JEPPE HIGH SCHOOL FOR BOYS
Jeppe High School for Boyscenter36258500Grade: 11Subject: Business StudiesJune Examination MEMORANDUMDate: 8 JuneDuration: 3 HoursTotal Marks: 300 MarksExaminer: Mr B. Gittins Instructions: Complete the front cover of your answer booklet.Answer all questions in the answer booklet provided.Number in the middle of the page.Rule off after each section.The following are not allowed in the examination room: cell phones,school bags, ipods (or similar devices), books, dictionaries, notes, sketches or paper.Only the official examination material distributed by the invigilator is allowed.The Question paper consists of THREE sections: This paper consists of the following sections, please use the table below to make your question selections.Use the time allocation as a guideline.SECTION A COMPOLSORY SECTION: COMPLETE ALL QUESTIONSQUESTION 1.1MULTIPLE CHOICE (10 X 2 =20)1.1.11.1.21.1.31.1.41.1.51.1.61.1.71.1.81.1.91.1.10QUESTION 1.21.2.11.2.21.2.31.2.41.2.51.2.61.2.71.2.81.2.91.2.10SECTION BCOMPULSORY SECTION 180 MARKSChoose any THREE of the following FIVE Case Studies. Clearly mark the question numbers of the Case Studies you have chosen on your answer sheets.QUESTION 2 BUSINESS ENVIRONMENTS AND CSI [60 Marks]2.1What does CPI stand for? (2)Consumer Price Index ??2.2It is clear that Devon is in the process of environmental scanning. Define environmental scanning and evaluate its importance for the business’ survival. (4)Scanning environment for possible threats, and opportunities??. This involves being aware of issues outside the business. This gives a business a warning to prepare for issues that may be a problem??2.3Briefly discuss two risks of importing products from another country. (4)Make sure student actually discuss’s (2 x 2) The risk of fluctuating Exchange Rates. ??The risk of rising import taxes ??Damage in transit.Instability in country(economy/wars/political) affecting levels of availability. (supply/demand).Poor quality because can’t assess before order is made. 2.4Name 3 micro environmental challenges that Devon is likely to face, and suggest strategies that Devon can implement to meet each of these challenges. (12)Management: No experience in marketing or business management.Problems with employees. No experience in dealing with people.Internal stricture, with new partners coming in.Sales skills.Any 8 business function implementation.USE DISCRETION IN AWARDING TWO MARKS PER GOOD STRATEGY TO OVERCOME POTENTIAL ISSUE. MUST BE IN FULL SENTANCES, AND FULLY EXPLAIN TO ACHIEVE THE TWO MARKS.2.5Devon has plans to manufacture locally. Why are cheap Asian imports making it so hard for the local manufacturers to be successful? (4)Asian imports are generally a lot cheaper mainly due to relaxed labour and trading laws.???Much cheaper to bring these products in rather than making there own products.???Clients rather buy imports than locally manufactured products, this puts massive pressure on local manufacturers.2.6Devon must understand his market environment. Discuss two elements of the market environment and how Devon should ensure success.Two marks for element, 2 marks explanation, 2 marks ensure success. (2 x 6). Mark only two options! COMPETITION: ??These are the other business that sell similar products??They can be dangerous for Buhle’s business especially if they offer better products, a wider range, cheaper and more easily accessibly?? Devon needs to keep an eye on competition and ensure his own level of quality, service and prices match and better them. He can also use competition as a positive by setting up close by to competitiors in this way using the competitors customer flow to enter his store. (MAX= 6) CONSUMERS ??People who are likely to buy the products.???Most important element and need to be communicated with and won over.???This can be done by effective marketing campaign including advertising, selling, promotion etc.The customers should be well understood through market research and needs analysis etc. Excellent service and quality will help keep CONSUMERS loyal. (MAX= 6)SUPPLIERS: ??Businesses that supply products to Buhle. Local and from USA,China, middle east.???Suppliers are vital. Need to provide best quality and best prices as well as be reliable.???Devon must ensure he searches for best suppliers and then forms good relationships, ensuring the best service prices and deals. (12)(MAX=6)2.7What business sector does Devon’s business operate in, give a reason for your answer. (4)Tertiary Sector:??? He is selling already finished products.???2.8Although his business is still relatively new, Devon wants to take part in corporate social investment (CSI) projects. This is costly and time consuming for the business, but if these programs are managed effectively, it may have a positive influence on his businessIdentify any THREE positive influences of CSI on the business. (6)Explain fully:Positive reputation.???Community Loyalty. ??Tax Breaks BEE pointsGoodwillGive three practical examples of CSI projects that Devon could get involved in. (6) Community projects, ??Eductaion projects: Invest in schools,build a school. ??Offer learenerships to local students. ??Any relevant answerAssist Devon by defining the following macro environmental challenges:2.9.1Inflation The average increase in prices of consumer products from year to year, calculated using the basket method and shown on the CPI. ?? (2)2.9.2Exchange Rate The ratio in which one countries currency is swopped for another.The cost of buying various foreign exchange, the price of which fluctuates due to many forces such as supply and demand, economic stability etc. ?? (2)2.70.3 Recession When competing businesses secretly agree on a pre-determined price for their products. This is an illegal activity and goes against the concept of a free-market system.??? (2)QUESTION 3 BUSINESS VENTURES [60 Marks]3.1Robert and his friend Fernando are successful entrepreneurs. Name 4 characteristics that successful entrepreneurs are likely to have. (4)One mark per listing point: √Hardworking, ambitious, perserverance, people person, disciplined etc.3.2What evidence in the above extract suggests that the owners used innovation as a strategy. (2)They shifted from traditional ‘take aways’ to what is know as a mixed service model√. This was a new and innovative concept in South Africa. √3.3Certain forms of ownership do not have legal personality.3.3.1List TWO such forms of ownership. (2)Sole Traders√, Partnerships. √3.3.2Fully evaluate the owner’s liability for the debts of a business that do not have legal personality. (4)Owners have unlimited liability√ for the debts of the business. √This means that the owners personal assets√ may be taken if the business falls into debt. √ There is no separation between owner and business.3.4These two entrepreneurs effectively acquired an existing business. Discuss 3 advantages and 2 disadvantages of buying an existing business as opposed to starting one from scratch (10)ADVANTAGES- THREEDISADVANTAGES-TWOCheaper – no goodwill to pay √√Nothing to measure the business against to determine its likelihood of success √√You do not inherit the problems of an existing business √√Competition and demand for the product is unknown √√Freedom to introduce new techniques, procedures, staff, etc √√No established systems and procedures in place √√Can have a greater impact on the character of the business √√An extra business