IEB BUSINESS STUDIES
GR 12
, BUSINESS STUDIES GR 12
Contents
Investment Opportunities *.............................................................................................................................................. 4
Human Resources........................................................................................................................................................... 8
BUSINESS Environments (Micro, Market, and Macro).................................................................................................. 12
Marketing and Branding................................................................................................................................................. 19
1. BRANDING........................................................................................................................................................ 19
2. MARKETING...................................................................................................................................................... 20
8. Franchising and Marketing................................................................................................................................. 24
Performance management*........................................................................................................................................... 26
Legislation..................................................................................................................................................................... 33
Corporate Social Responsibility and Corporate Governance *......................................................................................38
Professionalism and ethics............................................................................................................................................ 42
Entrepreneurship, Management, and Leadership.......................................................................................................... 47
Insurance:...................................................................................................................................................................... 51
Creative Thinking and Problem Solving:........................................................................................................................ 54
Industrial Relations........................................................................................................................................................ 57
Conflict Management..................................................................................................................................................... 61
BUSINESS ACRYNYMS............................................................................................................................................... 64
BUSINESS SCOPE/SAGS............................................................................................................................................ 69
Section C: Report.......................................................................................................................................................... 75
Sources
School PowerPoints
School and IEB question and memo past papers 2019-2025
Via Afrika eBook pdf
Page 1 of 78
@studysmartpro-stuvia
,Business studies
300 marks
(3 hours)
Section A: 30 minutes (100 marks)
Section B: 90 minutes (150 marks)
Section C (Report): 45 minutes. (50 marks)
Extra 15 minutes
Depending on the exam
Define/Name/List/Identify → 2–3 marks
Explain/Discuss → 4–6 marks
Analyse/Evaluate/Recommend → 6–10 marks
Scenario-based or integrative questions → 8–12 marks
Questions key words
List / Name / Identify → Give short answers or items only. No explanation.
Define → Give the exact meaning or definition of a term.
Explain / Discuss → Give reasons, details, or descriptions. Show understanding.
Analyse → Break down the question into parts and examine causes, effects, or relationships.
Evaluate → Give positive and negative points, weigh them, and make judgments.
Recommend / Suggest / Propose → Give a solution or action and justify why it works.
How → Explain the process, method, or way something happens.
Why → Explain the reason behind something happening.
Describe → Give features, characteristics, or details.
Impact / Effect / Consequence → Discuss positive or negative outcomes. Advantages or
disadvantages.
Compare / Contrast → Show similarities and differences.
Justify → Provide clear reasoning or proof for a choice or action.
Outline → Give the main points or a summary.
Illustrate → Show by using a scenario, steps, or a diagram.
Scenario-based / Integrative → Apply theory to a situation, combine different concepts, show
understanding, and give possible solutions.
Mark allocation: The mark allocation directly tells you how many distinct, explained facts
(points) you need. Each point/fact you make is = 1 mark… not a sentence!
Include examples in you answers to support arguments even when not asked for
examples – however be specific and stick to the principles of the IEB definition = (past papers)
What is the action verb?
What mark range would you expect?
What type of information must you provide (list, explanation, or evaluation)?
Page 2 of 78
@studysmartpro-stuvia
, It explores obtaining financial protection against
1. Insurance unexpected losses or the certainty of certain events, such
as death.
2. Creative Thinking and This explores using innovative ideas to identify and implement
Problem Solving the best solutions for business challenges.
These topics explore the different factors influencing a
3. Business business: the Micro Environment includes internal factors with
Environments (Micro, full control; the Market Environment involves external parties
Market, Macro) the business can influence; and the Macro Environment
encompasses broad external forces with little to no control.
It explores the function responsible for finding, hiring, training,
4. Human Resources
managing, and supporting employees within a business.
It explores acting respectfully and politely at work
5. Professionalism and
(professionalism) and making morally right decisions in
Ethics
business operations (ethics).
It explores the process of planning, monitoring, evaluating,
6. Performance
and improving individual and organizational work to ensure a
Management
business achieves its goals.
7. Corporate Social CSR explores how businesses act ethically and contribute
Responsibility (CSR) positively to society, the environment, and the economy.
and Corporate Corporate Governance explores the systems, rules, and
Governance practices used to direct and control a company responsibly.
It explores various options for putting money into assets with
8. Investment
the primary goal of growing that money over time and
Opportunities
generating future returns.
Marketing explores ongoing activities to promote
9. Marketing and products/services and connect with target customers. Branding
Branding explores defining a business's identity to build recognition and
foster customer loyalty.
It explores the working relationship between employers,
10.Industrial Relations employees (and their unions), and the government to
maintain peace and productivity in the workplace.
It explores using methods, tools, and skills to handle
11.Conflict Management disagreements or disputes in a respectful and creative way,
aiming for solutions that satisfy all parties.
Entrepreneurship explores starting a business and taking
12.Entrepreneurship, calculated risks. Management explores planning, organizing,
Management, and leading, and controlling resources to achieve goals.
Leadership Leadership explores the ability to guide, inspire, and
influence people towards a common vision.
It explores the laws created by a government or parliament
13.Legislation
that set compulsory rules and regulations for everyone to follow.
