BUSINESS STUDIES

BUSINESS
OPERATIONS

GRADE 10 CORE NOTES (2020)

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 TERM DEFINITION
An Act is a bill which has passed through the various legislative steps required
Act
for it and which has become law
Capital is a large sum of money which you use to start a business, or
which you invest in order to make more money.
Capital You can use capital to refer to buildings or machinery which are necessary to
produce goods or to make businesses more efficient, but which do not make
money directly.
Fixed assets are assets which are purchased for long-term use and are not likely
Fixed Assets
to be converted quickly into cash, such as land, buildings, and equipment.

Interrelated Interrelated is when things are related or connected to one another.

Liaise To liaise is a link to assist communication between people or groups

An overdraft is an extension of credit from a lending institution that is granted

when an account reaches zero. The overdraft allows the account holder to
Overdraft
continue withdrawing money even when the account has no funds in it or has
insufficient funds to cover the amount of the withdrawal
Pre-requisite is something that is required as a prior condition for something else
Pre-requisite
to happen or exist.
A requisition, in procurement, is a request for goods or services made by an
Requisition employee to the person or department in a company that is responsible for
purchasing.

Risk Risk is a situation involving exposure to danger, harm or loss

Routine Routine is performed as part of actions that are regularly followed

Strategic relates to the identification of long-term aims and interests and the
Strategic
means of achieving them

Tactical Tactical involves in taking action that are immediate or short-term in duration

Commission is an instruction, command, or role given to a person or group This

Commission
is a formal written authorization to perform various acts and duties
An ombudsman is an official appointed to investigate individuals' complaints
Ombudsman
against a company or organization.
A tribunal is generally, any person or institution with authority to judge,
Tribunal
adjudicate on, or determine claims or disputes

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TOPIC 1: BUSINESS FUNCTIONS

The PURPOSE of the eight business functions

• The eight business functions work together to achieve the business goal.
• Each function carries out specific tasks which are closely linked in order to achieve the same
goal.
• Roles and tasks may change depending on the size/type/stage of growth of the business.
• Business functions work together to ensure that the survival and sustainability of the business.

Eight business functions:

1. General Management 5. Human resources
2. Purchasing 6. Public Relations
3. Production 7. Administration
4. Marketing 8. Financial

STUDY TIP: Use the first letter of the eight functions to make a phrase or sentence that will help you
remember them. This study technique is known as a mnemonic.
For example: Good People Play Music Honest People Admit Failure

1. GENERAL MANAGEMENT FUNCTION

• Sets the overall direction or strategy for the business.
• This function leads, organises and controls all the other functions.
• There are also decisions taken in each level.
• Management has three different levels, each with its own roles and responsibilities.
• Ensures that there is co-ordination among the seven different functions of the business.

Explain/Discuss/Describe MANAGEMENT TASKS.

TASK EXPLANATION
1. PLANNING • Planning is done in all departments by all employees with the
objectives of the company in mind.
NOTE:
Top management • The process of setting goals and developing strategies.
formulates strategic
plans. • It includes getting all the information you need for planning.
• Analysing the information and set long term goals.
Middle management
formulates tactical • Considering different plans to achieve the goals.
plans.
• Choosing the best plan and decide on the action to be taken.
Lower management • Implementing the chosen plan.
formulates
operational plans. • Follow up to make sure the plan is successful, adjust it or change to the
backup plan
• TOP management formulates STRATEGIC plans.
• MIDDLE management formulates TACTICAL plans.
• LOWER management formulates OPERATIONAL plans.

