Business Studies Grade 12 | Study Guide | Notes | Past Exam Papers Revision 1

Various options are provided as possible answers to the following questions. Choose the answer

Question
This Act promotes comprehensive safety regulations for employers and employees in the workplace:
A. Skills Development Act (SDA), 1998 (Act 97 of 1998)
B. Consumer Protection Act (CPA), 2008 (Act 68 of 2008)
C. Labour Relations Act (LRA), 1995 (Act 66 of 1995)
D. Compensation for Occupational Injuries and Diseases Amendment Act, 1997 (Act 61 of 1997)

The correct answer is D. Compensation for Occupational Injuries and Diseases Amendment Act, 1997 (Act 61 of 1997).
This Act ensures that employees who are injured or contract diseases at work receive compensation. It promotes safety in the workplace by encouraging employers to implement safety measures and prevent occupational injuries and illnesses.

Question
Sue Stationery applied the … diversification strategy when they added cleaning materials to their product range that could appeal to new customers.
A. Concentric
B. Horizontal
C. Conglomerate
D. Vertical

The correct answer is C. Conglomerate.
A conglomerate diversification strategy involves expanding into products or markets that are entirely different from the company’s current offerings. By adding cleaning materials, Sue Stationery entered a different industry to attract new customers, which fits this strategy.

Question
The cashiers at Sunshine Supermarket lack the skill of how to operate the new cash registers. This is an example of a/an … in a SWOT analysis.
A. Strength
B. Weakness
C. Opportunity
D. Threat

The correct answer is B. Weakness.
A weakness in a SWOT analysis refers to internal limitations that hinder a business’s performance. In this case, the lack of skills among cashiers is an internal issue that negatively affects operations, making it a clear weakness.

Question
Businesses may use … as a source of internal recruitment to advertise available vacancies.
A. Word of mouth
B. Professional associations
C. Employment agencies
D. Networking

The correct answer is A. Word of mouth.
Word of mouth is an internal recruitment method where existing employees are informed of job vacancies and encouraged to refer suitable candidates. It is often cost-effective and promotes the hiring of people who fit the company culture.

Question
KB Manufacturers have regular control checks and procedures in place to prevent product defects. This refers to … as a total quality management element.
A. Adequate financing and capacity
B. Continuous skills development
C. Monitoring and evaluation of quality processes
D. Total client satisfaction

The correct answer is C. Monitoring and evaluation of quality processes.
This element of Total Quality Management involves continuously checking and refining production and operational processes to ensure that standards are met and product defects are avoided.

Complete the following statements by using the word(s) provided in the list below

List of words

medical aid; tertiary; National Credit Regulator; economic; management; secondary; social; performance; Unemployment Insurance; National Credit Act

Question
Express Bank must be registered with the … in order for them to offer loans to clients.

The correct word is: National Credit Regulator
The National Credit Regulator (NCR) is the authority responsible for monitoring and regulating the credit market in South Africa. It ensures that credit providers, like Express Bank, comply with the National Credit Act to protect consumers from unethical lending practices.

Question
Jenny Wholesalers operate in the … sector as they specialise in distributing products.

The correct word is: tertiary
The tertiary sector involves services rather than goods, including distribution and retail. Since Jenny Wholesalers are involved in product distribution—a service—they belong to the tertiary sector.

Question
A challenge of the PESTLE analysis that affects businesses’ profitability due to high interest rates, is known as the … factor.

The correct word is: economic
The economic factor in a PESTLE analysis relates to issues such as inflation, interest rates, and economic growth. High interest rates can reduce consumer spending and increase borrowing costs, directly impacting business profitability.

Question
The … fund is a compulsory benefit that offers short-term financial assistance to workers who lose their jobs due to illness.

The correct word is: Unemployment Insurance
The Unemployment Insurance Fund (UIF) provides temporary financial relief to workers who are unemployed, sick, or on maternity leave. It is a compulsory contribution made by both employers and employees in South Africa.

Question
Shesha Constructions implements quality … by using tools and techniques to improve the quality of their products.

The correct word is: management
Quality management refers to the coordinated activities used to direct and control an organization’s performance in relation to quality. Shesha Constructions uses quality management systems to ensure their products meet the desired standards.

Question
Choose a description from COLUMN B that matches a term in COLUMN A.

Learnership

The correct answer is: E. Theoretical and practical training opportunities leading to a recognised qualification
A learnership provides structured learning combined with hands-on work experience, allowing individuals to gain both knowledge and skills required for a specific occupation, leading to a formal qualification.

Market development

The correct answer is: G. Aims at selling existing products in a new market
Market development is a growth strategy where a business attempts to increase sales by entering new geographical or demographic markets with its current product offerings.

Recruitment

The correct answer is: H. Finds potential candidates for available vacancies
Recruitment is the process of identifying and attracting individuals who are suitable for specific job roles within an organisation to ensure that the right talent is brought into the company.