sub-divides the market further √√If capital is limited, can start on a smaller scale √√Initial establishing costs may limit cash flow √√3.5Nando’s has experienced exponential growth both locally and abroad. A large reason for their success is the use franchising. Discuss 3 advantages of franchising for the franchisor and 3 advantages of franchising for the franchisee. (12)BENEFITS TO FRANCHISORBENEFITS TO FRANCHISEEReceive royalties every month Can study other franchisees before committing Other entrepreneurs help grow your brand Have a recognised brand and trademark Able to replicate your business success and business model Any advertising / promotion by the franchisor benefits the business Can grow far quicker than you may have by not franchising ANY OTHER RELEVANT ANSWERHas exclusive rights in a certain areaGets training and support from the franchisor Financing the business may be easier Can network, and get support from, other franchiseesExisting relationships with supplier 3.6Nando’s are well known for humorous advertising campaigns. They have outsourced there marketing function as a whole to various advertising agencies. 3.6.1Define outsourcing. (2)Any task, job, operation or process that could be performed by the employees in a business, but instead is contracted to a third party for a long period of time. √√3.6.2Analyse 3 possible negative aspects of outsourcing and 3 positive aspects of outsourcing. (Advantage and disadvantages) (12)Advantages√√Disadvantages√√Allows business to focus on core functionsLoss of managerial control.Saves on costs and improves efficiency. Instead employing someone full time, rather outsource only when needed.Hidden costs. Can bring in experts in that field.Threat to security and confidentiality of business information.Provides continuity, for example when key staff members resignQuality problems.Frees the staff up to concentrate on key rolesPoor staff morale should staff feel they are inadequate to do job that was outsourced.Can be very expensive. Nando’s are considering listing on the stock exchange.Define the following termsMemorandum of IncorporationDocument that must be completed when starting a Company√√. This is an important document when governing a company. They provide a guideline as well as company rules and requirements. √√Prospectus (4)A document that includes important information about a company offering to sell securities/shares to the public√√. This must include all information that a potential investor may need to assess the financial position and prospects of the company. √√Name 2 roles of the Johannesburg Securities Exchange (JSE). (4)Mark leniently as this is not in the syllabus:Facilitate the buying and selling of public company shares on a public platform. Install regulations to ensure fair operations. Keep standards. Act as measure for economic performance by displaying key indicators. 3.8An option of a franchisee is to lease equipment as opposed to buying it. Discuss two advantages of leasing expensive equipment. (4)Advantage√√Disadvantage√√Use of asset with less initial expenditure than if the asset was purchased. (Cheaper)Total of lease payments over a period of time may be more that the original purchase price of the assetThe business can use the latest technology without having to invest in large sums of capitalLessee is bound by the lease contract even when the business may not need the items any longer.Business does not have to carry the risk of carrying expensive equipment that may become obsolete.When owner sells business the lease has to be taken over by the new owner.Lease payments are tax deductableImproves cash flow.Regarded as an expense rather than debt QUESTION 4 STRESS AND CRISIS MANAGEMENT, CREATIVE THINKING [60 Marks]4.1Travis’s business has many problems. He has heard that there are various creative thinking techniques. List any two creative thinking techniques. (4)Delphi, nominal,4.2Lateral thinking may assist Travis in dealing with his business’ problems. What is lateral thinking? (4)4.3What is a mental block in reference to create thinking? (4)4.4Name five work-based strategies to handle stress and a further five personal strategies when managing stress that Travis can utilise. (10)WORK (5 x 1)Introduce flexitime √Select and train employees properly √Arrange stress-management training √Implement better systems √Develop a friendly and supportive culture √Share the workload √Consult workers √Improve equipment and working conditions √PERSONAL (5 x 1)Get enough sleep √Balanced diet √Exercise and keep fit √Balanced lifestyle √Be positive √Develop self-awareness to recognise signs of stress √4.5Name and analyse five ways in which stress can cost a business money relating it to the above Case Study. (10)Absenteeism √ – Employees can stay away from work due to stressPoor Judgement √ - Employees make bad decisions due to being uder stress. E.g. charging the wrong rental for a unitHigh staff turnover √ - Due to unhappiness, high staff turnover may result leading to loss of skills and experienceConflict and inter-personal problems √ - Staff may fight, disagree and not act as a team due to stressCustomer Service Problems √ - Due to stress, staff may not treat customers properly and thus lose potential businessResistance to change √ – Employees are reluctant to change and thus stick to old ways and old systems, costing the business money √Any other relevant answer 4.6What is a “crisis”? Do you think Travis is in crisis? Motivate your answer. (5)Crisis = Time of intense difficulty, trouble or danger. √√ OR From a business perspective = Any event that can, within a short time, harm the business, its property, finances or reputation. √√YES, Travis is in crisis (√) – REASONS: His behaviour is becoming erratic √Lifesyle is spiralling out of control (drinking, late nights, etc) √Personal life unravelling (wife has left him) √Any other relevant answer4.7The conversion of the former hotel into residential flats requires Change management processes. Describe what Change Management is. (3)Change Management = A planned, or unplanned, reaction to pressures and forces. It is the process of managing, and controlling, the impacts of change. It is designed to bring new life, creativity and innovation to a business. It is often accompanied by resistance from employees. √√√4.8Travis has experienced a lot of resistance from his staff to the conversion project. Name and explain 5 reasons for people resisting change. (10)Loss of security √ - a new manager or technology frightens workers √Loss of power and control √ - some people may lose power in the restructure√Reluctance to change old habits √ - people get comfortable – changes require a new way of thinking √Peer pressure √ - workers may pressurise each other not to change√Misunderstanding √ - if people do not fully understand the change, they may resist it√Timing and scope of change √ - if people are unprepared for change, and it is too great a change, they may resist it√Fear of economic loss √ - workers may fear the change could lead to them losing their jobs√Awareness of weakness in the proposed change √ - employees foresee that the change will cause problems√4.9Name and explain 5 typical changes in the workplace that South African employees have to deal with. (10)Unemployment √– there is a great deal of unemployment in SA and a lot of people have faced the issue of not being able to get a job √Retrenchment √– Even