Business Studies Grade 12

Grade 12

NSC Business Studies Yvette Russell | Lisa Akerman | Séan Topper | José Oliveira Cathlyn Dracatos | Sumari Purdon

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Studying Business Grade 12 Textbook

This textbook works in conjunction with The Studying Business Working Smarter Workbook which can be used for class notes or revision.

Yvette Russell Lisa Akerman Séan Topper José Oliveira Cathlyn Dracatos Sumari Purdon

Studying Business Grade 12

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Published by: Excom Publishers (Pty) Ltd Registration Number: 2017/328968/07 Enquiries: orders@excompublishers.co.za www.excompublishers.co.za Cell: 083 785 7813

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NOTE: Use of pronouns: Any gender shall include the other gender, and the singular shall include the plural and vice versa.

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Studying Business Grade 12

Table of Contents

Chapter 1

Conflict Management

1

Team Dynamics....................................................................................................................1

Conflict Management...........................................................................................................2

Reasons for Conflict ............................................................................................................4

Skills a Manager Needs in Order to Manage Conflict..........................................................8

Recommendations for Conflict Management ....................................................................10

Conflict Management Through Third-party Interventions...................................................12

Chapter 2

Professionalism and Ethics

17

Introduction.........................................................................................................................17

Some Basic Questions ......................................................................................................17

Some Ethical Issues in the Corporate World .....................................................................19

Why Business Ethics?........................................................................................................22

Ethics in different spheres of society .................................................................................24

Levels of business ethics...................................................................................................27

Professional codes of Ethical Conduct ..............................................................................28

Chapter 3

CSR and Corporate Governance

31

Introduction.........................................................................................................................31

Social Responsibility..........................................................................................................31

CSR in South Africa............................................................................................................34

Triple Bottom Line Reporting (also known as 3 P's: People, Planet, Profit).......................36

King Code and Corporate Governance..............................................................................37

Chapter 4

Creative Thinking and Problem Solving

What is Creativity?.............................................................................................................51

Problem Solving.................................................................................................................53

51

Conclusion..........................................................................................................................59 Chapter 5

The Micro, Market and Macro Environments

Introduction: The Micro, Market and Macro Environments.................................................61

Environmental Scanning....................................................................................................62

How to Develop a Management Strategy...........................................................................63

Section A: Micro (Internal) Environment...........................................................................64

Business Functions............................................................................................................64

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Techniques used to identify and analyse challenges in the micro-environment.................66

Section B: Market Environment (External)........................................................................71

Elements of the Market Environment.................................................................................71

Environmental Scanning Methods......................................................................................71

Section C: Macro (External) Environment.........................................................................79

Section D: Strategies as Tools..........................................................................................84

Events in the Business Environment .................................................................................85

Advantages of Strategies...................................................................................................86

Types of Business Strategies.............................................................................................86

Chapter 6

Entrepreneurship, Management and Leadership

Entrepreneurs vs Intrapreneurs..........................................................................................93

93

Entrepreneurs.....................................................................................................................96

Management and Leadership.............................................................................................98

Managerial Competencies................................................................................................104

Motivational Factors.........................................................................................................108

Chapter 7

Marketing and Branding

113

Marketing.......................................................................................................................... 113

Interdependence of Marketing with Management Functions .......................................... 117

The Impact of the Consumer Protection Act (CPA) on marketing.................................... 118

Branding...........................................................................................................................122

Factors that influence a buyers decision..........................................................................125

Service marketing – People, process and physical evidence..........................................126

Digital Marketing and the influence of social media ........................................................127

Ethical Versus Unethical Marketing .................................................................................131

Franchise Marketing.........................................................................................................132

Chapter 8

Human Resource / Human Capital Management

Definition, Importance and Aim of the HR Department....................................................137

Human Resource Activities..............................................................................................138

Chapter 9

Industrial Relations and Legislation

The Constitution (108 of 1996).........................................................................................155

Labour Relations Act (66 of 1995) ...................................................................................161

Basic Conditions of Employment Act (75 of 1997)...........................................................177

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Employment Equity Act (55 of 1998)................................................................................179

Broad Based Black Economic Empowerment Act (53 of 2003).......................................181

Skills Development Act (97 of 1998) and Skills Development Levies Act (9 of 1999) .....183

Chapter 10

Investment Opportunities and Insurance

SECTION A: INVESTMENT.............................................................................................187

187

Introduction.......................................................................................................................187

The Major Asset Classes and Risk...................................................................................187

Risk Profiling ..................................................................................................................190

Investment Strategies.......................................................................................................191

Investment Opportunities.................................................................................................192

Investments and Taxation.................................................................................................200

