Topic 2 Business Functions

Question 1

Business Functions and The Activities of The Business
(10)

Answer 1

Question 2

The relationship between the business functions
(6)

Answer 2

The eight business functions depend on one another. We say that they are interrelated.

These functions work together as a team for the business to
be successful
.
* The general management function is directly linked to all seven business functions.

• The financial and administration functions are responsible for gathering, storing, and processing information and financial records.
• The purchasing, production, and marketing functions are responsible for the delivery of goods. The purchasing function buys raw material for the production function to process into finished goods.
• The marketing function promotes and sells the product that the production function has produced.
• The public relations function promotes the business and ensures that there is a good relationship between the business and the public/consumers.
• Skilled staff are sourced and appointed by the human resources function.

Question 3

**The differences between leadership and management **
(10)

Answer 3

Question 4

**The meaning of general management
**

Answer 4

The general management function sets the overall direction or strategy for the business.

This function leads, organises, and controls all the other functions.

It has three different levels – each with its own roles and responsibilities – which ensure that there is coordination among the seven different functions of the business.

Question 5

**The meaning of the levels of management **

Answer 5

The level of management determines a chain of command, the amount of authority, and status enjoyed by any managerial position.

Question 6

**Top level management **
(6)

Answer 6

• **Oversees **the activities of the other functions so that the business can achieve its objectives.
• Comprises of the CEO and directors.
• Develop long-term goals, strategic plans, and business policies.
• Determine the vision/mission/objectives/strategy of the business.
• Ensure that people work together to accomplish certain goals.
• Responsible for controlling and overseeing the entire
  organisation.

Example: CEO’s Directors, Partner, Owner

Question 7

Middle management
(7)

Answer 7

• Responsible for executing organisational plans,
  which comply with the company’s policies and lower management.
• Responsible for specific departments within the business.
• Take medium-term ** tactical** decisions.
• Execute the organisational plans in conformance with the companies policies.
• Responsible for achieving the goals and objectives set for specific departments.
• Implement plans made by top-level management.
• Implement the vision and plans of the top management.
• Work with managers in other departments and acquire resources needed in their departments.

Example: Departmental Managers: Marketing Manager, Financial Manager,

Question 8

Lower level management
(6)

Answer 8

• Act as role models for employees because they provide supervision, performance feedback, and so on.
• Focus on controlling and directing.
• Responsible for a high level of productivity, technical assistance, and motivating employees.
• Take short-term routine/operational decisions.
• **Implement ** instructions given by middle management
• Called the first management level because it is the first management level to which subordinates can be promoted.

Examples: Foreman, Supervisor, Team Leader

Question 9

Management Tasks
(5)

Answer 9

These are:
* planning
* organising
* leadership
* controlling
* risk management.

Question 10

MT1 **Planning **

Answer 10

**Planning **

• This task evaluates the existing activities and goals.
• This includes scheduled activities that will lead to
  achieving those goals.
• The top management formulates strategic plans.
• The middle management formulates tactical plans.
• It includes getting all the information you need
  for planning.
• The lower management **formulates operational plans. **
• Different plans are considered to achieve set goals.
• Backup plan/s are put in place if the chosen plan
  becomes impossible.
• The chosen plan is implemented.

Question 11

MT2 Organising

Answer 11

**Organising **

• This task brings resources together to achieve the set goals.
• Resources include materials, human and financial resources.
• Involves breaking a plan into actions.
• The activities are assigned/delegated to specific individuals.
• Training is included to ensure that the job/s are carried out successfully.
• The tasks are coordinated to keep resources moving efficiently toward set goals.
• Resources are prioritised to essential areas at any given time.
• Organise the jobs within specific functions or departments.

Question 12

MT3 Leadership
(Leading/Directing/Activating)

Answer 12

**Leading/Directing/Activating
**

• Letting staff know what needs to be done, and by when it needs to be done.
• The employees are motivated to contribute to the success of the business.
• Supervise staff while motivating teams through guided leadership communicated in clear ways.
• Inspire employees to carry out their tasks to the best of their abilities.
• Establish a productive working climate.
• Motivate employees to achieve set goals/targets.
• Guide employees in the right direction so that the business can achieve its goals.
• Motivate workers to use their skills and resources to their best ability.

