Answers to self-assessment questions in the Study Guide and Lessons:

Lessons 1 to 5
Activity 1.1

Identify from t h e five headlines above what type of influence South African
organisations are exerting on society.

The Stilfontein situation has been described in detail above. A mining group has a
certain responsibility to its workers. Liquidating their mine and leaving the mineworkers
to their own devices created a major media disaster for DRDGold. Simmer & jack
Mines, on the other hand, was seen as the white knight coming to the rescue of the
workers and opening up the mines so that gold and uranium could be
exported. Simmer & jack therefore fulfilled its social responsibility while still trying to
attain profits in taking over these mines.

Saambou Bank was liquidated a few years ago and some of the bank's directors are
now being charged with a l l e g a t i o n s of reckless b u s i n e s s d e a l i n g s
and putting shareholders' and clients' capital at risk. The basic allegation is
unethical b e h a v i o u r on the part of the directors, which assumes that they have
betrayed the trust of the shareholders.

De Beers' announcement of a BEE (Black Economic Empowerment) partner refers to

the implementation of the various Acts of government to level the economic
playing field in South Africa. Through this, affirmative action and employment
equity in the South African business environment will be achieved by giving
African people an opportunity to share in the economic wealth of the country.

The Mittal Steel case was discussed in the excerpt above. It is clear that Mittal Steel was
found guilty on charges of damaging the environment and harming the lives of
small landholders in the areas mentioned. Mittal Steel was forced to buy out some of
these landholders, thus trying to rectify the environmental damage that they
caused.

The high cost of telecommunications is well known in South Africa. When consumer
organisations complain about this they are fulfilling their obligation to be a social
force to guard the interests of the consumer, thus hopefully influencing players
such as Telkom to reduce the prices of their services.

Activity 1.2

Use Maslow's hierarchy of needs to classify the above situations.

Using Maslow's hierarchy of needs we can classify the above as follows:

• Being hungry is classified as a physiological need it is the most basic need.

• Being scared to sleep at night reflects a need for security a right that is
guaranteed by the Constitution of the Republic of South Africa.
• having problems with your partner reflects a social need for love and
affection, which seems to be negatively affected.
• having had your boss shout at you in front of your fellow workers affects your
self-esteem negatively. Self-esteem is a very important part of the hierarchy of
needs and may adversely affect your productivity at work.
• Finally, having aspirations to further yourself in life through education is classified
as a self-realisation need, which is the pinnacle of the hierarchy of needs.

Open Rubric
Activity 1.3

1 How would you classify the South African economic system?

2 Would socialism be the answer to South Africa's economic problems?

1 Even though South Africa is often classified as a socialistic economic s y s t e m

together with other developing nations such as Brazil and developed nations
such as Fr a n c e and the United Kingdom, very rarely do any of the three
economic systems in use occur in a pure form. Keeping this in mind, the most
appropriate description of the prevailing economic system in South Africa
is a mixture between the free-market system and the socialist system. In
other words, it is moving towards a market-orientated economy, yet has a
high degree of government participation and control within the economy.
2 Some members of the government a l l i a n c e see socialism as the best
alternative economic system. They state that only in a socialist South Africa will
problems of unemployment, lack of housing and other needs of society be solved.
The opinion is that without the planned, rational, equitable and sustainable
use of South Africa's resources the survival of all the people of South Africa is
at risk.
In this section we looked at the three main economic systems, which include the
free-market economy, the command economy and socialism. In the next
section we will look at the need-satisfying institutions of the free market.

Activity 1.4

The telecommunications organisation, Telkom, was owned by the state. Then

Telkom was privatised and its shares are now traded on the Johannesburg Stock
Exchange. However, the South African government still holds shares in the
organisation.

The Treatment Action Campaign (TAC) is a non-profit private organisation that

campaigns for the rights of South Africans suffering from IV Aids. It is described as a
non-governmental organisation (NGO).
Pirates is a private profit-seeking organisation owned by private businesspeople.

Activity 1.5

Which of these statements have to do with the broad South African economy and
society in general? What are the implications of these statements for South African
businesses?

All of these statements have implications for the broad South African economy and
society in general. H owever there are also implications for business organisations,
in that businesses such as retailers must be careful about granting credit to
consumers because an increase of 2% in the interest rate will have a negative
impact on the disposable income of consumers. This could therefore adversely affect
the turnover of these organisations. As such, this statement must be carefully
considered by the financial function of the business, which deals with the granting of
credit. The reference to the labour laws is also important for each and every business
in South Africa that is currently very hesitant about employing more workers because
of labour laws that are perceived to be restrictive.

Activity 2.1

What makes the people in the above scenarios entrepreneurs?

Each of the persons in the above cases is an entrepreneur. This follows from the fact
that they all started their own businesses. Freddie, for instance, started on the road
to entrepreneurship when he was 12 years old. Beauty became an entrepreneur when
she started the cleaning business. Roderick started his accounting business when
he did accounting Jobs in his spare time while still employed as a clerk.

