Grade 11 Business Studies - Influences, Challenges, and Adaptations in Business Environments
Business Studies Grade 11 Term One - Chapter 1: Influences and Challenges of Business Environments
Exam guidelines for business environments are available.
Key terms and definitions are provided.
Components of micro, market, and macro environments are recapped.
Reasons for varying degrees of business control over different environments are explained.
Ways businesses can engage with the macro environment are outlined.
Benefits of macro environment involvement are listed.
Challenges in business environments are examined using scenarios and case studies.
The extent of business control over different environments is analyzed.
Explanations of various business environment challenges are given.
Examples of contemporary legislation are provided.
Key Terms and Definitions
Control: The power to influence or direct behavior or events.
Organizational Structure: Framework showing division of responsibilities.
Organizational Culture: Controls and influences business conduct.
Vision: Predicts the future.
Mission Statement: Defines what a business does best daily and how.
Human Resources: Personnel regarded as significant assets.
Suppliers: Providers of goods/services.
Competitors: Businesses selling similar products/services.
Deforestation: Clearing trees for other purposes.
Redressing: To make amends or to set right.
Nepotism: Favoritism towards family/friends.
Retrenchment: Involuntary termination due to operational needs.
Go-Slows: Employees working slowly to persuade employers for higher pay.
Trade Union: Association protecting workers' rights.
Strike: Work stoppage as a form of protest.
Industrial Action: Includes strikes or go-slows.
Open Market: No control over providers or prices.
Demographics: Statistical data about the population.
Psychographics: Classification by attitudes and aspirations.
Globalization: Increased trade and collaboration between countries.
Physical Environment: Ecological elements like natural disasters and pollution.
Institutional Environment: Public-private partnerships.
Components of the Business Environment
Micro Environment:
Business mission and objectives.
Management structure.
Resources and culture, primarily controlled by management.
Market Environment:
Customers/Buyers: Final users of products/services.
Suppliers: Factories/providers of goods/services.
Intermediaries/Agents: Promote, sell, and distribute products.
Competitors: Sell same/similar products/services.
Regulators: Control activities and ensure satisfactory operation.
Strategic Allies: Businesses working to obtain missing expertise.
Unions: Improve working conditions for the labor force.
Macro Environment:
Physical/Natural environment
Economic environment
Social/Cultural/Demographic environment
Technological environment
Legal/Political
Environmental/Global environment
Institutional environment
/
Level of Control Over Business Environments
Micro Environment: Business owners/managers have great control over day-to-day decisions.
They choose suppliers, hire employees, and decide on products and sales locations.
Skills and resources are used to satisfy customers.
Market Environment: Includes company-related influences with impacts on sustainable business.
Businesses can influence competitors by improving product quality relative to prices.
Suppliers' raw materials influence product quality.
Macro Environment: Major external, uncontrollable factors influencing decision-making.
Factors include economic, demographic, legal, political, social conditions, technological changes, and natural forces.
These conditions are beyond management control and constantly change.
Ways Businesses Can Be Involved in the Macro Environment
Influencing suppliers via long-term contracts.
Creating new product uses to find new customers.
Influencing regulators through lobbying and bargaining.
Initiating bargaining sessions between management and unions.
Influencing owners using information in annual reports.
Negotiating strategic alliance agreements via contractual processes.
Knowing and adhering to government regulations.
Staying updated with and leveraging new technologies for production and marketing.
Lowering environmental impact.
Entering the global market by using the internet to source suppliers and customers.
Working within the law to set up contracts.
Taking advantage of economic changes (e.g., exchange rates, tax breaks).
Staying informed and adapting to challenges in the macro environment.
Getting involved in research/development to continue operating.
Benefits of Involvement in the Macro Environment
Accurate prediction of future events, threats, and opportunities.
Contribution to a healthier, more skilled, and productive workforce.
Protection of natural resources and meeting consumer needs sustainably.
Contribution to wealthier consumers.
Reduced industrial conflict and increased productivity.
Promotion of causes concerned by society.