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2. ORGANISING • It is the mechanism used to execute the plan.
• Ensures successful execution of the plan by using relevant
organisational structure.
• It looks at what needs to be done and organizing resources need to
achieve goals and objectives.
• Organising the jobs within specific functions or departments.
3. LEADING • The process of leading is to guide, motivate and inspire others to
achieve goals.
• Refers to inspiring employees to carry out their task to the best of their
abilities.
• Establishing a productive working climate.
• Motivating employees to achieve the goals set.
4. CONTROLLING • Ensures that the business achieve its goals.
• Ensures that standards are met.
• Ensures activities are carried out as planned.
• Enables the business to take corrective measures if the objectives are
not achieved.
• Risk can be identified during control.
• Involves comparing actual results with goals set by management
• Corrective measures must be taken if there is a difference between
actual results and the goals the business set out to achieve.
5. RISK • Identifies possible risk by finding risk-bearing activities (i.e. activities
MANAGEMENT which could go wrong) within the organisation.
• Assists businesses to in analyse each possible risk to assess how likely it is
that the risk will happen.
• Evaluates the potential impact of risk in terms of financial liability.
• Controls/Monitors the risk by studying reports and trends in the
environment so that measures can be taken to prevent it from
happening.
• Handles the risk by determining what actions to take should the event
happen using available resources and contingency plan and
communication with stakeholders.

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Mention/Outline/Explain/Discuss/Describe the three LEVELS OF MANAGEMENT

STRATEGIC DECISIONS made regarding the

TOP management
goals, vision and mission of a company.
TACTICAL DECISIONS are short-term
MIDDLE management strategies put in place to ensure that correct
procedures take place.
OPERATIONAL DECISIONS are processes that
LOWER management are put in place to carry out the strategic
and tactical decisions.

Mention/Discuss/Explain/Describe the RESPONSIBILITIES of various levels of management

• Reports to a board of directors/advisory board.

TOP LEVEL • TAKES LONG TERM STRATEGIC DECISIONS.

MANAGEMENT • Responsible for directing, controlling and managing risks.
for example: • Determines the vision/mission/objectives/strategy of the business.
CEOs, Directors,
Owner of sole trader, • Act of getting people together to accomplish certain goals.
Partners in partnership • Oversees the activities of the other functions so that the business
can achieve its objectives
• Responsible for specific departments within the business.
• TAKES MEDIUM TERM TACTICAL DECISIONS.
MIDDLE LEVEL • Responsible for achieving the goals and objectives set for the
MANAGEMENT
specific department.
for example:
Departmental • Concerned with implementing plans made by top level
managers. e.g. management.
marketing manager.
• Implements the vision and plans of the top management.
financial manager etc.
• Responsible for working with managers in other departments and
for acquiring resources needed in their departments.
• Responsible for a high level of productivity, technical assistance
LOWER LEVEL and motivating employees.
MANAGEMENT • TAKES SHORT TERM ROUTINE/TACTICAL DECISION.
for example:
• Carry out instructions given by middle management
Foreman, Supervisor,
Team leaders. • They are also called first management level as it is the first
management level to which subordinates can be promoted

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Explain the meaning of a business ORGANISATIONAL STRUCTURE.
• An organisational structure is a system that outlines how certain activities are directed in
order to achieve the goals of the organisation.
• It identifies each JOB, its FUNCTION and where it REPORTS to in the organisation.
• Example of an organisational structure

MANAGING DIRECTOR

MARKETING MANAGER HR MANAGER FINANCE MANAGER

HEAD OF HEAD OF HEAD OF DEBTORS CREDITORS

PURCHASES PRODUCTION DISTRIBUTION CLERK CLERK

FACTORS that influence the organisation structure

• the size of the company
• technology
• resources
• strategic goals of the company

TYPES of organisational structures

1. FUNCTIONAL organisational structure
• Employees get instructions from more than one manager
• The plan to be carried out determines who will be giving instructions
• This structure confuses employees as they report to more than one manager.

2. PROJECT organisational structure

• This is structured around project teams
• It is a temporary structure because employees are drawn from different departments
• Employees are then grouped together to form a project team which will carry out a
particular project.

3. MATRIX organisational structure

• This structure is structured around projects but employees stay in their departments.
• A project must be completed up to a certain point
• The project is then passed on to the next team, which will carry out the next phase of the
project.

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2. ADMINISTRATION FUNCTION:
• Handling information and data.
• Business collects a lot of information.
• Essential that this information is stored and distributed effectively.
• Information must be interpreted, analysed and communicated
• Important information must be communicated to the necessary managers and employees.
• Administration is responsible for collecting, processing and distributing information which is
used for decision by management.
• Stores/Records information by using recent technology.
• Making general office work such as filing and storing of information.