Total quality management

The correct answer is: A. Ensures full involvement of all employees to satisfy customers’ needs
Total Quality Management (TQM) is a company-wide approach that involves every employee in continuously improving processes, products, and services to meet or exceed customer expectations.

Public relations function

The correct answer is: B. Provides regular press releases to the community
The public relations function focuses on managing the business’s image and reputation by communicating effectively with the public and media, often through press releases and community updates.

BUSINESS ENVIRONMENTS

Question

Name any consumer rights as stipulated in the Consumer Protection Act (CPA), 2008 (Act 68 of 2008).

The Consumer Protection Act (CPA), 2008 (Act 68 of 2008), was introduced in South Africa to protect consumers from unfair business practices and to promote transparency, fairness, and accountability in the marketplace. Below are some of the key consumer rights outlined in the CPA

Right to Choose

Consumers have the right to freely select from a range of products or services without being forced or manipulated into a particular purchase. This includes protection against practices such as tied selling, where a consumer is required to buy additional goods or services as a condition for buying the one they actually want. It empowers consumers to make decisions that suit their needs and financial situations.

Example: A customer shopping for a cellphone should not be forced to buy a specific brand of accessories along with the phone to complete the transaction.

Right to Privacy

This right ensures that consumers’ personal information is protected and not shared without their consent. Businesses must handle customer data responsibly and must not use it for unsolicited marketing unless the consumer has agreed to it. It is aimed at reducing spam and unwanted contact from businesses.

Example: A clothing store cannot send promotional SMS messages to a customer unless the customer has opted in to receive marketing content.

Right to Fair and Honest Dealings

Consumers are protected from misleading, deceptive, or fraudulent conduct by suppliers. This includes false advertising, hidden costs, or being misled about the nature or quality of a product. The law ensures that transactions are conducted with integrity and that consumers are not taken advantage of.

Example: An electronics retailer must not advertise a laptop as having 1TB storage when it only has 512GB.

Right to Disclosure and Information

Consumers have the right to receive clear, understandable, and accurate information about the goods or services they are purchasing. This includes product labels, warranties, pricing, and return policies. It enables informed decision-making and prevents misunderstandings or exploitation.

Example: A bottle of medication must clearly state the dosage, ingredients, and expiration date on the label.

Right to Fair and Responsible Marketing

Marketing and advertising must be truthful, not misleading, and must clearly state any terms or limitations. Consumers must not be misled by exaggerated claims or hidden costs in advertising. This protects consumers from being tricked into purchases under false pretences.

Example: A promotion stating “Buy one, get one free” must deliver on that promise without hidden conditions like minimum spend.

Right to Fair Value, Good Quality and Safety

Products and services must meet reasonable quality standards and be safe for use. Consumers are entitled to goods that are durable, functional, and fit for purpose. If goods are defective, the consumer has the right to return, repair, or replacement within a reasonable period.

Example: A washing machine that stops working properly within a few weeks of purchase must be repaired or replaced under warranty.

Right to Accountability by Suppliers

Suppliers must take responsibility for their products and services, especially if they are defective, hazardous, or cause harm. They must honour guarantees, warranties, and promises made during the sale process. This builds trust and ensures ethical business practices.

Example: If a power tool causes injury due to a design flaw, the supplier is liable for damages and must take corrective action.

Right to Fair, Just and Reasonable Terms and Conditions

Contracts and agreements must be written in plain language, and the terms must not be excessively one-sided in favour of the business. Hidden clauses or unfair penalties are prohibited. Consumers must be able to understand and accept the terms without being misled.

Example: A cellphone contract that imposes a heavy cancellation fee even if the consumer cancels due to poor service may be challenged under this right.

Right to Equality in the Consumer Market

Consumers must be treated equally and fairly, regardless of their race, gender, socio-economic status, or geographic location. Discrimination in pricing, service, or access to goods is prohibited under the CPA. Every consumer deserves the same level of service and access to quality products.

Example: A retailer cannot charge customers from rural areas higher prices than those from urban areas for the same product.

Question

Outline the advantages of diversification strategies

Diversification strategies are essential tools used by businesses to expand their operations, improve sustainability, and remain competitive in ever-changing markets. By branching into new products, industries, or markets, businesses can minimize risks and unlock new opportunities for growth. Businesses that adopt diversification strategies enjoy the following advantages

Increases Sales and Business Growth

Diversification gives a business access to new customers and new income streams by offering more products or entering different markets. When a business is no longer dependent on one line of products, it can sell more to different groups of people with different needs. This often leads to increased revenue and helps the company expand its size, reach, and reputation.

Example: Shoprite, originally a food retailer, expanded into services like Shoprite Money Market, airtime sales, and household appliances. These extra offerings attract more customers and increase overall sales, helping the business grow faster.

Improves the Business Brand and Image

A company that successfully diversifies is often seen as innovative, stable, and trustworthy. When customers see that a business can provide quality across different products or services, they are more likely to support it. This strengthens the brand and creates a positive image in the market, helping to attract even more customers and business partnerships.