Contribution of expertise and resources to influence public opinion (advocacy).
Challenges of the Business Environment
Micro Environment:
Difficult employees.
Lack of vision and mission.
Lack of adequate management skills.
Unions.
Strikes and go-slows.
Skills shortages.
High employee turnover.
Employee absenteeism.
Market Environment:
Competition.
Shortage of supply.
Changes in consumer behavior.
Demographics and psychographics.
Socio-cultural factors.
Change in income levels.
Macro Environment:
Political changes.
Contemporary legislation.
Labor restrictions.
Micro lending.
Globalization/international challenges.
Social values and demographics.
Socio-economic issues and challenges.
Explanation of Challenges
Micro Environment
Difficult Employees: Negative attitudes, require supervision, harm the business image.
Lack of Vision/Mission: Hampers guidance and leadership, lacks focus and direction.
Lack of Managerial Skills: Prevents achieving objectives, ineffective guidance, conflicts, affects productivity and profitability.
Impact of Unions: Creates tension, unmet demands, leads to industrial disputes.
Strikes and Go-Slows: Affect production, shutdown strikes, slow work affects targets.
Differences Between Strike and Go-Slow
Strike: Temporary collective refusal to work; cessation of work to force employers to accept demands; participation in a protected strike prevents workers from being fired.
Go-Slow: Employees work slowly; disrupt workplace production; workers are often punished, sometimes fired.
Skills Shortages: Difficulty finding qualified employees, unqualified employees contribute to bad decisions.
High Employee Turnover: Affects productivity, continuity, and recruitment.
Employee Absenteeism: Reduces productivity and profitability.
Market Environment
Competition: Businesses selling similar products threaten success.
Businesses aim to sell more than competitors, new entrants with better products/cheaper substitutes.
Inability to make sufficient profit, essential regular supply for the production process.
Shortage of Supply: Businesses may lose customers if they buy from other businesses.
Raw materials become unavailable when drought cause poor harvest.
Imported goods may not arrive when the country of origin has transport/political problems.
Changes in Consumer Behavior: Consumers influence buying behavior.
Consumer preferences and tastes change as fashions change and as technology advances.
The challenges include keeping up with changes in consumer tastes and demand by doing research.
Demographics and Psychographics: Consumer's attitudes, interests, opinions and lifestyles determine the characteristics of the consumer.
These can change quickly so businesses need to collect interprete the information about the target market and develop a marketing strategy.
Socio-Cultural Factors: Common behavior and attitudes of a particular society.
As society changes, so will the cultural values and practices of individuals.
Ways to Overcome Competition in the Market
Differentiate through customer focus.
Offer personal services.
Provide low-cost extras (credit terms, discounts).
Lower prices.
Sell superior quality/new products/services.
Be the best employer (well-trained staff, better atmosphere).
Step up marketing (promotional ideas).
Update business image (modernize premises).
Keep up with sector developments (consumer trends, technology).
Improve customer service.
Macro Environment
Change in Income Levels: Factors (unemployment/high interest rate) give consumers less disposable income.
Reduced consumer spending results in lower profit for businesses.
Political Changes: Unstable government deters investors.
A business that relies on imported/exported goods may be challenged by government’s attitude on duties and tariffs to be imposed.
Contemporary Legislation: Acts (National Credit Act and Consumer Protection Act) to protect businesses and customers.
Government has passed a number of laws which impose restrictions on businesses labour practices making it a challenge for business to employ suitable people locally and internationally.
Micro Lending: Small loans to those without bank credit.
Puts pressure on businesses since they want to support micro businesses, but they are a big risk as many fail and cannot repay debt.
Globalization/International Challenges: Exchange of products/services/capital and labour across boundaries/countries.
Local businesses are competing with international businesses for local consumers which can results in local skills shortage.
Social Values and Demographics: Values influence consumer buying.
Socio-Economic Issues: Challenges of poverty, unemployment, skills shortages, crime, and HIV/AIDS make success difficult.
Examples of Assessing Challenges
Vashnie Fashion Designers (VFD):
Designers are late for work (Micro-environment, Full control).