Discuss/Explain/Describe/Mention/Outline the ACTIVITIES of the administration function.

1. COLLECTION OF INFORMATION
• Information is collected from both outside and inside the business
• Correct and reliable information should be available for meaningful decision making and to
run the business successfully.

2. HANDLING OF INFORMATION
• It is important for the administrative staff to handle information correctly to avoid making
wrong decision based on wrong information.
• The administration function is responsible for dealing with the following types of information:
o ACCOUNTING RECORDS: Can be used to draw up financial statements and reports.
Keep an up-to date all business transactions
o COST ACCOUNTING: Determines whether the product can be sold at a competitive
price considering the manufacturing or production costs
o BUDGETS: A plan of estimated expenses and income for a specific period
o STATISTICS: The collected and classified numerical data.

3. INFORMATION TECHNOLOGY (IT)

• IT is the use of electronic equipment to assist with various administrative tasks.
• Technology is used to both communicate and handle information and referred to as ICT
(information and communication technology).

4. OFFICE PRACTICE
• Office practice refers to how the administrative staff should handle their duties
• It covers matters such as the dress code for employees/ proper filing of documents/
telephone etiquette/internet usage by staff etc.

The DIFFERENCES between data and information

DATA INFORMATION
• Refers to raw/unprocessed facts found in • Refers to processed/analysed data that
statistics/ graphs/ tables. gives specific knowledge to managers to
make decisions
• Data can be collected from other business • Information can be stored manually in
functions within the business. files/boxes/shelves/computers etc.
• Data can be processed manually or using • Most businesses use electronic devices
technology such as computers such as memory sticks and CDs to store
information
NOTE: The action verb “Differentiate / Distinguish” means that the difference / distinction does not
have to link but they must be clear.

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3. FINANCIAL FUNCTION
• Financial function is responsible for planning and managing all the funds and assets of the
business

Discuss/Explain/Mention/Outline the PURPOSE of the financial function.

• The financial function determines how much capital the business needs.
• Establishes the sources for acquiring the capital.
• Decides how to invest/allocate the capital funds in the business.
• Ensures that the business can generate enough income to cover the cost of raising capital.
• Prepare financial statements to present to the bank/investors to convince them that the
business is financially healthy.

Explain the reasons why a business may NEED FINANCE.

• Businesses need to find the best investments
• Businesses need to source funding.
• Audit and control the spending of the finances
• Plan so that finances are spent in the most efficient way.
• Allocates the necessary funds to the different department

Outline/Mention/Define TYPES AND SOURCES of financing.

SOURCE DESCRIPTION
• This is money borrowed from the bank & is repaid over a period of time.
• The money is repaid with an interest.

1. BANK LOANS • The entrepreneur who borrowed the money will attach his/her fixed asset
as surety to the value of the loan.
• Bank loans are usually used for long-term financing.

2. BANK • It is the short -term loan added onto the account of the entrepreneur. It is
OVERDRAFT also repaid with an interest over a set period of time.
• The money lent to successful businesses that want to expand further.

3. ASSET-BASED • The loan is used to purchase an asset and that asset belongs to the lender
LOAN until it is fully paid off.
• If the money is not paid back, then the lender will take that asset.
• This is money provided by government to small businesses that are
developing.

4. GRANTS • The money does not have to be paid back if it benefits the community.
• The government want to see small developing businesses benefiting the
community and the environment in some way.
• This is a loan provided to businesses while waiting for payment of the
5. RECEIVABLE goods /service provided to avoid a cash flow shortage.
FINANCE
• The loan is equal to the outstanding invoices that are due.

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 • This is money offered by wealthy entrepreneurs to other businesses for a

6. ANGEL share in that business.

FUNDING • This is usually used at the start of a business and carries a high risk for the
investor.
• This is money offered by individuals or organisations to start up or expand
the business.
7. VENTURE • This is done in exchange of a share in the business.
CAPITAL
• The investor usually requires for a management position or to be a board
member in the business
NOTE: You must be able to identify the sources of financing from given scenarios.

Outline/Mention/Define TYPES of capital.

