 2 3
Terminology No use of business terminology Isolated / limited use of business terminology
Good use of business terminology Outstanding use of business terminology
Content (number of relevant facts)
Maximum 50 facts. Divide by 2 to get mark out of 25. Marks are inter alia given for mentioning the fact, explanations of facts or statements, relevant examples; expansion of acronyms. NOTE: Listed facts that are not explained = max 4 marks (8 facts
Sub-Total: (30 marks)
1A 2A
BUSINESS STUDIES PAPER II - HIGHER ORDER THINKING RUBRIC (40% WEIGHTING) If all SECTIONS have not been completed, the judgment is based on the amount of expected information. E.g. A candidate substantiating one section well, but not answering the other cannot qualify for a ―majority of statements‖ mark.
CRITERIA 0 1 2 3 4 Question 1 Question 2
Substantiation (justification for
statements made)
No attempt at Substantiation.
Very limited Substantiation.
Less than half of the statements are substantiated.
The majority of the statements are substantiated.
The majority of the statements are thoroughly substantiated showing
breadth and / or depth of understanding.
0 1 2 3 4
Application to context/ industry
Superficial reference based on the case study / context given
(Just keep mentioning the name of the business repeatedly without
relevant examples)
Continuous reference is made to the case study / context given with some
applicable examples given.
Continuous reference is made to the case study / context given with several examples that are fully
integrated into the answer.
Examples are relevant to the case study / context given and fully
integrated into the response showing understanding of the issues at hand. Reference is made to current affairs.
Examples are relevant to the case study / context given and fully
integrated into the response showing understanding of the issues at hand. Current affairs is fully integrated into
the response.
0 1 2 3 4 5 6
Creative Problem Solving
No understanding of the problem and no solution
given.
Identification of the problem and an
incorrect/poor solution suggested.
Identification of the problem with breadth but
no depth (superficial).
Good insight and understanding of half the problem with solutions
offered showing depth of understanding OR less than half in breadth and
depth
Good insight and understanding of the
majority of the problem(s) with solutions offered
showing depth of understanding OR half in
breadth and depth.
Good insight and understanding of the holistic problem with
solutions offered which are fully discussed, showing
understanding on all aspects OR the majority in
breadth and depth.
Good insight and understanding of the holistic problem with
solutions offered which are fully discussed, showing
breadth and depth of understanding
0 1 2 3 4 5 6
Synthesis None of the criteria as listed below are met
At least one of the criteria fulfilled
Any two of the criteria fulfilled
Any three of the criteria fulfilled
Any four of the criteria fulfilled
Any five of the criteria fulfilled
All six of the criteria are fulfilled
1 Introduction – don‘t just re-write question, but shows an understanding of the ―link‖ between the topics
2 Conclusion – this should be a logical affirmation of the points raised
3 Flow of thought, i.e. paragraphs leading into one another
4 Integration of topics given in the question
5 Integration of question with other Business related topics to enhance the quality of the answer
6 Arguments are developed
Sub-Total: (30 marks)
1B 2B
TOTAL
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Activity 3 continue: Page 67
Did you think there was sufficient:
Substantiation?
Good substantiation - example:
―Because the government realises how much foreign currency flows into the country from foreign tourists, it
creates certain structures that will protect our national heritage (such as national parks).‖
Verse….
―Government realises how much currency flows into the country!‖
Problem solving?
Good problem solving - example: (The issue has been stated, with a full solution)
―The inflation rate and interest rates are relatively high (October 2014). Both these factors make it
expensive for South Africans to go on holiday. If this is combined with the high price of petrol, GOGS may
have to come up with a creative promotion to make it attractive to people to consider it as a tourist
destination. One such strategy could be to give special discounts out of season to encourage more visitors
by making the price of accommodation cheaper. ―
Application to context?
Good application because if you change GOGS with Steers or Standard bank, it does not make sense.
Examples are relevant to the case study / context given and fully integrated into the response showing
understanding of the issues at hand.
Current affairs?
Current affairs is fully integrated into the response. They are not just dropped randomly in the answer.
Example:
―Problems such as crime that is not brought under control by the government, may pose a threat to the
tourism industry. From time to time foreign governments warn their citizens against visiting certain tourist
attractions due to incidents of crime taking place in the area. For example: The USA government warned
American travellers in September 2014 to not visit the Pretoria zoo, due to a number of armed robberies
occurring in the area.‖
Integration of topics?
Integration of topics given in the question: Continually refer back to the question but incorporating the
―Scenario‖ in your response. If the question is regarding the war in Israel and Pick n Pay, then continually
go back to this topic in your links examples etc. It is important that you mould your theoretical knowledge to
the question being asked and continuously integrate topics asked.
Integration of questions with other business related topics to enhance the quality of the answer:
There are marks allocated in a report for these additional topics (10 marks per paper over and above the
other factual marks). This refers to a report which asks for Investments and Labour Legislation – while you
are answering you realise that good management would need to apply the utilitarian theory in this particular
case, so you include the theory and a short description. Even though it was not directly asked, it relates
well and has been incorporated successfully so the necessary marks will be allocated for the facts as well
as on the rubric.
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How will you improve on the extract from the business report?
A conclusion would need to be added and as an extract this report is very long, I would see where facts can
possibly be reduced to ensure you finish within an hour.
Activity 4: Page 67
Complete the following table to indicate the type of message and the target audience when the following methods of
communication are used in your school:
Method of
communication
Message From whom to whom?
E mail Can be more personal e-mail to parents regarding a specific student. Can be a longer more detailed general email to staff or parents
From school to parent or parents to school
Short, quick notices
Teacher to parents Teacher to class Between class mates Between teachers
Magazine Long articles, photos and news of positive experiences over a year period at the school
From school to all stakeholders.
Statement Financial message or summary School to parents
Activity 5: Page 73
Look at each of the following Primary research questions and identify the type of error:
Research question: Type of error:
Why is butter tastier than margarine? Halo effect
Do you like to go to the movies or read a book and while doing that, do you
prefer popcorn or chips? Double barrelled question
Indicate your income levels:
Under R20 000 R20 000 – R30 000 R30 000 – R50 000
Income per day? Week? Month?
Year?
How old are you? Sensitive question - give a range
Why do old people go to bed early? Leading question
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Additional activities: Page 76
1 ... is a horizontal bar chart that is used during project management to shows time allocated to different tasks.
A Gannt
2 If Wimpy undertakes research to determine if people are enjoying a new item on the menu, it is …
A primary research B secondary research
C industrial espionage D plagiarising customer ideas
3 Jargon is a … barrier to effective communication.
A cultural B language
C research D behavioural
3 Use the table below to indicate in which category each scenario fits:
Scenario Plagiarism Unethical
research
Poor research
design
Copying homework from a friend X
Not asking permission to observe people when
conducting research X
Asking ambiguous questions to determine
people‘s opinions on a topic X
Not acknowledging a source in the text of your
assignment X
Getting your mom/dad/ … to do your research X
Completing all the research questionnaires
yourself instead of getting real research subjects
to give their opinions.
X
5 Muslims and Jewish people may find if inappropriate for a man and woman to shake hands when they are
introduced to each other. This is a … issue that may lead to problems, because it may be seen as
disrespectful.
Cultural
6 Uncomfortable chairs in a meeting room would be considered a … barrier to effective communication.
Physiological
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Chapter 5: Forms of Ownership (Page 77)
Activity 1: Page 78
1 Explain the concept unlimited liability?
2 Define continuity of existence.
3 What is meant by the concept legal entity?
1 The owner‘s liability for debts is also directly related to the issue of legal persona. If the business was
registered as a separate legal entity, it is responsible for its own debt and the owner cannot be held
liable for any debt of the business. This means the owner has limited liability and his/her personal
belongings cannot be used to repay the debt of the business. But if the business was never registered
as a separate legal entity, the owner would have entered into business contracts in his/her own name
and will, therefore, be liable for the debts of the business, i.e. unlimited liability. This means the owner‘s
personal belongings may be used to pay for the debt of the business.
2 If the business was registered as a legal persona, it will automatically have continuity of existence. This
means the business exists as an entity and functions independently of the owner. Therefore, if the
owner dies or there is a change in ownership, the business is not affected.
3 Legal persona – If the law requires the business to be registered, it means the business becomes a
separate legal person from the owner. The legal person (either the owner in some forms of ownership
or the business in others), enters into contracts, will sue or be sued if the contractual stipulations are
not adhered to.
Activity 2: Page 80
Jack‘s Spaza Shop has been operating as a sole trader for the past 15 years. Jack, however, feels that he
is getting a bit old and he would like his daughter, Jill, to take over from him.
Jack is not sure if it is a good idea for the business to continue as a sole trader. The profit the previous year
was R150 000.
Recommend to Jack whether he should offer Jill a partnership in the business, or if it would be better if she
took over the business and continued to run it as a sole trader.
Ensure you motivate your answer fully.
There should be no reason why Jack can‘t enter into a partnership with his daughter, it has many positives and negatives.
Advantages:
No legal requirements – quick and low cost. A partnership agreement may be entered into in writing, but
it is not a requirement according to the law. It is possible to raise more capital through a partnership, because there are more people who can
contribute capital to the business.
38
A good employee may be retained if he/she is offered part ownership in the business. The quality of
decision making may be better than in a sole trader, because there are a number of people to give input,
i.e. synergy through the combination of skills and knowledge. Division of labour is a possibility, i.e. each
partner can specialise in an aspect of the business where he/she has expertise.
Disadvantages:
If there is no partnership agreement in writing, it may complicate issues if there is a disagreement and
the matter needs to be settled in a court of law.
The owners are the legal entities and they enter into contracts in their own names. This means the
owner carries all the risks.
The business has no continuity of existence. If one of the partners dies, retires or if a new partner joins,
a new partnership agreement has to be signed and this means (on paper at least) it is a new business.
Partners have unlimited liability. In addition, they are also jointly and severally liable for the debt of the
business. This means if one partner gets the business into debt; all partners are responsible in their
personal capacities for the debt.
It depends on the profit generated by the business. Refer to the tax scales above for this discussion. If the
profit is below R272 701 per annum, the owners will pay tax at a maximum rate of 25% on profits and this is
below the rate charged to companies. If the net profit exceeds R272 701 the owners will be taxed at a rate
higher than 28% and then it becomes a disadvantage.
Activity 3: Page 84
1 Why do you think the law specifies that the name of a company may not pretend to be linked to the
government?
2 What is meant by the concept fiduciary duty?
3 Why is it an advantage that the business is the legal entity when we refer to a company?
1 People might think the business is a government institution and gain undue benefit from it. A
government organization will not follow the same laws as a private companies so it would need to
be clearly identified.
2 A fiduciary duty is a legal duty to act solely in another party's interests. Parties owing this duty are
called fiduciaries.