Increased import tariffs on designer clothing from China (Macro environment, No control).
Raw materials shortage from Ditebogo Clothing Manufacturers (Market environment, Less/limited/partial/can influence).
Examples of Contemporary Legislation
National Credit Act: Protects from negligent lending.
Consumer Protection Act: Advances consumer welfare.
Employment Equity Act: Eliminates unfair discrimination.
Broad Based Black Economic Empowerment Act: Ensures participation in the economy.
Basic Conditions of Employment Act: Addresses working conditions.
Labor Relations Act: Deals with labor justice.
Skills Development Act: Improves skills.
Compensation for Occupational Injuries and Diseases Act/COIDA: Provides compensation for workplace injuries/diseases.
Business Studies Grade 11 Term One - Chapter 2: Adapting to Business Challenges
Adapting to Business Challenges
Adapting to the challenges of the micro, market, and macro environment is crucial for business success.
Businesses can deal with difficult employees as a micro-environment challenge by revisiting the recruitment & induction policies.
Businesses can adapt to challenges of the macro environment by:
Information management
Strategic responses
Mergers, takeovers, acquisitions and alliances
Organisation design and flexibility
Direct influence of the environment and social responsibility
Key Terms and Definitions
Information Management: Finding, recording, storing, and retrieving information for effective use.
Strategic Response: Developing a system to meet long-term needs.
Merger: Two similar-sized businesses combine willingly.
Takeover: Assuming control of a company, often against its will.
Alliances: Associations formed for mutual benefit.
Hedging: Investing to grow money faster than inflation.
Networking: Interacting to exchange information and develop professional contacts.
Ways to Adapt to Challenges
Micro Environment
CHALLENGES | RECOMMENDATION |
|---|---|
Difficult employees | Businesses can deal with difficult employees as by revisiting the recruitment & induction policies. Businesses need to develop strategies to deal with different types of personalities. Businesses must offer counselling sessions to employees with personal problems. |
Lack of vision and mission | Management must have a clear vision which is understood and communicated this to all employees. The vision must and mission statement have to be implemented in a way that shapes the internal environment. The vision and mission should direct the use of resources and actions of employees. Businesses’ values must be evident in their ethical standards and the way employees are treated. Management must be able to anticipate changes in the internal environment so that they can plan goals and operations proactively. |
Lack of adequate management skills | A business manager needs to be skilled in technical aspects of their job and in dealing with employees. Managers need good interpersonal and conflict resolution skills. Managers must attend management and leadership causes. Businesses may request mentors and coaches from successful businesses to train their managers. |
Unions, strikes and go slows | Managers need to deal fairly and transparently with trade unions. They need to build relationships with union representatives so that through positive negotiations strikes can be avoided. The business can also make use of the CCMA to help reach an agreement with the trade unions. Employers need a labour relations strategy where a business engages positively and meaningfully with its employees before tensions rise and strikes are threatened. Businesses must be able to manage employees in such a way that good working relationships are maintained and disputes are resolved timeously. |
Market Environment
CHALLENGES | RECOMMENDATION |
|---|---|
Competition | Businesses must take into account its entry into and operation within the market. Conduct research and identify customer needs. Offer products or services, offer more personal services. Ensure that the staff is well trained and knowledgeable. |
Shortage of supply | Select suppliers which are reputable/trustworthy and reliable suppliers. Maintain a good relationship with suppliers. Enter into contracts with suppliers to secure raw materials of good quality in sufficient quantities. Take over suppliers to ensure continuity of its supply. This is called backwards integration. |
Change in consumer behaviour | Marketing of the business should conduct an on-going research to investigate the general behavioural patterns. The marketing manager must monitor and respond to changes in consumer patterns of consumption. |
Demographics and psychographics | Businesses need to ensure that their information is up-to date and accurate. They need to interpret data accurately so that they can plan an effective marketing strategy and plan. They need to keep track and study the attitude, taste and desires of the market. |
Socio cultural factors | The entrepreneurs need to remain informed of socio-cultural changes. They must be able to respond to socio-economic factors by adapting the internal environment of the business. Businesses must be able to modify the marketing strategy and marketing plan accordingly. |
Macro Environment
The following ways in which business can adapt to challenges of the macro- environment will be discussed in detail below:
Information management
Strategic responses
Mergers, takeovers, acquisitions and alliances
Organisational design and flexibility
Direct influence of the environment and social responsibility
Information Management
Information must be found/recorded/stored/easily retrieved and effectively used.
