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BUSINESS STUDIES – GRADE 12 CORE CONTENT
MAIN TOPIC: BUSINESS ENVIRONMENT
. HUMAN RESOURCES FUNCTION - SESSION 1
1. SKILLS DEVELOPMENT ACT [SDA] – 1998
1.1 Nature
Developed in response to redress to the demand for equity. An integral part of the National Skill Development Strategy that aims to link learning
to the demands of the world of work.
1.2 Purpose / Aims
to develop skills of people; business to invest in training of workers; business to improve the skills of workers; improve the chances of previously disadvantaged people to get jobs; and the workplace must be viewed as an active learning environment
1.3 Impact [Advantages / Disadvantages] or [Positives / Negatives]
Advantages / Positives
improve the skills level of the workforce; improvement in work prospects of the unemployed; increasing the labour mobility of employees; increase in productivity levels in the workplace; promotion of self-employment and entrepreneurship; and increase South Africa's global competiveness
Disadvantages / Negatives
Bureaucratic and involves a large amount of paperwork and administration. Only businesses with a salary bill of more than R500 000 per annum can claim for skills
development of employers.
RECENT LEGISLATION
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Monitored and controlled by government departments that do not have education as their key priorities.
SETAs are not well organised. Many service providers that offer training services are not SAQA accredited.
1.4 Rights of businesses and employees
Right of the business / employers
Right to reclaim 70% of all levies paid provided a Workplace Skills Plan was submitted and evidence is provided that it was carried out.
May claim a learnership incentive payment for employing workers who find it difficult to be employed, due to their lack of skills
Rights of employees
Entitled to enrol in skills development programmes Entitled to participate in Learnership programmes
1.5 Compliance
Employers who collect PAYE have to register with SETAs. One percent of an employer’s payroll has to be paid over to the SETA. Businesses must register with SARS
1.6 Penalties
Any person convicted of a fraudulent offence may be sentenced to a fine, imprisonment or stop operating.
1.7 Actions regarded as discriminatory
No employee may be discriminated against and be prevented from signing up for a learnership due to their work or age, gender, disability etc.
Employers who promote skill and development unfairly.
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1.8 Role of government in compliance or promoting the SDA
The government's commitment to promote skills development in South Africa is demonstrated in the Skills Development Act, 1998, the Skills Development
Levies Act, 1999 and the SAQA Act, 1995. These Acts introduced new institutions, programs and funding policies, designed to increase
investment in skills development and guarantee the quality of training and education provisioning.
By implementing the NSDS the government, in partnership with employers, workers and communities, aims to improve the employability of the country's workforce.
1.9 The National Skills Development Strategy [NSDS]
Framework for skills improvement was drawn up as part of the National Skills Development Strategy.
The National Skills Development Strategy identifies priorities for skills development and the contribution toward an emerging national human resources development strategy.
The National Skills Development Strategy makes provision for a new system of learning. NSDS combines structured learning and work experience culminating in nationally
recognized qualifications that signify job readiness within the National Qualification Framework (NQF).
Government Organised business and Organised labour must participate.
1.10 Human Resource Development Strategy [HRDS] / Sector Education & Training Authorities [SETAs]
HRDS for South Africa ensures that the various components of the state work together to deliver opportunities for human development.
The Human Resource Development Strategy for South Africa is therefore, to ensure that relevant Constitutional provisions are progressively ensured.
Implementation of the SDA is to be achieved through the establishment of theSector Education and Training Authorities (SETAs).
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1.11 Role / Functions of the SETAs
To compile sector skills plans that states who is employed where in the sector and what the strengths, weaknesses and opportunities in the sector are;
To determine where learnership’s are needed, designing, marketing and registering the learnership’s; To act as an Education and Training Quality Assurer for standards and qualifications in the sector; To disburse money from the National Skills Development Levy; and To provide information about the sector.
1.12 Skills Levies
Introduced to ensure that private businesses contribute to the development of skills. All businesses with a salary bill of more than R500 000 per annum must pay 1% of the amount as a levy to
SARS. Distribution of the accumulated levies paid by business
National Skills Fund - 20% SETA organisation - 10% Learnership skills plan - 20% Business: Skills plans and reports - 50%
100% The business can claim a proportion of the levy back from the SETA for producing workplace skills plans and
implementation reports.
1.13 Learnership
Learnership and skills programmes are occupationally structured learning programmes that are offered by accredited providers and constitute credit(s) towards a qualification within the NQF.
Example: The PSETA ensures that a well-coordinated education and training takes place in the public service by working with departments to:- identify and design learnership’s;- registers learnership’s;- provide workplace assessor training;- registers and accredit service providers;- administers learnership agreements;- and issues certificates.
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1.14 Purpose / Benefits of SETAs
Manage the learnership’s and training in each SETA sector. √√ Ensure that skills requirements of different sectors are identified. √√ Ensure that training is of the appropriate quality. √√ Responsible for skills programmes to improve skills of current workers. √√ Assist unemployed people to enter the job market by providing skills programmes. √√ Provide accreditation to facilitators and training providers.
1.15 Funding of SETAs
The SETAs’ receive 80% of the funds collected from the skills development levies. Money paid to the SETA from the National Skills Fund. Grants, donations and bequests made to the SETA. Income earned on surplus money deposited or invested. Income earned on services rendered.
2. LABOUR RELATIONS ACT [LRA] - 1995
2.1 LRA - Nature
Sets out the rules and regulations employers, employees and for labour unions and the settling of disputes. LRA deal with matters like:
- hiring and firing procedures;- disciplinary processes;- rights and responsibilities of trade unions;- negotiations;- strikes; and- disputes.