Page 3 of 78
@studysmartpro-stuvia
, INVESTMENT OPPORTUNITIES *
An investment is when you put money into something to make more money in the future. The
main goal is to grow your money over time.
There are four major types of investments, called asset classes, that help you spread your money
around to manage risk.
When answering questions always state the level of risk such as high/low/moderate, ROI
(Return on investment), long term or short-term investment and the advantages and
disadvantages of the investment.
1. Assess the Risk — how likely it is to lose money.
2. Evaluate the ROI — how much profit the investment can bring.
3. Decide the Time Frame — how long to keep the money invested.
Four Major Investment Types:
1. Cash:
o This is money kept in safe places, like bank accounts.
o It has low risk, meaning you are unlikely to lose your original money.
o However, it also offers low reward or interest.
o Often, the money you earn might not even keep up with inflation, so your buying power
can go down.
o [Examples: Bank deposits, money market accounts].
2. Property:
o This means buying real estate (like land or buildings) to make income or profit.
o Property can help your money grow with inflation as its value often increases.
o It generally has moderate to high risk.
o A main problem is lack of liquidity, meaning it can be hard to quickly sell property for
cash.
o Success depends on things like location, economic conditions, and government rules.
o [Example: Owning a home or renting out a property].
3. Bonds/Gilts:
o These are loans you make to governments or companies.
o In return, you get regular interest payments and your original money back later.
o They are generally safer if from stable countries.
o Bonds can offer higher interest than cash.
o They are high to moderate risk.
Why are bonds safer than stocks? = Bonds usually pay you a fixed amount of money (interest) regularly
– you know what to expect. At the end of the bond’s term, you usually get back the money you
originally invested (the principal). Stocks are riskier because their price can go up or down a lot, and
companies might not always pay dividends (profit shares). So basically, with bonds, you have more
certainty of getting your money back and earning some interest, while stocks could give more money
but come with higher risk.
4. Equities (Shares):
o Shares mean you own a small part of a company.
o When you buy shares, you become a shareholder.
o You can earn money in two ways: through dividends (parts of the company's profits paid
to you) and if the share value grows.
Dividends= Own a share → company makes profit → company pays you a
small part of that profit → that’s your dividend.
o This is a high-risk investment because prices go up and down a lot.
o Over a long time, shares offer the best chance to earn more than inflation.
o [Example: Buying shares in Woolworths on the JSE (Johannesburg Stock Exchange)].
Why is spreading the risk important? = Spreading the risk is important because it helps protect
your money. If one investment loses value, others can still do well. It keeps you from losing everything
at once. It makes your overall investment more stable and safer.
Other Investment Choices:
1. Pension Fund – A pension fund is a way to save money for when you retire. Usually, your
employer helps you by putting money into this fund, and sometimes you also contribute. Over time,
this money is invested, so that when you stop working, you have a steady income to live on.
2. Endowment – An endowment is like a savings plan that also includes life insurance. You pay
Page 4 of 78
@studysmartpro-stuvia
,into it over time, and at the end of the term, you get a lump sum of money. It also provides financial
protection for your loved ones if something happens to you.
3. Unit Trust – A unit trust is like a big pool of money from many investors. This pool is managed
by professionals and invested in different things like stocks and bonds. This way, your money is
spread out, and the risk is reduced.
4. Collectibles – Collectibles are valuable items like art, rare coins, or antiques. People invest in
them hoping that their value will increase over time. However, they can be risky because their value
depends on trends and demand.
5. Offshore Investments – Offshore investments are investments made in other countries. They
can offer benefits like tax advantages or diversification. They let you invest globally and spread
out your risk.
6. Debentures – Debentures are like loans you give to a company. When you buy a debenture,
you’re lending your money to that company, and in return, they pay you interest over time and
return your money later.
7. Retirement Annuities – Retirement annuities are savings plans that give you a steady
income when you retire. You put money in regularly, and when you retire, you get payments to help
support you.
8. Notice Deposits – Notice deposits are savings where you agree to keep your money in the bank
for a certain period. In return, you get a higher interest rate. If you need the money sooner, you
must give the bank notice.
Advantages of Investing Disadvantages of Investing
1. Wealth Growth: Investing helps your money 1. Risk of Loss: Investments carry the risk of
grow more than just keeping it in a savings account. losing money. Market fluctuations can cause a
Over time, investments usually offer higher returns, drop in value, especially in high-risk
helping you build wealth. investments.
2. Inflation Protection: Your money has the
2. Complexity: Investing can be complicated
potential to grow faster than inflation, helping
and requires research, knowledge, and skill to
maintain its value and protecting your purchasing
make good decisions.
power.
3. Passive Income: Some investments, like rental 3. Liquidity Issues: Certain investments (like
properties or dividend-paying stocks, provide a property or bonds) can’t easily be turned into
steady income stream even when you’re not cash, which can be a problem if you need
actively working. money quickly.
Criteria used to choose an investment option
Investment timeframe: How long you plan to invest. Longer times allow for more risk (like
shares), while short times usually mean less risk.
Financial Position: Your overall wealth. Wealthier investors can often take more risk.
Risk and return on investment: is the investor looking for a low, medium or high risk
investment?