Example: Woolworths is not only known for food but also for clothing, beauty products, and homeware. By consistently offering high-quality products in multiple areas, Woolworths has built a premium brand image that customers trust.

Reduces the Risk of Relying on One Product

If a business relies on only one product or service, it becomes vulnerable. For example, if that product becomes outdated or demand drops, the whole business could fail. Diversification spreads this risk. Even if one product performs poorly, other products can still keep the business financially healthy.

Example: MTN used to rely mainly on airtime sales. Today, the company has diversified into mobile banking, data bundles, music streaming, and even enterprise IT services. If one area faces challenges, other areas can provide income.

Improves Technology Through Product Changes

When a business adds new products, it often requires new technology to produce or support those offerings. This investment in technology improves the business’s overall capabilities, leading to better products, improved customer experiences, and faster service delivery.

Example: Discovery started as a health insurance provider but diversified into banking, life insurance, and wellness programmes. To support these services, Discovery developed advanced digital platforms and mobile apps, enhancing the technological edge of the business.

Creates Balance During Economic Fluctuations

Economic downturns or changes in consumer behaviour can hurt a business that depends on one industry. A diversified company, however, can maintain balance by earning income from different sectors. When one sector is down, others may still perform well, keeping the business stable.

Example: Bidvest is involved in food services, logistics, financial services, and more. During an economic slump in one sector, revenue from another helps balance the company’s overall income, reducing the risk of major losses.

Produces More with Less Resources

By using the same factory, equipment, or staff to produce multiple products, businesses can reduce costs and become more efficient. This is called economies of scale—doing more with the same amount of input, which improves profits and productivity.

Example: Tiger Brands produces products like Jungle Oats, Tastic Rice, and All Gold tomato sauce using shared facilities and resources. This allows the company to save on production costs and still meet diverse customer demands.

Meets More Customer Needs to Stay Competitive

When a business offers a wider variety of products or services, it can better meet the changing needs of its customers. This allows the company to stand out from its competitors and keep existing customers while attracting new ones.

Example: Capitec Bank expanded from basic banking services to include loans, funeral cover, and digital banking. By meeting more customer needs under one brand, Capitec stays ahead of competitors and retains customer loyalty.

Helps the Business Stay Relevant

In a rapidly changing business environment, customer preferences, technology, and market trends shift constantly. Businesses that diversify are more adaptable and able to stay functional even as the market evolves. This helps them remain successful in the long run.

Example: Clicks has gone from being a pharmacy to also selling beauty products, vitamins, and personal care services, while also investing in online shopping platforms. This diversification helps them stay relevant in both physical and digital retail spaces.

Encourages Innovation and Long-Term Success

Entering new markets or developing new products challenges a business to think differently and innovate. Innovation leads to better solutions, improved efficiency, and stronger long-term performance, ensuring the business stays ahead of competitors.

Example: Naspers transitioned from being a print media company to becoming one of the largest technology investors globally. By investing in platforms like Takealot, Mr D, and PayU, Naspers has reinvented itself through innovation, ensuring long-term growth and global relevance.

Religion Studies Grade 12 | Paper 1 Study Guide & Exam Prep

Business Studies Grade 12 Term 2 Revision

Read the scenario below and answer the questions that follow.

RAINBOW FURNITURE MANUFACTURERS (RFM)

Rainbow Furniture Manufacturers took over Woody Furniture Manufacturers
to reduce competition in the market. The management of RFM evaluate their strategies regularly.

Question

Identify the type of integration strategy in the scenario above.

The type of integration strategy in the scenario is Horizontal Integration.

Horizontal integration happens when a business takes over another business that operates at the same level in the same industry. In this scenario, Rainbow Furniture Manufacturers (RFM) took over Woody Furniture Manufacturers, which also made furniture. This means RFM has eliminated a competitor from the market, which is a clear example of horizontal integration.

The advantage of this strategy is that it allows RFM to grow its market share and reduce competition. It can also help lower costs through shared resources, such as using the same supply chains or distribution networks. RFM may also gain access to Woody’s customers and improve brand strength.

By using horizontal integration, businesses like RFM can become more powerful in their industry and more stable, especially during tough economic times, because they have a larger market base and fewer competitors.

Question

Discuss the steps in strategy evaluation.

In business, a strategy is a long-term plan designed to achieve specific goals, and its success largely determines the future of an organization. However, no strategy is perfect from the start, and businesses must regularly assess their strategies to ensure they are on the right path. This process is known as strategy evaluation, and it involves the following series of steps aimed at identifying whether the strategy is delivering the desired results, and if not, what changes need to be made.

Examine the Underlying Basis of a Business Strategy

This step involves reviewing the reasons why the strategy was chosen in the first place. These reasons may include market trends, customer needs, competitor behaviour, or the business’s own strengths and weaknesses. Over time, these factors may change. So, it is important to evaluate whether the strategy is still based on current and accurate information. If the foundation of the strategy is outdated, the business may be following a plan that no longer suits the current situation.