1. FIXED CAPITAL
• Money pays fixed assets, e.g. land and buildings etc.
• Finance long term capital needs of the business.
• Examples: capital market, selling shares, mortgage bonds etc.

2. WORKING CAPITAL / OPERATING CAPITAL

• Money pays for day to day activity, e.g. trading stock, raw materials, etc.
• Finance the short term capital of the business.
• Examples: money market, credit allowed by suppliers, short terms loans etc.

3. OWN CAPITAL
• It is money provided by the owners of the business. It could come from their own savings or
the sale of their assets or investors.
• Example: Personal savings, Venture capital.

4. BORROWED CAPITAL
• It is money borrowed from financial institutions like banks or person. The money should be
paid back with interest.
• Examples: bank loan, bank overdraft.

Explain the differences between a FIXED and WORKING capital.

FIXED CAPITAL WORKING CAPITAL
• Money pays fixed assets, e.g. land and • Money pays for day to day activity, e.g.
buildings etc. trading stock, raw materials, etc.
• Finance long term capital needs of the • Finance the short term capital of the
business. business
• Examples: capital market, selling shares, • Examples: money market, credit allowed
mortgage bonds etc. by suppliers, short terms loans etc.

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Explain the differences between OWN and BORROWED capital.
OWNED CAPITAL BORROWED CAPITAL
• Owner provides capital • Obtained from financial institutions
• Permanent capital as company is not • Temporary capital as it is to be repaid
under obligation to repay the amount. after a fixed period.
• It is not a liability for a business. • It is a liability for a company.
• Return on capital .is on profits. • Return on capital is paid in the form of
interest.

4. PURCHASING FUNCTION
• The purchasing function plays an important role in buying quality raw materials and services
for the business
• It should continuously look for suitable, new and better suppliers
• It should place orders with suppliers and follow up on them to ensure that the ordered
products are delivered on time.
• Ensures that ordered goods are delivered at the agreed price, right quantities & right quality.

Discuss/Explain/Mention/Outline the PURPOSE of the purchasing function.

• Manage stock to ensure sufficient levels of stock to carry out business operations.
• Continuously looking for the best/reputable suppliers.
• Regular make contact with other business departments to determine their needs.
• Send damaged goods back to the supplier and see to it that it is replaced.
• Receive confirmation that all goods were according to specifications and the price invoiced
as the quoted price.
• Negotiate the best possible term of payment with suppliers.

Outline the ACTIVITIES of the purchasing function

• Purchasers should have expert knowledge of the product they need to buy and about the
market in which they operate.
• Find out the needs other business department.
• Look for suitable, new and better suppliers.
• Ensure that there is enough stock available for continuous production and sales.
• Place orders with suppliers and follow up on them.
• Ensure that ordered products are delivered on time.
• Send damaged products back to the suppliers and see to it that they are replaces.
• Buy the right amount of stock/quantity so that the business does not run out of stock.
• Buy goods from the best supplier, who supply the goods at the right time and place.
• Get the best price for the quality that the purchasing function requires.
• Keep the correct stock levels of stock on hand.
• Record the cost prices and selling prises of stock .

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Discuss/Explain/Describe the purchasing PROCEDURE.
1. Requisition: • Liase with the financial department to establish the budget for
Determine the need the purchasing of goods and services.
for the product • Determine the product/material/ resource needs of the
businesses.
• Find the right quality/ quantity of goods and services at the
right price and at the right time.
2. Determine the price • Find the best price by obtaining quotes/tenders or making
of the product enquiries.
3. Select / Choose a • The purchasing department should choose reliable suppliers
suitable supplier for its raw materials/products.
• Evaluation criteria based on quality of raw
material/prices/delivery time, should be used to select the
best suitable supplier.
• The purchasing department should conduct a thorough
investigation about potential suppliers /their reputation and
reliability.
4. Place an order • The purchasing function should place an order in writing so
that goods delivered can be compared with the order.
• Confirm the prices of the products on order to avoid
unexpected surprises when payments are made.
5. Collect or receive • The purchasing department should ensure that the right orders
the order are received and recorded.
• The quality and quantity of stock received should be checked
against the order.
• The purchasing department should keep a copy of a delivery
note for records keeping purposes.
6. Pay the supplier • Purchasing department instructs the financial department to
pay the supplier after delivery of the order.
• The supplier must provide copies of the requisition form to the
purchasing department.
• Purchasing department must provide a delivery note to the
financial department.
• The supplier sends the invoice to the financial department for
final payment after satisfactory delivery.
7. Distribute stock • The purchasing department should ensure proper distribution
of stock/raw materials to all relevant departments.
• Distribution of stock should be in line with pre-requisite orders
from each department to avoid stock loss.
8. Complete the order • Ensure that all the correct documentation is in place and filed
for future reference.

