Chapter 2
what is the basic economic problem
everyone has unlimited needs and wants but the resources to fulfill these needs and wants are limited
what is a trade union
A trade union is a group of employees who join together to bargain collectively with their employer about working conditions, wages, and employee rights.
Three economic sectors
Primary secondary tertiary
what are the three business environments
macro micro market
What is a business plan?
A written document that describes a business, its objectives, and the strategies to achieve them.
another name for the economic cycle
circular flow of money
If the consumer has a need for a product
if the consumer can afford the product
if the consumer is prepared to pay the price of the product
Explain how the Primary Sector contributes to the economy of South Africa.
It provides raw materials for industries, creates jobs in mining and agriculture, and earns foreign income through exports.
How can poor performance in the Purchasing Function negatively affect the Production Function?
If purchasing fails to buy the right materials on time or at the right quality, production may stop or produce low-quality goods.
Explain what a SWOT analysis is and why it is included in a business plan.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It helps the entrepreneur understand internal and external factors affecting the business, guiding better decision-making.
Three characteristics of a need
limited intensity
people have different needs at different times
needs are complementary
What are the four factors of supply
Change in production methods
natural disasters
international occurrences(war)
Increased competition
How does the Secondary Sector add value to goods produced in the Primary Sector?
It changes raw materials into finished or semi-finished products through manufacturing and processing, increasing their market value.
four main goals of the financial function
maximise profit
increase profitability
ensure liquidity
be solvent
How does identifying a target market in a business plan help a business succeed?
It allows the business to focus its marketing and production efforts on the specific group of customers most likely to buy the product, increasing efficiency and sales.
Explain the concept of exchange rate
The exchange rate is the value of one country’s currency compared to another country’s currency.
It tells you how much of one currency you can get in exchange for another.
Three examples of industrial action with a definition of each
. Strike
When employees refuse to work in order to force their employer to meet their demands.
2. Go-Slow
When employees deliberately reduce their work pace to put pressure on the employer without stopping work completely.
3. Picketing
When employees peacefully demonstrate outside the workplace to raise awareness or show support during a dispute.
Why is the Tertiary Sector important for the success of the other two sectors?
It provides essential services like transport, banking, communication, and marketing that allow the Primary and Secondary sectors to operate effectively.
four marketing policies
product price place promotion
Why is market research important when creating a business plan?
It helps the entrepreneur understand customer needs, competitors, and market trends, which improves decision-making and increases chances of success.
how does south africa benefit from international trade
Access to a larger market – South African businesses can sell goods and services to other countries, increasing sales and profits.
Job creation and economic growth – Export industries and foreign investment create employment and help grow the economy.
Access to goods and technology – South Africa can import products, machinery, and technology that are not produced locally, improving efficiency and quality of life.
WHat does NEDLAC stand for
National economic development and labour council
Explain how the three sectors are interdependent.
The Primary Sector supplies raw materials to the Secondary Sector, which produces goods distributed and sold through the Tertiary Sector. Each relies on the others for production, income, and growth in the economy.
Explain why coordination among all business functions is essential for achieving business objectives, using an example to support your answer.
Each function supports the others — e.g., Production can’t work without Purchasing, HR provides workers, and Marketing sells the product. If one fails, the business can’t operate effectively, leading to losses or customer dissatisfaction.
Explain how a financial plan in a business plan can influence investor decisions.
It shows projected income, expenses, and profitability, helping investors assess risks, expected returns, and the sustainability of the business.