Example: Suppose Pick n Pay’s strategy was based on consumers preferring to shop in physical stores, but now more customers prefer online shopping. The company must reassess whether its original focus is still relevant or if it needs to shift more towards e-commerce.

Look Forward and Backward into the Implementation Process

Businesses must reflect on how the strategy was implemented in the past (backward view) and anticipate future developments (forward view). The backward look helps to understand what was done correctly or where mistakes happened. The forward look ensures that the strategy is still suitable for future changes and prepares the business for upcoming challenges or opportunities. This dual view allows the company to strengthen weak areas and build on strengths.

Example: If Standard Bank introduced a new digital banking platform, they would look backward to assess issues like technical failures or customer complaints and look forward to anticipate upcoming features or competition from digital-only banks.

Compare Expected Performance with Actual Performance

Every strategy is created with goals, like increasing profits, gaining more customers, or improving efficiency. In this step, the business compares what it planned to achieve (expected performance) with what actually happened (actual performance). This shows whether the strategy is working or not. If the results are far below expectations, the business must investigate further.

Example: If Shoprite expected to increase profits by 10% after launching a low-cost food range, but only achieved 4%, this gap shows the strategy did not perform as expected.

Determine the Reasons for Deviations and Analyse These Reasons

Once the business sees a difference between expected and actual results (a deviation), it must find out why it happened. This could be due to internal reasons (like poor staff training or bad planning) or external reasons (like a new competitor or inflation). A full analysis helps the business understand the root causes so they can be fixed properly.

Example: If Dis-Chem expected more customers from a new store in a mall but saw low sales, the cause might be high prices, poor store location, or better competitors nearby. Analysing these issues helps the business learn from its mistakes.

Take Corrective Action so that Deviations may be Corrected

After identifying the problems, the business must act to fix them. This may involve retraining staff, improving technology, changing suppliers, or even revising the strategy. Corrective action is necessary to bring the business back on track and ensure future success.

Example: If Checkers found that customers were leaving due to long queues at checkout, they could introduce more self-service tills or hire more cashiers to solve the issue.

Set Specific Dates for Control and Follow-Up

Setting clear dates for reviewing progress helps ensure the business stays focused and accountable. Managers can check at regular intervals if the strategy is on track and make changes quickly if needed. This prevents small issues from growing into big problems.

Example: Woolworths may set quarterly (every 3 months) meetings to review the progress of its sustainability strategy, such as reducing plastic packaging or food waste.

Draw Up a Table of the Advantages and Disadvantages of a Strategy

Listing the benefits and drawbacks of a strategy helps the business evaluate whether it is still worth continuing. This table helps managers see both the strengths and the risks, which improves decision-making. It also avoids emotional or rushed decisions.

Example: Vodacom might draw up a table showing the benefits (market leadership, higher profits) and disadvantages (very high costs, slower rollout) of launching 5G services across rural areas.

Decide on the Desired Outcome that will Result in the Achievement of Business Goals

A business must be clear on what exactly it wants to achieve with the strategy. This could be a specific sales target, market position, or customer satisfaction level. Having a clear and measurable outcome helps focus the business and guides all actions towards the same goal.

Example: If NetFlorist wants to grow online orders by 25% in six months, it can use this as the desired outcome to measure the success of new advertising or product offerings.

Consider the Impact of the Strategic Implementation in the Internal/External Environments of the Business

Example: When Discovery Bank launched digital banking, it had to ensure its staff were trained (internal) and that customers could access and use the system easily while also staying compliant with financial regulations (external).

A strategy must work well within the business (internal environment), such as among employees, processes, and finances, and also outside the business (external environment), such as among customers, competitors, and government rules. Ignoring either side can lead to strategy failure.

Question

Explain how businesses could apply the following forces of Porter’s Five Forces model to analyse their position in the market environment in regard to

1. Power of buyers

The Power of Buyers is one of the key forces in Michael Porter’s Five Forces model, and it refers to the influence that buyers or customers have on a business. Understanding this force is essential for businesses to assess how much control customers have over their prices and terms. By applying this concept, as indicated below, businesses can evaluate their position in the market and make strategic decisions to maintain a competitive edge.

Assessing the Ability to Drive Prices Down
One of the first steps in analyzing the power of buyers is to assess how easy it is for buyers to drive prices down. When buyers have the ability to influence the price they pay for a product or service, businesses may need to lower their prices to remain competitive. This often happens in markets where there are many suppliers offering similar products, giving buyers a wider choice and the power to demand better deals.
For instance, if a business operates in an industry with many competitors and little differentiation, buyers can easily compare prices and may push businesses to lower their prices to attract them.

