Name:

Lindokuhl
e

Sur
name:
Ndl
ovu

St
udentnumber
:61648493

Uni
quenumber
s:734211

Modul
ecode:
OTE2601

 
Quest
ion1

1.1Ski
ll
sdevel
opmentmeansmor eandbett
eropportuni
ti
es.I
tmeanst hatj
obscanbe
consi
deredwhereunskil
l
edwor ker
swouldneverbeabletovent
ure.Skil
lsar
eakeyt othe
economygrowing,busi
nessesexpandi
ngandjobcreati
on.Sout
hAf r
ica'
squali
tyofeducat
ion
conti
nuestodecl
ine.

Thedev el
opmentofski ll
scancont r
ibutet
ostruct
uraltransformationandeconomi cgrowt
hby
enhancingempl oyabi
lit
yandl aborproducti
vi
tyandhelpi ngcountri
est obecomemor e
compet i
ti
ve,eg.SouthAf r
icahaddecadesofunequal educat i
on.Themaj ori
tyofSouthAfr
icans
didn’
thavetheski l
lsrequiredtofuncti
oninamoder neconomy .Bant ueducat i
onwas
speci
fical
lydesignedt oinhibi
tBlackSouthAfri
cans’progress.Itensuredt hattheycoul
d
funct
ionaslitt
lemor et hangardeners,domesti
cworker s,anddayl abourers.

Alotofski
ll
edwor ker
sleftt
hecountryi
ntherun-
upt oourfi
rstdemocr
ati
celecti
on.Manymor
e
ski
lledwor
kerslef
tthecountryov
erthelastt
wenty-
fiveyear
s.Theri
seinvi
olentcri
meand
perceiv
edbet
teropportuni
ti
esabroadhavebeenreasonsforthi
sski
ll
sexodus.

Itwasal
sonecessarytoredr
esstheunfai
remploymentpol
ici
esoft
hepast.
 Butmanywho
wouldnowtaketheposit
ionsopenedtothem hadn’
tbeent
rai
nedwit
hthenecessar
yski
l
ls.Thi
s
sit
uat
ionhasneverbeenproper
lyaddr
essed.

Wit
ht r
ansfor
mat i
oncameanunski l
l
edworkfor
ceoccupyi
ngposit
ionsthatr
equi
redskil
l
ed
worker
s. Wit
houtup-ski
ll
ingthewor
kfor
ce,t
ransf
ormati
onleadst
oi ncompet
entworker
s
worki
nginjobsineff
ecti
vely
.

Weseet
hisi
nthebi
l
li
onsofRandsspentonout
sour
cingski
l
ls.Li
ter
all
y,hundr
edsofbi
l
li
onsof
Randshavebeenspentoncont
ractor
sandconsul
tant
s.Theywhohavetheskil
lst
hatthel
abour
for
celacks.Ther
eneedsi
tobetransf
ormat
ion.
 Buti
tisamist
aketoneglectt
oequipour
workf
orce.

Quest
ion2

2.
1

Moneyi
sdef
inedbyt
het
hreef
unct
ions(
orser
vices)t
hati
tpr
ovi
des:

1.AMedi
um ofExchange

Themainandmostimpor t
antfunct
ionofmoneyisthati
tcanbeusedi
ntheexchangeofgoods
andser
vices.Asawi
delyacceptedfor
m ofpayment,i
tser
vesasamedium ofexchanget
hat
al
lowst
hosewhousei ttogetwhattheyneedeasi
ly
.

Withoutmoney,peoplewouldhavetouset hebart
ersy st
em.Inthissyst
em, peopl
eexchange
goodsandservi
ceswi thoneanother.It
’sagoodsystem ifbot
hpar t
ieshol
dwhatt heother
wants,whi
chiscalledadoublecoincidenceofwants.Forexample,i
fIwantedt oexchangea
l
uxurycarforausedspeedboatwi thsomeone, wewoul dbothwalkawayhappy .

Howev er
,thepr obl
em comesi nwhent hei
ndiv
idualdoesnothaveagoodorserv
icet
hatt
he
otherval
uesf ortheexchange.Example:WhatifIwantedtobuyyourcarf
or10cowsanda
coupleofchickens?I’
m guessingtheywouldn’
tbetakenaspay ment.