3 Legal persona – If the law requires the business to be registered, it means the business becomes a
separate legal person from the owner. The legal person (either the owner in some forms of
ownership or the business in others), enters into contracts, will sue or be sued if the contractual
stipulations are not adhered to. This means that the owners are not personally responsible for the
debt of the business.
39
Additional activities: Page 85
1 Shares in a … are freely transferable.
Public company
2 A … is automatically dissolved if one of the owners sells his/her part of the business and this may hamper the
success of the business.
Partnership
3 The name of a … ends in ―Proprietary Limited‖.
Private company
4 The ownership of Travel Management Ltd. is restricted to a maximum of ... and this may contribute to the
success of the business.
A seven B fifty
B unlimited D twenty
5 What does it mean to ―float a company‖?
The term "float" refers to the regular shares that a company has issued to the public that are available for
investors to trade. This figure is derived by taking a company's outstanding shares and subtracting from it
any restricted stock.
It happens when a firm ie, sole owners get bigger and want to expand. They then with an accountant form a
company with shares, of which they will retain at least 51% for safety. Then they will apply for a listing on
the stock exchange. Having secured the listing they will then decide how many shares they will make
available for investors to subscribe to by floating those shares on the open market. Those people then have
a say in the running of the company. That is the reason the (owners) retained 51% of the stock to have a
majority vote.
6 Explain the relationship between legal persona, liability and continuity of existence.
If a business has legal persona, they then automatically have limited liability for the debt of the business
and a continuity in existence.
If a business does not have a legal persona, then they automatically have unlimited liability for the debt of
the business and no continuity in existence.
7 Explain the concept that partners are jointly and severally liable for the debts of the business.
Jointly and severally is a legal phrase that means two or more persons are fully responsible equally for the
liability.
8 Explain the registration procedure for a Company.
In order to register a company, the person / people who want to register the company have to pay the required fee, complete a Notice of Incorporation and register a Memorandum of Incorporation (MOI). The Memorandum of Incorporation:
is the founding document to start a company
stipulates different types of shares that will be sold and the associated rights, duties and responsibilities of the shareholders
40
describes the duties, responsibilities and liabilities of directors
may impose stricter or more rigorous requirements on directors than what is described in the Companies Act, but may in no other way contravene the Act
may be changed by means of a Special Resolution accepted by shareholders The minimum number of shareholders for both Private and Public Companies is one. A public company has to have at least three directors, while a private company has to have at least one director. It is possible for all shareholders in a private company to be a director at the same time. As soon as the Registration Certificate is issued, the company becomes a legal entity.
9 What are dividends?
A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a
class of its shareholders.
10 Tabulate five differences between a Partnership and a Company.
Partnership Company
Has no legal personality Has a legal personality
Has unlimited liability for the debt of the business Has limited liability for the debt of the business
Has no continuance of existence Has a continuity of existence
Has 2 or more partners Has 1or more shareholders
Has little to no promotion procedures which are not
costly
It is more complicated and expensive to form.
11 Look at the following table that has been partially completed for you. Complete the missing elements and
explain if each element will contribute to the success or failure of the business.
Ensure you motivate your answers.
Characteristic: Sole trader Partnership Private co Public co
Number of
owners One owner
2 – 20 1 – unlimited 1 – unlimited
Who has limited /
unlimited liability?
Owners have
unlimited liability
Partners have
unlimited liability
AND are jointly
and severally liable
Shareholders have
limited liability
Shareholders
have limited
liability
Who is the legal
entity?
Owner Partners
Business Business
Name?
No special
requirements
No special
requirements
Name has to end
with (Pty) Ltd.
Name has to end
with Ltd.
Continuity of
existence?
No
No Yes
Yes
Who pays tax? Owners pay tax in
personal capacity
on profits received
Partners pay tax in personal capacity on
profits received
Company pays tax Company pays tax
Managed by?
Usually the owner One or more of the
partners
Board of
directors
Board of directors
41
Chapter 6: Creative Thinking and Problem Solving (Page 87)
Activity 1: Page 89
1 Fluency: Your teacher will choose a colour. Make a list of everything you can think of that is that colour. See who
comes up with the most things in 10 minutes.
2 Flexibility: Make a list of everything that has wheels. Do not limit yourself to vehicles! Now eliminate all those
items and think of items without wheels, but which would work better if they had wheels.
3 Originality: Come up with as many original uses as possible for an eraser.
4 Elaboration: Take a good look at your school desk. Add innovative details (elaborate) to improve the design of
the desk. Ensure you describe every addition in detail, try to draw the additions as well. Your teacher will
randomly choose four designs, photocopy them and give these four learners the opportunity to present their ―new
and improved school desk‖ design to the class. There is no limit to the improvements you may suggest, but it may
not be fewer than five.
Teacher may choose any colour.
An example with the colour ‗Red‘
1 Fluency:
Tomatoes Strawberries Raspberries Socks Trousers Hats T-Shirts IPod‘s Fire Cushions Plates Bowls Bowling Balls Walls Carpet Camera
Nail Polish Earphones Drinks Bottles Paper Crayons Pencils Pens Felt-tips Flags Race Cars Cars Motorbikes Bike-Helmets Bikes Scooters Handbags
Lipstick Chairs Sofa's Crisp Packets Packets Stickers Crystals Necklaces Bracelets Rings Belts Posters Duvet Covers Rugs
2 Flexibility: With wheels: airplane, ambulance, bike, bus, car, Ferris wheel, gas grill, golf cart, mine, cart, moster truck, motorcycle, roller coaster, scooter, shopping carts, skate, board, skate, stroller, toy cars, tractor, train, truck, van, wagon, water wheel, wheel chair. Without wheels: (That could use wheels) Guitar case Lamp on wheels Fan on wheels Couch on wheels
42
3 Originality: Uses for an eraser:
Glue pieces of eraser to the bottom corners of frames. The erasers will protect your wall from scratches and keep the frames from tilting.
Remove sticker gunk from products and packaging with an eraser.
Make custom stamps from erasers.
Clean marks off piano keys with an eraser.
Use wedged shaped pencil erasers and replacement caps on glue bottles.
Extend the life of rechargeable batteries by rubbing the contact points with an eraser. Dirty contact points are a primary source of charging problems. This works on flashlights as well!
You can repair scratch marks on a flat screen TV with a clean, soft eraser. Gently rub the eraser on the scratch and wipe with a clean cloth. Repeat until the scratch disappears.
Use a large eraser as a make-shift pin cushion.
A small piece of eraser makes a great temporary earring backing. 4 Elaboration: Some ideas that were googled to help stimulate the group. Pinterest.com decomorth.com yankodesign.com Wehearit.com
Activity 2: Page 90
Explain how the following factors could affect the creativity within the business
o Fluency
o Flexibility
o Elaboration
o Originality
Fluency: looks at the ability to produce several different ideas, which can be developed through the
use of creative thinking and brainstorming sessions within teams, but also between teams
Flexibility: being able to look at concepts from different points of view and to consider the
implications of small changes made to current products / services
Originality: refers to the ability to develop unique ideas that have the edge of newness and
creativeness
Once a number of different ideas have been tabled, elaboration follows. This is about adding detail
and depth to different solutions.
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Activity 3: Page 91
Imagine you are the manager at a local fast food franchise. Identify a problem with the product or service offered by
the business. Use the SCAMPER method to solve this problem.
The example used was a pizza franchise: # Customers complaining about too little cheese on the pizza.
(This is due to inflation and costs of cheese)
Substitute Look at cheaper alternatives like processed cheese or a cheese flavouring.
Combine Mix the expensive mozzarella cheese with a cheaper processed or cheddar cheese.
Adapt Pizzas have adapted to breakfast pizza or dessert pizza or even many layers
Modify Pizza shapes could differ instead of the traditional round pizza, you could have square or animal shapes for kids.
Put to a new use
Cutting of the extra dough can be made into cheese bites and sold as an accompanying product.
Eliminate or Elaborate
Reduce certain toppings that aren‘t selling very well.
Reverse Topping then chees or chees then topping…
Activity 4: Page 92
Imagine you are the current CEO of your favourite brand, you have decided that it is time that the brand expands into
Africa. Many of your department managers, however, are not in favour of this idea. You have agreed to complete a
Force Field analysis as a team, before making a final decision on the expansion of the brand.
Complete a force field analysis for your brands expansion.
Use the different steps in this analysis to help you decide if the expansion should go ahead.
Brand: Local coffee company
Whether or not to expand the coffee into African countries
Step 1 - Define the problem
There are already well-know, established companies in Africa.
Technical support for the machines is limited.
Border control and restrictions makes it difficult.
Step 2 - Define the change objective
To get the coffee to African countries at a reasonable price in order to build the brand and market share.
Step 3 - Identify driving forces
Our company‘s machines are more technologically advanced so we have a lot to offer.
There is a better quality in the blending and roasting of coffee.
Africa is a new, huge market to penetrate.
We have existing group customers that may make entry easier.
Step 4 - Identifying restraining forces
Import/export laws (Legislation) are very strict and stock and equipment taken from SA can‘t easily be
brought back.
There are other well-known brands that could come in at a cheaper price.
The Rand is not very strong against other currencies and competing with local product might be difficult.
44
Step 5 - Develop a change strategy
Looking at the driving and restraining forces, it is clear that the driving forces are stronger and it will be a
good idea to carry on with moving operations into Africa.
Activity 5: Page 93
Discuss the concept of indigenous thinking. Explain when and under which circumstances a business would use
indigenous thinking.
Indigenous thinking (knowledge) is about the local knowledge and way of thinking that is unique to a culture
or to a particular society. The indigenous knowledge, includes the skills, know how, experience and insight
of a particular group of people, which can be applied to develop a sustainable product/service.
Being aware of the concept of Indigenous thinking may help the business to create a competitive
advantage by offering a unique product or service to a group of people who may not have thought about
this, because it is not part of their way of living.
On the other hand, indigenous thinking may also pose a threat to a business that wants to compete in a
market that is unfamiliar to them.
Technologically
advanced
Quality
Large market
Legislation
Competitors
are well-
known
Weaker Rand
Driving Forces Restraining forces
Change/Problem
Have existing
customer
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Additional activities: Page 93
1 Define the term creativity.
Seeing the same thing as other people, but thinking about it in a different manner.
Breaking down and then rebuilding concepts in order to gain a better understanding and insight into
business-related problems.
Organising thought processes and available resources in such a way that they lead to viable and feasible
solutions to problems.
A process of discovery to gain insight into a problem and then considering different ways to deal with the
problem.
Rejecting the obvious to find a solution that has not yet been considered and to then make this work for the
business.
Differentiating the business from competitors in order to gain a competitive edge for the business.
