Business Operations Notes

BUSINESS FUNCTIONS
2024

TABLE OF CONTENTS

TOPICS PAGES
Examination guidelines 2
Concepts/Terms and Definition/Meaning 3
Differences between leadership and management 4
The purpose of the eight business functions 4
General Management Function 4-8
Organisational Structure 9
Administration Function 9-10
Financial Function 11-13
Public Relations 14-15
Purchasing 15-17
CPA and NCA: 17-20
Nature
- Purpose
- Rights
- Responsibilities
- Remedies

This chapter consists of 16 pages

CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT PURPOSES
Learners must be able to:
 Outline/Explain/Discuss the differences between management and leadership
 Recap the eight business functions.
 Outline/Describe/Explain/Discuss the importance of the eight business functions.
 Identify business functions from given statements/scenarios/case studies.
 Name factors that influence the organisation structure e.g. the size of the company,
technology, resources, and strategic goals of the company.
 Name/Explain/Discuss/Describe three types of organisational structures e.g.
functional, project and matrix structures.
 Outline/Explain/Describe/Discuss the activities of the administration function.
 Outline/Describe/Explain/Discuss the importance/purpose of the administration
function.
 Identify these activities from given statements/ scenarios/case studies.
 Outline/Explain/Describe/Discuss the activities of the financial function.
 Outline/Explain/Discuss the importance/ purpose of the financial function.
 Define/Explain/Describe the types and sources of financing.
 Identify the types and sources of financing from given scenarios/case
studies/statements/ pictures/cartoons.
 State/Name/Explain/Discuss the types of capital.
 Explain the differences between a fixed and working capital.
 Explain the differences between own and borrowed capital.
 Outline/Explain/ Discuss the importance/ purpose of the purchasing financial
function.
 Outline the activities of the purchasing function
 Explain/Describe/Discuss the purchasing procedure.
 Explain the differences between cash and credit payments.
 Explain/Discuss the importance of stock Control.
 Outline/Explain/Describe/Discuss the purpose/nature of the National Credit Act and
the National Consumer Protection Act.
 Outline the consumer rights as outlined in the NCA.
 Outline/Explain/Describe/Discuss the responsibilities of credit providers. Outline/
remedies of the NCA e.g. the Consumer Tribunal, National Consumer Commission,
Consumer Court, and an appropriate Ombudsman.
 Discuss/Evaluate/Analyse the impact (positives /negatives) of these Acts on
businesses.
 Discuss/Explain the implication of the National Consumer Protection Act on the
marketing function.
 Outline/Explain/Describe/Discuss the activities of the administration function.
Outline/Explain/Describe/Discuss the importance/purpose of the public relations
Differentiate/Distinguish between external and internal public relations.
Outline/Explain/Discuss the methods of carrying out public relations.
 Identify these methods from given scenarios/ case studies
/statements/pictures/cartoons.
Terms/Concepts Definition/Meaning
General management overseeing everything that goes on in a company,
and making sure that all departments are working
together to turn a profit.
Administration function the process of collecting and storing information that
will be used by management in decision making.
Financial function involves the acquiring and utilisation of funds
necessary for efficient operations.
Purchasing function the act of buying the goods and services that a
company needs to operate and manufacture
products.
Organising the process of identifying and grouping work that
needs to be done, defining and delegating
responsibility and authority.
Leadership (business) providing direction or guidance.
Controlling a function that helps to measure the progress
towards organisational goals, highlights any
deviations, and indicates corrective actions.
Production function the action of making or manufacturing a complete
product.
Marketing function the act of promoting and selling product or services.
Public relations the continuous maintenance of a public image by
the business.
Human resources the department of a business that deals with the
hiring and training of staff.
Top management responsible for controlling and overseeing the entire
organisation.
Middle management responsible for executing organisational plans,
which comply with the company’s policies and lower
management.
Planning is the process of thinking about the activities
required to achieve a desired goal.
Directing activities which are designed to encourage the
subordinates to work effectively and efficiently.
Risk management the process of identifying, assessing and controlling
threats to a business.
Information facts that are provided to learn about something.
Data facts and statistics collected together for reference
and analysis
Consumer Tribunal an independent entity who’s mandate is to hear and
decide on cases involving consumers.
National Consumer Commission promotes compliance with the Consumer Protection
Act through advocacy and enforcement.
Consumer Court court that deals with cases regarding consumer
disputes, conflicts and grievances.
Ombudsman an official appointed to investigate individuals’
complaints against a company.
The differences between management and leadership

Leaders and managers play a vital role in contributing to the success of a business. In Grade
12 we will learn about different leadership styles and leadership theories, which impacts a
business

