GRADE 11

BUSINESS STUDIES
JUNE 2023

PAPER 2
MARKING
GUIDELINES

MARKS: 100
TIME: 1½

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SECTION A (COMPULSORY)

QUESTION 1

1.1.1 C √√
1.1.2 A √√
1.1.3 C √√
1.1.4 D √√
1.1.5 D √√
(5 x 2) (10)

1.1.1 DELPHI √√
1.1.2 FRANCHISOR √√
1.1.3 PROSPECTUS √√
1.1.4 CLOSED CORPORATION √√
1.1.5 STRESS √√
(5 x 2) (10)

TOTAL SECTION A: 20

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SECTION B

QUESTION 2: Benefits of a company over other forms of ownership.

2.1 Name TWO aspects that must be included in the prospectus. (2)

Name of the company

 Company overview, including the vision, mission, and goals of a business√

 Product or service portfolio√
 Market analysis and strategy√
 Management team√
 The risks and potential of the business√
 Available financial and share information√
 Company’s assets and liabilities√
 Financial position√
 Profits and losses√
 Cash flow√
 Prospects for growth√
 Pre-incorporation contracts that have been signed√
 Date of registration of the prospectus√
 The minimum subscription√
 Purpose of the offer√
 Share capital√
 Shares issued√
 Property owned√
 Preliminary expenses√

2.2 Scenario based questions.

2.2.1 Mention the type company that Sound Symphony Pty Ltd is currently. Motivate
your answer. (2)

Private company√ – The name of the business ends with Pty Ltd. √

2.2.2 Discuss the advantages of the company the Sound Symphony Pty Ltd wants to
convert to. (6)

 More capital can be raised by a company than by an individual. √√

 Auditing of the financial statements is voluntary. √√
 Not necessary to appoint an auditor, audit committee, or company secretary. √√
 More opportunities to pay less taxation. √√
 Good long-term growth opportunities. √√

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  Own legal identity and shareholders have no direct legal
implications/ limited liability. √√
 Board of directors with expertise/experience can be appointed to make decisions.
 Not required to file annual financial statements with the commission. √√
 It is a legal person and can sign contracts in its own name. √√
 The new Act forces personal liability on directors who knowingly participated in
conducting business in a reckless/fraudulent manner. √√
 Financial statements are private and not available to the general public. √√
 A company has continuity of existence. √√
 It is possible to sell a private company as it is a legal entity in its own right. √√
 It can easily raise capital by issuing shares to its members√√

2.3 Discuss the characteristics of a personal liability company. (4)

 One (1) or more persons (including juristic persons) may incorporate a personal liability
company. √√
 The board of a personal liability company must comprise at least one director (1 or more
directors). √√
 Personal liability companies are subject to fewer disclosure and transparency requirements.
√√
 Governed by the Companies Act (Act 71 of 2008) and incorporated in terms of the
Memorandum of Incorporation. √√
 The directors are jointly and severally liable with the company for all company debts and
liabilities incurred. √√
 Certain professional persons, such as attorneys and accountants, who are statutorily
prohibited from enjoying limited liability, often incorporate a personal liability company to
regulate their affairs. √√
 The company has the benefit of corporate existence and perpetual succession. √√
 These companies are identified by the suffix ‘Incorporated’ or ‘Inc.’. √√
 A personal liability company is prohibited by MOI from offering its shares to the public and
the transferability of its shares is restricted. √√
 A personal liability company must prepare annual financial statements but is not required to
lodge its annual financial statements with the Commission. √√
 Annual financial statements need not be either audited or independently reviewed, unless
prescribed by regulation. √√
 Shareholders of a personal liability company have a right of pre-emption in respect of the
issue of new securities unless the MOI provides otherwise. √√
 A personal liability company has a separate legal personality and shareholders have limited
liability. √√
 A personal liability company is required to give 10 business days’ notice for shareholder
meetings. √√

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2.4 Explain the legal requirements of the name of a company. (2)

