MAN201: Topics: Venture selection, good business ideas Establishment and ownership of a business Wee

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MAN201TopicsVenture selection, good business
ideasEstablishment and ownership of a
businessWeek 9 2007

• Dr DJ Visser
• Professor of Management

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Learning outcomes

• Factors determining capacity for survival of new
  enterprise
• Necessity for market strategy
• Influence of competitors
• Identify resource needs
• Size of business as a factor of influence
• Geographical factors of location
• Factors affecting choice of ownership
• Legal forms of ownership

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New industries launched by entrepreneurs

• Cellular phone services
• CD-ROM
• Internet publishing shopping
• Desktop computing
• Virtual imaging
• Convenience food
• Digital media entertainment

• Personal computers
• Biotechnology
• Wireless cable TV
• PC software
• Desktop information
• Wireless communications
• Healthy living products
• Voice mail

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Small firm innovations major new industries

• Airplane
• Biosynthetic insulin
• Heat sensor
• Polaroid camera
• Quick frozen foods
• Aerosol can
• Artificial skin
• Helicopter
• Prefabricated housing

• Soft contact lens
• Air conditioning
• Assembly line
• Bakelite
• Safety razor
• Sonar fishing monitoring
• Cellophane
• Heart valve

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Factors that determine survival of an enterprise

• The entrepreneur characteristics, traits,
  abilities
• The resource requirements of the venture
• Presence of competitors
• Size of the proposed enterprise
• Location of the enterprise
• What legal business form the enterprise will be

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Characteristics, traits, abilities

• Characteristics
• Nurturing qualities
• Desire to achieve
• Willingness to accept responsibility
• Orientation towards reward and excellence
• Optimism
• Ability to organise
• Other abilities traits
• Educational level
• Intellectual capabilities
• Ethical moral standards
• Family and personal preferences
• Consider all these before starting an enterprise

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Market marketing strategy

• Mistake of starting without testing the market
• Do proper market research
• Factors to consider
• New existing product/service?
• What is the demand?
• If new, create demand from scatch?
• Characteristics of the clients?
• Size of market, potential of clients?
• Patterns of growth?
• Nature and extent of competition

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Presence of competitors

• Do they offer the same product/service?
• Possibility of substitute products?
• Market share of competitors
• Their pricing policy?
• What effect will your business have?

Resource needs

• Physical
• Human
• Financial
• Informational

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Size of the new enterprise

• Usually start small, when desirable, expand
• Factors influencing the size of the enterprise
• Raw material availability, labour, equipment,
  capital, managerial skills
• Current size of the market
• Optimum level of production
• Minimum volume required

Geographic location

• For details on site selection, see notes pp. 55-58

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Forms of ownership

• In essence, there 4 forms of ownership of
  enterprise in a South African context
• Sole Proprietorship
• Partnership
• Incorporation
• Close Corporation
• Company
• Private company
• Public company
• Co-operative
• Each legal form has its advantages and
  disadvantages

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Factors affecting choice of legal form

• Dependence/independence of the enterprise
• Liability of the owner
• Control by the owner
• Ability to acquire capital
• Possibilities of change in ownership
• Legalities of establishing, managing and
  dissolving the enterprise
• Types, advantages, disadvantages
• Self-study pp. 59-66

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Tutorial, Wednesday 28 February 2007

• Forms groups of 5 students per group
• Read the short case study of Jeffreys golden
  opportunity
• Discuss the question in your group
• Write a 2-page report by the end of the lecture
• Submit the names and student numbers of the
  participants on the tutorial before you submit
• Mark you document very clearly as
• Tutorial Week 9
• Date February 28 2007