Question 13

MT4 Controlling

Answer 13

**Controlling **

• Establish performance standards and ensure that those standards are met.
• Ensure that the business achieves its goals.
• Ensure activities are carried out as planned.
• Enable the business to take corrective measures if the objectives are not achieved.
• The risk can be identifi ed during control.
• Compares actual results with goals set by management
• Corrective measures must be taken if there is a difference between actual results and the goals sets out by the business.
• Continuous control ensures that the business runs smoothly.

Question 14

MT5 Risk Management

Answer 14

**Risk management **

• Identify possible risk by fi nding risk-bearing activities (that is, activities which could go wrong) within the organisation.
• Assist businesses to analyse each possible risk and how likely it is that the risk will happen.
• Evaluate the potential impact of risks in terms of fi nancial liability.
• Controls/monitors the risk by studying reports and trends in the environment so that measures can be taken to prevent it from happening.
• Handle the risk by determining what actions to take should the event happen using available resources and contingency plan and communication with stakeholders.

Question 15

**The meaning of the purchasing function **
(4)

Answer 15

The purchasing function is responsible for:
1. buying quality raw materials and services for the business.
2. It should continuously look for suitable, new, and better suppliers.
3. It should place orders with suppliers and follow up on them to ensure that the ordered products are delivered on time.
4. It should ensure that ordered goods are delivered at the agreed price, right quantities, and right quality.

Question 16

**Activities of the purchasing function **
(7)

Answer 16

• The purchasers should have expert knowledge of the product/s they need to buy and about the market in which they operate.
• The purchasing manager should find out the needs of other departments. * They look for suitable, new and better suppliers.
• They ensure that there is enough stock available for continuous production and sales.
• Make follow up on orders placed with suppliers.
• Ensure that ordered products are delivered on time.
• Keep the correct stock levels for stock on hand.
• Record the cost prices and selling prices of stock.

Question 17

The Purchasing Procedure
(8)

Answer 17

**Purchasing procedure
**
The following purchasing procedure should be followed:

1 Determine the need for the product/Requisition.

2 Determine the price of the product.

3 Select/Choose a suitable supplier.

4 Place an order.

5 Collect or receive the order.

6 Pay the supplier.

7 Distribute stock.

8 Complete the order.
*– The purchasing department ensures that all the correct documentation is in place and filed for future reference.
*

Question 18

**The importance of stock control **
(6)

Answer 18

• Enables businesses to determine the amount/value of stock.
• Businesses can check the cost and selling price of products.
• Ensures that there is enough stock to meet the normal demand of customers.
• Keeps the correct levels of stock on hand.
• Records the cost prices and selling prices of stock.
• Identifies theft in the business when the physical stock count is compared with the electronic stock control system.

Question 19

**Meaning of the public relations function **

Answer 19

The public relations function is responsible for keeping all
stakeholders of the business happy.

It ensures that there is good communication between the business and all its stakeholders.

Question 20

**The importance of public relations **

Answer 20

• Businesses get publicity for promotional events and
  information through media.
• News conferences may be called to release information,
  which will ensure the survival of the business.
• Employees may volunteer to spend time with people in need, for example, volunteering / orphanages / hospitals / schools, and so on.
• Businesses could sponsor community events.
• Businesses should produce Annual Reports in which they review the activities and achievements of the business.
• Brochures can also be used to distribute information about the company.

Question 21

The meaning of….

Organisational structure

Answer 21

• An organisational structure is a system that outlines how certain activities are directed to achieve the goals of an organisation.
• These activities can include rules, roles, and responsibilities.
• The organisational structure also determines how information flows between levels within the company.

Question 22

Factors that influence the organisation structure

Answer 22

• Size of the organisation
• Strategy
• Technology
• Resources

Question 23

**Types of organisational structure **

Answer 23

**1. Functional organisational structure **
* Employees get instructions from more than one manager.
* The plans to be executed determines who will be giving instructions. * This structure confuses employees because they report to more than one manager.

**2. Project organisational structure **
* Structured around project teams.
* It is a temporary structure because employees are drawn from different departments.
* Employees are then grouped to form a project team that will carry out a particular project.

**3. Matrix organisational structure **
* Structured around projects but employees remain in their departments.
* A project must be completed up to a certain point.
* The project is then passed on to the next team that will carry out the next phase of the project.