when people are able to find jobs, these jobs are often lost due to restructuring or a downturn in the economy √Dismissal √– An employee may be dismissed from their work due to a variety of factors such as misconduct, incapacity or operational reasons √Affirmative Action / BEE √– BEE is an important policy to redress the wrongs of the past and is aimed to make the South African employed population more representative of the demographics of the country √Globalisation √– The world is becoming increasingly “smaller” and businesses have to compete with local, as well as global, competitors. √ (10)QUESTION 5 STARTING A BUSINESS, MICRO ENVIRONMENT, CSR [60 Marks]5.1Jonathan Liebmann set up his own business at a young age, and convinced investors to help fund his idea by preparing a business plan.5.1.1Why is it so important to draw up a business plan when starting a business. (4)5.1.2Describe four advantages of having an action plan. (8)It enables projects to be achieved within the specified time √√It assists in helping the person to be more organised √√It is a control measure against which standards and performance can be measured √√It prioritises activities according to importance √√5.2Discuss the 2 types of funding sources that Jonathan would have been able to use to start his business. (8)EQUITY / OWN CAPITAL √BORROWED CAPITAL √Of a permanent nature √May be short term, medium term or long term √Is seldom withdrawn √Can be withdrawn frequently √Receives dividends and growth in value as a return √Remuneration is in the form of interest √Managers (owners) have control √Own capital is the last to be paid out on termination / liquidation √Has little / no control over the business √Has a preferential claim on termination / liquidation √5.35.3.1Is Activity 3 a parallel or dependent task? Why? (2)Parallel Task √ - It can be done at the same time as Task 2 and is not dependent upon task 2 being completed first. √5.3.2 Name two uses of a critical path analysis? (4)Useful for calculating the minimum time needed for a project. √√Prioritises tasks that need to be completed before further tasks can commence (dependent tasks)5.3.3How many days are allocated for deciding the type of business to run? (1)One day √5.4Explain the ‘SMARTER’ approach to setting goals and starting a business. (14) S- Specific√: Goals must be able to be defined√ M- Measurable: √ The goal should be quantifiable√Achievable: √ Business should have the ability to reach the goal. √R- Realistic: √ Must be possible to do and within your plan√T- Time Bound. √ Should have a clear time line for achievement. √E- Ethical√: Should not be in anyway unethical practice to get to the goal. √R- Recordable√: Progress should be recordable. Must be recorded so it can be reviewed. √5.5Management is a very important part of setting up a business. Name and evaluate the 4 activities of good management. (8)Planning√: The ability to forecast and set in motion a plan of action. √Leading√: Ability to inspire the people on a project to put the plan in action. √Organising:√ Allocating the time, resources and responsibilities of the plan. √Controlling: √Overseeing the tasks and running of the project√5.6It is clear that Jonathan is in it, for more than just the money that he can make.5.6.1Discuss the concept ‘triple bottom line theory’. (6)A company doesn’t just concentrate on the ‘bottom line’ of solely making profit but rather expanding focus to 3 areas namely√: Profit√, People√, Planet. √The theory states that if a business does not focus on all three aspects the long term sustainability and profitability of the business will decline. √√Too much focus in an unbalanced manner in one area will result in decline in another area√√Concept of corporate citenzinship√√5.6.2Name ONE contemporary socio-economic issue that you believe Jonathan’s business is helping improve. Give TWO ways in which the business is improving the socio economic issue. (4)Poverty/Crime/Unemployment √√Two marks for evidence of case study: ie Area improvement, business growth and job opportunities etc. √√QUESTION 6 MISCELLANIOUS [60 Marks]Apple is a ‘listed company’. Explain four benefits of establishing a company versus other forms of ownership. (8)Explain what makes a company ‘listed’? (4)Discuss two advantages and two disadvantage of buying another company, such as Apple have done. (8)Would you describe this as a hostile take-over? Give a reason for your answer. (4)Apple have used a strategic approach by acquiring Beats Music, briefly evaluate ONE other strategy that business use to grow or overcome challenges. (4)Name one difference between a Public and a Private company. (2) What would the advantages be for Pick n Pay if they were known to be a strong ethical brand? (6)Provide two recommendations for Pick n Pay’s management on how they can effectively avoid unethical practices by the business and its employees. (4) Pick n Pay has recently launched Pick n Pay express, which operates inside BP Garages. This is a mutually beneficial agreement. 6.8.1 What is the difference between an alliance and a merger. What is this deal an example of? (6)6.9Analyse how poverty, as a socio-economic issue affects a company like Pick n Pay. (4)6.10Consider the following challenges from the Macro Environment faced by Pick n Pay.For each challenge you are required to:Identify the PESTLE factor (2)Suggest a possible strategy to overcome the challenge (4)Explain the impact on the profits of Pick n Pay. (4)ChallengePESTLE factorPossible strategy Impact on the Profits 6.10.1 The low number of skilled workers in South Africa. 6.10.2 Obligations to Comply with BEERedraw the following table in your answer books.SECTION C: ESSAYS ANSWER TWO ESSAYS ONLYQUESTION 7 BUSINESS ENVIRONMENTS [40 Marks]Identify the challenges facing (indicate the business environment these challenges arise from) Gareth and Roy and the possible impact of such challenges on the factory. Formulate strategies to overcome each challenge (refer to strategic management). Recommend whether they should consider selling their idea to a large company and exiting the industry.You may answer this question in tabular format:ChallengeEnvironmentImpactStrategyIntroductionBody:28 maxChallenge7 maxEnvironment3 maxImpact7 maxStrategy14 maxMotivation2 maxInsight8COINEX:Introduction:A strategy is a creative plan for successThe strategic plan is developed after analysing the challenge and impactThe business environment is made up of Micro, Market and Macro environment. The business has full control over decisions of the micro environment, no control but influence over the market environment, and no control or influence over the challenges over the Macro environment.Any other relevant introduction related to business environment and implementation of strategies.Body:ChallengeEnvironmentImpactStrategyHigh AbsenteeismMicro-Lower productivity-Higher labour expense per produce- -Draw up contract with employee considering policy of no-work-no-pay-Insist on doctors notes-Refer to BCOE ActIncrease in REPO RateMacro-Economic-3 Million Rand from Loan Absa bank, loan repayments will increase due to interest rate increase-Consumers may be affected due to interest rate an increase and have less spending power-Repay loan as soon as possible-Defensive strategy, cut costs -Promotions and sales to attract customers during this stage where they have less disposable income.High turnover of worker employment and loss of highly skilled workers to competitorsMicro- High replacement costs, including recruitment and training.