Essay writing tips
Essay format
The following writing tips will guide you through the essay writing process
Plan your essay before you start
Understand the question and what is expected of you
Understand the question, break it down
Read the requirements, highlight, underline keywords, pay attention to directive
words
Write down in your own words what you think the assignment is asking you to do
What do you already know about the subject matter?
Brainstorm – mind maps, lists, rough outline
What do you want to say?
Essay structure
Writing: Your essay must be structured and have a good flow.
Introduce your topic – outline the purpose of your essay
Body paragraphs
Each paragraph in the body should focus on a single idea
Use transitional words and sentences
Support arguments with relevant examples
Avoid using bullet points or listing information.
Include diagrams where applicable and label and explain them thoroughly.
If provided with a quote, refer to the quote and investigate it in your essay.
Avoid going off-topic or including irrelevant information
Conclusion to summarise the main points of the essay
Essay writing improves with practice.
General paragraph structure
Topic sentence
Supporting sentences
Provide evidence to support your topic sentence.
Focus on key differences or contrasting points.
Use specific details and examples.
Concluding sentence
Introduce your main point or argument.
Summarise your main points and their significance.
Transitional Sentence
Connect your previous points to the next ones.
Use transition words like "however," "conversely," or "furthermore."
Marking criteria
Includes introduction and conclusion
Focus on the topic
Structure of the essay
Content is relevant to the topic
Language and editing
Support arguments with evidence or examples
Writing should be legible!
Test 1 2019 (20 marks: 18 minutes)
Essay 2
Corporate governance refers to the rules, processes and laws by which companies are
operated, controlled and regulated. An issue that has to be managed in this regard is known
as the Agency issue which arises from the separation of owners (shareholders) and
management in a typical corporate organisational structure. Furthermore, to better
understand the role that shareholders play in shaping a firm’s corporate governance, we
need to distinguish between individual and institutional investors.
Required:
Discuss the Agency issue with specific reference to the following:
The underlying problem,
The resultant types of costs (including examples),
Possible solutions to the problem (provide three),
The difference between Individual Investors and Institutional Investors, and how each
can inform corporate governance policy and the Agency issue.
Essay Outline
Introduction
Provide a roadmap for the essay, outlining the key areas that will be discussed.
Body paragraphs
Main point 1 : Agency issue
Begin with a detailed explanation of the Agency issue.
Discuss how the separation of ownership and management can lead to conflicts of
interest.
Address the challenges that arise when managers prioritize personal interests over
shareholders.
Main point 2: Costs
Discuss the various costs associated with the Agency issue.
Differences between direct and indirect costs.
Provide examples of agency costs.
Essay outline
Main point 3: Solutions
Present three solutions to mitigate the Agency issue.
Discuss the potential effectiveness of each solution.
Examples could include improved monitoring mechanisms, aligning incentives, and
Increasing focus on corporate governance.
Main point 4: Investors
Define and differentiate between individual and institutional investors.
Explain how the differing perspectives of individual and institutional investors can
influence corporate governance. Explain how institutional investors, with their
significant ownership stakes, can influence corporate strategy and management
decisions.
Essay Outline
Conclusion
Summarize the key points discussed in the essay.
Concludes by stressing the importance of addressing the Agency
issue to strengthen corporate governance, enhance shareholder
value, and ensure long-term business success.
Example
Introduction
Corporate governance shapes how companies operate and adhere to
regulations. The Agency issue, arising from the separation of
management and ownership, is an important challenge. This essay will
discuss the source of the agency problem and its resulting costs with
examples, and propose three potential solutions to this problem.
Moreover, the essay will examine the roles of individual and institutional
investors, and how these investors inform corporate governance and the
Agency issue.
Example
Main point 1
The Agency issue, is an important concern in corporate governance, and
arises from the separation of ownership and management within a typical
organisational structure. (TOPIC SENTENCE)
Shareholders and management have an agency relationship. In an agency
relationship the managers act as agents for the shareholders but may put
their own interests first. (SUPPORTING SENTENCE 1)
A conflict of interest arises from the fact that managers may make
decisions that are not in line with the goal of shareholders’ wealth
maximisation. (SUPPORTING SENTENCE 2)
Managers may be incentivized to engage in actions that maximize their
own benefits at the expense of shareholder value. This could include
excessive risk-taking, manipulating financial statements, or pursuing
personal ventures using company resources. (SUPPORTING SENTENCE 3)
Example
Understanding these conflicts is crucial in addressing the challenges
posed when managers prioritize personal interests over the well-being
of shareholders. (CONCLUDING SENTENCE)
Having established the Agency Problem as a key concern, the next
step is to examine its costs and explore potential solutions for
mitigating its impact on corporate governance. (TRANSITIONAL
SENTENCE)
Example
Conclusion of essay
In conclusion, the Agency issue, arising from the separation of ownership and
management, presents a significant challenge to effective corporate
governance. Understanding the underlying problem of conflicting interests,
the potential costs like reduced shareholder value, and the differing roles of
individual and institutional investors is crucial for devising solutions.