2.2 LRA - Purpose / Aims
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Promote simple procedures for the resolution of labour disputes. Promote and facilitate collective bargaining at the workplace. Right to strike and the recourse to lock-out are regulated by the LRA. Established the Labour Court to hear and rule on disputes provided by the LRA. Also established the Labour Appeal Court to hear and rule on appeals or final decisions of the Labour Court. Simplified the registration of trade unions and employers' organisations. Provides regulations to ensure that these organisations act democratically and have proper financial
controls
2.3 LRA - Impact [Advantages / Disadvantages]
Advantages
Promotes a healthy relationship between the employers and employees Promotes orderly collective bargaining and effective resolution of labour disputes. Provides opportunities for and encourages workers to participate in decision-making
Disadvantages
Businesses must restructure their human resources department to accommodate the additional workload Business owners will have to undergo training to familiarise themselves with the change management
process that has to take place. It can be costly to consult labour lawyers especially for small businesses
2.4 LRA - Rights of business and employees
Rights of the business / employer
Form an employers’ organisation; Example Mining companies may join the Chamber of Mines of SA. Join an employers’ organisation; Take part in lawful employers’ organisation activities; and Protected from anyone who discriminates against them, because of their membership or activities.
Rights of the employee
Right to be treated with dignity and respect Right to fair wages Right to belong to a trade union Employees who are trade union representatives are entitled to reasonable time off for union activities Employees who are not union members can receive benefits negotiated by trade unions Right to a safe and healthy working conditions
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2.5 LRA - Compliance
Employers must allow the formation of workplace forums and bargaining councils Businesses need to know how to deal with disputes and dismissals legally. An employer must disclose all relevant information to the trade union representative required to do the
job, expect for information excluded in the Act.
2.6 LRA – Penalties if a business does not comply
Any employee or employer, who does not comply with the LRA, will be forced to enter into a dispute resolution process.
Agreements reached during the process are binding. Failure to comply will result in a fine. Amount of the fine may be stipulated by the Minister of Labour
2.7 The role of government in compliance or promoting the LRA
Government must ensure that the spirit of the law is applied by all the stakeholders Essentially the government must provide for a climate of industrial peace between employers and
employees Mechanisms must be in place to ensure that disputes are resolved peacefully and within a reasonable
period of time.
2.8. LRA – Actions regarded as discriminatory
Employers who request that employees should not become members of a trade union Employers refusing union representatives leave for trade union activities Employers dismissing employees illegally or unfairly
3. EMPLOYMENT EQUITY ACT [EEA] – 1998
3.1 EEA - Nature
Ensures equality for all people by providing equal opportunities for employment and fair treatment in the workplace.
3.2 EEA – Purpose / Aims
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Purpose is to achieve equity in the workplace. Prohibiting unfair discrimination against all employees. Putting in place affirmative action measures for designated groups of employees such as:
- women employees;- Coloured employees;- Indian employees;- African employees; and- people with disabilities.
3.3 EEA- Impact [Advantages / Disadvantages]
Advantages
Promotes equal opportunity and fair treatment in the workplace. Promotes the implementation of affirmative action in the workplace. Prevents unfair discrimination. Creates a framework for acceptable employment practices. Promotes diversity in the business. Encourages consultation between the employer and employee. Requires the business to develop and implement an employment equity plan.
Disadvantages
Employees with inexperience can be appointed and promoted into positions. Implementation can be costly to the business as it requires investment in training. Businesses are often compelled to appoint someone not regarded as their first choice. Can be used to unfairly promote individuals.
3.4 EEA - Rights of business and employees
Rights of a business / employers
To test employees in specific sector for HIV, e.g. In the health sector To perform psychometric testing of employees where it has been scientifically shown that it is valid and
reliable May appoint an applicant on the basis of an inherent or unique requirement of a job.
Rights of employees
Equal opportunities and fair treatment when applying for a job
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Refer unfair discrimination to the CCMA Terms of conditions must be the same for employees doing the same or similar work Only psychometric testing certified by the Health Professional Council of SA may be used to assess
employees.
3.5 EEA - Compliance
Employers must promote equal opportunities in the workplace Businesses must draw up an employment equity plan that details how they plan to implement affirmative
action. Businesses must make a summary of the Act available for employees to view in the workplace
3.6 EEA – Penalties for not complying with the LRA
A labour inspector may issue a compliance order if the business does not comply. If found guilty, the employer could be fined between R500 000 and R900 000; As well as be ordered to pay compensation and damages to the employee
3.7 EEA – Role of the government in promoting the EEA
To enforce transformation in the workplace through legislation To fulfil a constitutional mandate to veto discrimination in the workplace and promote affirmative action They introduce legislation to bring about equal employment in the workplace, focusing particularly on
previously disadvantaged staff. They try to eradicate discrimination, promote fairness and labour peace by implementing affirmative action
measures. They see it as a form of ‘corrective action’ against the apartheid regime to promote equal employment
opportunities for the mass population who were previously disadvantaged
3.8 EEA – Actions regarded as discriminatory
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Not employing a young woman because she will want to have children Refusing to employ a person because they have strong religious beliefs Does HIV testing unless justified by the Labour Court Any person who is denied access to the workforce by being treated unfairly is being discriminated against.
4. BASIC CONDITIONS OF EMPLOYMENT ACT [BCEA] - 1997
4.1 BCEA - Nature
Ensures that the rights to fair labour practices are put into effect. Protect workers from violations of human rights. The Act applies to all employers and employees. The Act, however, does not apply to the following workers:
- members of the National Defence Force;- members of the National Intelligence;- members of the South African Secret Service; and- volunteers working for charities.
4.2 BCEA - Purpose / Aims
Regulate basic conditions of employment for all employers and employees. Set minimum standards for employment contracts. Creates a framework for acceptable employment practices.
4.3 BCEA - Impact [Advantages / Disadvantages] or [Positives / Negatives]
Advantages / Positives
promotes equal opportunity in the workplace; promotes fair treatment in employment; prevents unfair discrimination; creates a framework for acceptable employment practices; encourages consultation between employer and employee; and
Disadvantages / Negatives
process of ensuring that all employees have contracts can be time-consuming; employees are restricted to a maximum number of hours that may work overtime per day and per
week; processes and procedures stipulated can be very costly to a business;
businesses are restricted within the framework of the BCEA; and business cannot offer cheap labour.
