BUSINESS STUDIES

BUSINESS
OPERATIONS

GRADE 11 CORE NOTES (2020)

TOPIC 1: MARKETING FUNCTION

TERM DEFINITION
The path through which goods and services travel from the vendor to
Channels
the consumer.
The process of introducing a new product or production method into
Commercialisation
commerce—making it available on the market
A process of transmitting and sharing ideas, opinions, facts, values
Communication
etc. from one person to another or one organisation to another.

Demand Consumers' willingness and ability to consume a given good.

To spread the product throughout the marketplace such that a large

Distribution
number of people can buy it.
E-marketing is a process of planning and executing the distribution,
e-Marketing promotion in a computerised, networked environment, such as the
Internet
Foreign markets are any markets outside of a company's own
Foreign Marketing
country.
Grade means "to evaluate or rank,". A food inspector who grades a
Grading
crop, determining whether it is "food-grade."
Part of a country's economy that is not recognized as normal income
Informal Sector
sources and therefore do not declare and pay taxes.
Intermediaries put buyers and sellers together without taking
Intermediaries ownership of the product, service or property. They act as go-
betweens.
A commercial enterprise undertaken jointly by two or more parties
Joint Ventures
which otherwise retain their distinct identities.
The activity or fact of increasing the market share of an existing
Market Penetration
product, or promoting a new product, through strategies.

Perish To lose its normal qualities; rot or decay (of rubber, food, etc.)

A course or principle of action adopted or proposed by an

Policy
organisation or individual.
Relating to the publicising of a product, organisation, or venture so as
Promotional
to increase sales or public awareness.
The giving out of information about a product, person, or company
Publicity
for advertising or promotional purposes.
It is the accepting of the possibility of loss in the marketing of a
Risk bearing
product.
The practice of maintaining some level of consistency in the product
Standardisation
or service that a company provides.
Something that can be touched or felt: tangible assets have a value
Tangible
that can be precisely measured.
A group of potential customers to whom a company wants to sell its
Target Market
products and services.
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Define MARKETING

Marketing is the action or business of PROMOTING and SELLING products or services,

including MARKET RESEARCH and ADVERTISING.

Briefly explain the ROLE of MARKETING

 Marketing plays an important role in establishing relationships between customers and

the organisations offering to the market.

 The marketing function is also tasked with branding of the organisation, participation in
publicity activities, advertising and customer interaction through feedback collection.

Outline/Mention/Discuss/Explain the following MARKETING ACTIVITIES:

Locating the  Important for the business to establish target market and locate the
consumer most appropriate customers.
 To obtain this information, the business should carry out market
research.
 Market research entails the gathering of data on the market and
customers analysing it and using the information to make informed
decisions.
 Market research can be done in different ways.
 Examples: observing the markets, questionnaires, internet and
interviewing people.
Standardisation  Products sold under the same label for the same price; should be a
uniform size, shape and standard.
 Related products should therefore be identical.
 Mechanisation of the production process, has promoted the
standardisation of products.
Grading  Products are normally graded according the quality of the products.
 Each level of grading has specific criteria to measure the product.
 Grading allows the customers to choose the level of quality that best
suits their need and budget.
 Examples of products that are sold in different grades:
- Floor tiles, cheese, eggs, meat

DID YOU KNOW? Grading is done not only for Products, but for Services as well?
The quality of fruits and vegetables is determined by various factors. For processed
commodities the letter grade "A" is the highest quality level. Grades "B," "C," and “D”
contain increasing amounts of product with less desirable characteristics in appearance
and/or edibility.
The Tourism Grading Council of South Africa (TGCSA) evaluates accommodation
establishments and grades them 1 to 5 stars, according to the type of accommodation &
the level of comfort and quality offered. For example: Hotels, Lodges, B&Bs, Self-Catering,
Caravan Parks, Camping Sites and Backpackers.

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Storage  Refers to the storage of a product from the time it is finished to the
time it is sold to the customer.
 Some products can be stored longer than other products.
 Some products need specialised storage conditions.
 Dairy products require cold storage before they are sold to the
customer and have a limited storage time.
 Mass production have created a need for more storage.
 These goods need to be stored until there is a demand for them.
Transport Time  Some goods have a limited shelf life.
 They need to be transported as quickly as possible
(Consideration so that the customer gets it as fresh as possible.
when choosing  Example: fruit and vegetables.
a method of Conditions  Frozen goods will need containers that are
transportation.) temperature controlled to ensure that the products
remain frozen.
Price  Certain modes of transport are more expensive
than others.
 Transport cost add to the final costs of the product
and it will also influence the profitability of the
business.
Size  Large and heavy items such as cars cannot be
transported by air as they are too big and too
heavy.
Availability  Certain modes of transport are not available in all
areas.
 Businesses must consider where they are located
and what transport is available directly to them.
 Example: If there is no harbour nearby, the products
still need to be transported to the harbour by
another mode of transport before they can be
exported.
Weight  A product may be small, but very heavy to
transport.
 Some methods of transportation price according to
weight and other according to size.
 Example: Air transportation is priced according to
weight.
Financing  Financing is needed to bridge the gap from when the product is
completed to when the customer pays for it.
 Financing can be done in the following ways:
1. Credit facility: Client pays after taking possession of the goods or
services.
2. Deposit: This is paid when the customer orders the products or services
3. Lease agreements: Customers pay monthly instalments for the use of
the product or service, but never owns it themselves.

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Risk bearing  All businesses carry risk such as unplanned and unforeseen
circumstances, e.g. outbreak of a pandemic
 This can impact on their productivity, production process, delivery,
quantity and profit.
 Businesses may transfer possible risks to insurance businesses.

Buying and  Refers to the actual exchange of goods and services.

Selling  This can be done in different ways:
o Online services, i.e. the internet.
o Third party or agent.
o Personal selling, i.e. direct selling from producers to consumers.
o Mail orders.
o Telesales
o Classified section of the newspaper

SUB-TOPIC: PRODUCT POLICY

Outline/Mention/Explain/Discuss the product policy with specific reference to types of

products, product development, trademarks and packaging.

TYPES OF PRODUCTS:

Durable Non-Durable Consumer Industrial

Products Products Products Products

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Outline/Mention/Discuss CATEGORIES OF CONSUMER GOODS/products.

1. DURABLE PRODUCTS:
 The products which are tangible and can be used repeatedly,
 For example: television, refrigerator, clothes, machines, etc.

2. NON-DURABLE PRODUCTS:
 The products which are tangible and perish within one or few uses,
 For example: salt, pepper, soap, etc.

3. CONSUMER PRODUCTS:
According to consumer’s shopping habits, products can be classified into following
categories:
3.1. CONVENIENCE PRODUCTS:
 These products which are purchased frequently, and immediately and with minimum
efforts.
 For example: newspaper, toothpaste, washing-detergent, coffee, sugar, etc.

3.2. SHOPPING PRODUCTS/LIFE STYLE:

 The products which customer purchases less frequently and after careful
comparison, based on suitability, quality, price and style.
 For example: clothing, furniture, used cars, etc.

3.3. SPECIALITY PRODUCTS:

 Those products that have brand identification or unique characteristics.
 Buyers for these goods generally spend more time seeking the product they want
than on comparing brands.
 For example: expensive sport cars, professional photography equipment, designer’s
clothes, etc.

