Jeppe High School for Boys

Grade: 11Subject: Business Studies

June Examination 2015

Date: 10 JuneDuration: 3 Hours

Total Marks: 300 MarksExaminer: Mr B. Gittins

Moderator: Mr D. Jackson, Mrs C. LilleyQuality Control: Ms T. Bechus

Number of Pages: 15

Instructions:

Complete the front cover of your answer booklet. Answer all questions in the answer booklet provided. Number in the middle of the page. Rule off after each section. The following are not allowed in the examination room: cell phones,

school bags, ipods (or similar devices), books, dictionaries, notes, sketches or paper. Only the official examination material distributed by the invigilator is allowed. The Question paper consists of THREE sections: This paper consists of the following sections, please use the table below to make your

question selections.

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Use the time allocation as a guideline.

SECTION A COMPLULOSRY SECTION: COMPLETE ALL QUESTIONS

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QUESTION SECTION MARKS TIME

1 A: SHORT QUESTIONS 40 30 minutes

23456

B: SHORT QUESTIONS

Answer any THREE of five questions

180 90 minutes

30 minutes

per question

78910

C: ESSAYS:

Answer any TWO on four questions

80 60 minutes

30 Minutes

per essay

TOTAL 300 3 Hours

QUESTION 1.1 MULTIPLE CHOICE (10 X 2 =20)

Choose the correct answer and indicate the letter next to the question.

1.1.1 The rate indicates the increase or decrease in the price of consumer goods from one year to the next. It is calculated monthly from year to year and will indicate the % these goods have gone up or down from one year to the next.A Interest ratesB Inflation ratesC Exchange ratesD Repo rate

1.1.2 This is the type of business where the owner(s) pay(s) tax in his (their) capacity.A Private and public companyB Close corporation and partnershipC Partnership and private companyD Sole trader and partnership

1.1.3 A registered symbol, design, name or specific colour that is afforded exclusive legal protection.A trademarkB sloganC brandD prototype

1.1.4

The above diagram of the matric pass rate in South African high schools is an example of a:A bar chartB line chartC pie chartD gantt chart

1.1.5 Which ONE of the following is an example of a problem solving technique?A delphi

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B stepladderC force-fieldD all of the above

1.1.6 Which one of the following Ethics theories “focuses on a person’s character rather than their actions”?A virtue-based theoryB good cop bad cop theoryC utilitarian theoryD deontological theory

1.1.7 An example of poor judgement as a result of stress in the workplace is:A staying absent from workB being incompetent to perform tasksC deciding to double production levels even though there is a severe shortage of

staffD mood swings and regularly fighting with fellow colleagues

1.1.8 An unethical business practice where a company uses misleading promotions and information to lure customers into buying their products:A abusing work timeB unfair advertisingC sexual HarassmentD tax evasion

1.1.9 When doing a Gantt chart, activities that can be done at the same time as other tasks are known as:A parallel TasksB dependent TasksC critical Path AnalysisD timelines

1.1.10 Which of the following are examples of debt agreements that businesses can enter into:A instalment sale agreementsB leasesC debenturesD all of the above

QUESTION 1.2 WORD BANK (10 X 2 = 20)

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Choose the correct answer to the sentences below:

Stepladder technique, Residual, Contingency Plan, Gantt chart, Ordinary Shares, Outsourcing, Prospectus, Operations Plan, Breaking Point, Gantt Chart, Instalment Sale Agreement, Franchising, Nepotism, Memorandum of Incorporation, Fraud, Borrowed Capital, Break-Even, Preference Shares, Own Capital, Marketing Plan, Leasing, Trade Credit, Non-cumulative preference shares, Pie Chart, Fishbone analysis, Delphi technique.

NO. SENTENCE

1.2.1 The point at which a company covers its costs and begins to make profits.

1.2.2 A problem solving technique whereby lines are drawn at angles on a diagram in order to represent the cause or effects of a problem.

1.2.3 The shareholders receive a higher dividend if the company performs well and achieves high profits.

1.2.4 A visual aid, used in presentations, most effective in comparing percentages.

1.2.5 The component of the Business Plan that describes the “what if” situation, detailing the threats to the business and the plans to overcome them if they happen.

1.2.6 The remaining portion of money which the lessee must pay in order to acquire the permanent ownership of the leased goods, e.g. car, machinery.

1.2.7 A task, operation or job that is contracted to a third party rather than be performed by employees within a business.

1.2.8 An unethical practice whereby a politician appoints family members to positions of power in his government rather than other, more qualified, individuals.

