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2.1 Name any TWO types of defensive strategies - NSC Business Studies - Question 2 - 2022 - Paper 1
Question 2
2.1 Name any TWO types of defensive strategies. 2.2 Outline the advantages of diversification strategies. 2.3 Identify the PESTLE elements that pose a challenge to... show full transcript
Worked Solution & Example Answer:2.1 Name any TWO types of defensive strategies - NSC Business Studies - Question 2 - 2022 - Paper 1
Step 1
2.1 Name any TWO types of defensive strategies.
Answer
Defensive strategies are measures taken by companies to protect their market share and profits. Two examples include:
- Divestiture - Selling off or reducing certain business operations.
- Retrenchment - Reducing expenses, often by cutting down on workforce or operations.
Step 2
2.2 Outline the advantages of diversification strategies.
Answer
Diversification strategies offer several benefits:
- Increased Sales and Growth: By entering new markets or industries, businesses can expand their customer base.
- Risk Reduction: By not relying solely on one product or market, companies protect themselves from economic downturns.
- Brand Enhancement: Expanding into new areas can improve the overall brand image and reputation.
- Resource Utilization: Businesses can use existing resources to develop new products, increasing operational efficiency.
Step 3
2.3 Identify the PESTLE elements that pose a challenge to Simmy Traders in EACH statement below:
Answer
2.3.1 Social Element: Many customers cannot afford their products due to low income levels, resulting in a decline in sales.
2.3.2 Technological Element: Lack of internet facilities hinders customer access to purchasing options.
2.3.3 Economic Element: Rising fuel prices increase delivery costs, making it financially unfeasible for Simmy Traders.
Step 4
2.4 Explain the steps in strategy evaluation.
Answer
The steps in strategy evaluation include:
- Reviewing the Business Strategy: Assess the current strategy and its alignment with business goals.
- Implementation Review: Look back and forward to ensure the strategies are being effectively implemented.
- Outcome Determination: Decide on the expected outcomes and compare them with actual results.
- Feedback and Revision: Based on evaluations, adjust strategies as necessary, considering both internal and external impacts.
Step 5
Step 6
2.5.2 Discuss the impact of the National Credit Act on businesses.
Answer
The National Credit Act influences businesses in various ways:
- Transparency: It necessitates clear communication between businesses and consumers regarding credit agreements.
- Credit Protection: Protects against non-paying customers, impacting cash flow positively if adhered to.
- Administrative Changes: Businesses may face increased workload due to compliance requirements, such as maintaining accurate records and conducting assessments.
Step 7
2.6 Explain overtime as one of the provisions of the Basic Conditions of Employment Act (BCEA), 1997 (Act 75 of 1997).
Answer
Overtime under the BCEA includes:
- Workers must be compensated for hours worked beyond the standard weekly hours.
- Overtime pay is calculated at a higher rate, usually 1.5 times the normal rate.
- The Act also stipulates that workers may negotiate their terms of overtime with their employer.
Step 8
Step 9
2.7.2 Threat/Barriers to new entrants to the market.
Answer
Businesses need to evaluate:
- The obstacles faced by new businesses attempting to enter the market, such as high startup costs.
- The impact of existing competitors on their market share.
- Potential customer loyalty that can serve as a barrier for new entrants.