2 Discuss the importance of creative thinking in a business.
Students can give their own ideas, however, some examples include:
3 Assess how creativity could assist a business with change.
4 Discuss how the SCAMPER method could be used as part of the different management tasks of a manager.
Many businesses find it difficult to come up with new ideas when they are trying to develop and improve on
a current product and/or service offering of the business. SCAMPER helps a business to generate new ideas by encouraging a business to think about how it could
go about improving the existing product and service offering.
5 Draw a mind map which could be given to the members of the class that would help them understand the
force-field analysis method used in the decision making process.
Force Field analysis
Step 1: Define the problem The business needs to look at what/who in the current situation has to change to help the business reach its objectives. It is important that the business separates the problems from those elements that are working well.
Step 2: Define the change objective The business will define and describe the desired outcome or the goal that it will be working towards. This description has to be as specific as possible.
Step 3: Identify driving forces Once the business knows what the goal is, it has to identify the factors that support the change by stipulating what the strengths of these factors are and how change would add value to the business. It is important to place these forces on the force field diagram (shown below) by labelling each arrow. It is also very important that the business assess the interrelationships between the different driving forces.
Step 4: Identify restraining forces
The factors which are resisting the change must now be considered. The business will plot these factors on the diagram in exactly the same way as the positive forces. Yet again, it is important to look at the interrelationship between these factors.
Step 5: Develop a change strategy By this stage there will be a visual representation of all factors both pushing and resisting change. Arrows will be close to the line (change) if they are strong forces, and further away from the line if they are weak forces. This will give the business a clear indication of whether or not change is a good idea. If there are more forces pushing for change closer to the line than there are forces resisting change, the business will need to implement strategies for change.
1 2
3 4
5
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6 Define the term indigenous thinking.
Indigenous thinking (knowledge) is about the local knowledge and way of thinking that is unique to a culture
or to a particular society. The indigenous knowledge, includes the skills, know how, experience and insight
of a particular group of people, which can be applied to develop a sustainable product/service.
7 Think of three examples where it is possible a business used indigenous thinking as part of its business
strategy. Explain why you think the business opted for this approach.
In SA: solving labour relations issues, government to resolve housing and education problems.
8 Explain how each of the following methods could also be seen as creative problem-solving tools:
a. SWOT analysis
This Tool is used to identify the strengths, weaknesses which are within the business. And the opportunities and threats outside the business. Once issues have been identified, the problems can be solved and decisions can be made on how to correct them.
b. Porters Five Force Model
A Porter analysis can be used to assess the attractiveness of a market. A market will be attractive if it has
the potential of high profits. You use the following headings: Threat of new entrants in the market,
Availability of substitute products, Level of rivalry in the market, power of the buyer and power of the
suppliers.
c. PESTLE analysis
Identifies and analyses the challenges affecting the macro environment, which the business has no control over. POLITICAL, ECONOMICAL, SOCIAL, TECHNOLOGICAL, LEGAL & ENVIRONMENTAL (PHYSICAL AND ETHICAL)
9 We often hear that entrepreneurs need to be creative if they wish to make their mark in the market place.
Justify this statement, by providing sound examples.
There is so much competition in the business world, it is necessary for entrepreneurs to be creative in the
ideas and the approach to business. Look at ‗Facebook‘ it was a unique idea that made the founders so
successful.
There will also be many problems that arise in the day to day running of the business, it will therefore be a
useful skill to have to be able to combat these problems creatively.
10 Think of your favourite brand and explain how this brand has possibly used creativity to gain a share of the
market place.
Students to choose their own brands.
Example:
Burger King offer their customers who eat at the store the opportunity to refill their drinks from the soda
fountain. (Bottomless) This is different from other similar stores who offer you one drink, not bottomless.
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Chapter 7: Professionalism and Ethics (Page 95)
Activity 1: Page 95
1 Ask five teachers, five grade 8s and five grade 12s what they see as the core values of your school.
2 Work in groups of three to four and decide which of the core values the teachers / other learners mentioned
should be used to determine if your school is successful.
(Students will have their own core values)
Ideas of core values that can be named:
Thinking skills, Research skills, Communication skills, Social skills, Self-management skills
Activity 2: Page 97
1 True or false: People change the ethical theory that they adhere to according to the circumstances they are
faced with.
2 Consider your reaction to each of the following scenarios and then reflect on the ethical theory you would
apply in each of the following instances. You need not show your answers to anybody, but be honest with
yourself.
2.1 Your friend does not look good in a particular outfit and asks your opinion. You know she has had a bad
day at school and, because you feel sorry for her, you tell her …
2.2 You see a short YouTube clip where someone is painting graffiti all over a wall. Your immediate thought
is …
2.3 You see your friend being dishonest in a test. What do you do and why?
1 True
2.1 …that she looks fine - Consequence-based theory (Students to give their own feedback)
2.2 …that they are doing something illegal - Principle-based theory (Students to give their own
feedback)
2.3 …after class go tell the teacher or tell your friend what they did was wrong - Virtue-based theory
(Students to give their own feedback)
Activity 3: Page 98
Look at the criteria of how a professional person should act. How many of those do you uphold?
ensure his/her knowledge and skills relating to the job at hand are current and that he/she is committed to lifelong learning in the field to make sure a superior outcome is achieved
be prepared to share his/her knowledge to develop other employees
exercise good judgement when doing the job (related to ethics)
be reliable by honouring commitments to clients, but also to other stakeholders and where possible, exceed expectations
accept accountability if a mistake was made and not to lie or try to shift the blame onto someone else ensure that his/her appearance matches the above-mentioned high standards
be punctual, because being late is a sign of disrespect towards the person / people with whom you are meeting
use appropriate language and not swear - it is often expressed and perceived that swearing indicates a lack of vocabulary
Avoid falling into the trap of gossiping about colleagues: Remember, if someone is prepared to say horrible things about a colleague to you, what does that person say behind your back about you?
Personal issues are best left at home. Avoid spending company time telling everybody about personal matters. Not only does this waste time and reduce productivity; it may also negatively affect general employee morale by being exposed to constant complaints and negativity.
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Additional activities: Page 103
1 A document that describes expected behaviour for employees is a/an...
A code of conduct B unit trust
C appraisal form D memorandum of incorporation
2 An unethical practice could be...
A Wimpy advertising on billboards close to Nandos
B Debonairs employing unskilled workers
C Tasha‘s requiring new waiters to undergo HIV/AIDS testing when it is prohibited by law.
D McDonalds selling fast foods that are unhealthy
3 Sue is a manager at Pick n Pay and she subscribes to the 'principle-based theory'. This means …
A a person‘s character is judged, rather than his/her actions
B Sue will tell new employees about business-related incidents to help them to understand what
acceptable behaviour is
C actions are measured against common values to determine if the action is right or wrong
D employees get warnings if they disagree with one another
4 The Famous Brand Code of Ethics will …
A be used to determine when workers are allowed to strike
B guide customers to determine which items on the menu are unhealthy
C guide management‘s actions when a Famous Brands franchise is sold
D helps employees to understand the values and beliefs on which Famous Brands has based its
policies
5 … is a document that defines the principles and values of Famous Brands.
A a grievance procedure
B a code of ethics
C a CSR program
D an induction plan
6 Explain the difference between Professional and Ethical behaviour.
There is often insufficient clarity of what the difference is between being Professional and acting in an
ethical manner. The easiest way to illustrate this is probably as follows:
From this it should be clear that ethical behaviour is just a component of being a professional. Ethical
behaviour means the person will:
be honest and act with integrity
act in a manner acceptable to society
do what is right rather than what is easy or financially rewarding
Professionalism
Ethical behaviour
49
7 Why is the Batho Pele framework important in the South African context?
The Batho Pele principles were developed to ensure professional and ethical behaviour by Public Servants
in order to support the Constitutional values of:
Using and applying state resources efficiently and effectively during service delivery
Not subscribing to discrimination or bias, but rather to be impartial and fair to all citizens of the country
All state departments respecting the needs of the people of the country
Acting in a transparent manner and accepting accountability for actions
8 Why is Corporate Governance important?
Albert Einstein said, ―If people are good only because they fear punishment, and hope for reward, then we
are a sorry lot indeed.‖ Businesses should be good citizens of the country in which they operate, because it
is the right thing to do.
a good image and therefore a much easier task for the Public Relations team
improved relations with stakeholders such as:
o a healthier workforce with easier recruiting, because people want to work at a place regarded
as responsible towards all stakeholders
o investor confidence makes it easier to raise capital
o an increased market share because of a higher satisfaction levels amongst customers because
the business contributed to a better environment by helping others
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Chapter 8: Teamwork and Conflict Management (Page 105)
Activity 1: Page 106
1 We can differentiate between formal and informal teams. Formal teams are those that have been established to
achieve a formal goal. E.g. the school management team has to make sure the school is managed in a manner
that will ensure success. Identify five other formal teams in your school.
2 A group of friends sitting together during break will be classified as an informal team. What are the aims (give at
least three) of an informal team?
1 Suggested answers include: Outreach committee, 1st Netball team, Swimming team, Public speaking
teams, prefect body, Mathematics department.
2 To have fun, socialize, for enjoyment, mutual benefit, pursue common interests and not to have
stress.
Activity 2: Page 107
Think of a team that you belong to. Describe important incidents that took place when the team went through the
different stages as listed above.
A team was put together for the schools JSE challenge
Forming All the grade 9‘s were called together to decide on a team of 8 students to play the JSE shares game. The 8 members were uncertain of their place in the team.
Storming There was a bit of turmoil when they were deciding on a captain or leader. Some girls paired up and withdrew, some boys were very domineering and overpowering.
Norming Once clear roles were decided and accepted, everyone calmed down and started understanding each other‘s personalities and getting along.
Performing The task of trading shares and who will be buying/selling and who will be investigating businesses is established and members get on with the task.
Adjourning In September, when the game is over, the team members will go their separate ways.
Activity 3: Page 109
1 Now think of your circle of friends. Make a list of people and decide who plays the different roles.
2 Next think of the teachers at your school. If you have to take a guess, try to put one or two names next to
each of the above mentioned roles. Once you have done this, discuss it as a class. REMEMBER, if you can‘t
say anything positive about someone else, rather keep quiet.
The aim is not to say nasty things about your teachers, but to see if some of them are clearly fulfilling certain
roles in the school.
Students will attach names of friends and teachers to the following roles:
Consider the different roles:
Thinkers: 3 roles
The Evaluator monitors situations to look for opportunities and then thinks strategically about the optimal
utilisation of these opportunities.
51
The Plant: This is a creative type of person who can think out of the box and contribute towards solving
problems in imaginative ways.
The Specialist is the person with a valuable skill that is not commonly available and he/she shares this
knowledge with the group.
Task orientated: 3 roles
The Finisher is very conscientious and will proactively look for mistakes or omissions to ensure the end
product is delivered on time.
The Implementer will try to convert ideas into practical actions in a conservative and disciplined manner.
The Shaper loves pressure and will challenge people and push hard to overcome obstacles.