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4.4 BCEA - Rights of businesses and employees
Right of the business / employers
Can decide to pay cash or give the employee time off / lieu of overtime worked May require a medical certificate before paying a worker who was sick more than two days at a time
or more than twice within a period of eight weeks May ask for proof that an employee’s family responsibility leave was necessary, for example may
request a death certificate
Rights of employees
1 Working hours May not work more than 45 hours in one week Maximum 9 hours a day for a 5 day week Maximum of 8 hours for a 6 day week
2 Overtime By mutual agreement between employer and employee Max 3 hours a day Max 10 hours a week
3 Payment for overtime Weekdays & Saturdays – 11/2 times the normal rate
Sunday’s & Public Holidays – Double the normal rate4 Meal Breaks Meal break of 1 hour after 5 hours of work
May be reduced to 30 minutes by mutual agreement5 Night work Hours between 18:00 – 06:00
Must receive extra pay or get the same pay for less hours of work
6 Public Holidays Paid holidays if the public holiday falls on a working day Work is by mutual agreement Paid at double the normal wage rate
7 Annual Leave Up to 21 days continuous annual leave8 Sick Leave Up to 6 weeks paid sick leave during a 36 month cycle9 Maternity Leave Pregnant women may take up to 4 months continuous maternity leave10 Job information New employee must receive a copy of their job description and working
conditions This includes salary information & deductions that will be made each month
11 Remuneration Must be made on a regular basis as negotiated Payslip containing details of payment must be issued to workers
12 Termination of employment
Notice of termination of employment by the employer must be in writing Due notice must be given in terms of the time stipulated on the employment
contract Employee may challenge dismissal if they consider these to be unfair,
through the CCMA and Labour Court13 Child Labour Unlawful to employ a child under the age of 15 years
No child under the age of 18 years may do work considered to be dangerous
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4.5 BCEA - Compliance
An employer may not force an employee to work overtime. An employer must give new workers information about their job description and working
conditions in writing. Labour inspectors must issue a Compliance Order in the event of non-compliance by
employers. Labour inspectors must also report non-compliance to the Department of Labour. Department of Labour will verify the facts and either agree with the order, change the order
or cancel it.
4.6 BCEA - Penalties
The business could face fines and legal action from the Labour Court. Employers could be imprisoned for up to three years for an offence in terms of section 43 of
the Act. A business could be held liable by the CCMA or Labour Court for non-compliance.
4.7 BCEA - Actions regarded as discriminatory
Forbidding workers to discuss wages and salaries with co-workers Preventing workers from having access to employment contracts or conditions of work. Refusing to accept the medical certificate of a worker who is sick. Refusing to grant a worker family responsibility leave in the event of a family member
becoming sick or dying.
4.8 BCEA – Role of the government in compliance or promoting the BCEA
Government must assist with, and enforce, such compliance through a combination of advisory and enforcement measures to ensure decent work for all.
The main role of labour inspection is the promotion of compliance with labour legislation Labour inspectorates are expected to assist management and workers in developing good
labour practises and achieving social justice and decent work for all.
5. COMPENSATION FOR OCCUPATIONAL INJURIES AND DISEASES ACT [COIDA] – 1997
5.1 COIDA - Nature
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Provides or more comprehensive protection to employees who are injured in the course of performing their duties.
Employees who are injured on the job have the right to claim compensation from the fund. Medical expenses and other types of compensation are paid to employees and / their families. Payment is made based on the type and severity of the employees injuries. Injuries could be:
- temporary disablement; - permanent disablement; and - death.
5.2 COIDA - Purpose / Aims
To protect employees and their families against injury or death that is the result of duties performed for the employer.
Protection is in the form of compensation, for the employees and / families, for injuries or death that occur in the course of the employees' work duties
The employee must be a bona fida employee, that is he / she must be legally employed. Injury must have been caused by accident, while carrying out normal duties. Applies to all employees that are permanent- and casual staff.
5.3 COIDA - Impact [Advantages / Disadvantages]
Advantages
The employee can receive medical assistance should an accident occur, which lessens their financial burden The Act promotes safety in the workplace Employers are forced to take responsibility for creating a safe and healthy working environment All employees are covered, provided they fulfil the necessary requirements
Disadvantages
Dealing with Compensation Fund contributions and employee accident reports is an administrative burden to businesses
Contribution to the Compensation Fund can be a financial burden on businesses, especially small business.
5.4 COIDA - Rights of employees and obligations of the employer
Rights of the employee
Right to make a claim for compensation. Dependents have a right to receive compensation if a worker has died as a result of the accident.
Obligations of the employer
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Provide healthy and safe working environment. Ensure that the employees have adequate changing rooms, drinking water and seating. Register with the Commissioner of the Compensation Fund. Send record of wages paid and time worked by all employees to the Commissioner. Pay a levy to the Commissioner each month for each employee. Keep record of wages paid and time worked for a period of four years. Ensure that the injured employee will be able to receive compensation.
5.5 COIDA - Compliance
All companies must register their businesses with the commissioner of the Compensation fund. At the end of the year the business must provide the commissioner with information on the workers
employed, wages / salaries paid to them. These records must be kept safely for a period of four years. Employers must register and submit annual returns. Employers make sure their work environments are safe. The employer must send the claim, medical report and any other relevant documents to the Commissioner
within seven days of receiving it.
5.6 COIDA – Penalties if a business does not comply
The Compensation Fund will recover costs from the employer or a civil law suit will be brought against the employer by the injured employee.
If businesses have a high accident record, they may be required to pay more to the Compensation Fund. The employer may be fined for not notifying the commissioner within the specified time or failing to do so
altogether.