- Loss of skilled workers hampers effective production-Review recruitment policy; send workers on training courses (SETA’s).-Loyalty Bonus’s and incentives for valued employees and long service employees.- Internal promotions advertised regularly and growth paths for employees.Import Taxes from Asia have increased.MACRO – EconomicCost of parts increases dramatically. Increased cost of production.Higher prices, less marketable product at higher price.Try source local suppliers.Find other ways to cut back.Find cheaper import countries.Recession and high Inflation rates.Macro-Economic-Higher cost of supplies and raw materials. (Inflation), leading to higher selling price and lower sales.-Consumer spending power drops due to general price increase, meaning lower sales.-Expectation of increased salary expense.- General ‘belt tightening’ across economy meaning business slow down and increased costs.Intensive strategy: Market Penetration-Selling goods at close to cost or at temporary loss to secure market share through tough economic stageDefensive Strategy:RetrenchmentCost CuttingDivestitureBackward integration:Securing more business and securing easy access to suppliesHigh transport costs to send manufactured goods to customers around the country.Macro-EconomicHigher costs, resulting in higher turnover.-Source cheaper transport methods.-Fuel efficient vehicles-Outsourcing if less regular-Frequency of long delivery trips to be dropped.-Aggressively cut other costs (Defensive strategy)Large companies have shown interest in entering the market as direct competitorsMarket-Loss of market share.-Important to source the best quality from suppliers-Research the best supplier-Market penetration: consider selling at close to cost to gain market share.-Horizontal Integration or amalgamation with competitor.73714Recommendation:Yes:Tough times during recession and a diversification strategy may help the business growth and profits.Overseas markets may provide further growth opportunity.No:Too risky in uncertain timesNot skilled and experienced in the industryOverseer’s markets have further risks including exchange rate fluctuations, high customs taxes, and political instability.MAX= 2ConclusionIn order for the strategic plan to be successful, workers must adopt a positive attitude.Strategic planning and implementation is a continuous process that needs to be revised on an on-going basis.Continuous analysis of the challenges facing the business from arising from the various business environments.QUESTION 8 FORMS OF OWNERSHIP [40 Marks]Mr Blanks has asked you to assist him in making the decision between a partnership and a private company by:Discuss the impact of tax, as well as the legal personality of the business as factors that can contribute to the success or failure of both a partnership and a private company.The procedures necessary to set up both a private company and a partnership. Advise Mr Blanks whether, in your opinion, he should choose a partnership or private company structure. Introduction2Body:Reduced to 28Tax , success failure PARTNERSHIP4 maxTax, success failure PRIVATE COMPANY4 maxLegal Person,success failure PARTNERSHIP4 maxLegal Person,success failure PRIVATE COMPANY4 maxSET UP PROCEDURES10 maxRECOMMENDATION6 maxConclusion2Insight8Total40INTRODUCTIONThe form of ownership is a key decision and could affect the success of the business.Factors like profitability, tax liability, degree of control, continuity and debt liability are all affected by the form of ownership chosen.There are a number of requirements, both legal and procedural, to adhere to when forming a company (2)BODY:1.TAXATION:The company is responsible for paying tax on the profits.The company is taxed at a fixed rate of 30% as determined by the Minister of Finance.The company is subject to double tax: the company as a legal person pays tax on its profits and on the dividends declared.Success:The company has more opportunities to reduce the tax liability through allowances such as depreciation of assets.The company can claim for operating expenses such as rent, directors’ fees and auditors’ fees.Failure:The company may experience cash flow problems when paying provisional tax and this may lead to the failure of the company.The company is taxed on taxable income and dividends which affects the profits of the company.[Max 8][Max. 8]LEGAL PERSONALITY/LIABILITY:Shareholders enjoy limited liability: they are liable for the debts of the company only to the extent of their shareholding in the company.Success:Shareholders enjoy the protection of the Companies Act due to the strict legal requirements.A public company is a legal entity and enters into contracts in its own name, which has the advantage of limiting the shareholders’ liability.Failure:If a public company fails, it could have a disastrous effect on the economy due to job losses and loss of shareholders’ investments.5 x 2 = 10 MAX)Procedures to set up a private companyProcedures to set up a partnership A Memorandum of Incorporation and Articles of Association must be handed to the Registrar of CompaniesEvery partner must contribute somethingPostal and physical address must be stipulatedThere must be a valid agreement between the partnersA list of directors, and each director’s consent to act as a director, must be providedThe main purpose must be to make a profitWritten consent of auditorsContributions of the partners must be to the advantage of the partnershipDirectors must agree to buy at least one share in the businessRECOMMENDATION AND MOTIVATIONOPTION 1They should remain in a partnership.Advantages/benefits of a PartnershipJoint decision making leads to better results.Allows for sharing of responsibilities and work load amongst partners.Do not have to comply with any form of auditing requirements.Allows for specialization amongst partners.[Max. 6]Disadvantages of a Public companyExpensive to establish.The business must follow legal procedures – Memorandum of Incorporation.Expensive requirements according to the Companies Act e.g. costly annual audits and high registration fees.Subject to double taxation: on taxable income and declared dividends.OPTION 2They should establish a public company.Advantages/benefits of a public companyLimited liability of shareholders.They raise a large amount of capital by selling shares.Unlimited continuity of the business operation.Management is in the capable hands of the Board of Directors.They meet the legal requirements in terms of the Companies Act in respect of the accounting records, auditing and publication of financial records.