1.2.9 Shares with special rights who receive dividends before other types of shareholders.

1.2.10 A good visual representation of an action plan that gives details of the activity or task and who is responsible.

SECTION B COMPULSORY SECTION 180 MARKS

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Choose any THREE of the following FIVE Case Studies. Clearly mark the question numbers of the Case Studies you have chosen on your answer sheets.

QUESTION 2 BUSINESS ENVIRONMENTS AND CSI [60 Marks]

2.1 What does CPI stand for? (2)

2.2 It is clear that Devon is in the process of environmental scanning. Define environmental scanning and evaluate its importance for the business’ survival. (4)

2.3 Briefly discuss two risks of importing products from another country. (4)

2.4 Name 3 micro environmental challenges that Devon is likely to face, and suggest strategies that Devon can implement to meet each of these challenges. (12)

2.5 Devon has plans to manufacture locally. Why are cheap Asian imports making it so hard for the local manufacturers to be successful? (4)

2.6 Devon must understand his market environment. Discus two elements of the Market Environment and how Devon should ensure success. (12)

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Devon Oppermann runs a small business that imports various electronics but in particular the latest PlayStation, X Box and PC games. He import’s products from all over the world in order to get the cheapest deals. Devon also plans to go into partnership with two friends who have the ability to manufacture electronic products locally. Oppermann’s shop is located in Johannesburg, and he has hired 3 skilled employees. He does not have experience in managing a business or people. In order to finance his business Oppermann has taken out a loan from the Bank.

Devon has been in business for a relatively short time however has started to hear about and notice the impact of forces external to his business. He is learning about them and how to cope with the challenges. While watching the news over the last few weeks a few issues have been highlighted:

‘increasing inflation levels in the country’ ‘South African Reserve Bank lift the Repo rate’ ‘exchange rate fluctuations’ ‘threat of the economy going into recession’ ‘high levels of crime, poverty and unemployment’ ‘Cheaper Asian imports close down local manufacturers’ ‘Government threaten to lift the rate of import tax’

Devon is not always sure about how these challenges will affect him however he wants to be prepared.

2.7 What business sector does Devon’s business operate in? Give a reason for your answer. (4)

2.8 Although his business is still relatively new, Devon wants to take part in corporate social investment (CSI) projects. This is costly and time consuming for the business, but if these programs are managed effectively, it may have a positive influence on his business.

22.8.1 Identify any THREE positive influences of CSI on the business. (6)

2.8.2 Give three practical examples of CSI projects that Devon could get involved in. (6)

2.9 Assist Devon by defining the following macro environmental challenges:

2.9.1 inflation (2)2.9.2 exchange Rate (2)2.9.3 recession (2)

QUESTION 3 BUSINESS VENTURES [60 Marks]

Extract from Entrepreneur Magazine MWEB http://www.mweb.co.za/Entrepreneur

What is the history of Nando’s and how did they become such a worldwide success? What makes them stand out among the dozens of other ‘fast food’ restaurant chains? 

In 1987, an entrepreneur named Robert Brozin and his friend Fernando Duarte, went to a Portuguese takeaway restaurant named Chickenland in Rosettenville, southern Johannesburg. Brozin was so impressed with the restaurant's flame grilled chicken that he proposed the pair of them buy the restaurant, which they duly did. They renamed the restaurant Nando’s, abbreviating Duarte’s first name. Within two years, Nando’s had three outlets in Johannesburg and one in Portugal.

Their growth and popularity continued, and today there are over 1,000 restaurants in 30 countries around the world, making Nando’s South Africa's most successful restaurant group export. 

The business struggled at first, and was on the verge of collapse when the chairman, Richard Enthoven, handed it over to his son Robert, who shifted the emphasis from takeaways to what is known as a mixed service model. Under the mixed service model, the way customers are encouraged to act is different and there's an element of responsibility, in that you have to go to the counter to order and you help yourself to your own cutlery, soft drinks and sauces, before servers bring the meal to your table. All this moving about helps to create a fluid, busy atmosphere, and an environment that customers enjoy spending time in.

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3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

Robert and his friend Fernando are successful entrepreneurs. Name 4 characteristics that successful entrepreneurs are likely to have.

What evidence in the above extract suggests that the owners used innovation as a strategy?

Certain forms of ownership do not have legal personality.

3.3.1 List two such forms of ownership.3.3.2 Fully evaluate the owner’s liability for the debts of a business that do not have have legal personality.

These two entrepreneurs effectively acquired an existing business. Discuss 3 advantages and 2 disadvantages of buying an existing business as opposed to starting one from scratch.