Activity 2.2

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activity.

Activity 2.3

1. What management skills did Mr Ndamane use in his quest to be a

successful entrepreneur?
2. What resources did Mr Ndamane use to start his business?
3. How did Mr Ndamane identify the new business opportunity?

Question 1

The skills required to be a successful entrepreneur are the basic functional skills required
to be a manager, namely to understand and apply the principles of management. In
other words, one needs to be able to plan and implement an idea and to control
aspects of a business and people. If we take a closer look we will see that Mr Ndamane
had some strategic skills. He was jobless and started to sell tins of oil to taxi drivers
in the area in which he lived. He realised then that he could do more than just
be a reseller of oil because there was a need for this kind of service (a reseller is a
person who buys a product with the intention of reselling the product and usually
making a profit from this effort). If he could convince Engen (the oil company) to
make him a distributor he would enlarge his business (a distributor i s an organisation
that sells the product to different resellers who then sell it to the customer). This also
means that he had some planning skills because he saw the opportunity and
planned to utilise the opportunities available to him (i.e. to grow his business and to
get other people to help him sell the product). This brings us to the marketing skills
that he used: he could see that he was satisfying his customers (the taxi drivers)
because he was offering them convenience. The taxi drivers did not need to visit a
shop to buy oil - instead they could buy it at a stop street on their taxi route. When he
started the new paraffin business he also fulfilled the needs of his other customers:
housewives who could not travel to a shop. Obviously Witness also had some financial
skills because he realised that he could buy tins of oil and resell them at a profit and so
try to make a living. When he started the paraffin business he really hit the jackpot
Even at a low profit of 10 cents a litre he could be earning R100 000 per year with a
turnover of R1 million. Witness also used project management s k i l l s when he started
the paraffin business. just look at how he organised an uninterrupted supply of
paraffin, first installing a 1 000-litre tank at home and thereafter as the business
expanded an additional tank of 9 000 litres, ensuring a steady supply of paraffin to his
 customers. When Witness started employing people (he currently employs four
workers in two shops) he was also using his human relations skills, among other
things by motivating them and communicating with these employees in order
to keep the customers happy.

Question 2
The resources used by Mr Ndamane are not clearly stated in the case study. There were
obviously some financial resources available to Witness when he was retrenched. In
terms of legislation he was owed some money by his previous job in the form of
severance pay. It is also mentioned t h a t he was driving a delivery vehicle, which must
have been bought with money available to him. He also had some human
resource skills in that he was involved in the transportation business (maybe
building up a network of people who could help in his new venture) and he gained
additional selling and marketing skills in his hawking of oil at stop streets. He also
had some operating resources because he had a delivery vehicle to make it
possible for him to sell the paraffin to customers in the township.

Question 3
This question refers to the identification of opportunities by an entrepreneur. Mr
Ndamane had a business idea when he proposed to the Engen Company that they
should make him a distributor of oil in the township. The problem was the venture's
feasibility. The investment opportunity was restricted because there are usually a
limited number of taxis operating in a certain township. H ow many litres of oil do
you sell per day to taxis? These would surely not be enough to be really profitable and
to be able to care for your family? The people from Engen had a better opportunity in
mind when they redirected Witness to the idea of selling paraffin. There is a proven
need for paraffin in the townships because it is used in Primus stoves to prepare
food and for heating purposes. It is also evidence that there was growth potential,
because initial demand for the product exceeded his initial expectations. The timing
was right because there was a latent need for an entrepreneur to provide a service to
the spaza shops and to the housewives in their homes.

Activity 4.1

1. Identify the three sub-environments of the business environment for an

organisation such as Shoprite and briefly describe the influence of each of
these sub-environments on this business.

Shoprite is the largest supermarket chain in Africa and one of the ten largest in the
world. As such Shoprite is exposed to all the variables that were mentioned as part of
the business environment above. Let us take a look at the influence of the three sub-
environments on Shoprite's operations:
• Micro-environment
In this sub-environment we see that essentially Shoprite has complete control internally over
the running of the business. It can formulate its vision and objectives, determine its
objectives and set up an organisational structure that makes it easier to manage this vast
business which is represented in a major number of African countries. It also has control
over resources such as capital and human resources. One of its major problems is the scourge
of HIV1Aids and how this impacts on its most valuable resource, namely its employees.
Because of the size of the organisation, it has a limited influence on the market environment
as it sells a major share of grocery products in the countries in which it operates.
• Market environment
The market environment consists of the customers, and the suppliers of grocery
products such as the manufacturers of the range of McCain frozen vegetables.
Intermediaries are also involved, such as the transporters of the groceries from the
manufacturer to S h o p r i t e ’ s warehouses. There are also the competitors in this
environment such as Pick n Pay and the Spar chain of supermarkets. They are all
competing for the money in the customer's pocket. The market environment has an
influence on Shoprite's micro-environment through especially the intensity of the
competition and the changing needs of the customer.

