Entrepreneurship Assignment_final

MANCOSA

Entrepreneurship

Assignment

Marvin Horkins

10/4/2010

EntrepreneurshipOctober 4, 2010

ContentsQuestion 1: Strategic Entrepreneurship..............................................................................3

a) Wal-Mart.........................................................................................................................5

b) Kauai Health Foods & Juice Company.........................................................................13

Question 2: Kauai Franchise Business Plan.....................................................................29

1. Executive Summary.........................................................................................................31

2. Mission............................................................................................................................ 33

3. Products.......................................................................................................................... 34

4. Market Survey................................................................................................................. 36

5. Strategy and Implementation Summary..........................................................................38

6. Main Competitors............................................................................................................39

7. Marketing Strategy..........................................................................................................39

8. Sales Strategy.................................................................................................................40

9. Sales Forecast..............................................................................................................41

10. Personnel Plan.............................................................................................................42

11. Financial Plan..................................................................................................................43

12. Important Assumptions...............................................................................................44

13. Other Current Assets..................................................................................................45

14. Projected Cash Flow...................................................................................................45

15. Exit Strategy and Risk................................................................................................47

16. Appendices..................................................................................................................... 48

Question 3: South African Policy Framework...................................................................56

a) Support for women-owned enterprises............................................................................58

b) Broad-based black economic empowerment strategy.....................................................59

Bibliography.........................................................................................................................61

Page 2Marvin Horkins Student Nr: 109730


Question 1: Strategic Entrepreneurship

Strategic thinking is usually associated with the competitiveness of the organisation, while

entrepreneurial thinking is associated with innovation and creativity to capture opportunities.

Strategic thinking is usually isolated as the “thinking” part of the strategic planning process.

This wrongly implies the removal of the behavioural or “action” component of strategy

thinking from the construct. Strategic thinking, just like the entrepreneurial thinking, is a

mindset that encapsulates thinking, state of mind and way of behaviour.

The concept of strategic entrepreneurship has widely been written about primarily as a

relationship between strategic management and corporate entrepreneurship.

Growth-oriented strategic thinking is essential in the globalised world and is one of the most

important factors in the development of entrepreneurial ventures. Strategy can be defined as

the direction an organization intends to take in the future mindful of its context, resources,

purpose and objectives (Lunch 1997 cited in Venter, Urban and Rwigema 2008:405).

All of the components of this definition are the elements that need to be considered when

developing and embarking on a strategic process:

Context

Resources

Purpose

Objectives



Before analyzing this for the two caselets, let us examine each of these elements in a bit

more detail:

Context

Context refers to the external environment within which an entrepreneurial venture operates.

Every organization operates in a context; there is a constant interaction between the

organization and the elements that impact on the business. Sometimes the best way to gain

insight into complex issues is through the use of a model or a tool. Tools that can be used

include the PESTLIED Model and a SWOT analysis.

SWOT Analysis

As part of a business development process, many organisations use a SWOT analysis to

understand the factors that are affecting their buisness, and therefore allow them to

understand the strategies and tactics they should employ to ensure business success.

As a guide to using SWOT :

Internal Factors

Strengths:

When creating objectives and strategies, you should build on strengths

Weaknesses:

When creating objectives and strategies, you should resolve weaknesses

External Factors

Opportunities:

When creating objectives and strategies, you should exploit opportunities

Threats:

When creating objectives and strategies, you should avoid threats.

These tools and factors cover the Context component.

Let us take a look at both Wal-Mart & Kauai’s contextual elements (PESTLIED & SWOT):



a) Wal-Mart

COMPANY PROFILE

Wal-Mart is the world's number 1 retailer, with more than 4,800 stores, including 1,475

discount stores, 1,750 combination discount and grocery stores (Wal-Mart Supercenters in

the US and ASDA in the UK) and 540 warehouse stores (SAM's Club).

Nearly 75% of its stores are in the US, but Wal-Mart is expanding internationally. Wal-Mart is

the number 1 retail in Canada and Mexico. The company also owns nearly 38% of Japanese

supermarket chain SEIYU.

Below is Wal-Mart’s SWOT Analysis

Strengths

Possible Strengths ResponseIs it a

strength?