2.Uni
tofaccount

Serv
ingasaunitofaccount,
moneyactsasacommonst andardformeasuringtheval
ueof
goodsandser
vices.I
t’
sconsist
entandall
owsyoutoeasi
lycomparet heworthofa$1sodatoa
$50chai
r.Ont
heot herhand,i
fIhadtopayfort
hesodawithpencil
s,andthechairwi
thappl
es,
i
t’
dbehar
dert
ounder
standt
hei
rval
ues.

Wi
thmoneyasacommonmeasur
e,i
t’
seasi
ert
oquot
eandbar
gai
npr
ices.

3.St
oreofv
alue

Moneymustal soserveasastoreofvalue,meaningt hati

tretai
nsit
swor thoverti
me.Itshoul
d
beabletobesav ed,
stor
ed,andretr
ievedwhi l
esti
llbeingvi
ableasar el
iablemedium of
exchange.I
fIsoldabunchofchairsforapples,Iwouldnotbeabl et
o“ StackMyApples”and
conti
nueincr
easingmywealth.Overti
me, t
heywoul dbewor t
hLESSwhent hey’
regett
ingsoft
,
andWORTHLESSwhenspoi led.

However
,onecoul
darguethatmoneydoesnotr
eal
l
y“st
orev
alue”ei
therduet
othef
luct
uat
ing
pur
chasi
ngpowerwit
hinfl
ati
on.

2.
2

Adv
ant
agesoff
ranchi
singf
ort
hef
ranchi
see

Thefranchiseeisthethi
rd-part
ybuyerwhopurchasesthebrandri
ghtsfrom thef ranchi
sor(t
he
ownerofthebr and).Thefranchi
seepaysanini
tial
franchi
sefeetothefranchisorf ort
heri
ghts
tousetheirbrandinadditi
ont oongoi
ngfr
anchisefeesformarket
ing,r
oy al
ti
es, andmor e.

Ther
ear
esev
eral
adv
ant
agesoff
ranchi
singf
ort
hef
ranchi
see,
incl
udi
ng:

1.Busi
nessassi
stance

Oneofthebenef
itsoff
ranchi
singf
ort
hef
ranchi
seei
sthebusi
nessassi
stancet
heyr
ecei
ve
fr
om t
hefranchi
sor.

Dependi
ngontheter
msofthefranchi
seagreementandthestr
uctur
eofthebusi
ness,
the
fr
anchi
seemightr
eceiv
eessent
ial
lyatur
nkeybusinessoper
ati
on.Theymaybeprovi
dedwit
h
thebrand,theequipment
,suppl
i
es,
andt
headv
ert
isi
ngpl
an—essent
ial
l
yev
ery
thi
ngt
heyneedt
o
operatethebusiness.

2.Br
andr
ecogni
ti
on

Abigbenef
itthatfr
anchi
seesr
ecei
vewhenopeni
ngafranchi
seisbrandrecogni
ti
on.I
fyoust
art
abusi
nessfrom scrat
ch,
youwouldhav
etobuil
dyourbrandandcustomerbasefrom t
he
gr
oundup,whi chwouldt
aketi
me.

3.Lowerf
ail
urer
ate

Ingeneral,f
ranchiseshaveal owerfai
l
urerat
et hansol
obusi
nesses.Whenafr
anchiseebuys
i
ntoaf ranchise,
they’r
ejoini
ngasuccessfulbrand,aswel
lasanetworkt
hatwi
llof
ferthem
supportandadv ice,makingitlessl
i
kelyt
hey’l
lgooutofbusi
ness.

4.Buy
ingpower

Anot
herbenefi
toffr
anchi
singisthesheersizeofthenet
wor k.I
fyou’
reoperat
ingastandal
one
busi
nessandneedtoorderproductsorsuppli
estomakey ourproduct
s,you’
repayi
ngmor e
moneyperit
em becauseyourorderisr
elat
ivel
ysmall.

