bus man chpt1,2,3

business

organisation that strives for profits by providing goods & services desired by customers

organisation goods

tangible products offered by a business

services

intangible offerings provided by a business

standard of living

measured by output of goods and services that people can buy with money

quality of life

level of human happiness based on access to basic needs (education, shelter, etc)

revenue

money business receives by providing goods and services to customers

cost

expenses (rent, supplies, transportation, salaries, etc) that reduces revenue

profit

revenue - cost

not-for-profit organisations

enrich and help impact communities positively - exists to achieve goals other than the usual business goal of profit

stakeholder

people who have impact on company (manufacturers, customers, etc)

shareholder

people who own a part of company (buy shares)

risk

potential loss of time and money - chances of making a profit (challenges: inflation, etc)

factors of production

human resources, natural resources, financial resources, informational resources, entrepreneurship

Human resources

labour/people

Natural resources

farmland, forests, minerals, oils, water, etc

Financial resources

capital - money, land, tools, machinery, factories, facilities, etc

Informational resources

knowledge - combined skills of workforce

Entrepreneurship

people who combine the inputs of natural resources, labour, and capital to produce goods or services to make a profit or accomplish a not-for-profit goal

economic growth

higher economic growth = rich

economic growth impact on business

higher economic growth=more jobs available(rich), lower economic growth=less jobs available(poor)

SA unemployment

long term unemployed people were 7.8 million at end of 22 (1/3 of SA pop)

SA credit grading

grading of people who want to lend money to other countries

credit grading impact on access to financing(give&lend)

cost to get lend money is higher than if one lends to other countries because our grading is low

circular economy

implied that what we buy/sell must be used over and over again or make it available

food wastage

10 million tons of food is lost = 1/3 of the 31 million tons produced annually

recycling

growing trend among consumers

SA non-profit organisation - National Recycling Forum (NRF)

Economic Influences

Factors affecting the economy such as price fluctuations, tax, interest rate, unemployment rate, and poverty levels.

Political & Legal Influences

Factors including general political stability, laws, regulations, quotas, tariffs, export restrictions, patents, copyrights, environmental protection, minimum wage, and business licenses.

Demographic Influences

The study of people's vital statistics (age, gender, race, ethnicity, location) that helps companies define markets and workforce size.

Social Factors

Attitudes, traditions, cultures, religion, values, interests, ethics, lifestyle, and behaviors that influence purchasing decisions.

Technology

The science, skills, and knowledge used to solve production and organizational problems, including equipment and software that improve productivity.

Risk

Factors that are out of one's control, bringing uncertainty and requiring knowledge to develop protective plans.

Load Shedding

A medium to long term risk that hinders business production, increases costs, and impacts the economy and communities.

War

A short to long term risk that directly affects businesses through loss of lives, infrastructure damage, and decreased production.

Climate Change

A short to long term risk that causes physical damage to infrastructure and increases costs for businesses.

Types of Climate Action

Includes adaptation, mitigation, loss & damages, and carbon & climate finances to address climate change.

Ethics

A set of morals for judging whether something is right or wrong, applied to business situations.

Ethical Issue

A situation where someone chooses actions that may be ethical or unethical.

Business Ethics

The application of moral standards to business situations.

Morality

The distinction between right and wrong.

Recognising Unethical Behaviour

Identifying actions such as taking property, lying, engaging in conflicts of interest, and committing improper personal behaviour.

Justice

The equitable distribution of burdens and rewards in society.

Utilitarianism

The ethical principle focusing on seeking the best outcome for the majority.

Deontology

The ethical approach that emphasizes meeting obligations and duties.

Individual Rights

Rights that exist under certain conditions, serving as guides for ethical decisions.

Leading by Example

The influence of managers on employee behaviour and ethical standards.

Ethics Training Programs

Formal training to develop awareness of unethical activities and appropriate responses.

Code of Ethics

A document outlining expected responsibilities and behaviours in an organization.

Corporate Social Responsibility (CSR)

The ongoing commitment by a business to behave ethically and contribute to social development.

Responsibilities to Stakeholders

Obligations to employees, customers, society, the environment, and investors.

Triple Bottom Line

A framework considering people, planet, and profit in business practices.

Greenwashing

Misleading publicity aimed at creating an impression of environmental responsibility.

Supply Chain Accountability

Holding the entire supply chain responsible for ethical practices.

Global Ethics

The implementation of ethical guidelines by responsible multinationals in their operations.

