Business Studies Grade 10

Business Studies Grade 10
HEAD FOR SUCCESS Business Studies Grade 10

Topic 1: Contemporary socio-economic issues
TERM 2 Topic 1: Contemporary socio-economic issues

CONTEMPORARY SOCIO-ECONOMIC ISSUES
“Socio” refers to people. “Economic” refers to the economy of a country. “Issues” refers to a problem. Socio-economic issues refer to problems that negatively affect people and the economy.

Inequality and poverty Inclusivity Unemployment and unproductive labour force HIV/Aids Gambling Piracy Counterfeiting, imitations and bootlegging Strikes, labour disputes and political disturbances Violence Crime

Inequality and poverty Inequality in a socio-economic sense is the degree to which people do not have the same opportunities in life and are treated differently. Greater inequality causes greater differences in income, so the rich become richer and the poor become poorer. Poverty is the state of being poor – where people have little or no money and often cannot pay for their basic needs. Poverty usually goes together with poor living conditions, hunger and disease.

Inequality and poverty Inequality means that everybody is not equal. Some people are very rich, while others are desperately poor. There is a large gap between the rich and the poor in South Africa. Government needs to ensure that education is accessible to all people. It is much easier for qualified people to find employment that for unqualified people. It is much easier for qualified people to find employment than for unqualified people. Once a person is employed, he/she earns money. As people start earning and spending money, businesses grow. Businesses then need to employ more people. Inequality is one of the major reasons for poverty. A person is poor when he/she does not have enough money to satisfy his/her basic needs.

Inequality and poverty Other reasons for poverty include: Illiteracy Lack of education High and constantly increasing costs of living lack of job opportunities

Inequality and poverty Inequality and poverty have the following influences on businesses: The cost of inequality and poverty for businesses are high, because many businesses spend money on relieving poverty through their social responsibility programmes. Inequality and poverty shrink the market because poor people cannot afford to buy luxuries. This leaves businesses with only a small portion of the market to sell their products to. Inequality and poverty often lead to crimes such as robbery and shoplifting. Businesses suffer losses as a result of these crimes, because money must be spent on improving security. Insurance premiums also increase when businesses claim from their insurance.

Inclusivity Inclusivity means giving everyone equal opportunities. For example, inclusivity allows no discrimination on the basis of age, race, gender, sexual orientation, disabilities or HIV status.

Inclusivity Inclusivity means that no one should be discriminated against. Discrimination is when a person is excluded from something. The following policies and Acts have been implemented in an effort to create an inclusive workforce: Employment Equity Act Eliminates unfair discrimination in the workplace. Promotes equal opportunities and fair treatment of all employees. Ensures equal representation of all population groups in the workforce.

Inclusivity The following policies and Acts have been implemented in an effort to create an inclusive workforce: Skills Development Act Aims to develop the skills of the South African workforce. This is mainly done by using the workplace as an active learning environment. If an employer provides training to employees, the employer qualifies for grants from the state to pay for this training. Affirmative action A policy according to which preference is given to previously disadvantaged individuals (PDI) when an employer employs new candidates. Previously disadvantaged individuals refer to all people who were treated unfairly before 1994 due to the apartheid laws.

Inclusivity The following policies and Acts have been implemented in an effort to create an inclusive workforce: BEE and BBBEE Promotes distribution of wealth to black people. Promotes ownership of business enterprises by black people. Promotes the appointment of previously disadvantaged individuals in managerial positions.

Inclusivity Inclusivity influences business operations in the following ways: Businesses had to (and are still in the process of adapting) their policies to comply with legislation that promotes inclusivity. Only businesses that comply with this legislation are considered for state contracts. These contracts are usually very large – businesses may even have to employ additional employees. Business enterprises that do not comply with legislation that promote inclusivity face fines and will not be considered for state contracts.

Unemployment and an unproductive labour force Unemployment is the condition where people want to work and are able to work, but cannot find a job. Unemployment often goes with a lack of skills or the wrong skills for the current job market, but if the economy is in recession or not growing fast enough to absorb new job-seekers, many skilled people will also struggle. An unproductive labour force produces less than it should. This is usually the result of too little or inappropriate training and education and poor health. An unproductive labour force results in tension between employers and employees, low profits for businesses, and stress for both employers and employees.

Unemployment and an unproductive labour force Unemployment: A person is unemployed if he/she is looking for employment, but cannot find employment. There are many reasons why people are unemployed, e.g.: lack of skills and qualifications retrenchment due to poor economic conditions lack of job opportunities Socio-economic issues such as poverty and unemployment create a vicious cycle. Unemployed people usually have very little money to spend. Business enterprises cannot grow or expand if people don’t spend money. This means that job opportunities are not created.