Tangible Strengths

Consider your assets including plant and equipment

Assets are really only shop fittings and stock with

two computers and software.No

Do you have long-term rental contracts for your business

locations?

Annual lease in major shopping centers, location within the shop is at the will of the center, poor

sales will result in a shift to a low foot traffic location

No, same as competition

Are your products unique or market leading?

No, stock is the same as our competitors. We can pick and choose what styles to stock.

No

Have you got sufficient financial resources to fund any

changes you would like to make?

Yes. No

Do you have any cost advantages over your

No, rents are all pretty standard, one can save on No



Strengths


strength?

competitors? rent but loose the foot traffic, so it is all relative.

Do you use superior technology in your business?

No No

Is your business high volume?Yes. Their product is high quality, low margin and

high volume in comparisonYes

Can your scale up your volume if you need to?

Yes. This is in line with agreements with suppliers Yes

Intangible Strengths

Do you have or stock strong recognisable brands

Yes, though the brand space is becoming cluttered with more and more recognizable

brands. Depleting the value of any one brand.Yes

Your reputation - are you considered a market leader? or

an expert in your filed?

Yes Yes

Do you have good relationship with your customers?

(Goodwill)

Yes, there is a good connection with its customers, their email list grows and many customers advise

they were referred to us by their friends/family.

They get a lot of repeat customers.

Yes

Do you have strong relationships with your

suppliers

Yes. They are able to differentiate from their competitors. We have long term agreements in

place with some suppliers to be their sole representative in this region.

Yes

Do you have a positive relationship with your

employees

Yes

No, their competitors also

have good employee relations

Do you have any unique alliances with other

businesses?

Yes, this is made possible with other suppliers/partners

yes

Do you own any patents or No No



Strengths


strength?

proprietary technology?

Do you have a proven advertising process that works

well?

Email news letter with specials and new stock, seems to work for retaining customers.

Most new customers were attracted to the shopping complex as well as the online options.

Yes

Do you have more experience in your field?

Yes Yes

Are you managers highly experienced?

Yes Yes

Do you have superior industry knowledge?

Yes, and they do have a good set of sales skills, particularly up selling and forming relationships.

People feel good coming by and seeing us.Yes

Are you involved with industry associations?

No No

Is your business Innovative? Yes No

Summary of StrengthsWorld's number 1 retailer

Customer service.

Supercenters offer one stop shopping.

Satisfaction guaranteed program promoting customer goodwill.

Company culture and employee motivation.

High bargaining power over supplier.

Sophisticated distribution systems.

Superior information system.

Low price every day.

Geographic presence

Solid financial standing.



Strengths


strength?

Stock ownership and share-profit with employees.

Sells a large variety of brand name products.

Strong community involvement

Weaknesses

Possible Weaknesses ResponseIs it a

Weakness?

Tangible Weaknesses

Is your plant and equipment old or outdated?

N/A N/A

Is your product line too narrow?

Maybe, we only sell a few of brands of men clothing, we could stock more accessories, but we don’t want to confuse the customer about what line of business we

are in.

Maybe

Have you got insufficient financial resources to fund any changes

you would like to make?

Yes, we often think about opening a bigger store, but the rent would be an issue if we did not get immediate

salesYes

Do you have a high overall unit cost relative to your competitors?

No No

Do you use inferior technology in your business?

No No

Do you have low volume and are restricted in your ability to scale

up?

Yes, it may take a few weeks to replenish stock, less early in the season. But late in the season our

suppliers are often out of stock of the quick moving products

No, all retailers are in the same

situation

Intangible Weaknesses

Do you have a weak or unrecognisable brand?

Yes, maybe our shop name is not a public recognizable brand but our stock is. Some of our

Yes



competitors are franchise and everyone knows them

Do you have a weak or unrecognisable image?

No, our shop frontage tends to draw people in No

Do you have a poor or impersonal relationship with your customers?

No, we have great relationships with our customers No

Do you have a poor relationship with your suppliers?

No No

Do you have a poor relationship with your employees?

No No

Is your marketing failing to meet objectives?

No No

Are your managers inexperienced?

Yes, I have less than 2 years in Retail Yes

Do you have low R&D? n/a N/A

Do you lack industry knowledge? No Yes

Do you lack innovative skills? No No

Other WeaknessesFew women and minorities in top management

Pending litigation

Puts smaller retailers out of business.