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Explain the differences between CASH and CREDIT PAYMENT.
CASH PAYMENT
• Cash payment refers to all payments
made by cash/ cheque for business
purchases
• Cash payment enable businesses to
budget for stock purchases and avoid
unnecessary delays
• Cash payers can qualify for cash
discounts.
CREDIT PAYMENT
• Credit payment refers to all payments
made by means of credit cards/on
future date for business purchases.
• Credit payment allows businesses to buy
stock and pay on a future date. .
• The credit payer can pay more for goods
due to interest added on credit
purchases.

Discuss the ADVANTAGES/DISADVANTAGES of CREDIT PURCHASING

ADVANTAGES
• There is no discrimination based on age/ • There is always the risk of unsettled debts.
race/age/religion on granting credit.
• If interest rates decrease consumers will
have more cash to pay off debts.
• Consumers will be having disposable
income to purchase products if interest
rates are low.
• Low income consumers can buy
products on an affordable re-payment
as per credit agreement.
• If any of the goods/products is damaged
it can be easily repairable or replaced.
DISADVANTAGES
• Accounts should be send out to debtors.
• There will be less money to invest for
consumers
• The credit provider can refuse credit
based on credit risk evaluation.
• Consumers will have less money to spend
so they would not buy as much
• The consumer pay more than the original
price due to high interest rates on credit
purchases.

Explain/Discuss the importance of STOCK CONTROL

• Enables businesses to determine the amount/value of stock.
• Businesses can check the cost and selling price of products
• Ensure that there is enough stock to meet the normal demand of customers.
• Keep the correct levels of stock on hand.
• Record the cost prices and selling prices of stock.
• Identify theft in the business when physical stock count is compared with the electronic stock
control system.

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NATIONAL CREDIT ACT (NCA)
• The NCA was introduced to provide both credit provides and credit applicants with clear
guidelines regarding their rights and responsibilities.
• This Acts applies to ALL BUSINESSES THAT SELL ON CREDIT.

Explain the PURPOSE of the National Credit Act.

• Promotes the development of a credit market that is accessible to all South Africans
• Encourage responsible buying
• Avoidance of over-indebtedness and fulfilment of credit providers and consumers
• Discourage reckless credit granting by credit providers
• Educate consumers on making the right choice when applying for credit

CONSUMER rights outlined in the NCA: Consumers have a right to…

1. …apply for credit.
2. …information in one’s official language.
3. …be protected unfair discrimination in granting credit.
4. …be given reasons why an application for credit is refused.
5. …be informed about the interest rate and any other costs of the proposed credit transaction.
6. …receive a copy of a credit contract & a replacement copy when the consumer asks for it.
7. …apply for debt counselling if a customer has too much debt.

Responsibilities of CREDIT PROVIDERS

• Credit providers should conduct a credit assessment on the consumers’ affordability.
• Check the most recent pay slip or bank statement to ensure the consumer has an income.
• Check the consumer’s monthly debt-repayment obligations in terms of credit agreements.
• Take into account other expenses of the consumers.
• Consider the consumer’s debt-repayment history

REMEDIES of the NCA

1. The Consumer Tribunal
• The Consumer Tribunal is responsible for reviewing decisions made by the National Credit
Regulator (NCR), the National Consumer Commission (NCC).

2. National Consumer Commission

• The National Consumer Commission is responsible for promoting compliance with the NCA
and CPA through advocacy and enforcement.
• Protects the economic welfare of consumers.

3. Ombudsman
• An ombudsman is an independent person with authority and responsibility to
receive/investigate/formally address complaints from consumers.