5.7 COIDA - The role of government in compliance or promoting COIDA
This function is performed by the Director General of the Department of Labour Must inquire into accidents and occupational diseases; Adjudicate on claims and other matters coming before him for decision; Issue an order for the payment of compensation in respect of an award made by him; Administer the compensation fund and the reserve fund; After the conclusion of each financial year submit a report to the Minister
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5.8. COIDA – Actions regarded as discriminatory
An employer may not bribe an employee to not report an injury. An employer who does not pay the monthly contributions or submit the employees’ claims for
compensation would be seen to be uncaring and discriminating against his/her worker. An accident that is caused by the serious and wilful misconduct of an employee An employer who fails to take the necessary precautions to ensure the workplace is a safe and healthy
environment
6. BROAD BASED BLACK ECONOMIC EMPOWERMENT ACT [BBBEE] - 1998
6.1 BBBEE - Nature
BBBEE is the cornerstone of the South African Government’s efforts to educate and train the large sector of the population that was disadvantaged under apartheid rule.
It aims to accelerate the participation of black people in the economy by encouraging change in the following key areas of business:- ownership,- management and control,- employment equity,- skills development,- preferential procurement,- enterprise development - socio-economic development.
Integrated and coherent socio-economic process that directly contributes to the economic transformation of South Africa.
BEE measured only:• ownership; and• representation in management.
BBBEE was developed in response to criticism of BBE. BBBEE had to ensure a better spread of wealth across a number of South Africans.
6.2 BBBEE – Purpose / Aims
Enable wealth to be spread more broadly Outlines areas that would give the government a better platform for bringing about a better spread of
wealth. BBBEE Act is an enabling framework Allows for the development of Codes of Good Practice
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6.3 BBBEE- Impact [Advantages / Disadvantages]
Advantages
A good BBBEE rating will improve the image of the business Develops the employees’ potential and skills, and boosts staff morale. BBBEE can be used as a tool for marketing the business to other businesses looking for a BBBEE compliant
supplier.
Disadvantages
Investment and ownership issues can cause animosity between shareholders. It can lead to corruption and jobs for friends Many employees get jobs based on BEE rating rather than on proficiency.
6.4 BBBEE - Rights of employees
Rights of employees Employed in senior, middle and junior management Blacks with disability must be employed Increased skill development expenditure on black employees Increased number of blacks participating in learnership programmes
6.5 BBBEE - Compliance
Use the services of verification agencies who issue certificates of compliances. Increase the number of black employees managing and owning the business Use suppliers who comply with BBBEE standards.
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6.6 BBBEE – Penalties for not complying with the BBBEE Act
Fronting will be penalised Companies that do not comply with the employment equity ratios will be prosecuted and fined It will be difficult for sectors (mining sector) to renew their licenses.
6.7 BBBEE – Role of the government in promoting the BBBEE
Empower more black people to own and manage enterprises. Achieve a substantial change in the racial composition of ownership and management structures and in
the skilled occupations of existing and new enterprises. Promote access to finance for black economic empowerment. Empower rural and local communities by enabling their access to economic activities, land, infrastructure,
ownership and skills. Promote human resource development of black people through, for example, mentorships, learnerships
and internships. Increase the extent to which communities, workers, co-operatives and other collective enterprises own and
manage existing and new enterprises, and increase their access to economic activities, infrastructure and skills.
Ensure that black-owned enterprises benefit from the government's preferential procurement policies.
6.8 BBBEE – Actions regarded as discriminatory
Not employing a young woman because she will want to have children Refusing to employ a person because they have strong religious beliefs Doing HIV testing, unless justified by the Labour Court Any person who is denied access to the workforce by being treated unfairly is being discriminated against.
6.9 BBBEE –Distinguish between BBBEE and BEE
BEE BBBEE
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Consists of two empowerment elements that measures black participation in the economy through:- equity ownership: and- management representation in businesses
It aims to accelerate the participation of black people in the economy by encouraging change in the following key areas of business:- ownership,- management and control,- employment equity,- skills development,- preferential procurement,- enterprise development- socio-economic development
6.10 Justify the introduction of BBBEE in relations to BEE
BEE
Policy that was put in place by the government to give those who are classified as previously disadvantaged a chance to balance out the inequalities of the past
The objective was to right the wrongs of the past Focus was on getting black people into management
BBBEE
Objective is to distribute the wealth of the country across all races and gender groups. Focus was on increasing black ownership of businesses; increase the skills levels; increase the
number of candidates in management positions who are blacks
6.11 Discuss the obligations / principles of businesses in terms of their broad based approach
Human Rights Basic Human Rights linked to BBBEE- Equality- Respect and dignity- Education- Economic- Social
Link between BBBEE and the human rightsEquality:
Previously disadvantaged persons are given equal opportunities√ for promotion/management/ownership in the workplace.√
Preferential procurement processes should be fairly implemented√ to the benefit of previously disadvantaged persons.√
BBBEE Act should be implemented fairly at all levels√ to ensure equality before the law.√
Respect and dignity: Previously disadvantaged persons are empowered by skills development√ to
improve their chances of better employment/wages.√ Black people are economically more active through preferential
procurement/entrepreneurial development√ and are able to live with dignity and respect.
Black people, who have been promoted to managerial positions,√ has the
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right to be treated with respect and dignity.√
Education: Skills development programmes√ promote the right to education.√ Skills development programmes/Learners programmes√ improve
businesses' BBBEE scoring.√
Economic: BBBEE ensures√ that economic transformation takes place. √ Previously disadvantaged people√ are given a chance to manage, own and
control the economy.√Social:
Socio-economic development programmes√ should include provision of houses/access to healthcare to previously disadvantaged workers.√
Inclusivity No employees should be discriminated against on the basis of:- race;- gender;- sexual orientation- disabilities- HIV status
The workforce must represent the demographics in the country Preferential treatment should be given to Blacks, women, people with
disabilities. business’s?? investment in the training and development of its black employees. Representation of black people at each level of management
Environmental Issues BBBEE is also concerned with the relationship between business and the environment in which blacks resides
The business should make Socio-economic development or CSR contributions to projects in Black areas that will impact positively on the environment.
