Business management is the fundamental study field for managers in all fields of functional specialization e.g. marketing. Business management focuses on the basic functions, skills, knowledge, and tasks of a manager where these factors need to be developed and applied to the functional business in order to manage their departments. The economy is a complex system it is divided into 3 sectors namely: market, social and command. Business management can help individuals to understand the business elements that one will be exposed to in the working environment. Business management aims to provide knowledge and understanding of the basic concept, theories, tasks and principles while, having a look at the business challenges, business environment, task of a manager, business functions, entrepreneurship and the business plan.
1.1) The role of a business in society: To supply needs and wants by scanning the environment. Create jobs which will bring about a high standard of living in developed countries and create wealth which helps with economic development.
Social Responsibility: Is measured by its contribution to creating job opportunities and how it benefits the economy. Protecting the community, in such a way they can help enhance your image within the community. Participating in CSR (corporate social responsibilities) projects e.g. KFC raising hope for children where people are able to donate R2 when purchasing their products. This sort of initiatives show the community that the business has an interest and does car about society and their children. The company will be enhanced by the community.
Business ethics: This focuses on ethical behaviour of employers and employees. The business must be respectful and honest with their stakeholders. The manager has to be professional. Professionalism is the way in which a person act, works, talk’s, dresses and generally conducts his/her work life with enthusiasm and commitment. This is why code of conducts have been drawn up and put in place, as they keep members aligned and place order in a work place. They are guidelines that inform members what is and isn’t appropriate in a work place environment.
Consumerism: These are the social forces that protect consumer’s rights. The consumer rights act was placed in order to ensure that their products and services comply with standards. No false advertising e.g. when you advertise by a “one get one fee every Monday” special, ten when you arrive at wimpy they charge you double the amount. By not false advertising, the image of the business will improve by abiding to the consumer act as well as producing goods and services that are good for consumers to utilize.
Employment equity act: This is one where they redress the economic inequalities of the past and allowing for more equal job opportunities. Its implemented to create more diverse workforce with better representation from all people is ensured. This will help with the upliftment of the previous standards and must benefit all people in the economy.
Environmental damage: protecting the community in every aspect that is possible .e.g. going green. Implementing environment initiatives gets you great publicity.
1.2) South Africa is importing steel from China which has affected the local economy and country’s economy. As they stop supporting local businesses, they decrease the job creation, this decrease causes a low economic growth rate. This causes other steel factories such as the Vereeniging steel works to close down causing a 1200 in job loss.
Human resources: you are not employing the people with the correct skills and knowledge. Therefore you will not produce the right quality and quantity of product, which means no customers, no income or profit, company plummets. Waste of resources, time and money because you would have to train the individuals you have recruited.
Supply and demand: everybody wants a good quality product at a fair price. The South African steel industry is making it hard for potential buyers to purchase their steel as, their price isn’t fair. The high prices are due to the fact that the steel has been imported instead of being produced locally. They need to satisfy the needs and wants of the consumers. Better quality, satisfied consumers.
Competitors: out buying the business to be exact. This industry in South Africa has been volatile and difficult as the global market has been tough as china’s steel have increased their exports and reduced their prices to respond to the slow domestic growth. South Africa’s distance from major export markets that means South African steel producers are not cost competitive in these markets and that only 2.8 mt of that excess steel capacity was able to be exported in 2008.Growth opportunities are limited in the steel sector due to its current large size structural lack of export competitiveness of South Africa’s steel manufacturing industry. The majority of South Africa’s steel operations are currently either only marginally profitable or are in a loss making position due , to the fact that they struggling with the structural lack of export competitiveness of South Africa’s steel manufacturing industry.
1.3) Environmental damage: protecting the community in every aspect that is possible .e.g. Stop polluting environment. Since they are importing goods from China, the pollution within the vicinity decreases due to the fact they don’t need to use the factories to create the steel. That means the nearby river won’t be flushed with chemical waste and toxins. The water will be more hygienic for the society that lives there. This will also stop fish from being poisoned plus we will be protecting their habitat. Looking after the eco system.
Business ethics: trading with other countries to better the economy, how this benefits society is that it allows for the country to develop and exploit their scares resources which can enable them to produce surplus and trade them for resources needed. With surplus comes many benefits as it can be used to fix the roads, build RDP houses, build more health care vicinities etc. This in essence will get more people interested, therefore more stakeholders who are interested in the company.
1.4) They can come up with a new policy regime which looks at measures such as decontrol of steel prices and distribution, delicensing/ de-reservation of capacity and liberalization of foreign trade largely . The industry is now determined by market forces and the role of the Government in the new economic order has changed from a regulator to that of facilitator and coordinator. Consumers will benefit by the process of liberalization as they will have easy availability to quality steel both from domestic and overseas sources.
The decrease of the steel industry has resulted in large scale imports of steel thus depriving the South Africa economy the benefits of domestic value addition and local employment. Making a suitable change in some of the policy/regulatory areas to facilitate time bound implementation of green field capacities. In the absence of these regulatory/policy changes, it will be a challenging task for South African Industry to capitalize on the opportunities offered by a fast growing domestic economy. The demand for steel is a derived demand. Therefore demand Side Management is needed as the growth in steel consumption will depend on overall growth in economy at a more general level. Increasing steel demand by increasing steel intensity in construction, deeper penetration into rural markets and through market & product development. Growth is achievable by tapping new opportunities in macro-economic environment, framing innovative policies and by reducing gap between intentions and actual realization.