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The impact of the National Credit Act on BUSINESSES
POSITIVES/ADVANTAGES
• Lower bad debts resulting in better cash • Businesses are forced to budget to keep
flow.
• Protects business against non-paying
consumers.
• Increases cash sales as credit can only
be granted to qualifying customers.
• Prevents reckless lending by financial
institutions.
• Ensures that businesses settle their debts
on time so that they can obtain good
credit scores.
NEGATIVES/DISADVANTAGES
more cash/have enough cash on hand
for stock purchases.
• Businesses can no longer take the risk of
selling poor quality goods at high prices.
• Businesses can no longer carry out credit
marketing.
• Leads to loss of sales as many businesses
may no longer qualify to buy on credit.
• Businesses can only buy limited stock as
credit is not available resulting loss of
customers.

THE CONSUMER PROTECTION ACT (CPA)

• The consumer Protection Act was introduced to prevent consumers from exploitation.by
businesses.
• This Acts ensures the full participation of previously disadvantaged individuals in the economy.
• It applies to all businesses which sell goods and services to consumers.

Explain the PURPOSE of the Consumer Protection Act.

• Promotes responsible consumer behaviour.
• Strengthens a culture of consumer rights and responsibilities
• Establishes national standards to protect consumers.
• Establishes a National Consumer Commission (NCC).
• Ensures that consumers have access to information they need to make informed choices.

The impact of Consumer Protection Act on BUSINESSES

POSITIVES/ADVANTAGES
• Businesses may be safeguarded from
dishonest competitors.
• Businesses may be protected if they are
regarded as consumers.
• Prevents larger businesses from
undermining smaller ones.
• May gain consumer loyalty, if they
comply with CPA.
• Enables businesses to resolve disputes
fairly through the National Consumer
Commission/Consumer Court/Industrial
ombudsmen
NEGATIVES/DISADVANTAGES
• Confidential business information may
become available to competitors.
• Penalties for non-compliance may be
very high.
• Businesses may feel unnecessarily
burdened by legal processes.
• They have to disclose more information
about their products and
processes/services
• Staff need to be trained /Legal experts
need to be consulted, which can
increase costs

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5. PUPLIC RELATIONS FUNCTION
• The public relations is responsible for keeping all stakeholders of the business happy.
• It ensures that there is good communication between the business and all its stakeholders

Discuss the IMPORTANCE of public relations

• Businesses get publicity for promotional events and information through media.
• Businesses can sponsor community events.
• Produce annual reports that review business activities and achievements.
• Brochures van be used to distribute information.
• Attend network events and talk about the business product.

Differences between EXTERNAL and INTERNAL public relations

EXTERNAL PUBLIC RELATIONS
• Deals with communications outside of
the organisation, such as press releases,
speech and interview preparation, or
discussing information with community
groups
• Creates a good company image and
awareness to THOSE OUTSIDE of the
company.
INTERNAL PUBLIC RELATIONS
• Refers to those who work and have a
role in an organisation such as
employees, management and their
family members.
• Creates a good company image and
awareness to EMPLOYEES IN the
company.

Identify and discuss the different METHODS of public relations

METHOD DESCRIPTION
1. Media • Businesses get publicity for promotional events and information
through media.
• Includes advertising and the distribution of about the business
2. Direct contact • Information about the business is passed on to the members of the
public who have dealt with the business previously.
• Direct contact with employees or telephonic communication is a
popular form of public relations.
3. Brochures • Excellent way of distributing information in a cost effective way.
4. Exhibitions • The business is introduced to the public and meet existing
customers in shopping centres
5. Social • The business uplifts the community as the community support the
responsibility business by buying their product.
6. Transit advertising • Advertising on vehicles such as taxis, busses, vans etc.
7. Use of the • A potential customer phones the business to enquire about
telephone something, the person answering the phone is perceived as the
business.
• If the potential customer is pleased with when information that
was required, then that person can to be the important customer

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The INTERRELATION between the business functions
• The eight business functions depend on each other and are INTERRELATED.
• These functions work together as a team for the business to be successful
• The GENERAL MANAGEMENT is directly linked to all seven business functions
• The FINANCIAL and ADMINISTRATION functions are responsible for gathering, storing and
processing information and financial records.
• The purchasing, production and marketing functions are responsible for the delivery of goods.
• The PURCHASING function buy raw material for the PRODUCTION function to process raw
material into finished goods. The MARKETING function sells the product which the production
function has produced
• The MARKETING function promote the product while PUBLIC RELATIONS function promotes the
business and ensures that there is a good relationship between the business and the public.
• All the staff with the right skill and qualifications is appointed by the HUMAN RESOURCES
function.