Example: making funds available to ensure that the level of pollution is reduced in rivers and the air in black areas
7. CONSUMER PROTECTION ACT [CPA] - 2008
7.1 CPA - Nature
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Protects the interests of all consumers. Ensures access to clear and efficient ways for consumers to set right if they experience abuse or
exploitation in the market place. Ensures that previously disadvantaged persons enjoy full participation as consumers in the economy
7.2 CPA - Purpose / Aims
Promotes and protects the economic interest of consumers. Improves the access to information to make informed choices. Protects consumers from hazards to their well-being and safety. Promotes and provides for consumer education.
7.3 CPA - Impact [Advantages / Disadvantages]
Advantages
Promotes and protects the interest of consumers by improving access to information Compels the business to provide and promote consumer education Enables businesses and consumers to resolve disputes fairly and in a way that respects the rights of both
parties. It makes transactions fairer for both the consumer and the business. Forces consumers to make responsible and informed decisions
Disadvantages
The Act encourages consumers to complain Businesses need to ensure that they comply with the Act, so that they are not penalised. Many business documents need to be redone, so that they comply with the Act. Consumers can take advantage of the business by being able to cancel contracts very easily
7.4 CPA - Rights and obligations of the business and rights of consumers
Obligations of the business
Business should not treat any person differently, or in a manner that constitutes unfair discrimination. Warrants that the goods comply with the requirements, with regards to the consumer’s right to safe and
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good quality goods Not to bundle certain goods or services into a single transaction as a condition of entering into an
agreement or transaction. To display the price of goods or services adequately to the consumer. Trade descriptions must not mislead the consumer. Written sales records of all transactions, for the supply of goods or services, must be given to customers
stipulating certain specified information.
Rights of the business
The supplier has the right to recover goods delivered within 20 days after the date of informing the consumer that the goods were delivered in error.
If the consumer terminates the contract before fully paying for goods, the supplier may charge a penalty in respect for those goods
Rights of the consumers
Right to equality in consumer market Consumer’s right to unwanted direct marketing Consumer’s right to demand quality service The consumer also now has the right to choose or select its suppliers The right to end any fixed term contract on any date earlier than the agreed expiry date????? The consumer has the right to a 5 business day cooling-off period after direct marketing. The consumer has the right to receive notices, documents and or other visual representation in plain
language
7.5 CPA - Compliance
Businesses must comply with the terms and conditions of the National Consumer Commission. The business will have to consider how to manage all the risks linked to the implementation of the Act. Businesses have to comply with the requirements of the law regarding promotional competitions. Businesses must disclose the prices of all products, including those on sale.
7.6 CPA – Penalties if a business does not comply
The consequences for businesses that contravene the CPA could be costly, involving a fines of up to a R1 000 000 or imprisonment.
A business may be ordered to pay any interest or damages that may be due to the consumer. Replace goods or complete the service as specified by the authority. Refund any money owing to the consumer.
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7.7 The role of government in compliance or promoting the CPA
In terms of the Act the respective provincial consumer protection authorities will perform their functions within their provinces but also, at the direction of the Minister, across its provincial boundaries.
A provincial consumer protection authority has jurisdiction within its province to:- issue compliance notices in terms of this Act on behalf of the Commission,- facilitate the mediation or conciliation of a dispute,- refer a dispute to the provincial court within the province: and- request the Commission to initiate a complaint in respect of any apparent prohibited conduct or offence in terms of this Act.
The National Consumer Commission is established by the Act as an organ of the state within the public administration.
By notice in the Gazette the Minister may issue policy directives to the Commission in respect of the application, administration and enforcement of this Act.
The Minister may also at any time direct the Commission to investigate an alleged contravention of this Act or any matter or circumstance with respect to the purpose of this Act.
7.8. CPA - Actions regarded as discriminatory
Varying the quality of goods when selling in different areas Prioritising any consumers' groups over another when marketing or selling Charging unfair prices for the same goods and services Treating customers differently based on age, race, gender etc.
8. NATIONAL CREDIT ACT [NCA] - 2005
8.1 NCA - Nature
Covers all aspects of credit management and application Allows consumers to make informed decisions before buying on credit. National Credit Regulator [NCR] was established to regulate the credit industry in SA The National Debt Mediation Association [NDMA] provides advice on credit usage and ways to avoid the
debt spiral.
8.2 NCA – Purpose / Aims
Improves the protection offered to consumers. Promotes full participation in the economy by all South Africans, especially the previously disadvantaged
South Africans. The NCA specifically aims to improve consumer rights in terms of applications for credit Streamlines credit transactions:
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Seeks to remove unfair discriminatory practices, to make it easier for more people to have access to credit. Promotes responsible granting of credit by credit providers.
8.3 NCA- Impact [Advantages / Disadvantages]
Advantages
Makes credit agreements easy to read. Prevents reckless lending and thereby avoids possible losses to the business Enables businesses to do thorough credit checks and receive up-to date documentation from consumers, as
proof that they can afford the repayments. Allows consumers to make informed decisions before buying goods or services Consumers have the right to know why credit has been refused
Disadvantages
A business must make sure all attempts have been made to recover the debt before blacklisting the customer.
Businesses must extend their administrative capacity to be able to comply with the Act. Businesses must disclose a lot of information about their products and processes. The Act encourages consumers to complain. Businesses are not allowed to carry out credit marketing. Administrative process required by the NCA is costly and time-consuming.
8.4 NCA – Obligations of business and Rights of consumers
Obligations of the business / credit provider
All registered credit providers must treat all consumers equally when assessing the credit application. A credit provider must advise the consumer, in writing, the reasons for refusing application for a new credit
facility. All your documentation and information from credit providers must be delivered to consumers in a manner
that is in plain language. Credit Providers must provide records and statements without charge Statements must be delivered within 20 days if the credit agreement (account) is more than one year old.