The Risks and Rewards of Interest-bearing Investments ................................................201

SECTION B: INSURANCE .............................................................................................201

Introduction.......................................................................................................................201

Non Compulsory Insurance..............................................................................................202

Compulsory Insurance.....................................................................................................205

Requirements of a Valid Insurance Contract....................................................................206

Concepts Relating to Insurance and Assurance..............................................................207

Advantages of Insurance/Assurance ...............................................................................210

Chapter 11

Performance Management

213

Introduction.......................................................................................................................213

Quality Improvement........................................................................................................213

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The Performance in the business will Impact on the Success or Failure of the Business.....................................................................................................214

Techniques that can be applied throughout the organisation to improve performance...................................................................................................224

Note: Please see www.businessdictionary.com for an extensive, comprehensive source of business-related terms, definitions and useful articles.

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Introduction

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This is a talking textbook! ‘Bubbles’ are located throughout the book, which provide QR codes that can be scanned to give you more information and additional examples. Simply download a free QR reader onto your smartphone or device, or click on the active links in the eBook versions to access these 6090 second interactive lessons, which will help you revise or catch up on missed concepts!

Introducing Bubbles

3. Business Environments

1. Conflict Management

Lesson

2. Ethics, Professionalism and Social Responsibility

Mindmaps

10. Overall Organisational Performance

4. General Management and Corporate Governance

9. Insurance and Assurance 8. Investment

5. Marketing

7. Labour Legislation

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6. Human Resources

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Chapter 1

Conflict Management

1. Team Dynamics In class, sport and most careers it is almost impossible to do everything on your own.

Whether we make use of formal or informal teams, we need other people around us – and we need to learn to work with them. Even an artist who works in isolation needs to negotiate with suppliers, agents and customers in order to make a living out of their art.

Teamwork Both academic and portfolio work is also often based on teamwork, and these skills were covered in more detail in Grades 10 and 11, but note that you will still be applying them in Grade 12 (teamwork projects, sports teams and maybe even a leadership team). In addition, within Business Studies, many of the strategies which you will learn about this year are very team-orientated (see Chapter 5), so it is important that you revise teamwork concepts before proceeding with your studies.

Teamwork and Conflict Management There is a direct link between effective team management and the need for conflict management: Good team dynamics will result in open communication and fewer misunderstandings, as well as being able to nip problems in the bud – which will prevent conflict from building into crisis situations.

Conflict in teams often arise from the allocation of workload (amount that each person is expected to do).

The following problems may occur: ○ R ole overload occurs when one member of the team (often willingly) takes on more than he/she can cope with. ○ R ole conflict occurs when more than one member wants to play a certain role, and in instances like the role of the leader, it can lead to conflict. ○ R ole ambiguity occurs when there is a lack of clarity between the roles that members are expected to play.

Conflict is inevitable due to the complexity of human relations and the pressures under which modern society puts us. It is therefore imperative that you learn Conflict Management skills as you will use them in everyday life, leadership positions and in future business situations.

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Synergy Everyone knows the old adage ‘A chain is only as strong as its weakest link’, but the synergy that is created when teams work together results in it often being referred to as ‘1+1=3’.

This is well illustrated by John Maxwell as follows: If each of 5 team members puts in an effort of 3 units: 3x3x3x3x3 = 243 total units Synergy

If each member now puts in only 1 extra unit of effort: 4x4x4x4x4 = 1024 total units!

So, effectively, 5 additional units of effort have had a fairly dramatic effect within the team context!

(John Maxwell. 1993. Developing the leader within you. P180. Thomas Nelson Publishers. Nashville) Synergy: The interaction of two or more agents or forces so that their combined effect is greater than the sum of their individual effects.

2. Conflict Management Wherever there is a clash of interest or potential for disagreement relating to facts or assumptions, there may be conflict. Unless this conflict is managed and resolved it could cause harm to the business.

Conflict is a disagreement through which the parties involved perceive a threat to their needs, interests or concerns.

Conflict management

2.1 Functional vs. Dysfunctional Conflict Conflict is not always bad, but could in fact spark creativity, allowing people to develop and grow. It may even lead to change and improve the productivity in the enterprise. Whether conflict is good or bad will, however, be determined by how the emotions surrounding the conflict are handled.

Functional Conflict – This is a non-aggressive form of conflict which stimulates creativity and allows ideas to flow, such as used in brainstorming. In this instance people can disagree but still work together to find a solution. The outcome is often positive and results in higher productivity.

Dysfunctional Conflict – An aggresive type of disagreement where people refuse to work towards a solution and the task is compromised, which results in reduced productivity and a waste of valuable human capital resources.