1 Differences between leadership and management

LEADERSHIP MANAGEMENT
Leaders inspires other people Managers ensures that tasks given to
subordinates are completed
People orientated Task orientated
Uses motivational approach Uses Instructional approach
Uses motivational approach Uses Instructional approach
A leader does not hold a managerial position Managers hold a managerial position in the
business
Leadership is the process of inspiring and Management is the process of achieving
influencing other to achieve business goals business goals
Influences human behaviour Guides human behaviour
A leader creates a vision/sets direction A manager understands the goals of the
business
Communicates by means of Communicates through management
interaction/behaviour/vision/value s/ functions, e.g. line function.
charisma.
Leaders are born with natural/ instinctive A person becomes a manager because
leadership skills he/she is appointed in the position
Lead by example/trust/respect Manage by planning/organising/leading and
controlling

2 The eight business functions

 General management
 Administration function
 Financial function
 Purchasing function
 Public function
 Human resources function
 Production function
 Marketing function

3. The purpose/importance of business functions

The general management
 Sets the overall direction or strategy for the business.
 This function leads, organises and controls all the other functions.
 There are also decisions taken in each level.
 Management has three different levels, each with its own roles and responsibilities-
ensures that there is co-ordination among the seven different functions of the
business.
3.1 The levels of management
The meaning of the levels of management
 The level of management determines a chain of command, the amount of
authority, and status enjoyed by any managerial position.
Let’s look at the three levels of management in more detail.
3.1.1 Top level management
 Oversees the activities of the other functions so that the business can achieve its
objectives.
 Reports to a board of directors/advisory board.
 Takes long term strategic decisions.
 Comprises of the CEO and directors.
 Develop long-term goals, strategic plans, and business policies.
 Responsible for directing, controlling and managing risks.
 Determines the vision/mission/objectives/strategy of the business.
 Act of getting people together to accomplish certain goals.

3.1.2 Middle level management

 Responsible for specific departments within the business.
 Takes medium term tactical decisions.
 Responsible for achieving the goals and objectives set for the specific department.
 Concerned with implementing plans made by top level management.
 Implements the vision and plans of the top management.
 Responsible for working with managers in other departments and for acquiring
resources needed in their departments.
 Execute the organisational plans in conformance with the companies’ policies.

3.1.3 Lower-level management

 Act as role models for employees because they provide supervision, performance
feedback and so on.
 Focus on controlling and directing.
 Responsible for a high level of productivity, technical assistance, and motivating
employees.
 Takes short term routine/tactical decision.
 Implement instructions given by middle management
 They are also called first management level as it is the first management level to
which subordinates can be promoted.
Levels of management and the type of decision taken by each.
Level of Type of decision Examples Responsibilities of the
management levels of management
Top level Make long- term CEOs, directors, -Plan the future of the
management strategic decisions. Owner of sole business.
(Policy), which will trader, partners -Manage change in the
have long-term in partnership business environment.
outcomes/ -Plan the activities of the
Consequences. business.
-Gives direction to the
vision, mission, goals and
objectives.
Middle level Make medium-term Departmental -Controls the people and
management tactical decisions. managers. e.g. processes in the business.
(organise the activities marketing -It is the link between top
needed to carry out a manager. management and lower
plan). financial level management.
manager etc. -Pass information from top
management to lower
management
-Focuses on how the
business will carry out the
strategic decisions
-Acquire.
resources needed in their
department
Lower level Make short-term Foreman, -Make routine activities.
management operation decisions. supervisor, team Plan the daily activities
leaders. --Set individual objectives
for workers working under
him/her.
-Offer feedback and
suggestions to middle
management.
-Implement the objectives
of the middle
management.
-They motivate and guide
workers.
NOTE: You must be able to identify the levels of management from given statements
and scenarios
 4. The management tasks

4.1 The meaning of the management tasks

The management tasks are tools used by an organisation to help complete projects
more efficiently by organising and prioritising related tasks. These tasks address a
general need to organise, prioritise and visualise work. Part of being organised includes
setting priorities for tasks, visualising the progress of tasks as they pass through stages
of completion, and compiling analysis or reports to direct future tasks and workflows.
There are five basic management tasks.
 There are five basic management tasks which include the following:
o Planning
o Organising
o Leadership
o Controlling
o Risk management

 These tasks should be carried out at different levels of the business.

 These tasks are carried out to ensure that the vision, mission, and goals of the
business are met.