Nando’s has experienced exponential growth both locally and abroad. A large reason for their success is the use franchising. Discuss 3 advantages of franchising for the franchisor and 3 advantages of franchising for the franchisee.

Nando’s are well known for humorous advertising campaigns. They have outsourced there marketing function as a whole to various advertising agencies.

3.6.1 Define outsourcing.3.6.2 Analyse 3 possible negative aspects of outsourcing and 3 positive aspectsaspects of outsourcing. (Advantage and disadvantages).

Nando’s are considering becoming a public company and listing on the stock exchange.

3.7.1 Define the following terms: Memorandum of Incorporation Prospectus

3.7.2 Name two roles of the Johannesburg Securities/Stock Exchange (JSE)

An option of a franchisee is to lease equipment as opposed to buying it. Discuss two advantages of leasing expensive equipment

(4)

(2)

(2)

(4)

(10)

(12)

(2)

(12)

(4)(4)

(4)

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QUESTION 4 STRESS AND CRISIS MANAGEMENT, CREATIVE THINKING [60 Marks]

Read the following case study and answer the questions that follow:

Travis Cameron is a partner in a property business which owns a number of properties in the Durban CBD. Lately Travis has been extremely stressed as his employees have been on strike and the tenants in his buildings are refusing to pay rent. Travis was retrenched from his previous job which cause a lot of stress in his life.

In order to try and sort out the problems with the business, Mr. Cameron has been working very long hours, not exercising, eating takeaway food and has put on a lot of weight. He has taken to sleeping over at the office, often after having a bottle of wine to relax and unwind.

The business is in the form of a sole trader and as a result of the problems with the business, Travis has recently been informed that the bank, to whom he owes R3 million, are commencing procedures to repossess his house. In addition, his wife has recently left him due to the financial stresses.

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

Travis’s business has many problems. He has heard that there are various creative thinking techniques. List any two creative thinking techniques

Lateral thinking may assist Travis in dealing with his business’ problems. What is lateral thinking?

What is a mental block in reference to create thinking?

Name five work-based strategies to handle stress and a further five personal strategies when managing stress that Travis can utilize.

Name and analyse five ways in which stress can cost a business money relating it to the above case study.

What is a “crisis”? Do you think Travis is in crisis? Motivate your answer

The conversion of the former hotel into residential flats requires change management processes. What is change management?

Travis has experienced a lot of resistance from his staff to the conversion project. Name and explain 5 reasons for people resisting change.

Name and explain 5 typical changes in the workplace that South African

(4)

(4)

(4)

(10)

(10)

(5)

(3)

(10)

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employees have to deal with. (10)

QUESTION 5 BUSINESS VENTURES, BUSINESS ENVIRONMENTS [60 Marks]

Extract ’10 South African Entrepreneurs under 35’ http://www.mweb.co.za/Entrepreneur

Jonathan Liebmann (28) His name might not ring a bell, but if you are from Johannesburg, then you will definitely know of the Maboneng Precinct, a thriving cultural district in the east side of Johannesburg’s CBD. Jonathan is the man behind this project. He is a South African real estate developer and CEO of Propertuity. Propertuity is a South African real estate development company and the brains behind the construction of the Maboneng Precinct. Once a neglected and deteriorating neighborhood housing abandoned industrial complexes, Jonathan transformed Maboneng into a vibrant urban mixed-use community complete with art galleries, retail spaces, offices and artist studios. An entrepreneur who has changed the biggest city in Africa, forever!

5.1

5.2

Jonathan Liebmann set up his own business at a young age, and convincedinvestors to help fund his idea by preparing a business plan.

5.1.1 Why is it so important to draw up a business plan when starting a business?

5.1.2 Describe four advantages of having an action plan.

Discuss the 2 types of funding sources that Jonathan would have been able to use to start his business.

(4)(8)

(8)

5.3 Below is an example of a critical path analysis:

Activity Number

Activity Day 1

Day 2

Day 3

Day 4

Day 5

Day 6

Day 7

Day 8

1 Decide on the type of business to run

2 Agree on selling prices of the products

3 Purchase the products from suppliers

4 Final meetings to discuss strategy

5 Draw up an advert

6 Ensure sufficient change is available

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5.4

5.5

5.6

5.3.1 Is Activity 3 a parallel or dependent task? Why?5.3.2 Name two uses of a critical path analysis?5.3.3 How many days are allocated for deciding the type of business to run?

Explain the ‘SMARTER’ approach to setting goals and starting a business.