Implementing measures such as incentive plans, promoting transparency and
accountability (list other solutions) can mitigate the Agency issue's impact on
shareholder value. Furthermore, distinguishing the roles of individual and
institutional investors highlights their unique contributions to corporate
governance. Addressing the Agency issue enables companies to strengthen
their governance structures, promoting long-term success and creating value
for shareholders.
Test 1 2017 (30 marks: 27 minutes)
In working as a financial planner, you are aware that it is important to be
aware of potential negatives to all financial decisions. Clients of yours
are looking at various forms of business ownership in South Africa,
however, your clients do not seem to have a good understanding of the
downsides of the various forms, which is worrying you. Further, they
insist that the best choice for them would be a Close Corporation.
Prepare a document to send them which:
Discusses the weaknesses associated with each business form, as well as
highlighting the weakness you feel is the most significant (and why you
feel that way).
Explains why their choice of a Close Corporate form may be problematic;
and what their other choices may be.
Explains how the goal of their business may be influenced by the form
that is chosen.
Essay Outline
Introduction – Outline the forms of business ownership available (2-4
sentences)
Body
Discuss the weaknesses associated with each business form in full
sentences (each form of ownership should take a paragraph).
Ensure to highlight the most significant weakness.
When discussing Close Corporations – highlight why this is no
longer an option of ownership and suggest alternative options.
Discuss the type of business each form of ownership is suited for
Conclusion
Introduction
There are four different legal forms of business organization- sole
proprietorship, partnership, close corporation & company (public or
private). Each of the forms have distinct weaknesses in terms of the
life of the business, its ability to raise capital and how it is taxed. As a
firm grows, the weight of these weaknesses grow prompting a change
in the form of business ownership. This document will discuss the
disadvantages of each form, highlight the most critical issue, and
examine why a Close Corporation may not be the best choice. Finally,
it will explain how business structure impacts long-term goals and
success.
Example: Body (One paragraph per form of ownership)
Define a sole proprietorship (1) & partnership (2): (1) A business owned by a single
individual. (2) A business formed by two or more individuals or entities
Discuss weaknesses:
-Unlimited liability
-Limited access to capital and financial resources
-Lifespan of the business is limited
Discuss the most significant weakness:
Personal liability can be a considerable risk, as your personal assets are at stake in the event
of business debts or legal issues.
***The primary weakness of sole proprietorships and partnerships are (1) unlimited liability for
business debts on the part of the owners, (2) limited life of the business, and (3) difficulty of
transferring ownership. These 3 points add up to a central point: the ability of such businesses
to grow can be seriously limited by an inability to raise capital for new investments.
Discuss the type of business each form of ownership is suited for:
Suitable for small businesses/family businesses
Body (One paragraph per form of ownership)
Define Close Corporations: A legal form of corporate personality designed for small
businesses.
Discuss weaknesses:
-Corporations are expensive to form and operate.
-Limited capital compared to larger corporations.
-Limited transferability of ownership.
-Difficulty in raising funds.
Explains why their choice of a Close Corporate form may be problematic:
One of the effects of the new Companies Act 71 of 2008, was the phasing out of Close
Corporations. Under the Act, private companies are designed to take the place of Close
Corporations.
Body (One paragraph per form of ownership)
Define a Company: A separate legal entity from the owners and governed by the
Companies Act.
Distinguish between a private and public company: A public company being listed on a
formal exchange while a private company is not.
Weaknesses of a private company:
-Limited access to capital
-Transfer of ownership is limited
Significant weakness:
The lack of marketability of shares makes the transfer of ownership difficult.
Discuss the type of business each form of ownership is suited for:
Private companies are suitable for businesses in the expansion phase (either on a regional
or national level) looking to enjoy limited liability and tax benefits.
Body (One paragraph per form of ownership)
Weaknesses of a public company:
-
High formation, regulation and operation costs
-
High disclosure requirements
-
Audit fees incurred due to audit requirements
-
Information is made public and is accessible by competitors
Significant weakness:
Public companies are required to disclose extensive financial information regularly, including
quarterly and annual reports. The level of detail and frequency of reporting can be timeconsuming and resource-intensive for the company. Meeting regulatory requirements involves
additional costs, including legal and accounting fees. The company must allocate resources to
comply with various rules and regulations, impacting its overall cost structure.
Discuss the type of business each form of ownership is suited for:
Public companies are suitable for conglomerates looking for access to large amounts of
capital.
Conclusion
This essay discussed the four forms of business ownership and highlighted
the weaknesses of each and noted the type of business each form of
ownership is suited for. While each structure has its drawbacks, unlimited
liability in sole proprietorships and partnerships poses the most significant
risk, as personal assets are at stake. Additionally, the Close Corporation
(CC), which clients initially preferred, is no longer a viable option for new
businesses due to legal restrictions. A Private Company (Pty) Ltd may be
better suited if you aim for long-term growth, diversification, and
attracting external investments. The structure chosen should align with
your vision, risk tolerance, and strategic objectives.
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