"Cheap" image

Keep poor performance employee on hand.

Employee and customers theft.

Old fashion store policies.

The congestion of the large stores might deter customers from wanting to go to shop at Wal-Mart

Opportunities



Possible Opportunities

Response Is it an Opportunity?

Industry Opportunities

Can you expand your product range?

Yes, there are no contractual restrictions to us adding products to the store, store size is an issue

Yes

Can you diversify your business interests?

Maybe, if we had the funds No

Can you expand into your customer's field?

No, the customer is the consumer No

Can you expand into your supplier's field?

Yes, I don’t have the skills to establish an import business

Yes

Can you expand your customer base? (Geographically or through

new products)

Maybe, through internet sales and mail order, maybe open another location

Yes

Do you have placid competitors? Yes, there is not a lot of competitive advertising in our niche, and price is not so much of an issue to

our customersYes

Do you have any export opportunities?

No, we import No

Will the total market for your products grow?

Yes, but not significantly No

Macro Opportunities

Are there any favourable changes to legislation pending

No No

Will there be any changes to any import/export constraints that will be favourable for your business?

No, almost all clothing is imported there is little domestic production and a lack of ability for

domestic producers to scale up. Any changes will impact all retail outlets equally.

No

Is the economic outlook favourable?

No, however this may play favorably to our business as our target market might postpone

larger expenses as a result a greater share of purse may be allocated to clothing – this is yet to be

proven.

No

Are there any favourable cultural shifts that will benefit you?

Due to increases in housing prices our target customer has opted to postpone taking on longer

Yes



term debit. Instead to remain in the “nest” for longer. This trend increases their customer life for

our products.

Are there any changes in the use of technology that your business can utilise such as Ecommerce

or Internet sales?

Use of internet to increase marketing and online sales.

Yes

Other OpportunitiesConsumers want ease of shopping.

Expanding e-commerce.

Expanding into emerging markets

Expanding into urban marketplaces.

Offering new products.

Environment conscious consumers

Threats

Possible Threats Response Is it a threat?

Industry Threats

Will low cost imports impact your business?

No, our shop appeals to the middle income bracket who are not interested in low cost alternatives.

Though high quality low cost imports will increase our margin.

No

Do consumers have a choice to use a substitute product?

Yes, many other products in the category No

Are substitute product sales increasing?

No more than ours, the market share is reasonably consistent

No

Is your market in slow growth or in decline?

No, our market is relatively stable, maybe slight growth

No

Is the power of your customers or No, maybe one supplier is trying to increase prices No



suppliers growing, can they dictate price?

above CPI, but we can stop selling their stock and shift to another supplier of a similar quality product

Are the needs of your buyers changing?

Yes, every season fashion changes, however the need for medium quality products remains unchanged.

Yes

Macro Threats

Will foreign exchange rate changes affect your imports or

exports?

Yes, declining dollar will impact us, and all others in our industry, may also reduce sales if we pass price

on to customerYes

Are there any changes in demographics that will impact

your business

Maybe an increase in awareness about the behavior of governments of low cost producing nations may

eventually impact our supply chain.No

Is regulation in your industry increasing?

No No

Other ThreatsIndustry maturity.

Labor unions.

Growing criticism against Wal-Mart.

Expense of internalization.

Variety of competition nationally, regionally or locally.

Regulation of Wal-Mart pharmacies.

Substitute products more easily because of intense competition

b) Kauai Health Foods & Juice Company



Company Profile:

Kauai was born in Cape Town, South Africa in 1996 as the brainchild of three friends who

had previously lived on the Hawaiian Garden Isle of Kauai.

Kauai In Motion has been exclusively developed to offer Virgin Active members health on the

go!

The founders’ approach to the task was straightforward: to prepare food they themselves loved to eat

but couldn’t readily find anywhere in South Africa. One of their first creations was the now infamous

Kauai smoothie – it is widely credited with starting the smoothie craze in our country!

Smoothies were complemented with a range of great tasting freshly made food, with the

ingredients always left as close to nature as possible. The range now includes sandwiches,

salads, wraps and snacks.

There are currently 41 Full Concept stores nationwide directly employs over 700 people,

along with 44 Kauai In Motion outlets and two Kauai Schools and we're continuously

growing.