People orientated: 3 roles
The Resource Investigator is an extrovert who loves talking to others. This person will network and
establish connections that may help with the task at hand.
The Team Worker is a diplomat who listens to others and who tries to keep everybody calm to avoid
conflict.
The Coordinator is a natural leader who knows when to delegate. This person will ensure all members
understand the goal, but he/she is not afraid to make a decision if intervention is required.
Activity 4: Page 112
1 Describe different situations where the source of conflict was:
1.1 Poor communication
1.2 Cultural differences
1.3 Unfair resource allocation
1.4 Team members not performing their roles
1.5 Any three other conflict situations where you were involved.
2 Now discuss how the above mentioned situations were handled to resolve the conflict. Was it successful?
3 How would you have handled the situation differently? Why?
These are fictitious examples to assist with ideas:
1.1 Two girls were fighting because one thought the other one said she was overweight, she never said
that. All that was said was the tracksuit pants were a flattery style.
1.2 During a class party the only Jewish student in the class was offended when all the snacks
contained pork. She thought it was in poor taste that no one thought of her. She stormed off.
1.3 The netball team was angry because the rugby boys all got new tracksuits and new training
equipment from the school. They got nothing.
1.4 In Business Studies, the teacher gave the class a task to run a little business during school to see
which group could raise the most money. The group had to contain 4 members. I the one group
there were three that worked and the 4th was absent for most the planning and had every excuse
under the sun.
1.5 Other conflict could be caused by: Stereotyping, not respecting rules, power struggles, uncertain of roles, different personality types, priorities.
2 1.1 - the girls sent terrible messages via their phones to each other - the situation got worse.
1.2 - the Jewish students left the party and everyone didn‘t know what they did to upset them.
52
1.3 - the netball girls moaned about the situation and parents phoned in and wanted to know what
was happening. The headmaster responded to them, however, they were still angry and one girl left
the school.
1.4 - The group‘s parents complained because they all got the same mark. The parents were
unhappy, the teacher was called in by the headmaster and she had to explain what happened. The
boy who did nothing, ended up getting 0/20 for his contribution and the boys are not friends
anymore.
3 1.1 - I would have made the girls sit down together and each say what was on their hearts. I would
have forced them both to listen and speak.
1.2 - I would have explained to the class what the different students eat and don‘t eat due to cultural
reasons before the party so there was a better understanding from each one.
1.3 - I would have looked at who needed what resources, checked budgets and then spread it more
evenly or sat the teams down and explained where we were thinking of spending the money before
it was spent.
1.4 - I would have made sure all group members outlined their contributions to the task and followed
up regularly to see if they are doing their part.
Additional activities: Page 112
1 Peter and Jane have been arguing over how to advertise a new computer game to teenagers. Peter
thinks the best way to do it, will be to give it to a group of teenagers to play the game and then tell
their friends. Jane agrees that this is a good idea, but thinks it will take too long to advertise the new
game in this way. Peter left the room mumbling: ―Females always think they know better!‖ The
source of conflict is …
A stereotyping.
B role overload.
C cultural differences.
D resource allocation.
2 When people in a conflict situation agree to disagree to solve the problem, it is known as ... conflict.
A synergistic
B role
C behavioural
D functional
3 According to the Bellbin theory, the … is a natural leader that is prepared to delegate to sub-
ordinates.
A Thinker
B Plant
C Shaper
D Co-ordinator
4 … will result in a lower staff morale and compromise productivity.
A Synergy
B Dysfunctional conflict
C Team development
D A devil‘s advocate
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5 A type B personality is …
A highly strung
B moody
C relaxed
D always looking for excuses
6 Explain how the following factors could lead to conflict in a fast food franchise such as Wimpy.
6.1 The appointment of a new supervisor.
Employees can be nervous of changes the new supervisor might make. They might also be insecure about
the stability of their future at the company.
6.2 Insufficient products to meet customer orders.
They customers might be rude to front of store staff and then they in turn might lash-out at other employees
unnecessarily.
6.3 A waiter that does not understand English.
Customers might get frustrated trying to explain their order over and over and the waiter then orders the
wrong food. This will cause frustration on both parties.
7 Why is it important for a manager to know how to solve conflict?
If one can learn how to manage stress caused by issues such as tight deadlines, too much work and fellow
team members not always doing their jobs, etc., the degree of interpersonal conflict in the workplace will be
minimised.
8 How could dysfunctional conflict in the workplace have a negative impact on the brand / corporate
image of Mug & Bean?
If customers see employees arguing or even getting physical, it will chase them away. Customers will then
tell their friends about the negative experience and it will damage the brand. Employees will also be
unhappy about the situation and will not portray a good vibe to the customers. All this will damage the
brand for Mugg & Bean.
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Chapter 9: Public Relations (Page 114)
Activity 1: Page 119 Identify a business that has recently been faced with a social or environmental issue; collect as much information
about this issue.
Once you have assessed all your information, decide if the business has handled the ―issue‖ in the most suitable
manner. Motivate your answer by looking at the Research, Action, Communication and Action the business took.
Students need to investigate their own business by using the following principles:
Research: This is where the Public Relations function assesses all the factors that contributed to the
PR problem or opportunity. The different contributing factors are investigated and analysed before a
decision is made about the most appropriate action to take.
Action: Before the PR department decides what action should be taken, they have to refer to the
policies and procedures of the business and then decide what it is that the business is going to do
about the situation. Top management should at all times be kept up to date with developments and
how the PR department is going to respond.
Communication: The question arises about what the relevant stakeholders are going to be told about
the problem / situation? Once this has been determined, the message will be communicated to all
relevant stakeholders through appropriate channels such as newsletters, websites, speeches and
special events to name a few. Remember, however, we already said PR is not a one-way
communication. The business should gather and analyse feedback from the stakeholders regarding
the problem / situation.
Evaluation: The success of the PR-drive needs to be evaluated in order to make adjustments if and
where necessary. Some of the questions that the PR department will ask are:
o Did the stakeholders respond to the communication and if so, which stakeholders responded?
o Was the reaction of the stakeholders positive or negative?
o Did the stakeholder/s take action based on the message that was communicated and if so,
what was the effect that it had on the business?
Activity 2: Page 119
Work with a partner. Select a business familiar to you and your partner. Research the Public Relations department
of this business.
Identify possible PR issues the business has dealt with recently and assess whether or not you believe the
business effectively dealt with these issues. Motivate your response.
Present your findings to the class in a 5 minute presentation.
Students to do their own investigation, however, the following rubric can be used to assess the task.
55
0-2 3-5 6-8 9-10 Total QUALITY OF DELIVERY
Presentation -
Communication
[LOT]
(0) Not. (1&2)Partially
meeting the standard of
correct articulation, proper
preparation, eye contact etc.
(3)Adhering to presentation
criteria of public speaking (4)
in a business environment (5)
and dynamic
Good to very good meeting
the criteria of public
speaking(6), good posture
and eye contact(7), The use
of visual aids and correct
language use(8).
Superbly meeting the criteria
of public speaking, good
posture and eye contact (9),
The use of visual aids and
correct language use (10).
QUALITY OF CONTENT
PR issues were
identified
[LOT]
(0) None (1&2) limited detail
of PR issues.
(3) Adequate to (4 &5) good
detail of PR issues.
(6) Satisfactory to (7 &8)
good detail of PR issues.
Excellent detail in the
Research of PR issues. (9&10)
How the business
has dealt with these
issues
[HOT]
(0) None (1&2) limited detail
in dealing with the issue.
(3) Adequate to (4 &5) good
detail in dealing with the
issue.
(6) Satisfactory to (7 &8)
good detail in dealing with
the issue.
Excellent detail in dealing
with the issue. (9&10)
TOTAL: (30MARKS)
Activity 3: Page 121
Identify a situation where PR failed in a business or business situation. Discuss why this was the case and suggest
an alternative approach the Public Relations department could have adopted.
Student will research their own businesses, however, here are some interesting examples:
Toyota (International)
Toyota recalled 5.2 million cars on January 28, 2010. The No.1 car manufacturer in the
world was accused of being aware of the safety problems and a cover-up meant to
save the company the costs of repairs. Toyota CEO Akio Toyota appeared before
Congress to explain the reasons for the malfunctions of brake and steering systems.
Later in 2010 and early this year, it became clear that many of the problems with
Toyota cars were due to driver error and not manufacturing defects. That analysis
came too late to spare Toyota from the lion's share of the harmful media coverage.
The Deepwater Horizon incident may be the largest public relations disaster in corporate
history. The explosion killed 11. The spill let out 206 million gallons of crude. Corporate shares
fall from $60 to $27 in one month, wiping out $100 billion in shareholder value. BP is forced to
establish a $20 billion fund to cover costs of the leak.
Limpopo textbook crisis
When the Limpopo government failed to deliver textbooks to its schools at the
beginning of 2012 it triggered a national outcry. Even when the national government
and the Zuma got involved, textbooks were still not delivered to some schools and
evidence of dumping and destroying of textbooks emerged. It was a public example of
the extent to which the ANC‘s cadre deployment policies, and possibly corruption,
have undermined the capacity of the civil service. The consequences of such
mismanagement would have resonated in poor communities around the country.
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Activity 4: Page 121
Identify a situation where a Marketing-drive has failed and discuss how Public Relations department was used to turn
the situation around.
Here are some examples to assist the teacher:
1. Malaysia Airlines: My Ultimate Bucket List
The first of our worst marketing campaigns for 2014 has to go to Malaysia Airlines, who at the centre of 2
tragic lost airlines in 2014, should‘ve been more conscious of their marketing.
In a competition, the airline asked their audience to answer the question ―What and where would you like to
tick off on your bucket list, and explain why?‖ The competition was open to participants in New Zealand and
Australia, who would be eligible to win IPads or economy class tickets on the airlines.
But what Malaysia Airlines didn‘t take into account was the concept of a ―bucket list‖ and its connection with
death. With its recent tragic history, Malaysia Airlines showed a crude lack of empathy and sensitivity
towards the situation, and people were quick to call them out. The links to the competition were cancelled,
and people were asked to describe destinations and activities on their ―to-do‖ list instead.
2. U2 & Apple: Forced Download
There‘s nothing more cringe-worthy than someone trying to get rid of
your product – especially when you‘ve given it away for free. This year‘s
biggest marketing fail campaign has to be from U2 and Apple‘s
collaboration when it forced U2s new album onto 500 million desktops
and iPhones, regardless of whether each user wanted it or not.
The criticism was swift and merciless, and Bono later admitted that they
―might have gotten carried away with [themselves]‖.
3. Huggies: “Have Dads Put Huggies to the Test”
In 2014, we can pretty much safely assume that the majority of our target demographic are
modern thinkers, and as such, have a more modern view on what a ―typical‖ family looks like.