Businesses need to implement an effective information management system which is accessible and useful to all staff.
They should invest large capital into information technology (IT) system to update business operations.
Modern IT solutions enable businesses to satisfy customer needs faster and better.
Business may benefit from an increase in market share and profitability.
Strategic Responses
Management needs to design strategic responses to various challenges by analysing all information, identifying stakeholders’ involved.
Get a clear picture of each stakeholder’s viewpoints and requirements
Businesses need to be aware of new competitors in the market and they must be able to strategically respond to threats.
They must make strategic plans to remain sustainable in a competitive market.
Correct strategic responses assist businesses to identify the most important features of their products.
Mergers, Takeovers, Acquisitions, and Alliances
Business sometimes have to make quick decisions to survive as a result of challenges from the business environments.
They may implement mergers, takeovers, acquisitions and alliance as solutions to respond to the challenges of the environments.
Mergers
This occurs when two companies join together and form one new business.
When two businesses, usually by agreement become one.
If it is a public company, then the shareholders will swop their shares in one company for the equivalent value of shares in the new merged company.
Takeovers
The purchasing of a company (target) by another company (bidder) usually against the will of their targets.
Businesses that take over existing companies by buying out its shares until the business has controlling interests.
Acquisitions
A business buys another business at an agreed price.
It usually occurs to private companies that are not listed.
Alliances
These are agreements when two or more businesses work together to achieve their objectives.
Organisations with similar interest/nature/qualities choose to work together for the mutual benefit of both organisations.
They remain separate and merely co-operate with one another.
Organizational Design and Flexibility
Organisational design describes how a business sis structured and how it communicates its culture.
It is a process to integrate people/information/technology of an organisation so that improves the profitability of the business.
Businesses need to be flexible in their organisational design and strategies so that they can compete in a changing market.
They need to change the organisational design to adapt to a specific challenge.
Direct Influence on the Environment
Direct influences on businesses usually results from legislation/trade agreements and competitor strategies.
Successful businesses and their environment adapt to the unavoidable influences by creating a competitive environment.
Ways in which businesses can have a direct influence on the environment
Businesses need to be flexible by getting involved in research/development so that they can continue to operate.
Influence its suppliers by signing long term contracts.
Create new uses for a product by finding new customers.
Influence regulators through lobbying and bargaining.
Initiate bargaining sessions between management and unions.
Influence its owners using information contained in annual reports.
Negotiate strategic alliance agreement through contractual processes.
Social Responsibility
Increasing pressure in the business environment is forcing businesses to become more socially responsible by giving back to communities.
A business code of conduct should take into consideration the norms and values of the community in which it operates.
When a business makes a commitment to environmental and social responsibilities it will deliver a tripple bottom line which includes planet, people and profit.
Projects that can be undertaken by businesses as part of social responsibility
Businesses must allow employees to get involved in social development.
Managers must protect the environment and participate in community upliftment programs.
Environmental friendly campaigns
Making donations to charity organisations
Engaging in economic development
Charity community projects
Benefits for the business Increased sales due to customer loyalty.
HIV and Aids awareness programs
Benefits of CSI projects for businesses
Increases employees’ morale and job satisfaction when they are involved in social responsibility programmes.
CSI projects may be used as a marketing strategy to promote their products.
CSI projects promote teamwork within businesses.
CSI helps to attract investors because of increased profits/income
Promotes customer loyalty resulting in more sales.
May attract experienced employees/increase the pool of skilled labour which could increase productivity.
