Economic Literacy and Entrepreneurship Only Study guide for PSTS 1 1 -L Study guide 2 for PFC l O3-S Compiled by Dr EldriQ Gouws Edited and Translamd Celia Mendelsohn UNIVERSITY OF SOUTH AFRICA PRETORIA
2003 University of South Africa All rights reserved Printed and published by the University of South Africa Muckleneuk, Pretoria PST311-L/1/20042006 PFC103-S/2/20042006 97435716 3B2 PRS Style
(iii) PST311-L/1/20042006 PFC103-S/2/20042006 Contents Study unit Page INTRODUCTION (vii) Section A 1 ECONOMIC LITERACY 1 THE SOUTH AFRICAN ECONOMY 2 Learning outcomes 2 1.1 The economic reality 2 1.1.1 Defining economics 3 1.1.2 Economic literacy 4 1.1.3 Participants in the economy 4 1.1.4 The economic process 5 1.2 The South African economic system 7 1.2.1 A market-oriented mixed economic system 8 1.3 Economic growth, inflation and unemployment 10 1.3.1 Economic growth 10 1.3.2 Inflation 11 1.3.3 Unemployment and the world of work 12 1.4 The government sector 16 1.4.1 Tax 17 1.4.2 Fiscal policy and the budget 18 1.4.3 The Reconstruction and Development Programme (RDP) 18 1.4.4 The government and politics 19 1.4.5 The government and the employee 20 1.5 The monetary sector and other important financial institutions which play a role in the economy 22 1.5.1 Monetary policy 22 1.5.2 Important financial institutions/mediators 22 1.6 The foreign sector 23 1.6.1 International economic organisations 23 1.6.2 Foreign exchange and the exchange rate 24 2 THE INDIVIDUAL AND THE ECONOMY 26 Learning outcomes 26 2.1 People and the economy 26 2.2 Human needs 27 2.3 Man as consumer 29 2.3.1 The rights of the consumer 29 2.3.2 Buying and selling 29 2.3.3 The quality of goods 30 2.3.4 Production of goods and services 31 2.3.5 The consumer and the retailer 33 2.4 Productivity 36 2.4.1 The importance of productivity 37 2.4.2 Personal productivity 37 2.5 Personal financial management and planning 38 2.5.1 Money 38 2.5.2 Instruments associated with money 40 2.5.3 A budget 41 2.5.4 Savings 43
(iv) Study unit Page 2.5.5 Bank overdrafts 44 2.5.6 Credit 45 2.5.7 Investment 46 Section B 49 ENTREPRENEURSHIP 3 ENTREPRENEURSHIP 50 Learning outcomes 50 3.1 What is entrepreneurship? 50 3.2 Entrepreneurship and the economy 52 3.2.1 Reasons why entrepreneurs are important to the economy 53 3.3 Establishing a culture of entrepreneurship in South Africa 54 3.4 Promotion of entrepreneurship 54 3.4.1 The national Department of Education 54 3.4.2 Community involvement in entrepreneurship education 56 3.4.3 Entrepreneurship at school level 57 3.5 Factors which hamper the promotion of an entrepreneural culture 58 4 THE ENTREPRENEUR AS A PERSON 61 Learning outcomes 61 4.1 The characteristics of an entrepreneur 62 4.1.1 Qualities and personality 63 4.1.2 Aptitudes, abilities and skills 65 4.1.3 Interest 70 4.1.4 Attitudes and values 72 4.1.5 Conclusion 75 4.2 Self-knowledge and entrepreneurship 76 4.2.1 Johari's window and self-knowledge 77 4.3 Motivation and entrepreneurship 79 4.3.1 Intrinsic motivation 80 4.3.2 Extrinsic motivation 81 4.3.3 The connection between intrinsic and extrinsic motivation 81 4.3.4 Motivational theories 82 4.3.5 Performance motivation 83 4.3.6 Motivation in the classroom 85 4.4 Creativity and entrepreneurship 86 4.4.1 Creativity and intelligence 87 4.4.2 Identifying creativity 87 4.4.3 Factors which hamper creativity in primary schools 88 4.4.4 Stimulating creativity 89 5 STARTING A BUSINESS 92 Learning outcomes 92 5.1 Introduction 92 5.2 Step 1: Assessing your own abilities and knowledge of business 93 5.2.1 Formal and informal sector 93 5.2.2 Forms of business 95 5.3 Step 2: Consider the feasibility of your business idea 108 5.3.1 Generating business ideas 109 5.3.2 Is your business idea feasible? 110 5.3.3 Is your business idea viable? 110 5.3.4 Protecting your business idea 112 5.4 Step 3: The business plan 112 5.4.1 The cash flow plan 113 5.4.2 The cash budget 115