One stereotype in particular that‘s been challenged is that it‘s the mother who‘s the main
caregiver for the children of the family, and that the father is simply the ―breadwinner‖.
Unfortunately, Huggies missed the memo. In the campaign ―Have Dads Put Huggies to the
Test,‖ dads were shown as being inattentive to babies with full diapers… but not to worry!
Because Huggies diapers can handle anything. Even neglectful fathers.
The backlash against the ad was so severe that a petition was launched called, ―We‘re Dads,
Huggies. Not Dummies‖ to remove the ads. Huggies eventually removed the ads.
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Additional activities: Page 121
1. Public Relations is …
A a tool to assist the business to generate trust and confidence among customers.
B a handy instrument to make people feel better when they are unhappy about the quality of the
product/service.
C not a reliable best tool to convince shareholders to invest in the business.
D a contingency plan that is implemented when the business experiences a crisis.
2. Public Relations requires the purchase of media?
A True B False
3. The potential audience of Public Relations is:
A Local Authorities B Financial groups
C Suppliers D All of the above
4. Traditionally, PR and Marketing functioned as … units?
A Separate B United
C Merged
5. The main objective of the PR activity is…
A Sponsorship and publicity B Publicity and event management
C Exhibitions and publicity D Event management and exhibitions
6. Discuss the role that ethics plays in the Public Relations function of a business.
If PR promotes open communication channels with all stakeholders then there must be a strong emphasis
on honesty. This goes hand in hand with ethical behaviour because wrong doings of a business will always
come back to them in some way.
7. Explain the possible links between Public Relations and Marketing.
Although there are distinct differences between the role of the Marketing function and the Public
Relations function, there is an increased awareness of how these two functions should support each
other through an integrated approach to achieving the business‘s objectives.
Although Marketing still uses advertising as one of the communication tools, it has lost some of its
impact due to the increase in cluttered advertising, and the general lack of loyalty among customers and
the fast rate at which business developments take place. To succeed, the business has to use all
methods and resources available to get the message across to the stakeholders.
A new approach to getting the message across is known as the Integrated Marketing Communication
Function. The value of communication through traditional marketing communication mix (advertising,
personal sales, sales promotion and publicity) is now combined with Public Relations. By combining
these activities of marketing Communication and Public Relations, clarity and consistency in the
message is a greater certainty for the business which will maximise the impact on relevant stakeholders.
Business should look at integrated tactics that are able to:
o Launch products / services
o Sell the product / service to a given segment
o Reinforce a consistent message regarding the image and brand of the business
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8. Discuss how a manager could use PR to help motivate the business workforce.
Employees and the trade unions that represent them are seen as internal stakeholders or brand
ambassadors of the business. The business cannot always control what employees say about the
business, and therefore, it is important to ensure that employees ―buy into the brand and live the
brand‖. If employees are treated in a fair manner, this will hopefully translate into positive messages
being communicated about the business. Also refer to point 4 below where internal marketing is
discussed.
Shareholders are the owners of the business. Although they are probably not active in the business on
a daily basis, they are also considered to be internal stakeholders. It is important that shareholders are
kept up to date with important developments and/or changes in the business that may affect the share
price.
9. Show why clear policies and proper planning are important in any Public Relations program.
Planned:
Public Relations communication should be clear and unambiguous. The PR function should be aware of all
internal and external factors that could affect communication (such as public perception or employees‘
attitudes and behaviour) and then plan the communication activities to generate positive change.
Deliberate:
Communication with stakeholders does not take place ―by accident‖. It is intentional and carries a specific
message. The message should be put together to ensure that:
It gains an understanding of stakeholders‘ perceptions
It influences the desired group of people by providing the correct information
Feedback can be collected so that the business knows what needs to be done to achieve its
objectives
Public Relations should be systematic (a step-by-step approach) to ensure all necessary research is
undertaken before the communication process starts and that feedback is analysed in order to inform the
next phase of the communication process.
A Management function:
PR should be part of a business‘s strategic planning, because it is a tool that can assist management with
problem solving. Public Relations can help the business deal effectively with conflict in order to ensure the
day-to-day functioning of the business creates a positive image of the business, both internally and
externally.
Involve two-way communication:
It is vital that the business listens to stakeholders‘ concerns or demands and that the business responds in
an effective manner.
Promote Performance:
The Public Relations department ensures that the business policy is properly communicated and
understood by everybody. People are usually more prepared to ―buy-into an idea‖ if they understand the
logic and reasoning behind it.
Be in the interest of the public:
PR ensures stakeholders understand that business activities are of mutual benefit to the business and
themselves.
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10. How can a business ensure that the PR activities make a positive contribution to the functioning of the
business?
The Marketing function deals with the product / service position and sales in the market.
Public Relations tries to ensure that the business is successful by monitoring the brand in the market
place and ensuring that all actions are in line with the way it expects to be perceived by stakeholders. In
short it can be said that Public Relations is involved in shaping and promoting the business‘s core
values, both internally and externally
11. Explain John Marston‘s acronym RACE, and apply this acronym to a PR-related issue in a business of your
choice.
Research: This is where the Public Relations function assesses all the factors that contributed to the PR
problem or opportunity. The different contributing factors are investigated and analysed before a
decision is made about the most appropriate action to take.
Action: Before the PR department decides what action should be taken, they have to refer to the
policies and procedures of the business and then decide what it is that the business is going to do about
the situation. Top management should at all times be kept up to date with developments and how the
PR department is going to respond.
Communication: The question arises about what the relevant stakeholders are going to be told about
the problem / situation? Once this has been determined, the message will be communicated to all
relevant stakeholders through appropriate channels such as newsletters, websites, speeches and
special events to name a few. Remember, however, we already said PR is not a one-way
communication. The business should gather and analyse feedback from the stakeholders regarding the
problem / situation.
Evaluation: The success of the PR-drive needs to be evaluated in order to make adjustments if and
where necessary. Some of the questions that the PR department will ask are:
o Did the stakeholders respond to the communication and if so, which stakeholders responded?
o Was the reaction of the stakeholders positive or negative?
o Did the stakeholder/s take action based on the message that was communicated and if so, what
was the effect that it had on the business?
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Chapter 10: Finance (Page 122)
Activity 1: Page 124
1 What is the new name for:
1.1 The Income Statement?
1.2 The balance sheet?
2 Explain the difference between cash flow and profit.
3 The difference between Non-current and current liabilities is the repayment period. Which one of the two must be
repaid within 12 months (1 year)?
1.1 Statement of Comprehensive income
1.2 Statement of financial position
2 Cash flow = Cash flow is the net amount of cash and cash-equivalents moving into and out of a
business / Income from sales, selling other assets or owner giving capital or borrowing money.
Profit = a financial gain, especially the difference between the amount earned and the amount spent
in buying, operating, or producing something.
3 Current liabilities
Activity 2: Page 125
1 What is the difference between fixed costs and variable costs?
2 Why is break-even an important calculation for the business?
1 Fixed costs remain the same, irrespective of the output (units produced), namely - when fixed costs
include insurance and rent expense, if a worker is paid a fixed salary irrespective of what the
production is, it is also a fixed cost. Salaries of workers are usually fixed if they are not directly
involved in the production process, such as the cleaner, manager and secretary.
Variable costs vary according to the output (units produced). Variable cost will increase when
production increases. Examples of variable costs include Water and Electricity, raw materials used to
make the product and the wages of workers who are paid according to their output.
2 The break-even point is the point where the income generated from sales is exactly equal to the total
costs. In other words this is the point where neither a profit nor a loss is made. This means as soon
as the business exceeds this point in sales, a profit will be generated.
Activity 3: Page 127
1 What is a feasibility study?
2 Why is a feasibility study important when Wimpy wants to open a new franchise?
1 A feasibility study is the process of assessing the potential of a new business idea. It is important to
know as soon as possible whether a project has the potential to succeed or not – preferably before
large amounts of time and money are invested.
2 A feasibility study helps to determine the possibility of success if a new idea is implemented, before a
business plan is developed.
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It forces the entrepreneur to take all emotion out of the equation and to focus solely on the facts by
answering certain questions in an objective manner.
The feasibility study forces the entrepreneur to THINK critically about what it is that he/she wants to
do and if there is an opportunity to make money from this idea. It is not good enough merely to think
about all these aspects.
The feasibility study should be put in writing to add to, to refer to at a later stage if need be, to use as
a guide to develop a business plan.
Activity 4: Page 129
1 Explain the concept ROI.
2 Discuss TWO investment options if someone wants to generate a monthly income from the investment.
1 The return on investment is:
The additional money generated by the investment x 100
The original amount invested 1
In a business context this formula will measure the profitability of the business. If a business can only
generate a 4% return on investment, it will not be a good idea to invest money in that particular
business, because even banks pay about 4% interest on fixed deposits (and there is no risk or the
trouble of running a business associated with the investment in the bank). The entrepreneur will have
to calculate the business return on investment and then evaluate it in terms of risks taken in the
business and other effort invested in the business. There is no hard and fast rule that can be applied
to say ―if the ROI is less than …% the entrepreneur should invest his/her money elsewhere‖. But
comparing ROI in the business with ROI of other investment opportunities will give some indication of
what the better option may be.
2 Investing in property and you receive rental income from the tenants on a monthly basis.
Notice deposit at a bank where you can invest in a fixed deposit or money market account and
receive a steady flow of interest income.
Activity 5: Page 131
1 How does insurance help a business to reduce certain risks?
2 Why do you think is it expensive to take out insurance against bad debt?
3 If the business decides not to take out insurance against bad debt, how can they manage the risk of bad debt in
the business?
1 There are many events that may occur which could have a serious impact on the business. Think
about fire, burglary, robberies, floods, or a customer slipping and falling in the store, a car accident or
an employee being injured while on duty. Any of these events will cost the business money to recover
from the consequences or possible claims made by injured parties. Sometimes it may be impossible
to recover from a big disaster! - If your business is insured, you can transfer the risk to the insurance
company and you will be put in the same position as you were before the incident occurred.
2 It possess a high risk and your premiums are established on the amount of risk the insurance
company is taking on. Ie: There is a very strong chance that your customers won‘t pay. Also if you
know you will get a pay-out from insurance if they don‘t pay, what is pushing you to go through all the
effort of trying to get the customers to pay?
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3 You need to ensure proper credit checks are done before credit is granted to the customer.
Background checks according to the Credit agreements act need to be followed.
Additional activities: Page 131
Are the following statements true or false? If false, motivate your answer by correcting the statement.
1 Overhead expenses consist of variable cost only.
False - it can include fixed and variable costs
2 The break-even point is the point at which the undertaking shows neither a profit nor a loss.
True
3 It is a sound financial policy to finance fixed assets with long-term funds.
True
4 Enterprises in sound financial positions can obtain loans at better rates.
True
5 The relationship between own capital and borrowed capital is known as liquidity.
False - it is known as gearing
6 A life assurance contract provides the insured with indemnity in the case of death.
True
7 The premium payable according to an insurance contract increases as the risk gets smaller.
False - It increases at the risk gets higher.