4.1.1 Planning
 The process of setting goals and developing strategies.
 It includes getting all the information you need for planning.
 Top management formulates strategic plans.
 Middle management formulates tactical plans.
 Lower management formulates operational plans
 Analyzing the information and set long term goals.
 Considering different plans to achieve the goals.
 Choosing the best plan and decide on the action to be taken.
 Management looks ahead at the future to determine business objectives.
 Planning is done in all departments by all employees with the objectives of the
company in mind.
 Process of setting goals and making plans to achieve these goals.
 Deciding on the backup plan to use if the chosen plan becomes impossible.
 Implementing the chosen plan.
 Follow up to make sure the plan is successful, adjust it or change to the backup plan.
4.1.2 Organising
 It is the mechanism used to execute the plan.
 Involves breaking a plan into action.
 The way in which people are grouped together.
 May also include training to ensure that the jobs are carried out successfully.
 Ensures successful execution of the plan by using relevant organisational structure.
 It looks at what needs to be done and organizing resources need to achieve goals
and objectives.
 Organising the jobs within specific functions or departments.
 People must understand what is expected from them in terms of tasks/ authority /
 responsibility etc.
  The tasks are coordinated to keep resources moving efficiently toward set goals.
 Resources are prioritised to essential areas at any given time.
 This task brings resources together to achieve the set goals.
 The activities are assigned/delegated to specific individuals.
 Employees must know the organisational procedures for instructions and feedback
and which resources they can use.
4.1.3 Leading/Directing/Activating
 Letting staff know what needs to be done, and by when it needs to be done.
 The employees are motivated to contribute to the success of the business.
 The process of leading is to guide, motivate and inspire others to achieve goals.
 Supervise staff while motivating teams through guided leadership communicated in
clear ways.
 Refers to inspiring employees to carry out their task to the best of their abilities.
 Establishing a productive working climate.
 Motivating employees to achieve the goals set.
 Guiding employees in the right direction so that the business can achieve its goals.
 Activating workers to use their skills and resources to their best ability.
 Providing employees with directions on how things should be done.
 Respecting and treating employees so that they work willingly to achieve the
business goals.
 Leaders set up proper communication channels so that the workers are always
informed and there is clear transfer of information.
4.1.4 Controlling
 Ensures that the business achieve its goals.
 Establish performance standards and ensure that those standards are met.
 Ensures activities are carried out as planned.
 Enables the business to take corrective measures if the objectives are not achieved.
 The risk can be identified during control.
 Involves comparing actual results with goals set by management
 Corrective measures must be taken if there is a difference between actual results
and the goals the business set out to achieve.
 Continuous control ensures that the business runs smoothly.
4.1.5 Risk management
 Identify possible risk by finding risk-bearing activities (i.e. activities which could go
wrong) within the organisation.
 Assists businesses to in analyse each possible risk to assess how likely it is that the
risk will happen.
 Evaluates the potential impact of risk in terms of financial liability.
 Controls/Monitors the risk by studying reports and trends in the environment so that
measures can be taken to prevent it from happening.
 Handle the risk by determining what actions to take should the event happen using
available resources and contingency plan and communication with stakeholders.
5 Organisational structure

The meaning of the organisational structure

 An organisational structure is a system that outlines how certain activities are
directed to achieve the goals of an organisation.
 These activities can include rules, roles, and responsibilities.
 The organisational structure also determines how information flows between
 levels within the company.
Factors that influence the organisation structure
o Size of the organisation
o Strategy
o Technology
o Resources

5.1 Types of organisational structure

Functional organisational structure

 Employees get instructions from more than one manager.
 The plans to be executed determines who will be giving instructions.
 This structure confuses employees because they report to more than
one manager.
Project organisational structure
 Structured around project teams.
 It is a temporary structure because employees are drawn from different departments.
 Employees are then grouped to form a project team that will carry out a particular
project.
Matrix organisational structure
 Structured around projects but employees remain in their departments.
 A project must be completed up to a certain point.
 The project is then passed on to the next team that will carry out the next
phase of the project.

6 The administration function

The meaning of the administration function

 Handling of information and data.
 Administration is responsible for collecting, processing and distributing information
which is used for decision by management.
 Stores/Records information by using recent technology.
 Making general office work such as filing and storing of information.
6.1 Activities of the administration function
Management of information
 The administrative staff need to handle information correctly to avoid making the
incorrect decisions based on incorrect information.
 The administration function is responsible for dealing with the following types of
information:
o accounting records, which can be used to draw up financial statements and
reports keeping all business transactions up-to-date.
o cost accounting to determine whether a product can be sold at a competitive
price while considering the manufacturing or production costs
o budgets, which is a plan of estimated expenses and income for a specific
period
o collecting and classifying numerical data and statistics.

6.1.1 Collection of information

 Information is collected from both outside and inside the business.
 Correct and reliable information should be available for meaningful decision
making and to run the business successfully.
 Any other relevant answer related to collection of information as an activity of
the administration function that could be applied by FED.
6.1.2 Information technology (IT)
 IT is the use of electronic equipment to assist with various administrative tasks.
 Technology is used to communicate and handle information and is referred to
as ICT (information and communication technology).
6.1.3 Office practice
 Office practice refers to how the administrative staff should handle their duties
 It covers matters such as the dress code for employees/ proper filing of documents/
telephone etiquette/internet usage by staff etc.

