Business Studies - Term 4 - Week 9

Walking through Khayelitsha, you’ll see some spaza shops bustling while others have closed their doors. What makes the difference? Let’s look at two shops: Thandi’s Tuckshop and Sipho’s Snacks. Thandi’s shop is always stocked, has friendly staff, and uses WhatsApp to take orders. Sipho’s, on the other hand, often runs out of bread and doesn’t accept card payments. The difference comes down to internal factors—things inside the business, like management, stock control, and staff skills. Internal factors are under the owner’s control. Many learners mistakenly think things like load-shedding are internal, but those are external. Remember: if the owner can change it directly, it’s internal. Strong internal factors help businesses survive even tough times. For example, Thandi can decide to train her staff or change suppliers, but she cannot control the price of electricity. This distinction is crucial for business analysis and for answering exam questions correctly.

Imagine Ahmed runs a printing shop in Polokwane. One week, load-shedding hits during exam season, and a taxi strike keeps staff from coming in. These are external factors—things outside Ahmed’s control. External factors include economic conditions (like inflation), social trends (like more people using e-wallets), technological changes (like new payment apps), and physical events (like floods or power cuts). Ahmed can plan for these, but he can’t stop them. A common misconception is that good planning can prevent all external problems. In reality, businesses must adapt to external factors, not control them. For example, Ahmed buys a generator and offers delivery to cope. Recognising external factors helps businesses prepare and stay competitive. If Ahmed only focused on what he could control and ignored external threats, his business might fail when unexpected events occur. Successful businesses always monitor both internal and external environments.

When Banyana Banyana won the Women’s Africa Cup of Nations, sponsors rushed in. Why? Internal factors like the team’s hard work and management attracted sponsors. But external factors—like public support and media coverage—influenced sponsor decisions too. In business, internal factors include leadership, resources, and company culture. External factors include market trends, legal changes, and competitor actions. It’s crucial to distinguish them: internal factors can be improved from within, while external factors require adaptation. Many learners mix these up in exams, losing marks. Always ask: can the business owner change this directly? If yes, it’s internal. If not, it’s external. For example, a bakery can change its recipes (internal) but cannot stop a new competitor from opening nearby (external). Understanding this difference helps businesses focus their efforts where they have the most control and adapt to what they cannot change.

Sipho owns a spaza shop in Soweto. His business is doing well. Let’s analyse why using the steps below: Step 1: List internal factors. Reason: Identify what Sipho controls. Examples: Stock management, staff training, pricing strategy. Step 2: List external factors. Reason: Identify what affects Sipho from outside. Examples: Load-shedding, crime rates, supplier prices. Step 3: Evaluate impact. Reason: Decide which factors help or hinder success. Sipho’s good stock management (internal) keeps customers happy. Load-shedding (external) is a challenge, but he uses a solar lamp. Final answer: Sipho’s success is mainly due to strong internal factors, but he adapts well to external challenges. Sanity check: Did we separate internal and external? Yes.

Lerato’s laundry in Durban is losing customers. Let’s analyse the reasons: Step 1: Identify internal weaknesses. Reason: See what Lerato can fix. Example: Machines often break down, staff are untrained. Step 2: Identify external threats. Reason: Spot outside problems. Example: Water restrictions, new competitors nearby. Step 3: Suggest solutions. Reason: Apply analysis to improve business. Lerato can train staff (internal) and offer eco-friendly services to attract customers despite water restrictions (external). Final answer: Lerato’s main issues are internal, but external factors make them worse. Sanity check: Did we match solutions to the right factor? Yes.

Question: Why is Ahmed’s taxi business in Mthatha losing profit? Let’s think: What can Ahmed control? What can’t he? We start by listing internal factors, like the condition of his vehicles and how he schedules his drivers. If his taxis are old and break down often, that’s an internal issue. Next, we look at external factors, such as fuel price increases and stricter traffic laws, which Ahmed cannot control but must respond to. Ahmed can upgrade vehicles (internal) but must adapt to fuel prices (external). Now you try: What is one internal and one external factor affecting a hair salon in Soweto? Answer: Internal—staff skills; External—load-shedding. Remember, always separate what the owner can change from what they cannot.

Question: Compare why Thandi’s bakery is growing while Sipho’s bakery is closing in Polokwane. Model thinking: Look for differences in what they control and what they can’t. Thandi invests in staff training (internal) and uses social media to attract customers, which she can control. Sipho ignores customer feedback (internal) and struggles with rising flour prices (external), which he cannot control. Thandi adapts to external changes by promoting specials online, while Sipho does not. Now you try: What could Sipho do to improve his internal factors? Answer: Train staff, improve customer service, manage stock better. Think about how these actions are within the owner’s power and can make a real difference.

1. List two internal factors that affect a business in South Africa, such as staff skills and inventory management. 2. Name one external factor that could impact a minibus taxi business, like fuel price hikes or road construction. 3. Define ‘internal factor’ in your own words, explaining why it is something the business owner can control or change directly.

1. Explain how a business owner in Durban could respond to load-shedding, giving at least two possible strategies. 2. Give two examples of how internal factors can be improved in a spaza shop, such as better stock control or staff training. 3. Compare internal and external factors using a real business example from your community, showing how each affects the business differently.

1. Analyse the impact of both internal and external factors on a business of your choice in your community. Write at least four sentences. 2. Justify which factor (internal or external) is more important for long-term business success, using evidence from a real or hypothetical business. 3. Solve an exam-style question: ‘Discuss how a bakery in Soweto can adapt to rising electricity prices and increased competition.’ Give at least two strategies for each challenge.

• Load-shedding
• Staff motivation
• Interest rates
• Competitor actions

Answer: Staff motivation

Staff motivation is controlled by the business owner, unlike load-shedding or competitor actions. Many confuse motivation with external morale.

• Pricing strategy
• Store layout
• Supplier price increases
• Staff uniforms

Answer: Supplier price increases

Supplier prices are outside the store’s control. Learners often confuse supplier choice (internal) with supplier pricing (external).

• Internal factor
• External factor
• Financial resource
• Staff issue

Answer: External factor

Water shortages come from outside the business. Some may think it’s internal if the bakery uses too much water, but the shortage itself is external.

• Buying a generator for load-shedding
• Negotiating lower rent
• Training staff in customer service
• Responding to new competitors

Answer: Training staff in customer service

Staff training is internal. Buying a generator is a response to an external issue, not an improvement of an internal factor.

• Technological change
• Company culture
• Economic inflation
• Legal regulations

Answer: Company culture

Company culture is set by the business. Many learners wrongly think it’s external because it’s influenced by society.

Answer: Electricity prices are set by external suppliers and government, not by the shop owner.