Unemployment and an unproductive labour force Unproductive labour force: A person is unproductive if he/she cannot complete a reasonable amount of word in a reasonable amount of time. A business enterprise must set and achieve performance targets to be profitable. An unproductive labour force will not achieve its performance targets. Additional people must then be appointed to do the work of unproductive employees at an extra cost. An increase in expenses results in an reduction in profit. This means that there is not enough money for growth and expansion and that job opportunities cannot be created.

Unemployment and an unproductive labour force Unemployment and an unproductive labour force influence business operations in the following ways: Limit growth and expansion Increase labour costs

HIV/Aids HIV and Aids is an incurable disease which gets transferred from one infected person to another healthy person through certain body fluids, such as blood and semen.

HIV/Aids HIV is the abbreviation for human immunodeficiency virus. According to medical science, this virus causes Aids. Aids is a chronic disease where a person looses cellular immunity, which affects the person’s ability to fight off infections. People with Aids are more inclined to contract diseases than people who do not have Aids. Employers may not discriminate against people who live with HIV/Aids. However, Aids will influence productivity in a business enterprise. Business enterprises should devise policies and strategies for dealing with HIV/Aids.

HIV/Aids HIV and Aids influence businesses in the following ways: High absenteeism – employees living with Aids will generally need more sick leave than employees who do not have Aids. Reduction of the business enterprise’s labour force – sick employees will eventually stop working. This means that the work must now be done by fewer employees. Reduction in the country’s workforce – because the HIV/Aids prevalence rate in South Africa is so high, it reduces the labour force in general. Increased recruitment costs – HIV and Aids cause business enterprises to hire employees more frequently. There are costs involved in hiring new candidates. This puts an additional financial burden on businesses.

Gambling Gambling means to bet on something of which the outcome is not certain. Illegal gambling includes all operations which are not allowed by law in a particular place. A Pyramid scheme is a deposit-taking business that promises people abnormally high interest returns on money they invest, or abnormally high income from goods or services they sell. This promise of a high return convinces more and more people to place money with the scheme, because they think that they will all get these high returns. Money laundering is the process whereby criminals invest the ‘dirty’ profits from their crimes in legal businesses so that the money becomes ‘clean’. Doing this, makes it easier for criminals to operate because it hides their criminal activities.

Gambling Gambling means to bet on something of which the outcome is not certain. There are different forms of gambling, for example, casino gambling, the National Lottery or betting on horses. Some people become addicted to gambling. People become addicted to gambling because they believe that they will win some money the next time they gamble. They usually don’t. Because they have already spent much money on gambling, they feel forced to keep on trying to make up for some of the losses they have incurred. The National Responsible Lottery Programme was launched in 2000 to educate gamblers on responsible gambling.

Gambling Pyramid schemes: A pyramid scheme is a type op fraudulent investment scheme. There is one person at the top of the pyramid scheme – this person invests money in the pyramid scheme. This person now recruits ten people on the second level of the pyramid scheme who each invest money. The people on the second level must now each find ten people to invest money in the scheme. The person at the top of the pyramid makes money from all the investments on the lower levels. The people on the other levels receive money from everyone lower on the pyramid than themselves. The problem with a pyramid scheme is that it runs out of new investors fairly quickly. People are deceived into believing that they will make money, when in fact it is only a matter of time before the pyramid collapses.

Gambling Illegal gambling: The National Gambling Act (Act 33 of 1996) permits specific gambling activities at specific gambling venues. Gambling activities not permitted by the act are illegal. Illegal gambling operators do not pay tax, because they don’t disclose the source of their income. Illegal gambling may cause harm and financial distress to people who participate in it, because the illegal gambling industry does not inform people about the dangers of addiction. Money made from illegal gambling activities may be used to finance other criminal activities.

Gambling Money laundering: Money laundering refers to hiding the source of money that was obtained illegally. Money can be obtained illegally in different ways, for example stealing and drug dealing. Money that was obtained illegally is known as “dirty money”. Dirty money is sometimes used to run legal businesses. The money made from this legal business, now appears “washed” or “laundered”.

Gambling Gambling, pyramid schemes, illegal gambling and money laundering have the following influences on business operations: Theft – business enterprises suffer losses as a result of employees stealing money to sustain their gambling habit, or to finance a criminal activity. Cost of rehabilitation – if an employer is aware of an employee with a gambling problem, the employee should be given the opportunity to enter a rehabilitation programme. Loss of productivity – an employee will need time off from work to participate in a rehabilitation programme. Criminal charges – the directors of business enterprises engaging in illegal activities face criminal charges.