Rights of consumers
The right to apply for credit and the right to know why your credit was refused. You have the right to receive documentation and information in the language that you can speak, read and
understand. The right to receive documents, including statements. The right to access and challenge Credit Bureau Records and Information. The right to confidentiality and for personal information not to be divulged to a third party, without written
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consent. The right to apply for debt counselling in terms of The (NCA). The right to be advised by the credit provider, before any adverse information is reported.
The right to receive a free credit report, once a year, from each of the Credit Bureaus operating in South Africa.
8.5 NCA - Compliance
Credit providers must submit an annual compliance report to the National Credit Regulator. Credit providers must do an affordability assessment to ensure the consumer has the ability to meet
his/her obligations. Credit providers need to have procedures in place to comply with the provision of the Financial Intelligence
Centre Act ( FICA) e.g. verify the identity of clients, report suspicious transactions, train staff on their obligations in terms of FICA.
Credit providers must also conduct a credit check with a registered credit bureau and may also consult the National Credit Register.
A credit provider or debt counsellor who does not adhere to the regulations set out in the NCA could be criminally prosecuted.
8.6 NCA – Penalties for not complying with the NCA
The credit provider will receive a non-compliance notice and may even lose its registration with the NCR. Have its credit agreements suspended. Fined R1 000 000 or 10% of annual turnover.
8.7 NCA – Role of the government in promoting the NCA
The government established the National Credit Regulator (NCR). The NCR is responsible for the regulation of the South African credit industry. The roles of the NCR:
- Register credit providers, credit bureaus and debt counsellors, and monitor the conduct of these parties;- Educate and create awareness of the protection which the Act offers;- Research the credit market and monitor access to credit and the cost of credit to identify factors that may undermine access to credit, competitiveness and consumer protection;- Advise government on policy and legislation;- Receive and investigate complaints and ensure that consumer rights are protected; and
- Enforce the Act and take action against contravening institutions.
8.8 NCA – Actions regarded as discriminatory
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Refusing to grant credit to a customer based on gender, race, religion or age. Charging consumers different interest rates based on the gender, race, religion or age of the consumer. Blacklisting the consumer before exhausting all other remedies.
1. Strategies
Meaning of the term: Plan of action to achieve certain desired goals
DEVISING STRATEGIES
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1.1 The strategic management process.
Involves:
Goal setting- This stage consists of identifying three key facets: Firstly, define both short- and long-term
objectives.- Secondly, identify the process of how to accomplish your objective.- Finally, customize the process for your staff; give each person a task with which he can succeed.
Analysis- In this stage, gather as much information and data relevant to accomplishing your vision.- The focus of the analysis should be on understanding the needs of the business as a sustainable
entity, its strategic direction and identifying initiatives that will help your business grow.
Strategy formulation- The first step in forming a strategy is to review the information gleaned from completing the
analysis.- Determine what resources the business currently has that can help reach the defined goals and
objectives.- The issues facing the company should be prioritized by their importance to your success. Once
prioritized, begin formulating the strategy.
Strategy Implementation- Successful strategy implementation is critical to the success of the business venture.- This is the action stage of the strategic management process.- Once the funding is in place and the employees are ready, execute the plan.
Strategy monitoring & evaluation- Strategy evaluation and control actions include performance measurements, consistent review
of internal and external issues and making corrective actions when necessary.- Any successful evaluation of the strategy begins with defining the parameters to be measured- Determine your progress by measuring the actual results versus the actual plan.
1.2 Apply the strategic management process to solve business-related problems.
• Use any creative-thinking technique to devise business strategies • Generate business ideas • Resolve conflict • Solve any business-related problems
2. Challenges
Meaning of the term: Tasks or situations that test the organisation’s abilities to successfully resolve the tasks or situation
2.1 SWOT analysis
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Tool to analyse factors within the Micro Environment Focus on the strengths, weaknesses, opportunities and threats that the business could face Useful for setting goals and for strategic planning
2.2 Apply PESTLE
Tool used to analyse factors within the Macro Environment Used to determine the impact of external factors on the business Components of PESTLE: Political, Economic, Social, Technological, Legal & Environmental factors
2.3 Formulate strategies
Refers to the process of choosing the most appropriate course of action that will enable the business to achieve its goals and objectives.
Strategic plan provides employees with a clear vision of the purpose and objective of the business. Formulating strategy is part of the business planning process
STEPS1 Set objectives Objectives define the destination of the organisation.
Strategy will show what must be done to achieve the objective.2 Evaluate the
environments Evaluate the general economic and industrial environment in which
the organization operates. Micro, Market and Macro Environment must be evaluated. Tools that could be used are the SWOT analysis, PESTLE and
Porters Five Forces.3 Set targets Determine target values for some of the organizational objectives.
Allow the organisation to compare and evaluate the contribution that might be made by various product zones or operating departments.
4 Use contexts The contributions made by each department within the organization are identified.
Strategic planning is done for each department.5 Analyse
performance Analysis is made of the gap between the planned performance and
the actual performance of the business. Critical evaluation must be done of past performance, present
conditions and desired future outcomes.6 Choose strategy Organisation must choose the best course of action to achieve its
desired goals. Strategy is then implemented by taking specific steps.
2.4 Implement strategies
Involves putting the strategy that was formulated into action.
