Contemporary socio-economic issues and business Flashcards
What are Low income levels and their impact?
•This can attributed to the difference in salaries between high and low salary earners
-many south africans live in poverty, which limits their buying power
-consumers opt to spend money on cheaper good and services
-low income earners mainly spend their money on basic goods and services, thus leading to lower profits for businesses
What is Inflation and it’s impact?
•The general increase of prices. Increases the fall in the purchasing value of money
•Raising inflation causes consumers to spend less because they have less disposable income
-business sales will decrease because of reduced consumer spending on goods and services
-business will have less money to spend on producing goods if the cost of the materials increases
-reduced sale figures could lead the businesses implementing cost saving models
What are social, cultural and demographic issues?
• The population of a country is characterised by age, gender ratios, and the racial composition of the people within the country. These are demographic factors that influence the composition of the population in the country.
• South Africa has a diverse population characterised by different race groups, religions and creeds.
• The way in which people live, work, produce and consume products can influence the market environment.
-The diverse nature of the population of the country impacts on businesses because consumers spend their money differently, and on goods and services that they deem important.
-Businesses need to try and accommodate the preferences of the diverse consumer body so that it could lead to an increase in sales for the business.
-Businesses are also encouraged to keep track of the latest trends in the different industries so that they can grow their market share.
What is Economic crime and its impact?
• Economic crime, also known as white collar crime, includes criminal activities such as: - fraud, -money laundering
-Theft of business profits through fraud and deception lead to a decrease in profits for the business.
-Businesses need to spend money on installing additional security features in offices or on their premises. This may result in additional costs.
-Cyber security poses a huge challenge, especially for businesses who advertise their products on the internet.
What is Ethical misconduct and its impact?
• Ethical misconduct happens inside a business and poses various threats and challenges.
• “Ethical misconduct” can be defined as any behaviour by employees of a business that is not consistent with the values of the business.
Types of ethical misconduct
-sexual harassment
-corruption
-mismanagement of funds
-Ethical misconduct refers to dishonest activities in which a person entrusted with authority in a business acts contrary to the interest of the business.
-An employee may abuse his or her position of trust for monetary gain.
-It negatively affects the image of the business and may result in disinvestment
or no new investments from new shareholders.
What is Population growth and its impact?
• Population growth refers to the percentage change in the population as a result of births, deaths and relocation to other countries.
• Population growth occurs when the number of individuals born in a year is
more than the number of people who die during the same year.
-Business growth may lead to the creation of jobs for some people.
-A high population growth may put strain on the natural resources of
the country.
-The economy may also be put under strain because of an increasing number of individuals who require support from the government.
What is Illiteracy and its impact?
• Illiteracy refers to people who unable to read or write.
• Many illiterate people find it difficult to secure formal employment because
most jobs require some reading and writing skills.
-Businesses may find it difficult to enter into written contracts with illiterate individuals.
-Little to no literacy skills puts people at a disadvantage when trying to find employment or when trying to learn a new skill.
-High levels of illiteracy in communities may force businesses to contribute
What are Lack of skills and their impact?
•Some fields, such as education, medicine, engineering and the finance industry, may experience severe skills shortages.
-The time spent on assisting unskilled workers can reduce productivity levels in the workplace
-This could lead to errors and having to repeat or correct a work task.
-Businesses may be required to increase the budget for skills development programme
What is the Unavailability of natural resources and its impact?
• •
Oil, coal, water and gold are examples of natural resources. The resources are becoming more and more scarce.
If natural resources usage is not controlled and monitored carefully such resources will cease to exist.
-Businesses will not be able to produce goods due to shortages of natural resources that are used as raw material.
-Oil and coal are examples of natural resources that are not renewable. Once depleted, they cannot be recovered.
-Businesses need to find alternative sources of natural resources to sustain the production of goods. However, this may lead to additional operational costs.
What is Inefficiency in the use of resources and its impact?
• Inefficiency in the use of resources occurs when the number of products produced is less than the maximum possible output of goods and services made from the resources.
• Unnecessary wastage leads to further depletion of the natural environment and threatens the future supply of natural resources.
-Businesses cannot produce at optimum levels if resources are not adequately used.
-Reduced production levels may lead to a drop in sales and profitability.
-Unused stock can become obsolete, increasing losses for businesses.
What is Dumping and its impact?
• Dumping occurs when a country or company exports a product at a price that is lower in the international importing market than the price in the exporter’s local market.
-Local businesses lose profits as they cannot compete with cheaper prices.
-They may also lose income and be forced to close their operations.
-This may lead to a decrease in local production and a loss of jobs.
What is Exhaustion of natural resources and it’s impact?
• This refers to the over-usage of natural resources, which could lead to depletion of these resources.
• Resource depletion occurs mostly in the farming, mining and fossil fuel industries.
-Exhaustion of natural resources can be devastating for businesses whose operations solely depend on their existence.
-Over time, the depletion of these resources will lead to an energy crisis, which government will then need to address.
-Businesses may be forced to substitute exhausted natural resources with chemicals and become a strong contributor to climate change. This can drive business costs higher when they need to find solutions to minimise emissions
What is Strikes and its impact?
•A strike can be defined as a joint action organised by employees or their union representatives -to stop working- and try to force the employers to accept their demands.
•Strike is a result of unresolved disputes for example, on salary increase between the employer and employees.
-Strike actions have a potential of jeopardising relations between the employer and employees.
-It can also affect teamwork in the workplace in instances where not all workers are in support of such industrial action.
-Businesses suffer financial losses due to low levels of productivity and consumer confidence is adversely affected.
