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Move from lesson study to exam practice in Business Studies.
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Imagine Sipho runs a spaza shop in Khayelitsha. He faces daily decisions: should he sell expired cold drinks to make extra profit, or throw them away and lose money? Many South African businesses, big and small, face similar choices. Ethical business practices mean doing what is right, fair, and honest, even when no one is watching. For example, a taxi association in Durban might be tempted to agree with competitors to raise fares during load-shedding. This is called price fixing and is both unethical and illegal. The rule: ethical businesses put people before profit and follow the law. Many learners think ethics only matter for big companies, but even a single person’s choice can affect a whole community. Every decision, from a tuckshop in Mthatha to a national supermarket, shapes trust and reputation.
Thandi buys a cellphone advertised as 'brand new' from a shop in Polokwane, but it turns out to be second-hand. This is false advertising, a common unethical practice. Other examples include bribery (paying for favours), tax evasion (not paying required taxes), and discrimination (unfair treatment based on race, gender, or disability). In South Africa, the Competition Commission investigates price fixing and collusion, especially when companies work together to cheat customers. The Consumer Protection Act protects buyers from unfair business practices. A common misconception is that 'everyone does it, so it’s okay.' In reality, these actions can lead to fines, jail time, and loss of business licences. Ethical businesses avoid shortcuts and build long-term trust.
When Ahmed’s family in Soweto buys bread at a higher price because bakeries have secretly agreed to raise prices, everyone suffers. Unethical practices hurt customers through higher prices, poor quality, or unsafe products. Employees may lose jobs if a business is fined or shut down. Communities lose trust, and the economy suffers. For example, if a minibus taxi owner pays bribes to avoid safety checks, passengers’ lives are at risk. Ethical lapses can destroy reputations overnight—think of companies exposed for selling expired food. The lesson: unethical behaviour may bring short-term gain, but the long-term costs are severe for everyone involved.
Lerato is offered a bribe to ignore a safety problem at her uncle’s Durban construction company. She feels pressured, but remembers a simple test: Would I be proud to tell my family or see this on the news? Ethical decision-making means asking: Is it legal? Is it fair to all? Would I want this done to me? In South Africa, businesses use codes of conduct and ethics training to guide staff. The King IV Report gives companies a framework for good governance. Remember, ethical choices are not always easy, but they build stronger businesses and communities. If unsure, ask for advice or report concerns to authorities.
Step 1: Read the scenario. Example: A supermarket in Mthatha advertises 'fresh chicken' but sells meat past its expiry date. Step 2: Identify the unethical practice. Reason: Selling expired food is unsafe and dishonest. Step 3: Name the law or principle broken. Reason: This violates the Consumer Protection Act, which requires honest advertising and safe products. Step 4: State the impact. Reason: Customers could get sick, and the store could be fined or closed. Final answer: The supermarket’s action is unethical and illegal. Sanity check: Would you want your family to eat expired food? No—so it’s clearly wrong.
Step 1: Read the scenario. Example: A taxi association in Polokwane agrees with competitors to raise fares during a taxi strike. Step 2: Identify the unethical practice. Reason: This is price fixing—companies colluding to set prices. Step 3: Analyse the impact on stakeholders. Reason: Commuters pay more, and trust in the taxi industry drops. Step 4: Link to law. Reason: The Competition Act forbids price fixing. Step 5: Suggest an ethical alternative. Reason: Compete fairly and let market forces decide prices. Final answer: Price fixing is unethical, illegal, and harms the community. Sanity check: If you were a commuter, would you feel cheated? Yes—so the practice is wrong.
Question: A clothing store in Durban claims to donate 10% of profits to charity, but never actually does. Is this ethical? Let’s think: What is the store promising? Are they keeping their promise? No. This is false advertising and dishonest. Model answer: The store’s action is unethical because it misleads customers and breaks trust. Now you try: A minibus taxi owner tells passengers his vehicle is regularly serviced, but skips maintenance to save money. Is this ethical? Answer: No, it is unethical because it endangers passengers and is dishonest.
