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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

2-4

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

Intrinsic and extrinsic motivation

References

QUESTION 3
QUESTION 4

6-7

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 sellers
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

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 consumers duty to complain
Manufacturers and businesses that have the consumers 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.

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.

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.

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

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.

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.

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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