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Move from lesson study to exam practice in Business Studies.
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Walking past Thandi’s spaza shop in Khayelitsha, you’ll notice it’s always busy, even during load-shedding. Thandi’s secret? She stocks essentials, knows her customers, and uses a generator to keep fridges running. These are internal factors—things she controls, like stock choices, staff training, and customer service. Internal factors are decisions or resources within the business’s control. For example, Thandi chooses to open early for commuters catching minibus taxis. Many learners think only big businesses can control their success, but even small businesses like Thandi’s have power over their operations. Internal factors include management style, employee skills, and financial management. Recognising these helps us see how businesses can adapt and improve, no matter their size. For instance, if Thandi notices customers want more healthy snacks, she can change her stock. This flexibility is what gives businesses an edge in tough times.
Sipho runs a small printing shop in Polokwane. Even with great service, he loses customers during load-shedding or when paper prices rise. These are external factors—things outside his control, like economic trends, government policies, and social changes. For example, when the rand weakens, imported paper costs more. A common misconception is that businesses can control everything with hard work. In reality, external factors like new laws, competitors, or even a Springboks victory (which can boost sales of team shirts) impact success. Businesses must monitor these factors and adapt. Understanding the difference between internal and external factors is key for exam questions and real-life business decisions. For example, if a new competitor opens nearby, Sipho must find ways to stand out, even though he can’t stop the competitor from opening.
Imagine Ahmed’s internet café in Durban. He can control his opening hours and Wi-Fi quality, but not the price of electricity or sudden strikes. Controllable factors are internal, like staff motivation or marketing. Uncontrollable factors are external, such as inflation or new competitors. Sometimes, learners confuse these—thinking, for example, that a business can control the price of petrol. In NSC Paper 1, you might be asked to classify factors as controllable or uncontrollable. Remember: if the business can change it directly, it’s controllable. If not, it’s uncontrollable. This distinction helps you analyse case studies and justify business decisions. For instance, if Ahmed wants to attract more customers, he can improve his service (controllable), but he cannot stop a city-wide internet outage (uncontrollable).
Step 1: Read the scenario. Sipho’s printing shop in Polokwane faces rising paper costs and staff absenteeism. Step 2: Identify the factors. Rising paper costs (external), staff absenteeism (internal). Step 3: Classify each factor. Paper costs are set by suppliers and global markets—external, uncontrollable. Staff absenteeism is within Sipho’s control—internal, controllable through better management and staff policies. Step 4: State the final answer. Rising paper costs = external/uncontrollable; staff absenteeism = internal/controllable. Sanity check: If Sipho can change it himself, it’s internal. If not, it’s external. This method helps avoid common classification errors in exam questions.
Step 1: Read the scenario. Thandi’s shop stays open during load-shedding using a generator. She stocks items her customers need most. Step 2: Identify internal and external factors. Generator (internal), load-shedding (external), customer needs (internal—she researches them). Step 3: Explain how each factor affects success. The generator helps her serve customers despite load-shedding (adapting to an external factor with an internal solution). Stocking the right items meets demand, boosting sales and customer loyalty. Step 4: State the final answer. Thandi’s success comes from managing internal factors to overcome external challenges, showing how businesses can thrive by being proactive. Sanity check: She can’t stop load-shedding, but she can plan for it and keep her business running smoothly.
Question: Ahmed’s internet café in Durban faces slow internet speeds and rising rent. Which factors are internal and which are external? Let’s think: Can Ahmed control internet speed? Only partly—he can choose a provider, but network issues are external. Rising rent is set by the landlord—external. Internal factors could include how Ahmed trains staff or maintains computers. Worked response: Slow internet (partly external), rising rent (external), staff training (internal). Now you try: If Ahmed decides to offer loyalty cards to attract customers, is this internal or external? Answer: Internal—Ahmed controls his marketing strategies and can implement loyalty cards as a way to boost business.