• Macro-environment
This is the sub-environment in which matters such as an increase in taxation or a
lowering of the interest rate influence the market environment, for example putting more
or l e s s money into t h e customer’s hands. These changes in the macro- environment
will thus have an indirect influence on the profitability of the Shoprite group.
Visit the website of the Shoprite group (http11www.shoprite.co.za) for more information on
this group.

Activity 4.2

There are various reasons why South African businesses must get involved with the
management of HIV Aids in the workplace. Some of these reasons are the
following:
• Better opportunities for growth in markets. Signs of long-term, negative
economic effects of H IV Aids suggest that business opportunities for growth in
South Africa may be constrained if steps to counteract the pandemic are not
taken. Business- sponsored H IV Aids prevention programmes in workplaces
and local communities help to reduce the accumulated costs and extent of the
pandemic.
• Increased productivity. There are varying estimates about the loss of productivity
each year due to the absence of individuals with H IV Aids from the work
force. Productivity is negatively a f f e c t e d by increased absenteeism, the loss of
skilled employees, the need to invest in training replacements and declining
morale.
• Decreased costs of healthcare and other employee benefits. The healthcare and
related costs sustained by companies having employees with HIV Aids can be
a significant burden. A Harvard University survey of companies in Durban,
South Africa, concluded that companies may need to set aside as much as 7,5%
of their annual payroll to fund losses incurred by the disease. Company-
generated HIV Aids t r a i n i n g and education for employees can
contribute to the reduced prevalence of HIV and to reducing long-term health
costs. Studies of South African firms indicate that cost savings due to
investment in prevention and education programmes are as high as 3, 5 to 7,5
times the cost of intervention.
• Reduced employer liability. South African businesses can reduce their risk of legal
liability by implementing a formal IV Aids policy that prohibits discriminatory
behaviour, providing training and education to reinforce this policy, and taking steps
to ensure accommodation for employees with IV Aids.
• Continued work force diversity. Rates of IV infection worldwide are highest
among the youth and women. Women now account for half of all Aids cases,
and in Africa it is estimated that 0% o f all IV-infected persons are
women. Businesses that place special emphasis on IV Aids education and
 support for employees in these particularly at-risk populations will benefit from
being able to maintain a work force that represents multiple perspectives, talents
and skills, as well as being more reflective of the general population.
• Lower rates of employee turnover. Company efforts to prevent HI V infection and
to support employees with H IV Aids will reduce the numbers of employees lost to
this disease.
• Improved employee morale. The most immediate reported benefit of workplace
HIV Aids education is improved morale. In addition to providing information that
allays fears and offers guidance on preventing infection, support programmes are a
sign that employers are knowledgeable about the issues and care about their
employees. F ormal policies on H IV Aids also raise morale by clarifying
responsibilities and expectations.

Activity 4.3

1. How would you classify the following developments as part of the six sub-
environments of the macro-environment?
• The government announces the date of the general election.
• Inflation is on the rise.
• Unemployment figures are on the rise.
• More women are going out to work.
• A wonder cure for influenza has been found.
• There is an increase in oil spills on the South African coastline.

Activity 4.3

Although the process of environmental scanning covers the same aspects of the
business environment, some unique requirements need to be considered when you do
an environmental scan for a particular business. Remember that t h e different
environments a f f e c t businesses differently. A computer manufacturer, for example,
will be affected far more by the technological environment than will, say, a bakery. A
public organisation will be influenced more by the political environment than a bicycle
repair shop. A farming business will be far more influenced by the physical environment
(ie the climate) than a firm of accountants. What may be a factor in the macro-
environment for one business could be a significant factor in the market
environment of another business. The gold price (international economic
environment) will be part of a gold mine's market environment, but part of a shoe
factory's macro-environment.
 Activity 5.1

There is no one correct answer to this activity. You could have referred to the various
definitions mentioned above, but you should have stated in your own words what you
understand by corporate social responsibility. You should have included the following
elements in your definition:
• responsibility
• stakeholders
• laws
• social impact
• environmental impact
• economic impact
• society

Next we discuss another approach to illustrate the elements of corporate social

responsibility and how it relates to the three elements of the triple bottom line. This
approach considers corporate social responsibility in the context of an organisation's
upstream relationships (supply chain), internal business p r a c t i c e s , downstream
relationships (customers and products) and wider societal and environmental impacts.

Supply chain Workplace Marketplace Society

Environment • Supply chain • Impact of • Impact of • impact of op-
impact operations products erations and
products
Economic • Enterprise • Company • Enterprise • Economic va-
support control support lue
• Preferential • Product ac- • Enterprise
procurement cess support
• Social invest-
ment

Supply chain Workplace Marketplace Society

Social • Supply chain • Employees' • Product stew- • Social impact
compliance workplace ardship of opera-
• Equity tions
• Skills and • IV Aids
training
• ealth and
safety
• IV Aids
Source: The good corporate citizen (2004:34)

Activity 5.2