 If a name is reserved at the CIPC, it cannot be used by another company. √√

 Names can be reserved by a business for six months. √√
 The name of a company is subject to approval by CIPC. √√
 The name of a company must be original and may not be misleading. √√
 A company’s name must appear on all company documents. √√
 The name of a company must show the type of company, that is:
– the name of the non-profit company must end with NPC. √√
– the name of a personal liability company must end with Incorporated or Inc.
√√
– the name of a private company must end with Proprietary Limited or Pty Ltd.
√√
– the name of a public company must end with Limited or Ltd. √√
– the name of a state-owned company must end with SOC Ltd. √√
 The name of the company must not be offensive, promote violence or hatred and cause any
harm. √√
 The name must not be shortened and translated. A company is not allowed to use a
misleading name. √√

2.5 Advise businesses about the benefits of establishing a company versus other forms
of ownership. (4)

Legal status and liability√√

 A company has its own legal status, trading name, and owns its assets. √√
 Shareholders’ private assets are protected as they have limited liability. √√
 The shareholders have no direct legal responsibility. √√
 Companies have their names, and these are protected. √√

Profit-sharing√√

 Shareholders share in the profits of the company in the form of dividends. √√

 Other forms of ownership will share profit according to their contribution or internal
agreement. √√

Ownership and management√√

 Shareholders are able to buy and sell shares freely in a public company. √√
 The company is managed by qualified and competent board of directors. √√
 A company is less likely to use consultants as it has a larger pool of skills and expertise. √√
 Directors are more likely to take risks and allow growth opportunities for the business. √√
 Some of the other forms of ownership e.g. sole proprietor has to rely on his/her own abilities
to manage the business. √√

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Capital and cash flow√√

 A company may have more investors to fund the setting up of the business. √√
 Companies have a better cash flow than sole traders. √√
 A company is not limited to the individual contribution of the members’ capital. √√
 The long-term growth opportunities for companies are good as there are always possibilities
of getting in more investors. √√
 Directors do not have to take out personal loans to grow the business. √√
 Companies have a bigger potential to gain capital than any other form of ownership. √√

Life span and continuity√√

 A company has continuity of existence. √√

 Company shares can be transferred, bought, or sold. √√
 The life span of a sole proprietor and partnership is limited. √√

Taxation√√

 Companies have tax benefits that other enterprises do not have. They may obtain tax
rebates if they are involved in social responsibility projects. √√
 Allowances made for companies such as tax-deductible business expenses are:
 Day to day expenses such as: material and equipment costs, employeecosts and
administrative costs, business/office rental costs√√
 Capital expenses√√
 Education√√
 Entertainment√√
 Business start-up expenses√√
 The life span of a sole proprietor and partnership is limited. √√

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QUESTION 3:

3.1 Mention any TWO reasons why an entrepreneur would decide to buy an existing
business. (2)

Established business√

Established customer base√

Established name and reputation√

Known market√

Mentorship√

Cash flow√

Financing√

Current staff√

Market position√

3.2 Identify the business avenue in each of the following statements: (6)

3.2.1 Franchise √√

3.2.2 Outsourcing. √√

3.2.2 Leasing. √√

3.3 Advise the businesses on the impact of franchising (4)

Advantages of franchising

 Forms of financing that are not available to the public are often available to franchisees. √√
 Purchasing a franchise could be cheaper than starting your own business. √√
 A business is based on a proven idea and the product and service are tried and tested.
 Reduced long-term financial risk. √√
 Management advice is often provided so it is not necessary to be a business expert.
Franchises often offer entrepreneurial help. √√

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 Established suppliers give bulk discounts as they form part of a
larger group. √√
 Businesses are able to use a recognised brand name and registered trademark.
 The systems, operations and services are well established. √√
 Franchise agreements dictate how you run the business, so there may be little room for
creativity. √√
 There are usually restrictions on where you operate, the products you sell and the suppliers
you use. √√
 Franchises often have an established reputation and image, proven management and work
practices, access to national advertising and ongoing support. √√
 Franchises offer the independence of a small business ownership supported by the benefits
of a big business network. √√
 You do not necessarily need business experience to run a franchise. Franchisors usually
provide the training you need to operate their business model. √√
 Franchises have a higher rate of success than start-up businesses. √√
 The marketing and advertising costs can be shared, so they are lower than for a non-
franchised business. √√
 There is often access to group support from other franchisees and a network of
communication and legal advice. √√
 An operational franchise is an established business so there is less financial risk. √√
 Franchisees and their staff receive training and support from the franchisor. √√
 Banks will more likely grant financial assistance to an established business. √√
 The product is already well known in the market, which guarantees sales and good return.
 Franchisees benefit from lower costs due to centralised buying by the franchiser√√