Provide the correct term for each of the following:
8 A debt that the business is unable to collect and that will have to be written off
Bad debt
9 The maximum amount that a person may buy for from a business undertaking
Credit limit
10 The ratio which indicates the income generated as a percentage of the investment
ROI
11 The money that the owner gives to start a business
Own capital (Owners‘ equity)
12 The remuneration paid to the insurance company for the risks which it bears
Premiums
13 When goods are taken from a property after forced entry
Burglary
14 An employer can take out this insurance which will protect him against losses because of an employee‘s
dishonesty.
Fidelity insurance
Choose the correct alternative:
15 Which one is NOT an example of a source of working capital?
A Bank drafts
B Bank overdrafts
C Factoring of debtors
D Bank acceptances
16 Which one is an example of current assets?
A Bank overdraft
B Production stock
C Cash
D Debtors
Which one does not fit?
17 Sources of fixed capital are:
A Sale of shares
B Retained income
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C Long-term loans with a bond as security
D Short-term loans with security
18 Discuss five criteria which a potential investor may consider when a choice is made between investing in two
different businesses.
He will compare the financial statements of the two business.
Do any of the two of the businesses use special technology to produce its merchandise for sale?
Ask for a copy of the lease agreements of both building if the business is renting premises.
Stock must be checked and reasonably valued. Old or damaged items must not be taken over.
The value of the stock must be calculated at cost price.
The equipment must be checked by a knowledgeable person for faults, and wear and tear
Check with local authorities for licensing requirements, permits and zoning.
19 Describe three steps that need to be followed when a feasibility study is undertaken.
Step 1: Describe the business or project idea
Write down a detailed description of what it is that will be sold, i.e. the product/service.
o Will the business manufacture the product? Is there a patent that can be used to protect the
intellectual property?
o If the product is bought from a supplier, who will be the supplier? Where is the supplier? Are
there alternative suppliers?
o What distribution channels will be used to get the product to the consumer?
Clearly state how the project idea is different from businesses already selling something similar or
identical, i.e. why will the consumer want to buy THIS product/service as opposed to that of a
competitor? Describe why this will be more successful than other products/services.
Step 2: Describe the market (by doing market research, if need be… )
Is there a market for the proposed idea? Who is the target market?
Does the market have the potential to absorb another competitor? The business thus has to assess
its potential position in the market.
Is there potential for growth in the market?
Is the market sensitive in terms of price? Does the target market expect a product/service that sells
for less than existing products or should the product/service be sold at a premium, i.e. more
expensive than existing products/services because it offers more?
Who will be the competitors? What are their strengths and weaknesses?
Step 3: If it is a viable idea, what next?
How much capital is needed to get the business off the ground? How will capital be raised? It is
prudent to ensure enough working capital is available for at least the first six to eight months of the
business‘s operations.
Where will the business be located? Why that specific location? Advantages and/or disadvantages
of the location? What are the municipal requirements in terms of business zoning?
What special equipment will be required in the business? Can it be sourced? At what cost?
What special skills are needed to proceed? Where will the business get people with these special
skills?
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Chapter 11: Marketing (Page 133)
Activity 1: Page 134
Choose three very different products/ services and describe the market segment for which your chosen products/
services cater. Share your ideas with a partner to see if your partner agrees with you.
What is a 'Market Segment‘ (http://www.investopedia.com/terms/m/market-segment.asp?)
A group of people that share one or more characteristics. Each market segment is unique and marketing
managers decide on various criteria to create their target market(s). They may approach each segment
differently, after fully understanding the needs, lifestyles, demographics and personality of the target.
Sports energy drinks - a thirst quencher for sporty on the go people needing that extra boost.
Super bike - For younger adults who have a ‗need for speed‘ and a need for
transportation.
Mac book laptop - a technologically advanced group that is willing to pay a large amount
on a specialised laptop.
Activity 2: Page 137
Decide on a product of your choice. Describe the market segment that the particular product is aimed at. Motivate
your response by looking at the characteristics of the market segment.
Briefly discuss the marketing mix of your product by describing the:
product/service
price
place where the product/service is distributed activities to promote the product/service
A market can be segmented based on a variety of criteria. The ideal is to ―create a market‖ that is big
enough to achieve sufficient returns on investments by combining some of these characteristics. For
example:
Debonairs will focus its marketing resources on getting the message to people in an income bracket
who can afford to eat takeaways.
In addition, they will look at people with a lifestyle who would find takeaways attractive and enjoyable.
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Debonairs will then frequently remind these consumers of the convenience of the product, because it
is delivered to their doorstep.
Should a particular Debonairs franchise be located in a geographical area where there is a large
number of people of a certain cultural grouping (e.g. Jewish community), they will make sure their
advertisements emphasise that all pizzas are Kosher.
The Product component includes the characteristics of the product/service, packaging, logo and trade
mark.
Price looks at the money the target market is prepared to exchange for the product/service. When
setting the price it has to be kept in mind that the cost of production needs to be covered. In addition the
business will have to consider what competitors are charging for the same or similar products/services.
Place refers to the different channels that could be used to ensure that the product/service reaches the
desired market segment.
Activity 3: Page 138
Identify an example of each of the following types of products:
o Consumer goods
o Consumer services
o Producer goods
o Producer services
o Consumer goods - goods bought by consumers, e.g. food, clothing, furniture and computers, etc.
o Consumer services - purchased by the consumer for personal use, such as education, hairdressing
and banking, etc.
o Producer goods - sold to other businesses to use in the day-to-day running of the business or for
further manufacturing. These goods include machinery or components that are used in manufacturing
such as oil, nuts and bolts, etc.
o Producer services - assist the business with its daily operations, e.g. insurance, banking and
accounting services.
Activity 4: Page 139
Identify a brand of your choice. Discuss how advertising has been used to communicate the values that the brand
represents.
Students to identify their own brands, and example:
According to Group Head of Marketing for Multichoice South Africa, Nomsa Chabeli Mazibuko, ―With Gabriel Macht as the new Brand Ambassador for DStv Premium, we are bringing our subscribers closer to
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the international stars of their favourite series. As a DStv subscriber, you will always know best as we continue to bring you the best curated entertainment, the best of international talent." (http://www.channel24.co.za/TV/News/All-the-deets-on-why-the-star-from-Suits-is-in-SA-20150901)
The DSTV brand is being portrayed as ‗international‘ due to the prominent (good-looking) star. In his suit,
he is also very professional and on his show he is extremely confident and a go-getter. This is a good
brand for viewers to associate with DSTV.
Activity 5: Page 140
Assess how Apple Inc. has ensured that its products are more successful than those of its competitors. Use the
criteria of ―making a successful product‖ to help you motivate your response.
Students to use:
The business must ensure that the product/service satisfies the needs and wants of the consumer. This
process, however, does not stop once the needs/wants have been met. The business has to continue to
monitor needs/wants in order to change or reinvent the offering if there is a change in consumer taste or
when trends in the market segment changes.
The design of the product not only refers to the quality, consistency, performance and the appearance
of the product, but also to the brand image of the overall business. It is important that the target market
looks at the product design which must create or cultivate a desire by the consumer to own the product.
It is important that the product should be differentiated from the offering of competitors and/or substitute
products. This will help the customer to identify the product amongst other similar products. A product
that is unique will help the business to create and build a competitive advantage.
Cost is an important factor to consider when the product is produced or when the service is rendered,
because not only does the business want to recover costs, it also has to make a profit. Consumers will
expect to pay more for certain products and less for others. It is, however, not only the price of the
product that will influence the decision to buy the offering, but also opportunity cost when the purchase
is made. Opportunity cost refers to the fact that the consumer will have to sacrifice another item if the
product is purchased. A practical example illustrates this: Peter may think that R30 is not too much to
spend on a movie ticket, but considering that he only has R50 in his pocket, he realises if he goes to the
movies, he will only have R20 left. He also wants to buy a computer game from his friend for R35. So
even though he is prepared to pay R30 for a movie ticket, he will then have to sacrifice the computer
game, so he decides not to go to the movies.
This is an interesting article from ―TIME‖ on Apples success -
(For the full article: http://techland.time.com/2012/05/07/six-reasons-why-apple-is-successful/)
6 Reasons Apple Is So Successful
1. For any product that Apple creates, the people who create it have to want it themselves
So many times with projects I do with other tech companies, the goal is almost always based around the
technology first, followed by whether or not people really want to use it. Geeky engineers are dazzled by
the technology at their disposal and often create something because they can. But Apple‘s approach is
quite different. The engineers who are creating Apple products actually make them for themselves. And
Jobs was the chief ―user‖ of Apple products when he was alive. All of Apple‘s products are based on the
fact that Jobs represented the real customer. And his engineers had to come to grips with that when
designing a product. It has to be something that they personally couldn‘t live without.
2. The products have to be easy to use
Jobs was a stickler on this point. While industrial design is a critical component of any product Apple
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makes, if it is not easy to use, it is considered worthless to the consumer. This is what drove the company‘s
user-interface designs from Day 1 and is still the mantra pushed to the software and hardware engineers
every day they go to work. All of the products they create have to be intuitive and easy to understand and
learn. As technology has become more intricate and users want more features, the task of keeping things
simple is sometimes difficult. And Apple creates tools for power users and rookies, which can mean a
broad range of ease-of-use issues. But even with that, Apple is the only company I deal with where ease of
use is more important than the product itself. Apple makes this a critical goal of its approach to creating
anything for the market.
3. Keep things simple
Apple only has one iPhone model, and anyone who has gone into an Apple store understands that every
staff member there knows a great deal about each of the four major products carried in its stores. Apple
doesn‘t have five iPhone models to choose from; it has only one. While this may seem limiting given the
amount of smart phones available to users, the truth is the reverse. Our company has done consumer
research for over 30 years, and consumers constantly tell us that while choice is nice, in reality they want
the process of choosing a tech product to be simple and not complicated by a plethora of choices.
4. Offer great customer service and in-store experiences
Because it keeps product SKUs simple, the salespeople inside the stores know the products really well.
Notice that when you go into an Apple store and are greeted by one of the sales staff, you‘re not asked,
―How can I help you?‖ Instead they ask, ―What would you like to do today?‖ They go right to the heart of
any technology user‘s question, a question that‘s always related to what they want to do with the
technology the user is interested in. And once you explain your needs, they take care of it on the spot in
most cases. Or if you need more hand holding, they turn you over to the Apple Geniuses. No wonder 50%
of people buying Apple products are new to Apple. Apple‘s products are simple to understand and use, but
if you do have a problem, Apple can take care of it at their stores or over the phone quickly.