The differences between data and information

DATA INFORMATION
Refers to raw/unprocessed facts found in Refers to processed/analysed data that gives
statistics/ graphs/ tables. specific knowledge to managers to make
decisions
Data can be collected from other business Information can be stored manually in
functions within the business. files/boxes/shelves/computers etc.
Data needs to be processed before it can be It is important to have a backup for all stored
used as information. information on computers or other electronic
devices in case they are damaged
Data can be processed manually or using Most businesses use electronic devices such
technology such as computers as memory sticks and CDs to store
information
NOTE: The action verb “Differentiate/Distinguish” means that the difference/
distinction does not have to link but they must be clear.
7 The financial function

The meaning of the financial function

 Financial function is responsible for planning and managing all the funds and assets
of the business.
 Businesses need a regular stream of income to pay their expenses
 The financial function involves the acquiring and utilisation of funds necessary for
efficient operations.

7.1 The purpose of the financial function

 The financial function determines how much capital the business needs.
 Establishes the sources for acquiring the capital.
 Decides how to invest/allocate the capital funds in the business
 Ensures that the business can generate enough income to cover the cost of raising
capital
 Prepare financial statements to present to the bank/investors to convince them that
the business is financially healthy.

7.1.1 Sources of financing

Bank loans
 This is money borrowed from the bank and will be repaid over a period of time.
 The money is repaid with an interest.
 The entrepreneur who borrows money may attach his/her fixed asset as surety to
the value of the loan.
 Bank loans are usually used for long-term financing.
Bank overdraft
 It is the short -term loan added onto the account of an entrepreneur/business.
 It is also repaid with an interest over an agreed upon time frame.
Asset-based loan
 The money lent to successful businesses that want to expand further.
 The loan is used to purchase an asset and that asset belongs to the lender until it is
fully paid off.
 If the money is not paid back, then the lender will take that asset.
Grants
 This is money provided by government to small businesses that are developing.
 The money does not have to be paid back if it benefits the community.
 The government want to see small developing businesses benefiting the community
and the environment in some way.
Receivable finance
 This is a loan provided to businesses while waiting for payment of the goods /service
provided to avoid a cash flow shortage.
 The loan is equal to the outstanding invoices that are due.
Angel funding
 This is money offered by wealthy entrepreneurs to other businesses for a share in
that business.
 This is usually used at the start of a business and carries a high risk for the investor.
 Venture Capital
 This is money offered by individuals or organisations to start up or expand the
business.
 This is done in exchange of a share in the business.
 The investor usually requires for a management position or to be a board member in
the business
NOTE: You must be able to identify the sources of financing from given
scenarios.
8 Budgeting
 It is a planning tool to estimate the money that will be received (income) and how it
will be used (expenditure). Once the budget is drawn, it should be compared to the
actual income and expenditure. Budget enables businesses to keep track of its
finances and ensure better profitability.
 Each department within the business should have its own budget.

8.1 Types of budgets

Capital budget
 Determines whether an organisation’s long-term investment plans are worth
pursuing.
 Estimates the fixed capital.
 Plans the purchasing, upgrading, and changing of the fixed assets such as buildings,
machinery, equipment, and so on.
Cash budget
 Determines whether income will be sufficient to cover expenses.
 Estimates the working capital.
 Assesses whether the business will be able to buy all the needs for its operation.

9 Investments
 Businesses invest some money from its profit to generate wealth and income.
 Invested money increases without labour effort.
 Businesses can choose to invest in financial institutions, government bonds or public
companies.
 Investments options are available include property investment/ unit trust investments/
Government Retail Saving bonds/fixed deposits etc.
 Types of capital
Fixed capital
 Is the capital that people invest in fixed assets, for example, land and buildings.
 Finance long term capital needs of the business.
Examples: capital market, selling shares, mortgage bonds etc.
Working capital/operating capital
 Money pays for day-to-day activity, e.g. trading stock, raw materials, etc.
 Finance the short-term capital of the business.
Examples: money market, credit allowed by suppliers, short terms loans etc.
Own capital
 This type of capital is provided by the owners of the business.
 It could come from their savings, the sale of their assets, or investors.
Examples: personal savings and venture capital.
Borrowed capital
 It is money borrowed from financial institutions like banks or person.
 The money should be paid back with interest example bank loan, bank overdraft

Differences between a fixed and working capital

FIXED CAPITAL WORKING CAPITAL
- Money pays fixed assets, e.g. land and - Money pays for day-to-day activity, e.g.
buildings etc. trading stock, raw materials, etc.
- Finance long term capital needs of the - Finance the short-term capital of the
business. business
- Examples: capital market, selling shares, - Examples: money market, credit allowed by
mortgage bonds etc. suppliers, short terms loans etc.