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TOPIC 2: THE CONCEPT OF QUALITY

TERM DEFINITION

Features A distinctive attribute or aspect of a product.

Efficiency signifies a level of performance that describes using the least

Efficiency
amount of input to achieve the highest amount of output.
Refers to all safety, quality and other specifications and standards
Standards
applicable to a product.
A shortcoming or fault of something essential to perfection or
Defects
completeness: A defect in a machine or product.
The accomplishment of a given task measured against preset known
Performance
standards of accuracy, completeness, cost, and speed.
The number or percentage of workers who leave an organization and
Staff turnover
are replaced by new employees
Equitable selection A fair selection process consists of judging people not on the basis of
process their race, sex, age, religion, disability etc.
Remuneration is the pay or other Financial compensation provided in
Remuneration
exchange for an employee's services performed.
The responsibility of employees to perform the duties required by their
Accountability
job in order to further the goals of the organization.
Money remaining after all liabilities, including taxes, insurance, and
Surplus funds
operating expenses, are paid.

Deadlines The latest time or date by which something should be completed.

A system of moral principles that govern a person's behaviour or the

Ethics
conducting of an activity.
Manufacturing system that includes all functions required to produce a
Production system
manufactured product.
The hard work and skill that go into making something or working at a
Workmanship
task. A quality of a handmade object that is skillfully crafted.
Product differentiation is a market strategy that businesses use to
Differentiating products
distinguish a product from similar offering on the market.

Correlation A mutual relationship or connection between two or more things.

Introduction to QUALITY:

How do we identify ‘Quality’ in PRODUCTS?

• Methods used to indicate quality include the following:
o TRADEMARKS: special signs, marks or names used by manufacturers
o SAMPLES: a small portion of product given to consumers to test quality
o GRADES: agricultural products are classified according to quality
o COMMERCIAL STANDARDS: the SABS approves commercial standards of products.

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Why is ‘Quality’ import to promote the IMAGE of the business?
• It enables businesses to have a good reputation and promotes brand awareness.
• Customers associate image of the business with quality of the product.
• Quality products increase sales, profits, business growth and attracts prospective investors.
• Businesses gain goodwill and support from the community.

Define the meaning of QUALITY

• Quality refers to a good/service’s ability to satisfy a specific need.
• It refers to the features/characteristics of a product/service that meets customer’s
requirements.
• The efficiency of services and the ability to provide an effective outcome without too many
delays.
• It is measured against specific criteria such as physical appearance / reliability / durability /
sustainability / after-sales services.
• Includes learning from mistakes and continuously improving all aspects of the business.

Define the meaning of QUALITY CONTROL and QUALITY ASSURANCE.

Meaning of QUALITY CONTROL

• Inspection of 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.

Meaning of QUALITY ASSURANCE

• Checks carried out during and after the production process. to ensure required standards
have been met at every stage of the process.
• Ensure that required standards have been met at every stage of the process.
• Processes put in place to ensure that the quality of products/services / systems adhere to pre-
set standards with minimal defects / delays / short- comings.
• Ensuring that every process is aimed to get the product 'right the first time' and prevent
mistakes from happening.

Define the meaning of QUALITY MANAGEMENT and QUALITY ASSURANCE.

Meaning of QUALITY MANAGEMENT

• The process of managing all activities needed to ensure a business produces goods and
services of consistently high standard.
• Refer to techniques / tools used to design / improve the quality of a product.
• Can be used for accountability within each of the business functions.
• Aims to ensure that the quality of goods/services is consistent.
• Focuses on the means to achieve consistency.

