Chapter 1: Business Environments

Question 1

Micro environment analysis tools

Answer 1

• Resource-based analysis- Considering how tangible and intangible resources are utilised in the business and how they can create competitve advantage
• Value Chain Analysis- Evaluating how much value was/was not added within a chain of activities in the business

Question 2

Different business functions: Purchasing

Answer 2

• Buys goods to be used for the business’s own use
• Buys goods that are to be sold(trading stock)
• Buys raw materials/semi-finished that will be processed into sellable goods
• They find the most suitable supplier
• Keep costs as low as possible to maintain ROI
• Ensure delivered goods are right quality, quantity, and have no damage
• Supply chain management

Question 3

Supply chain management

Answer 3

• Control the flow of raw materials from the supplier to the final customer
• All activities performed to deliver the correct product at the right time, place, correct quantity and quality
• If done correctly it will reduce amount of capital invested into stock.
• In order to be done correctly, information must be communicated within the network of businesses that buy/sell from one another
• Ensure that supply chain is ethical

Question 4

Production Function

Answer 4

• The combination of the factors of production to produce the correct product at correct time, place, etc
• Turning raw materials into profitable products
• Keeping production costs as low as possible while still producing good quality
• Work closely with Marketing to create product that attracts buyers

Question 5

Quality control

Answer 5

• Important because quality of raw materials will influence the quality of products
• Sampling: a few batches of a product are tested
• Inspection: products are tested and compared to quality control standards
• The more thorough the control the more expensive it is

Question 6

Quality control pros

Answer 6

• Save production costs by elimanating sub-standard products
• Encourages workers to delivery high quality
• The better the quality means higher remuneration
• Retailers have confidence in the stock they put out and will thus result in better stock turnover

Question 7

Risks for production

Answer 7

• Insufficient materials/poor quality
• Expensive changes in technology
• Poor quality control
• External factors

Question 8

Financial Function

Answer 8

• Capital is the first thing needed, either borrowed or own
• Statement of comprehensive income: Income and expenses
• Statement of financial position: Assets and liabilities

Question 9

Four main objectives of Financial Function

Answer 9

• Maximise profit: by keeping costs as low as possible and selling price high
• Increase profitability: Ensuring a ROI
• Ensure liquidity: ensure business can pay for all expenses
• Ensure solvency:ensure business has more assets than liabilities

Question 10

Credit pros and cons

Answer 10

Pros:
* Stock turnover increases
* Gains customer loyalty and good faith
* Business can increase selling price to accomodate for bad debt
* Credit stimulates the economy

Cons:
* Creates a delay in paying debtors
* No cash flow
* Risk of bad debt
* Credit facilities create greater demand and lead to demand pull-inflation

Question 11

Marketing Function

Answer 11

• 4 Ps of marketing
• Promotion: Publicity, Personal Sales, Sales promotion, Advertising
• Market research must be done to effectively identify/execute 4 Ps of Marketing

Question 12

Risks in Marketing

Answer 12

• Poor/insufficient market research
• Money spent on promotion does not generate ROI
• Design of product does not satisfy needs
• Price of product is too low/high

Question 13

Duties of Human Capital

Answer 13

• Must have good relationship with trade unions
• Hire staff to fill up vacancies
• Train staff accordingly to maximise productivity
• Recognise and reward hard work
• Staff retention via motivation
• Ensure job security and satisfaction
• Ensure business is aligned with labour legislation

Question 14

Labour Legislation

Answer 14

• Labour relations act(LRA)
• Occupational Health and Safety Act (OHS)
• Basic Conditions of Employment act( BCEA)
• Compensation of Occupational Injuries and Disease Act(COIDA)
• Unemployment Insurance Act

Question 15

Risks in Human Capital

Answer 15

• Lack of speficied skills
• Changed in legislation
• Unrealistic demands from trade unions
• Conflict
• Unmotivated staff

Question 16

Public relations

Answer 16

• All activities that influence the perception of the public
• Managing the continuous and long term relationship between the business and stakeholders
• Can only be successful if conducted with integrity and honesty
• Create and maintain favourable image of business
• Respond to issues that may influence business’s image or brand (either good or bad)

Question 17

Risks in Public Relations

Answer 17

• Bad publicity
• Managing social media
• Failing to create and maintain relationship with stakeholders
• Inappropriate response

Question 18

Administration Function

Answer 18

• Collects all data in the business
• Data will be processed into information
• Info is stored fro availability of manager
• Handles all paperwork
• Data collection must align with legislation

Question 19

Risks in Admin

Answer 19

• Not keeping documents by the prescribed time by legislation
• Incorrect, outdated or inaccurate records will lead to poor decision making
• Poor safekeeping of customer details (POPI)

Question 20

General management

Answer 20

• Plan
• Lead
• Organise
• Control
• Coordinate
• Communicate
• Delegate
• Discipline
• Decision making
• Motivating
• Formulate vision. mission, objectives

Question 21

Leadership styles

Answer 21

• Laissez-Faire
• Autocratic
• Democratic
• Transactional
• Situational