Differences between owned and borrowed capital

OWNED CAPITAL BORROWED CAPITAL
- Owner provides capital - Obtained from financial institutions
- Permanent capital as company is not - Temporary capital as it is to be
under obligation to repay the amount. repaid after a fixed period.
- It is not a liability for a business. - It is a liability for a company.
- Return on capital .is on profits. - Return on capital is paid in the form
of interest.
10 The public relations

Meaning of the public relations

 The public relations is responsible for keeping all stakeholders of the business
happy.
 It ensures that there is good communication between the business and all its
stakeholders

10.1 The importance of public relations

 Businesses get publicity for promotional events and information through media.
 News conferences may be called to release information which will ensure the survival
of the business.
 Employees may volunteer to spend time with people in need at
orphanage/hospitals/schools etc.
 Businesses can sponsor community events.
 Produce annual reports that review business activities and achievements.
 Brochures can be used to distribute information.
 Networking a popular form of public relations direct contact with employees or
telephonic communication.
 Attend network events and talk about the business product.
 Use corporate social responsibility as a public relations activity involving communities
to get positive exposure.

10.2 Networking as a popular form of public relations.

 Clients/customers can have direct contact with employees or they can communicate
telephonically.
 Business representatives should attend networking events and promote the product/s
of the business.
 Business could use corporate social responsibility involving communities as a public
relations activity. This will promote businesses and ensure positive exposure.

Differences between external and internal public relations

EXTERNAL PUBLIC RELATIONS EXTERNAL PUBLIC RELATIONS
-Creates a good company image and -Creates a good company image and
awareness to those outside of the awareness to employees in the company.
company.

10.3 Methods of public relations

Media
 Businesses get publicity for promotional events and information through media.
 Includes advertising and the distribution of about the business
Direct contact
 Information about the business is passed on to the members of the public who have
dealt with the business previously.
 Direct contact with employees or telephonic communication is a popular form of
public relations.
Brochures
 Excellent way of distributing information in a cost effective way.
 Exhibitions
 The business is introduced to the public and meet existing customers in shopping
centres
Social responsibility
 The business uplifts the community as the community support the business by buying
their product.
Transit advertising
 Advertising on vehicles such as taxis, busses, vans etc.
Use of the telephone
 A potential customer phones the business to enquire about something, the person
answering the phone is perceived as the business.
 If the potential customer is pleased with when information that was required, then that
person can r to be the important customer
11 The purchasing function
The meaning of the purchasing function
 The purchasing function plays an important role in buying quality raw materials and
services for the business
 It should continuously look for suitable, new and better suppliers
 It should place orders with suppliers and follow up on them to ensure that the ordered
products are delivered on time.
 It ensures that ordered goods are delivered at the agreed price, right quantities and
right quality.

11.1 The purpose of the purchasing function

 Manage stock to ensure sufficient levels of stock to carry out business operations.
 Continuously looking for the best/reputable suppliers.
 Regular make contact with other business departments to determine their needs.
 Send damaged goods back to the supplier and see to it that it is replaced.
 Receive confirmation that all goods were according to specifications and the price
invoiced as the quoted price.
 Negotiate the best possible term of payment with suppliers.

11.2 Activities of the purchasing function

 Purchasers should have expert knowledge of the product they need to buy and about
the market in which they operate.
 Find out the needs other business department
 They look for suitable, new and better suppliers.
 Ensure that there is enough stock available for continuous production and sales.
 Place orders with suppliers and follow up on them.
 Ensure that ordered products are delivered on time.
 Send damaged products back to the suppliers and see to it that they are replaces.
 Buy the right amount of stock/quantity so that the business does not run out of stock.
 Buy goods from the best supplier, who supply the goods at the right time and place
 Get the best price for the quality that the purchasing function requires
 Keep the correct stock levels of stock on hand
 Record the cost prices and selling prises of stock
11.3 Purchasing procedure
The following purchasing procedure should be followed
Determine the need for the product/Requisition
 Liaise with the financial department to establish the budget for the purchasing of
goods and services.
 Determine the product/material/ resource needs of the businesses.
 Find the right quality/ quantity of goods and services at the right price and at the right
time.
Determine the price of the product
 Find the best price by obtaining quotes/tenders or making enquiries.
Select/Choose a suitable supplier
 The purchasing department should choose reliable suppliers for its raw
materials/products.
 Evaluation criteria based on quality of raw material/prices/delivery time, should be
used to select the best suitable supplier.
 The purchasing department should conduct a thorough investigation about potential
suppliers /their reputation and reliability.
Place an order
 The purchasing function should place an order in writing so that goods delivered can
be compared with the order.
 Confirm the prices of the products on order to avoid unexpected surprises when
payments are made.
Collect or receive the order
 The purchasing department should ensure that the right orders are received and
recorded.
 The quality and quantity of stock received should be checked against the order.
 The purchasing department should keep a copy of a delivery note for records
keeping purposes.
Pay the supplier
 Purchasing department instructs the financial department to pay the supplier after
delivery of the order.
 The supplier must provide copies of the requisition form to the purchasing
department.
 Purchasing department must provide a delivery note to the financial department.
 The supplier sends the invoice to the financial department for final payment after
satisfactory delivery.
Distribute stock
 The purchasing department should ensure proper distribution of stock/raw materials
to all relevant departments.
 Distribution of stock should be in line with pre-requisite orders from each department
to avoid stock loss.
Complete the order
 The purchasing department ensures that all the correct documentation is in place
and filed for future reference.
12 The importance of stock control
 Enables businesses to determine the amount/value of stock.
 Businesses can check the cost and selling price of products.
 Ensures that there is enough stock to meet the normal demand of customers. Keeps
the correct levels of stock on hand.
 Records the cost prices and selling prices of stock.
 Identifies theft in the business when the physical stock count is compared with the
electronic stock control system.