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2.2 Advantages and Disadvantages of Conflict Advantages of Conflict ○ C onflict may help to create an awareness of a problem that can then be addressed to the benefit of the business. ○ Conflict may stimulate creative thinking. ○ Conflict may help people to understand a problem better or to learn from one another. ○ Conflict may lead to collaboration where the focus shifts to working together by encouraging ownership and commitment in a team. ○ C onflict may motivate people to give input and to get involved or to participate in a situation where they previously felt apathy.

Disadvantages of Conflict ○ Unless the conflict is managed to create positive spin-offs it may hamper productivity and lower morale. ○ N egative conflict may lead to inappropriate behaviour such as violence due to feelings of confusion and frustration. ○ If the conflict is not managed to the benefit of all, however, it may distract from critical issues and lead to poor quality decision-making.

Source: https://za.pinterest.com/jeff3814/conflict-management/?lp=true

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3. Reasons for Conflict There are numerous reasons for conflict and to pretend to be able to draw up an all-encompassing list is unrealistic. We attempt here to look at some of the most obvious reasons for conflict in a business environment.

3.1 Change

Charles Darwin said it is neither the strongest nor the most intelligent of the species who survive; it is the one most adaptable to change.

Charles Darwin’s quote is as true in business as it is in the word of Science. Proper change management will help to increase the chances of survival of undertakings operating in the new economy. The so-called new economy can be defined as a situation where revolutionary changes are experienced in terms of innovation in technology, globalisation and knowledge management. The management of these changes may be the difference between businesses that will succeed and those that will perish.

There is, however, (almost) always resistance to change as it creates uncertainty. This resistance often leads to conflict.

3.2 Inclusivity and Cultural Diversity In South Africa we have many different cultures and it is important to remember that we have to accommodate all of these in the workplace. Unfortunately these cultural differences may lead to conflict situations – often because of ignorance.

Also beware of the danger of stereotyping: “All Afrikaners believe this or that” or “Only men are natural leaders and should therefore be promoted over females”.

Despite having been warned against stereotyping, we have to acknowledge that certain cultures in a country or certain countries have very distinct cultures and may require a thorough understanding.

Diversity

In this regard we can simply look at the African culture of Ubuntu vs. the more Western culture. When entering business transactions or negotiations in the workplace it will stand the person in good stead to acknowledge that some of these differences may lead to conflict situations if not taken into account.

Different backgrounds and values may also cause conflict in multi cultural environments.

Ubuntu

Western culture

Establish social trust first – “I am because we are”. A “Let’s just get down to business” attitude often prevails.

Personal relations and goodwill are valued.

The emphasis is on performance and expertise.

Negotiations are often slower and rituals may play a role.

Time is money and we need to conclude negotiations as fast as possible to start negotiating the next transaction.

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Exercise 1.1: Ubuntu vs Western Culture Evaluate, by means of a group discussion, the Ubuntu and Western approaches explained.

Identify TWO situations where you would use each approach to obtain optimum results.

3.3 Lack of, or Poor Communication If employees are not informed about decisions or are not sure of what to expect next, they start to rely on the grapevine (rumours), which are not always reliable. Conflict is a result of uncertainty.

Uncertainty regarding expectations, such as poorly defined job descriptions or inconsistent actions from management, will most definitely lead to conflict.

Poor communication may be the result of poor listening skills. People sometimes listen but they don’t hear, and this results in misunderstandings.

Communication barriers such as an organisational structure that is too hierarchical could also contribute to conflict. A poorly defined organisation structure, on the other hand, may lead to jurisdictional ambiguities (uncertainty regarding what is allowed) such as who may discipline a worker. Any other barrier to effective communication will also probably lead to conflict between role players in the business.

Role overload may also arise as workers don’t understand what their actual jobs entail i.e. a lack of communication regarding job description and responsibilities.

3.4 Resource Allocation Insufficient resources or unequal distribution of resources to perform a task will cause stress amongst employees. This ‘fighting’ for resources is a structural reason for conflict in an organisation.

Interdependence in the organisation is related to resource allocation. If, for example, the purchasing department has to wait for the financial department to allocate funds needed to buy raw material that is required in the production process, this interdependence means that a delay in one department will have a ripple effect of conflict throughout the organisation.

Skills and abilities are also classified under resources. If a manager expects an employee to perform a task that an employee is not capable of performing, it will lead to problems in the workplace.

3.5 Personalities and Emotions All people in the workplace are unique. Sometimes different personality types thrown together in close proximity in the workplace may contribute to conflict. Different personality types also react with different emotions to situations.

Type A personalities are, for example, usually workaholics that have extremely high expectations of themselves and others; they are impatient and unhappy about even small delays in deadlines. Type B personalities on the other hand are usually easy-going, with no real sense of time urgency.