Positive/Improved image as the business looks after employees/conducts itself in a responsible way.
A business may have a competitive advantage, resulting in good publicity/an improved reputation.
The business enjoys the goodwill/support of communities.
Lobbying, Networking, and Power Relations
Lobbying
Lobbying refers to the process of trying to influence legislation or parliamentary decision making.
It involves acquiring public support for an issue such as children or animal rights.
It is an organised process where individuals, business and organisations use their influence to change government policy.
Lobbying specifically applies to law-makers and government officials and it is a participatory approach to government.
It is done by various people with similar motives, beliefs or commercial positions.
Reasons why businesses lobby
Businesses lobby their regulator or supervisory body in order to try influence prices, policies, regulations and other decisions made by the regulator or the supervisory body
Businesses or people lobby or change laws like, child labor laws, clean air and water laws, municipal regulations, etc.
Their views are important and heard, thus making a difference and giving solutions to business challenges.
Lobbying advances business men’s cause and builds public trust.
Types of lobbying
Hedging against inflation
Businesses use hedging to protect their financial investments by spreading the risk
Businesses invest surplus fund so that its value grows at a faster rate than inflation.
They can hedge against inflation by investing their surplus assets/money in investments with intrinsic value e.g. gold/oil/property etc.
The business use hedging by buying bonds, shares, property or buying precious metals like gold to protect capital from the effects of inflation
Bargaining sessions between management and unions
These sessions enable employees to negotiate with employers as a group to protect employees’ rights.
Bargaining sessions prevent labour strikes and provide critical information to people in power.
Businesses make sure that their representatives are trained/skilled to negotiate own their behalf.
The purpose of bargaining sessions is to find a win-win situation for all parties.
Influencing supervisory body/regulators
There are large number of supervisory bodies and regulators who operate in the business environment.
Businesses take an active role in professional bodies.
Through their membership/advocacy/submissions they may be able to influence changes to existing regulations.
Networking
It refers to a coordinated activity where people who have a similar objective meet and exchange information and ideas.
The goal of networking is to reach as many people as possible and to make every connection count.
It is a tool that is used by businesses to increase sales
Businesses can become a member of chambers of commerce and industry/ professional business clubs/ informal social groupings to meet new-contacts.
Importance/Advantages/Benefits of networking
Businesses can be attract new customers resulting to increased market share and profitability.
Networking can be an excellent source of new perspectives and business ideas.
Allows managers to build new businesses relationships and generate new business opportunities.
Plays a role in the marketing and expansion of a business.
Assists businesses in making future business decisions.
Businesses can gain support when representation to various authorities is planned.
Power Relations
Meaning of power relationship
Power relations can be described as a measurement of a business‘s ability to control its environment and the behaviour of other businesses.
A business forms relationships with its environment and markets.
The power that the business has on the environment determines the status it holds within its industry.
Ways businesses can form power relations
Strategic alliance/Partnership agreements
Businesses form partnership agreements in order to benefit each in each other’s involvement.
These partnership alliances help parties involved to benefit in infrastructure development and scarce skills.
These alliances are designed to build on the expertise of each partner and on the way and on the way in which they complement each other.
Persuasion of large investors
If a business has a powerful investor, the business can often benefit from the relationship so that it can gain credit more easily and better deals from suppliers.
Businesses invite powerful influential people to sit on their board of directors in order to get advice from those people.
Having such powerful as part of the business may have a positive influence √ on the reputation and image of the business.
Company representatives’ influence
This representative fulfils an important function in trying to persuade investors to invest in a particular business practice.
People will make decisions based on the company’s image, personality, communication style and power of persuasion.
Businesses must invest time and energy to recruit the right person for this job.
Business Studies Grade 11 Term One - Chapter 3: Contemporary Socio-Economic Issues
Contemporary Socio-Economic Issues
List of Contemporary Socio-Economic Issues:
Low income levels
Inflation
Social, cultural and demographic issues
Economic crime
Ethical misconduct
Population growth
Illiteracy
Lack of skills
Unavailability of natural resources
Inefficiency in the use of resources
Exhaustion of natural resources
Dumping
Strikes
Piracy
Impact of each socio-economic Issues on businesses
Low Income Levels
Decrease in demand for goods and services. Consumers shift to cheaper brands.