4. INDUSTRIAL PRODUCTS:
Those products that are purchased for further processing or for use in operating a
business. They can be classified as:
4.1. FARM PRODUCTS e.g. wheat, cotton, livestock, vegetables, fruits, etc.
4.2. NATURAL PRODUCTS e.g. crude oil, fish, timber, iron-ore, etc.
4.3. MANUFACTURED PRODUCTS e.g. crude-iron is converted in steel and then steel is
further used for making bars, utensils, etc.
4.4. SUPPLIES are of two types:
4.4.1. OPERATING e.g. lubricants, coal, typing paper
4.4.2. MAINTENANCE e.g. paint, nails, brooms

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Explain/Discuss the IMPORTANCE OF PRODUCT DEVELOPMENT

 It is critical for a business to develop new products or improve their current products if
they want to stay in the market.
 Business must follow changing market demands and keep up to changes in
technology
 Diversify product offering to reduce risk and remain competitive

Outline/Mention/Discuss/Explain the STEPS/STAGES OF PRODUCT DESIGN

1. Idea generation  Come from needs survey, SWOT analysis, creative thinking
techniques and market research.
2. Idea screening  This is done to determine if the idea is necessary, feasible and
profitable for the business.
3. Concept  The market is tested to see how the product will best provide
development and the necessary benefits.
testing  How best to produce the product in the most cost-effective
way.
 Consumer’s reaction to the product is also determined.
4. Business analysis  During this phase the profitability, breakeven point, sales
volume and final selling price are determined.
5. Market testing  The actual sample product is tested in the market.
 Necessary adjustments are made according to the responses
given by the market testing.
6. Technical  Systems and processes are put into the production planning
implementation and control process.
 Planning, scheduling, monitoring and quality control are
worked out and put into place for production.
7. Commerciali-  The product is launched.
sation  Marketing and advertising campaigns are implemented.
8. New product  The product is priced.
pricing  Forecasts are worked out.

Mention/Explain/Discuss the PURPOSE OF PACKAGING

There are five main purposes of packaging:

1. Contain  The packaging is needed to contain the item or product.
 Example: Cool drink in a bottle.
2. Information  Packaging indicates the brand, trademark and information about
the product
3. Protection  Packaging protects many products from germs, breakage,
moisture and spoilage.
4. Transportation  Some packaging is designed to make the transportation of the
product easier or safe.
5. Display  Some products are packaged specially to look attractive
 Perfume and jewellery packaging are carefully designed as part
of the marketing

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Outline/Mention/Discuss/Describe/Classify the TYPES OF PACKAGING
Some of the different types of packaging options that can be used to enhance products
& customer experience:

TYPE OF
EXPLANATION EXAMPLES
PACKAGING
1. Paperboard Paperboard is a paper-based Can be used for packing
boxes material that is lightweight, yet cosmetics, medicines, milk and
strong. juice, frozen food and more.
It can be easily cut and
manipulated to create custom
shapes and structures.
2. Plastic boxes Plastic box packaging has many Airtight plastic packaging
advantages as they can be containers can help to preserve
recycled, and generally they are the quality of food and eliminate
much more durable than any contamination issues.
paperboard boxes.
3. Rigid boxes A rigid box is made out of highly The example of rigid boxes are
condensed paperboard that is 4 the boxes that hold Apple’s
times thicker than the iPhones and iPads, which are 2-
paperboard used in the piece setup rigid boxes.
construction of a standard folding
carton.
4. Poly bags A poly bag, also known as a It is one of the common types of
pouch or a plastic bag, is packaging and can carry a wide
manufactured out of flexible, thin, range of products including food
plastic film fabric. items, flowers, waste, chemicals,
magazines, and so on.
5. Foil sealed It keeps the products dense to Nuts, cereals, smoked fish, cheese
bags maintain the flavour, protects it and cured meats are also
from bacteria coming in and packaged with foil sealed bags
helps increase shelf life to prevent from spoilage.

Elaborate on the MEANING OF TRADEMARKS

Trademark is a WORD, PHRASE, SYMBOL or DESIGN, COMBINATION OF WORDS, PHRASES,

SYMBOLS or DESIGNS that identifies and distinguishes the goods of a business from that of
competitors

Discuss/Explain/Describe the IMPORTANCE OF TRADEMARKS to BUSINESSES & CONSUMERS

 A trademark or brand establishes an identity or reputation for a company or product.
 Brand awareness is essential in marketing and advertising.
 Businesses spends a lot of time and effort to ensure that their trademarks and brands
achieve a reputation for quality and value.
 Trademarks and branding create a sense of security and consistency for customers.

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Outline/Mention/Explain the REQUIREMENTS OF A GOOD TRADE MARK

 A trademark is specifically registered and protected by law.

 This means that this name cannot be used by any other business or person.

SUB-TOPIC: PRICING POLICY

Define/Explain the MEANING OF PRICE

Pricing is the process whereby a business sets the price at which it will sell its products and
services

Discuss/Explain the IMPORTANCE OF PRICING

 The main aim of a business is to make a profit.

 Setting the correct prices can influence:
o Number of sales of the product.
o Cost of the production.
o Profits of the business.

PRICING TECHNIQUES:
1. Cost-based /  Cost plus profit is the most common way of calculating the price.
orientated  The costs are calculated and then the profit is added to the
pricing amount.
o Fixed cost is R10 000
o Variable cost if R20 000
o Profit is R6 000
Example:
o 100 shirts were produced
Pricing of shirt
o Selling price will be: (R10 000 + 20 000 + 6000) ÷ 100
= R36 000 ÷ 100
= R360.00
2. Mark-up  This is calculated as a percentage
pricing  Percentage is calculated from the cost per unit
o Fixed cost is R10 000
o Variable cost if R20 000
o Mark-up is 20%
o 100 shirts were produced
o Unit cost will be: (R10 000 + 20 000) ÷ 100
Example:
= R30 000 ÷ 100
Pricing of shirt
= R300.00
o Selling price: Add the mark-up percentage to the unit cost
o R300 + (R300 x 20%)
= R300 + R60
= R360.00
3. Customer /  Business estimates what consumer is willing to pay, influenced by
Target based the value of the good
pricing  Business set selling price to cover costs and a reasonable profit
margin
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4. Competition  Businesses often set their prices below the value of their
based / competitors to obtain an edge on their competitors.
orientated  Business will watch for changes in prices and adjust their prices
pricing accordingly.
 The more competition in the market, the lower the prices are likely
to be.
 Example: In the retail industry Pick ‘n Pay, Checkers and Spar will
often adjust the prices of certain products in response to the
prices of the competitor.
5. Promotional  Many businesses offer sales or special offers to attract customers.
pricing  Specials such as “two for the price of one” can influence the
pricing of the good or service.
6. Market  The initial price of a product to penetrate the market
Penetration  Example: new magazine will offer part of a kit-building set with
pricing every edition.
 The first edition is very cheap but future editions cost more
7. Psychological  Psychological pricing is the practice of setting prices slightly lower
pricing than a whole number.
 An example of psychological pricing is setting the price of a shirt
at R299 rather than R300.
 This type of pricing is extremely common for consumer goods
8. Bait pricing  Bait pricing refers to an advertising strategy used to attract
customers by making them think that they will pay less for
something that costs more.
9. Skimming  Price skimming is a pricing strategy that involves setting a high
prices price before other competitors come into the market.
 Good examples of price skimming include innovative electronic
products, such as the Apple iPhone and Sony PlayStation 3.

Outline/Mention/Explain/Discuss FACTORS THAT INFLUENCE PRICING

1. Input cost  The higher the input cost, the higher the final price.
 The lower the input cost, the lower the final price.
2. Demand for  The higher the demand, the higher final price.
the product  The lower the demand, the lower the final cost
3. Target market  Income level of the target market
4. Type of the  Luxury products are normally priced higher
product  Essential products are normally priced lower

PRICE ADJUSTMENT:
1. Business may be FORCED to adjust their prices because of:
 Promotional prices needed for entry into the market.
 Competitors prices that is lower.
 Decrease in the demand for a good or service.
 Increase in the cost of production.
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2. Business may CHOOSE to adjust their prices because:
 Demand for the product has increased.
 Production cost has decreased.
 Competitors have raised their prices.
 A customer places a bulk order.

SUB-TOPIC: DISTRIBUTION POLICY

Define/Explain the meaning of DISTRIBUTION

Distribution is the process of making a product or service available to the consumer or

business user who needs it.

This can be done DIRECTLY by the producer or service provider, or using INDIRECT
channels with distributors or intermediaries.

Outline/Discuss/Explain the CHANNELS OF DISTRIBUTION

 Distribution is the channel that the product follows from manufacturing to the
consumer.
 Essential that the channel is the most effective.
 Channel must also be cost efficient for the product and reaches the target market.