5.Pr
ofi
ts

I
ngeneral,f
ranchisesseehi gherprofi
tst
hanindependentlyestabl
ishedbusinesses.Most
fr
anchi
seshav erecognizablebrandsthatbr
ingcustomer sindroves.Thispopulari
tyr
esul
tsi
n
hi
gherprofi
ts.Evenfranchisesthatrequi
reahighini
ti
alinvestmentf ort
hefranchisef
eesee
hi
ghreturnoninvestment .

2.
3

2.
3.1 Agrocerystokveli
susedt osav eforhousehol
ditemsthatallmembersneedona
monthl
yory earl
ybasis.Thef undsaredistr
ibutedwhentheperi
odofsavinghasended.-
Pur
chasingStokvels.Purchasingst
okv el
sar eusedt
obuyi t
emst hatwi
l
lgenerat
emoneyf or
members.
2.3.
2 Pr oper
tystokvel
sprov
idelowt omiddle-
incomefamil
i
eswithavehicl
etoinv
estandbui
l
d
wealthbyhar nessi
ngthecol
lect
ive'
spower .Thegroupcanpur
chasebiggerandmore
expensiveproperti
esandcanbenefitfr
om thecompoundingpr
inci
plebypooli
ngfi
nanci
al
resources.

2.3.
3 Thi
sisknownas“i
zandla([hel
ping]hands)
”.Asatypi
calSt
okvel,
memberscont
ributea
setamountofmoneyatregul
arinter
vals,f
orasetbenefi
t.Bur
ial
Societ
iest
ypi
cal
lypr
ov i
de
poli
ciest
hatcovert
hemaingroupmemberaswel lasfamil
yandextendedf
amil
y.

Quest
ion3

3.
1a)Sol
ePr
opr
iet
orshi
p

Atypeofbusinessenti
tythati
sownedandrunbyonei ndiv
idual–ther
eisnol
egaldi
sti
nct
ion
betweentheownerandt hebusi
ness.Sol
ePropr
iet
orshipsarethemostcommonform ofl
egal
str
uctur
eforsmallbusi
nesses.

b)Gener
alPar
tner
shi
p

Anassociationbetweentwoormor epeopl ei
nbusinessseekingapr ofit.Par
tnershi
pscanbe
createdwit
hl i
tt
lefor
mal i
ty,butbecausemor ethanoneper sonisinv olved,apartner
shi
p
agreementshouldbecr eated.Apart ner
shi
pagreementstipulat
est het er msofthepartner
shi
p
byfor mal
i
zingrulesforprofi
t/l
ossshar i
ng,ownershi
ppercentages, dissoluti
onterms,and
managementr i
ghtsamongmanyot herthi
ngs.

c)Li
mit
edLi
abi
l
ityCompany(
LLC)

Ahy bridbet
weenacorporati
on,gener
al par
tner
ship,andsolepropriet
orship.Owner
sofanLLC
arecalledmembers.Member smayincludeindi
vidual
s,corporat
ions,otherLLCsandfor
eign
enti
ties.Mostst
atesper
mi tanLLCwithonlyoneowner ,call
eda“ si
nglememberLLC.
3.2.
 Riskconsi
stsofthr
eeparts:
anuncer
tainsi
tuati
on,t
heli
keli
hoodofoccur
renceoft
he
si
tuati
on,andtheeff
ect(posi
ti
veornegat
ive)t
hattheoccur
rencewouldhaveonproj
ect
success.

3.3 
 Entr
epreneurshi
pcompet enci
escombinecreati
vi
ty,asenseofini
ti
ati
ve,pr
obl
em-sol
vi
ng,
theabil
i
tytomar shalr
esources,andfi
nanci
alandtechnologi
calknowl
edge.These
competenci
esenabl eent
repreneursandent
repreneur
ialemploy
eestoprovokeandadaptt
o
change.

3.4.
  The"
marketsize"i
smadeupofthetot
alnumberofpotent
ialbuy
ersofaproductor
serv
icewit
hinagivenmar ket
,andt
het
otalr
evenuet
hatthesesalesmaygener
ate.

3.5 
 Product
ionmet hodsfal
li
ntot
hreemaincat
egor
ies:j
ob(one-
offpr
oduct
ion),
batch
(mult
ipl
eitems,onest epatati
meforal
li
tems),
andflow(mult
ipl
eit
ems,al
lstepsinpr
ocessat
onceforseparat
eitems) .
 