Bulk Buying and Bargaining Power
Another important factor is when buyers purchase in large quantities. Large buyers, such as wholesalers or retailers, can often bargain for better prices. The more products they buy, the greater their leverage in negotiating lower prices. This is particularly evident in industries such as manufacturing, where bulk orders from large retailers or distributors may lead businesses to offer discounts to secure high-volume sales.
For example, large supermarket chains often have significant bargaining power with food suppliers because they purchase goods in bulk. As a result, suppliers may lower their prices or offer other terms to maintain the business relationship.

Market Research and Understanding Buyer Needs
Businesses can strengthen their position by conducting thorough market research to understand the preferences, behavior, and needs of their buyers. By gathering this information, companies can anticipate shifts in demand, tailor their offerings, and adjust pricing strategies accordingly. The better the understanding of buyers, the more effectively businesses can respond to changing market conditions and retain customer loyalty.
For example, a mobile phone manufacturer might research consumer preferences for new features and adjust their product designs and pricing to better align with the demands of their target market.

Evaluating the Number of Buyers and Switching Costs
Another critical factor is the number of buyers a business has and the importance of each buyer. If a business relies on a few key customers for a significant portion of its revenue, these buyers may have more bargaining power to negotiate better terms. Additionally, if the cost of switching to another product is low, buyers can easily move to competitors, further increasing their power.
For example, if a small business only has a handful of clients who contribute to most of its revenue, these clients may demand lower prices or more favorable terms due to their significant purchasing power.

Influence of Powerful Buyers
In markets where a few powerful buyers dominate, these buyers can dictate the terms of sale to businesses. Large corporations or government agencies with significant purchasing power can force suppliers to lower prices or provide additional services, reducing the supplier’s profitability.
For example, multinational companies like Walmart or Amazon have significant power over their suppliers because of the large volume of goods they purchase, and they can demand lower prices or better terms.

Buyers Who Can Do Without the Product
Lastly, buyers who can do without a business’s product or service have more power in determining prices. If a product is non-essential or easily substituted by other options, buyers are less likely to pay high prices, and businesses must lower their prices to stay competitive.
For example, if a company sells a type of software that has several free or low-cost alternatives, buyers can easily switch to other options, leaving the company with little ability to control prices.

By applying these factors, businesses can analyze their position in the market and adjust their strategies accordingly. Understanding the power of buyers helps businesses make informed decisions regarding pricing, product offerings, and customer relationship management to remain competitive.

2. Threat of Substitution/Substitutes

The Threat of Substitution is another key force in Michael Porter’s Five Forces model, which focuses on the availability of alternative products or services that can replace a business’s offerings. Substitutes can significantly impact a business’s position in the market, as they provide customers with alternatives, potentially reducing demand for the original product. Businesses need to assess the threat of substitutes to understand how much competition they face from alternative products and how it affects their pricing and sales strategies.

Impact of Easily Substituted Products
When a business’s products can be easily substituted with alternatives, it weakens its position in the market. If customers can quickly switch to a different product without significant cost or inconvenience, the business faces increased competition. This makes it harder to maintain market share and command premium prices.
For example, if a business sells bottled water, customers might easily switch to tap water or filtered water systems at home, which are cheaper and more convenient. This reduces the business’s ability to control prices or retain customer loyalty.

Assessing Substitutes with Improved Products or Lower Prices
It’s important for businesses to establish whether the sellers of substitute products have improved their offerings or are selling lower-quality products at cheaper prices. If substitute products have been enhanced or offered at lower prices, the threat increases, as consumers are more likely to choose these alternatives.
For instance, if a company selling traditional cable television services faces competition from streaming platforms like Netflix or YouTube, and these substitutes offer higher-quality content at lower prices, the business may struggle to maintain its customer base.

Protection from Substitutes through Unique Products
Businesses that sell unique or highly differentiated products are less likely to be threatened by substitutes. If a business has a strong brand identity, innovation, or proprietary technology that cannot be easily copied, customers are less likely to switch to substitute products. This allows the business to maintain a competitive advantage and reduce the impact of substitutes.
An example of this is Apple’s iPhone. Despite the presence of numerous smartphone alternatives, Apple’s unique design, brand loyalty, and software ecosystem help shield it from the threat of substitutes.

Analyzing Customer Use of Substitutes
Businesses should assess whether customers are already using substitute products or services and determine the reasons for this shift. Understanding why customers prefer substitutes (such as price, convenience, or better features) can help businesses make necessary adjustments to their offerings, such as improving quality or reducing costs.
For example, if a business that manufactures traditional cameras notices that customers are shifting to smartphones with advanced cameras, it may decide to innovate by developing new features that appeal to the changing preferences of customers.

By applying the concept of the threat of substitutes, businesses can evaluate their market position and make strategic decisions to either defend their products against substitutes or adapt to changing customer preferences. Recognizing the influence of substitutes helps businesses stay competitive by adjusting their pricing, marketing, and product development strategies.