Increase poverty, robberies due to lack of income
Affect workforce and could lead to lower productivity
Inflation
Increased costs of raw materials. It decreases consumer spending resulting to decreased sales and profitability.
Employees may be retrenched which increases unemployment and decreases buying power even further
Social, cultural and demographic issues
Different groups of people with different cultures act different as customers. New types of consumers which may lead in sales reduction
Economic crime
Loss of income if the money was stolen from a business and investors
Leads to a decrease in investors’ confidence resulting poor economic and business growth
Ethical misconduct
Employees who have been victims of sexual harassment may experience a lack of concentration/anxiousness/productivity
High staff turnover which can lead to bad publicity and loss of customers/potential investors
Population growth
Consumers will have less income and business will have a decrease in sales
Increase unemployment and crime, municipal/health service become expensive
Illiteracy
Employees without the correct skills can also be the cause of accidents in the workplace and this could impact on the image of the business
Training of these employees can be very costly and leads to financial loss. Difficult to market products to people who cannot read or write.
Lack of skills
Cost of labour becomes expensive as some businesses recruit candidates from abroad
Unavailability of natural resources
The lack of transport due to the scarcity of oil which is used to manufacture fuel may affect businesses.
Inefficiency in the use of resources
Loss of productivity if business operations come to a halt due to unavailability of natural resources.
Exhaustion of natural resources
The supply and quality of natural resources may decline
Dumping
Loss of profits as some local producers cannot compete with cheaper prices, they make revenue and be forced to shut down their operations
Strikes
May can lead to violence/assaults/looting/destruction of property and intimidation of workers who do not strike causing financial loss to business.
Economy can be jeopardised since production is lost and employees can lose their pays for all the days that they strike
Piracy
Causes businesses to looses out on sales and income which in turn threatens industry. Reduces the value of the businesses and reduces productivity and profit
Ethical Misconduct
These are socio-economic issues that occur inside the business that also present threats and challenges to businesses.
Ethical can be defined as acting in ways that are consistent with a person’s value. Ethical misconduct can be defined as any behavior by employees of the business that is not consistent with the values of the business.
Types of Ethical Misconduct:
Sexual harassment, workplace harassment or unwanted attention of a sexual nature from someone that cause physical discomfort
Corruption, dishonesty such as bribery/theft, kickbacks.
Mismanagement of Funds (irregular expenses and theft). Misconduct leads to a loss of income.
Solutions to piracy
Patent Act No. 57 of 1978
This prevent other businesses/people not to produce and sell the same product/specific service but they must register a patent with the patents office in South Africa and include a sample of their invention that complies to the Patent Act No. 57 of. Business can bring legal proceedings against anyone who uses the invention by claim damages
Trademark Business
identify themselves and they must register their trademarks with the register of trademarks. Damages can be claimed from someone who infringes the trade mark for copy violation.
Industrial relations
Refers to Industrial relations refers to the relationship or partnership between employers and workers in any work environment. It also describes the relationship among trade unions and the different management levels, employees and the governments
Types of industrial actions:
Strikes: When employees stop working completely causing employers to agree to the demands of the strikers.
Go-Slows: A slow reduction of production rate by workers which causes employees still have to be paid as they are doing their work whereas they do not get paid when they go on strike.
Lockouts: Occurs when an employer locks employees out of a workplace which results if the worker safety.
Purpose of the Labour Relations Act
Provides a framework where employees, trade unions, and employers discuss matters relating to employment.
Promotes orderly negotiations and employee participation decision making in the workplace.
Promotes resolution of labor disputes, fair employment practices, the effectiveness of bargaining councils, statutory councils, Labour Courts and Labour Appeal Courts.
Establishes workplace forums, the Commission for Conciliation, Mediation and Arbitration (CCMA).Allows Workplace forum where employee may participation in dicision making.