[Max. 6]Disadvantages of a PartnershipThey have unlimited liability.They are jointly and severally liable for the debts of the business.A partner binds his co-partners by his actions.Capital is limited to the amount contributed by the partners.CONCLUSION:To start a company involves legal matters that must be complied with.The company can be successful if the capital, taxation and profits are well-managed.QUESTION 9: PROFESSIONALISM AND ETHICS [40 Marks]Describe the principles of professional and ethical behaviour. In reference to the above example, briefly discus the consequences of the above incident to those organisations.Evaluate 2 examples of challenges to the business environment in terms of ethical behaviour and comment on its application in the business enterprise. Discuss any 2 type of ethical theories or standards. (40) ETHICS AND PROFESSIONALISM:Breakdown of mark allocation:Introduction3Body:28Principles of professional and ethical behaviour8 maxConsequences to organisations6 maxChose TWO Examples ONLYSexual harassment6 maxUnfair advertising6 maxTax evasionAbusing work timeEthical theories8 maxConclusion2Insight8Total40 INTRODUCTION Enterprises realise that they cannot exist in isolation, but interact with the various environments.Many institutions in South Africa have their own code of conduct and a commitment to ethical and professional behaviour. Codes of practice have been developed to ensure that these issues are being addressed. Definition of Ethics: Moral guidelineBODY:PRINCIPLES OF ETHICAL AND PROFESSIONAL BEHAVIOUR Personal benefit to the individual.Social benefit to society.Principle of not doing harm to others.Honesty and not to deceive others.Lawfulness in order to obey the law.MAX 8 MarksCONSEQUENCES TO ORGANISATIONSReputation will be damaged, causing sustainability issues.Future trust in the brand greatly diminished.Employees may feel unmotivated knowing that corruption has taken place.Lose top employees and unable to attract top employees.ETHICAL ISSUES THAT POSE CHALLENGES TO THE BUSINESS ENVIROMENT (MARK ANY TWO) (MAX 6 MARKS PER EXAMPLE): Must have suggestion for improvementMisuse of business assetsAt work: making copies for themselves on the photocopier of the business, using paper from the business. Workers use a business vehicle and fuel for their own purposes. Private telephone calls with the business’ telephone without prior consent, etc. Suggestions for improvement:Compile a workable business policy that prohibits the misuse of assets.Disciplinary rules against transgressors OR Allow limited use of business assets where the workers must pay for using the assets. This must be controlled fully. Unauthorized use of fundsTheft of or misuse of funds belonging to the business. Increase the costs and have an influence on competitiveness. Prices had to be increased to cover the loss. Businesses must make their employees aware of this unethical and unprofessional practice. Taking of bribes to get contracts. Workers taking businesses’ money or assets for their own purposes. Suggestions for improvement: Put systems in place to reduce fraud, e.g. internal audit.Give the names of these workers to the SAPS for prosecution purposes.Sexual harassment Violate basic human rights normally by a person misusing his authority position against other. Gesture/ remark/ action / suggestive behaviour that leave a person of menace. Manager promises increase in salary or promotion, in exchange for sexual favours. Touching a person in a sexual manner. Sexual harassment is prohibited by law, and businesses must educate their workers according to this. The affected person is normally afraid to report this because of victimizing. Suggestions for improvement: Businesses must educate their workersGive the name of the guilty party to the SAPS for prosecution purposes.Unfair profit takingSell stock at higher prices while it was bought at a lower fixed price. Increase of prices during holidays, especially in areas where there are many holiday makers .Suggestions for improvement: Ethical behaviour to the consumer.Application of a honest business practice.Misuse of working time by employeeMany workers use working time for personal activities. Taking longer tea and lunchtime as prescribed. Workers doing their own business during working hours. Includes personal telephone calls, e-mail, and use of the business’ internet facilities for personal purposes during working hours. Suggestions to improvement: Set a code conduct and policy for workers according to this.Implement time controlling and a clock card system.Unfair and dishonest advertisingThe Advertising Standard Authority (ASA) regulates advertisements and protects the interest of the community. Advertising must be honest and must not misuse the trust of the consumer or the lack of knowledge of the consumer. Some enterprises use ethical advertising practices to get more value for their money, e.g. selling products using false trademarks etc. Suggestions for improvement: Consumer may refer these unethical practices to the ASA.Businesses must behave in an ethical manner.Taxation The government needs revenue from taxation to provide essential services such as housing, education, infrastructure development and medical care, etc. Company tax, VAT and personal income tax are some of the main sources of income for the government. Professional behaviour for businesses in this regard would be NOT to evade tax by falsifying financial records. Businesses do not declare all income to SARS. That is illegal and is regarded as a crime, punishable with a fine or even a prison sentence. Suggestions for improvement: Application of ethical and honest business practices by the business.Fine businesses that evade tax.More streamlined tax collection by SARS through the SAPS and VIP systems.Max = 12 MarksTWO ETHICAL THEORIESDeontological The rules of surroundings/orgainsiation must be followed Utilitarium Consequence based. Greater good/harm of decisionCare Theory Walk a mile in someone else’s shoesVirtue Based Thepry concentrates on a person’s character and natural moral system.CONCLUSION Policies and legislation which have been implemented must be continually monitored and improved to lead to a successful business. Profitability is regularly affected by each of the above issues. QUESTION 10 CREATIVE THINKING AND PROBLEM SOLVING [40 Marks]ZEBRA USED CARSZebra Cars is a successful used car dealership that buys and sells a wide variety of used cars. Although the business has done very well, the owner and head manager, Hadchieva Dayimane, is concerned that his staff are unhappy and as a result he has to replace his top staff often. This means he has to spend money and take time to mentor new employees on a regular basis. The staff that have not left are not motivated to work hard.The dealership manager Dylan Wadely, has reported back to Hadchieva on the following issues.The sales staff are often put into situations of conflict with customers, making it a hostile work environment. Most commonly they have to deal with dissatisfied customer who feels unhappy by the promises made by both the sales person and the marketing of the business. For example, if a car salesman sells a used car without a performance guarantee or warranty and the car breaks down on the buyer, the buyer may return to angrily confront the salesperson and demand a refund.The staff in general think the sales targets are too high, forcing the salesman to sell aggressively.Some employees complained that they often have to do duties that they were not hired for due to the promises made by the dealership. One such example is the promise of a free car wash once a week with nay purchase. Often salesman themselves have to do this task.The dealership also promises free services for the first year, however there is only one qualified employee in the service department, meaning he often needs help from sales staff. The staff in general feel that their payment structure is not clear and there is no clear channel that they can report their unhappiness. ‘Dayimane is unsure of what to do because his aggressive sales targets and marketing campaign have yielded a