Disadvantages of franchising

 Acquiring a franchise can be an expensive initial layout. √√

 It is sometimes difficult to sell a franchise and or to terminate the contract. √√
 The high initial franchise cost can make it difficult to buy into the franchise agreement. √√
 There are often restrictions in the agreement in terms of how you can run the business. √√
 Some creative entrepreneurs feel limited as to how much they can grow and expand their
ideas. √√
 The brand could get a bad reputation through other franchisees. √√

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  A large portion of profit is paid in royalties and often the
franchisors do not deliver on their promises. √√
 It is often difficult to sell a franchise or end a contract. √√
 Franchisees have to pay royalties or a share of the profit to franchisors. √√
 The start-up cost could be quite high. √√
 Too many outlets may flood a specific area. √√
 Running a franchise restricts creativity because all outlets need to carry the same branding.
√√
 One poor-performing outlet may risk the reputation of the entire franchise. √√

3.4 Discuss the disadvantages of leasing (4)

 The lessee does not automatically become the owner of the asset. √√
 No added tax advantages can be derived from leasing expenses. √√
 Lease payments are treated as expenses and not as payments towards an asset. √√
 When paying lease payments towards a property, the business cannot benefit from any
appreciation in the value of the property. √√
 Lease expenses reduce the net income of a business. √√
 It might be difficult for a business to raise or access further loans because leasing is treated
as debt. √√
 A lease agreement is a complex process and requires thorough documentation and proper
examination of an asset being leased. √√
 The lessee normally remains responsible for the maintenance and proper operation of the
asset being leased. √√
 The lessee is bound by a contract. √√

3.5 Advise businesses on the contractual implications of leasing. (4)

There are several responsibilities and contractual implications relating to lease agreements. The
main responsibilities and contractual rights of the lessee are:

 the right to occupy an asset, for example, a property√√

 the right to use the asset, for example, a delivery van√√
 the responsibility to keep the asset in good order or condition√√

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  the responsibility of paying fees or rent on time√√
 not making any alterations or changes without the consent of the lessor√√
 where an asset needs to be insured, the lease agreement must stipulate it. √√

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QUESTION 4

4.1 Give the meaning of the meaning of stress in the workplace. (2)

 Stress can be defi ned as a mental state or emotional strain or tension resulting from
negative or demanding circumstances. √√
 The strain that an individual is placed under can affect their ability to remember information
and can affect their attention span and overall efficiency in the workplace. √√
 Stress is the response of a person’s body to anything that requires more action or work
from an individual than normal. √√
 An employee is generally referred to as being stressed when they are not able to
sufficiently balance the demands of getting work done versus the amount of work that they
must do. √√
 An individual’s physical and emotional response to stress may be debilitating, which could
result in lower productivity levels at work. √√
 The strain that individuals experience to meet the daily demands of the business may
cause them to be stressed and may cause high levels of absenteeism from work. √√
 Stress may also result in low self-esteem and morale for employees√√

4.2 Scenario based questions:

4.2.1 Identify TWO causes of stress in the workplace from the given scenario. (2)

Some of the workers are complaining that the work hours are too long without adequate
breaks. √

Cindy, the manager also had to address more than one case of bullying and harassment. √