Use these criteria are used to determine the investment options
Key Investment Ideas:
1. Diversification: This is spreading your investments across different types (like shares,
property, cash, bonds) to reduce overall risk. If one investment does badly, others might do
well.
2. Risk Profiling: This is a process to figure out how much risk you are willing and able to
take with your money. It helps choose the right mix of investments for you. It considers your
risk capacity (ability to take risk), risk tolerance (comfort with risk), and required risk (risk
needed to reach goals).
3. Taxation:
o You usually pay income tax on interest and dividends you earn.
o You also pay Capital Gains Tax (CGT) on any profit you make from selling assets like
property or shares.
Ways to Limit Losses:
Stop-Loss Strategy: This is a plan to automatically sell an investment (like a share) if its
price drops below a certain point. This prevents you from losing too much money. it’s basically
setting a backup plan
Page 5 of 78
@studysmartpro-stuvia
, Rebalancing: This means adjusting your investments back to your original plan. If one
investment grows a lot, you sell some of it and buy more of investments that haven't grown as
much. This helps keep your risk level balanced.
Investment Strategies
1. Conservative Investor:
Wants safety and steady income. This investor focuses on protecting their money and takes low
risk because they invest in safe options like bonds, cash, and property that rarely lose value
2. Defensive Investor:
Wants income with a small amount of growth. This is also low risk because they choose stable
investments like bonds and cash, and only a small part in shares for limited growth
3. Balanced Investor:
Wants both income and growth. This means medium risk because they mix safe investments
(bonds) with riskier ones (shares), so there’s a balance between safety and profit
4. Growth Investor:
Wants to grow their money a lot over a long time. This is high risk because they invest mostly in
shares (equities), which can go up or down quickly, but also give bigger returns over time
Investment
Risk Reward Discussion of Criteria
Option
Risk depends on the mix of assets (shares, bonds).
Unit Trust Medium Medium
Good for long-term growth and diversification.
Offered by insurance companies. Returns are stable,
Endowment Low Low
but usually lower than other investments.
Value depends on rarity and demand. Can give high
Collectables High High
profits but also big losses. Not guaranteed.
Property grows over time and earns rental income.
Property Medium High Risk from interest rates, location, and market
conditions.
Cash/Bank Very safe, but interest is low. Often doesn’t beat
Low Low
Deposit inflation. Best for short-term savings.
Slightly better than bank deposits. Good for
Money Market Low Low
preserving capital and earning small interest.
Pays fixed interest. Safer if from government. Can
Bonds/Gilts Medium Medium
lose value if sold early or interest rates rise.
Equities Share prices rise and fall often. Over time, shares give
High High
(Shares) best return. Good for long-term growth.
A loan to a company. Pays interest and returns
Debentures Medium Medium
capital. Less risky than shares, more than cash.
Offshore Diversified investments. Returns can be high, but
Medium High
Investments depends on global economy and currency exchange.
Retirement Safe and long-term. Offers tax savings and grows over
Low Medium
Annuities years. Access only at retirement.
Employer and employee contribute. Grows slowly over
Pension Fund Low Medium
time with low risk and tax benefits.
Liquidity refers to how quickly and easy you can turn an investment into cash without losing money.
The more liquid faster you can sell it.
Example Exam Question
Explain how a business (such as Shein) should use the following three investment criteria when
considering investing in Equities:
1. Risk
2. Return on Investment (ROI)
3. Time frame of the investment
Answer:
When a business like Shein considers investing in equities, it must analyse the following criteria:
1. Risk:
Equities are generally regarded as a moderate- to high-risk investment. The volatility of the market
means that an investor could potentially lose their investment.
Page 6 of 78
@studysmartpro-stuvia
, Although the JSE (and other stock exchanges) implement strict rules for companies that list,
intending to decrease the risk of investing in them, equities remain risky.
Share prices are influenced by external factors such as political and economic stability,
consumer trends, and global events — all beyond Shein’s control.
A strategy to reduce this risk is to use a stop-loss order, which automatically sells the shares if
the price drops to a predetermined level, limiting potential losses.
2. Return on Investment (ROI):
The ROI from equities is derived from two main sources: the increase in the share price (capital growth)
and dividends.
Shein would invest in shares expecting their value to increase over time, resulting in capital
gains.
Dividends, paid from company profits, provide an additional return to shareholders. In South
Africa, dividends are not taxed in the hands of the shareholder.
Equities usually generate a higher yield than most other investment types.
Over time, the combination of capital growth and dividends can help Shein’s investment
outperform inflation.
3. Time Frame of the Investment:
Equities are generally seen as a long-term investment, as achieving good returns often takes time.
Shein might choose to invest in blue-chip shares, which tend to show steady growth over the
long term.
In this long-term strategy, dividends earned from the share portfolio can be reinvested to buy
more blue-chip shares.
In contrast, speculators buy shares hoping for a quick rise in price and sell them soon after for
profit; these short-term investors are usually not interested in dividends.
Page 7 of 78
@studysmartpro-stuvia
, HUMAN RESOURCES
What is Human Resources
Human Resources is the part of a business responsible for finding, hiring, training, and
looking after employees.
Its goal is to ensure workers are treated fairly and to help the company get the best out of its
people.