Cash and credit payments

Differences cash and credit purchasing
CASH PAYMENT CREDIT PAYMENT
 Cash payment refers to all payments made by  Credit payment refers to all payments made
cash/ cheque for business purchases by means of credit cards/on future date for
business purchases.
 Cash payment enable businesses to budget  Credit payment allows businesses to buy
for stock purchases and avoid unnecessary stock and pay on a future date. .
delays
 Cash payers can qualify for cash discounts.  The credit payer can pay more for goods due
to interest added on credit purchases.

Advantages of credit purchasing

 There is no discrimination based on age/ race/age/religion on granting credit.
 If interest rates decrease consumers will have more cash to pay off debts.
 Consumers will be having disposable income to purchase products if interest rates
are low.
 Low income consumers can buy products on an affordable re-payment as per credit
agreement.
 Consumers can access more than one credit from different creditors if the creditor
made a personal assessment and is satisfied with the credit evaluation.
 Credit goods bought by the consumer have extended warrantee per the credit
agreement.
 If any of the goods/products is damaged it can be easily repairable or replaced.

Disadvantages of credit purchasing

 There is always the risk of unsettled debts.
 Accounts should be send out to debtors.
 There will be less money to invest for consumers
 The credit provider can refuse credit based on credit risk evaluation.
 A consumers’ income and expenses can be declared reckless and can be
suspended if a credit agreement is not adhered to.
 Consumers will have less money to spend so they would not buy as much
 The consumer pay more than the original price due to high interest rates on credit
purchases.

13 National Credit Act/NCA

 Definition of the NCA
The NCA was introduced to provide both credit provides and credit applicants with
clear guidelines regarding their rights and responsibilities.
This Acts applies to all businesses that sell on credit.

The purpose of the NCA

 Promotes the development of a credit market that is accessible to all South Africans
 Encourage responsible buying
 Avoidance of over-indebtedness and fulfilment of credit providers and consumers
 Address and correct imbalances in negotiating power between consumers and credit
providers
 Discourage reckless credit granting by credit providers
 Educate consumers on making the right choice when applying for credit
 It gives guidelines within which the different kinds of credit transactions must take
place in South Africa

Consumer rights outlined in the NCA

Consumers have a right to…

 apply for credit.
 receive information in one’s official language.
 be protected unfair discrimination in granting credit.
 be given reasons why an application for credit is refused.
 be informed about the interest rate and any other costs of the proposed credit
transaction.
 receive a copy of a credit contract and a replacement copy when the consumer asks
for one.
 apply for debt counselling if a customer has too much debt.

The impact of the National Credit Act on businesses

Positives/Advantages
 Lower bad debts resulting in better cash flow.
 Protects business against non-paying consumers.
 Increases cash sales as credit can only be granted to qualifying customers.
 Prevents reckless lending by financial institutions.
 Ensures that businesses settle their debts on time so that they can obtain good credit
scores.
 Ensures that credit process is transparent e.g. both businesses and customers know
their responsibilities.

AND/OR

Negatives/Disadvantages
 Businesses are forced to budget to keep more cash/have enough cash on hand for
stock purchases.
 Businesses can no longer take the risk of selling poor quality goods at high prices.
 Businesses can no longer carry out credit marketing.
  Businesses can only buy limited stock as credit is not available resulting loss of
customers.
 The Act complicates the purchasing process due to too much administration work in
the credit providing process.
 The Act compels businesses to sell quality products or businesses may be forced to
reimburse the consumer.
 Leads to loss of sales as many businesses may no longer qualify to buy on credit.
 The purchasing department must know the terms and conditions of credit granting
and the National Credit Act.
 It may take longer to purchase goods and this could influence the overall efficiency of
the business.