Financing

The process of obtaining funds necessary for business operations.

ways for businesses to get start-up capital and financing

• own capital

• personal loan

• venture capital

• preference shares

• listed quity(shares)

• business loan(bank)

• development finance loan

• listed debt

start-up capital

to purchase or lease assets, marketing, inventory, hire staff, operational costs, to cover funding costs

OWN CAPITAL

advantages: retain full control of your business (rewards and decisions taken), no application process, prudent use of funding

risks of using own capital

disadvantages: risk of losing investment, generally one of the most expensive cost of funding on a risk adjusted basis, reduced diversification (all eggs in one basket)

PERSONAL LOAN

advantages: easier to qualify for than a business loan, process and cash is available quickly, unsecured funding - retain control of your business

disadvantages of personal loan

disadvantages: personal liability, limits future access to personal funding, funding costs more expensive than business loans

VENTURE CAPITAL / PRIVATE EQUITY

advantages: expertise, connections and non-financial resources, mentoring, reduced ongoing borrowing costs

disadvantages of venture capital

disadvantages: sell a portion of your company, less control and possible restrictions (4C's), due diligence process takes long, generally expensive funding costs as a portion of future reward must be relinquished

LISTED EQUITY / SHARES

advantages: access to a large pool of investors, publicity could lead to future access to funding and resources, can be used as an incentive to attract skills

disadvantages of listed equity

disadvantages: can lose complete control of your company, expensive funding cost, upfront funding costs and time (prohibitive), maintenance of program

PREFERENCE SHARES

advantages: retain full control of your business, reduces maturity risk, less expensive than equity investments

disadvantages of preference shares

disadvantages: upfront setup costs, setup time takes longer than a loan, ongoing program maintenance, smaller market than listed bonds and equity investments

BANK LOANS (BUSINESS LOANS)

advantages: retain full equity in business, low interest rates and access to large amounts of funding, no interference from bank

disadvantages: strict eligibility criteria (4C's), long application process, secured loans carry the risk of losing your business (4C's)

DEVELOPMENT FINANCE LOANS

advantages: retain full control of your business, favourable interest rates

disadvantages: time to receive funding can be significant, possible restrictive covenants, ongoing reporting requirements can be arduous

LISTED DEBT

advantages: retain full control of your business, access to a large pool of investors, least expensive form of debt funding and less expensive than equity funding

disadvantages: upfront setup costs (prohibitive), setup time takes longer than a loan, maintenance of program, can include restrictive covenants

OWNER CONSIDERATIONS

ownership of business, control of a business, cost of funding, timing and process involved in obtaining funding

factors to take into consideration when it comes to financing (4C'S)

capacity - ability to make debt payments on time, collateral - quality and value of assets supporting indebtedness, covenants - terms and conditions, character - quality of management

BREAK EVEN ANALYSIS

TOTAL INCOME: quantity produced (or sold) x selling price

TOTAL COST:

variable: increase as production (sales) increases, fixed: regardless of number of products produced (sold) - determined over fixed period of time, semi-variable: contains fixed and variable cost component

BREAK-EVEN QUANTITY (x)

Selling Price (x) = Variable Cost (x) + Fixed Cost

x = fixed cost/(selling price - variable cost)

BREAK-EVEN SALES/TURNOVER

Break-even Quantity x Selling Price

PERSONAL INCOME TAX

Tax paid by sole proprietors and partnerships where the owner pays tax.

REBATES

Discounts that are accumulative, e.g., a 75-year-old gets all three discounts.

TAX THRESHOLDS

Tax Income(Tax Levied %) = Tax according to scale - Rebates.

MARGINAL TAX RATE

Tax rate applicable on the next rand of income, read from the scale.

EFFECTIVE TAX RATE

Percentage of taxable income paid towards taxes, calculated as Tax Payable / Taxable Income x 100.

COMPANY INCOME TAX

Tax rate of 27% on net profit.

DIVIDEND TAX

Tax rate of 20% on dividends.

SMALL BUSINESS CORPORATION

An entity with turnover less than R20 million, must have its own legal personality, and may only be owned by natural persons.

TAXABLE INCOME

Income that is subject to taxation.

TAX LEVIED

The amount of tax imposed on taxable income.

TAXABLE TURNOVER

Turnover that is subject to taxation.

MICRO-BUSINESS

An enterprise with turnover less than R1 million that does not need its own legal personality.

TURNOVER TAX

A tax that replaces VAT, income, provisional, capital gain, and dividend tax for micro-businesses.

DIVIDEND WITHHOLDING TAX

Tax of 20% on amounts above R200 000.

TAX MORTALITY

Willingness of individuals to pay taxes and comply with tax laws, influenced by various factors.

Taxpayer

An individual or entity that pays taxes to the government.

Tax Base

The total amount of income or assets that can be taxed by the government.

Personal Income Tax

A tax imposed on individuals' earnings, which in South Africa is significantly covered by a small percentage of taxpayers.

Tax Evasion

Deliberately conducting activities that result in purposely not paying tax when there is a clear tax liability.