EBM N4 | Essential Revision Guide 2

Question

The ‘S’ in the SWOT analysis stands for strengths.

The correct answer is: True
SWOT analysis is a strategic planning tool that evaluates Strengths, Weaknesses, Opportunities, and Threats. The ‘S’ represents a business’s internal strengths, such as financial stability, skilled employees, or a strong brand reputation.

Question

The management plan of a business will include information about its remuneration policy.

The correct answer is: True
A business’s management plan outlines how it operates, including employee salaries, benefits, and other compensation details. The remuneration policy is crucial for attracting and retaining skilled employees.

Question

Brainstorming is a very popular method of coming up with ideas.

The correct answer is: True
Brainstorming is a widely used technique for generating creative ideas in business, education, and problem-solving. It encourages free thinking and collaboration among team members.

Question

People who owe you money are called creditors.

The correct answer is: False
People or businesses that owe you money are called debtors, while creditors are the ones you owe money to. For example, if a company sells goods on credit, the customer becomes a debtor, and the company is the creditor.

Question

The marketing plan must analyse the marketing environment.

The correct answer is: True
A marketing plan includes an analysis of external and internal factors that impact a business, such as competitors, customer behavior, and economic conditions. Understanding the marketing environment helps businesses make informed decisions.

Question

You will place necessities and staple goods at the rear of the retail store.

The correct answer is: True
Retail stores often place essential products like bread, milk, and household staples at the back to encourage customers to walk through the store and make impulse purchases along the way.

Question

Examples of industrial products are raw materials and machinery.

The correct answer is: True
Industrial products are used in production rather than for personal consumption. Examples include raw materials (like steel and wood) and machinery used in manufacturing or construction.

Question

Innovation is the conversion of a new idea into a new product or service.

The correct answer is: True
Innovation is not just about having an idea—it involves turning that idea into something practical that creates value, like a new technology, product, or service that improves efficiency or meets customer needs.

Question

Demographic segmentation establishes the population or number of customers.

The correct answer is: False
Demographic segmentation divides customers based on characteristics like age, gender, income, and education, rather than simply counting the population. It helps businesses target the right audience for their products and services.

Question

Natural resources are classified as an asset of the business.

The correct answer is: True
Natural resources, such as land, minerals, and water, are considered assets if a business owns or controls them. These assets have economic value and can contribute to the company’s financial success.

Give ONE word for each of the following description

Question

They need to research their business idea and when in business, continue to get information.

The correct answer is: Entrepreneur
An entrepreneur is someone who starts and manages a business, continuously researching and gathering information to ensure success and growth.

Question

Be careful about discussing the details of your business plan with close people.

The correct answer is: Secrecy
Secrecy is important in business to protect ideas, strategies, and competitive advantages from being copied or misused by others.

Question

Refers to our national heritage, such as water, air, and animal and plant life.

The correct answer is: Natural environment
The natural environment consists of natural resources and ecosystems that sustain life and should be preserved for future generations.

Question

Appears when a needed product or service is not available.

The correct answer is: Gap in the market / Shortage
A gap in the market occurs when there is demand for a product or service that is not currently being supplied, creating a business opportunity.

Question

Ability to do something new, original, and different.

The correct answer is: Creativity
Creativity involves thinking innovatively and developing unique ideas, products, or solutions that add value.

Question

Point at which the income generated from sales equals total costs.

The correct answer is: Breakeven
The breakeven point is where total revenue matches total expenses, meaning the business is not making a profit or a loss.

Question

Needs to be developed after the target market has been identified.

The correct answer is: Marketing mix
The marketing mix (Product, Price, Place, Promotion) is planned after identifying the target audience to ensure effective marketing.

Question

A wrapping that surrounds a product.

The correct answer is: Packaging
Packaging protects the product, provides important information, and makes it more attractive to consumers.

Question

Number of customers in the area you want to serve.