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Exercise 1.2: Top Toys Ltd. Eitsaz has just been employed as the Marketing Manager of Top Toys Ltd. It is June and the festive season is just a few months away. The Board of Directors has made it clear to Eitsaz that they expect him to make sure sales revenues will be at least 40% higher than last year.

Eitsaz has called a meeting with the advertising agency to discuss the marketing campaign.

Dorah is the Advertising Consultant working with the Top Toys account. After Eitsaz’s telephonic discussion with Dorah, it is clear to him that Dorah is a Type B personality. Eitsaz is the first to admit he is a Type A personality. Dorah has suggested Eitsaz stop worrying as they don’t really need to change the advertising campaign of last year. In fact, Dorah’s words were: “No need to change something that worked last year. Change is so uncomfortable and unsettling!”

Eitsaz has approached the MD of Top Toys to discuss the possibility of either moving to a different advertising agency or requesting someone else for the account. The MD refuses point-blank because she believes Dorah is the right person for the job.

Eitsaz has asked you for advice on how to handle Dorah’s laid-back and somewhat negative attitude towards the advertising campaign.

3.6 Values and Ethics: Perceived or Real Values and ethics are personal sets of beliefs that guide actions or describe a preferred manner in which to handle a situation. Values and ethics are, however, closely linked to culture and religion and will therefore differ between people.

Remember: perceptions are more important than reality. People often believe what they perceive to be true even if it is not true and this may lead to unnecessary conflict.

3.7 Inner Conflict Conflict is not only external. We are all human, and as such, bring our past experiences, issues, beliefs and morals into every situation. Often, our perception of a situation is far more important (and influential) than the reality. That is why two people can attend the same event, e.g. a soccer match, and have two totally different reactions to it. One will see it as disorganised and the crowd as unruly; the other will describe it as having a great vibe and the crowd as having a lot of spirit.

As discussed in the Problem Solving Chapter (Chapter 4), the problem presenting itself is often not the real issue. For example, an argument erupts between two team members busy on a task. The team has to decide which of three different advertising layouts to use for their next campaign. Xando is keen on layout 1, but Ann is insisting on layout 3. After stepping in to arbitrate, the team leader discovers that Ann is actually upset about the fact that Xando was recently promoted into a position that she applied for, so she is not looking at the best layout, but merely determined to oppose Xando. Her inner conflict over the promotion is causing problems in the workplace, so in order to resolve the issue, that has to be addressed.

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Some of the issues that can lead to inner conflict: ○ Jealousy (as above); ○ Feelings of inferiority, being used as a scapegoat; ○ Need to control or need to impress people (seeking constant approval); ○ Personal morals, beliefs and ethics; and ○ Oversensitivity and low self-esteem.

Exercise 1.3: Inner Conflict Discuss how the following can lead to inner conflict that will affect the workplace: 1.

An outspoken ‘pro-life’ nurse being asked to assist with abortions.

2.

A stockbroker who is aware of ‘insider trading’.

3.

A counselor who has promised confidentiality to a client, but thinks they may be planning to commit a crime.

4.

Someone who is overweight, but good-naturedly pretends not to be hurt by jokes and comments from colleagues.

5.

An employee who designs and develops a project that the team-leader then presents to management and takes the credit for. Think of two or three more examples, and then revisit the list above. Can you add to it?

Resolving Inner Conflict: ○ The first step is to identify inner conflict. A problem cannot be addressed unless it is exposed. ○ I t is also important to refer the person to the correct department – they may need the HR department to resolve (or explain) a salary or promotional issue; a manager to listen to their concerns; or a counselor to work through personal issues with them. ○ The extent of the intervention will depend on the intensity of the problem, and the effect it is having on their productivity in the workplace, as well as the enterprise’s HR policy: some businesses have both counseling services and practical help (e.g. HIV/AIDS or Covid-19 clinics, feeding schemes, daycare centres) to assist their employees in solving personal problems; others may deal only with direct, work-related issues. Either way, it needs to be considered as a factor in the normal conflict resolution process.

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4. Skills a Manager Needs in Order to Manage Conflict Managers and employees alike can and should be coached to change behaviour in order to handle conflict better. In order to change, employees in the organisation can, irrespective of their level in the business, use skills and tools to transform a conflict situation into an opportunity through constructive conflict resolution.

4.1 Ability to Deal with Change

“If you start to think the problem is ‘out there,’ stop yourself.

That thought is the problem.”

Stephen CoveyAt

Change is often one of the key contributors to conflict. Managers at all levels should be able to cope with change and help their employees deal with change.