very high profit, however he cannot afford to keep losing staff and is concerned about the future reputation of the business.Briefly discuss the long term effect of the way Dayimane is running his business.Use the seven steps of problem solving as well TWO creative thinking technique to help solve this problem, up to finding workable, logical and reasonable solutions. (40) IntroductionBody:28 maxEffect6 Max7 Steps14 Max2 Techiniques14 MaxInsight8INTRODUCTION:Importance of problem solving and creative thinking in today’s business climate.Problems occur all business’s who have to under go changing conditions, the best have an ability to adapt quickly and creativelyCreative thinking is a vital business skill to keep innovating.BODY:Long term effect:Will ruin his reputation to potential buyers through word of mouth putting pressure on the sustainability of his business.His employees are vital to his long term success, and keeping good emplyees will ensure good continuity of systems.Constant employee turnover will hamper growth going forward.Unqualified individuals performing jobs such as car servicing will result in a loss of customers.Steps of Problem Solving:Note to Marker: Ensure learner actually uses the 7 steps to help solve the problem as presented in the case studyDefine the problem√Identify the crisis and the real problem at handDayimane’s management technique.Find potential causes for the problem√Collect as much information as you can on the issue, the root cause of the problem.Be as objective as possibleDayimane’s attitude towards success and his employees is not sustainableIdentify alternative ways to solve the problem√Think of as many alternative ways to solve the problems as possible.ANY CREATIVE METHOD: example: Give clear incentives to employees sales targets, align staff capacity with promises made.Choose a way to solve a problem√Evlauate each idea and chose the best oneChose onePlan and implement an action plan√Monitor the implementation of the plan√Check if the problem has been resolved√2 Creative thinking technique:Explain fullyBrainstormingSeveral people think about the problem and suggest ideas that could lead to a solution.√√E-brainstorming√√People can share, elaborate and evaluate ideas online.Delphi technique√√Use a confidential questionnaire to solve the problem.Stepladder technique√√Encourage individual participation in group decision-making, to get a greater mix of ideas.Fishbone technique√√A group of people get together to identify the problem factors then individuals work on solutions.Max 6 marks eachConclusion:Some problems need to assessed, in terms of feasibility, that cost too much money and time to fix. Research the cause more than the solution in order to gain perspective on the underlying issue.No business has been problem free.SECTION C: ESSAYS ANSWER TWO ESSAYS ONLYQUESTION 7 BUSINESS ENVIRONMENTS [40 Marks]Identify the challenges facing (indicate the business environment these challenges arise from) Gareth and Roy and the possible impact of such challenges on the factory. Formulate strategies to overcome each challenge (refer to strategic management). Recommend whether they should consider selling their idea to a large company and exiting the industry.You may answer this question in tabular format:ChallengeEnvironmentImpactStrategyIntroductionBody:28 maxChallenge7 maxEnvironment3 maxImpact7 maxStrategy14 maxMotivation2 maxInsight8COINEX:Introduction:A strategy is a creative plan for successThe strategic plan is developed after analysing the challenge and impactThe business environment is made up of Micro, Market and Macro environment. The business has full control over decisions of the micro environment, no control but influence over the market environment, and no control or influence over the challenges over the Macro environment.Any other relevant introduction related to business environment and implementation of strategies.Body:ChallengeEnvironmentImpactStrategyHigh AbsenteeismMicro-Lower productivity-Higher labour expense per produce- -Draw up contract with employee considering policy of no-work-no-pay-Insist on doctors notes-Refer to BCOE ActIncrease in REPO RateMacro-Economic-3 Million Rand from Loan Absa bank, loan repayments will increase due to interest rate increase-Consumers may be affected due to interest rate an increase and have less spending power-Repay loan as soon as possible-Defensive strategy, cut costs -Promotions and sales to attract customers during this stage where they have less disposable income.High turnover of worker employment and loss of highly skilled workers to competitorsMicro- High replacement costs, including recruitment and training.- Loss of skilled workers hampers effective production-Review recruitment policy; send workers on training courses (SETA’s).-Loyalty Bonus’s and incentives for valued employees and long service employees.- Internal promotions advertised regularly and growth paths for employees.Import Taxes from Asia have increased.MACRO – EconomicCost of parts increases dramatically. Increased cost of production.Higher prices, less marketable product at higher price.Try source local suppliers.Find other ways to cut back.Find cheaper import countries.Recession and high Inflation rates.Macro-Economic-Higher cost of supplies and raw materials. (Inflation), leading to higher selling price and lower sales.-Consumer spending power drops due to general price increase, meaning lower sales.-Expectation of increased salary expense.- General ‘belt tightening’ across economy meaning business slow down and increased costs.Intensive strategy: Market Penetration-Selling goods at close to cost or at temporary loss to secure market share through tough economic stageDefensive Strategy:RetrenchmentCost CuttingDivestitureBackward integration:Securing more business and securing easy access to suppliesHigh transport costs to send manufactured goods to customers around the country.Macro-EconomicHigher costs, resulting in higher turnover.-Source cheaper transport methods.-Fuel efficient vehicles-Outsourcing if less regular-Frequency of long delivery trips to be dropped.-Aggressively cut other costs (Defensive strategy)Large companies have shown interest in entering the market as direct competitorsMarket-Loss of market share.-Important to source the best quality from suppliers-Research the best supplier-Market penetration: consider selling at close to cost to gain market share.