(v) PST311-L/1 Study unit Page 5.4.3 The human resources (personnel) plan 117 5.4.4 Additional information 117 5.5 Step 4: Starting a business 117 5.5.1 Who to turn to for help 118 5.5.2 Establishing a new business 118 5.5.3 Marketing 122 5.5.4 Personnel 125 5.5.5 Finances and record keeping 126 5.5.6 Financial statements 135 5.5.7 Conclusion 138 6 ENTREPRENEURSHIP IN THE CLASSROOM 139 Learning outcomes 139 6.1 A strategy for developing entrepreneurship 139 6.2 The teacher's role in entrepreneurship activities and their facilitation 141 6.3 Teaching methods 144 6.3.1 Story-telling technique 144 6.3.2 Games technique 145 6.3.3 Role-play technique 146 6.3.4 Mentoring programme as a technique 146 6.3.5 Brainstorming as a technique 147 6.3.6 Group work and discussion as a technique 148 6.3.7 Case study as a technique 149 6.3.8 Active participation and experience as a technique 149 6.4 Flea markets/market day 150 6.4.1 A flea market at school 150 6.4.2 The teacher's role in organising a flea market 151 6.5 A plan of action for four terms: helping learners to start real business enterprises 151 6.6 Reasons why businesses fail 157 6.6.1 Incompetent management 157 6.6.2 Lack of experience 157 6.6.3 Poor financial planning 157 6.6.4 Poor financial control 157 6.6.5 Inflexibility 157 6.6.6 Unrealistic time frames 158 6.6.7 Keeping things to themselves 158 6.6.8 Too many interruptions 158 6.6.9 Working without a plan 158 6.6.10 Not doing enough research 158 6.7 Overview of reasons for teaching entrepreneurship 159 6.8 Conclusion 159 7 ADDITIONAL INFORMATION 161 7.1 Applying for credit 161 7.1.1 Total honesty 161 7.2 Magazines and institutions involved in entrepreneurship 162 7.3 Holland's model: Personalities and career possibilities 165 7.4 Nelson's test for interest field or pattern 166 7.5 Entrepreneurial potential: Test designed by the Small Business Development Corporation 168 7.6 Johari's window 170 7.7 Characteristics of intrinsic and extrinsic motivation 172 7.7.1 Intrinsic motivation 172 7.7.2 Extrinsic motivation 172 7.8 Brain-teasers 173
(vi) Study unit Page 7.8.1 Brain-teaser 1 173 7.8.2 Brain-teaser 2 173 7.8.3 Brain-teaser 3 174 7.8.4 Brain-teaser 4 174 7.8.5 Brain-teaser 5 174 7.8.6 Brain-teaser 6 175 7.9 Who to turn to for help 175 7.10 What banks want 175 BIBLIOGRAPHY 177
Introduction Aim The aim of this course is to equip you with the knowledge, skills and attitudes you need to teach Economic Literacy and Entrepreneurship at school level, specifically in the intermediate and senior phases of the general education and training (GET) band. The value of the course cannot be overemphasised, as Grade 9 marks the end of the GET phase and constitutes an exit level. (vii) PST311-L/1 LEARNING OUTCOMES When you have completed this module you should be able to: impart knowledge of and insight into the South African economy and the role of the individual in the economy to learners prepare learners for the economic world examine possible ways of promoting entrepreneurship in the intermediate and senior phase of the GET band teach economic literacy and entrepreneurship with a positive attitude prepare learners for the world of work In this module we introduce primary school teachers to our economic reality: our daily involvement as consumers and participants in the economic world can be seen in our economic activities. We also give teachers a glimpse of the world that school leavers enter. (The first exit level is at the end of Grade 9. According to the Education Laws Amendment Act 57 of 2001, the first nine years of schooling are compulsory and free.) Then we go on to discuss the necessity of promoting a culture of entrepreneurship in South Africa. All learners require economic knowledge, skills and attitudes because they will all be required to participate in economic and consumer activities. The primary aim of this module is to teach you how to impart the required knowledge, attitudes and skills to primary school learners. Our aim is to help learners to participate in these activities in a responsible way and to develop an entrepreneurial approach to life, both while they are still at school and when they leave school. We hope that you will find this module interesting and stimulating, and that the knowledge you gain here will help you to prepare your learners for the economic world. How to use the study guide This is the only study guide for Economic Literacy and Entrepreneurship; there is no textbook. All the subject matter is contained in the study package.