Differentiate/Distinguish between DIRECT AND INDIRECT CHANNEL OF DISTRIBUTION.

DIRECT DISTRIBUTION INDIRECT DISTRIBUTION

 Involves only the producer and the  Most common distribution channel
consumer. includes a wholesaler and a retailer
 The wholesaler and the retailers are cut before the product reaches the
out of the process. consumer
Example: The consumer going to Polar Ice Example: A sweet manufacturer would
Cream and buying a bucket of ice cream. produce sweets and send them to a
wholesaler in large quantities. The
wholesaler sells the sweets in large boxes at
bulk prices to retailers. The retailers would
then sell them to the consumer.

Explain the meaning of INTERMEDIARIES

 Refers to all the people that fall into the distribution process between the producer
and the consumer.
 They are the middlemen.
 Act as negotiators and mediators between the producer and the consumer.
 Examples are wholesalers, retailers, agents and brokers.

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Outline/Mention DIFFERENT TYPES OF INTERMEDIARIES

 Buys large quantities from the producers and sells it to the

1. Wholesalers consumers.
 Wholesaler can get cheaper prices on the products it purchases
from the producer.
 The wholesaler transport and stores the product for the producer.
 Transport and storage cost must be factored into the wholesaler’s
price when it sells its good to the consumer.
2. Retailers  Retailers are shops that sells to the consumers.
 Many retail outlets have staff that can advise and assist the
customer on their purchase.
 Some retailers specialise in one specific type of product.
 Example: cell phone retail outlet.
 Large manufacturers usually contracts agents and brokers to
distribute their products.
3. Agents
 The agents will create a link between the manufacturer and the
retailers.
 Brokers are specialised agents in a certain field of expertise,
example insurance brokers.
 Agents and brokers are normally remunerated on a commission
basis.
 Refers to independent businesses, which fall under a common
brand or product.
4. Franchises
 They are intermediaries for the manufacturers.
 The individual franchise retail outlets are intermediaries to the main
brand and company.
 Most of the recipes, packaging and price list are produced centrally
and then distributed to the various outlets.
 Examples: McDonalds, KFC, OK, Steers, Spur restaurants and others.

Explain the ROLE OF INTERMEDIARIES in the distribution process

 Intermediaries provide services that RAW MATERIALS

enable manufacturers to reach 
different types of customers. MANUFACTURER
 Intermediaries act as middlemen
between different members of the

distribution chain, buying from one
party and selling to another.

WHOLESALER
 
CONSUMER RETAILER

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Briefly explain the reasons WHY MANUFACTURES MAY PREFER TO MAKE USE OF DIRECT OR
INDIRECT DISTRIBUTION METHODS

DIRECT DISTRIBUTION INDIRECT DISTRIBUTION

 Collect valuable data on customer  Share shipping and storage costs
buying habits  Make it easier for customers to find your
 Distinguish yourself from the competition products
 Respond to product performance and  Benefit from your third-party’s experience,
customer feedback infrastructure and salesforce
 Get your products to consumers faster  Avoid the complexity of managing
 Avoid sharing profits with a third-party distribution logistics
distributor
 Build relationships with your customers

SUB-TOPIC: COMMUNICATION POLICY

Define/Explain the meaning of a MARKETING COMMUNICATION POLICY

 It is also referred to as “promotion” part of the business

 Promotion consist of THREE stages:
1. Create awareness among customers of goods and services that are available.
2. Inform customers about the benefits of buying the goods and services.
3. Persuade the customer to buy the goods and services

Outline/Mention/Explain/Discuss/Describe the following components of the marketing

communication policy:

Explain the purpose of SALES PROMOTION and give practical EXAMPLES

 Also known as merchandising is a means of bringing a product to the attention of

consumers and persuading them to buy it.
MERCHANDISING EXAMPLES
 Clothing shops and supermarkets advertise items as “Buy two get
1. Special Offers
one free”

 Larger items are sold at the price of a smaller item, e.g. 2,2 litre coca
2. Bonus Packs
cola for the price of a 2 litre

3. Discount
 An amount of R5 is offered off the price of the next item purchased.
Vouchers

 Gift vouchers or small gifts are included with the item, e.g. lipstick
4. Free Gifts
when purchasing a magazine

 Pick ’n Pay offers the “smart shopper” and clicks the “club card”
5. Loyalty Cards
where loyalty points can be earned.

6. Charity  Donations are made to a charity, e.g. 5c of each Danone yoghurt

promotions goes to children suffering from cancer

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Explain the PURPOSE OF ADVERTISING and give EXAMPLES of advertising medium.
 Advertising is the most popular method for manufacturers to get their message to the
target market and consumers.
 A good advertisement should include the following:
o Attract Attention
o Spark Interest
o Develop Desire
o Result in Action
 The above is commonly referred to as the “AIDA” effect.
 Advertising is the most popular method for manufacturers to get their message to the
target market and consumers.

Elaborate on the meaning of PUBLICITY

 Publicity is a way of mass communication.

 It is not a paid form of mass communication
 Publicity comes from reporters, columnists, and journalists.
 It can be considered as a part of public relations.

Explain the role of the PUBLIC RELATIONS in publicity

 Public relations are a tool companies use to present a favourable image.

 To gain free positive publicity.
 Public relations function builds good relationships with representatives of the media.
 Keep media informed of newsworthy items such as product launches to be brought
to the attention of consumers.

Explain the meaning of PERSONAL SELLING

 Personal sales are usually face to face or telephonically
 Needs a high level of salesmanship

Justify the EFFECTIVENESS of PERSONAL SELLING in promoting a business product

 Personal selling ensure that consumers receive the product, pricing and technical
information they need to decide
 Personal selling is more efficient than other forms of promotion because salespeople
target consumers
 Personal selling affords greater managerial control over promotion costs.

SUB-TOPIC: MARKETING IN THE FORMAL AND INFORMAL SECTOR

Define the INFORMAL SECTOR

 Refers to all businesses that do not keep record of their economic activities.
 In most cases the direct channel of distribution is used between the producer and
consumer.
 Example: A person manufacturing a wooden chair in his back yard, will sell directly to
the consumer

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Explain the ADVANTAGES of marketing in the informal sector
 Marketing activities are limited to word of mouth
 Advertising may be a notice board or poster, sometimes hand-written
 Marketing in the informal sector is therefore not expensive

Justify the REASONS why the INFORMAL SECTOR prefers to use DIRECT DISTRIBUTION
 Direct distribution is cheaper as the producer sells directly to the consumer
 The informal sector caters for a specific target market which is directly accessible

Explain/Discuss HOW the INFORMAL SECTOR uses INDIRECT DISTRIBUTION.

 Business within the informal sector is increasingly making use of mobile applications
 A dressmaker sells her products to owners of stalls at a variety of flea markets

Compare the MARKETING MIX of the formal sector with the informal sector
(Marketing Mix of a clothing business)
ELEMENTS OF
FORMAL SECTOR INFORMAL SECTOR
MARKETING MIX

PRODUCT  Many well-known brands  No branded clothing

 Higher prices  Lower prices

PRICE
 Cash or credit  Cash only

PLACE  Sophisticated interior  No interior decoration

 Handwritten advertisements on
PROMOTION  On TV and magazines
bulletin boards

SUB-TOPIC: ELECTRONIC MARKETING

Define ELECTRONIC MARKETING and give EXAMPLES

 Also known as e-Marketing.
 Makes use of internet, websites, e-mail, social media and cell phones
 Marketing communication can reach potential customers throughout the world
at very low costs to the business

Explain/Discuss the IMPACT of ELECTRONIC MARKETING

ADVANTAGES DISADVANTAGES
 Cost are lower and there is better return  Dependent on the market.
on investment.  Very competitive global market.
 Quicker process to get message to  Maintenance of the technology and
customers. systems
 Able to measure and use data from  Breach of Security
target market.  Less flexible pricing structures.
 More interaction with the consumer.
 Reduce cost of intermediaries.
 Fast and successful way of brand
visibility.