4.2.2 Mention TWO other causes of stress in the workplace. (2)

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  a heavy workload, unrealistic targets, and deadlines
aggravated by time pressure working long hours without adequate breaks√√
 shift systems not properly designed and coordinated√√
 changes in job description, management or in technology√√
 working at home to complete tasks not done at the office√√
 staying abreast of the latest technology√√
 attending many meetings that take time and do not allow employees to complete their
work tasks during working hours√√
 work demands that affect an employee’s family and personal life√√
 inadequate training given to employees√√
 managers who are not competent and efficient√√
 job insecurity, bullying and harassment√√
 conflict with those in the business who have different beliefs and values√√
 the nature of interpersonal relationships with colleagues√√
 the frequency of work-related travel√√
 lack of accountability of employees and managers√√
 lack of participation in decision-making√√
 insufficient funds and vacant posts not filled√√
 unconducive working conditions√√
 a lack of power and influence√√
 lack of teamwork and conflict situations amongst employees. √√

4.3 Explain the importance of stress management in the workplace. (4)

 If stress is not managed effectively, it can result in absenteeism, poor performance of

staff, conflict, grievances and complaints, amongst other things in the workplace. √√
 Stressed employees are more likely to miss work because they cannot cope, or because
of serious health problems. √√
 Managing workplace stress will minimise absenteeism and maintain productivity in the
workplace. √√
 Workers who suffer from stress often make poor decisions and errors of judgement in
times of crisis, and this could result in unforeseen emergencies. √√
 Grievances or complaints that lead to staff turnover can be addressed if stress is well-
managed. √√
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  Conflict and interpersonal problems can be avoided if stress
is managed at the workplace. √√
 Having stressed and tired employees serving the public may lead to poor service and
unhappy customers and can be avoided through good stress management. √√
 Stressed employees are more likely to cling to the old ways of doing things by resisting
change, but this can be managed through proper management of stress. √√
 Constant stress can cause many problems for a business since it can become an
unhealthy working environment. √√
 Too much stress can become a barrier to success and lower the performance of
employees. √√

4.4 Outline strategies businesses use to deal with globalisation and affirmative action as
major changes in a business. (4)

Globalisation

 Businesses should be attentive of changes and trends in their related industry. √√

 They should stay up-todate with new technology, processes and developments to ensure
that they have a competitive edge. √√
 Overseas markets for the businesses’ products should be explored. √√
 Businesses should ensure that their products meet international standards of quality. √√
 Products that are made available to different markets should be useful, eye catching and
unique. √√
 Source overseas manufacturers/materials/suppliers etc, to ensure the business stays
competitive. √√
 Build a strategy for connecting with governments around the world. √√
 Comply with international trade laws to make it easy to trade internationally. √√
 Upgrade the enterprise’s information technology (IT) network to enable online
purchasing. √√

Affirmative Action

 Businesses should ensure that they are compliant with affirmative action procedures and
that all employees are aware that these are being implemented within the business. √√
 Employees should research new ideas and opportunities to keep track of the latest
trends and to improve their workplace practices. √√

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  All staff should work together and practice mindfulness about
their job. √√
 Skill levels should be improved so that eligible staff can apply for future positions and
promotion within the business. √√
 Differences amongst staff members should be acknowledged and respected, and
emphasis should be placed on achieving the goals and objectives of the business. √√
 Self-employment opportunities should be explored. √√

4.5 Discuss John P Kotter’s eight steps of leading change. (6)

Establish a sense of urgency by motivating employees.

1. Form a powerful coalition by bringing together a team of influential people who will
convince everyone else that change is needed. √√
2. Develop a vision and a strategy to decide what values are central to the required
change in the business or organisation. √√
3. Communicate the vision frequently and demonstrate the kind of behaviour that they
want from their employees. √√
4. Empower broad based action by identifying employees who are resisting change and
help them see the need for change. √√
5. Generate a short-term victory and make sure their businesses taste success early in the
change management process. √√
6. Build on change by analysing what went right and what needs to be improved after each
winning situation. √√
7. Anchor the changes in corporate culture and this must become part of the core
mechanism of their business√√

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SECTION C

ANSWER ONLY ONE QUESTION IN THIS SECTION

QUESTION 5

Introduction

 Ethics and professionalism are two critical components of any successful and fulfilling career. In
today's fast-paced and increasingly complex world, the importance of these principles cannot be
overstated. √
 Ethics refer to a set of moral principles and values that guide behavior, while professionalism
encompasses the behavior and attitudes expected of a person in a particular profession.
Together, these principles ensure that individuals and organizations act in ways that are fair,
honest, and transparent, and that they adhere to a code of conduct that promotes trust, respect,
and integrity. √

Outline the different perspectives on ethics.

