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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 ... 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
Name any TWO types of defensive strategies.
Answer
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Divestiture: This involves selling off parts of the business that are not performing well, allowing a company to focus on more profitable areas.
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Retrenchment: This strategy involves reducing the scale of operations to cut costs and thus improve the financial status of a business.
Step 2
Outline the advantages of diversification strategies.
Answer
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Increases sales and business growth, as entering new markets can provide additional revenue streams.
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Improves the business brand and image, as diversification can enhance the company's reputation.
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Reduces risk by not relying on a single product, making the business less vulnerable to market fluctuations.
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Businesses gain new technological capabilities through product modification and innovation.
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Creates a balance during economic fluctuations, as diverse products can buffer losses in one area with gains in another.
Step 3
Identify the PESTLE elements that pose a challenge to Simmy Traders in EACH statement below:
Answer
2.3.1 Social: Many customers cannot afford their products due to low income levels, resulting in a decline in sales.
2.3.2 Technological: The absence of internet facilities to cater for customers who prefer online purchases limits market reach.
2.3.3 Economic: The increase in fuel prices affects delivery costs, limiting affordability and distribution capabilities.
Step 4
Explain the steps in strategy evaluation.
Answer
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Examine the underlying basis of a business strategy to ensure alignment with goals.
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Look forward and backward into the implementation process to assess progress.
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Determine the reasons for successes or failures and analyze these reasons thoroughly.
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Decide on the desired outcome as envisioned when strategies were implemented.
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Consider the impact of strategic implementation on both internal and external environments of the business.
Step 5
Step 6
Discuss the impact of the National Credit Act (NCA) on businesses.
Answer
Positives:
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The credit process becomes more transparent, improving trust between consumers and businesses.
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Businesses can protect themselves against non-paying consumers through legislated procedures.
Negatives:
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Compliance with the NCA can lead to increased administrative costs for businesses.
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Failure to comply may result in legal consequences.
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Businesses may face struggles in acquiring credit as more regulations apply.
Step 7
Explain overtime as one of the provisions of the Basic Conditions of Employment Act (BCEA), 1997 (Act 75 of 1997).
Answer
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Workers must be compensated double the normal rate of pay for overtime worked outside normal working hours.
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Employees must communicate work schedule changes in advance and either pay for extra hours or provide equivalent time off.
Step 8
Advise businesses on how they could apply the following forces of the Porter’s Five Forces model to analyse their position in the market environment:
Answer
2.7.1 Power of buyers: Businesses should assess how easy it is for buyers to switch to alternative products, which can drive prices down and impact profit margins.
2.7.2 Threat/Barriers to new entrants: Companies should evaluate the barriers that exist for new entrants, such as strong brand loyalty and required investments, to understand their competitive position.