The correct answer is: Geographic segmentation
Geographic segmentation divides the market based on location, allowing businesses to tailor their products and services to specific regions.

Question

A word or symbol that is displayed on a product.

The correct answer is: Trademark
A trademark is a legally registered symbol, logo, or word that represents a company or product, protecting its brand identity.

Question

Explain the different business environment categories and give examples.

A business operates within a broader environment consisting of various factors that influence its success or failure. These factors can be categorized based on how they affect business operations. Below is a detailed explanation of the main categories, along with examples.

1. Customers

Customers are one of the most crucial aspects of a business environment, as they determine the demand for products or services. Understanding customer needs, preferences, and buying behavior is essential for business success.

For instance, a clothing store that targets teenagers must stay updated with the latest fashion trends and offer styles that appeal to young shoppers.

2. Suppliers

Suppliers provide raw materials, products, or services that businesses need to operate. A reliable supply chain ensures smooth operations, while delays or poor-quality supplies can lead to business challenges.

For example, a bakery depends on flour, sugar, and dairy suppliers to maintain production. If suppliers increase prices or experience shortages, the bakery may struggle to remain profitable.

3. Competitors

Competitors are other businesses offering similar products or services and competing for the same customers. Businesses must differentiate themselves through better pricing, product quality, customer service, or marketing strategies.

Consider a situation where two grocery retailers, such as Checkers and Pick n Pay, compete for market share. They use promotions, product variety, and store locations to attract more customers.

4. Economic Environment

The state of the economy affects all businesses, whether large or small. Economic factors such as inflation, interest rates, exchange rates, and recessions influence consumer spending and business operations.

For example, during the Covid-19 pandemic, many businesses suffered due to lockdowns and restrictions, leading to financial losses and closures. However, online retailers and delivery services saw significant growth as more people shopped from home.

5. Cultural Forces

Culture refers to the values, traditions, and social norms of a community or country. Businesses must consider cultural factors when marketing products to different regions and customer groups.

For instance, a fast-food chain expanding into a country where pork is not widely consumed due to religious beliefs must modify its menu to exclude pork-based products.

6. Technological Forces

Technology plays a crucial role in modern business operations. Businesses that adopt new technologies can improve efficiency, reduce costs, and expand their market reach.

For example, online shopping platforms like Takealot allow businesses to sell products without a physical store, increasing convenience for customers and expanding business opportunities.

7. Government and Political Factors

Government policies, laws, and regulations can either support or restrict business operations. Political stability, taxation, labor laws, and trade regulations all play a role in shaping the business environment.

For instance, if the government increases import taxes, businesses relying on foreign products may have to raise their prices or look for local alternatives to remain competitive.

8. Natural Environment

The natural environment includes essential resources such as water, air, and land. Businesses must consider environmental sustainability and follow regulations to minimize their ecological impact.

For example, a bottled water company depends on access to clean water sources and must comply with environmental laws to prevent overuse or pollution.

Question

Explain the basic or primary methods that entrepreneurs can use to gather market information.

Entrepreneurs need accurate market information to make informed business decisions, understand customer needs, and stay competitive. There are several primary methods they can use to gather this information effectively as explained below

1. Survey

A survey involves collecting information directly from potential or existing customers by asking them structured questions. Surveys can be conducted through online forms, face-to-face interviews, telephone calls, or written questionnaires.

For instance, a new coffee shop owner might conduct a survey to determine customers’ preferred coffee flavors, pricing expectations, and location preferences before opening the business.

2. Observation

Observation involves monitoring customer behavior without directly interacting with them. This method helps businesses understand buying habits, customer preferences, and market trends without influencing responses.

For example, a supermarket might observe which sections of the store attract the most customers or which products are frequently picked up and returned to the shelves. This can provide insights into shopping patterns and product appeal.

3. Experiments

Experiments allow businesses to test different variables in a controlled setting to see what works best. This method helps in understanding customer reactions to new ideas, pricing strategies, or marketing techniques.