The study guide is divided into two sections: Section A: Economic literacy Section B: Entrepreneurship The subject matter is divided into different study units. Every study unit covers a specific theme. Please note that it is impossible to deal comprehensively with the whole economic reality as well as entrepreneurship in one module. There are many good sources you could consult to extend your knowledge of the economic reality and entrepreneurship. Study unit 7 of the study guide is not to be studied for examination purposes. It has been included to provide you with additional information to facilitate your task in the classroom. In the rest of the module we often refer to sections in study unit 7 which provide you with additional information. A number of learning outcomes are listed at the beginning of each study unit. It is your responsibility to ensure that you comply with these requirements. Please complete the activities that appear in the text before you move on to the content that follows. The study units are divided as follows: SECTION A STUDY UNIT 1: THE SOUTH AFRICAN ECONOMY STUDY UNIT 2: THE INDIVIDUAL AND ECONOMIC REALITY SECTION B STUDY UNIT 3: ENTREPRENEURSHIP STUDY UNIT 4: THE ENTREPRENEUR AS A PERSON STUDY UNIT 5: STARTING A BUSINESS STUDY UNIT 6: ENTREPRENEURSHIP IN THE CLASSROOM STUDY UNIT 7: ADDITIONAL INFORMATION Please refer to the contents page before you study a particular theme. This will help you to understand how the section fits into the course. Look at the following symbols that are used throughout the study guide to highlight different sections: We use this symbol whenever we refer to learning outcomes. Learning out- comes are the outcomes you need to achieve during this course. (viii) This symbol means that you should think about the topic in the light of what you have already learned. We do this to place new content into context and to enable you to progress from work you know to new content and ideas, opinions and texts. You should read these boxes carefully before you begin to study any new content, since the text serves as a link between your existing knowledge and the task that follows.
(ix) PST311-L/1 This symbol indicates a written activity. You may not have to submit your written answer, but the activity will help you to understand and interpret the work. Written activities often serve as practice for the assignments that you have to submit. We use this symbol for self-assessment questions. These questions may re- quire you to think, reflect and evaluate. Our aim is to enable you to apply theoretical content in practical situations. This icon denotes references to additional information in study unit 7. We suggest that you keep a journal and record your responses. Write down the plans of action you could follow when dealing with the case studies; which ap- proach works best for a particular situation; and any information gleaned (learned) from additional reading or from your practical experience. This is not compulsory, but you will find that a journal is an asset and an invaluable source of reference when you are involved in real-life teaching. Programme for the year You will not be able to work through this course if you do not start as soon as possible. Please do not attempt to start studying days before the examination. We recommend that you work throughout the year and hand in all your assignments. Study the relevant sections carefully before you tackle the assignments. If this is your first year of studying at a distance education institution such at Unisa, you will have to adapt your approach to your studies. You will have to work through the study material at your own pace, in your own time and at a place of your choice. You need to draw up a work schedule and then stick to it. Tackle the work unit by unit. I hope that this module will help you gain more knowledge and a better under- standing of the challenging, exciting disciplines of economic literacy and entre- preneurship. I also hope that you will acquire the theoretical and practical knowledge you need in your specific situation. Dr Eldrie Gouws