Contents

[Pages:78]Contents:

Chapter 1: Chapter 2: Chapter 3: Chapter 4: Chapter 5: Chapter 6: Chapter 7: Chapter 8: Chapter 9: Chapter 10: Chapter 11:

Business Environments

Page 2

Corporate Social Responsibility

Page 13

Management and Entrepreneurship

Page 22

Research and presenting of data and information formats Page 31

Forms of Ownership

Page 37

Creative Thinking and Problem Solving

Page 41

Professionalism and Ethics

Page 47

Teamwork and Conflict Management

Page 50

Public Relations

Page 54

Financial

Page 60

Marketing

Page 64

# 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.

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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 (MRP).

There is no stipulation regarding the format - This SWOT has been tabulated to show how each element requires an analysis to clarify how it contributes to each element`s success.

Strengths:

Weaknesses:

SWOT analysis Of Mr Price (MRP)

Aspect

How it could lead to the success of Mr Price

MRP has 1150 stores in total, which implies These stores are located in a variety of

it is an established, well-known brand.

areas across Africa, making the brand

accessible to all Africans.

MRP has launched its online store and has Online stores are more cost effective than

successful result of R112.3 million in sales. physical stores in malls and have seen a

growth of 107.3% for MRP.

MRP has a strong brand with a large

The strong brand has drawn customers to

customer base which is echoed in the R18.1 the stores which has added to the 13.9%

billion turnover.

growth on last year.

Aspect

How it could lead to the success of Mr Price

MRP stores have been known to be

If management look at this clutter` issue and

cluttered and untidy at times, which may

fix it, it will gain favour in the eyes of the

leave customers with the wrong impression public and increase market share.

of the brand.

MRP offers low price items, which can place If MRP adapts their marketing to combat this

the quality of the product in the spotlight.

perception, it will improve their image and

Low quality is often associated with the

customers would be assured of quality.

brand.

Suppliers can also be consulted on the

required quality standards.

Aspect

How it could lead to the success of Mr Price

MRP can continue expanding the brand,

Considering the model of low prices, MRP

MRP could open Mr Price food` which would food` most probably have a large customer

take them into a new market with new

base purely because of the perception of the

competitors like Pick n Pay.

market.

MRP could look at an expensive` brand

This could increase their market share by

within the brand. They could have an

adding a new segment to the market. It

exclusive range that is of higher quality and could also kill the rumour which brings the

higher priced in a small section in all stores. general quality into question.

Aspect

How it could lead to the success of Mr Price

Inflation is at an all-time high and people are MRP needs to understand the struggles of

left with less disposable income to spend at the consumers and needs to try and meet

MRP stores.

their needs by offering lowest of low prices.

The Rand has weakened against other

Mr Price needs to investigate the strength of

currencies and MRP imports a lot of its stock the Rand against all major currencies and

from other countries. This is placing their low investigate different sources of supply. They

price under pressure.

can also bulk buy when the Rand

strengthens.

Opportunities:

Threats:

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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

Opportunities: Possible brand expansion to

Food` Add an exclusive range

Threats: Inflation Weak Rand

Strengths:

Weaknesses:

1150 store - established brand Successful online offering Large customer base - R18

billion turnover SO Strategies:

Cluttered and untidy stores Quality questionable

WO Strategies:

Add a small food section to all stores.

Healthy foods to the sport stores.

ST Strategies:

All stores could focus on better packing / displaying of products on shelves.

An exclusive store displaying pristine quality and tidiness.

WT Strategies:

Source cheaper suppliers to maintain exceptionally low prices.

Look at increasing the options of customer accounts.

Find innovative ways of keeping stores tidy - which doesn`t necessarily entail 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 could use this to improve the business.

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Porters Five Force Model - Cell C

Level of Rivalry in the market:

A competitor`s profile will tell Cell C everything about its competition since it is important for any business to know what its competitors are doing. Cell C needs to know its competitors and their tactics! By Cell C understanding its competition, the company can prevent them from stealing away market share. Moreover, the company could upstage them with new ideas and could slowly attract portions of the market away from Vodacom, thus edging closer to becoming the market leaders in the industry.