For example, a clothing retailer may display the same T-shirt design at different price points in separate stores to analyze which price attracts more buyers.

4. Test Marketing

Test marketing involves introducing a new product or service in a limited market before launching it on a larger scale. This method helps entrepreneurs measure demand, gather customer feedback, and identify potential improvements.

For instance, a snack company might release a new flavored chip in one city to see how customers respond before expanding the product nationwide.

Question

Where can you find help, when drawing up a business plan?

Creating a business plan is an essential task for any entrepreneur, and there are several institutions that can offer valuable support. Here are some key sources of assistance:

Educational Institutions

Universities, business schools, and technical colleges offer a wealth of resources for entrepreneurs developing a business plan. These institutions often have business development centers, mentorship programs, and specialized courses to guide entrepreneurs through the planning process. For instance, a student entrepreneur could receive support from their university’s business incubator, where experts provide templates, advice on financial planning, and tools for conducting market research. Educational institutions help build a solid foundation for creating a well-rounded business plan.

Service Organisations

Non-profit and community-based service organizations provide affordable or free assistance to entrepreneurs. These organizations specialize in helping small businesses with various aspects of business planning, including crafting effective business plans, seeking funding, and connecting with networks. For example, a local small business development agency may offer one-on-one coaching sessions to help an entrepreneur fine-tune their business goals, structure financial projections, and develop a sound marketing strategy. Service organizations are valuable for entrepreneurs seeking guidance without incurring high costs.

Commercial Institutions (e.g., Banks)

Commercial institutions, such as banks, often offer crucial support to entrepreneurs, especially when seeking funding. Many banks have dedicated business advisory services that can help with writing a business plan, understanding financial requirements, and preparing for loan applications. For instance, when applying for a business loan, a bank may require a detailed business plan. They often provide consultants who guide applicants through the process, ensuring that financial forecasts and risk assessments are robust and well-prepared. These institutions help bridge the gap between planning and financial success.

Government Institutions

Government institutions play a vital role in supporting entrepreneurs through various programs, funding initiatives, and small business development agencies. They offer tools such as business plan templates, training, and access to grants or funding opportunities. For example, in South Africa, the Small Enterprise Development Agency (SEDA) assists entrepreneurs by offering business plan development support, mentorship, and access to funding resources. Government-run websites and portals often provide step-by-step guides to writing a business plan, helping entrepreneurs navigate the complexities of starting a business. Government institutions help provide both the knowledge and the financial resources needed to get a business off the ground.

Question

Explain the types of layouts for a manufacturing or service business.

In both manufacturing and service businesses, selecting the right layout is crucial for ensuring efficient production, service delivery, and overall workflow. The three primary types of layouts are:

Product Layout

In a product layout, the arrangement of equipment and workstations is based on the specific sequence of operations needed to produce a product. This layout is typically used in environments where the same product is produced repeatedly. For example, assembly lines in car manufacturing utilize a product layout, with each workstation performing a specific task as the product moves along the line. This type of layout is ideal for mass production as it maximizes efficiency by minimizing the distance products must travel between workstations.

Process Layout

A process layout groups similar processes or machines together. This layout is commonly used in environments where different products or services are produced in varying quantities. In this layout, workstations are arranged by the type of task they perform, such as grouping all drilling machines together or all finishing stations in one area. For instance, a factory that produces customized products may use a process layout, allowing it to be flexible and adaptable to different orders and production volumes. This layout is often used in job shops or service industries like hospitals or restaurants.

Fixed Position Layout

A fixed position layout is used when the product being manufactured or serviced is too large or too heavy to be moved during production. In this layout, the product stays in one location, and workers, equipment, and materials are brought to the product. This layout is typically used in the construction industry or in the manufacture of large machinery, like ships or airplanes. The fixed position layout ensures that the product remains stationary while different tasks are performed around it.