Question

Discuss ways in which businesses can comply with the Employment Equity Act (EEA), 1998 (Act 55 of 1998).

The Employment Equity Act (EEA), 1998, was introduced to promote fairness and diversity in the workplace by eliminating discrimination based on race, gender, disability, and other factors. To comply with the Act, businesses must take the following proactive steps to create an inclusive and equitable environment.

Businesses should guard against discriminatory appointments in their hiring practices. This involves adopting fair and transparent recruitment processes that prioritize qualifications, experience, and skills over personal preferences such as race or gender. By ensuring that appointments are made based on merit, businesses can create a more diverse and equitable workforce and avoid violating the Employment Equity Act. For instance, businesses must ensure that their hiring managers are trained to recognize and prevent unconscious bias during recruitment. In line with this, businesses should regularly assess the racial composition of all employees, including senior management. This assessment helps businesses understand if certain racial groups are underrepresented in key areas. For example, if a company finds that its senior management team lacks representation from a particular demographic group, it can develop targeted strategies to address this gap, such as focusing on mentorship or development programs aimed at nurturing leadership talent from underrepresented groups.

Additionally, businesses need to ensure that there is equal representation of all racial groups at every level of employment. It’s important to set clear goals for diversity across all positions, ensuring that each level of the organization reflects the diverse demographics of the wider community. For example, a company could aim to ensure that at least 50% of middle management positions are filled by individuals from previously disadvantaged backgrounds, ensuring equal access to opportunities for career advancement. To further support fairness and transparency, businesses should clearly define the appointment process. This means outlining the qualifications and selection criteria for each position, as well as providing a transparent and structured process for hiring and promotion. For instance, businesses could publish their recruitment policies to employees to ensure they are aware of the steps involved in hiring and the qualifications needed for advancement. This clarity helps remove any potential for bias or confusion.

Moreover, businesses must ensure that diversity and inclusivity are achieved in the workplace. Achieving diversity goes beyond simply meeting quotas – it’s about creating an environment where all employees feel valued and included. For example, a company can offer diversity training sessions and develop employee resource groups to foster inclusion. By creating a culture of respect and understanding, businesses can retain employees from diverse backgrounds and foster innovation. A critical part of complying with the Employment Equity Act is preparing an employment equity plan. This plan should be developed in consultation with employees, ensuring that everyone has a say in the policies and strategies that will shape the workplace’s diversity. A company could conduct surveys or focus groups to gather feedback on how to improve inclusivity and address concerns about diversity.

The employment equity plan must also include specific strategies on how affirmative action will be implemented. Affirmative action aims to provide targeted support and opportunities to underrepresented groups in order to promote equal representation. For example, a company could introduce a leadership development program that focuses on upskilling employees from designated groups, helping them advance into senior roles. Businesses must implement the employment equity plan once it has been developed. This involves taking concrete actions based on the plan’s strategies, ensuring that the objectives for diversity and inclusion are being met. For example, the company could start recruiting more employees from underrepresented groups or provide specific support services to employees from disadvantaged backgrounds.

Further, businesses need to ensure that affirmative action measures are actively working to redress disadvantages experienced by designated groups. These measures may include creating mentorship opportunities, offering scholarships or training programs, and actively promoting from within underrepresented groups. By offering such initiatives, businesses can provide tangible support to those who have faced historical barriers to employment and advancement. Once the employment equity plan has been developed and implemented, businesses are required to submit it to the Department of Labour. This ensures that the government can monitor the company’s progress and ensure compliance with the Employment Equity Act. For example, a company could submit an annual report to the Department of Labour that outlines its employment equity goals, actions taken, and the results achieved so far.

It is also crucial for businesses to assign one or more senior managers to oversee the implementation and monitoring of the employment equity plan. These individuals are responsible for ensuring that the plan is executed effectively and that the business stays on track to meet its diversity goals. For instance, a company might assign a Diversity and Inclusion Officer or HR Manager to track the success of diversity initiatives and report on progress regularly. Furthermore, businesses must eliminate barriers that have an adverse impact on designated groups. These barriers could include outdated recruitment practices, biased interview processes, or workplace cultures that exclude certain groups. For example, a company could assess its hiring process to ensure it is inclusive and remove any practices that may unintentionally disadvantage certain groups, such as requiring unnecessary qualifications that may not be relevant to the role.

Regular reporting to the Department of Labour is also a requirement. Businesses must report on the progress they are making in implementing the employment equity plan, detailing any adjustments made and how they have impacted their workforce composition. For example, a company could provide a quarterly report showing how many people from designated groups have been promoted or hired, highlighting their commitment to meeting the goals outlined in the plan. Finally, businesses must display a summary of the Employment Equity Act where employees can easily access it. This allows employees to understand their rights and the company’s obligations under the Act. For instance, a company could place the summary in common areas or make it available on the company’s intranet, ensuring that all employees are informed and can refer to the document as needed.