Key Activities of the Human Resources Function: Human Resources performs several crucial
activities:
1. Manpower Planning:
o This is about planning how many workers are needed, what skills they must have,
and when the business will need them.
o It includes Work-load Analysis. [Example: If the business is busy, it needs more
workers].
o It also involves Job Analysis, which has two parts:
Job Description: A list of what the job is about. [Example: Job title, duties,
working conditions]. [Example: A cashier handles money, works shifts, and reports
to the supervisor].
Job Specification: The qualifications and skills a person must have. [Example:
Must have Matric, good with numbers, friendly].
o Human Resources also identifies Skills Gaps (missing skills). [Example: If no one knows
how to use a new computer program, that’s a skills gap].
2. Recruitment:
o This is about finding and attracting suitable people for job openings.
o External Recruitment involves hiring from outside the business. [Examples: Head
hunting (directly approaching skilled people), advertising in newspapers, using
employment agencies, visiting schools].
o Internal Recruitment involves hiring from inside the business. [Example: Promoting
a cashier to a supervisor position.]
o Ask existing employees to make recommendations. (hybrid)
ADVANTAGES AND DISADVANTAGES OF INTERNAL AND EXTERNAL RECRUITMENT
INTERNAL RECRUITMENT
Advantages Disadvantages
You already know the worker's work Moving one worker may leave a big gap in
record. another department.
No need to train the worker again. There may be no right person for the job.
cheaper than external recruitment Managers may not want to lose good workers.
because: no need for costly
advertisements
Workers feel happy and motivated.
EXTERNAL RECRUITMENT
Advantages Disadvantages
Avoids in breeding High cost of recruitment process
Possible to widen choice of applications by
Frustration amongst existing employees
having a pool of candidates
Encourages diversity and fresh
Takes longer to recruit and train new employees
perspectives
3. Selection:
o This is the process of screening applicants and choosing the best person for the
job.
o It's seen as "negative" because it removes unsuitable people, narrowing the choice.
o Why a good selection process is important: Staff stay longer, production costs are
lower, employees need less training, and workers perform better.
o The 8 Selection Steps: Receive applications, initial screening, shortlist candidates,
check references and background checks, interview, conduct tests (if needed), medical
exam (if job requires), and send a letter of appointment.
Page 8 of 78
@studysmartpro-stuvia
, Step 4 such as reference and background checks is skipped my many businesses
because it is time consuming.
4. Employment Contracts:
Are agreements between the employer and employee that set out the rules, duties, and
conditions of the job. They must be agreed upon and signed by both parties and are
legally binding. Employers can offer better conditions than the law, but not worse
A contract usually includes the following:
Employee information: name, address, identity number, and tax number.
Employer information: name and address.
Employment details: position held, main duties, probation period, and whether the job is
permanent or temporary.
Salary details: starting salary, overtime rate, incentives, pension, and medical aid.
Leave details: information about annual, sick, and family leave.
Termination of services: notice period that must be given by each party to end the contract.
Other conditions: any additional issues that the employer or employee may agree on.
5. Placement of Staff:
o This means putting the employee into the job they applied for.
o Sometimes, an employee might be better suited for another job, and the offer is
changed.
o Good placement means the worker uses their skills well, which helps both the business
and the employee.
6. Remuneration and Employment Benefits:
This section is all about how employees are paid and what extra benefits they get.
o Remuneration « This means the money or reward a worker gets for doing their job —
like wages or a salary.
o The Basic Conditions of Employment Act (BCEA) has rules for fair pay.
• This law protects workers and ensures fair pay and working conditions.
• It sets rules like minimum wage, working hours, and overtime pay.
• So, employers can’t underpay or overwork employees.
o Job evaluation
This is a system used to decide how much each job is worth in a company.
The pay is based on how important, skilled, or responsible the job is.
There are different methods:
Paterson Method: Looks at decision-making levels (e.g., manager vs.
assistant).
Hay Job Method: Looks at knowledge, problem-solving, and responsibility.
o Salary Structures:
Cost Plus Benefits: Basic salary plus extra benefits. [Examples: Pension fund,
medical aid, travel allowance].
o Cost to Company (C-T-C): means the total amount of money a company spends
on one employee per year. it includes everything the company pays for you or to
you.
o Employee Deductions:
Voluntary: Employee chooses. [Examples: Trade Union fees, staff fund].
Compulsory: Required by law. [Examples: UIF (Unemployment Insurance Fund),
PAYE (Pay As You Earn) income tax].
7. Induction:
o This helps a new employee get to know the business and feel comfortable.
o It's not training; it helps the employee settle in and understand how things work.
o Benefits of Induction: Reduces stress, gives correct information, saves time and
money, helps staff adapt quickly, and improves staff retention (people stay longer).
8. Training of Staff and Skills Development:
o This involves teaching employees new skills and improving current ones.
o Training is job-specific and helps employees do their current job better.
o Skills Development is broader and aims to fix skill shortages in South Africa,
promoting continuous learning.
o Training Methods: [Examples: Workshops, job rotation, self-study, online training,
buddy system, learnerships, on-the-job training, apprenticeships].
