PST311L Assignment 2

NAME : EKTHA NANKOOMAR MODULE CODE: PST 311 L

STUDENT NUMBER : 48325961 ASSIGNMENT 2

TABLE OF CONTENTS Page No.

QUESTION 1

The rights of the consumer Buying and selling The quality of goods Production of goods and services The consumer and the retailer

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QUESTION 2

Factors influencing profit  Kind of business  The element of risk  Competence of the entrepreneur  Turnover and market price  New production techniques  Business cycles Cash flow plan Cash budget Human resources

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Intrinsic and extrinsic motivation

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References

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QUESTION 3 QUESTION 4

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NAME : EKTHA NANKOOMAR MODULE CODE: PST 311 L

STUDENT NUMBER : 48325961 ASSIGNMENT 2

QUESTION 1 1.1 The rights of the consumer  The right to correct information-all consumers must be protected against dishonest and misleading information  The right to safety-consumers have the right to buy safe products  The right to free choice-consumers should be able to choose between a variety of products  The right to obtain products or services at realistic prices  The right to make their needs known-consumers should be able to voice their needs as to the kinds of products they want and the quality they expect 1.2 Buying and selling  Every time that goods are bought or sold, the buyer and the seller have to reach an agreement which is known as a sales agreement or sales contract  Before a sales agreement is binding on the seller and the buyer, they have to agree on the following: The article which is bought The price to be paid  If goods are bought to be transported and a freight rate is charged, the buyer and seller should agree if the freight rate should be included in the price. Following quotations of prices in sales contracts: Local price. This price does not include transport costs. The buyer has to pay the transport costs. Free on rail (F O R). The seller pays the transport costs to the seller’s station. Rail charges paid. The price includes the rail charges, which the seller pays 1.3 The quality of goods Sellers can indicate the quality of their goods as follows:  A description. The seller describes the quality of the article.  A sample. The seller sends an ex ample or a small part of the goods to the buyer, for ex ample soap, material, toothpaste, wood or wool. This part or sample has the same quality as the goods that will be bought.  A trademark: special mark or sign on the product. This mark must be registered and may not be used by other sellers. The use of the trademark allows the seller to show that all his products are of the same standard.  Consumers have the right to demand high quality products

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NAME : EKTHA NANKOOMAR MODULE CODE: PST 311 L

STUDENT NUMBER : 48325961 ASSIGNMENT 2

 By refusing to purchase inferior quality and that waste resources, thousands of other consumers benefit  Products and services provided need to match the value of the community and if it does not, it is the consumer’s duty to complain  Manufacturers and businesses that have the consumer’s needs at heart will be keen to know if consumers are dissatisfied.  Consumers must have their facts correct when they do complain.  They can complain to management, or in the case of a service, they may complain to the respective council, e.g. HPCSA 1.4 The production of goods and services In order to provide for our needs, goods have to be produced. These days we all do only those tasks that we have been trained for. We are paid in money for doing these tasks and we use the money that we earn to buy goods to satisfy our needs and wants. Certain production factors are needed in order to produce goods/services. Production factors are combined to produce completed articles which can be bought by people to supply their needs. The four production factors needed to produce goods/services are as follows : Natural resources or raw materials Work or labor Money or capital Entrepreneurship

1.5 The consumer and the retailer Retailers fulfill a very important function in satisfying human needs because they handle the collecting, storage and distribution of the articles that consumers need. Listed below are examples of some of the important services rendered to consumers.    

Retailers bring the goods within easy reach of the consumers They sell goods according to the quantity required by consumers. Shopkeepers grand credit to clients until they receive their salaries or wages. Shopkeepers learn to advise consumers on the goods they choose by assessing their clients tastes and needs. This allows consumers to personally attend to their clients.  Retails provide daily needs to clients which include things such as making fresh bread, milk, fruit and vegetables available to them.

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NAME : EKTHA NANKOOMAR MODULE CODE: PST 311 L

STUDENT NUMBER : 48325961 ASSIGNMENT 2

 Through advertising shopkeepers notify consumers of various things which include price changes and new products. In doing this, retailers are able to retain the interest of their clients in goods and well known trademarks.  Retailers also deliver goods with well-known trade marks to the homes of clients. Retailers do not render their services free of charge. Consumers have to pay for their services because retailers have a right to make a profit as a reward for their services rendered.