-Horizontal Integration or amalgamation with competitor.73714Recommendation:Yes:Tough times during recession and a diversification strategy may help the business growth and profits.Overseas markets may provide further growth opportunity.No:Too risky in uncertain timesNot skilled and experienced in the industryOverseer’s markets have further risks including exchange rate fluctuations, high customs taxes, and political instability.MAX= 2ConclusionIn order for the strategic plan to be successful, workers must adopt a positive attitude.Strategic planning and implementation is a continuous process that needs to be revised on an on-going basis.Continuous analysis of the challenges facing the business from arising from the various business environments.QUESTION 8 FORMS OF OWNERSHIP [40 Marks]Mr Blanks has asked you to assist him in making the decision between a partnership and a private company by:Discuss the impact of tax, as well as the legal personality of the business as factors that can contribute to the success or failure of both a partnership and a private company.The procedures necessary to set up both a private company and a partnership. Advise Mr Blanks whether, in your opinion, he should choose a partnership or private company structure. Introduction2Body:Reduced to 28Tax , success failure PARTNERSHIP4 maxTax, success failure PRIVATE COMPANY4 maxLegal Person,success failure PARTNERSHIP4 maxLegal Person,success failure PRIVATE COMPANY4 maxSET UP PROCEDURES10 maxRECOMMENDATION6 maxConclusion2Insight8Total40INTRODUCTIONThe form of ownership is a key decision and could affect the success of the business.Factors like profitability, tax liability, degree of control, continuity and debt liability are all affected by the form of ownership chosen.There are a number of requirements, both legal and procedural, to adhere to when forming a company (2)BODY:1.TAXATION:The company is responsible for paying tax on the profits.The company is taxed at a fixed rate of 30% as determined by the Minister of Finance.The company is subject to double tax: the company as a legal person pays tax on its profits and on the dividends declared.Success:The company has more opportunities to reduce the tax liability through allowances such as depreciation of assets.The company can claim for operating expenses such as rent, directors’ fees and auditors’ fees.Failure:The company may experience cash flow problems when paying provisional tax and this may lead to the failure of the company.The company is taxed on taxable income and dividends which affects the profits of the company.[Max 8][Max. 8]LEGAL PERSONALITY/LIABILITY:Shareholders enjoy limited liability: they are liable for the debts of the company only to the extent of their shareholding in the company.Success:Shareholders enjoy the protection of the Companies Act due to the strict legal requirements.A public company is a legal entity and enters into contracts in its own name, which has the advantage of limiting the shareholders’ liability.Failure:If a public company fails, it could have a disastrous effect on the economy due to job losses and loss of shareholders’ investments.5 x 2 = 10 MAX)Procedures to set up a private companyProcedures to set up a partnership A Memorandum of Incorporation and Articles of Association must be handed to the Registrar of CompaniesEvery partner must contribute somethingPostal and physical address must be stipulatedThere must be a valid agreement between the partnersA list of directors, and each director’s consent to act as a director, must be providedThe main purpose must be to make a profitWritten consent of auditorsContributions of the partners must be to the advantage of the partnershipDirectors must agree to buy at least one share in the businessRECOMMENDATION AND MOTIVATIONOPTION 1They should remain in a partnership.Advantages/benefits of a PartnershipJoint decision making leads to better results.Allows for sharing of responsibilities and work load amongst partners.Do not have to comply with any form of auditing requirements.Allows for specialization amongst partners.[Max. 6]Disadvantages of a Public companyExpensive to establish.The business must follow legal procedures – Memorandum of Incorporation.Expensive requirements according to the Companies Act e.g. costly annual audits and high registration fees.Subject to double taxation: on taxable income and declared dividends.OPTION 2They should establish a public company.Advantages/benefits of a public companyLimited liability of shareholders.They raise a large amount of capital by selling shares.Unlimited continuity of the business operation.Management is in the capable hands of the Board of Directors.They meet the legal requirements in terms of the Companies Act in respect of the accounting records, auditing and publication of financial records.[Max. 6]Disadvantages of a PartnershipThey have unlimited liability.They are jointly and severally liable for the debts of the business.A partner binds his co-partners by his actions.Capital is limited to the amount contributed by the partners.CONCLUSION:To start a company involves legal matters that must be complied with.The company can be successful if the capital, taxation and profits are well-managed.QUESTION 9: PROFESSIONALISM AND ETHICS [40 Marks]Describe the principles of professional and ethical behaviour. In reference to the above example, briefly discus the consequences of the above incident to those organisations.Evaluate 2 examples of challenges to the business environment in terms of ethical behaviour and comment on its application in the business enterprise. Discuss any 2 type of ethical theories or standards. (40) ETHICS AND PROFESSIONALISM:Breakdown of mark allocation:Introduction3Body:28Principles of professional and ethical behaviour8 maxConsequences to organisations6 maxChose TWO Examples ONLYSexual harassment6 maxUnfair advertising6 maxTax evasionAbusing work timeEthical theories8 maxConclusion2Insight8Total40 INTRODUCTION Enterprises realise that they cannot exist in isolation, but interact with the various environments.Many institutions in South Africa have their own code of conduct and a commitment to ethical and professional behaviour. Codes of practice have been developed to ensure that these issues are being addressed. Definition of Ethics: Moral guidelineBODY:PRINCIPLES OF ETHICAL AND PROFESSIONAL BEHAVIOUR Personal benefit to the individual.Social benefit to society.Principle of not doing harm to others.Honesty and not to deceive others.Lawfulness in order to obey the law.MAX 8 MarksCONSEQUENCES TO ORGANISATIONSReputation will be damaged, causing sustainability issues.Future trust in the brand greatly diminished.Employees may feel unmotivated knowing that corruption has taken place.Lose top employees and unable to attract top employees.ETHICAL ISSUES THAT POSE CHALLENGES TO THE BUSINESS ENVIROMENT (MARK ANY TWO) (MAX 6 MARKS PER EXAMPLE): Must have suggestion for improvementMisuse of business assetsAt work: making copies for themselves on the photocopier of the business, using paper from the business. Workers use a business vehicle and fuel for their own purposes. Private telephone calls with the business’ telephone without prior consent, etc. Suggestions for improvement:Compile a workable business policy that prohibits the misuse of assets.Disciplinary rules against transgressors OR Allow limited use of business assets where the workers must pay for using the assets. This must be controlled fully. Unauthorized use of fundsTheft of or misuse of funds belonging to the business. Increase the costs and have an influence on competitiveness. Prices had to be increased to cover the loss. Businesses must make their employees aware of this unethical and unprofessional practice. Taking of bribes to get contracts. Workers taking businesses’ money or assets for their own purposes. Suggestions for improvement: Put systems in place to reduce fraud, e.g. internal audit.Give the names of these workers to the SAPS for prosecution purposes.Sexual harassment Violate basic human rights normally by a person misusing his authority position against other. Gesture/ remark/ action / suggestive behaviour that leave a person of menace. Manager promises increase in salary or promotion, in exchange for sexual favours. Touching a person in a sexual manner. Sexual harassment is prohibited by law, and businesses must educate their workers according to