Business Studies - Term 3 - Week 10

Imagine Thandi runs a spaza shop in Khayelitsha. Some months, she earns enough to buy new stock and pay her staff. Other months, profits drop, and she struggles to cover rent. What changed? Sometimes, it's load-shedding that spoils her cold drinks. Other times, a new competitor opens nearby. These are real factors affecting profitability—the money left after all expenses. Profitability depends on both what Thandi can control (like her prices and staff training) and what she can't (like electricity supply or new competitors). Many learners think only big events, like strikes, affect profits, but even small changes—like a supplier increasing bread prices—can make a big difference. Understanding these factors helps you analyse any business, from a Soweto minibus taxi owner to a Durban tech start-up.

Sipho owns a small printing business in Polokwane. He chooses which machines to buy, how to train his staff, and what prices to charge. These are internal factors—things inside the business that management can control. Examples include the quality of products, staff skills, marketing strategies, and financial management. If Sipho invests in better printers, he can offer faster service and attract more customers, boosting profits. A common misconception is that internal factors are always easy to fix. In reality, improving staff skills or buying new equipment takes time and money. But, unlike external factors, the business has direct influence over these. For your exams, remember: internal factors = controllable by the business.

Now, think about Ahmed, who runs a minibus taxi in Mthatha. When petrol prices rise or new taxi regulations are introduced, his costs go up. He can't control these changes—they are external factors. These include the economy (like inflation or recession), government policies, competitors, social trends, and natural events (like floods or load-shedding). For example, during a Springboks victory parade, more people might use taxis, boosting profits. But during a fuel shortage, profits can drop sharply. Learners often mix up internal and external factors. Remember: external factors happen outside the business and are usually uncontrollable. Businesses must adapt to survive.

Lerato manages a fast-food outlet in Durban. When load-shedding hits, her fridges stop working (external factor). But she can buy a generator (internal decision) to keep operations running. The interaction between internal and external factors is key. Sometimes, strong internal management can reduce the impact of external problems. For example, good financial planning helps a business survive during tough economic times. In exams, you might be asked to analyse how a business responds to external challenges using its internal strengths. Always link your answer to a real example—like a business using social media marketing to attract customers during a quiet season.

Step 1: Read the scenario: Thandi’s spaza shop in Khayelitsha saw profits fall by R2 000 last month. Step 2: Identify possible internal factors. Did she change her prices, reduce staff, or stop advertising? Step 3: Identify possible external factors. Was there load-shedding, a new competitor, or a supplier price increase? Step 4: Analyse which factor had the biggest impact. If load-shedding caused her fridge to break, leading to spoiled stock, this is an external factor. Step 5: Suggest a solution. Thandi could invest in a backup generator (internal action) to reduce future losses. Final answer: The main cause was an external factor (load-shedding), but Thandi can use internal strategies to manage the risk. Sanity check: The answer clearly separates internal and external factors and suggests a practical solution.

Step 1: Scenario: Ahmed’s minibus taxi business in Mthatha faces rising fuel costs and new competition. Step 2: List internal factors: Ahmed’s vehicle maintenance, driver training, pricing strategies. Step 3: List external factors: Fuel price increases, new taxi regulations, more competitors. Step 4: Distinguish between them. Fuel prices and regulations are external; vehicle maintenance is internal. Step 5: Explain impact. Rising fuel costs (external) increase expenses, but good vehicle maintenance (internal) can reduce breakdowns and repair costs. Final answer: Ahmed faces both internal and external factors. He can control some (maintenance), but not others (fuel prices). Sanity check: The answer matches the scenario and clearly separates the two types of factors.

Question: Lerato’s Durban fast-food outlet lost R5 000 in sales last week due to load-shedding. What are the internal and external factors, and what can she do? Let’s think: Load-shedding is external—she can’t control Eskom. But she can decide to buy a generator (internal). Worked response: The external factor is load-shedding. The internal factor is her decision to invest in backup power. She should consider buying a generator to reduce future losses. Your turn: A hair salon in Soweto loses customers during taxi strikes. What is the external factor? Answer: The external factor is the taxi strike, which affects customer access.

Question: A tech start-up in Polokwane struggles because of slow internet and poor marketing. Which factors are internal, and which are external? Let’s think: Slow internet is external (outside their control). Poor marketing is internal (they can change it). Worked response: The external factor is slow internet. The internal factor is poor marketing. The business should improve its marketing strategy to attract more clients. Your turn: A Durban bakery faces rising flour prices and outdated ovens. Which is internal? Answer: Outdated ovens are internal; rising flour prices are external.

1. List three internal factors that can affect a business’s profitability, such as staff skills, product quality, or financial management. 2. Name two external factors that might impact a minibus taxi business in Soweto, for example, fuel price increases or taxi strikes. 3. Define 'profitability' in your own words, focusing on the money left after all expenses are paid.

1. Explain how staff training can improve a business’s profits by increasing efficiency and customer satisfaction. 2. Describe how load-shedding could impact a Durban fast-food outlet, considering spoiled food and lost sales. 3. Identify whether each of the following is internal or external: a) Supplier price increase, b) Poor customer service, c) New competitor. Give reasons for your choices.

1. Analyse how a Soweto spaza shop could respond to increased competition using internal strategies like improving customer service or offering promotions. 2. Compare the impact of rising fuel prices on a taxi business versus a retail store, considering their different cost structures. 3. Solve: A bakery’s profits dropped by R3 000 after flour prices rose. Suggest two internal actions to recover profitability, such as adjusting product prices or reducing wastage.

• Load-shedding
• Staff training
• Inflation rate
• New government regulations

Answer: Staff training

Staff training is controlled by the business. The other options are external and outside direct control.

• Internal factor
• External factor
• Marketing strategy
• Financial management

Answer: External factor

Petrol prices are set outside the business, making this an external factor. Many confuse it with financial management, but that is internal.

• Change government policy
• Improve staff skills
• Set national interest rates
• Control competitor actions

Answer: Improve staff skills

Businesses can only control internal actions, like staff skills. They cannot set policy or control competitors.

• A bakery raises bread prices after flour costs rise
• A business ignores customer complaints
• A shop repaints its walls
• A company hires more staff during a busy season

Answer: A bakery raises bread prices after flour costs rise

External (flour cost) leads to an internal response (raising prices). The other options are only internal.

• Competitor opening nearby
• Load-shedding
• Staff absenteeism
• Inflation

Answer: Staff absenteeism

Staff absenteeism is an internal factor because it is influenced by the business’s management and workplace environment. Many learners mistakenly classify it as external because it feels outside their personal control, but it is within the business’s power to address through better HR policies or incentives. The other options are all external factors that originate outside the business.