In conclusion, complying with the Employment Equity Act requires businesses to take a proactive and systematic approach. By preparing an employment equity plan, implementing affirmative action measures, monitoring progress, and ensuring that all employees are informed, businesses not only comply with the law but also create a more inclusive and diverse workplace. This fosters a positive work environment where everyone has equal opportunities to succeed.

Read the scenario below and answer the questions that follow.

KATLEGO LOGISTICS (KL)
Katlego Logistics complies with the Labour Relations Act (LRA), 1995 (Act 66 of 1995) by observing the rights of employees in the workplace. Employees take part in legal strikes without any fear of victimisation. They are also locked out by KL to prevent damages to the property. The trade union representatives are given time off to attend to their respective duties.

Question

Quote the rights of employees in terms of the Labour Relations Act from the scenario above.

The Labour Relations Act protects the rights of employees and promotes fair labour practices in the workplace. It ensures that employees are treated equally and given fair opportunities regardless of their background. The following are key rights of employees as outlined in the Act, based on the scenario provided.

Right to Participate in Legal Strikes
Employees have the right to take part in legal strikes without any fear of victimisation. This means that when workers participate in lawful strikes, they are protected by the law and cannot be fired, demoted, or mistreated by their employer for exercising this right. It ensures fairness in the workplace and gives employees a voice when negotiating better working conditions.

Right to Time Off for Union Duties
Trade union representatives are entitled to be given time off to attend to their respective duties. This right supports proper representation of workers’ interests, as it allows union leaders to engage in union activities, attend meetings, or negotiate with management during working hours without being penalised.

Question

Explain other rights of employees in terms of the LRA.

In addition to the rights already mentioned, the Labour Relations Act (LRA) provides employees with the following other important rights.

Freedom to Join a Trade Union
Employees have the right to join a trade union of their choice. This right ensures that workers can freely associate and organise themselves to protect their interests, such as negotiating better wages or working conditions. No employer may force an employee to join or prevent them from joining a union.

Right to Refer Disputes to the CCMA
If there are unresolved workplace disputes, employees may refer them to the Commission for Conciliation, Mediation and Arbitration (CCMA). This right provides a neutral platform for resolving conflicts fairly, whether the issue involves unfair dismissal, discrimination, or changes in working conditions.

Right to Appeal to the Labour Court
Should the CCMA fail to resolve a dispute satisfactorily, employees may refer the matter to the Labour Court on appeal. This step gives employees a legal route to further challenge unfair labour practices and ensures their concerns are heard at a higher legal level.

Representation in Hearings
Employees may request a trade union representative to assist or represent them during grievance or disciplinary hearings. This right gives workers support and helps to ensure that their side is fairly presented during formal procedures that may affect their employment.

Establishment of a Workplace Forum
In businesses with 100 or more employees, workers have the right to establish a workplace forum. These forums give employees a structured way to participate in discussions with management on workplace issues, such as health and safety, retrenchments, and work procedures.

Question

Advise businesses on the strategic management process.

The strategic management process is a step-by-step approach that helps businesses set clear goals, assess their internal and external environments, and make informed decisions to ensure long-term success. This process allows companies to remain competitive, adapt to change, and respond effectively to challenges in their industry. By following the strategic management steps below, businesses can align their resources and actions with their vision and mission, ultimately improving performance and sustainability.

1. Develop a Clear Vision, Mission Statement, and Measurable Objectives

To create a strategic management plan, businesses must first have a clear and well-defined vision. The vision represents the long-term aspirations of the company, guiding all future decisions. The mission statement explains the company’s purpose, defining the services or products it provides, and who it serves. In addition to the vision and mission, measurable and realistic objectives must be set. These objectives will allow the company to track progress and ensure that it is on the right path to achieving its long-term vision.
Example: Take Shoprite, a leading supermarket chain in South Africa. Their vision is “to be the leading retailer in Africa,” and their mission focuses on providing high-quality and affordable products to customers across the continent. Shoprite’s measurable objectives include increasing the number of stores in South Africa by 5% annually and expanding its footprint in Sub-Saharan Africa. These measurable goals help Shoprite track its progress towards becoming the continent’s retail leader.

2. Conduct Environmental Scanning or Situational Analysis

Environmental scanning involves assessing the external and internal environments to identify opportunities, threats, strengths, and weaknesses. This analysis helps businesses understand the factors that may influence their success or failure. External factors could include market conditions, competition, regulatory changes, and social trends, while internal factors involve the company’s resources, capabilities, and culture. This step provides a comprehensive view of the business’s situation, allowing the management team to make informed decisions.
Example: Discovery Health, a South African health insurance company, might conduct environmental scanning to assess shifts in healthcare regulations, such as the National Health Insurance (NHI) bill. They would also analyze the growing demand for affordable healthcare, especially in rural areas. Externally, they assess competitors like Momentum Health and new entrants like Uber Health offering healthcare services. Internally, Discovery evaluates its strong brand loyalty and technological infrastructure to determine if they can adapt quickly to new market demands.