Question: During school holidays, Lerato’s tuckshop in Mthatha sees fewer customers. She considers offering delivery to nearby homes. Is this an internal or external response? Let’s think: The drop in customers is due to an external factor (school holidays). Offering delivery is an internal strategy—something Lerato can control to adapt to the situation. Worked response: The challenge is external; the solution is internal. By offering delivery, Lerato is using an internal response to counteract an external challenge. Now you try: If the local municipality bans street vending, is this internal or external for Lerato? Answer: External—she cannot control municipal regulations, so this is an external factor affecting her business.
1. List two internal factors that can affect a business in Soweto, such as staff training and stock management. 2. Name two external factors that might impact a minibus taxi business in Durban, for example, fuel price increases or new government transport laws. 3. Define ‘controllable factor’ in your own words and give a business example.
1. Classify each as internal or external: staff training, exchange rate, customer service, new competitor. Write your answers in a table. 2. Explain how load-shedding can be both a challenge and an opportunity for a business, using a real South African example. 3. Give one example of how a business can adapt to an external factor, such as changing suppliers or adjusting prices.
1. Analyse a scenario: A bakery in Polokwane faces rising flour prices and high staff turnover. Recommend two actions the owner could take, justifying your choices with reference to internal and external factors. 2. Compare the impact of internal vs. external factors on a business’s long-term success. Use examples from South Africa. 3. Predict how a sudden change in government policy (e.g., minimum wage increase) might affect a small business, and suggest a possible response the owner could implement.
Answer: Staff motivation
Staff motivation is controlled by the business, unlike load-shedding, inflation, or government policy, which are external.
Answer: External and uncontrollable
Petrol prices are set by global oil markets and government taxes, not by individual businesses. Businesses have no control over these changes, so they must adapt rather than try to control the price directly. Many learners confuse external events with things a business can influence, but petrol price is a classic uncontrollable external factor.
Answer: Changing suppliers due to price increases
Switching suppliers is a response to external price changes; the other options are internal improvements.
Answer: It is determined by global markets
Exchange rates are influenced by international trade, investment flows, and global economic conditions. No single business or even government can directly set the exchange rate. This is why businesses must monitor exchange rates and plan accordingly, rather than trying to control them.
Answer: Staff absenteeism
Lerato believes her uncle’s tuckshop in Mthatha would succeed if he just worked harder. But even with long hours, sales drop during school holidays when learners aren’t around. This shows that external factors—like school schedules or local events—can affect business performance, regardless of effort. Many learners think effort alone guarantees success. In reality, businesses must plan for both internal improvements and external challenges. In exams, don’t just say ‘work harder’—analyse the real factors at play. This approach earns higher marks in NSC Paper 2, especially in longer questions. For example, if a business faces a sudden ban on street vending, no amount of hard work will overcome the legal barrier. Instead, the business must adapt its strategy to survive.
Staff absenteeism is managed internally by the business through policies, management, and workplace culture. The other options are all outside the business's direct control, making them external. Learners often confuse absenteeism with external issues, but it is something a manager can address.
Answer: (a) External, (b) Internal
Load-shedding is an external factor because it is caused by Eskom and national infrastructure, not the business itself. Customer complaints are internal because the business can address them directly through service improvements or staff training. This distinction is important for analysing business scenarios.
Answer: R50 per hour
Divide R500 by 10 hours to get R50 per hour. This shows the cost of her internal solution.
Answer: To adapt quickly to changes and stay competitive.
Businesses operate in a changing environment. By reviewing both internal and external factors, they can spot risks and opportunities early, adjust strategies, and avoid being caught off guard by new laws, economic shifts, or internal issues. This proactive approach is rewarded in exam answers.
Answer: The owner ignores customer feedback
Ignoring customer feedback is a management decision and an internal factor. The other scenarios are all external events. In exams, always check if the business could have acted differently—if yes, it's likely an internal factor.
Answer: Better product quality
Improved staff training is an internal factor that usually leads to better products. The other options are unrelated external factors. This question tests your ability to link internal actions to business outcomes.
Answer: Improve customer service
Improving service is a positive internal response to external competition; ignoring or reducing quality will likely lose customers.