Piracy Piracy in the modern business sense is the illegal act of copying or reproducing someone else’s material or product without permission. Piracy is basically the theft of ideas, often referred to as intellectual property. For example, if you put Microsoft software onto a computer without paying Microsoft for the version you use, you are pirating that software.

Piracy Piracy takes place when a person makes copies of goods protected by either copyright laws or trade mark laws, without the consent of the true owner of the goods. Products that are often associated with piracy are computer software, CD’s and DVD’s.

Piracy The following definitions will help you to understand piracy better: Intellectual property A product, for example artwork, music or poetry that was created by someone with their mind. Intellectual property belongs to its creator. Copyright Only an owner of intellectual property has the right to produce and copy it. Patent An invention. Someone who holds a patent has the sole right to produce and sell an invention. Trade mark A unique mark that represents a business enterprise and that belongs to the business enterprise. Includes words, slogans, designs, signs and symbols. Registered trademarks may not be used by anyone else, except by the business enterprise/person it belongs to

Piracy Consumers create a demand for pirated goods. If no one buys pirated goods, criminals will have no-one to sell pirated goods to. Business operations are affected by piracy as follows: Financial losses – businesses lose out on potential income. Businesses found guilty of selling pirated goods face fines and business owners face criminal charges.

Counterfeiting, imitations and bootlegging Counterfeiting is making goods that intentionally look like other products. For example, illegal copies of passports, driver’s licences or banknotes are counterfeit goods. Producing them or using them intentionally carries heavy fines. Bootlegging is illegally manufacturing goods for sale. Bootlegging usually refers to alcoholic drinks, or recorded music on CD’s and DVD’s.

Counterfeiting, imitations and bootlegging A counterfeit product or imitation is a copy of an original product. Counterfeit goods sometimes carry trademarks that look very similar to original and well-known trademarks. The quality of counterfeit goods is usually inferior if compared to original goods. Counterfeits are usually much cheaper than original goods. Authorities confiscate counterfeit goods. Bootlegging refers to smuggling. Smuggling takes place when goods are brought into a country illegally. Smuggling generally occurs to avoid taxes, or because the goods are illegal e.g. counterfeit goods or drugs.

Counterfeiting, imitations and bootlegging Counterfeit goods/imitations and bootlegging affect business operations as follows: Business enterprises lose money that could have been used for expansion and the creation of job opportunities. Counterfeit goods often result in price increases of original goods. Counterfeit goods did not go through quality tests. Illegal cigarettes can be more harmful than cigarettes that is regulated through law.

The relationship between piracy and copyright: When an author publishes a book or a musical makes a recording, the contents of the book or the recording is the intellectual property of the person who created it, and it belongs to that person (or people, if it is a group of musicians). There are strict laws that protect such property rights, and the punishments for transgression are severe. For example, if you are caught copying a CD you can get a jail sentence of five years or a fine of R The South African Federation Against Copyright Theft (SAFACT) works to enforce intellectual property rights. SAFACT’s motto is: It’s criminal if it’s not original.

The relationship between piracy and copyright: Patent laws protect new inventions. In other words, if you invent something that you think you can produce to sell, you can apply to take out a patent on it. You will have to include a sample of your invention with the application. Once a patent is awarded, nobody else may then produce and sell that same item or specific service. Businesses use trademarks to identify themselves and their products. Any mention of a trademark name therefore has the sign ᵀᴹ after it to show that this name is trademarked.

The relationship between piracy and copyright: Copyright is the exclusive rights given to a creator of original work, including the right to change, copy or distribute the work. Copyright owners are the only ones who can give permission for their work to be copied or used by others. Copyright laws applies to copying books, music or any sound recordings, maps, drama productions, photographs, drawings and paintings as well as computer programmes.

Strikes, labour disputes and political disturbances A strike is a type of industrial action by workers who refuse to work, in an attempt to force other business stakeholders to agree to workers’ demands on an issue, usually with the employer.

Strikes, labour disputes and political disturbances Strikes usually occur when employees and employers cannot agree about wage increases or other benefits. A strike is usually the result of a labour dispute. A strike takes place if workers refuse to work. A labour dispute is a conflict of interest between members of a trade union and their employer. The most common reason for strikes are wages, working hours and working conditions.