Quest
ion1

1.1Ski
ll
sdevel
opmentmeansmor eandbett
eropportuni
ti
es.I
tmeanst hatj
obscanbe
consi
deredwhereunskil
l
edwor ker
swouldneverbeabletovent
ure.Skil
lsar
eakeyt othe
economygrowing,busi
nessesexpandi
ngandjobcreati
on.Sout
hAf r
ica'
squali
tyofeducat
ion
conti
nuestodecl
ine.

Thedev el
opmentofski ll
scancont r
ibutet
ostruct
uraltransformationandeconomi cgrowt
hby
enhancingempl oyabi
lit
yandl aborproducti
vi
tyandhelpi ngcountri
est obecomemor e
compet i
ti
ve,eg.SouthAf r
icahaddecadesofunequal educat i
on.Themaj ori
tyofSouthAfr
icans
didn’
thavetheski l
lsrequiredtofuncti
oninamoder neconomy .Bant ueducat i
onwas
speci
fical
lydesignedt oinhibi
tBlackSouthAfri
cans’progress.Itensuredt hattheycoul
d
funct
ionaslitt
lemor et hangardeners,domesti
cworker s,anddayl abourers.

Alotofski
ll
edwor ker
sleftt
hecountryi
ntherun-
upt oourfi
rstdemocr
ati
celecti
on.Manymor
e
ski
lledwor
kerslef
tthecountryov
erthelastt
wenty-
fiveyear
s.Theri
seinvi
olentcri
meand
perceiv
edbet
teropportuni
ti
esabroadhavebeenreasonsforthi
sski
ll
sexodus.

Itwasal
sonecessarytoredr
esstheunfai
remploymentpol
ici
esoft
hepast.
 Butmanywho
wouldnowtaketheposit
ionsopenedtothem hadn’
tbeent
rai
nedwit
hthenecessar
yski
l
ls.Thi
s
sit
uat
ionhasneverbeenproper
lyaddr
essed.
Wit
ht r
ansfor
mat i
oncameanunski l
l
edworkfor
ceoccupyi
ngposit
ionsthatr
equi
redskil
l
ed
worker
s. Wit
houtup-ski
ll
ingthewor
kfor
ce,t
ransf
ormati
onleadst
oi ncompet
entworker
s
worki
nginjobsineff
ecti
vely
.

Weseet hi
sinthebi
ll
ionsofRandsspentonoutsourci
ngskil
ls.Li
ter
all
y,hundredsofbill
i
onsof
Randshavebeenspentoncontractor
sandconsult
ants.Theywhohav etheskill
sthatthelabour
for
celacks.Ther
eneedsit
obet ransf
ormat
ion.
 Butiti
sami staketoneglectt
oequi pour
workf
orce.

Quest
ion2

2.
1

Moneyi
sdef
inedbyt
het
hreef
unct
ions(
orser
vices)t
hati
tpr
ovi
des:

1.AMedi
um ofExchange

Themainandmostimpor t
antfunct
ionofmoneyisthati
tcanbeusedi
ntheexchangeofgoods
andser
vices.Asawi
delyacceptedfor
m ofpayment,i
tser
vesasamedium ofexchanget
hat
al
lowst
hosewhousei ttogetwhattheyneedeasi
ly
.

Withoutmoney,peoplewouldhavetouset hebart
ersy st
em.Inthissyst
em, peopl
eexchange
goodsandservi
ceswi thoneanother.It
’sagoodsystem ifbot
hpar t
ieshol
dwhatt heother
wants,whi
chiscalledadoublecoincidenceofwants.Forexample,i
fIwantedt oexchangea
l
uxurycarforausedspeedboatwi thsomeone, wewoul dbothwalkawayhappy .

Howev
er,theprobl
em comesi nwhenthei
ndi
vi
dualdoesnothav
eagoodorser v
icet
hatt
he
ot
herv
aluesfortheexchange.Exampl
e:Whati
fIwantedtobuyyourcarf
or10cowsanda
coupl
eofchi
ckens?I
’
m guessi
ngt
heywoul
dn’
tbet
akenaspay
ment
.