3. Utilize Environmental Scanning Tools

To make the environmental scanning process more systematic and effective, businesses often use specific tools like SWOT analysis, Porter’s Five Forces, PESTLE analysis, and industrial analysis. SWOT analysis helps in understanding the internal strengths and weaknesses of the company while identifying external opportunities and threats. Porter’s Five Forces analyzes the competitiveness of the industry by examining factors like the threat of new entrants, buyer and supplier power, and the threat of substitutes. PESTLE analysis evaluates the broader macro-environment, considering political, economic, social, technological, legal, and environmental factors.
Example: MTN South Africa might use SWOT analysis to identify internal strengths, such as its widespread network coverage and strong brand recognition in South Africa. It could also recognize weaknesses like network congestion in rural areas. By applying Porter’s Five Forces, MTN might determine that while the threat of new entrants is moderate due to high infrastructure costs, competition from Vodacom and Cell C is strong, which pressures pricing strategies. PESTLE analysis might reveal political risks related to government regulation in the telecommunications sector, such as policies around data pricing and network sharing agreements.

4. Formulate Alternative Strategies

Once the business has completed its environmental scanning and analysis, the next step is to formulate a range of alternative strategies to address any challenges and leverage identified opportunities. These strategies are designed to navigate various scenarios and should be flexible enough to be adjusted as circumstances change. A business can choose between different strategies, including diversification, market penetration, product development, or cost leadership, depending on its current situation and future goals.
Example: SABMiller, which is now part of AB InBev, might consider several strategies to respond to shifts in consumer preference for craft beer in South Africa. One strategy could be diversification, where the company introduces a new line of craft beers. Another strategy could be market penetration, where SABMiller focuses on increasing its share of the South African beer market by offering promotions and improving distribution. Alternatively, they could use a cost leadership strategy to keep prices low while maintaining high-quality production standards to compete with smaller, more agile competitors.

5. Develop Action Plans

Developing an action plan is crucial to translate strategies into actionable steps. This involves outlining specific tasks, setting deadlines, and determining the resources required. An action plan ensures that each element of the strategy is broken down into manageable components, assigning responsibilities to specific individuals or teams. Deadlines and resource allocation are critical to ensure timely execution and efficient use of resources. This stage provides clarity and direction, guiding teams to implement the strategy effectively.
Example: Suppose Woolworths decides to expand its line of organic and sustainably sourced products. An action plan would include specific tasks like sourcing suppliers for organic produce, redesigning store layouts to accommodate the new product lines, training staff on product knowledge, and launching a marketing campaign. Deadlines might be set for each task, such as signing supplier contracts by the end of the quarter and launching the new product line in stores within six months.

6. Implement the Strategy

The implementation phase is where the strategic plan comes to life. At this stage, businesses must communicate the strategy to all stakeholders, including employees, suppliers, and investors. It’s essential to organize the necessary resources, such as financial capital, human resources, and technology. Motivating staff and ensuring their alignment with the company’s goals are key to ensuring smooth execution. Effective communication, leadership, and support throughout the organization are critical to the success of the implementation process.
Example: Naspers, one of the largest companies in South Africa, might implement a new global expansion strategy for its e-commerce division. They would need to communicate this strategy to all employees, ensuring that staff in South Africa, Europe, and Asia understand their roles in the expansion process. The company would also need to allocate financial resources, such as setting aside capital for investments in new markets, and ensure that human resources are properly trained to manage international operations.

7. Continuously Evaluate, Monitor, and Measure Strategies

After the strategy has been implemented, businesses need to continuously evaluate and monitor its progress. This ensures that the company is on track to meet its objectives. Regular monitoring involves tracking key performance indicators (KPIs), such as sales growth, market share, profitability, and customer satisfaction. By evaluating the strategy’s success, businesses can identify areas for improvement and determine if adjustments are necessary.
Example: Capitec Bank might track its performance by monitoring KPIs such as customer growth, loan repayment rates, and new account openings. If Capitec’s new digital banking platform is underperforming, the company would monitor customer feedback and usage statistics to identify problems. Based on these metrics, Capitec might revise its user interface or invest in additional marketing efforts to boost platform adoption.

8. Take Corrective Action

The final step in the strategic management process is to take corrective action when necessary. If the strategy is not yielding the desired results or if external factors have shifted, corrective measures should be taken to realign the strategy with the company’s goals. This could involve revising the plan, reallocating resources, or modifying specific tactics. Regular evaluation and the ability to make adjustments ensure the business remains adaptable and focused on achieving its objectives.
Example: Sanlam, a leading South African financial services group, might find that a strategy aimed at expanding into the African insurance market isn’t yielding the expected results due to unforeseen political instability in certain regions. In response, Sanlam might take corrective action by redirecting its resources to more stable markets, such as Southern Africa, or by adjusting its offerings to better meet the needs of consumers in the region.