This can be done by understanding how people deal with change and helping them to overcome anxieties related to change. People’s first reaction to change is usually resistance. Communication to motivate the change and training can be used to overcome or reduce resistance to change.

4.2 Tolerance Regarding Inclusivity and Cultural Diversity Again: Beware of stereotyping!

People should be exposed to and educated regarding cultural diversity to create tolerance of differences.

Keep background information in mind when dealing with different people. For example, there are huge cultural differences regarding time and interpersonal space, to name but two potential sources for conflict.

Do you think an American who is appointed as the CEO of a company operating in South Africa will understand or appreciate it when the meeting starts twenty minutes late and the excuse offered is ‘African time’?

4.3 Communication Skills A manager should have the ability to communicate information in a clear and understandable manner.

The success of the communication is, however, often dependent on the degree of trust invested in the relationship. Without rapport the chances of successful communication diminish radically.

Regular meetings to get feedback and suggestions from employees can be useful communication tools.

As an alternative to meetings to get input from employees, a suggestion box can be implemented.

Meetings can also be used to communicate new initiatives and motivate changes that will be implemented. Notice boards, newsletters and memos are also forms of written communication in an organisation.

Regular written reports regarding proposed plans, the status of current activities and accomplishments can help management to pre-empt conflict situations that may cause problems.

An important element of communication is to listen to the reason for the unhappiness, acknowledge what is being said, then to try and understand why the person is feeling this way before responding.

Summarising and paraphrasing before responding are good tools that may improve the communication process.

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Negotiation, conciliation, mediation and arbitration are methods that can be used to reduce or eliminate conflict by involving a third party to improve the communication process.

4.4 The Ability to Think and Act Strategically The starting point of strategic planning is to develop a shared vision and mission to help employees to understand the purpose and direction of the organisation. The system approach to strategic planning helps the organisation to link its internal and external environments and improve performance by reconciling available resources with changes in the external environment.

Skills and Tools in Conflict Management

Linking the internal resources with the external environment requires an environmental scan using tools such as a SWOT- or value chain analysis in order to identify the key success factors and competitive advantage of the undertaking. The business can then formulate a strategy that will assist all employees to understand the long-term goals of the business.

Although strategic planning takes place at top management level, it is important to get input and feedback from lower levels as well in order to ensure buy-in and understanding of the process. If this can be achieved, a huge obstacle would have been overcome in managing potential conflict in the organisation due to inefficient resource allocation.

4.5 Emotional Intelligence to Deal with Different Personalities and Emotions Emotional intelligence refers to the person’s ability to manage relationships in a mature manner; this may include, amongst other things, resolving conflict and disagreements in a positive manner.

A good starting point for resolving conflict due to personalities and emotional issues is to keep emotions in check. This does not imply we have to ignore our emotions or pretend they do not exist, but rather that we make a choice about how to vent those emotions.

A manager should acquire the skills to steer a conflict in such a manner that people focus on the problem at hand and not get abusive towards the other parties. When emotions run high these two issues (the problem vs. the other person) often become entangled.

It is important that the origin of the conflict situation remains the focus and that the conflicting parties do not get sidetracked by non-pertinent issues in an emotional debate.

One tool that can be applied to separate the person and the problem is to ask the question “Why?” in order to understand the reason for the underlying problem. Asking the conflicting party to explain the problem will help in understanding the root cause rather than allowing people to get carried away justifying their emotions.

Source: http://www.talentsmart.com/about/emotional-intelligence.php

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Asking the question “Why?” may also offer the opportunity to ask “How do you propose we solve this problem in a fair manner?” Once again this focuses on the problem and prevents people attacking one another based purely on emotions.

4.6 Values and Ethics – Perceived or Real Training and open communication can help to overcome conflict due to a lack of understanding and help to encourage flexibility and create empathy that can help people to accommodate and even celebrate differences.

5. Recommendations for Conflict Management 5.1 Stimulating Functional Conflict – Devil’s Advocate Conflict can stimulate creativity and prevent ‘group think’ in teams. Group think occurs when team members do not want to criticise one another because of their desire to get along. This then hampers critical thinking. When a person assumes the role of Devil’s Advocate he criticises the proposed plan of action in order to encourage analytical thinking and to test the proposed plan of action. This deliberate introduction of criticism is known as programmed conflict and is used in order to elicit debate and different opinions.

A Case in Point

Exercise 1.4: Ethical Values Think about the frustration experienced by Westerners when they are doing business in eastern countries because these value systems differ from their own. Could this be a potential source of conflict? What is the best way to handle a conflict situation? Should one compromise one’s own ethical values to obtain business deals in this manner?