Page 9 of 78
@studysmartpro-stuvia
GR 12
, BUSINESS STUDIES GR 12
Contents
Investment Opportunities *.............................................................................................................................................. 4
Human Resources........................................................................................................................................................... 8
BUSINESS Environments (Micro, Market, and Macro).................................................................................................. 12
Marketing and Branding................................................................................................................................................. 19
1. BRANDING........................................................................................................................................................ 19
2. MARKETING...................................................................................................................................................... 20
8. Franchising and Marketing................................................................................................................................. 24
Performance management*........................................................................................................................................... 26
Legislation..................................................................................................................................................................... 33
Corporate Social Responsibility and Corporate Governance *......................................................................................38
Professionalism and ethics............................................................................................................................................ 42
Entrepreneurship, Management, and Leadership.......................................................................................................... 47
Insurance:...................................................................................................................................................................... 51
Creative Thinking and Problem Solving:........................................................................................................................ 54
Industrial Relations........................................................................................................................................................ 57
Conflict Management..................................................................................................................................................... 61
BUSINESS ACRYNYMS............................................................................................................................................... 64
BUSINESS SCOPE/SAGS............................................................................................................................................ 69
Section C: Report.......................................................................................................................................................... 75
Sources
School PowerPoints
School and IEB question and memo past papers 2019-2025
Via Afrika eBook pdf
Page 1 of 78
@studysmartpro-stuvia
,Business studies
300 marks
(3 hours)
Section A: 30 minutes (100 marks)
Section B: 90 minutes (150 marks)
Section C (Report): 45 minutes. (50 marks)
Extra 15 minutes
Depending on the exam
Define/Name/List/Identify → 2–3 marks
Explain/Discuss → 4–6 marks
Analyse/Evaluate/Recommend → 6–10 marks
Scenario-based or integrative questions → 8–12 marks
Questions key words
List / Name / Identify → Give short answers or items only. No explanation.
Define → Give the exact meaning or definition of a term.
Explain / Discuss → Give reasons, details, or descriptions. Show understanding.
Analyse → Break down the question into parts and examine causes, effects, or relationships.
Evaluate → Give positive and negative points, weigh them, and make judgments.
Recommend / Suggest / Propose → Give a solution or action and justify why it works.
How → Explain the process, method, or way something happens.
Why → Explain the reason behind something happening.
Describe → Give features, characteristics, or details.
Impact / Effect / Consequence → Discuss positive or negative outcomes. Advantages or
disadvantages.
Compare / Contrast → Show similarities and differences.
Justify → Provide clear reasoning or proof for a choice or action.
Outline → Give the main points or a summary.
Illustrate → Show by using a scenario, steps, or a diagram.
Scenario-based / Integrative → Apply theory to a situation, combine different concepts, show
understanding, and give possible solutions.
Mark allocation: The mark allocation directly tells you how many distinct, explained facts
(points) you need. Each point/fact you make is = 1 mark… not a sentence!
Include examples in you answers to support arguments even when not asked for
examples – however be specific and stick to the principles of the IEB definition = (past papers)
What is the action verb?
What mark range would you expect?
What type of information must you provide (list, explanation, or evaluation)?
Page 2 of 78
@studysmartpro-stuvia
, It explores obtaining financial protection against
1. Insurance unexpected losses or the certainty of certain events, such
as death.
2. Creative Thinking and This explores using innovative ideas to identify and implement
Problem Solving the best solutions for business challenges.
These topics explore the different factors influencing a
3. Business business: the Micro Environment includes internal factors with
Environments (Micro, full control; the Market Environment involves external parties
Market, Macro) the business can influence; and the Macro Environment
encompasses broad external forces with little to no control.
It explores the function responsible for finding, hiring, training,
4. Human Resources
managing, and supporting employees within a business.
It explores acting respectfully and politely at work
5. Professionalism and
(professionalism) and making morally right decisions in
Ethics
business operations (ethics).
It explores the process of planning, monitoring, evaluating,
6. Performance
and improving individual and organizational work to ensure a
Management
business achieves its goals.
7. Corporate Social CSR explores how businesses act ethically and contribute
Responsibility (CSR) positively to society, the environment, and the economy.
and Corporate Corporate Governance explores the systems, rules, and
Governance practices used to direct and control a company responsibly.
It explores various options for putting money into assets with
8. Investment
the primary goal of growing that money over time and
Opportunities
generating future returns.
Marketing explores ongoing activities to promote
9. Marketing and products/services and connect with target customers. Branding
Branding explores defining a business's identity to build recognition and
foster customer loyalty.
It explores the working relationship between employers,
10.Industrial Relations employees (and their unions), and the government to
maintain peace and productivity in the workplace.
It explores using methods, tools, and skills to handle
11.Conflict Management disagreements or disputes in a respectful and creative way,
aiming for solutions that satisfy all parties.
Entrepreneurship explores starting a business and taking
12.Entrepreneurship, calculated risks. Management explores planning, organizing,
Management, and leading, and controlling resources to achieve goals.
Leadership Leadership explores the ability to guide, inspire, and
influence people towards a common vision.
It explores the laws created by a government or parliament
13.Legislation
that set compulsory rules and regulations for everyone to follow.