Functions and Meaning establishment of trade unions
Is a establishment that protects and lobbies for the rights of workers. Protect the interest of general society and minority groups through media and negotiations along with the engaging/establishment in a political/economic actions strategy for helping the government. Engaging in collective bargaining to improve the standard of living and improve decent working conditions/remuneration
Business Studies Grade 11 Term One - Chapter 4: Business Sectors
Business Sectors
Overview
Business sectors are subdivisions of economic activities, categorized into primary, secondary, and tertiary sectors.
Primary Sector
Definition:
Extraction of raw materials from nature.
Deals with natural resources (coal, gold, fish, livestock).
Resources are forwarded to the secondary sector for production.
Examples:
Mining, fishing, agriculture, forestry, and farming
Secondary Sector
Definition Changing
Transforms raw materials from the primary sector into useful products.
Includes manufacturing, construction, and energy generation.
Involves manufacturing processes like furniture making.
Examples:
Manufacturing, clothing, food processing, building, and construction.
Tertiary Sector
Providing services
Renders services to the public and businesses.
Final services of products to consumers.
Includes transport, banking, legal, and health services.
Examples:
Distribution, banking, insurance, tourism, transportation, entertainment, retail, and legal services.
Relationship Between Sectors
The primary sector relies on the secondary sector for machinery, equipment, and fertilizers, and it dependent on the tertiary sector for its customer needs.
The secondary sector processes raw materials from the primary sector into useful products and needs from the tertiary sector to sell their products
The tertiary sector depends on the primary sector for raw materials and depends on the secondary sector for manufactured goods such as office machines/office furniture/stationery etc.
Statements on business sectors Examples: Primary sector is Duka Mines specialises in the extraction of platinum, Tertiary sector Timothy Distributors which involves drivers to deliver goods to various customers
Business Studies Grade 11 Term One - Chapter 5: Benefits of Company Over Other Forms of Ownership
Overview
Examines characteristics, advantages, and disadvantages of sole traders, partnerships, close corporations, private companies, personal liability companies, public companies, and state-owned companies.
Discusses the benefits and challenges of establishing a company compared to other forms of ownership.
Outlines procedures for the formation of companies and legal requirements for company names.
Defines key concepts: Memorandum of Incorporation (MOI), Notice of Incorporation, and Prospectus.
Key Terms and Definitions
Form of Ownership: The legal position of the business and how it is owned.
Continuity: The ability to continue existing, even with changes in ownership.
Securities: Shares and bonds issued by a company.
Limited Liability: Losses limited to the amount invested.
Unlimited Liability: Personal assets may be seized to pay debts.
Memorandum of Incorporation (MOI): A document setting out the rights, responsibilities, and duties of shareholders and directors (serves as a company constitution).
Sole Trader/Sole Proprietor: A business owned and controlled by one person.
Partnership: An agreement between two or more parties to finance and work together towards common goals.
Co-operative Society: Autonomous association to meet common needs through a jointly owned and democratically controlled enterprise.
Company: A legal person with the capacity and power to act on its own.
Public Company: A voluntary association governed by the Companies Act.
Private Company: A voluntary association of one or more persons.
Personal Liability Company: A voluntary association where directors are jointly and severally liable for company debts.
State-Owned Company: A legal entity created by the government for commercial activities.
Partnership Article: Exhaustive provisions concerning the business and partners.
Prospectus: Document inviting the public to buy securities/shares.
Annual General Meeting (AGM): A yearly meeting where shareholders receive a company performance report.
Directors: People elected by shareholders to represent their interests.
Forms of Ownership, Characteristics-Advantages vs Disadvantages:
1. Sole Trader/Sole Proprietor : #### Business management & responsibilities one person
Advantages:
* Quick Easy to install
* Inexpensive start due to owner responsibity
*Owner makes all decisions easy to adapt to the needs of client/customer simple management structure
Disadvantages
* Unlimited liablity, and cash flow can be prolem
Growth if the business cab be restricted due to lack in Capital.