Responsibilities of credit providers

 Credit providers should conduct a credit assessment on the consumers’ affordability.
 Check the most recent pay slip or bank statement to ensure the consumer has an
income.
 Check the consumer’s monthly debt-repayment obligations in terms of credit
agreements.
 Consider other expenses of the consumer.
 Consider the consumer’s debt-repayment history

Remedies of the NCA

The Consumer Tribunal

 The Consumer Tribunal is responsible for reviewing decisions made by the National
Credit Regulator (NCR), the National Consumer Commission (NCC).

National Consumer Commission

 The National Consumer Commission is responsible for promoting compliance with
the NCA and CPA through advocacy and enforcement.
 Protects the economic welfare of consumers.
Ombudsman
 An ombudsman is an independent person with authority and responsibility to
receive/investigate/formally address complaints from consumers.

14 The Consumer Protection Act/CPA

Definition
 The consumer Protection Act was introduced to prevent consumers from exploitation
by businesses.
 This Acts ensures the full participation of previously disadvantaged individuals in the
economy.
 It applies to all businesses which sell goods and services to consumers.

Purpose of the Consumer Protection Act

 Promotes responsible consumer behaviour.
 Promotes consumer safety by protecting them from hazardous products/ services.
 Promotes fair/accessible and sustainable places for people to sell their products.
 Promotes consistent laws relating to consumer transaction and agreement.
  Promotes the rights and full participation of historically disadvantaged individuals as
consumers.
 Establishes national standards to protect consumers.
 Establishes a National Consumer Commission (NCC).
 Ensures that consumers have access to information they need to make informed
choices.
 Provides guidelines for better consumer information and to prohibit unfair business
practices.
 Protects consumers against contracts that include unfair terms which limit the liability
of suppliers.
 Strengthens a culture of consumer rights and responsibilities
 Empowers consumers to take legal action if their rights are not upheld.

The impact of Consumer Protection Act on businesses

Positives/Advantages
 Businesses may be safeguarded from dishonest competitors.
 Businesses may be protected if they are regarded as consumers.
 Businesses may build a good image if they ensure that they do not violate consumer
rights.
 Prevents larger businesses from undermining smaller ones.
 May gain consumer loyalty, if they comply with CPA.
 Enables businesses to resolve disputes fairly through the National Consumer
Commission/Consumer Court/Industrial ombudsmen
AND/OR

Negatives/Disadvantages
 Confidential business information may become available to competitors.
 Penalties for non-compliance may be very high.
 Businesses may feel unnecessarily burdened by legal processes.
 They have to disclose more information about their products and processes/services
 Staff need to be trained /Legal experts need to be consulted, which can increase
costs conducted.

THE CONCEPT OF QUALITY

REVISED NOTES

2024
TABLE OF CONTENTS

TOPICS PAGES
Examination guidelines 2
Quality indicators of the following business functions : 2-3
o Human resource,
 o Administration,
o Financial
o General management
The correlation between management and the success of the 3
business.

This chapter consisting of 3 pages

 CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT
PURPOSES
Learners must be able to:
 Outline/Explain/Suggest quality indicators of the business function of the following
business function
o Human Resources function
o Administration function
o Financial function
o General management
 The correlation between management and the success of business in achieving its
objectives; strengths and weaknesses

1. Quality indicators of the business functions

1.1. Quality indicators of the Human Resources Function
 A Low rate of staff turnover in the business.
 Maintain a healthy relationship between employees and employer
 Provide good working conditions
 The HR manager should work towards building a good relationship
with employees.
 Performance incentives for staff should be offered to increase productivity.
 Market-related salaries should be offered.
 Fair remuneration packages that are aligned to the industry should be provided.
 Makes sure there is a good recruitment policy that attracts best candidates.
 Ensures fair and equitable selection process
 Offer performance incentives for staff to enhance productivity.
 Good relationship with employees.
 Ensure that employee understand the goals and objectives of the business
 Understand the interrelatedness of different departments

1.2 Quality indicators of the administration function

 Use modern technology efficiently.
 All systems and processes should be documented
 Easy to recall/find information/documentation. This is vital part of the administration
function.
 Complaints should be quickly and effectively.
 The administration function should collect data that can be used in decision- making, and
store it safely.
 Fast and reliable data capturing and processing systems.
 Make relevant information available for quick decision-making.
 All documentation is kept neatly and orderly in a safe place.
 Financial documents are kept up to date and recorded accurately.
 Vital information should be available to management when needed.