Question 24

Sources of Finance
(7)

Answer 24

**Bank loans **
* This is money borrowed from the bank, which will be repaid an agreed upon timeframe.
* Bank loans are usually used for long-term financing.
* The money is repaid with an interest.
* An entrepreneur who borrows money may attach his/her fixed asset as surety to the value of the loan.

**Bank overdraft **
* A bank overdraft is the short-term loan added onto the account of an entrepreneur/business.
* It is repaid with a set interest rate over an agreed upon timeframe.

**Asset-based loan **
* Money is lent to successful businesses that want to expand their operations. * The loan is used to purchase an asset and that asset belongs to the lender until it is fully paid off.
* If the money is not paid back, then the lender will take that asset.

**Grants **
* This is money provided by the government to small businesses that are in their development phase.
* The money does not have to be paid back if it benefits the community. * The government wants to see small developing businesses benefiting the community and the environment in some way.

**Receivable finance **
* This is a loan provided to businesses while they are waiting for payment of the goods/service provided to avoid a cash flow shortage.
* The loan is equal to the outstanding invoices that are due.

Angel funding
* This is money offered by wealthy entrepreneurs to other businesses in
exchange for a share in that business.
* This is usually used when a business in still in its start-up phase, and it carries a
high risk for the investor.

Venture capital
* This is money offered by individuals or organisations to start up or expand a business.
* This is done in exchange for a share in the business.
* The investor usually requires a management position, or to be a board member in the business.

Question 25

Types of Capital

**Differences between fixed and working capital
**

Answer 25

Question 26

**Differences between own and borrowed capital
**

Answer 26

Question 27

**Differences between cash and credit payments **

Answer 27

Question 28

Definition of The National Credit Act
NCA

Answer 28

The NCA was introduced to provide both credit providers and credit applicants with clear guidelines regarding their rights and responsibilities.

This act applies to all businesses that sell on credit.

Question 29

Advise businesses on the purpose of National Credit Act (NCA)

Answer 29

The Purpose of the National Credit Act (NCA)

1. Protect Consumers:

Avoid Over-Indebtedness: Ensures consumers don’t borrow more than they can afford by requiring lenders to check their ability to repay.
Clear Information: Provides clear details about loan costs, helping consumers make informed decisions.

2. Ensure Fairness:
Regulate Lenders: Sets rules for credit providers to prevent unfair practices and ensure fair treatment of borrowers.
Consumer Rights: Protects the rights of consumers in the credit market, like the right to apply for credit and to know why if credit is denied.

Conclusion
The NCA helps make borrowing and lending fair and transparent, protecting consumers and ensuring lenders act responsibly.

Question 30

Definition of The Consumer Protection Act
*CPA *

Answer 30

1. The CPA prevents consumer exploitation by businesses,
2. ensures the participation of previously disadvantaged individuals in the economy,
3. and applies to all businesses selling goods and services to consumers.

Question 31

Advise a business on the Consumer Protection Act
(CPA)

Answer 31

Advising a Business on the Consumer Protection Act (CPA)

1. Protects Consumer Rights:
Fair Treatment: Ensures consumers are treated fairly and not misled by false advertising or unfair practices.
Clear Information: Requires businesses to provide clear, accurate information about their products and services.

2. Product Safety and Quality:
Standards: Products must meet safety and quality standards, and businesses are responsible for ensuring they are safe for use.
Warranties and Repairs: Consumers have the right to warranties and repairs if products are defective.

3. Compliance and Penalties:
Legal Requirements: Businesses must comply with all provisions of the CPA to avoid legal consequences.
Penalties: Non-compliance can result in fines and damage to the business’s reputation.

Conclusion
The CPA ensures fair treatment, product safety, and effective complaint resolution, promoting consumer confidence and trust in the business.

Question 32

Ombudsman

Answer 32

Ombudsman: an official appointed to investigate individuals’ complaints against a company.

Question 33

National Consumer Commission
(NCC)

Answer 33

National Consumer Commission: promotes compliance with the Consumer Protection Act through **advocacy and enforcement. **

Advocacy- Getting support from another person to help you stand up for your rights.

Question 34

Consumer Tribunal

Answer 34

Consumer Tribunal: an independent entity who’s mandate is to hear and decide on cases involving consumers.