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The correct implementation of the strategy is essential for the organisation to achieve its objectives and desired goals
STEPS1 Allocate resources Plan for appropriate implementation of the budget
Ensure that resources are used efficiently and effectively2 Ensure that organisation
structure is in place Organizational structure is a system used to define a hierarchy
within an organization It identifies each job, its function and where it reports to, within
the organization3 Motivate staff Staff must be motivated to carry out the plan effectively and
efficiently4 Organisational policies Develop and follow organisational policies that support the
implementation strategy5 Management
involvement Manage sub-ordinates through creative leadership Management must be fully supportive of the implementation
plan6 Solve on-going problems Give immediate attention to problems that might arise
Use creative thinking to solve problems and challenges7 Adapt Adapt the strategy, if necessary when it becomes clear that the
current strategy is not going to achieve the desired outcomes
2.5 Evaluate strategies
Process of monitoring business activities and performance results Actual performance can be compared with the desired performance Evaluation and feedback provides the foundation for successful future strategy formulation Steps in strategy evaluation:
- Identify goals and measure achievement against the goals- Compare expected results with the actual results- Determine the deviations and reasons therefore- Develop actions that can be implemented to prevent similar deviation- Implement the actions to correct the deviations
2.6 Industrial tools to analyse the challenges of the business environment
2.6.1 SWOT Analysis
STRENGTHS [INTERNAL] WEAKNESSES [INTERNAL] Refers to those factors that exist within a
business that contributes to the business achieving its objectives
Example: Skilled workers
Includes characteristics within the business that will prevent the business from achieving its objectives
Example: Insufficient capitalOPPORTUNITIES [EXTERNAL] THREATS [EXTERNAL]
Refers to factors outside the business that could improve the chances of the business being successful
Example: New technology
Refers to factors outside the business that could prevent the business from achieving its objectives
Example: High interest rates
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2.6.2 Porters Five Forces
Strategic management tool that assists a business to have a competitive advantage over its competitors Useful tool to analyse factors within the Market Environment Informs the business about trends in the industry Profitability of the business will be influenced by the FIVE competitive forces PORTERS FIVE FORCES are: Threat of new entrants; Threat of substitution, Power of buyers; Power of
suppliers & Competitive Rivalry
PORTERS FIVE FORCES1 Threat of new entrants New entrants bring more competition into the market.
New competitors can quickly enter your market and weaken your position.
Strong and durable barriers to entry, limits the number of new entrants.
2 Threat of substitution Occurs when a competitor offers a different product with the same quality and performance at a lower price.
Businesses are always looking at ways of imitating products of competitors that are industry innovators.
If substitution is easy and substitution is viable, it weakens the power position of the business.
3 Power of buyers Refers to the power of buyers to compel the business to offer lower prices.
A few powerful buyers can dictate terms to the business. Example: Buyers buying in large quantities can negotiate
discounts.4 Power of suppliers Refers to the ability of suppliers to increase the input cost of the
business. The fewer suppliers in the industry the greater their ability to drive
prices upwards. The more unique the product of the supplier the more control the
supplier will have over your business.5 Competitive rivalry Important here is the number and capability of your competitors.
If you have many competitors, and they offer equally attractive products and services, then you'll most likely have little power in the situation.
Suppliers and buyers will go elsewhere if they don't get a good deal from you.
The less intense the rivalry amongst competitors, the more attractive the market.
2.6.3 PESTLE
FACTORS IMPACT ON EACH FACTORPolitical Changes in government; Political instability; Affirmative ActionEconomic Inflation; Interest: Exchange ratesSocial Poverty; Unemployment; Crime; Government grantsTechnological New technology; Social networking; Communication technologyLegal Labour laws; Competition laws: CPA; NCA:Environmental Pollution; Recycling; Green taxes;
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3. Determine the nature, effectiveness and use of the following strategies:
3.1 Integration
Integration takes place when companies merge or one company buys another
TYPESVertical Forward Occurs when a business gains control over its distribution and retailers
Downstream buyers Example: Farmer taking control over Fruit & Veg
Backward Occurs when a business takes control over its supplier in order to reduce the risk of dependency
Upstream suppliers Ensure a reliable flow of raw materials at an affordable price Example: Fruit & Veg gains control over a Farm
Horizontal Occurs when a business gains control over a competitor in the same industry and the same stage of production
Reduces the threat of competition Acquire businesses with substitute or complementary products Example: Macro taking over Game
3.2 Intensive strategy
Aims to increase sales and market share through INTENSIVE efforts to improve long-term growth Directed at internal growth within the business
TYPESMarket penetration Business focuses on selling existing products in existing markets
Do research on current consumer base and use the information to make adjustments and improvements
Example: Decrease the prices of products to ensure higher sales levels Example: Run an aggressive marketing campaign aimed at existing customers
Market development Focus is on selling existing products in new markets Product remains the same, with the emphasis on increasing its market share Example: Exporting products Example: MTN providing cell-phone services in Nigeria
Product development Focus is on introducing new products into existing markets Customer base remains the same, but new products are introduced to current
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customers Example: Modifying packaging of a product to appeal to current customers Example: Packing cooking oil in retail pouches for household consumption
3.3 Diversification
Involves changing both the product and the market Businesses market new products in new markets Used to increase sales, market share and ensure the growth of the organisation
TYPESConcentric Adding new products or services that are related to existing products and will
appeal to new customers Example: A business selling fried chicken may add fried chips to the chicken
and sell a new product fried chicken & chips
Horizontal Adding a new product or service that are unrelated to existing products to appeal to existing customers
Example: A Car dealer selling cars and offering financing of the car services or insurance of the car to the customer
Conglomerate Adding new products or services that are unrelated to existing products that may appeal to new customers
Example: General Electric known for its electrical appliances are also engaged in oil drilling and computer manufacturing
3.4 Defensive
Used by businesses when they are under severe pressure and have very few other options Used by businesses to defend themselves against attacks from their competitors
TYPESDivestiture Occurs when a business starts selling divisions, within the business, that are not
profitable or assets that are not productive.
