TOPIC 4 - CONTEMPORARY SOCIO-ECONOMIC ISSUES AND BUISNESSES

Question 1

List 13 contemporary socio-economic issues that pose a challenge to businesses.

Answer 1

1. low income levels
2. inflation
3. social, cultural and demographic issues
4. economic crime
5. ethical misconduct
6. population growth
7. illiteracy
8. lack of skills
9. unavailability of natural resources
10. inefficiency in the use of resources
11. exhaustion of natural resources
12. dumping
13. strikes

Question 2

Discuss the negative impact of the following contemporary socio-economic issues on businesses:
1. Low income levels
2. Inflation
3. Social, cultural and demographic issues
4. Economic crime
5. Ethical misconduct
6. Lack of skills
7. Unavailability of natural resources
8. Dumping
9. Strikes
10. Illiteracy

Answer 2

1. Low income levels - Many South Africans live in poverty, which limit their buying power. Consumers opt to spend money on cheaper goods and products.
2. Inflation - Businesses sales will decrease because of reduced consumer spending on
   goods and services. Businesses will have less money to spend on producing goods if the cost of raw materials increases.
3. Social, cultural and demographic issues - 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.
4. Economic crime - 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.
5. Ethical misconduct - 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.
6. Population growth - 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.
7. Illiteracy -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.
8. Lack of skills - Unskilled employees could spend considerable time seeking assistance to perform their work. They may perform tasks without the appropriate knowledge and expertise which could lead to poor performance.
9. Unavailability of natural resources - 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.
10. Inefficiency in the use of natural resources - Reduced production levels may lead to a drop in sales and profitability. Unused stock can become obsolete, increasing losses for businesses.
11. Exhaustion of natural resources - 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.
12. Dumping - 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.
13. Strikes - 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.

Question 3

Analyse the negative impact of piracy on businesses.

Answer 3

1. Unlawful copying and streaming of movies and television series lead to a
   decline in the sales and profits for the business.
2. Artists may see no value in producing a new set of music or movies because of the reduced sales.
3. This may affect the artist’s and producer’s productivity levels.

Question 4

Elaborate on the meaning of the following solution to piracy:
1. Copyright
2. Patent
3. Trademark

Answer 4

1. Copyright - Copyright refers to an exclusive legal right assigned to the author, artist or producer of artistic work to print, publish, perform or record the work. Laws relating to copyright protect authors and allow them to sell their works to make a profit.
2. Patent - A patent gives the creator of the product the right to prohibit other people from making or using their invention. This right is granted by government for a limited period of up to twenty years for the exclusive right to an invention.
3. Trademark - A trademark refers to a sign, character or word that is protected by law to
   represent a product or company. These are used by businesses so that their products or the business itself is easily identifiable.

Question 5

Define the meaning of industrial relations.

Answer 5

1. Industrial relations refer to the relations between management and workers
   in the industry.
2. The term “industrial relations” explains the relationship between employees and the management that stems directly or indirectly from union versus the employer relationship.

Question 6

Define the meaning of a lockout as an industrial action.

Answer 6

1. Lockouts occurs when the employer prevents striking employees from
   entering the business premises.
2. When businesses comply with the
   Labour Relations Act, the lockout is
   regarded as legal.

Question 7

Discuss the purpose of the Labour Relations Act (LRA).

Answer 7

1. The act provides the structure for governing the relations between an
   employer and their employees.
2. It encourages collective bargaining processes to take place in the workplace.
3. It also encourages the establishment of workplace forums to support employees in decision-making.
4. The act further encourages fair labour practices between the employer and its employees.

Question 8

Define the meaning of trade unions.

Answer 8

1. Refers to an employee organisation, controlled, managed and paid for by its members.
2. Trade union members elect shop steward and committees to represent them.

Question 9

Outline the roles of trade unions.

Answer 9

1. The main role of trade unions is to represent staff members in the workplace.
2. Trade unions advocate that the economy should support the working class
   and the poor.
3. They highlight the need for job creation in the country.

Question 10

Explain the functions of trade unions.

Answer 10

1. Employees are protected from unfair dismissals and labour practices.
2. They may take legal action on behalf of their members when necessary.
3. Trade unions represent and protect their members against unfair labour practices in the workplace.

Question 11

3 types of ethical misconduct

Answer 11

1. Sexual harassment in the workplace involves unwelcome or unwanted
   conduct of a sexual nature from someone at work.
2. Corruption refers to any act of dishonesty such as bribery.
3. Mismanagement of funds refers to the wrongful use of funds