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5.2 Negotiation Negotiation is the process of two people trying to sort out their own differences. It is one possible method of handling dysfunctional conflict. It is a suitable approach to resolve conflict that exists due to misunderstanding, but is not suitable when the root of the conflict lies with differences in value systems.

People are usually just not prepared to renegotiate their value systems.

In a situation where negotiation fails, it usually calls for the dispute to be resolved through anything from conciliation to arbitration (see third-party interventions).

5.3 Smoothing This is mostly a temporary method of solving a conflict situation as differences are ignored and the focus is placed on what people have in common. The conflict situation is ‘smoothed over’ but if it is a serious problem it may actually make the situation worse. The short-term solution to the problem may lead to the conflict surfacing again in the future.

5.4 Forcing In a situation of forcing, a person in a position of authority forces his solution to the problem on the subordinate. This autocratic style does not encourage participation in the problem-solving process and often leads to resentment.

5.5 Avoidance The problem is avoided by pretending it is not there or ignoring it, and is mostly used when the perception exists that it is simply not worth the effort to argue. This approach is suitable for trivial issues, but with a serious situation, it may worsen the conflict over time.

Another form of conflict avoidance is if one sends someone else is sent to deliver a message rather than confront the situation personally. The issue is not resolved but just (often temporarily) postponed.

5.6 Compromise This democratic style of handling conflict is found in a situation where there are opposing opinions on an issue but both parties have equal power. It is a situation of mutual give and take but if not managed well it may lead to a situation where deadlines are not met because it is easier simply to withdraw or give in. If one person is constantly expected to yield or compromise, he may decide it is better (at least psychologically) to withdraw from the situation. This approach may even worsen the conflict over time as it may cause conflict within the person who has to constantly compromise and accommodate others.

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6. Conflict Management Through Third-party Interventions Conflict that is not handled appropriately may become destructive. Sometimes it is possible for the dispute to be settled between the parties involved, but if the issue cannot be resolved there are easier and more cost-effective ways to try and resolve conflict than to battle it out in court. An alternative method of resolving the conflict may be to involve a third party to assist in this process but it is important that both the conflicting parties feel they can trust the integrity of the third party. Although it is possible to use an internal person (part of the organisation) as a third party if the conflict situation exists in the business, it is often more productive and viewed as more fair to use an outsider.

Conciliation involves a third party helping the conflicting parties to address their conflict directly and constructively, but only in the role of a facilitator.

The mediator will attempt to help the conflicting parties to reach a mutually acceptable decision by fulfilling an advisory role, but may not, (unlike an arbitrator) solve the problem by coming to a decision on behalf of the conflicting parties.

Once the arbitrator has made his decision it is binding on both parties and it is therefore critical that the arbitrator is fair and impartial in his judgment.

Conflict Resolution Steps: Negotiation

Conciliation

Mediation

Arbitration

NEGOTIATION

CONCILIATION

MEDIATION

ARBITRATION

Disputants

Disputants

Disputants

Disputants

The two parties sit down and try to come to a compromise by themselves.

If negotiation is unsuccessful, a third person gets involved, but only to facilitate the discussion i.e. make sure both parties get a chance to speak.

If conciliation does not work, the third person gets more involved and will give advice, but the ultimate decision is still up to the original parties involved.

If mediation has not solved the problem, the decision is taken out of the hands of the original parties, and the third person has to make a judgement call.

E.g. Father and son disagree on a curfew time, but sit down and discuss it together.

E.g. Two friends have been fighting due to a misunderstanding, and a third friend joins the discussion to make sure both have all the information and the misunderstanding is cleared up.

E.g. Two business partners are fighting about whether or not to sign a new contract. A friend who is a lawyer gives them some more insight, and they are then able to agree.

E.g. Two floor managers in a factory cannot agree on the placement of a large new piece of equipment and the Production Manager steps in to make the decision which is then binding on both departments.

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Conciliator

Mediator

Arbitrator

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The Con-arb process The Con-arb process is a one step process of conciliation and arbitration for unfair labour practices affecting individuals. The two processes take place as a continuous action in one day which saves time and unnecessary costs. This process is compulsory in matters relating to probation.

6.1 CCMA The CCMA (Commission for Conciliation, Mediation and Arbitration) is an independent organisation that acts as a dispute resolution body that promotes cooperation between employers and employees. Any dispute that can be settled at this level prevents labour unrests such as strikes and lockouts and promotes productivity in the economy.

Source: https://www.ccma.org.za/

The CCMA will help to settle labour-related disputes in the workplace through a process of conciliation, mediation and ultimately if necessarily, through arbitration. In this process of trying to regulate the smooth functioning of a workplace, the CCMA can also get involved in workplace restructuring and provide training and advice on certain issues such as termination of employment, when requested to do so.

