CHAPTER 1 INTRODUCTION TO THE BUSINESS WORLD AND BUSINESS MANAGEMENT PART 2 Gross domestic product (GDP) is the value of all goods and services produced within a country in a year. Contribution of business sectors to GDP, 2019 Source: Statistics South Africa. (2019a) © Juta & Company 2019 Business Management: An African Perspective 1e 2 Sources of employment by sector, 2019 Source: Statistics South Africa. (2019b) © Juta & Company 2019 Business Management: An African Perspective 1e 3 Contribution of business to society and the modern economy According to stats SA when measuring GDP, the output of a business does not remain constant but fluctuates on the demand sustained and prolonged GDP growth is needed to meaningfully create employment opportunities © Juta & Company 2019 Business Management: An African Perspective 1e 4 South African Gross Domestic Product (GDP) growth rates: 2014–2019 Source: Trading Economics. (2019) © Juta & Company 2019 Business Management: An African Perspective 1e 5 Consumer needs and wants • Basic human needs are both physical and physchological • “Theory of human motivation” by Abraham Maslow (1943) indicates that there are various stages of growth a human goes through • The bottom of the pyramid – foundational level (physiological needs first – food, shelter and warmth) • Once satisfied, the next tier is safety – this level influences actions and behaviours – this tier has both physical and psychological aspects against threats to physical wellbeing including natural disasters, war and physical violence. This level also fulfills financial security and the need for steady and adequate income • The third tier is the need for belonging – to feel loved and accepted by peers in a group (work peers, social groups, memberships) if not fulfilled, can result in loneliness and depression © Juta & Company 2019 Business Management: An African Perspective 1e 6 Consumer needs and wants • The fourth need is esteem needs – status or ego needs – concerned with recognition by peers, respected and feel important and need to be accepted (recognized for their contributions in the form of praise or appointed to a prestigious position and leads to internal satisfaction and self-esteem • The final need is self-actualization – fulfilling ones inherent potential – Maslow refers to this level as the desire to accomplish everything. This need is very specific to the individual as different people have different goals they wish to accomplish © Juta & Company 2019 Business Management: An African Perspective 1e 7 Consumer needs and wants • An individual will always want to satisfy more basic needs found at the bottom of Maslow’s hierarchy first before attempting to satisfy other needs. • David McClelland, 1960s ‘Three Needs Theory’ aims to explain, from a managerial and organisational point of view. • The three needs are: • the need for achievement, (challenging goals and accomplishing them by taking calculated risks and receives feedback on progress – individualistic and is self motivated through personal achievement. Employees are considered assets, thrive to solve difficult problems and achieve set objectives that are aligned with organizational goals • need for affiliation – is similar to Maslow’s need for belonging to a social group, feel liked and accepted. Individuals enjoy working in a team setting and mgrs. Should ensure they place them with like-minded co-workers. They do not seek the limelight but wish to work with others © Juta & Company 2019 Business Management: An African Perspective 1e 8 Consumer needs and wants • need for power – need to have control and influence others (different forms: issuing direct instructions or winning arguments) – these individuals want to be in charge and enjoy competition. Mgrs should take note that they are good negotiators. • The three needs can exist all at once in an individual, although to different degrees. • Mgrs can use these theories to structure work and team settings to extract the most potential out of employees. • Entrepreneurs of organisations should be able to identify needs and wants of customers in order to drive consumer spending. They need to consider customer demands, experiences, and lifestyle changes including technology) • Needs satisfaction is dependent on a limited number of resources (factors of production – natural resources, human, capital, information and entrepreneurship) © Juta & Company 2019 Business Management: An African Perspective 1e 9 The main economic systems • The traditional economic system – based on customs, beliefs of an economy – handed down from generations (family or tribe system) bartering system where goods are exchanged • While different types of economic systems exist, a county does not always fit neatly into one category. This means that a country’s economic system can have characteristics of many different economic systems • Example: South Africa is a mixed economy © Juta & Company 2019 Business Management: An African Perspective 1e 10 The main economic systems The free-market economic system (Capitalism) • Based on supply and demand • Creation of wealth for the owners of the means of production • Free competition between companies without interference from government • Pursue opportunities in the marketplace to generate maximum profit • Markets set prices based on supply and demand © Juta & Company 2019 Business Management: An African Perspective 1e 11 The main economic systems The command economy (communism) • Government determines which goods and services are offered to citizens at which price • All activities are central to government • Management of abundant natural resources is centralised by government • Advantages – owning, managing and distributing wealth to citizens • Disadvantages – government inefficiency and not paying attention to other resources © Juta & Company 2019 Business Management: An African Perspective 1e 12 The main economic systems The mixed economic system (dual economy) • Advantages – most sectors of free from government interference • Disadvantages – tendencies to increase to power and scope of influence of government in other parts of the economy in areas that government-controlled sectors that have flourished. • Heritage Foundation Assessment states that in the world have extensive economic freedom (Australia, New Zealand, USA, Canada, Great Britain and others like Algeria, Chad, Sudan, Bolivia, Venezuela, and Cuba have very low levels of economic freedom) © Juta & Company 2019 Business Management: An African Perspective 1e 13