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SUB-TOPIC: FOREIGN MARKETING

Define FOREIGN MARKETING

 Refers to marketing that is carried out in other countries.
 Allows businesses to expand their local target.
 Businesses can also take advantage of overseas prices and exchange rates.
 Exporting and importing goods and services have been made easier with the use of
e-marketing and advertising.
 A person from South Africa can order a laptop from Hong Kong, pay for it online and
have it delivered to a South African home address.
 Similarly, a South African can sell a product to a foreigner, receive money online and
have the product delivered to a foreign address.

Outline/Mention/Explain/Discuss RESTRICTIONS AND REGULATIONS that control foreign

marketing
1. Tariffs trade  Custom tariffs = government duties paid on imports & exports
agreement  Country charge custom duties on manufactured goods from foreign
countries to make it less attractive than local substitutes
 To motivate consumers to buy local products
2. Export  Provided by government to encourage exports of goods to promote
subsidies economic growth and job creation
 Export subsidies ensure that the local market is not oversupplied
which causes local prices to drop
3. Protection  A country may prevent or discourage free trade by imposing quotas,
policies etc. tariffs and other levies
 To protect local industries
 To protect local business against unfair competition and dumping

Suggest WAYS in which South African businesses can ENTER INTO A FOREIGN MARKET
 Exports  Joint ventures
 Licensing  Direct investments

Explain/Discuss how the PRODUCTION FUNCTION can align its processes in order to meet
the GLOBAL DEMAND
1. Production  Investigate current production systems to ensure an increase in
systems production without compromising quality and safety
2. Planning  The operation of a manufacturing plant might need to be adjusted
to increase output
 More resources and labour might be required
 Resulting in financial planning
3. Safety  Safety standards of the product must be assessed and aligned to
the requirements of the foreign country
4. Quality  Some export markets will require only top-quality products,
especially in the fresh fruit industry
 A quality standard used throughout the world is the ISO 9000 series
5. Costing  Costing is a key factor to compete in the global market

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TOPIC 2: PRODUCTION FUNCTION

TERM DEFINITION
Absenteeism is an employee's intentional or habitual absence from
Absenteeism
work.
The break-even point shows the point when a company's revenue
Breakeven
equals total costs.
A group of people appointed for a specific function by a larger
Committee
group and typically consisting of members of that group.
Money, awarded to someone in recognition of loss, suffering, or
Compensation
injury.

Comply Following a rule or order.

A procedure for assigning employees (workers) to a task or the

Dispatching
movement of materials and machinery to the necessary locations.
A cost that does not change with an increase or decrease in the
Fixed Costs
amount of goods or services produced or sold.
A hazard is any agent that can cause harm or damage to humans,
Hazards
property, or the environment.
An inspection involves checking something, i.e., examining and
Inspection
assessing something.
the process of bringing together component sub-systems into one
Integrated System
functional system.

Loading Involves allocating every person or machine to their specific task

A book giving detailed information about how something should be

Operating Manuals
operated.
The indirect costs or fixed expenses of operating a business. (The
Overhead Costs
costs not directly related to a product/service)
A firm's expenses directly related to the materials and labour used in
Primary Costs
production
The set of inherent properties of an object that allows satisfying
Quality
stated or implied needs.
The process of arranging, controlling and optimizing work and
Scheduling
workloads in a production process or manufacturing process.
A management approach to long-term success through customer
Total Quality satisfaction. In a TQM effort, all members of an organization
Management (TQM) participate in improving processes, products, services, and the
culture in which they work.
A unit cost is a total expenditure incurred by a company to
Unit Cost
produce, store, and sell one unit of a particular product or service.
An expense that changes in proportion to production output.
Variable Costs Variable costs increase or decrease depending on a company's
production volume.

17
Explain the role of the PRODUCTION FUNCTION in the manufacturing process.

 Production is a process of turning the inputs into desired products i.e. outputs.
 It adds value to the input and creates substitutes for the products if needed.
 Production function plays a crucial role in manufacturing because it helps us to
decide the best methods and designs for carrying out manufacturing

SUB-TOPIC: PRODUCTION SYSTEMS

MASS PRODUCTION

Define MASS PRODUCTION

Mass production is used for producing large quantities of similar items with a constant
demand, for example canned goods.

Explain/Discuss the CHARACTERISTICS/ADVANTAGE/DISADVANTAGES of MASS

PRODUCTION

CHARACTERISTICS ADVANTAGES DISADVANTAGES

 The products are  The unit costs of products  Production stoppages

standardised but is are low as production is through breakdowns in
limited in variety continuous machinery can be costly
 Machinery is highly  Minimal storage costs as  Machines are specialised
specialised and raw materials and and can only do one
designed to do one finished products are not function
process only stockpiled  Workers can become
 An assembly line is used  Specialised tasks mean bored
and every product flows employees become
along an identical route highly skilled workers
 Examples of products
that are mass produced:
o car manufacturing
o television sets

18
BATCH PRODUCTION

Define BATCH PRODUCTION

Batches of similar products are made. Each batch is completed before the next batch
can begin.

Explain/Discuss the CHARACTERISTICS/ADVANTAGE/DISADVANTAGES of BATCH production

CHARACTERISTICS ADVANTAGES DISADVANTAGES

 The demand for these  The unit costs are  Time is lost when batches
products are constant reduced when batches are changed and
and small are made machines need to be
 The type of product and  Production is flexible as reset
quantity will depend on customers can place  High stock levels of raw
the demand. specific orders materials need to be
 The same machinery is  Specialists machinery can kept
used for different but increase productivity  Money is tied up in stock
similar products so cash flow needs to be
 Examples planned carefully
o Clothing factories
o Bakeries

JOB PRODUCTION/JOBBING

Define JOB PRODUCTION (Jobbing)

Products are only made once an order has been placed, for example dressmaking and
construction.

Explain/Discuss the CHARACTERISTICS/ADVANTAGE/DISADVANTAGES of JOB production

CHARACTERISTICS ADVANTAGES DISADVANTAGES

 The product is usually  No stock of finished  Unbalanced workloads
unique goods kept as they are as some machines are
 The customer can be made to order used more
very specific about the  Labour is highly skilled  A lot of planning and
finished product and quality of administrative work is
 Highly skilled workers are workmanship is high involved
needed  Risk is low as sales are  The cost of each order
 Examples of job guaranteed will be different
production:  A deposit is usually
o oil paintings required to secure an
o dress making order
o wooden carvings
o wedding dress
o beaded necklaces.

19
SUB-TOPIC: PRODUCTION PLANNING

Define PRODUCTION PLANNING

Production planning is the setting of goals regarding what will be produced and how it will
be achieved.

Outline/Explain/Discuss ASPECTS that must be considered during production PLANNING

e.g. PLANNING, ROUTING, SCHEDULING and LOADING.

1. PLANNING:
 Refers to the planning of each aspect of the overall process.
 Includes the layout of the factory
 Flow of materials through the process.
 Decisions are taken to determine what materials to use and how many to purchase.
 Budgets, machines and manpower are calculated and used to determine expected
output

2. ROUTING:
 Establishes the best and cheapest way to sequence the production process.
 This involves the process time and production order.
 Routing determines:
o quality and type of raw materials.
o manufacturing process and sequence.
o specification of the final product.
o cost analysis.

3. SCHEDULING:
 Refers to the timing of the production process.
 Prioritises certain jobs.
 Determines which jobs need to be completed before the next one can take place.
 Time periods that need to be worked out and considered include:
o preparation of the material.
o delivery of the raw materials.
o process from raw material to finished product.
o delivery of the final product

4. LOADING:
 Involves allocating every person or machine to their specific task.

Explain/Discuss the ADVANTAGES of PRODUCTION PLANNING.

 Efficient production planning allows a business to meet its demands and prevents
problems that could cause unnecessary expenses and wastage
 By setting standards, planning shows what level of quality must be met and allows this
to be monitored
 Proper planning allows resources to be used efficiently and profits to be maximised.