 An ethical perspective is the frame of reference an individual or business uses to interpret a

problem, and to find a relevant solution to it. √√
 Ethics are practised universally by businesses. All people have an inherent moral compass that
guides them to know the difference between what is right, wrong, or acceptable decisions or
behaviour to demonstrate in business and society. √√
 The way in which an employee views ethical perspectives is determined by their culture, religion,
education and background. √√
 The employees background will influence the way in which he/she will respond to ethical
dilemmas within the business. √√
 In ethics there is no absolute right or wrong. Businesses will manage ethical dilemmas according
to what is deemed acceptable or not according to their code of ethics or business code of
conduct. √√
 Businesses are entitled to decide the kinds of behaviour that it demands from its employees and
customers. √√

Explain any three theories of ethics that is applicable to the workplace.

Consequential theory√√

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 The consequentialist theory suggest that an action is good or bad
depending on its outcome. It tries to answer the ethical questions about right or wrong and how
we arrive at this answer. √√
 It determines whether to do or not do something based on the expected result of the action. √√
 If the expected result is good then, it’s ethically right to do; if the expected result is bad, then it is
ethically wrong to do. √√

The common good approach√√

 The common good approach ensures that business values and ethical principles are in line with
the society in which the business operates. √√
 It recognises that ethics and values vary from area to area, and from country to country. √√

The rights approach√√

 The focus of the rights approach is on individual rights – where people are treated with respect
and dignity. √√
 Business should not impose its mission or products on people. √√
 Employees working within a business should not be ill-treated for any reason. √√

Discuss differences between professionalism and ethics

PROFESSIONALISM
Refers to when a person acquires
knowledge and skills to practice a specific job or
profession. √√
Set of standards of expected behaviour√√
Applies a code of conduct of a profession or
business. √√
Focuses on upholding the reputation of a
business or profession√√
Includes guidelines for the appearance,
conduct, communication, attitude, roles and
responsibilities of employees within the business
ETHICS
Refers to the principles of right and wrong
and what is acceptable in society. √√
Conforms to a set of values that are
morally acceptable within a business or
organisation. √√
Forms part of a code of conduct to guide
employees to conduct themselves ethically. √√
Focuses on developing a moral compass for
decision-making. √√
Involves following the principles of right and
wrong in business practices. √√

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 or organisation. √√

Advise businesses on ways in which professional, responsible, ethical and effective business
practice should be conducted.

 The business should ensure that they pay employees fair wages and salaries which corresponds
to the requirements of the BCEA. √√
 Employees should be paid for working overtime and on public holidays. √√
 The business should respect employees and treat them with dignity by recognising the value of
their human capital for work well done. √√
 All goods and services produced should be done according to the required standards and ethical
requirements. √√
 New businesses should avoid using business names and ideas that are copyrighted,
trademarked, and protected by law when starting a business. √√
 New business owners must plan effectively and ensure that they put preventative measures in
place to protect their business. √√
 To foster employee confidence and loyalty, it is important to ensure that all staff has equal access
to opportunities, positions, and resources. √√

Conclusion

 Adhering to a code of conduct that promotes ethical behavior and professional attitudes is
critical for building trust, respect, and integrity in the workplace and society as a whole. √√
 By understanding the importance of ethical decision-making, individuals and organizations can
build a reputation of excellence and contribute positively to their communities. However, ethics
and professionalism are not one-size-fits-all; different professions and industries have their own
unique ethical standards and expectations. It is essential to understand and follow these
standards to succeed in one's chosen profession. √√
 Ultimately, practicing ethical behaviour and professionalism is not only a matter of personal
integrity but also a responsibility to the broader community. By valuing these principles, we can
build a better and more just world, where honesty, fairness, and respect are fundamental values
that guide our actions. √√