Page 3 of 78
@studysmartpro-stuvia
, INVESTMENT OPPORTUNITIES *
An investment is when you put money into something to make more money in the future. The
main goal is to grow your money over time.
There are four major types of investments, called asset classes, that help you spread your money
around to manage risk.
When answering questions always state the level of risk such as high/low/moderate, ROI
(Return on investment), long term or short-term investment and the advantages and
disadvantages of the investment.
1. Assess the Risk — how likely it is to lose money.
2. Evaluate the ROI — how much profit the investment can bring.
3. Decide the Time Frame — how long to keep the money invested.
Four Major Investment Types:
1. Cash:
o This is money kept in safe places, like bank accounts.
o It has low risk, meaning you are unlikely to lose your original money.
o However, it also offers low reward or interest.
o Often, the money you earn might not even keep up with inflation, so your buying power
can go down.
o [Examples: Bank deposits, money market accounts].
2. Property:
o This means buying real estate (like land or buildings) to make income or profit.
o Property can help your money grow with inflation as its value often increases.
o It generally has moderate to high risk.
o A main problem is lack of liquidity, meaning it can be hard to quickly sell property for
cash.
o Success depends on things like location, economic conditions, and government rules.
o [Example: Owning a home or renting out a property].
3. Bonds/Gilts:
o These are loans you make to governments or companies.
o In return, you get regular interest payments and your original money back later.
o They are generally safer if from stable countries.
o Bonds can offer higher interest than cash.
o They are high to moderate risk.
Why are bonds safer than stocks? = Bonds usually pay you a fixed amount of money (interest) regularly
– you know what to expect. At the end of the bond’s term, you usually get back the money you
originally invested (the principal). Stocks are riskier because their price can go up or down a lot, and
companies might not always pay dividends (profit shares). So basically, with bonds, you have more
certainty of getting your money back and earning some interest, while stocks could give more money
but come with higher risk.
4. Equities (Shares):
o Shares mean you own a small part of a company.
o When you buy shares, you become a shareholder.
o You can earn money in two ways: through dividends (parts of the company's profits paid
to you) and if the share value grows.
Dividends= Own a share → company makes profit → company pays you a
small part of that profit → that’s your dividend.
o This is a high-risk investment because prices go up and down a lot.
o Over a long time, shares offer the best chance to earn more than inflation.
o [Example: Buying shares in Woolworths on the JSE (Johannesburg Stock Exchange)].
Why is spreading the risk important? = Spreading the risk is important because it helps protect
your money. If one investment loses value, others can still do well. It keeps you from losing everything
at once. It makes your overall investment more stable and safer.
Other Investment Choices:
1. Pension Fund – A pension fund is a way to save money for when you retire. Usually, your
employer helps you by putting money into this fund, and sometimes you also contribute. Over time,
this money is invested, so that when you stop working, you have a steady income to live on.
2. Endowment – An endowment is like a savings plan that also includes life insurance. You pay
Page 4 of 78
@studysmartpro-stuvia
,into it over time, and at the end of the term, you get a lump sum of money. It also provides financial
protection for your loved ones if something happens to you.
3. Unit Trust – A unit trust is like a big pool of money from many investors. This pool is managed
by professionals and invested in different things like stocks and bonds. This way, your money is
spread out, and the risk is reduced.
4. Collectibles – Collectibles are valuable items like art, rare coins, or antiques. People invest in
them hoping that their value will increase over time. However, they can be risky because their value
depends on trends and demand.
5. Offshore Investments – Offshore investments are investments made in other countries. They
can offer benefits like tax advantages or diversification. They let you invest globally and spread
out your risk.
6. Debentures – Debentures are like loans you give to a company. When you buy a debenture,
you’re lending your money to that company, and in return, they pay you interest over time and
return your money later.
7. Retirement Annuities – Retirement annuities are savings plans that give you a steady
income when you retire. You put money in regularly, and when you retire, you get payments to help
support you.
8. Notice Deposits – Notice deposits are savings where you agree to keep your money in the bank
for a certain period. In return, you get a higher interest rate. If you need the money sooner, you
must give the bank notice.
Advantages of Investing Disadvantages of Investing
1. Wealth Growth: Investing helps your money 1. Risk of Loss: Investments carry the risk of
grow more than just keeping it in a savings account. losing money. Market fluctuations can cause a
Over time, investments usually offer higher returns, drop in value, especially in high-risk
helping you build wealth. investments.
2. Inflation Protection: Your money has the
2. Complexity: Investing can be complicated
potential to grow faster than inflation, helping
and requires research, knowledge, and skill to
maintain its value and protecting your purchasing
make good decisions.
power.
3. Passive Income: Some investments, like rental 3. Liquidity Issues: Certain investments (like
properties or dividend-paying stocks, provide a property or bonds) can’t easily be turned into
steady income stream even when you’re not cash, which can be a problem if you need
actively working. money quickly.
Criteria used to choose an investment option
Investment timeframe: How long you plan to invest. Longer times allow for more risk (like
shares), while short times usually mean less risk.
Financial Position: Your overall wealth. Wealthier investors can often take more risk.
Risk and return on investment: is the investor looking for a low, medium or high risk
investment?
