Summary
Business Studies IEB Grade 12 Full Notes and Summary
- Course
- Business Studies
- Institution
- 12th Grade
Full In-Depth Business Studies Notes for Grade 12 IEB Learners. It includes all chapters.
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BUSINESS ENVIRONMENTS1. The Macro Environment
1.1 An Environmental Scan
In a environmental scan:
• The business identifies key issues.
• A SWOT analysis focuses only on Opportunities (O) and Threats (T).
• PE2STLE helps pinpoint specific opportunities and threats.
1.2 A SWOT-analysis (Only O and T)
Opportunities and threats in the macro environment include issues like:
• A deteriorating exchange rate, which can threaten profitability if raw materials are imported.
1.3 A PE2STLE analysis
1.3.1 Political Factors
The political situation of the country the business operates in and the political situation of other countries.
Important Terminology: The Constitution
The Constitution forms the basis of all other laws in the country and both private citizens and businesses have
to abide by this law.
Some of the basic issues covered by the Constitution include:
• The Bill of Rights (basic human rights) • Provincial governance
• Public administration • Local governance (municipalities)
Political factors be considered include:
• Government interference in the economic functioning of the country.
• The degree of political stability in the country.
• Political ties with other countries. This influences trade agreements
• Degree of media freedom/freedom of speech which can be used to criticise corrupt political parties.
1.3.2 Economic Factors
Economic factors include:
• Economic growth and development rates - The improvement/deterioration of the standard of living
of the people of the country
• Inflation rates – Affects the purchasing power of money.
• Interest rates - High interest rates make it difficult for businesses to borrow money to expand.
• Exchange rates - The strength of the local currency vs. the currencies of other countries
• High unemployment rates – Reduces consumer spending.
• Taxes such as income tax, VAT, import duties, etc.
,1.3.3 Ethical Factors
Refers to the principles/values that will determine if decisions and actions are acceptable. Ethics provide a
guideline for the business to evaluate how to act in the "right" way when faced with a difficult situation.
Elements to consider when looking at Ethics include:
• Fair Trade - Respect and transparency in business dealings.
• Corporate Social Responsibility - The responsibility towards the shareholders to balance profit and
give back to the community.
• Employee's privacy - Balancing internet privacy with responsible behaviour and regulation
compliance.
1.3.4 Social/Socio-Economic Factors
Refers to the impact that social trends have on the market. The business must adapt to these trends
• The average age of the population, the life expectancy and people becoming more health conscious.
• The number of single parents providing for a family (Family status)
• HIV / Aids infection and diseases such as TB and malaria (Illness)
• Levels of literacy/education
• Unemployment rates
• Personal safety and crime (Security)
• Awareness of the issue of pollution and recycling (also refer to Environmental factors)
• Distribution of wealth/ poverty (Status)
• The changing role of women in society in certain cultures.
1.3.5 Technological Factors
Refers to the equipment the business uses to buy (or make), advertise, or sell the products or services.
Factors that impact on the business:
• The rapid development of issues surrounding social media
• Automation of different processes, requiring less use of lower-skilled and cheaper manual labour
• Advances in online money transfers (internet banking, electronic fund transfers)
• Online shopping
• Quicker sales transactions through EPOSSE (Electronic Point of Sales Scanning Equipment as opposed
to manual pricing) at pay points.
• Product innovation through Research and Development (R & D).
1.3.6 Legal Environment
Key laws impacting businesses include:
• Labour legislation (Labour Relations Act, Basic Conditions of Employment Act, etc.).
• Consumer protection laws (Consumer Protection Act, Credit Act).
• Environmental protection laws.
• Criminal laws against piracy and fraud.
• Laws on taxes, business registration, health, safety, and food handling.
1.3.7 Physical environment and other Environmental factors
Environmental factors focus on growing awareness to protect the environment, including:
• Shift towards eco-friendly products.
• Emphasis on recycling and hybrid cars.
• Higher taxes on air travel.
• Efforts to reduce carbon footprints.
, 2. The Market Environment
The market environment is where goods and services are exchanged. Tools for investigating forces in the
market environment include:
• Environmental scan.
• SWOT analysis (focusing on opportunities and threats).
