South Africa - Economic and Management Sciences Lessons
The Economic Cycle 8
• The History of Money and an Introduction to Trade ...The introduction of money into the economy hundreds of years ago simplified the process in which people obtained and sold products and services. Money continues to evolve. We witness even more changes in money today than in the past due to the changes that are taking place in modern business transactions. Countries are merging their currencies into one, such as the Euro in Europe. Banks are introducing very dynamic products and services into the market. Money markets continue to be very volatile and governments are continuously striving to find more effective and efficient ways of managing their money markets and the risks that are attached thereto. Because countries have different resources such as natural, human, and capital, and different ways of combining these resources, they are not equally efficient at producing the goods and services that their residents need or want and therefore they will resort to trading with other countries that can supply products and services which they do not have enough. World trade is not static. It has been increasing both in amount and in significance. New supplies of natural resources can be discovered and developed while existing supplies are better managed. Human resources can be improved through better educational programs. Capital resources can be acquired to make the better trained workers even more productive. The increase in world trade should result in more efficient use of the world's scarce resources, and in higher standards of living.
• Economic Systems and Trade Unions ...The rapid discovery and excessive use of steam power, coal, and petroleum and enhanced communication ingenuities led to a vast industrial global environment in the late 18th century through the early 20th century. Many great inventions and technological advancements enhanced manufacturing and communication. With this progression came widespread social decline. Various social reform movements arose from the economic and social depression of these times including liberalism, conservatism, socialism, Marxism, communism, and capitalism. The social, political, and economic changes made within society due to industrialization are still an issue for concern today. The numerous and conflicting ideologies about how society should be set up and maintained ushered in an era of both accomplishment and confusion. This age of “isms” laid the groundwork for the various international government and political philosophies of today. Trade unions are often seen as successors to the guilds of medieval Europe. These guilds existed to protect and enhance their members' livelihoods through controlling the instructional capital of artisanship (such as leatherworkers or metalworkers guilds) and the progression of members from apprentice to craftsman, journeyman, and eventually to master and grandmaster of their craft. Trade unions have evolved over time and they play a very important role in South African economics and politics.
• Inflation...Inflation relates to general increases in prices across an economy. The value of the South African Rand against other countries’ currencies also affects the ability of consumers to purchase goods and services that they need on a daily basis. The South African Reserve Bank (SARB) plays a very important part in the South African economy and especially in controlling inflation and growth. SARB uses the prime interest rate (the rate at which it lends money to other banks) as one of its most important tools in controlling inflation as this interest rate controls the supply and demand of money which is one of the major causes of inflation.
Sustainable Growth, Reconstruction and Development 8
Managerial, Administrative and Financial Skills 8
Entrepreneurs and their Work 8
The Economic Cycle 9
Sustainable Growth, Reconstruction and Development 9
Managerial, Administrative and Financial Skills 9
Entrepreneurial Knowledge and Skills 9
• Researching a Business Idea and Developing Business Plans...A business idea is a concept that can be used for commercial purposes. It typically centers on a commodity or service that can be sold for money, according to a unique business model. Some entrepreneurs focus on the skills that they have and build a business around those skills; others think more about the wants and needs of society and look for opportunities in the market. There are several methods for developing and testing a business idea. The ability to come up with a business idea can be transformed into a viable business, where ideas supported by feasibility and a business plan can then also be sold to interested investors, firms, and interested parties for a lump sum or a management contract. Business ideas, if introduced at the right time when demand for such service or a product introduced by the idea is expected to surge, can lead to a very profitable business. Business ideas are always available through different sources. However, it is the application used with these ideas, and timing, that makes the difference between success and failure. A business plan is a statement of a set of business goals, the reasons why they are believed to be attainable, and the plan for reaching those goals. It may also contain background information about the organization or management team attempting to reach those goals. The attempted business goals may be for-profit or non-profit. For-profit business plans typically focus on financial goals. Non-profit and government agency business plans tend to focus on service goals, although non-profits may also focus on maximizing profit. Business plans may be internally or externally focused. Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. They typically have detailed information about the organization or team attempting to reach the goals. With for-profit entities, external stakeholders include investors and customers. External stake-holders of non-profits include donors and the clients of the non-profit's services.
• Forms of Ownership and Marketing Goods...Jonny Vessels has to make a decision with regards to his expansion now. Which business form do you think is the best for him? Pay close attention to the financial liability of the business owners and consider carefully the amount of capital that Jonny would need to keep his business successful. After making your decision think further on the impact this expansion is going to have on his sales and later, on his profits. His costs are going to increase in expanding his business, but his start-up costs will be a once off cost and his production costs should be close to what he is experiencing in his sandwich bar currently. We wish Jonny all the success in his business expansion!