Use these criteria are used to determine the investment options
Key Investment Ideas:
1. Diversification: This is spreading your investments across different types (like shares,
property, cash, bonds) to reduce overall risk. If one investment does badly, others might do
well.
2. Risk Profiling: This is a process to figure out how much risk you are willing and able to
take with your money. It helps choose the right mix of investments for you. It considers your
risk capacity (ability to take risk), risk tolerance (comfort with risk), and required risk (risk
needed to reach goals).
3. Taxation:
o You usually pay income tax on interest and dividends you earn.
o You also pay Capital Gains Tax (CGT) on any profit you make from selling assets like
property or shares.
Ways to Limit Losses:
Stop-Loss Strategy: This is a plan to automatically sell an investment (like a share) if its
price drops below a certain point. This prevents you from losing too much money. it’s basically
setting a backup plan
Page 5 of 78
@studysmartpro-stuvia
, Rebalancing: This means adjusting your investments back to your original plan. If one
investment grows a lot, you sell some of it and buy more of investments that haven't grown as
much. This helps keep your risk level balanced.
Investment Strategies
1. Conservative Investor:
Wants safety and steady income. This investor focuses on protecting their money and takes low
risk because they invest in safe options like bonds, cash, and property that rarely lose value
2. Defensive Investor:
Wants income with a small amount of growth. This is also low risk because they choose stable
investments like bonds and cash, and only a small part in shares for limited growth
3. Balanced Investor:
Wants both income and growth. This means medium risk because they mix safe investments
(bonds) with riskier ones (shares), so there’s a balance between safety and profit
4. Growth Investor:
Wants to grow their money a lot over a long time. This is high risk because they invest mostly in
shares (equities), which can go up or down quickly, but also give bigger returns over time
Investment
Risk Reward Discussion of Criteria
Option
Risk depends on the mix of assets (shares, bonds).
Unit Trust Medium Medium
Good for long-term growth and diversification.
Offered by insurance companies. Returns are stable,
Endowment Low Low
but usually lower than other investments.
Value depends on rarity and demand. Can give high
Collectables High High
profits but also big losses. Not guaranteed.
Property grows over time and earns rental income.
Property Medium High Risk from interest rates, location, and market
conditions.
Cash/Bank Very safe, but interest is low. Often doesn’t beat
Low Low
Deposit inflation. Best for short-term savings.
Slightly better than bank deposits. Good for
Money Market Low Low
preserving capital and earning small interest.
Pays fixed interest. Safer if from government. Can
Bonds/Gilts Medium Medium
lose value if sold early or interest rates rise.
Equities Share prices rise and fall often. Over time, shares give
High High
(Shares) best return. Good for long-term growth.
A loan to a company. Pays interest and returns
Debentures Medium Medium
capital. Less risky than shares, more than cash.
Offshore Diversified investments. Returns can be high, but
Medium High
Investments depends on global economy and currency exchange.
Retirement Safe and long-term. Offers tax savings and grows over
Low Medium
Annuities years. Access only at retirement.
Employer and employee contribute. Grows slowly over
Pension Fund Low Medium
time with low risk and tax benefits.
Liquidity refers to how quickly and easy you can turn an investment into cash without losing money.
The more liquid faster you can sell it.
Example Exam Question
Explain how a business (such as Shein) should use the following three investment criteria when
considering investing in Equities:
1. Risk
2. Return on Investment (ROI)
3. Time frame of the investment
Answer:
When a business like Shein considers investing in equities, it must analyse the following criteria:
1. Risk:
Equities are generally regarded as a moderate- to high-risk investment. The volatility of the market
means that an investor could potentially lose their investment.
Page 6 of 78
@studysmartpro-stuvia
, Although the JSE (and other stock exchanges) implement strict rules for companies that list,
intending to decrease the risk of investing in them, equities remain risky.
Share prices are influenced by external factors such as political and economic stability,
consumer trends, and global events — all beyond Shein’s control.
A strategy to reduce this risk is to use a stop-loss order, which automatically sells the shares if
the price drops to a predetermined level, limiting potential losses.
2. Return on Investment (ROI):
The ROI from equities is derived from two main sources: the increase in the share price (capital growth)
and dividends.
Shein would invest in shares expecting their value to increase over time, resulting in capital
gains.
Dividends, paid from company profits, provide an additional return to shareholders. In South
Africa, dividends are not taxed in the hands of the shareholder.
Equities usually generate a higher yield than most other investment types.
Over time, the combination of capital growth and dividends can help Shein’s investment
outperform inflation.
3. Time Frame of the Investment:
Equities are generally seen as a long-term investment, as achieving good returns often takes time.
Shein might choose to invest in blue-chip shares, which tend to show steady growth over the
long term.
In this long-term strategy, dividends earned from the share portfolio can be reinvested to buy
more blue-chip shares.
In contrast, speculators buy shares hoping for a quick rise in price and sell them soon after for
profit; these short-term investors are usually not interested in dividends.
Page 7 of 78
@studysmartpro-stuvia
, HUMAN RESOURCES
What is Human Resources
Human Resources is the part of a business responsible for finding, hiring, training, and
looking after employees.
Its goal is to ensure workers are treated fairly and to help the company get the best out of its
people.