6.2 Workplace Forums (WPF) According to the Labour Relations Act (LRA), a trade union may apply to the CCMA for a Workplace Forum to be established. The WPF will not take over the role of the trade union, but enables workers at all levels to participate in consensus decision-making with senior management. One of the primary functions of the WPF is thus to increase efficiency in the workplace.

The LRA states that there are certain issues on which management has to consult with the WPF, while other issues require more than consultation, demanding consensus and joint decision-making between the WPF and management. Employees elect fellow workers to represent them.

Some issues on which management must consult with the WPF: ◦

Criteria for merit increases;

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Restructuring of the workplace and worker retrenchments; and

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Training-related issues.

Management and the WPF must take joint decisions on issues such as Disciplinary Procedures and Affirmative Action. If no consensus decision-making can be achieved, the issue may be referred to the CCMA.

Source: https://wjc.me.uk/

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6.3 Employers Organisations These organisations provide members with a Labour and/or Industrial Relations expert when required, or on a contractual basis of one or two days per week. In short, the business outsources this element of the HR function to experts who stay up to date with amendments in labour legislation. NAPE (National Association of Private Employers), COFESA (Confederation of Employers in South Africa) and NEASA (National Employers' Association of South Africa) are examples of organisations that were established because they realised that many of the smaller employers do not have the funds or the need to employ a full-time labour practitioner.

Employer Organisations will assist employers on issues such as: ◦

Employment contracts;

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Disciplinary and grievance procedures;

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Dispute resolution;

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Employment Equity Plans;

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Representation at the CCMA; and

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Trade union negotiations.

Some employer organisations work within specific industries, such as: South African National Security Employers Association; Road Freight Employers Association; Minerals Council of South Africa and the Electrical Contractors Association of South Africa.

6.4 Trade Unions Trade unions are discussed in detail in Chapter 9 dealing with Industrial Relations and obviously also play an important role in reducing and handling conflict between employers and employees.

Source: http://socialistnetwork.org/tag/ south-african-municipal-workers-union/

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EOHCB Employers’ Organisation

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Trade unions set up help-lines and crisis centres for concerned members

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Chapter 2

Professionalism and Ethics

Introduction In broad terms ethics can be described as the human morals or values which govern good behaviour.

Over the past few decades, business ethics has developed as a field in its own right, over and above some of the more ‘traditional’ ethical dilemmas faced in fields such as Ethics medicine and the legal profession. One of the reasons for this phenomenon of business ethics is a growing understanding that business transactions do not take place in a vacuum, but that there are always implications for stakeholders (both individuals and groups). This understanding of ethics will guide management’s actions to implement plans taking into account that the financial bottom-line (although very important) – is not the only criterion to determine business success or failure. Different environmental dimensions such as the economic, political, legal, technological, demographic, social, governmental and regulatory environments impact on organisations and businesses as well as on individual jobs.

Business Ethics

1. Some Basic Questions Some basic questions a manager could consider when making a business decision: ○ W hat does the law say and do we agree with this law? Consider the situation of a Multi-National Corporation (MNC) operating in more than one country. In some countries it may be legal to give large gifts or pay to ensure the desired end-result (i.e. to give what we would term ‘bribes’, but which are known as ‘go-between’ payments in some cultures), but not in others. If that is the acceptable way of doing business in one country and the MNC knows that it will not secure any deal without operating in this manner, is it then acceptable to have different sets of ‘ethics’ for different countries? ○ W hat about choices regarding economic and social issues not covered explicitly by legislation or where the legislation is not enforced? Is it acceptable to cause levels of air pollution in a third-world country where there is no legislation on pollution? Is it acceptable to use child labour if the child is willing and sometimes desperate to work because he or she is the breadwinner? This last issue is a very real one in South Africa where HIV/Aids has left many children parentless.

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○ T he issue of self-interest vs. the interest of the business also raises some ethical dilemmas. Can you think of a situation where one may experience a conflict of interest in a business situation that leads to ethical dilemmas?

Exercise 2.1: Ethical Concepts Before we look at ethical issues that employees and management at all levels have to deal with on a daily basis, let’s familiarise ourselves with some of the concepts that may help us to understand when something is ethical or unethical.

