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2.4 Advise businesses on the differences between own and borrowed capital. IUESTION 3 1 Elaborate the meaning of the market-environment (8) [20 2 Read the scenario below and answer the questions that follow. KHUTSO CIVILIANS ORGANIZATION (KCO) Khutso Civilians is a community based organisation that deals with a variety of sociOo-economic issues. KCO offers counselling services for people who are infected and affected by HIVIAids in the community. They also work together with the Community Police Forums in reducing high crime create in their area. 3.2.1 Qoute TWO ways in which KCO addresses socio-economic issues in the community from the scenario above. 3.2.2 Name any FOUR other socio-economic issues that KCO can deal with. Explain the relationship between the three business sectors. 18

Ask by Thornton Campbell. in South Africa
Mar 12,2025

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**2.4 Differences Between Own and Borrowed Capital** - **Own Capital**: - Funds from business owners or internal earnings. - No interest or repayment required. - Less financial risk but may limit control if external equity is used. - **Borrowed Capital**: - Funds from external lenders like banks or bonds. - Involves interest payments and fixed repayment schedules. - Increases financial risk and may limit operational flexibility. **IUESTION 3** 1. **Market Environment**: - External factors influencing business operations, including economic, political, sociocultural, technological, and competitive aspects. 2. **KCO's Socio-Economic Initiatives**: - **Counselling Services** for HIV/AIDS affected individuals. - **Community Policing** to reduce crime rates. 3. **Additional Socio-Economic Issues KCO Can Address**: - Unemployment through job training. - Poverty alleviation programs. - Substance abuse rehabilitation. - Support for domestic violence victims. **Business Sectors Relationship**: - **Primary Sector** extracts raw materials. - **Secondary Sector** manufactures goods using these materials. - **Tertiary Sector** provides services to support both sectors. - Each sector depends on the others, creating an interconnected economy.

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Businesses often walk a fine line between using their own capital and borrowing funds. Own capital refers to the money that’s generated from within the business, whether it’s initial investments from owners or profits reinvested into growth. Borrowed capital, on the other hand, involves funds sourced from outside the business, such as loans or credit lines, which must be repaid with interest. While using own capital avoids debt and interest, borrowed capital can accelerate growth and expansion if used wisely. One common mistake is underestimating the cost of borrowed capital. It’s crucial for businesses to evaluate the total financial implications, including interest rates and repayment schedules, before taking on debt. In contrast, businesses may overly rely on their own funds, limiting their potential for growth. Balancing both types of capital effectively can maximize opportunities and maintain financial health, ensuring that businesses can thrive without falling into traps inherent in either strategy.

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