Strikes, labour disputes and political disturbances There are different kinds of strikes, for example: Go-slow Employees show up at work, but work very slowly and produce fewer goods than usual. Sympathy strike Members of trade unions that are not in dispute with their employers, join a strike in support of workers who are in dispute with their employer. Sit-down strike Employees show up at work, but refuse to do any work. Wildcat strike Against the law – takes place without any warning. Work to rule Workers cause a decrease in production by doing only the minimum expected of them according to the rules of the workplace. Lock-out Employees are locked out by their employer and refused entry to their workplace.

Strikes, labour disputes and political disturbances Fewer or even no goods are produced while workers strike. Once workers return to work, they often need to work overtime to make up for all the lost production time. A political disturbance refers to any conflict on the political front. Investors prefer investing money in countries that are politically stable.

Strikes, labour disputes and political disturbances Strikes, labour disputes and political disturbances influence business operations in the following ways: Strikes, as well as political disturbances, scare off potential investors. Strikes result in production losses. Sometimes, a strike is so severe that a business has to close down. Strikes result in income losses.

Violence Violence refers to an act of aggression and involves the use of force. Violence is usually used when a person resists doing something, or it is used to defend or increase power, for example, police has used violence to control striking workers. There are different kinds of violence, for example: Political violence Acts of aggression due to political instability. Can result in, among others, war and terrorism. Emotional violence Involves constant criticising and threats. Causes emotional pain and fear. Physical violence Violence in the form of physical force e.g. kicking or hitting. Causes physical harm. Domestic violence Refers to physical and/or emotional violence between family members.

Violence A person who is, or was subjected to violence, can still be traumatised long after the violence took place. This influences the work performance of employees who have experienced trauma. Employers should therefore devise strategies for supporting traumatised employees. Violence influences business operations in the following ways: Political violence scares off investors. Businesses in violence stricken areas may sometimes need to close for the duration of the violence – this results in loss of income and productivity. Employees who were affected by violence may sometimes be less productive.

Crime Crimes refers to activities that are against the law. Crime is a problem in South Africa. The high crime rate has lead to many (mostly skilled) South Africans emigrating. Money made from crime is sometimes used to finance other and even more serious crime. We must all play a role in the fight against crime by distancing ourselves from activities such as corruption and bribery.

Crime Theft, burglaries and hijackings: Theft refers to stealing. Theft can take on various forms: Shoplifting Takes place when goods are stolen from a shop by a person who pretends to be a customer. Robbery Takes place when a person s threatened (usually with a weapon) to hand his/her possessions over to a robber. Robbers often target shops – shop attendants are threatened to hand over all the cash on the premises, while customers are robbed of their possessions. Burglary Takes place when a building has been broken into. Usually takes place when a business is not open for business. Hijacking Usually refers to the stealing of vehicles while the vehicle is in transit.

Crime Corruption: Corruption refers to acts of dishonesty. Involves the abuse of one’s position for dishonest gain. Examples of corrupt acts include: Bribery Money is offered to a person to influence that person. Example: money is offered to a traffic officer by an offender to “forget” about a traffic offence. Kickbacks Money is paid back to a person who makes a transaction possible. Example: a road construction company might pay back some of the money made to the government official who awarded the job to their company.

Crime Abuse: Abuse means not to use something for the purpose it was intended for. There are many different kinds of abuse, for example: Abuse of power Some employees who have been appointed in positions of power, use their power wrongfully. Power should be used responsibly and to achieve the goals of the business. Example: the human resources manager at a business abuses her position by appointing one of her friends, despite her friend not being the best candidate. Abuse of money The wrongful use of money. Some employees have access to funds of the enterprise. This money should be used responsibly. Example: using a business’s petrol card to fill up your car and to go on a personal trip.

Crime Abuse: There are many different kinds of abuse, for example: Substance abuse Improper use of substances such as drugs or alcohol. Employees who experience problems with substance abuse usually struggle to concentrate, they arrive late, they are absent often and they sometimes have trouble controlling their emotions. It is therefore in the employer’s best interest to help struggling employees to rehabilitate. This means that employers allow employees time to recover. By doing this, the skills of these employees are retained. Abuse of work time Improper use of work time. Employees are getting paid for the time they spend at work. It is unethical to use work time for personal matters. Example: personal telephone calls during working hours.

Crime Crime affects business operations in the following ways: Loss of income due to fraud and the replacement of stolen goods. Increase in expenses, e.g. to improve security (alarms, security gates, security guards). Loss of skilled employees who emigrated. Loss of productivity when employees use work time for personal matters.

Business Studies Grade 10

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Business Studies Grade 10

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