2.Uni
tofaccount

Serv
ingasaunitofaccount,
moneyact sasacommonst andardformeasuringtheval
ueof
goodsandser
vices.I
t’
sconsist
entandallowsyoutoeasi
lycomparet heworthofa$1sodatoa
$50chai
r.Ont
heot herhand,i
fIhadtopayf ort
hesodawithpencil
s,andthechairwi
thappl
es,
i
t’
dbehardert
ounder st
andtheirval
ues.

Wi
thmoneyasacommonmeasur
e,i
t’
seasi
ert
oquot
eandbar
gai
npr
ices.

3.St
oreofv
alue

Moneymustal soserveasastoreofvalue,meaningt hati

tretai
nsit
swor thoverti
me.Itshoul
d
beabletobesav ed,
stor
ed,andretr
ievedwhi l
esti
llbeingvi
ableasar el
iablemedium of
exchange.I
fIsoldabunchofchairsforapples,Iwouldnotbeabl et
o“ StackMyApples”and
conti
nueincr
easingmywealth.Overti
me, t
heywoul dbewor t
hLESSwhent hey’
regett
ingsoft
,
andWORTHLESSwhenspoi led.

However
,onecoul
darguethatmoneydoesnotr
eal
l
y“st
orev
alue”ei
therduet
othef
luct
uat
ing
pur
chasi
ngpowerwit
hinfl
ati
on.

2.
2

Adv
ant
agesoff
ranchi
singf
ort
hef
ranchi
see

Thefranchiseeisthethi
rd-part
ybuyerwhopurchasesthebrandri
ghtsfrom thef ranchi
sor(t
he
ownerofthebr and).Thefranchi
seepaysanini
tial
franchi
sefeetothefranchisorf ort
heri
ghts
tousetheirbrandinadditi
ont oongoi
ngfr
anchisefeesformarket
ing,r
oy al
ti
es, andmor e.

Ther
ear
esev
eral
adv
ant
agesoff
ranchi
singf
ort
hef
ranchi
see,
incl
udi
ng:
1.Busi
nessassi
stance

Oneofthebenef
itsoff
ranchi
singf
ort
hef
ranchi
seei
sthebusi
nessassi
stancet
heyr
ecei
ve
fr
om t
hefranchi
sor.

Dependingont het er
msoft hef
ranchi
seagreementandthestructur
eofthebusi
ness,the
franchi
seemi ghtreceiv
eessent
ial
lyatur
nkeybusinessoperat
ion.Theymaybeprovidedwit
h
thebrand,theequipment ,
suppl
i
es,andtheadver
ti
singplan—essenti
all
yever
ythi
ngtheyneedto
operatethebusiness.

2.Br
andr
ecogni
ti
on

Abigbenef
itthatfr
anchi
seesr
ecei
vewhenopeni
ngafranchi
seisbrandrecogni
ti
on.I
fyoust
art
abusi
nessfrom scrat
ch,
youwouldhav
etobuil
dyourbrandandcustomerbasefrom t
he
gr
oundup,whi chwouldt
aketi
me.

3.Lowerf
ail
urer
ate

Ingeneral,f
ranchiseshaveal owerfai
l
urerat
et hansol
obusi
nesses.Whenafr
anchiseebuys
i
ntoaf ranchise,
they’r
ejoini
ngasuccessfulbrand,aswel
lasanetworkt
hatwi
llof
ferthem
supportandadv ice,makingitlessl
i
kelyt
hey’l
lgooutofbusi
ness.

4.Buy
ingpower

Anot
herbenefi
toffr
anchi
singisthesheersizeofthenet
wor k.I
fyou’
reoperat
ingastandal
one
busi
nessandneedtoorderproductsorsuppli
estomakey ourproduct
s,you’
repayi
ngmor e
moneyperit
em becauseyourorderisr
elat
ivel
ysmall.

5.Pr
ofi
ts

I
ngeneral,f
ranchisesseehi gherprofi
tst
hanindependentlyestabl
ishedbusinesses.Most
fr
anchi
seshav erecognizablebrandsthatbr
ingcustomer sindroves.Thispopulari
tyr
esul
tsi
n
hi
gherprofi
ts.Evenfranchisesthatrequi
reahighini
ti
alinvestmentf ort
hefranchisef
eesee
hi
ghreturnoninvestment .