Strategy:

Cell C needs to develop strategies to improve and outperform competitors regarding 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 one`s position as a business in the market in which one operates. 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 of 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 both to 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 payphones 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 its 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 these do not arrive at the required time, it would prove disruptive for the 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, 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; thus without buyers, Cell C is nothing. Cell C has spent a lot of money on advertising to ensure customers know about them, and they in turn, 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, could 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:

Wi-Fi Calling Facebook basics Thumbtom C Surance Data transfer

These services are in addition to the contract customers receive and are aimed at improving 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, consider 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

Listing the different PESTLE factors and the elements below

each.

How these factors and elements, if not dealt with, could have an impact on your business / part of your business

Political:

Political instability in certain countries.

Cell C may be in business with these countries and trade restrictions might be imposed.

Potential impact of the factor

High Medium

Low Unaffected

M

Implication and importance

Type of effect: P - Positive N - Negative U - Unknown

Impact:

Increasing Decreasing Unchanging

Relative importance:

Critical Important Unimportant Unknown

N

I

I

Government changes Political power may shift H

may result in different in the country causing

P

regulations.

changes in the country.

Economic:

Cell C will need sales of

airtime and data to

The global economic

continue to grow. The

H

N

slowdown has

slowdown will definitely

resulted in the

hamper their growth and

slowing down of

they will need to put

consumers` spending strategies to put in place.

power.

Cell C purchase their

The weakening of the phones from other

H

N

Rand against other

countries and the

U

I

I

C

I

C

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currencies.

weakening Rand will

mean Cell C needs to

pay more money per

device.

Social:

Cell C needs to utilise

this cheaper` way of

M

P

Social media

marketing. It should also

platforms are leading be careful that there is

forms of media.

not negative publicity.

Cell C will definitely be

Unemployment rates

affected by unemploy-

H

N

are on the rise in our

ment and crime - they

country, creating a

have C Surance` for their

ripple effect in terms

customers.

of crime

Technological:

Cell C needs to keep up

with Vodacom which is

Technology

the industry leader. This H

P

surrounding cell

means moving money

phones and cabling is from other priorities to

advancing at a rapid

keep technology ahead.

rate.

Cell C must not let the

customers` experience in

All electronic till /

their store be interrupted H

N

payment systems are by loadshedding.

electrically powered;

Alternative energy

endless load-

sources are expensive,

shedding leads to

but a necessity.

work interruptions,

stoppages and

damages

Legal:

Cell C is under immense

pressure to increase its

BBBEE &

scorecard ratings. This H

P

Employment Equity

could affect current staff -

leading to retrenchments.

Basic Conditions of Cell C needs to treat its

Employment Act

employees well and the

BCEA should be the

M

P

minimum they adhere to.

Environmental:

Cell C is a large company

that may damage the

Global warming and

environment if it is not

M

N

an increasing carbon

serious about being eco-

footprint have

friendly, and its

resulted in a drastic

customers may question

need for the

whether or not they

environment to be

would want to support a

protected.

company which is

damaging the

The rules for disposal environment. They might

of oils and waste

choose a different

products which are

company which is more

harmful to the earth

eco-friendly.

are clear and

If Cell C is not compliant

wrongdoing is

and ignores its fiduciary H

P

punishable by law.

duty, the directors will, by

law, be punished and

could face jail time.

I

I

I

I

I

I

D

I

U

I

U

I

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. For example: Crime - the business would need to spend more money ensuring the customers` experience at the store is a safe one or else they might go elsewhere. Unemployment leads to poverty ? with so many people unemployed, they do not have cash to spend at your store, which would impede your business`s growth or would probably not be as much 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 may draw any diagram, which should only include three environments and demonstrate interrelatedness.)

Interrelatedness of Business Environments

Business adapts to factors with

strategic planning

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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 and a wider variety of goods, etc.

If the buyer demands any of the above (and you may add 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 Political Economic

Possible challenge

Political instability in certain countries.

Government changes may result in different regulations.

The global economic slowdown has resulted in the slowing down of consumers` spending money.

Economic pressure is causing rapid development in all sectors

Strategies to address the challenge

Be very careful where Famous Brands open international outlets.

Be very knowledgeable on any new regulations enacted by government.

Continue to come up with specials in stores, like with Steers - Wacky Wednesday and the latest special R49.90 King Steers burger and chips.

Continue to support individual

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