Key Activities of the Human Resources Function: Human Resources performs several crucial
activities:
1. Manpower Planning:
o This is about planning how many workers are needed, what skills they must have,
and when the business will need them.
o It includes Work-load Analysis. [Example: If the business is busy, it needs more
workers].
o It also involves Job Analysis, which has two parts:
Job Description: A list of what the job is about. [Example: Job title, duties,
working conditions]. [Example: A cashier handles money, works shifts, and reports
to the supervisor].
Job Specification: The qualifications and skills a person must have. [Example:
Must have Matric, good with numbers, friendly].
o Human Resources also identifies Skills Gaps (missing skills). [Example: If no one knows
how to use a new computer program, that’s a skills gap].
2. Recruitment:
o This is about finding and attracting suitable people for job openings.
o External Recruitment involves hiring from outside the business. [Examples: Head
hunting (directly approaching skilled people), advertising in newspapers, using
employment agencies, visiting schools].
o Internal Recruitment involves hiring from inside the business. [Example: Promoting
a cashier to a supervisor position.]
o Ask existing employees to make recommendations. (hybrid)
ADVANTAGES AND DISADVANTAGES OF INTERNAL AND EXTERNAL RECRUITMENT
INTERNAL RECRUITMENT
Advantages Disadvantages
You already know the worker's work Moving one worker may leave a big gap in
record. another department.
No need to train the worker again. There may be no right person for the job.
cheaper than external recruitment Managers may not want to lose good workers.
because: no need for costly
advertisements
Workers feel happy and motivated.
EXTERNAL RECRUITMENT
Advantages Disadvantages
Avoids in breeding High cost of recruitment process
Possible to widen choice of applications by
Frustration amongst existing employees
having a pool of candidates
Encourages diversity and fresh
Takes longer to recruit and train new employees
perspectives
3. Selection:
o This is the process of screening applicants and choosing the best person for the
job.
o It's seen as "negative" because it removes unsuitable people, narrowing the choice.
o Why a good selection process is important: Staff stay longer, production costs are
lower, employees need less training, and workers perform better.
o The 8 Selection Steps: Receive applications, initial screening, shortlist candidates,
check references and background checks, interview, conduct tests (if needed), medical
exam (if job requires), and send a letter of appointment.
Page 8 of 78
@studysmartpro-stuvia
, Step 4 such as reference and background checks is skipped my many businesses
because it is time consuming.
4. Employment Contracts:
Are agreements between the employer and employee that set out the rules, duties, and
conditions of the job. They must be agreed upon and signed by both parties and are
legally binding. Employers can offer better conditions than the law, but not worse
A contract usually includes the following:
Employee information: name, address, identity number, and tax number.
Employer information: name and address.
Employment details: position held, main duties, probation period, and whether the job is
permanent or temporary.
Salary details: starting salary, overtime rate, incentives, pension, and medical aid.
Leave details: information about annual, sick, and family leave.
Termination of services: notice period that must be given by each party to end the contract.
Other conditions: any additional issues that the employer or employee may agree on.
5. Placement of Staff:
o This means putting the employee into the job they applied for.
o Sometimes, an employee might be better suited for another job, and the offer is
changed.
o Good placement means the worker uses their skills well, which helps both the business
and the employee.
6. Remuneration and Employment Benefits:
This section is all about how employees are paid and what extra benefits they get.
o Remuneration « This means the money or reward a worker gets for doing their job —
like wages or a salary.
o The Basic Conditions of Employment Act (BCEA) has rules for fair pay.
• This law protects workers and ensures fair pay and working conditions.
• It sets rules like minimum wage, working hours, and overtime pay.
• So, employers can’t underpay or overwork employees.
o Job evaluation
This is a system used to decide how much each job is worth in a company.
The pay is based on how important, skilled, or responsible the job is.
There are different methods:
Paterson Method: Looks at decision-making levels (e.g., manager vs.
assistant).
Hay Job Method: Looks at knowledge, problem-solving, and responsibility.
o Salary Structures:
Cost Plus Benefits: Basic salary plus extra benefits. [Examples: Pension fund,
medical aid, travel allowance].
o Cost to Company (C-T-C): means the total amount of money a company spends
on one employee per year. it includes everything the company pays for you or to
you.
o Employee Deductions:
Voluntary: Employee chooses. [Examples: Trade Union fees, staff fund].
Compulsory: Required by law. [Examples: UIF (Unemployment Insurance Fund),
PAYE (Pay As You Earn) income tax].
7. Induction:
o This helps a new employee get to know the business and feel comfortable.
o It's not training; it helps the employee settle in and understand how things work.
o Benefits of Induction: Reduces stress, gives correct information, saves time and
money, helps staff adapt quickly, and improves staff retention (people stay longer).
8. Training of Staff and Skills Development:
o This involves teaching employees new skills and improving current ones.
o Training is job-specific and helps employees do their current job better.
o Skills Development is broader and aims to fix skill shortages in South Africa,
promoting continuous learning.
o Training Methods: [Examples: Workshops, job rotation, self-study, online training,
buddy system, learnerships, on-the-job training, apprenticeships].
Page 9 of 78
@studysmartpro-stuvia