20
SUB-TOPIC: PRODUCTION CONTROL

Explain the meaning of PRODUCTION CONTROL

 Production control is making sure that the actual production performance meets the
goals that were set in the production plan.
 It checks that the factors of production are used in the most efficient way to achieve
the goals of the business.

Outline/Explain/Discuss ASPECTS that must be considered during production CONTROL e.g.

DISPATCHING, FOLLOWING UP, INSPECTION and CORRECTIVE ACTION.

1. DISPATCHING:
 Converts the planning into action.
 Provides instruction for:
o movement of materials and machinery to the necessary locations.
o beginning of the process
o checking the time and cost involved in the process.
o checking the flow of work according to the routing
o supervising the process.

2. FOLLOWING UP:
 Looks at the progress of the work.
 Deals with unplanned issues and problems.
 Sorts out any misunderstanding in terms of job process requirements
 Indicates whether the activities are actually happening.

3. INSPECTION:
 Involves the checking of the quality of the process and the final product.
 Legal and regulatory processes are also checked to ensure that the necessary
standards are met.

4. CORRECTIVE ACTION:
 Involves any adjustments to the planning process.
 Staffing issues are also dealt with in corrective action.

SUB-TOPIC: PRODUCTION SAFETY

Justify the reasons why businesses must MANAGE SAFETY IN THE WORKPLACE

 Businesses create a productive work environment and demonstrate a commitment to

securing the premises from avoidable accidents which creates a culture shift to a
collective goal of safety.
 Absenteeism rates drop when safety programs are a priority because injuries are less
likely to happen because employees are properly trained to use equipment.

21
 High standards are set and met on work premises as employees know that their safety
depends on keeping aisles clear, for example, decreases the chance of someone
tripping and falling.
 Employees are happier when they come to a safe work environment.
 Workers’ compensation insurance claims decrease as a culture of safety reduces the
number of claims employees file each year.

Explain/Discuss the REQUIREMENTS FOR A SAFE ENVIRONMENT e.g. safety policy, visible
warning signs, first-aid kit, safe working environment etc.

 Safety policy must be drawn up by all businesses

 Control measures must be enforced.
 Safety warning signs should be visible.
 First aid must be up to date and in an accessible place.
 Workplace should be free of hazardous substances that could cause damage/injury.

Explain/Discuss/Recommend PRECAUTIONARY MEASURE that businesses should take when

HANDLING MACHINERY

 Employees should be well trained to operate the machinery.

 Operating manuals of machines should always be available.
 Employee should not be allowed to operate the machines if they are tired or on
medication that could interfere with their ability to control the machine.
 Employees should wear the appropriate clothing when operating machinery.
 Hard hats [helmets] should be worn on construction sites always.
 Machinery must be regularly checked and serviced.

Explain the PURPOSE of the OCCUPATIONAL HEALTH AND SAFETY ACT (OHSA)

 OHSA clarifies the roles and duties of the health representative and committee.
 The Act requires that the main dangers of the workplace be identified and eliminated.

Recommend/Suggest ways in which WORKERS & EMPLOYERS can COMPLY with the OHSA

RESPONSIBILITY OF WORKERS RESPONSIBILITIES OF EMPLOYERS

1. Workers should take care of their own 1. Provide and maintain all the equipment
health and safety in the workplace. that is necessary to perform the work
2. Co-operate and comply with the rules and 2. Keep the systems to ensure that there will
procedures, e.g. wear prescribed safety be no harmful impact on the health and
clothing. safety of workers.
3. Report unsafe/unhealthy working 3. Reduce/Remove dangers to workers and
conditions to the relevant authorities/ provide personal protective clothing
management. 4. Equipment must be used under the
4. Report accidents to the employer by the supervision of a designated trained worker
end of the shift 5. Comply with safety laws which seek to
5. Inform the employer of any illness that may promote a healthy working environment
affect the ability to work.

22
Recommend/Suggest ways in which BUSINESSES can COMPLY with the OHSA

Develop and DISTRIBUTE the health and safety policy to employees.

REVIEW existing health and safety procedures, equipment and staff

training.

APPOINT a health and safety officer at the workplace.

Maintain an accident REGISTER.

Establish health and SAFETY COMMITTEES consisting of representatives

from both management and staff.

Obtain COPIES of any relevant codes of practice or any guidelines

issued by the Department of Labour.

Ways in which business could PROTECT THE ENVIRONMENT and PROMOTE HUMAN HEALTH in
the workplace

 Minimise pollution, by re-using, reducing and recycling.

 Reduce consumption of goods/services which are environmentally unfriendly.
 Machines must be serviced/maintained regularly.
 Educate people about hygiene issues.
 Encourage employees to do regular health checks.

Explain the purpose of a WORKPLACE SAFETY POLICY

 A workplace safety policy is a written statement of principles and goals that set out the
business’s commitment to workplace safety.
 The main purpose is to prevent or reduce work-related accidents

Outline/Explain/Discuss ASPECTS that must be included in the WORKPLACE SAFETY POLICY

 Identifying the potential hazards.

 Establish precautionary measures to protect employees against injury or illness.
 Identifying procedure in case of someone getting injured or an illness.
 Outlining the responsibilities of an employee.
 Outlining the responsibilities of an employer.
 Identifying the appropriate clothing and protective gear to be worn.
 The establishment of a safety and health committee and their roles and responsibilities
 Details of health and safety audits and inspections.

23
ROLE OF HEALTH AND SAFETY REPRESENTATIVES in protecting the workplace environment

INVESTIGATE incidents/complaints from workers about health and safety.

Attend to any FORMAL ENQUIRY/investigation into an accident/health

related incident in the workplace

Ensure that PROTECTIVE CLOTHING is provided/available to all workers.

Ensure that all equipment that is necessary to perform work are provided/
MAINTAINED regurlarly.

Promote SAFETY TRAINING so that workers may avoid potential dangers/ act
pro-actively.

Define QUALITY CONTROL

 A system that ensures the desired quality is met by inspecting the final product to ensure
that it meets the required standards.
 Checking raw materials/employees/machinery/workmanship/production to ensure
that high quality standards are maintained.
 Includes setting targets/measuring performance and taking corrective measures.

Explain TOTAL QUALITY MANAGEMENT (TQM) as part of quality management system.

 TQM is an integrated system/methodology applied throughout the organisation, which

helps to design/produce/provide quality products/services to customers.
 TQM enables businesses to continuously improve on the delivery of products/ services
to satisfy the needs of customers.
 Management ensures that each employee is responsible for the quality of his/her
work/actions.

Outline/Mention QUALITY CONTROL BODIES

1. SABS 2. ISO 3. Quality Circles

IMPORTANCE OF QUALITY CIRCLES in TQM

 Solve problems related to quality and implement improvements.

 Investigate problems and suggest solutions to management.
 Ensure that there is no duplication of activities/tasks in the workplace.
 Make suggestions for improving systems and processes in the workplace.
 Improve the quality of products/services/productivity through regular reviews of quality
processes.
 Monitor/Reinforce strategies to improve the smooth running of business operations.
 Reduce costs of redundancy in the long run.
 Increase employees' morale/motivation.
24
SUB-TOPIC: PRODUCTION COSTS

Explain the meaning of PRODUCTION COSTS

 Production costs refer to the costs incurred by a business from manufacturing a product
or providing a service.
 Production costs can include a variety of expenses, such as labour, raw materials,
consumable goods, and general overhead costs
 Product costs may also include those incurred as part of the delivery of a service to a
customer.
 Taxes levied by the government or royalties owed by natural resource extraction
companies also are treated as production costs.

Outline/Mention/Discuss/Explain the COMPONENTS of PRODUCTION COSTS

PRIMARY COSTS OVERHEAD COSTS

 Primary costs are a firm's expenses  Costs not related to making of the
directly related to the materials and product.
labour used in production.  Must be paid to keep the factory
 Primary costs are also called direct operating.
costs.  The amount for each cost varies from
month to month.