Management is a very important part of setting up a business. Name and evaluate the 4 activities of good management.

It is clear that Jonathan started this business for more than just the purpose of making a profit.

5.6.1 Briefly discuss the concept of ‘triple bottom line theory’.5.6.2 Name one contemporary socio-economic issue that you believe Jonathan’s business is helping improve. Give two ways in which the business is improving the socio-economic issue.

(2)(4)(1)

(14)

(8)

(6)(5)

QUESTION 6 MISCELLANIOUS [60 Marks]

Refer to the extract below when answering the questions 6.1 – 6.5

Apple to acquire Beats Music & Beats ElectronicsApple® today announced it has agreed to acquire the critically acclaimed subscription streaming music service Beats Music, and Beats Electronics, which makes the popular Beats headphones, speakers and audio software. As part of the acquisition, Beats co-founders Jimmy Iovine and Dr. Dre will join Apple. Apple is acquiring the two companies for a total of $3 billion.“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” said Tim Cook, Apple’s CEO. “That’s why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world.”“I’ve always known in my heart that Beats belonged with Apple,” said Jimmy Iovine. “The idea when we started the company was inspired by Apple’s unmatched ability to marry culture and technology. Apple has a deep commitment to music fans, artists, songwriters and the music industry.

6.1

6.2

Apple is a ‘listed company’.

6.1.1 Explain four benefits of establishing a company versus other forms of ownership.

6.1.2 Explain what makes a company ‘listed’?

Discuss two advantages and two disadvantages of a business acquiring another

(8)(4)

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6.3

6.4

6.5

company such as Apple have done.

Would you describe this as a hostile take-over? Give a reason for your answer.

Apple have used a strategic approach by acquiring Beats Music, briefly evaluate one other strategy that business use to grow or overcome challengesName one difference between a Public and a Private company.

(8)

(2)

(4)

(2)

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Refer to the extract on Pick N Pay below when answering the questions 6.6 – 6.10

Code of Ethics Adapted from: http://fletcher.tufts.edu/News-and-Media/2008/10/06/Pick-n-Pay

Pick n Pay places great emphasis on social responsibility. The way in which we

conduct ourselves in the running of our business should be as ethical as our

contribution to society. The set of values to which we prescribe has been detailed in

this policy document and should be used as a standard for all our business partners.

We wish to build and maintain mutually beneficial relationships with all our

stakeholders, whether employees, customers, suppliers, shareholders, franchisees or

the communities in which our businesses are situated.

6.6

6.7

6.9

6.10

What would the advantages be for Pick n Pay if they were known to be a strong ethical brand?

Provide two recommendations for Pick n Pay’s management on how they can effectively avoid unethical practices by the business and it’s employees.

Pick n Pay has recently launched Pick n Pay express, which operates inside BP garages. This is a mutually beneficial agreement.

6.8.1 What is the difference between an alliance and a merger? Is this an example of a an alliance or a merger?

Analyse how poverty, as a socio-economic issue affects a company like Pick n Pay.

Consider the following challengers from the Macro Environment faced by Pick n Pay. For each challenge you are required to:

Identify the PESTLE factor.

(6)

(4)

(6)

(4)

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Suggest a possible strategy to overcome the challenge Explain the impact on the profits of Pick n Pay.

(2)(4)(4)

Challenge PESTLE factor Possible strategy Impact on the Profits

6.10.1 The low number of skilled

workers in South Africa.

6.10.2 Obligations to

Comply with BEE

Redraw the following table in your answer books:

SECTION C: ESSAYS ANSWER TWO ESSAYS ONLY

QUESTION 7 BUSINESS ENVIRONMENTS [40 Marks]

Gareth Demmer and Roy De Nobrega won a competition for a superb good business idea, while they were in school. They received a large start up fund and expert business set up advice. Roy and Gareth had both noticed that they had a lot of foreign currency coins lying around the house form past trips.

The idea was to set up coin foreign exchange vending machines at international airports and train stations around South Africa and then expand to other countries in the world. People would be able to simply pour there coins into a vending type machine and have it converted to local currency. Coinex was created as a Private Company and the two owners opened a factory to begin producing their product. They outsourced technical expertise initially to get the product up and running.

The factory has been open for 5 years and the Coinex product is in high demand. The business currently has a R5 million loan from ABSA Bank to help fund the expensive start-up costs. The boys have hired 10 employees, two of whom are expert vending machine manufacturers.