A suggestion on how to do it: Give each person in the class a number and let him/her take responsibility for reporting back to the rest of the class on the concept that he/she had to investigate. Considering that it is very important to understand these concepts, think about the ethical consequences if you let down classmates and friends who are depending on you…

1 Accountability 2 Responsibility 3 Integrity 4 Confidentiality 5 Morality 6 Impartiality 7 Any other relevant concept your class comes up with in a five-minute brainstorming

https://blogs.ubc.ca/emmadiao/2014/09/11/hello-world/

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2. Some Ethical Issues in the Corporate World 2.1 Conflict of interest A conflict of interest is a situation in which an individual or business is involved in multiple interests and serving one interest could involve working against another. For example, someone who is in the position to make decisions on granting tenders has a family member who is submitting tenders for a project.

More examples on conflict to interest: ○ A supervisor has a relative or close friend who reports to them which affects their job responsibilities, salary, and promotions. ○ A manager dating an employee who reports to him or her. ○ An employee works part-time in the evening for a company that makes a product that competes with the products of his full-time employer. ○ A member of the company board of directors accepts fees and provides advice to a company that is in direct competition with the company on whose board of directors he sits. ○ A purchasing agent accepts trips and gifts from a supplier and then selects that supplier's products for purchase by the company. ○ An employee sets up a personal website on which he sells his employer's software products.

2.2 Bribes, Corruption and Inappropriate gifts ○ When a gift is inappropriately large and given to persuade someone to act in one’s favour, it is seen as a bribe. ○ Corruption is the misuse of public power (by elected politicians or appointed civil servants) for private gain. ○ Inappropriate gifts may be linked to sexual harassment; for example, a senior manager giving junior employees jewelry, perfume or other gifts of that nature.

2.3 Sexual Harassment It may be defined as unwelcomed and uninvited sexual advances, both physical or verbal; normally from an authority figure to a subordinate.

Sexual harassment is not confined only to giving inappropriate gifts or other overt sexual behaviour, but may include sexually explicit comments, signs, innuendos, phone calls, emails, SMSs, voyeurism, intrusion of privacy and any other act that makes the recipient feel uncomfortable.

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2.4 Unauthorised use of funds may include, but are not limited to: ○ Fraudulent invoices or payment requisitions. ○ Forged signatures (a huge issue when it comes to encrypted and electronic signatures). ○ Unauthorised electronic payments. ○ Skimming accounts (transferring small, seemingly insignificant amounts from customers’ accounts on the assumption that they will not notice).

2.5 Tax Evasion Tax evasion is when a person does not disclose all income or lies about income to SARS. This differs from tax avoidance where one applies legitimate tax deductions.

2.6 Unfair Advertising Examples of unfair advertising: ○ False labeling – When incorrect information is put on product labels, such as claims that products are ‘MSG free’ when they are not. ○ Hidden fees – These are extra fees which are not specified in the advertised price, such as activation fees for cell phones or pre-delivery inspection charges on a new car. ○ Misusing the word "free" – When the sale is "Buy one. Get one free," the second item is not really free because you have to buy the first one. ○ Fillers – Food often has fillers to increase its weight, like meat injected with broth or brine. ○ Misleading illustrations – An example is showing the product in a picture as being bigger than it actually is, something which is often a problem in fast food advertising. ○ Bait and switch – This is advertising one product and substituting a similar product at a higher price, claiming that the advertised product is unavailable or sold out.

2.7 Employment/labour issues ○ Internet, email and cell phone issues.

With modern communication methods, come modern moral dilemmas ranging from employees visiting pornography and other questionable websites to forwarding morally corrupt or damaging emails and WhatsApps (e.g. spreading false rumours, forwarding compromising photos or confidential information). Twitter, Instagram and Facebook (and the countless others) also have the potential to destroy reputations and disseminate damaging information. ○ S tealing from the company.

There is the old ‘joke’ about a father being called by the police after his son was caught shoplifting in a stationery shop. On arrival the father wanted to know why his son had not told him he needed Tippex because he would have brought him some from work. Do you see the irony? And what about padding expense accounts to obtain reimbursements for questionable business expenses; for example, personal meals, golf rounds etc. If the employee uses company property for personal use without proper authorisation, is he stealing from the company?

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Studying Business for Grade 12 The Grade 12 Studying Business book cements the commercial concepts learnt in the FET phase to-date. The format encourages debate and problem solving within the context of current affairs and contemporary issues. This empowers school leavers to be effective global economic citizens and successful entrepreneurs with enquiring minds.

This Studying Business textbook is updated with contemporary case studies and new activities that encourage learners to reflect on and interact with the new world view brought about by the Covid-19 pandemic as well as how post-Covid-19 businesses must adapt in an ever-changing economic climate.

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Research

‘Bubbles’ are short, interactive online lessons that allow learners to revise concepts and get additional examples and explanations. Simply scan the QR codes or click on the active links in the eBook version. Bubbles are very useful for revising basic concepts and invaluable for learners who are studying online.

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Introducing Bubbles