Meaning of QUALITY PERFORMANCE

• Total performance of each department measured against the specified standards.
• The assessment and analysis of processes, goods and services in order to measure the
performance of a business.
• Can be achieved if all departments work together towards the same quality standards.

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Distinction between QUALITY CONTROL and QUALITY ASSURANCE
QUALITY CONTROL
• Inspection of the final product to ensure
that it meets the required standards.
• Includes setting targets/measuring
performance and taking corrective
measures.
• Checking raw materials / employees /
machinery / workmanship/products to
ensure that high standards are maintained.
QUALITY ASSURANCE
• Carried out during and after the production
process to ensure required standards have
been met at every stage of the process
• Ensure that every process is aimed at
getting the product right first time and
prevent mistakes from happening again.
• The 'building in' of quality as opposed to
'checking for' quality

Distinction between quality management and quality performance

QUALITY MANAGEMENT
• Techniques/tools used to design/ improve
the quality of a product
• Can be used for accountability within each • Can be obtained if all departments work
of the business functions
• Aims to ensure that the quality of goods/
services consistent/ focuses on the means to
achieve consistency
QUALITY PERFORMANCE
• Total performance of each department
measured against the specified standards
together towards the same quality
standards
• Quality is measured through physical
product/ statistical output of processes/
surveys of the users and/ or buyers of goods/
services

Discuss/Explain the IMPORTANCE of quality for businesses.

• Improve customer satisfaction.
• Efficient use of resources and time.
• Increase productivity.
• Constant improvement of products and services.
• More likely to achieve the business vision and goals.
• Place products above those of competitors.
• Improved employee skills and knowledge through training.

Explain how quality relates to the following business functions: Quality indicators of the…
GENERAL • Develop/Implement/Monitor effective strategic plans.
MANAGEMENT • Effectively communicate shared vision, mission and values.
• Ensure that all departments meet their deadlines/targets
• Understand changes in the business environments.
• Be prepared to set an example of the behaviour that is expected from
employees in terms of ethics as well as productivity.

ADMINISTRATION • Use modern technology efficiently.

FUNCTION • Easy to recall/find information/documentation
• All systems and processes are documented
• All documentation is kept neatly and orderly in a safe place.
• Make relevant information available for quick decision-making.

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 FINANCIAL • Effective management of cash by cash budgeting.
FUNCTION • Financial records to be kept up to date.
• Accountability through tight financial processes.
• Draw up accurate financial statements timeously/regularly.
• Invest surplus funds to create sources of passive income

HR • Low rate of staff turnover in the business

FUNCTION • Provide good working conditions
• Motivate and reward employees
• Ensures fair and equitable selection process
• Fair remuneration packages that is aligned to the industry.

PURCHASING • Buy raw materials in bulk at lower prices.

FUNCTION • Select reliable suppliers that render the best quality raw materials at
reasonable prices.
• Ensure that there is no break in production due to stock shortages.
• Required quantities should be delivered at the right time & place.
• Implement stock control systems to ensure the security of stock.

PRODUCTION • Utilise machines and equipment optimally.

FUNCTION • Accurately calculate the production costs.
• Select the appropriate production system e.g. mass / batch
• Provide high quality products according to specifications.
• Empower workers so that they can take pride in their workmanship.

MARKETING • Increasing their market share.

FUNCTION • Winning customers by satisfying their needs/wants.
• Differentiating products in order to attract more customers.
• Constantly reviewing value issues.
• Using pricing techniques to ensure a competitive advantage.

PUBLIC RELATIONS • Dealing quickly with negative publicity.

FUNCTION • Providing regular/positive press releases.
• Implement sustainable CSI programmes.
• Positive feedback from public surveys on business image.
• High standard of appearance of buildings / professional telephone
etiquette, etc.

Discuss the correlation between MANAGEMENT and the SUCCESS of the business.
• The correlation between management and the success of business in achieving its objectives,
strengths, and weaknesses.
• Management play an important role in making the correct decisions and motivating
employees to be productive.
• Poor management can result in ineffective employees and loss in productivity.
• Businesses requires ongoing decisions making and problem solving.
• Problems that cannot be solved and decisions that are note made appropriately can lead to
a decrease in productivity.

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