Business Studies - Term 3 - Week 2

Imagine you’re at a spaza shop in Khayelitsha and notice that the price of bread suddenly doubles overnight, even though there’s no shortage. Or you see an advert on a minibus taxi promising 'unbeatable' cellphone deals, but when you arrive, the real price is much higher. These are examples of unethical business practices—actions by companies that are dishonest or unfair. In South Africa, common types include price fixing (when businesses agree to keep prices high), false advertising, and selling expired goods. Many learners think only big companies can act unethically, but even small businesses can mislead customers. Understanding these practices helps you spot them in daily life and prepares you for exam questions that ask you to identify or explain unethical behaviour.

When a business in Polokwane sells expired food to save money, it risks customers’ health and trust. If a taxi company in Durban lies about safety standards, commuters may be put in danger. Unethical actions don’t just affect one person—they can damage whole communities. For example, if several petrol stations in Mthatha secretly agree to raise prices, everyone in town pays more. This can lead to public protests or even legal action. Many learners believe unethical behaviour only hurts customers, but it can also destroy a business’s reputation and lead to fines or closure. Ethical businesses, on the other hand, build loyal customers and support local development.

Picture Sipho, who runs a tuckshop at his school. He’s tempted to sell expired cooldrinks to make extra money. Ethical decision-making means choosing actions that are honest, fair, and legal—even when it’s tough. Unethical decisions often seem easier or more profitable in the short term, but they have long-term costs. A common misconception is that 'everyone does it, so it’s okay.' In reality, ethical choices set you apart and protect you from trouble. To distinguish between ethical and unethical actions, ask: Is this honest? Is it fair to customers? Would I be proud if my family knew? These questions help you analyse scenarios in exams and in life.

Lerato manages a small salon in Soweto. She discovers one of her employees is overcharging customers. Instead of ignoring it, Lerato sets clear rules, trains her staff on honesty, and puts up a price list. Strategies like these—creating codes of conduct, offering ethics training, and encouraging whistleblowing—help businesses stay on track. Some learners think only managers are responsible for ethics, but every employee plays a role. In South Africa, companies like Woolworths and Pick n Pay have public codes of ethics to guide staff. By learning these strategies, you’ll be able to recommend solutions in exam questions and real workplaces.

Sipho sees a billboard in Durban advertising a new sneaker for R300, but when he visits the store, the price is R500. Step 1: Identify the practice. The store advertised a lower price than the real one—this is false advertising. Step 2: Explain why it’s unethical. Customers are misled and may waste time or money. Step 3: State the impact. The store could lose trust and face fines from the Competition Commission. Step 4: Suggest a better approach. The store should ensure all advertising matches the real price to avoid misleading customers. Final answer: This is an example of unethical false advertising. Sanity check: If the advert and the store price matched, there would be no problem and customers would not feel cheated.

A supermarket in Polokwane is caught selling expired milk. Step 1: Identify the unethical practice. Selling expired goods is dishonest and unsafe. Step 2: Suggest a solution. The manager should remove expired products, train staff to check dates, and display expiry dates clearly. Step 3: Explain the benefit. Customers stay safe, and the store’s reputation improves. Step 4: Consider long-term impact. If the store consistently follows these steps, it will build community trust and avoid legal trouble. Final answer: The supermarket should implement strict stock checks and staff training to prevent future issues. Sanity check: If customers trust the store, they’ll keep coming back and recommend it to others.

Question: Ahmed runs a cellphone shop in Mthatha. He considers selling fake chargers at a low price. Is this ethical? Let’s think: Are fake chargers safe? No, they can damage phones or cause fires. Is it honest? No, customers think they’re buying real products. Worked response: Selling fake chargers is unethical because it’s dishonest and puts customers at risk. Now you try: Thandi owns a bakery in Soweto and thinks about using expired flour to save money. Is this ethical? Answer: No, it’s unsafe and dishonest.

Question: A taxi company in Durban lies about having seatbelts in all vehicles. What is the impact of this unethical behaviour? Let’s analyse: Who is affected? Passengers may be unsafe. What could happen? The company could face fines or lose customers. Worked response: The impact is that passengers are put at risk, and the company’s reputation suffers. Now you try: A clothing store in Polokwane claims all items are 'Made in SA' but imports half its stock. What is the impact? Answer: Customers are misled, and the store could lose trust and face penalties.

1. List two examples of unethical business practices you have seen or heard about in your community. 2. Define 'false advertising' in your own words. 3. Name one impact of unethical behaviour on a business. 4. Give one reason why honesty is important in business. 5. Identify one way a business can lose customers through unethical behaviour.

1. Explain why price fixing is harmful to consumers in South Africa. 2. Distinguish between ethical and unethical behaviour using a real or imagined example from your area. 3. Suggest one way a small business can promote ethical behaviour among staff. 4. Describe how a business could recover its reputation after being caught acting unethically.

1. Analyse a scenario where a business in your area is accused of selling expired goods. What steps should the manager take to fix the problem? 2. Justify why it is important for businesses to have a code of ethics, using a South African example. 3. Predict what could happen if unethical behaviour continues unchecked in a local industry. 4. Recommend a strategy for a business to rebuild trust after a major ethical scandal. 5. Evaluate the long-term effects of repeated unethical practices on a business’s survival.

• A shop advertises a product at R200 but sells it for R400.
• A store gives a discount to pensioners.
• A business pays its staff late.
• A company recycles its packaging.

Answer: A shop advertises a product at R200 but sells it for R400.

False advertising involves misleading customers about price or product. The other options are not examples of false advertising.

• Lower prices for everyone
• Increased competition
• Higher prices for consumers
• More product variety

Answer: Higher prices for consumers

Price fixing keeps prices artificially high, which harms consumers. Many think it leads to lower prices, but the opposite is true.

• Ignoring staff complaints
• Having a clear code of conduct
• Cutting corners to save money
• Keeping rules secret

Answer: Having a clear code of conduct

A code of conduct sets clear expectations for ethical behaviour. Ignoring issues or hiding rules does not promote ethics.

• It increases profits
• It is unsafe for customers
• It makes products cheaper
• It saves storage space

Answer: It is unsafe for customers

Selling expired goods can harm customers’ health. Profit or storage reasons do not justify unsafe practices.

• Price fixing
• False advertising
• Honest product labelling
• Selling fake goods

Answer: Honest product labelling

Honest product labelling means the business is being truthful about what it sells. This builds trust and is an example of ethical behaviour. The other options—price fixing, false advertising, and selling fake goods—are all forms of unethical business practices that harm customers and the business’s reputation.