this. The affected person is normally afraid to report this because of victimizing. Suggestions for improvement: Businesses must educate their workersGive the name of the guilty party to the SAPS for prosecution purposes.Unfair profit takingSell stock at higher prices while it was bought at a lower fixed price. Increase of prices during holidays, especially in areas where there are many holiday makers .Suggestions for improvement: Ethical behaviour to the consumer.Application of a honest business practice.Misuse of working time by employeeMany workers use working time for personal activities. Taking longer tea and lunchtime as prescribed. Workers doing their own business during working hours. Includes personal telephone calls, e-mail, and use of the business’ internet facilities for personal purposes during working hours. Suggestions to improvement: Set a code conduct and policy for workers according to this.Implement time controlling and a clock card system.Unfair and dishonest advertisingThe Advertising Standard Authority (ASA) regulates advertisements and protects the interest of the community. Advertising must be honest and must not misuse the trust of the consumer or the lack of knowledge of the consumer. Some enterprises use ethical advertising practices to get more value for their money, e.g. selling products using false trademarks etc. Suggestions for improvement: Consumer may refer these unethical practices to the ASA.Businesses must behave in an ethical manner.Taxation The government needs revenue from taxation to provide essential services such as housing, education, infrastructure development and medical care, etc. Company tax, VAT and personal income tax are some of the main sources of income for the government. Professional behaviour for businesses in this regard would be NOT to evade tax by falsifying financial records. Businesses do not declare all income to SARS. That is illegal and is regarded as a crime, punishable with a fine or even a prison sentence. Suggestions for improvement: Application of ethical and honest business practices by the business.Fine businesses that evade tax.More streamlined tax collection by SARS through the SAPS and VIP systems.Max = 12 MarksTWO ETHICAL THEORIESDeontological The rules of surroundings/orgainsiation must be followed Utilitarium Consequence based. Greater good/harm of decisionCare Theory Walk a mile in someone else’s shoesVirtue Based Thepry concentrates on a person’s character and natural moral system.CONCLUSION Policies and legislation which have been implemented must be continually monitored and improved to lead to a successful business. Profitability is regularly affected by each of the above issues. QUESTION 10 CREATIVE THINKING AND PROBLEM SOLVING [40 Marks]ZEBRA USED CARSZebra Cars is a successful used car dealership that buys and sells a wide variety of used cars. Although the business has done very well, the owner and head manager, Hadchieva Dayimane, is concerned that his staff are unhappy and as a result he has to replace his top staff often. This means he has to spend money and take time to mentor new employees on a regular basis. The staff that have not left are not motivated to work hard.The dealership manager Dylan Wadely, has reported back to Hadchieva on the following issues.The sales staff are often put into situations of conflict with customers, making it a hostile work environment. Most commonly they have to deal with dissatisfied customer who feels unhappy by the promises made by both the sales person and the marketing of the business. For example, if a car salesman sells a used car without a performance guarantee or warranty and the car breaks down on the buyer, the buyer may return to angrily confront the salesperson and demand a refund.The staff in general think the sales targets are too high, forcing the salesman to sell aggressively.Some employees complained that they often have to do duties that they were not hired for due to the promises made by the dealership. One such example is the promise of a free car wash once a week with nay purchase. Often salesman themselves have to do this task.The dealership also promises free services for the first year, however there is only one qualified employee in the service department, meaning he often needs help from sales staff. The staff in general feel that their payment structure is not clear and there is no clear channel that they can report their unhappiness. ‘Dayimane is unsure of what to do because his aggressive sales targets and marketing campaign have yielded a very high profit, however he cannot afford to keep losing staff and is concerned about the future reputation of the business.Briefly discuss the long term effect of the way Dayimane is running his business.Use the seven steps of problem solving as well TWO creative thinking technique to help solve this problem, up to finding workable, logical and reasonable solutions. (40) IntroductionBody:28 maxEffect6 Max7 Steps14 Max2 Techiniques14 MaxInsight8INTRODUCTION:Importance of problem solving and creative thinking in today’s business climate.Problems occur all business’s who have to under go changing conditions, the best have an ability to adapt quickly and creativelyCreative thinking is a vital business skill to keep innovating.BODY:Long term effect:Will ruin his reputation to potential buyers through word of mouth putting pressure on the sustainability of his business.His employees are vital to his long term success, and keeping good emplyees will ensure good continuity of systems.Constant employee turnover will hamper growth going forward.Unqualified individuals performing jobs such as car servicing will result in a loss of customers.Steps of Problem Solving:Note to Marker: Ensure learner actually uses the 7 steps to help solve the problem as presented in the case studyDefine the problem√Identify the crisis and the real problem at handDayimane’s management technique.Find potential causes for the problem√Collect as much information as you can on the issue, the root cause of the problem.Be as objective as possibleDayimane’s attitude towards success and his employees is not sustainableIdentify alternative ways to solve the problem√Think of as many alternative ways to solve the problems as possible.ANY CREATIVE METHOD: example: Give clear incentives to employees sales targets, align staff capacity with promises made.Choose a way to solve a problem√Evlauate each idea and chose the best oneChose onePlan and implement an action plan√Monitor the implementation of the plan√Check if the problem has been resolved√2 Creative thinking technique:Explain fullyBrainstormingSeveral people think about the problem and suggest ideas that could lead to a solution.√√E-brainstorming√√People can share, elaborate and evaluate ideas online.Delphi technique√√Use a confidential questionnaire to solve the problem.Stepladder technique√√Encourage individual participation in group decision-making, to get a greater mix of ideas.Fishbone technique√√A group of people get together to identify the problem factors then individuals work on solutions.Max 6 marks eachConclusion:Some problems need to assessed, in terms of feasibility, that cost too much money and time to fix. Research the cause more than the solution in order to gain perspective on the underlying issue.No business has been problem free. ................
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