Explain the meaning of FIXED, VARIABLE and TOTAL COSTS

FIXED COSTS (FC) VARIABLE COSTS (VC)

 Fixed cost remains the same,  Variable Cost varies with the production
irrespective the quantity of units levels of the business.
produced.  If production increases, Variable Costs
 Whether the business produces 1 million will increase.
or naught products, the Fixed Cost  If production decreases, Variable Costs
remains the same. will decrease.
 Examples of Fixed Cost:  Examples of Variable Cost:
o Rent o Raw materials
o Salary of the administrative staff o Electricity
o Insurance o Wages of employees
o Vehicle instalments
o Machinery and Equipment
TOTAL COSTS (TC)
 The Total Costs of a business include all the money spent by the business to produce
the good or service.
 Total Cost consist of Fixed Cost [FC] and Variable Costs [VC].
 Formula for Total Cost: TC = FC + VC

25
CALCULATE total, fixed and variable costs.

The table below list the variable and fixed cost items that were used to produce 1000
loaves of bread.

ITEM COST
1 Rental of building R1 500.00
2 Rates & Taxes R 800.00
3 Insurance R 500.00
4 Raw materials R1 000.00
5 Wages R1 000.00
6 Electricity R 500.00

Identify all cost items that are fixed cost and all cost items that variable cost

FIXED COST VARIABLE COST

Rental, Rates & Taxes and Insurance Raw Materials, Wages and Electricity
Add the Fixed Cost items together: Add the Variable Costs items together:
FC = Rental + Rates & Taxes + Insurance VC = Raw Materials + Wages + Electricity
= R1 500 + R800 + R500 = R1 000 + R1 000 + R500
= R2 800.00 = R2 500.00

Use the TC formula to calculate the TOTAL COST

TC = FC + VC
= R2 800 + R2 500
= R5 300

Calculate UNIT COSTS, SELLING PRICE, PROFIT and the BREAKEVEN POINT.
 Refers to the cost of producing one product.
 Also referred to as average cost
 The more goods produced the lower the Unit Cost.
 Formula to calculate Unit Cost (UC) is: UC = TC ÷ Output

The UNIT COST of producing 1000 loaves of bread will be:

UC = R5 300 ÷ 1000
= R 5.30c

Explain the MEANING of the BREAK-EVEN POINT

 Break even means that there is the same amount of money flowing in as there is flowing
out.
 Business is not making a profit or a loss
 Business needs to sell more units than the breakeven point to make a profit.
 Breakeven point is the point at which the Total Revenue equals Total Cost
 Breakeven point: TR = TC
26
TOPIC: HUMAN RESOURCES FUNCTION

TERM DEFINITION
the process used by business to identify vacancies in the business
Recruitment
and attract suitable candidates for it.
a process used to collect information about the duties,
Job Analysis
responsibilities, skills and work environment of a job.
the process of picking or choosing the right candidate, who is most
Selection
suitable for a vacant job position in an organisation.

Screening Check application documents against the requirements of the job.

a formal, in-depth conversation between two or more persons,

Interview wherein the exchange of information takes place, with a view of
checking a candidate's acceptability for the job.
The person who asks the questions of an interview is called the
Interviewer
interviewer.
A person being interviewed. An example of an interviewee is an
Interviewee
applicant being interviewed for a job.
Employment A signed agreement between an individual employee and an
Contract employer.
The pay or other financial compensation provided in exchange for
Remuneration
an employee's services performed.
A benefit is something that helps you, in the form of health
Employee benefits
insurance provided by an employer.
Amount withheld by an employer from employee's earnings.
Deductions
Includes income tax, pension fund contributions or union fees.
A collection of rules and regulations that include what is and is not
Code of Conduct
acceptable or expected behaviour.
The process of introducing a new employee to his/her job and
Induction organisation and providing all the necessary information required to
start his/her work.

Placement The process of assigning a new employee to a position.

If something is compulsory, you must do it or accept it, because it is

Compulsory the law or because someone in a position of authority says you
must.
The Compensation Fund provides compensation to employees who
Compensation Fund are injured or contract diseases through the course of their
employment.
A levy imposed to encourage learning and development in South
Skills Development
Africa. The funds are to be used to develop and improve skills of
Levy (SDL)
employees.

27
Explain the role of the HUMAN RESOURCES FUNCTION (Recap)

 The role of the human resources function is to provide labour law compliance,
recruitment, hiring and training, compensation, and performance issues.

Outline/Mention/Explain/Discuss the HUMAN RESOURCES ACTIVITIES e.g.:

SUB-TOPIC: 1. RECRUITMENT

Explain the meaning of RECRUITMENT

 Recruitment is the process used by business to identify vacancies in the business and
attract suitable candidates for it.
 It aims at finding candidates who have the necessary knowledge/ experience/
qualification to fill the vacancy.

Discuss/Explain the RECRUITMENT PROCEDURE

 Prepare a job analysis, which includes job description and job specification.
 The human resource manager (HRM) should prepare the job description to identify
recruitment needs.
 HRM should indicate the job specification/description/key performance areas to
attract suitable candidates.
 A decision whether to recruit internally should be made to identify suitable candidates
from within the business.
 If internal recruitment is unsuccessful, external recruitment should be considered.
 If the external recruitment is done, the relevant recruitment source should be selected,
e.g. recruitment agencies, tertiary institutions, newspapers,
 The advertisement should be prepared with the relevant information, e.g. the name of
the company, contact details, contact person, etc.
 Place the advertisement in the appropriate media that will ensure that the best
candidates apply.

Explain the meaning of JOB ANALYSIS

 A job analysis is a process used to collect information about the duties, responsibilities,
necessary skills, outcomes, and work environment of a job.

28
Distinguish between JOB DESCRIPTION and JOB SPECIFICATION as components of a job
analysis

JOB DESCRIPTION JOB SPECIFICATION

 Describes duties/responsibilities of a  Specifies the minimum acceptable
specific job/summary of the nature /type personal qualities/ skills/ qualifications
of the job needed for the job
 Written description of the job and its  Written description of specific
requirements qualifications/ skills/ experience needed
for the job
 Describes key performance areas/ tasks  Describes key requirements of the person
for a specific job, e.g. job title/working who will fill the position, e.g. formal
conditions/relationship of the job with qualifications/willingness to travel/work
other jobs in the business, etc unusual hours, etc.

Discuss/Explain SOURCES OF RECRUITMENT

INTERNAL RECRUITMENT EXTERNAL RECRUITMENT

 Refers to the use of internal sources to  Refers to the use of external sources to
advertise vacancies inside the business. advertise vacancies outside the business.
The following sources of internal recruitment The following sources of external recruitment
can be used: can be used:
1. Internal e-mails/Intranet/web sites to staff 1. Recruitment agencies
2. Word of mouth 2. Bill boards
3. Business newsletter/circulars 3. Printed media, e.g. newspapers/flyers
4. Internal / management referrals 4. Electronic media, e.g. radio/TV
5. Notice board of the business 5. Social media / Social networks / Internet
6. Internal bulletins / Business websites
7. Recommendation of current employees 6. Recruitment agencies
8. Head hunting within the 7. Head hunting
business/organisational database 8. Professional associations
9. Networking
10. Educational / Training institutions
11. Posters

29
Explain/Discuss/Analyse the IMPACT of the above stated METHODS OF RECRUITMENT

Impact of INTERNAL RECRUITMENT

POSITIVES/ADVANTAGES NEGATIVE/DISADVANTAGES
 Cheaper/Quicker to fill the post.  The promotion of an employee could
 Placement is easy, as management cause resentment among other
knows the employees' skills/personality / employees.
experience / strengths.  The number of applicants from which to
 Provides opportunities for career paths choose is limited to existing staff only.
within the business.  It may close the door to new ideas from
 The employee already understands outsiders.
how the business operates.  The business must spend more money
 Induction / Training is not always on training / developing existing
necessary. employees in the new position.
 Employees who are not promoted may
feel demotivated.