They have had lots of interest from the overseas market, however they cannot produce the machines at a quick enough rate at this stage. Although the business is doing well, the two inexperienced owners are experiencing the following problems:

High absenteeism of employees. The South African Reserve Bank has recently announced a 2% increase in

the repo rate. High turnover of worker employment and loss of highly skilled workers to

vending machine companies who can pay a much higher salary. The business has not yet made a lot of money.

Import taxes for main parts from Asia have been lifted dramatically by the South African Government.

Recession and high Inflation rates has slowed their growth plans. High transport costs to send manufactured goods to customers in Gauteng Large companies have shown interest in entering the market as direct

competitors

Identify the challenges facing (indicate the business environment these challenges arise from) Gareth and Roy and the possible impact of such challenges on the factory.

Formulate strategies to overcome each challenge (refer to strategic management).

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Recommend whether they should consider selling their idea to a large company and exiting the industry.

You may answer this question in tabular format:

Challenge Environment Impact Strategy

(40)

QUESTION 8 FORMS OF OWNERSHIP [40 Marks]

Mr. Blanks’ business, Support Sport CC, has recently won the tender to run the Coca-Cola Stadium supporters shop. Mr. Blanks started the business 8 years ago as a C.C, and is very excited about the opportunity to expand his business.

It has come to Mr. Blank’s attention that in terms of the new Companies Act, no new close corporations will be allowed to be registered in South Africa. Mr. Blanks is therefore considering closing Support Sport CC. He would like to re-open the business as either a private company, SS Sport (Pty) Ltd, or offering two of his staff members a share in a new partnership, Blank’s & Partners. This would allow him to potentially spend more time in growing his other shops. It is a long term goal of his to grow the business to include large shops all over the country.

Mr. Blanks has asked you to assist him in making the decision between a partnership and a private company by:

Discuss the impact of tax, as well as the legal personality of the business as factors that can contribute to the success or failure of both a partnership and a private company.

The procedures necessary to set up both a private company and a partnership. Advise Mr. Blanks whether, in your opinion, he should choose a partnership or private

company structure. (40)

QUESTION 9: PROFESSIONALISM AND ETHICS [40 Marks]

Managers and entrepreneurs face ethical business choices on a daily basis, some decisions may prove profitable for the enterprise yet unethical in nature, while other decisions may leave that person in a better position at an expense to other stakeholders of the enterprise. Below is an example of reported unethical practice by a world renowned institution and Government.

Extract from Telegraph UK.South Africa paid $10 million (£6.52 million) in bribes to secure the 2010 World Cup and the cash was transferred via a Fifa account, according to the explosive full indictment against 14 current and former Fifa officials.The money was paid to disgraced executives Jack Warner and Chuck Blazer, the United States Department of Justice alleges in a 164-page dossier detailing the charges that led to a raft of arrests in Zurich on Wednesday. http://www.telegraph.co.uk

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Evaluate the above extract and in doing so:

Describe the principles of professional and ethical behaviour. In reference to the above example, briefly discus the consequences of the above

incident to those organisations. Evaluate 2 examples of challenges to the business environment in terms of ethical

behaviour and comment on its application in the business enterprise. Discuss any 2 type of ethical theories or standards. (40)

QUESTION 10 CREATIVE THINKING AND PROBLEM SOLVING [40 Marks]

ZEBRA USED CARS

Zebra Cars is a successful used car dealership that buys and sells a wide variety of used cars. Although the business has done very well, the owner and head manager, Hacjivah Dayimani, is concerned that his staff are unhappy and as a result he has to replace his top staff often. The dealership manager Dylan Wadely, has reported back to Hacjivah on the following issues.

The sales staff are often put into situations of conflict with customers, making it a hostile work environment. Most commonly they have to deal with dissatisfied customers who feels unhappy by the promises made by both the sales person and the marketing of the business.

The staff in general think the sales targets are too high, forcing the salesman to sell aggressively and unethically.

Some employees complained that they often have to do duties that they were not hired for due to the promises made by the dealership. One such example is the promise of a free car wash once a week with any purchase. Often salesman themselves have to do this task.

The dealership also promises free services for the first year, however there is only one qualified employee in the service department, meaning he often needs help from sales staff.

The staff in general feel that their payment structure is not clear and there is no channel that they can report their unhappiness. ‘

Dayimani is unsure of what to do because his aggressive sales targets and marketing campaign have yielded a very high profit, however he cannot afford to keep losing staff and is concerned about the future reputation of the business.

Briefly discuss the long term effect of the way Dayimani is running his business. Use the seven steps of problem solving as well two creative thinking technique to

help solve this problem, find workable and logical solutions. (40)

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