5. Apple only makes a product if Apple can do it better
Apple normally doesn‘t invent a new product or product category. Sure, the company did invent the first
commercial PC with the Apple II, and the Mac improved on PCs with a graphical user interface and mouse
input. But since then, all of Apple‘s other products have been recreations of existing products. Apple did not
invent the MP3 player; Apple reinvented it and made it better. Apple did not invent the smart phone; Apple
reinvented it and made it better. And Apple did not invent the tablet; Apple reinvented it and made it better.
As Apple designer Jonathan Ive said recently, ―Our goals are very simple — to design and make better
products. If we can‘t make something that is better, we won‘t do it.‖ Clearly, Apple applied that thinking first
to iPods, then smart phones and more recently, to the iPad.
6. Apple stays at least two years ahead of its competitors
This is the one that scares Apple‘s competitors the most. While those competing with Apple are just getting
products to market that are competitive, Apple is already working on the products at least two years out.
For example, the new iPhone that will most likely go to market in October was designed and signed off on
two years ago. And the iPhone the company is working on now is for the fall of 2014. The same goes for
the iPad. The new iPad that we will most likely see next March was signed off on two years ago. The one
that‘s being worked on now we will probably see in 2015. This is a nightmare for Apple‘s competitors and
will continue to be for some time.
These six principles may seem a bit simplistic given the fact that Apple also has great software, industrial
design and a powerful ecosystem of content, apps and services as part of the company‘s success
equation. However, I can tell you that from my three decades of following Apple, it‘s these six key principles
that are what really makes it successful. And as long as it adheres to them, it‘s pretty likely that Apple will
continue to grow and command a relatively large share of the market in the company‘s product categories
where it competes.
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Activity 6: Page 144
Choose a product and identify the current point/place of your product in its life cycle. Justify why you believe your
product is at the particular point which you identified.
Students need to choose their own product and justify with the following phases:
Phase 1 - Developing a product:
Businesses are constantly looking at the need to adapt existing products or to develop new products to
stay competitive.
Phase 2 - Introduction
During this phase the product is introduced to or launched onto the market.
At first sales will usually increase slowly, with only the early adopters buying the product.
As the business, however, starts to apply more promotional strategies, sales tend to increase.
During this phase there is usually very little (or no) profit, because the business first has to recover
all the research and development costs.
Phase 3 - Growth
When aggressive promotional strategies start to attract the attention of the customers, sales usually
increase.
The business will try to engage with the customer through frequent interaction to generate loyalty.
The business needs to be aware of how competitors are reacting to the introduction of its product in
order to adapt its promotional and pricing strategies to remain competitive.
At this stage the business usually starts to make a profit, as the development costs are being
recovered.
Phase 4 - Maturity
During the maturity phase sales volumes are either maintained or sales decrease and the business
has to be innovative to retain optimal customer loyalty and ensure repeat purchases.
Phase 5 - Decline/Withdrawal
As trends and technology change in the market place, new products are introduced and this places
pressure on existing products.
The introduction of a new product may lead to customers losing interest in ―out-dated‖ products.
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During this decline/withdrawal phase, the business will usually put products on sale (reduce the
price) to get rid of the final stock before a new product is introduced.
Activity 7: Page 144
Identify a product you believe is currently in the decline phase. Suggest strategies that could be used by the business
to extend the life of this product.
Students to identify their own products, however, here is an interesting article on the iPod, which is in the
decline stage…
(For the full article: http://www.bbc.com/news/technology-25927366)
Apple's iPod: is the end nigh? By Dave Lee - Technology reporter, BBC News
…But 12 years, and 26 devices later, the generation-defining iPod range looks like it's about to fade into
history without as much as a whimper.
"I think all of us have known for some time that iPod is a declining business," said Apple boss Tim Cook
earlier this week, speaking during a conference call discussing the company's latest earnings report.
He announced massive profits - as ever - but noted that iPod sales had dipped: 52% down on this time last
year, with further drops expected.
That's not bad, or even surprising, news for the company. The people who would have previously bought
iPods are now more likely to buy iPhones or iPads.
But it's bad news for the humble iPod - a tiny-but-mighty device that many say was the catalyst that
propelled Apple into its boom era of iPhones and iPads.
Possible strategy to extend the life need to be based on these principles:
Variation: The Business could offer the same product in different sizes, colours, flavours, etc. with the
aim of increasing sales.
New markets: The business is looking to create a ―new demand‘ for the product to increase sales. This
can either be done by entering a new geographical market where the product has not been sold before,
or the business could try to appeal to a different market segment.
Development: The business could redesign the product to make it more modern or to improve the
functionality of the product. The aim is to ensure that the product is attractive to customers whose needs
and wants may have changed.
Distribution channels are improved or expanded to make the product accessible to customers or to
get the product to customers in a faster and more effective manner.
Promotion: The business could use different promotional strategies, such as ―buy one get one free‖, to
promote sales.
Price: The business could use different pricing strategies such as discounting to generate greater
demand.
Extending the life cycle of the iPod:
For Apple to bring it out the decline stage it will need music downloading capabilities OR
It can be pre-loaded with children‘s books or a type of encyclopaedia OR
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Activity 8: Page 147
Identify products / services where each of the different pricing strategies is applied. Motivate why you think the
business would have adopted this particular pricing strategy for this particular product / service.
Pricing strategy Product or service using the strategy
Why did they adopt this strategy
Cost-plus pricing A store with home-baked cakes and sweets.
All that is taken onto account is the manufacturing costs and an amount is added as a mark-up. The competitor‘s price is not taken into account.
Price skimming Apple iPhone Because there is excitement when the company launches a new product, everyone wants one and will pay the inflated price.
Penetration pricing Burger King have launched these burger at a very low price to increase their market share, however, with time the price will increase.
Competitive pricing McDonalds is using competitive pricing by responding to the Burger King prices. This is in an effort to stop customers going to Burger king. The R10 difference is justified by an extra patty.
Promotional pricing
This promotion, Edgars is getting rid of certain clothing ranges.
Psychological pricing
All these prices are made to look as cheap as possible, however, if you add R1 it looks substantially more in some instances.
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Activity 9: Page 147
Why is it important to ensure products are distributed to the correct place?
It is important to get the product to the consumer (correct place and time) and for this reason it is vital
that the business decides on the correct distribution channel/s.
A distribution channel looks at the different structures (places) the product will pass through to get to the
targeted market segment.
It must be kept in mind that the more intermediaries (middle-men) that are involved in distributing the
product, the higher the cost will be for the end consumer, because each intermediary will add a mark-up
to the product, to cover their costs and ensure a profit.
Activity 10: Page 153
Critically assess the success of the promotion mix of your favourite brand.
Students to assess their own brands keeping the following in mind:
Promotion is about giving the customer the necessary information about new and existing
products/services offered by the business.
The business will focus the message on the advantages of the product, the price and the place where
the product/service will be sold.
The aim is to formulate the marketing message in a manner that will convince the consumer he/she
cannot do without the product/service and that it is great value for money. If the message is successfully
communicated, it will lead to higher sales, customer loyalty and thus a competitive advantage.
Promotion is an important tool to create and support a particular brand image for the business.
Here is an interesting article to read on the marketing mix of Coca-Cola and the media they use:
http://research-methodology.net/coca-cola-marketing-communications-a-critical-analysis/
Activity 11: 154
Find an article that discusses Facebook as a medium to attract the consumer. Bring your article to class and discuss
what you have read with the rest of the class. Identify the strong points (highlight these).
Assess how a small business in your community could use these strong points to help grow and create a sustainable
business through Facebook.
An interesting article on:
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How Coca-Cola uses Facebook, Twitter, Pinterest and Google+
https://econsultancy.com/blog/62548-how-coca-cola-uses-facebook-twitter-pinterest-and-google/
Students need to discuss a small business using the following points:
Social Media such as Facebook, Twitter, Blogs and YouTube
Facebook and Twitter are inexpensive ways in which the business is able to interact with the
customer.
The business is also able to create its own Blog where it communicates with the customer in an open
forum. This gives the customer an opportunity to voice any concerns, but also to compliment the
business.
The business is also able to produce short promotional messages for customers to watch on
YouTube.
Activity 12: Page 154
Compile a presentation (not power-point, be creative with your presentation skills) in which you share the following
information with your class. You may work with a partner to complete this activity.
Identify a brand of your choice, motivate your choice.
Research your brand in full. What does your brand stand for, what are the brand values?
Identify how your brand has positively or negatively affected the social and environmental environments in
which it operates or is marketed.
Assess the CSR strategy of your chosen brand.
Identify how the business could strengthen the CSR strategy of the brand and thus its customer loyalty with the use of
the 7P‘s of marketing,
Students to present their tasks and the teacher can use the following rubric:
0-2 3-5 6-8 9-10 TOTAL
Has an appropriate brand
been identified?
Demonstrates little to
no understanding of
the topic. Many
requirements of topic
are missing.
Demonstrates a fair
understanding of the
topic. All requirements
of topic are included
in the response.
Demonstrates
considerable
understanding of the
topic. All requirements
of topic are included.
Demonstrates
complete
understanding of the
topic. All requirements
of topic are correctly
applied and included.
Has the brand been
researched:
What does it stand for?
What are the brand
values?
Demonstrates little to
no understanding of
the topic. Many
requirements of topic
are missing.
Demonstrates a fair
understanding of the
topic. All requirements
of topic are included
in the response.
Demonstrates
considerable
understanding of the
topic. All requirements
of topic are included.
Demonstrates
complete
understanding of the
topic. All requirements
of topic are correctly
applied and included.
Positive and negative
impact of the brand
Demonstrates little to
no understanding of
the topic. Many
requirements of topic
are missing.
Demonstrates a fair
understanding of the
topic. All requirements
of topic are included
in the response.
Demonstrates
considerable
understanding of the
topic. All requirements
of topic are included.
Demonstrates
complete
understanding of the
topic. All requirements
of topic are correctly
applied and included.
CSR strategy of brand
Demonstrates little to
no understanding of
the topic. Many
requirements of topic
are missing.
Demonstrates a fair
understanding of the
topic. All requirements
of topic are included
in the response.
Demonstrates
considerable
understanding of the
topic. All requirements
of topic are included.
Demonstrates
complete
understanding of the
topic. All requirements
of topic are correctly
applied and included.
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Presentation: as the
student used colour,
balance graphics and
words and does the
poster attract your
attention?
Demonstrates little to
no understanding of
the topic. Many
requirements of topic
are missing.
Demonstrates a fair
understanding of the
topic. All requirements
of topic are included
in the response.
Demonstrates
considerable
understanding of the
topic. All requirements
of topic are included.
Demonstrates
complete
understanding of the
topic. All requirements
of topic are correctly
applied and included.
TOTAL: (50 MARKS)
Activity 13: Page 156
Discuss the impact, both positive and negative, that trade regulations and restrictions had on the fruit and vegetable
industry in South Africa over the past five years. You might have to do a little research to support your arguments.