Impact of EXTERNAL RECRUITMENT

POSITIVES/ADVANTAGES NEGATIVE/DISADVANTAGES
 New candidates bring new talents /  External sources can be expensive, e.g.
ideas / experiences / skills into the recruitment agencies'
business. fees/advertisements in
 There is a larger pool of candidates to newspapers/magazines.
choose from.  Recruitment process takes longer / is
 It may help the business to meet more expensive as background checks
affirmative action and BBBEE targets. must be conducted.
 Minimises unhappiness / conflict  New candidates generally take longer
amongst current employees who may to adjust to a new work environment.
have applied for the post.

SUB-TOPIC: 2. SELECTION & INTERVIEWING

Explain the meaning of SELECTION

The process of picking or choosing the right candidate, who is most suitable for a vacant
job or position in an organisation.

30
Discuss/Explain the SELECTION PROCEDURE

STEP 1: PRELIMINARY SCREENING

 Receive CV’s / Letters of application

STEP 2: SCREEN & SHORTLIST

 Evaluate applicants.
 Draw up a shortlist of at least 5 candidates

STEP 3: INFORM APPLICANTS

 Contact short listed candidates

STEP 4: CONDUCT INTERVIEW

 Identify the best candidate

STEP 5: TEST CANDIDATES

 Conduct competency test

STEP 6: CONTACT REFERENCES

 Confirm background information

STEP 7: NOTIFY SUCCESSFUL CANDIDATE

 Mail offer of employment letter
 Candidate must confirm in writing

OR

1. Receive documentation, e.g. application forms and sort it according to the criteria of
the job.
2. Evaluate CVs and create a shortlist/Screen the applicants.
3. Check information in the CVs and contact references.
4. Conduct preliminary sifting interviews to identify applicants who are not suitable for the
job, although they meet all requirements.
5. Assess/Test candidates who have applied for senior positions/to ensure the best
candidate is chosen.
6. Conduct interviews with shortlisted candidates.
7. Offer employment in writing to the selected candidate(s).

31
Explain the meaning of SCREENING as part of the selection procedure.

 Check application documents against the requirements of the job.

 Candidates who meet the minimum requirements are separated from others.
 Do background/reference check of applicants who qualify for the job.
 Prepare a shortlist of suitable candidates after screening.

Discuss/Explain the PURPOSE OF AN INTERVIEW

 Obtains information about the strengths and weaknesses of each candidate.

 Helps the employer in choosing/making an informed decision about the most suitable
candidate.
 Matches information provided by the applicant to the job requirements.
 Creates an opportunity where information about the business and applicant can be
exchanged.
 To determine a candidate's suitability for the job.
 Evaluate the skills and personal characteristics of the applicant.

Outline/Explain/Discuss the ROLE of the INTERVIEWER BEFORE & DURING the interview

Role of INTERVIEWER BEFORE the interview Role of INTERVIEWER DURING the interview
 The interviewer should develop a core  Allocate the same amount of time to
set of questions based on the skills / each candidate.
knowledge / ability required.  Introduce members of the interviewing
 Check/read the application/verify the panel to each candidate/interviewee.
CV of every candidate for anything that  Make the interviewee feel at ease.
may need to be explained.  Explain the purpose of the interview to
 Book and prepare the venue for the the panel and the interviewee.
interview.  Record interviewees' responses for future
 Set the interview date and ensure that all reference.
interviews take place on the same date,  Do not misinform/mislead the
if possible. interviewee.
 Inform all shortlisted candidates about  Provide an opportunity for the
the date and place of the interview. interviewee to ask questions.
 Plan the programme for the interview  Close the interview by thanking the
and determine the time that should be interviewee for attending the interview
allocated to each candidate.
 Notify all panel members conducting the
interview about the date and place of
the interview.

32
Outline/Explain/Discuss the ROLE of the INTERVIEWEE DURING the interview
 Greet the interviewer by name with a solid handshake and a friendly smile.
 Listen carefully to the questions before responding.
 Make eye contact and have good posture/body language.
 Show confidence and have a positive attitude/be assertive.
 Ask clarity seeking questions.
 Show respect and treat the interview with its due importance.
 Be honest about mistakes and explain how you dealt with it.

SUB-TOPIC: 3. CONTRACTS

Explain the meaning of an EMPLOYMENT CONTRACT

Employment contract is an agreement between the employer and the employee and is
legally binding.

Outline/Mention ASPECTS to be included in an EMPLOYMENT CONTRACT

Personal details of the REMUNERATION, e.g.

EMPLOYEE. weekly or monthly pay.

Details of the BUSINESS /

Fringe BENEFITS / Perks /
employer e.g. name /
Allowances.
address, etc.

LEAVE, e.g. sick / maternity

Job title / POSITION
/ annual / adoption leave.

Employee DEDUCTIONS
Job description e.g. DUTIES
(compulsory /non-
/ working conditions
compulsory).

Job specification e.g.

PERIOD OF CONTRACT /
formal QUALIFICATIONS /
Details of termination.
willingness to travel.

DATE of employment /
commencement of PROBATION PERIOD.
employment.

PLACE where employee

SIGNATURES of both the
will spend most of his / her
employer and employee.
working time.
List of DOCUMENTS forming
HOURS of work, e.g. normal part of the contract, e.g.
time/overtime. letter of appointment /
code of conduct
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Outline/Explain/Discuss the LEGAL REQUIREMENTS OF THE EMPLOYMENT CONTRACT

1. Employment contract is an agreement between the employer and

the employee and is LEGALLY BINDING.

2. Employer and employee must agree to any CHANGES to the contract.

3. Aspects of the employment contract can be RE-NEGOTIATED during

the course of employment.

4. NO PARTY may unilaterally change aspects of the employment

contract.

5. The employer and employee must both SIGN the contract.

6. The employment contract should include a CODE OF CONDUCT and

code of ethics.

7. The employer must explain the TERMS AND CONDITIONS of the

employment contract to the employee.

8. It may not contain any requirements that are in CONFLICT with the
BCEA.

Outline/Explain/Discuss the REASONS for TERMINATION of an EMPLOYMENT CONTRACT

1. RESIGNATION: Occurs when an employee chooses to leave the

organisation voluntarily.

2. DISMISSAL: Occurs when the employee is asked to leave the

organisation due to misconduct, unsatisfactory performance, breach
of contract or illegal behaviour

3. RETIREMENT: Occurs when an employee reaches a pre-determined age

and do not have to work any longer. Example 65 years old.

4. RETRENCHMENT : Occurs when an organisation is forced to reduce the

number of employees for operational reasons, insolvency or
restructuring.

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SUB-TOPIC: INDUCTION & PLACEMENT

Explain the meaning of INDUCTION

 New employees should be familiarised with their new physical work environment /
organisational culture / products and services.
 Employees should be informed about the processes/procedures of the business.
 They should have a basic knowledge of what is expected in the job. / Understand his
role and responsibilities in his new job.
 Ensure that employees are well conversant with the safety regulations and rules.

Outline/Discuss/Explain the PURPOSE OF INDUCTION

 Introduce new employees to management/colleagues to establish relationships with

fellow colleagues at different levels.
 Make new employees feel welcome by introducing them to their physical work space.
 Give new employees a tour/information about the layout of the building/office.
 Familiarise new employees with the organisational structure/their supervisors
 Allow new employees the opportunity to ask questions that will put them at
ease/reduce insecurity/anxiety/fear.

Outline/Mention ASPECTS that must be included in the INDUCTION PROGRAMME

1. OVERVIEW of the business.

2. TOUR of the premises.

3. Introduction to KEY people and immediate colleagues.

4. SAFETY regulations and rules.

5. Discussion of employee BENEFITS

6. Discussion of the employment CONTRACT and conditions of service.

7. INFORMATION about the business products/services.

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Discuss/Explain the BENEFITS OF INDUCTION for BUSINESSES

1. Allows new employees to SETTLE IN quickly and WORK EFFECTIVELY.

2. Ensures that new employees understand RULES and REGULATIONS in the

business.