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NAME : EKTHA NANKOOMAR MODULE CODE: PST 311 L

STUDENT NUMBER : 48325961 ASSIGNMENT 2

QUESTION 2 2.1 Kind of business It is known that some entrepreneurs are satisfied with less profit than others. This is linked closely with the kind of business they have. For example, for grocery store or fashion shop, and to whether the goods are in a constant demand. The demand for groceries in this case will be greater than the demand a fashion items. 2.2 The element of risk Due to the uncertainty of economic life there can be no question of general rate of profit. In well established industries that are subject to lower fluctuations, uncertainty in small and pure profits are inclined to be low. The greater the uncertainty, the greater the expectations of profit but also the expectations of loss. The element of risk is always high when new products are launched, but expectations of high profits often move people to invest capital in those production areas. 2.3 The competence of the entrepreneur The profits of similar businesses which produce under similar conditions, do not normally differ much from each other. If differences between similar businesses occur, it would be due to competent and efficient running of individual businesses, which includes good organisation, optimising the use of manpower and materials, keeping unit costs down, etc. 2.4 Turnover and market size The total profit is determined by turnover. If the market is large, a lower profit can be made on each unit which will increase the turnover and lead to larger total profit. A high turner usually leads to a lowering of unit costs. 2.5 New production techniques Strong competition and striving towards maximum profits encourage entrepreneurs to develop and apply new production techniques and apply new production to improve the efficiency of their business, which leads to higher profits while businesses who use old methods and equipment are left with lower profits. A profitable business is one that uses the best combination of methods. 2.6 Business cycles Some of the most important factors which influence profits. During prosperity profits are usually high and during depressions are the order of the day. One of the reasons for this is because prices usually rise and drop faster than costs.

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NAME : EKTHA NANKOOMAR MODULE CODE: PST 311 L

STUDENT NUMBER : 48325961 ASSIGNMENT 2

QUESTION 3 3.1 Cash flow plan A cash flow plan shows you how much cash you can expect to come into your business and how much cash you expect to go out your business. Step 1: Cash at the beginning of the month This is the money that you have in your petty cash (cash box) and the amount of cash you have in your bank account at the beginning of the month Step 2: Cash in from sales This is the amount you forecast for cash sales. Through a sales and cost plan you can figure out the sales, costs, and profit your business will be likely to have during the next month or year. Step 3: Any other cash in This is the amount of cash your business will get during the month from other sources. Such as from the bank or sponsors. Step 4: Total cash in This the total from cash at the beginning of the month, cash in from sales, and any other cash in during the month. Step 5: Cash out for costs This is the amount your business will pay during the month for goods/materials, wages, electricity, transport etc. Step 6: Cash out for planned investment Equipment that might be bought during the month. Step 7: Any other cash out Money that the business will pay during the month, such as a loan payment. Step 8: Total cash out This is the cash out for costs, cash out for planned investment and any other cash out during the month. Step 9: Cash at the end of the month Subtract the total cash out from the total cash in to get the amount left in your cash box (petty cash) and bank account at the end of the month. Cash at the end of the month is the cash at the beginning of the next month. 3.2 Cash budget The cash budget is an essential instrument in the hands of the management of a business, enabling them to ensure that funds are available to meet the obligations of the business. If the business has insufficient funds to meet these obligations then there could be serious implications for the business. A cash budget indicates the financial implications of the

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NAME : EKTHA NANKOOMAR MODULE CODE: PST 311 L

STUDENT NUMBER : 48325961 ASSIGNMENT 2

planned activities for the budgeting period and therefore serves as a good indication of whether to cash available will be too little or too much. The budgeting period is normally one year, divided into periods of one month each. The following information is needed to compile a cash budget: A balance sheet The bank balance at the beginning of the budget period Expected cash and credit sales Payments from debtors Credit conditions for debtors Expected cash and credit purchases of trading stock Payments to creditors Credit conditions for creditors and credit purchases Other specified payments and receipts. Information contained in the cash budget : Estimated cash to be received from debtors for cash sales and collections for credit sales during the month Estimated cash to be paid for cash purchases and the payment of credit purchases to creditors for a particular month. The bank balance at the beginning of the month The estimated bank balance of the end of the month (this closing balance is the new opening balance for the following month).

3.3 Human resource The human resources plan is a description of how many staff you intend employing, and where, why and how you intend recruiting them. Human resource planning serves as a link between human resource management and the overall strategic plan of an organization. The aim of human resource is to maximize employee performance in service of the employers strategic objectives. Human resources focuses on the management of people within organizations, focusing on policies and systems.

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NAME : EKTHA NANKOOMAR MODULE CODE: PST 311 L

STUDENT NUMBER : 48325961 ASSIGNMENT 2

QUESTION 4 An intrinsically motivated person feels the need to perform because he/she finds the task at hand interesting and informative and because it leads to self-actualization. A person who interested in a particular task will also be motivated to undertake the task and carry it out without any encouragement and coercive pressure from outside. An intrinsically motivated person therefore derives more satisfaction from success at studying than from the idea of merely achieving something, like passing matric. People who are extrinsically motivated act because something or someone other than themselves has prompted them, or will reward them, or even because they want to merely impress or satisfy someone other than themselves. In this case, the individual is compelled to act. The individual shows no enthusiasm and has to be admonished continually to perform a task. An extrinsically motivated person exhibits no initiative or creativity.

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NAME : EKTHA NANKOOMAR MODULE CODE: PST 311 L

STUDENT NUMBER : 48325961 ASSIGNMENT 2

REFERENCES  PST311L Study Guide for Economic Literacy and Entrepreneurship  http://en.wikipedia.org/wiki/Strategic_human_resource_planning  http://en.wikipedia.org/wiki/Human_resource_management

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