These are some facts off SARS website:
The main difference between prohibitions and restrictions is that -
prohibited goods are never allowed to enter or exit South Africa under any circumstances
Restricted goods are allowed to enter or exit South Africa only in certain circumstances or under
certain conditions, for example on production of a permit, certificate or letter of authority from the
relevant government department, institution or body.
Restricted goods:
Food, plants, animals and biological goods: All plants and plant products, such as seeds, flowers, fruit,
honey, margarine and vegetable oils. All animals, birds, poultry and products thereof, for example, dairy
products, butter and eggs.
Some additional articles:
SA gets tough on fruit imports - http://www.sanews.gov.za/south-africa/sa-gets-tough-fruit-imports
TRENDS IN SOUTH AFRICA VEGETABLE IMPORTS - http://www.pma.com/~/media/pma-files/fc-south-africa-
2014/marianna-theyse.pdf?la=en
South Africa: Fresh Produce - Imports and Exports - http://www.pma.com/~/media/pma-files/research-and-
development/south-africa.pdf?la=en
Activity 14: Page 158
The Proudly South African Brand was created as a vehicle to promote goods and services which are produced locally.
Identify a product which is Proudly South African.
Assess the success of the product. Motivate your response by looking at the value the Proudly South African
brand has added to your product.
Students can identify any brands, some examples of brands include:
74
(http://www.mediaclubsouthafrica.com/images/stories/september2015/Brands_infographic_big.jpg)
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Additional activities: Page 158
1 Does the market of a business need to be in one place? Motivate your answer.
A market is any place where goods and services are bought and sold (exchanged for money).
Goods are bought by the target market, i.e. that portion of the population that feels the product or service
will satisfy a need.
In modern times, the market could exist electronically (e.g. via the internet) or as the conventional face-
to-face interaction.
2 What is the difference between market orientated and product orientated?
A Product-Orientated approach to Marketing:
When a Product-orientated approach is followed, the business concentrates on the skills,
knowledge and systems needed to produce a specific product.
When research is conducted, the focus is on the product and the characteristics of the product.
A Market-Orientated approach to Marketing:
A market-orientated approach demands that the business focusses on satisfying the needs and
wants of the customers.
The emphasis is on market research on an on-going basis to ensure changes in consumer needs
and wants are timeously identified.
3 Explain three different factors that could affect the length and shape of a product life cycle?
Any three of the following:
Variation: The Business could offer the same product in different sizes, colours, flavours, etc. with the
aim of increasing sales.
New markets: The business is looking to create a ―new demand‘ for the product to increase sales. This
can either be done by entering a new geographical market where the product has not been sold before,
or the business could try to appeal to a different market segment.
Development: The business could redesign the product to make it more modern or to improve the
functionality of the product. The aim is to ensure that the product is attractive to customers whose needs
and wants may have changed.
Distribution channels are improved or expanded to make the product accessible to customers or to
get the product to customers in a faster and more effective manner.
Promotion: The business could use different promotional strategies, such as ―buy one get one free‖, to
promote sales.
Price: The business could use different pricing strategies such as discounting to generate greater
demand.
4 What is meant by the term ―demand‖?
Demand is a buyer's willingness and ability to pay a price for a specific quantity of a good or
service. Demand refers to how much (quantity) of a product or service is desired by buyers at various
prices.
5 Explain, using of examples, how ―product‖ as part of the marketing mix is able to influence the demand of a
product or service.
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The product/service is seen as the most essential element of the marketing mix, because without a
product/service, a business cannot function. For this reason the product/service is the main focus of the
marketing mix; all other marketing mix elements as a result, are directed towards ensuring that the
product/service is successful.
Just a quick reminder about a discussion earlier in the chapter:
o Some businesses are product orientated. This type of business will develop a product and then look
for a market for the product.
o Other businesses are market orientated. These businesses invest large amounts of time and money
trying to understand the behaviour of consumers and how best they would be able to meet the
needs/wants of these consumers. A product/service is then developed to satisfy these needs/wants.
It is important that the business monitors the life cycle of the product/service in order to the
product/service offering new and relevant to the consumer.
6 Assess the importance of a clear promotional strategy as part of the business‘s overall marketing strategy.
Promotion is about giving the customer the necessary information about new and existing
products/services offered by the business.
The business will focus the message on the advantages of the product, the price and the place where
the product/service will be sold.
The aim is to formulate the marketing message in a manner that will convince the consumer he/she
cannot do without the product/service and that it is great value for money. If the message is successfully
communicated, it will lead to higher sales, customer loyalty and thus a competitive advantage.
Promotion is an important tool to create and support a particular brand image for the business.
7 Examine how a ―brand‖ Like Pick n Pay could lead to the competitive advantage of the business.
Their trademark could assist in creating a competitive advantage because:
o A Trademark is any symbol and/or word(s) that are legally registered to be used by the business on its
product and service.
o The trademark is ―the face of the business‖.
o A Trademark helps customers to distinguish one business‘s products and services from that of
competitors and this may help the business to get a competitive advantage in the market. This is
especially true if a new product is added to a range using an established trademark that is already
known for its good quality.
8 Pick n Pay is always looking to expand into new markets; assess how Pick n Pay could use different prices
strategies in order to capture the attention of a new market and develop a sustainable customer base.
Because of their wide range of products and the wide LSM group of 4-10, Pick n Pay can use the pricing
strategies to their advantage.
Pricing strategy Product or service using the strategy
Why did they adopt this strategy
Cost-plus pricing Pick n Pay bakery
All that is taken onto account is the manufacturing costs and an amount is added as a mark-up. The competitor‘s price is not taken into account.
Price skimming There sale of DSTV explorers
Because there is excitement when the company launches a new product, everyone wants one and will pay the inflated price.
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Penetration pricing A new brand of toilet paper
They introduce the unknown brand of toilet paper at a low affordable price, then it slowly gets more expensive as customers become hooked on the brand.
Competitive pricing Cleaning materials Look at the brand leaders with cleaning materials. The advertised prices take into account at what competitors are selling it for. Eg: Checkers and Shoprite.
Promotional pricing Brand match
Pick n Pay are ensuring that customers receive discount prices and promotions throughout their shopping experience.
Psychological pricing
All these prices are made to look as cheap as possible, however, if you add R1 it looks substantially more in some instances.
9 Briefly explain to the management of Pick n Pay, the need to do market research before attempting to enter a
new market environment.
Market research and development: Marketing starts with doing market research in order to understand
the behaviour patterns of the consumer and the way in which the consumer expects the product/service to
be delivered. This could involve testing the product/service in the market, collecting feedback from the
customer to improve on the product/service or further develop the product/service. The research process
helps the business to understand the expectations of consumers in terms of:
o the product/service and the demands in terms of the packaging
o the price people are prepared to pay
o where the target market wants to have access to the product/service (place) and
o preferential channels of communications to receive information about the product/service
offering
10 Help the management of Pick n Pay by examining different ways in which they could create value not only for
their product but for the brand as a whole. Adding value to the brand should create a competitive advantage for
Pick n Pay in the retail sector.
The business must ensure that the product/service satisfies the needs and wants of the consumer. This
process, however, does not stop once the needs/wants have been met. The business has to continue to
monitor needs/wants in order to change or reinvent the offering if there is a change in consumer taste or
when trends in the market segment changes.
The design of the product not only refers to the quality, consistency, performance and the appearance
of the product, but also to the brand image of the overall business. It is important that the target market
looks at the product design which must create or cultivate a desire by the consumer to own the product.
It is important that the product should be differentiated from the offering of competitors and/or substitute
products. This will help the customer to identify the product amongst other similar products. A product
that is unique will help the business to create and build a competitive advantage.
Cost is an important factor to consider when the product is produced or when the service is rendered,
because not only does the business want to recover costs, it also has to make a profit. Consumers will
expect to pay more for certain products and less for others. It is, however, not only the price of the
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product that will influence the decision to buy the offering, but also opportunity cost when the purchase
is made. Opportunity cost refers to the fact that the consumer will have to sacrifice another item if the
product is purchased. A practical example illustrates this: Peter may think that R30 is not too much to
spend on a movie ticket, but considering that he only has R50 in his pocket, he realises if he goes to the
movies, he will only have R20 left. He also wants to buy a computer game from his friend for R35. So
even though he is prepared to pay R30 for a movie ticket, he will then have to sacrifice the computer
game, so he decides not to go to the movies.
11 Pick n Pay has over the last few years developed its own product range. Assess how this could lead to a
competitive advantage for Pick n Pay. It is also important that you discuss how Pick n Pay could reintroduce
products as they reach a decline phase within the product life cycle.
Pick n Pay have different brands of their own:
House brand: ―The PnP range offers you quality products at lower prices than you'd expect. For almost
everything on your list there's a great value PnP product to try. So look out for our colourful PnP branded
products on shelf.‖
No name: ―Keep within your budget with PnP no name™ products. All of your household essentials and
everyday basics are priced just right, with no frills. Look for our blue and white products on the shelf.‖
Finest: ―The experience of PnP Finest is a journey to be relished. We have taken flavour influences from all
around the world, and blended combinations from the world‘s richest traditions, so we can bring the best of
fine dining flavour home for our customers. The premium ingredients for our PnP Finest products are very
carefully selected at only the most authentic sources, such as Kalamata olives from the Greek
Peloponnese, organic coffee from Antigua, fine Belgian chocolate and real South African Rooibos. So you
can be sure that every item in the range is incredibly special, and extremely superior in every aspect.‖
Organic: ―This all means that when you buy PnP Organic, you know it is good for you and your
environment. The range is constantly evolving and expanding to offer you more to choose from. Look for
them by name.‖
All the above brands cater for a totally different market segment, as well as LSM.
When a product is reaching the end of its life cycle, Pick n Pay can utilise the following to extend it:
Variation: The Business could offer the same product in different sizes, colours, flavours, etc. with the
aim of increasing sales.
New markets: The business is looking to create a ―new demand‘ for the product to increase sales. This
can either be done by entering a new geographical market where the product has not been sold before,
or the business could try to appeal to a different market segment.
Development: The business could redesign the product to make it more modern or to improve the
functionality of the product. The aim is to ensure that the product is attractive to customers whose needs
and wants may have changed.
Distribution channels are improved or expanded to make the product accessible to customers or to
get the product to customers in a faster and more effective manner.
Promotion: The business could use different promotional strategies, such as ―buy one get one free‖, to
promote sales.
Price: The business could use different pricing strategies such as discounting to generate greater
demand.
12 The four marketing policy instruments that Pick n Pay makes use of in its marketing department.
A Product, price, place, promotion
B Product, price, distribution, communication
C Product, price, publicity, advertising
D Advertising, personal selling, sales promotion, publicity
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