3. New employees may establish RELATIONSHIPS with fellow employees at

DIFFERENT LEVELS.

4. Make new employees feel at ease in the workplace, which REDUCES

ANXIETY / insecurity / fear.

5. The RESULTS obtained during the induction process provide a base for
FOCUSSED TRAINING.

6. INCREASES QUALITY of performance/productivity.

Elaborate on the meaning of PLACEMENT

 Selected candidates are placed where they will function optimally and add value to
the business.
 A specific job is assigned to the selected candidate.
 The qualifications/skills/personality of the selected candidate is matched with the
requirements of the job.
Outline/Discuss/Explain the PLACEMENT PROCEDURE

 Employer should outline specific responsibilities/expectations of the employee’s new

position.
 The employer should determine the relationship/similarities between the expectations
of the position and the competencies of the employee.
 Determine the employee’s strengths/weaknesses/skills/ interests by subjecting him to
various psychometric tests.
Explain/Discuss the IMPORTANCE of TRAINING in Human Resources Function

 The employee who receives the necessary training can perform in their job.
 Investment in training that a company makes shows employees that they are valued.
 An effective training program allows employees to strengthen their skills.
 Productivity usually increases when the human resources function implements training
courses.
 Ongoing training and upskilling of the workforce, encourages creativity.

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SUB-TOPIC: SALARIES

Outline/Mention/Explain DIFFERENT SALARY DETERMINATION METHODS

PIECEMEAL TIME-RELATED
 Workers are paid according to the  Workers are paid for the amount of time
number of items/ units produced /action they spend at work/on a task.
performed.
 Workers are not remunerated for the  Workers with the same
number of hours worked, regardless of experience/qualifications are paid on
how long it takes them to make the salary scales regardless of the amount of
items. work done.
 Mostly used in factories particularly in  Many private and public-sector
the textile/technology industries. businesses use this method

Differentiate between GROSS and NET PAY

GROSS PAY NET PAY

Gross pay is the amount of money Net pay is the amount of money
employees receive before any taxes and employees take home after all deductions
deductions are taken out. have been taken out.

Explain the LINK between:

SALARY DETERMINATION and the BASIC CONDITIONS OF EMPLOYMENT ACT

 The BCEA sets out conditions that ensure fair labour and human resources practices.
 According to the BCEA, businesses may use different remuneration methods to pay
their employees.
 Payment of salaries should be based on whether the employee is permanent or
employed on a fixed contract.
 Businesses are supposed to deduct income tax (PAYE) from the employees' taxable
salaries.
 BCEA outlines legalities, such as the employment contract, which may affect salary
determination.

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SUB-TOPIC: BENEFITS

Outline/Mention/Explain EMPLOYEE BENEFITS

1. FRINGE BENEFITS / ‘PERKS’

 A benefit that an employee receives, but which does not form part of the employee's
primary remuneration package (i.e. an employee's salary cash value).

EXAMPLES

MEDICAL Aid Fund / Health

FUNERAL benefits
Insurance Fund

PERFORMANCE based
Provident FUND
incentives

PENSION Fund Issuing of bonus SHARES

ALLOWANCES e.g. Staff DISCOUNT/Free or

CAR / Travel / Housing / low-cost meal/Canteen
Cell phone / Clothing facilities

Discuss/Evaluate the IMPACT OF FRINGE BENEFITS ON BUSINESSES

POSITIVES/ADVANTAGES NEGATIVES/DISADVANTAGES
 Improves productivity resulting in higher  Businesses who cannot offer fringe
profitability. benefits fail to attract skilled workers.
 It increases employee satisfaction /  It can create conflict/lead to
loyalty as they may be willing to go the corruption if allocated unfairly.
extra mile.  Fringe benefits are additional costs that
 Businesses save money as benefits are may result in cash flow problems.
tax deductible.  Decreases business profits, as
 Fringe benefits can be used as incentive/package/remuneration costs
leverage for salary negotiations. are higher.

2. COMPULSORY BENEFITS
 Refers to benefits that businesses are legally required to offer its employees

EXAMPLES

UNEMPLOYMENT SKILL DEVELOPMENT COMPENSATION

INSURANCE FUND LEVY FUND (COIDA)

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Explain UNEMPLOYMENT INSURANCE FUND (UIF) as a BENEFIT REQUIRED BY LAW
 The fund offers short-term financial assistance to workers when they become
unemployed or are unable to work due to illness, maternity or adoption leave.
 The fund also assists the dependants of a contributing worker who has died.
 Employers must pay unemployment insurance contributions of 2% of the value of each
worker’s salary per month.
 The employer and the worker each contribute 1%.
 Contributions are paid to the Unemployment Insurance Fund (UIF) or the South African
Revenue Services (SARS).

SUB-TOPIC: LEGISLATION

Explain/Discuss the IMPLICATIONS of the Labour Relations Act (LRA) on the HRF

 Workers cannot be easily dismissed as bargaining council/Commission for Conciliation,

Mediation and Arbitration (CCMA) processes need to be followed.
 The HR manager should allow workers to form workplace forums/trade unions to
promote the interests of all employees.
 Orderly negotiations and employee participation in decision making in the workplace
should be Promoted.
 The rights of employees/employers must be protected as outlined in the Constitution.
 Economic development/social justice/labour peace must be promoted.

Explain/Discuss the IMPLICATIONS of the Basic Conditions of Employment Act (BCEA) on HR

FUNCTION

1. Workers should only work 9 HOURS per day in a 5-DAY work week OR
8 HOURS per day in a 6-DAY work week.

2. OVERTIME should not exceed 10 HOURS per week.

3. They must have a break of 60 MINUTES after 5 HOURS of work.

4. Workers can take up to SIX WEEKS paid sick leave during a 36-MONTH
cycle

5. Businesses should NOT employ children UNDER the age of 16.

6. Workers must receive DOUBLE PAY if they work during PUBLIC

HOLIDAYS or on SUNDAYS

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Explain/Discuss the IMPLICATIONS of the Employment Equity Act (EEA) on the HR FUNCTION
 The HR manager must promote/provide equal opportunities in the workplace.
 To ensure that affirmative action promotes diversity in the workplace.
 To compile employment equity plans that indicate how they will implement affirmative
action.
 To assign a manager to ensure that the employment equity plan will be implemented/
regularly monitored.
 Report to the Department of Labour on the progress in the implementation of the
equity plan.

Explain/Discuss the IMPLICATIONS of Compensation for Occupational Injuries and Diseases

Act (COIDA) on the HR FUNCTION
 COIDA has significance for the HR function, because COIDA describes, amongst
others, how to deal with workplace accidents.
 The HR function must make sure that all managers throughout the business are familiar
with this act.
 If a workplace accident occurs, it will be the HR function’s responsibility to
communicate with the Compensation Fund and with the injured employee.
 The HR function is also responsible for calculating and paying the business’ monthly
contribution to the Compensation Fund.

Explain/Discuss the IMPLICATIONS of the Skills Development Act (SDA) on the HR FUNCTION
 The human resources manager should interpret the aims and requirements of the SDA
and adapt workplace skills training programmes accordingly.
 To identify the training needs of the employees and provide them with training
opportunities so that they will perform their tasks efficiently
 To contribute 1% of their salary bill to the Skills Development Levy/SDL.
 To ensure training in the workplace is formalised /structured.
 To appoint a full/part time consultant as a Skills Development Facilitator.

NOTE TO TEACHER & LEARNER: THE DIFFERENCE BETWEEN ‘IMPACT’ vs ‘IMPLICATION’

 Impact refers to a major influence or impact whereas
implication refers to consequences that are likely to happen.
 The key difference between impact and implication is that,
implications are not obvious or clear whereas impact is always
direct and obvious.
 Implications describe what can happen due to some action.
 Implications may be hidden and not understood by everyone.
 The word implication is often used to refer to consequences of
recent actions or future actions.

NOTE TO TEACHER & LEARNER: NON-EXAMINABLE CONTENT

Questions indicated in RED are not examinable in Grade 11 and is added for enrichment purposes
only.

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