Question: A big retailer in Soweto pays suppliers late to keep cash longer. Who is affected? Let’s think: Suppliers rely on timely payments. If they don’t get paid, they may struggle to pay workers or buy stock. Model answer: Late payments are unethical because they harm suppliers and can damage business relationships. Now you try: A sports shop in Polokwane sells fake Banyana Banyana jerseys as originals. Who is affected? Answer: Customers are cheated, and the real team loses out on support.
1. List two examples of unethical business practices common in South Africa, such as price fixing or false advertising. 2. Name one law that protects consumers from unethical behaviour, and briefly state what it covers. 3. Define 'price fixing' in your own words and give a local example. Make sure your answers are clear and use South African contexts where possible.
1. Explain why selling expired food is both unethical and illegal, using a real-life example from a South African shop. 2. Identify the stakeholders affected when a company evades tax, including employees, government, and the wider community. 3. Describe how false advertising can damage a business’s reputation and affect customer trust, using a South African scenario.
1. Analyse a scenario where a business discriminates against job applicants based on gender. What are the ethical and legal consequences, and how could this affect the business in the long term? 2. Justify whether it is ever acceptable for a business to pay bribes to speed up government paperwork, considering both short-term and long-term effects. 3. Predict the long-term effects on a community if local businesses regularly engage in unethical practices, such as loss of trust, reduced investment, and increased unemployment.
Answer: Taxi owners secretly agreeing to raise fares
Price fixing involves competitors agreeing on prices, not competing. Many think discounts are price fixing, but they are legal.
Answer: Consumer Protection Act
The Consumer Protection Act deals with fair marketing and product safety. The others focus on employment and competition.
Answer: Fines or loss of licence
Bribery is illegal and leads to penalties, not benefits. Some think it helps business, but the risks are high.
Answer: Following the law and treating all stakeholders fairly
Ethical business behaviour is about more than just making money. It means acting fairly, respecting laws, and considering the impact of decisions on customers, employees, and the community. Many learners wrongly believe that as long as a business is profitable, it is acting ethically, but profit without fairness can harm reputation and lead to legal trouble.
Answer: False advertising
Misleading customers about product origin is false advertising. Some confuse it with tax evasion, but that's about taxes.
Answer: It endangers customers’ health and breaks trust, violating both ethical standards and the law.
Selling expired food risks illness and is dishonest. Many forget the legal side, but both ethics and law are involved.
Answer: Customers pay R2 more per loaf, reducing affordability and possibly buying less bread.
Price fixing leads to higher costs for everyone. Some think only profits change, but customers are directly affected.
Answer: Bribery damages trust, leads to negative publicity, and can cause customers and partners to avoid the business.
Bribery often becomes public, harming reputation. Some think it stays hidden, but news spreads quickly.
Answer: Ethical practices improve morale; unethical ones lower it
Ethical practices create a positive workplace where employees feel valued, respected, and safe. This leads to higher motivation and loyalty. In contrast, unethical practices make employees feel insecure, stressed, and distrustful, which can increase staff turnover and damage productivity. Some learners think employees don't care about ethics, but workplace culture strongly affects morale.
Answer: Reporting a colleague who steals from the company
Ethical leadership means setting a good example and protecting the integrity of the business. Reporting theft shows honesty and responsibility, which encourages others to act ethically. Ignoring problems or lying may seem easier, but it damages trust and can lead to bigger issues. Some learners think loyalty to colleagues is more important, but loyalty to ethics and the law comes first.
Answer: Unethical and illegal
Paying below minimum wage breaks the law and is unfair. Some think it's just unethical, but it's also illegal.
Answer: It supports public services and avoids legal trouble
Paying taxes is a legal and ethical responsibility that funds schools, hospitals, and infrastructure. Avoiding tax may seem profitable, but it is illegal and can result in heavy fines, jail time, and loss of reputation. Some learners think tax evasion is harmless if not caught, but it harms society and puts the business at risk.