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QUESTION 6

Introduction

 Creative thinking has emerged as a vital skill for success in the workplace. √
 With the rise of automation and artificial intelligence, businesses and organizations are seeking
employees who can think critically, solve complex problems, and generate innovative ideas. √
 Creative thinking involves the ability to approach challenges with a fresh perspective, question
assumptions, and consider unconventional solutions. It is a valuable skill that can benefit
individuals, teams, and organizations in a variety of ways. √

Outline ways in which businesses can create an environment that stimulates creative thinking
in the workplace

 Businesses must emphasise the importance of creative thinking to ensure that all staff know
that their ideas will be heard. √√
 Inspire staff to come up with new ideas. √√
 Plan regular workshops so that brainstorming sessions can be held to generate new ideas. √√
 Ensure that communication channels remain open by placing suggestion boxes around the
workplace. √√
 Train staff members to think creatively, to solve problems, use mind mapping and lateral
thinking. √√
 Encourage job exchanges within the organisation and other businesses to improve creativity in
the workplace. √√
 Encourage alternative ways of working and doing things. √√
 Accommodate employees’ ideas and try not to let anyone feel less important in the workplace.
√√

Explain the advantages of creative thinking in the workplace

 Creative thinking will lead to improved participation of staff members, which will ensure the
generation of new ideas. √√

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  The business will have competitive advantage over other
businesses because of the unique strategies that are introduced. √√
 Businesses will be able to solve complex problems. √√
 As management and employees introduce and create many ideas, saving time and money for
the business, productivity will increase. √√
 Managers and employees will demonstrate more confidence as they perform their duties.
 Managers will be inspired to lead their teams more efficiently. √√
 Managers and employees will apply their knowledge in a collaborative manner when
performing their duties. √√
 The morale among staff members will be improved. √√
 Leads to a more positive attitude as managers and employees feel that they have contributed
towards problem-solving. √√
 Creative thinking will ensure that managers and employees stay abreast of the latest
developments in technology. √√
 Managers and employees will be more creative as they are challenged to work outside of their
comfort zones. √√
 Creativity may lead to new inventions, which will improve the general standard of living. √√
 Managers and employees will feel that they have contributed towards problem-solving. √√

Discuss how businesses can apply the Delphi Technique

 Businesses should invite a panel of experts to study the complaints from customers.
 Experts do not have to be in the same place and will be contacted individually. √√
 A questionnaire consisting of questions on how to improve the quality of products or services
must be designed and distributed to the panel members and experts. √√
 The panel should respond to the questionnaire individually to suggest improvements to the
products and then return them to businesses. √√
 The responses from the experts must be summarised in a feedback report. √√
 The feedback report and a second set of questions or questionnaires based on the feedback
report must be sent to the panel members. √√
 The panel members are requested to provide further input or ideas on how to improve the
quality of products or services after they have studied the results and documentation. √√
 A third questionnaire based on previous feedback from the second round is distributed to
panel members and experts. √√

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  A final summary or feedback report with all the methods to
improve the quality of products or services is prepared. √√
 After consensus has been reached, the best solution is chosen. √√

Advise businesses on the advantages of working with others to solve problems

 There are different perspectives to be considered because it could be difficult to be creative and
innovative on your own. √√
 Access to a broader base of skills, knowledge, and experiences helps if you can get the opinion
of others on a matter. √√
 More ideas can be triggered from other employees’ ideas which can help the problem-solving
process. √√
 It facilitates learning from one another when colleagues are able to teach or explain things to
one another, especially when working in groups. √√
 Working together is encouraged to produce greater results. √√
 The workload decreases because everyone shares the problem and their experiences. √√

Conclusion

 Creative thinking is a valuable skill for success in the workplace. √√

 By developing and nurturing this skill, individuals and organizations can generate
innovative solutions to complex problems, identify new opportunities, and adapt to
changing circumstances. √√
 Encouraging a culture of creative thinking can also lead to increased job satisfaction,
engagement, and productivity. √√
 While creative thinking can be challenging to cultivate, there are various strategies and
techniques that can be employed to foster it, such as brainstorming, collaboration, and
taking calculated risks. √√
 Ultimately, by valuing and prioritizing creative thinking in the workplace, individuals and
organizations can stay competitive, drive innovation, and make meaningful contributions to
their industries and communities. √√

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