1.3 Quality indicators of the financial function

 Ensuring a healthy cash flow through ensuring payments are made on time.
 The financial function has to obtained capital from the most suitable sources.
 They should draw a budget to ensure sufficient allocation of cash to prevent wastage.
 Financial records to be kept up to date.
 Accurate financial statements should be drawn up so that management can see the
performance of the business.
 Accountability through tight financial processes.
 Negotiate better interest rates in order to keep financial cost down.
 Draw up accurate financial statements timeously/regularly.
 Surplus funds should be invested to save for future projects/expansion/growth.

1.4 Quality indicators of the general management function

 The general management function develop/Implement/Monitor effective strategic plans.
 Set direction and establish priorities for their business.
 Effectively communicate shared vision, mission and values.
 Take responsibility for setting direction and prioritising responsibilities.
 Ensure that employees have the necessary resource to do the work
 Ensure that all departments/the business meet their deadlines/targets
 Learn about/understand changes in the business environment on an on-going basis.
 Be prepared to set an example of the behaviour that is expected from employees in terms
of ethics/professionalism as well as productivity.

2. The correlation between management and the success of

business in achieving its objectives, strengths, and weaknesses
 Management play an important role in making the correct decisions and motivating
employees to be productive.
 Poor management can result in ineffective employees and loss in productivity.
 Businesses requires ongoing decisions making and problem solving.
 Problems that cannot be solved and decisions that are not made appropriately can lead
to a decrease in productivity.

BUSINESS STUDIES

GRADE 10

PAPER 1

CHAPTER 3

TERM 1

(PART 2)

THE CONCEPT OF QUALITY

REVISED NOTES
 2024
TABLE OF CONTENTS

TOPICS PAGES
Examination guidelines 2
Quality indicators of the following business functions : 2-3
o Human resource,
o Administration,
o Financial
o General management
The correlation between management and the success of the 3
business.

This chapter consisting of 3 pages

 CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT
PURPOSES
Learners must be able to:
 Outline/Explain/Suggest quality indicators of the business function of the following
business function
o Human Resources function
o Administration function
o Financial function
o General management
 The correlation between management and the success of business in achieving its
objectives; strengths and weaknesses

3. Quality indicators of the business functions

3.1. Quality indicators of the Human Resources Function
 A Low rate of staff turnover in the business.
 Maintain a healthy relationship between employees and employer
 Provide good working conditions
 The HR manager should work towards building a good relationship
with employees.
 Performance incentives for staff should be offered to increase productivity.
 Market-related salaries should be offered.
 Fair remuneration packages that are aligned to the industry should be provided.
 Makes sure there is a good recruitment policy that attracts best candidates.
 Ensures fair and equitable selection process
 Offer performance incentives for staff to enhance productivity.
 Good relationship with employees.
 Ensure that employee understand the goals and objectives of the business
 Understand the interrelatedness of different departments

1.2 Quality indicators of the administration function

 Use modern technology efficiently.
 All systems and processes should be documented
 Easy to recall/find information/documentation. This is vital part of the administration
function.
 Complaints should be quickly and effectively.
 The administration function should collect data that can be used in decision- making, and
store it safely.
 Fast and reliable data capturing and processing systems.
 Make relevant information available for quick decision-making.
 All documentation is kept neatly and orderly in a safe place.
 Financial documents are kept up to date and recorded accurately.
 Vital information should be available to management when needed.

1.3 Quality indicators of the financial function

 Ensuring a healthy cash flow through ensuring payments are made on time.
 The financial function has to obtained capital from the most suitable sources.
 They should draw a budget to ensure sufficient allocation of cash to prevent wastage.
 Financial records to be kept up to date.
 Accurate financial statements should be drawn up so that management can see the
performance of the business.
 Accountability through tight financial processes.
 Negotiate better interest rates in order to keep financial cost down.
 Draw up accurate financial statements timeously/regularly.
 Surplus funds should be invested to save for future projects/expansion/growth.

1.4 Quality indicators of the general management function

 The general management function develop/Implement/Monitor effective strategic plans.
 Set direction and establish priorities for their business.
 Effectively communicate shared vision, mission and values.
 Take responsibility for setting direction and prioritising responsibilities.
 Ensure that employees have the necessary resource to do the work
 Ensure that all departments/the business meet their deadlines/targets
 Learn about/understand changes in the business environment on an on-going basis.
 Be prepared to set an example of the behaviour that is expected from employees in terms
of ethics/professionalism as well as productivity.

4. The correlation between management and the success of

business in achieving its objectives, strengths, and weaknesses
 Management play an important role in making the correct decisions and motivating
employees to be productive.
 Poor management can result in ineffective employees and loss in productivity.
 Businesses requires ongoing decisions making and problem solving.
 Problems that cannot be solved and decisions that are not made appropriately can lead
to a decrease in productivity.