Chapter 1 - Business World

Question 1

Production is the …

Answer 1

Transformation of certain resources into products & services.

Question 2

What is profit?

Answer 2

It is the reward for meeting the needs of people.

Question 3

What is the prevailing economic system in South Africa?

Answer 3

Market System / economy
More precisely SA is a mixture between the market system & the socialist system. Currently we are leaning more towards a market system yet there is a high degree of government participation.

Question 4

The informal sector contributes how much % to the economy?

Answer 4

20%

Question 5

How does business serve the community indirectly?

Answer 5

• technological innovation
• research and development
• improvements to infrastructure
• also supporting through education, development of HR, the arts, conservation, sport ect.

Question 6

What is the core of sustainability?

Answer 6

The business world and society both depend on and influence each other.

Question 7

What does corporate social responsibility entail?

Answer 7

The voluntary compliance of business with practices that are sustainable.

Question 8

What is at the heart of a business?

Answer 8

An entrepreneur or businessperson

Question 9

What are the 5 themes for sustainability in business?

Answer 9

1) social responsibility
2) employment equity
3) business ethics
4) consumerism
5) environmental sustainability

Question 10

What does social responsibility entail?

Answer 10

The provision of:

• a responsible and safe workplace
• housing
• concern for health issues
• environmental awareness
• involvement in community issues
• empowerment of disadvantaged

Question 11

What is employment equity about?

Answer 11

The notion that the workforce at all levels should reflect the composition of the community

Question 12

What is consumerism about?

Answer 12

Social force that protects consumers against unsafe products and malpractice by exerting moral & economic pressure on business.

Question 13

Which Act protects consumers?

Answer 13

Consumer Protection Act No 68 of 2008 - signed into law in 2011

Question 14

What is socialism?

Answer 14

It is a compromise between Pure Market and a Pure Command economy. The state owns principal (strategic) industries and resources such as transportation and communication. Here there is a similar limiting factor in creating wealth.

Question 15

What should Government’s intervention in the economy be limited to?

Answer 15

• encourage economic growth and stability by managing recession and inflation
• effecting greater equity in the distribution of incomes

Question 16

What is a PPP and give an example ?

Answer 16

Public Private Partnerships eg. Toll roads and Bombela Consortium

Question 17

What are the advantages of a Market Economy?

Answer 17

• private initiative occurs

- there is economic freedom

Question 18

What are the advantages of Socialism?

Answer 18

• there is the possibility of full employment

- state stabilises economic fluctuations

Question 19

What are the advantages of a Command economy?

Answer 19

• the state can concentrate resources towards particular ends.

Question 20

What are the disadvantages of a Market Economy?

Answer 20

• the environment is unstable
• cyclical fluctuations
• high social costs

Question 21

What are the disadvantages of Socialism?

Answer 21

• little incentive in state organistions

- state organisastions can be unproductive

Question 22

What are the disadvantages of a Command economy?

Answer 22

• low productivity
• low standard of living
• planning is difficult or impossible

Question 23

In a market economy the emphasis are on 4 diff elements?

Answer 23

Human Activities
Production
Exchange
Profit

Question 24

Name 6 reasons why South Africa is a favourable investment destination.

Answer 24

1) sound macro-economic policies
2) 100% ownership
3) large growing domestic market
4) modern transport and comm systems
5) rich natural resources
6) modern banking and financial services

Question 25

Name 4 negative factors when considering SA as investment destination.

Answer 25

1) high rates of crime and corruption 2) extensive exchange controls 3) major skills shortages, especially in mng roles 4) high levels of unemployment

Question 26

What are government organisations know as?

Answer 26

SOE's - State Owned Enterprises (parastatals or public corporations) Eg. Eskom, SAA

Question 27

What is the purpose of Business Management?

Answer 27

To produce the most units of products / services at the lowest possible price.

Question 28

There are 4 approaches to management methods. What are they?

Answer 28

- mechanist approach - human-relations approach - contingency approach - strategic management

Question 29

What is the mechanist approach about?

Answer 29

Was introduced at the turn of the century - emphisised mass production. Under management of engineers.

Question 30

What is the human-relations approach about?

Answer 30

Originated in 1930's - emphisised motivation of workers.

Question 31

What is the contingency approach about?

Answer 31

1950's - approach prescribed by the prevailing situation

Question 32

What is the strategic approach about?

Answer 32

Most recent approach, makes special study of how management should act in an unstable environment

Question 33

What is the task of business management?

Answer 33

To examine factors, methods and principles that enable a business to max profits and achieve its objectives.