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Aim is to either acquire additional capital or to reduce the cost of running the business
Example; Clothing store selling the children’s toy section that is running at a loss
Retrenchment Occurs when business reduces the number of employees for operational reasons Aim is to decrease the running cost of the business by reducing the salary bill of the
business. Example: Telkom reducing its workforce by 3000 employees
Liquidation Applied by businesses that faces bankruptcy Occurs when a business stops operating and sells the assets of the business. The cash raised will be used to pay creditors & money owing to employees
4. Other Business Strategies
1. The company repositions itself by replacing one or more individuals Business must ensure that the correct individuals are employed in the right positions Replacing an employee takes place when they don’t fit in; cannot cope; resign; retire or
are promoted2. Revising a business mission
As the business grows it will be necessary to revise its mission so it can adapt to the changing environment
As trends change, the business must be aware of it and adapt its mission to the latest trends
3. Establishing or revising objectives Short-term objectives must be constantly evaluated to ensure that all the stakeholders are
working towards the same goal4. Devising new policies
Business policies need to be revised regularly to ensure that the business keeps up with the latest developments and trends
Involving all employees in this process will ensure that they take ownership of the policies and the implementation thereof
5. Issuing stock to raise capital Additional shares could be made available to the public to ensure that the business has
sufficient capital to finance any expansion or growth of the business6. Adding additional salespersons
Additional staff could be employed to increase sales figures and to service any new customers that the business may have acquired
7. Allocating resources differently Strategies should be in place to ensure that resources are optimally used in the business Where this is not happening the resources must be allocated to departments where it will
be used effectively and efficiently
8. Developing new performance incentives. The more motivated the staff, the more productive they will be, thereby increasing
productivity and profit levels of the business Developing new methods to incentivise the staff will encourage staff members to be more
motivated and more productive
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5. Evaluation [advantages & disadvantages] of strategies and making recommendations for their improvement
STRATEGY ADVANTAGES DISADVANTAGESIntegration Can significantly reduce cost and
competition Increase the growth potential of the
business
Legal process of franchising and buyout can be time consuming
Can be an expensive process and could involve large amounts of capital
Intensive Variety of ways in which intensive strategies can be implemented
Some strategies can have a large impact with a limited amount of capital
Research & development of new products could be expensive
Could be labour intensive and place extra strain on staff
Diversification Exciting and motivating for staff Potential new mission, visions and
goals
Requires skilled resources May remove the focus from the main
objective of the businessDefensive Can save costs
Get rid of departments that are not profitable
Demotivating to the staff Time consuming process
6. Make recommendations for improvements of strategies
Develop strategies for reaching target customers. Devise strategies for selling additional products or services to existing customers, thereby growing the
organisation. Thoroughly reviewing the company’s operations to find ways of saving money. Set aside time for long-range strategy development. Having strategies in place to deal with challenges that could arise, as a result of risks the organisation
could be exposed to.
6. Activities for strategy evaluation
1) Examine the underlying base of an organisations strategy Essential to understand why the business chose the strategy that it did This will provide more detail and information on the actual effectiveness of the strategy
2) Compare expected results with actual results All businesses should set measurable targets Essential for the business to measure the actual results against the expected performance Elements of the success of the strategy could be measured in this way
3) Taking corrective actions where necessary
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If the actual performance is consistently below the expected performance, the business must complete a detailed analysis of the reasons for the deviation
Corrective actions must be implemented to ensure that targets are met This includes, making sure that realistic targets are set
1. The three economic sectors
Primary sector
Deals with raw materials and natural resources
BUSINESS SECTORS & THEIR ENVIRONMENTS
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Extract natural resources from nature Products are sold in raw state Examples: mining, fishing, agriculture, forestry, farming
Secondary Sector
Manufactures and processes raw material into final goods Final goods are sold to the consumer Goods are ready for consumption Examples: manufacturing, construction, ship building, generation of electricity
Tertiary Sector
Includes all industries that offer services to other businesses and consumers Examples: banking, retailers, transport businesses, consultants
2. Business Environments related to the three business sectorsPrimary Sector (e.g. Diary Farm)
Environment Elements Description Control
Micro Environment Vision
Mission
Goals
Objectives
Workforce
Provide goods (milk) to consumers
Managers workers Chooses the workers he
wants to employ
Full control over the business
Must comply with legislative framework (EE, BEE, Affirmative action)
Market Environment Suppliers
Consumers
Competitors
Intermediaries
Suppliers of farming equipment and feed
Some suppliers are from the primary sector (fodder) and some from the secondary sector (electricity) and some from the tertiary sector (transport)
No control over availability of supplies, but can choose his suppliers
Has no control over the consumers, but can attract them with quality products
Macro Environment Political
Environmental
Social
Technological
Legal
Employ technology to improve efficiency
New inventions can cause equipment to become obsolete
Legislation affects the business, e.g. land
Has no control over technological inventions
Has no control over legislation
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Economical reforms
Secondary Sector (dairy)
Environment Elements Description Control
Micro Environment Vision
Mission
Goals
Objectives
Workforce
Aims to provide dairy products to consumers
Maintain high levels of productivity and profitability and socially responsible
Chooses people he wants to employ but must comply with legislative requirements
Full control over mission and vision
Market Environment Suppliers
Consumers
Competitors
Intermediaries
Supplier from primary sector (milk)
Supplier from tertiary sector (transport)
Clients (retailers) from tertiary sector
Has no control over availability of supplies but can choose the best supplier
Has no control over clients, but can influence through advertising campaigns, good quality products and affordable prices
Macro Environment Political
Environmental
Social
Technological
Legal
Economical
Uses technology in manufacturing and transformation process
Legislation affects the business, e.g. land reforms
Can adapt to challenges in macro environment by forming power relationships, strategic alliances or lobbying
Has no control over technological inventions
Has no control over legislation
Tertiary Sector
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Environment Elements Description Control
Micro Environment Vision
Mission
Goals
Objectives
Workforce
Retailer (checkers) aims to create a wonderful shopping environment and offer widest range of quality products to consumers
Determine own vision and mission
Choose who they want to employ as long as they comply with labour legislation
Full control over mission and vision
Market Environment Suppliers
Consumers
Competitors
Intermediaries
Suppliers from secondary sector (diary) and tertiary sector (shop fittings)
Has no control over availability of suppliers but can choose the best supplier
Has no control over clients, but can influence through advertising campaigns, good quality products and affordable prices
Macro Environment Political
Environmental
Social
Technological
Legal
Economical
Can use technology to advertise online
Choose who they want to employ as long as they comply with labour legislation
Can adapt to challenges in macro environment by forming power relationships, strategic alliances or lobbying
Has no control over technological inventions
Has no control over legislation
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