Chapter 1 - Business World Flashcards
Production is the …
Transformation of certain resources into products & services.
What is profit?
It is the reward for meeting the needs of people.
What is the prevailing economic system in South Africa?
Market System / economy
More precisely SA is a mixture between the market system & the socialist system. Currently we are leaning more towards a market system yet there is a high degree of government participation.
The informal sector contributes how much % to the economy?
20%
How does business serve the community indirectly?
- technological innovation
- research and development
- improvements to infrastructure
- also supporting through education, development of HR, the arts, conservation, sport ect.
What is the core of sustainability?
The business world and society both depend on and influence each other.
What does corporate social responsibility entail?
The voluntary compliance of business with practices that are sustainable.
What is at the heart of a business?
An entrepreneur or businessperson
What are the 5 themes for sustainability in business?
1) social responsibility
2) employment equity
3) business ethics
4) consumerism
5) environmental sustainability
What does social responsibility entail?
The provision of:
- a responsible and safe workplace
- housing
- concern for health issues
- environmental awareness
- involvement in community issues
- empowerment of disadvantaged
What is employment equity about?
The notion that the workforce at all levels should reflect the composition of the community
What is consumerism about?
Social force that protects consumers against unsafe products and malpractice by exerting moral & economic pressure on business.
Which Act protects consumers?
Consumer Protection Act No 68 of 2008 - signed into law in 2011
What is socialism?
It is a compromise between Pure Market and a Pure Command economy. The state owns principal (strategic) industries and resources such as transportation and communication. Here there is a similar limiting factor in creating wealth.
What should Government’s intervention in the economy be limited to?
- encourage economic growth and stability by managing recession and inflation
- effecting greater equity in the distribution of incomes
What is a PPP and give an example ?
Public Private Partnerships eg. Toll roads and Bombela Consortium
What are the advantages of a Market Economy?
- private initiative occurs
- there is economic freedom
What are the advantages of Socialism?
- there is the possibility of full employment
- state stabilises economic fluctuations
What are the advantages of a Command economy?
- the state can concentrate resources towards particular ends.
What are the disadvantages of a Market Economy?
- the environment is unstable
- cyclical fluctuations
- high social costs
What are the disadvantages of Socialism?
- little incentive in state organistions
- state organisastions can be unproductive
What are the disadvantages of a Command economy?
- low productivity
- low standard of living
- planning is difficult or impossible
In a market economy the emphasis are on 4 diff elements?
Human Activities
Production
Exchange
Profit
Name 6 reasons why South Africa is a favourable investment destination.
1) sound macro-economic policies
2) 100% ownership
3) large growing domestic market
4) modern transport and comm systems
5) rich natural resources
6) modern banking and financial services
Name 4 negative factors when considering SA as investment destination.
1) high rates of crime and corruption
2) extensive exchange controls
3) major skills shortages, especially in mng roles
4) high levels of unemployment
What are government organisations know as?
SOE’s - State Owned Enterprises (parastatals or public corporations)
Eg. Eskom, SAA
What is the purpose of Business Management?
To produce the most units of products / services at the lowest possible price.
There are 4 approaches to management methods. What are they?
- mechanist approach
- human-relations approach
- contingency approach
- strategic management
What is the mechanist approach about?
Was introduced at the turn of the century - emphisised mass production. Under management of engineers.
What is the human-relations approach about?
Originated in 1930’s - emphisised motivation of workers.
What is the contingency approach about?
1950’s - approach prescribed by the prevailing situation
What is the strategic approach about?
Most recent approach, makes special study of how management should act in an unstable environment
What is the task of business management?
To examine factors, methods and principles that enable a business to max profits and achieve its objectives.