Question 2
Entrepreneurship
An entrepreneur is a person who combines the three factors of production (capital labour and raw material) in order to start a new business venture. An entrepreneur sees an opportunity in the market and he/she assumes the risk of starting a new business by inviting his/her capital in order to make a profit.
Characteristics:
• The ability for them to identify an opportunity with potential and to then pursue the opportunity, even if it may be risky.
• The entrepreneur to understand their target market and he/she is continuous needs to scan the internal and external environment to be proactive in identifying opportunities and or treats. , they must be willing to change or develop the business plan to satisfy the customer needs.
• They are an opportunist. They have to be with the latest market trends, identify the positives and use them to the advantage of the business.
• Must have commitment and perseverance. Creativity and innovation because being different to that of a competitor may lead to the successful business.
• The ability to prepare and to implement a plan to achieve goals is very important but, the entrepreneur must be realistic and proactive by developing a contingency plan to manage potential risks.
• The ability to communicate clearly and accurately is critical in order to implement strategies to overcome challenges and thus capitalize on opportunities.
• And the entrepreneur is personally motivated and often prefers to work on his/her own or at the very least be in charge of what is going on. It is very important that an entrepreneur is insightful enough to know what his/her shortcomings are and wisely to surround him/her with a supportive team.
• The ability to evaluate achievements and progress is crucial in order to initiate corrective measure if needed. Must be able to make quick decisions about the opportunities as they arise.
• They need to have leadership qualities. Without leadership qualities, the entrepreneur is unlikely to achieve success. They must have the ability to convince and motivate others to buy into the plan and follow them to achieve the desired goals.
Question 3
It is best suited that Elmo and Thato go for the franchising route. If they start a new business venture, they need to have planned, very carefully and have to come up with a business plan. A business plan is when one conducts a viability and feasibility analysis in order to establish the business opportunities for which will be developed into the business. This business plan can be seen as the planning tool for upcoming new entrepreneurs. It is easier to get into a business that you are already familiar with and, have the skills, knowledge and industry experience.it is very critical that you have good people around you in order for you to succeed.
Doing a feasibility study is establishing the need vs the ability. A viability study looks at the profitability and sustainability. You need to know your customer’s needs doing market research id beneficial. Market research helps in with improving customer satisfaction but also always us to identify new marketing opportunities. This research you have to consider these factors: the market environment, consumer behaviour, market segmentation, target market, product positioning and the marketing mix. Developing your vision, mission, goals and objectives (Business policy). Establishing your market share, calculate income of the business, the expected net-profit and the calculated breakeven point.
A perfect business plan needs to be a true reflection of the inspired business. It needs to include an executive summary , list of a business team , External business environment analysis , Products/service plan , Operational plan , Financial plan , Marketing plan, A risk assessment and a timeline to put a plan into action. A SWOT analysis will help you identify opportunities and threats in the external business environment while considering the strengths and weakness on the internal organisation. Identify the Strengths: qualified staff, Variety of products. Weaknesses: Cash flow problems and Technical skills shortage. Opportunities: Growing markets, Customers demanding innovative products. Threats: Economic climate, Restrictive legislation and Expensive technology.
Buying an existing business: the main reason why an entrepreneur would buy an existing business is because they want to start a business but don’t know-how to start a business from scratch. Another reason could be that they have a strategic business acquisition. Backward integration: allows the business to have better control of the supply of the product e.g. fast food chains taking over a potatoes farm to control the supply of potatoes. Forward integration: business have more control over the distribution. Market Consolidation: products e.g. Manufacturer taking over the wholesaler or retailers. Another reason for entering into an existing business could possibly be the diversity of the business activates e.g. Edcon buying CNA.
When deciding to buy an existing you need to consider the amount of capital available to clinch the deal. The level of staff competency. Finding a business that is for sale that meets the requirements of the entrepreneur in terms of geographical location, type of product/service sold. Financial position (profitability, solvency, liquidity, cash flow) and what would be a fair purchasing, price.
Franchising is buying a part of an existing business or even the entire business. Franchising is a system where the franchiser enters into an agreement with the franchise to distribute the products/services on certain agreed upon terms. A franchise agreement is a formal business agreement between the franchiser and franchisee. This contract is signed between the two parties which creates obligations on both sides e.g. Support from the franchise and the royalties being by the franchiser. Legalities: maintaining the brands integrity .Franchising is a marketing system not a form of ownership.
A franchise is a good opportunity for an inexperienced entrepreneur to enter the business world. It gives the entrepreneur the opportunity to start his own business based on the success of the successful franchiser. The franchise buys a business package from the franchiser and then sells a product/service in a particular area. The business is owned by the franchisee and he pays a fee or commission on sales to the franchiser. Successful franchiser will make there franchiser successful, it is therefore in the interest of the franchiser to assist the franchises wherever needed.
Conclusion
A business is “An organization or economic system where goods and services are exchanged for one another or for money”. A business has a lot of important roles in our economy. The main purpose of a business it to transforms resources into products and services to meet the needs of people in exchange for profit. It is also detrimental for a business to make a profit as it the way a business is able to survive.