2.
3
2.
3.1 Agrocerystokveli
susedt osav eforhousehol
ditemsthatallmembersneedona
monthl
yory earl
ybasis.Thef undsaredistr
ibutedwhentheperi
odofsavinghasended.-
Pur
chasingStokvels.Purchasingst
okv el
sar eusedt
obuyi t
emst hatwi
l
lgenerat
emoneyf or
members.

2.3.
2 Pr oper
tystokvel
sprov
idelowt omiddle-
incomefamil
i
eswithavehicl
etoinv
estandbui
l
d
wealthbyhar nessi
ngthecol
lect
ive'
spower .Thegroupcanpur
chasebiggerandmore
expensiveproperti
esandcanbenefitfr
om thecompoundingpr
inci
plebypooli
ngfi
nanci
al
resources.

2.3.
3 Thi
sisknownas“i
zandla([hel
ping]hands)
”.Asatypi
calSt
okvel,
memberscont
ributea
setamountofmoneyatregul
arinter
vals,f
orasetbenefi
t.Bur
ial
Societ
iest
ypi
cal
lypr
ov i
de
poli
ciest
hatcovert
hemaingroupmemberaswel lasfamil
yandextendedf
amil
y.

Quest
ion3

3.
1a)Sol
ePr
opr
iet
orshi
p

Atypeofbusinessenti
tythati
sownedandrunbyonei ndiv
idual–ther
eisnol
egaldi
sti
nct
ion
betweentheownerandt hebusi
ness.Sol
ePropr
iet
orshipsarethemostcommonform ofl
egal
str
uctur
eforsmallbusi
nesses.

b)Gener
alPar
tner
shi
p

Anassociationbetweentwoormor epeopl ei
nbusinessseekingapr ofit.Par
tnershi
pscanbe
createdwit
hl i
tt
lefor
mal i
ty,butbecausemor ethanoneper sonisinv olved,apartner
shi
p
agreementshouldbecr eated.Apart ner
shi
pagreementstipulat
est het er msofthepartner
shi
p
byfor mal
i
zingrulesforprofi
t/l
ossshar i
ng,ownershi
ppercentages, dissoluti
onterms,and
managementr i
ghtsamongmanyot herthi
ngs.

c)Li
mit
edLi
abi
l
ityCompany(
LLC)
Ahy bridbet
weenacorporati
on,gener
al par
tner
ship,andsolepropriet
orship.Owner
sofanLLC
arecalledmembers.Member smayincludeindi
vidual
s,corporat
ions,otherLLCsandfor
eign
enti
ties.Mostst
atesper
mi tanLLCwithonlyoneowner ,call
eda“ si
nglememberLLC.

3.2.
 Riskconsi
stsofthr
eeparts:
anuncer
tainsi
tuati
on,t
heli
keli
hoodofoccur
renceoft
he
si
tuati
on,andtheeff
ect(posi
ti
veornegat
ive)t
hattheoccur
rencewouldhaveonproj
ect
success.

3.3 
 Entr
epreneurshi
pcompet enci
escombinecreati
vi
ty,asenseofini
ti
ati
ve,pr
obl
em-sol
vi
ng,
theabil
i
tytomar shalr
esources,andfi
nanci
alandtechnologi
calknowl
edge.These
competenci
esenabl eent
repreneursandent
repreneur
ialemploy
eestoprovokeandadaptt
o
change.

3.4.
  The"
marketsize"i
smadeupofthetot
alnumberofpotent
ialbuy
ersofaproductor
serv
icewit
hinagivenmar ket
,andt
het
otalr
evenuet
hatthesesalesmaygener
ate.

3.5 
 Product
ionmet hodsfal
li
ntot
hreemaincat
egor
ies:j
ob(one-
offpr
oduct
ion),
batch
(mult
ipl
eitems,onest epatati
meforal
li
tems),
andflow(mult
ipl
eit
ems,al
lstepsinpr
ocessat
onceforseparat
eitems) .