• Porter's Six Forces Model to identify market opportunities and threats.
2.1 Porter’s Six Forces
Porter’s six forces investigates the following:
• Competitors: which businesses sell the same product
• Competitors: which businesses sell a similar product
• Competitors: which businesses may try to enter the market in the future
• Suppliers of the products
• Buyers that must be convinced to spend their limited money to buy the product or service
• The impact of complementary products
2.1.1 Level of rivalry (current competition)
Understanding competitors is crucial. Poor performance by competitors presents profit opportunities, while
their success indicates a threat requiring strategic action. Key factors for comparison include:
• Size, financial resources, location, distribution, market share, product quality, brand loyalty, pricing,
and trading hours.
Strategies to outperform competitors include:
• Customer loyalty programs.
• Reducing prices on certain products/services.
Important terminology: Strategies
Strategies can either be a formal business plan to achieve a long or short-term goal or it can simply be a plan of
action, implemented to improve the overall performance of the business.
2.1.2 Threat of new entrants
New businesses entering the market pose a threat, so existing businesses should create barriers to entry.
Examples include:
• Larger retailers negotiating with mall management to limit competitors.
• Registering patents to prevent similar products.
• Significant spending on advertising and promotions to lower prices.
• Government legislation that restricts new suppliers (e.g., electricity).
• Taxes on imported goods to protect local markets from cheap imports.
2.1.3 Availability of substitute products
Substitute products fulfil the same need, creating indirect competition (e.g., butter vs. margarine, glasses vs.
contact lenses).
Businesses must consider both direct competitors and substitutes when strategizing; for instance, margarine
producers must also account for butter manufacturers.
2.1.4 The power of suppliers
Businesses rely on suppliers for quality goods delivered on time and at reasonable prices. If suppliers favour
competitors with better pricing or stock availability, the business risks losing its competitive edge.
, Costs associated with stock unavailability include:
• Stopped production leading to no sales and profits.
• Underutilised machines and labour.
• Administrative and opportunity costs during stockouts, if a business has run out of stock, it becomes
very difficult to negotiate discounts when placing orders.
• Loss of customer loyalty if they turn to competitors.
2.1.5 The power of buyers
Retailers must consider several factors when selling to final consumers:
• Product Type: Consumers may travel further for specialty goods (e.g., cars, jewellery) but prefer
convenience for everyday items (e.g., groceries) and may settle for substitutes.
• Brand Loyalty: Consumers may switch brands for a better deal; loyalty can vary by product category
(e.g., toys from Pick n Pay vs. Toys R Us).
• Price Sensitivity: Buyers might pay more for added value, such as delivery or guarantees.
• Snob Value: The perceived image of a product can influence purchasing decisions, with some
consumers avoiding low-cost options for better perceived quality.
2.1.6 The power of complementary products
A complementary product is a product where the use of one product is interrelated with the use of another
product. Such as bread and butter, fast foods and Mr Delivery, etc.
For example, businesses that sell fast food that relies on Mr Delivery will be affected if Mr Delivery increases
their delivery charges.
3. The Micro Environment: Business Operations
When the micro environment is analysed the business will focus on internal factors. Tools that can be used to
perform an internal analysis include:
• An environmental scan – look at the internal departments/functions in the business.
• A SWOT-analysis (S and W only)
• Resource-based analysis – consider tangible and intangible resources and how they’re utilised.
• Value-chain analysis – examine the value created in a chain of activities performed by the business.
3.1 A brief outline of the EIGHT different business functions
3.1.1 Purchasing function
The purchasing function involves acquiring goods and services for all departments and includes three types of
purchases:
1. Goods for Own Use: Items like fridges for storing products (e.g., Coke).
2. Goods for Resale: Trading stock such as Coke and chips.
3. Goods for Processing: Raw materials (e.g., flour and meat) used to create finished products like
pies.
Key responsibilities include:
• Finding suitable suppliers.
• Ensuring the best return on investment (ROI) by negotiating discounts and keeping costs low.
• Placing and confirming accurate orders.
• Developing inventory control systems to maintain optimal stock levels and prevent shortages.
Supply Chain Management (SCM)
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