Below is Kauai’s SWOT analysis:



Strengths


strength?

Tangible Strengths

Consider your assets including plant and equipment

Furniture & EquipmentNo, same as competition

Do you have long-term rental contracts for your business locations?

Yes, lease contract as per venue (Mall/Virgin Active)

No

Are your products unique or market leading? Yes yes

Have you got sufficient financial resources to fund any changes you would like to make?

Yes, financial assistance available from both Kauai HQ & IDC to allow for

expansion to a larger footprint store.Yes

Do you have any cost advantages over your competitors?

No no

Do you use superior technology in your business?

No no

Is your business high volume?No; business volume low relative to

others in FMCGno

Can your scale up your volume if you need to? Yes yes

Intangible Strengths

Do you have or stock strong recognisable brands

Yes, strong brand; especially amongst higher income earners

concerned with healthyes

Your reputation - are you considered a market leader? or an expert in your filed?

Yes yes

Do you have good relationship with your customers? (Goodwill)

Yes, also have initiatives with Schools

Yes

Do you have strong relationships with your suppliers

Yes yes

Do you have a positive relationship with your employees

Yes, have employee assistance programmes

Yes

Do you have any unique alliances with other businesses?

Yes, joint venture with Virgin Active yes



Strengths


strength?

Do you own any patents or proprietary technology?

Yes, patented menu yes

Do you have a proven advertising process that works well?

yes, use of Schools advertising, sponsorships, Joint Ventures, email

ad, ad’s per mall locationyes

Do you have more experience in your field? yes yes

Are you managers highly experienced? yes no

Do you have superior industry knowledge? yes no

Are you involved with industry associations? Yes, department of education yes

Is your business Innovative? Yes yes

Weaknesses

Possible Weaknesses Response Is it a Weakness?

Tangible Weaknesses

Is your plant and equipment old or outdated? No no

Is your product line too narrow? No, busy expanding no

Have you got insufficient financial resources to fund any changes you would like to make?

Yes no

Do you have a high overall unit cost relative to your competitors?

No yes

Do you use inferior technology in your business?

n/a n/a

Do you have low volume and are restricted in your ability to scale up?

Yes yes



Intangible Weaknesses

Do you have a weak or unrecognisable brand?

No no

Do you have a weak or unrecognisable image?

No no

Do you have a poor or impersonal relationship with your customers?

No no

Do you have a poor relationship with your suppliers?

No no

Do you have a poor relationship with your employees?

No no

Is your marketing failing to meet objectives? No no

Are your managers inexperienced? No no

Do you have low R&D? Yes yes

Do you lack industry knowledge? A little. yes

Do you lack innovative skills? No no

Opportunities

Possible Opportunities ResponseIs it an

Opportunity?

Industry Opportunities

Can you expand your product range? Yes yes

Can you diversify your business interests? Yes yes

Can you expand into your customer's field? Yes yes

Can you expand into your supplier's field? Yes yes

Can you expand your customer base? (Geographically or through new products)

Yes yes

Do you have placid competitors? No yes

Do you have any export opportunities? Yes yes

Will the total market for your products grow? Yes yes

Macro Opportunities



Are there any favourable changes to legislation pending

No no

Will there be any changes to any import/export constraints that will be

favourable for your business?No no

Is the economic outlook favourable? Yes, business is picking up yes

Are there any favourable cultural shifts that will benefit you?

No no

Are there any changes in the use of technology that your business can utilise such as Ecommerce or Internet sales?

No yes

Threats

Possible Threats ResponseIs it a

threat?

Industry Threats

Will low cost imports impact your business? Yes yes

Do consumers have a choice to use a substitute product?

Yes yes

Are substitute product sales increasing? Yes yes

Is your market in slow growth or in decline? Slow growth yes

Is the power of your customers or suppliers growing, can they dictate price?

Yes yes

Are the needs of your buyers changing? No yes

Macro Threats

Will foreign exchange rate changes affect your imports or exports?

n/a yes

Are there any changes in demographics that will impact your business

No No

Is regulation in your industry increasing? Yes yes

PESTLIED Model of Business Analysis



The model of PESTLIED (analysis of Political, Economical, Social, Technical, Legal,

International, Environmental and Demographic factors) is a superb tool to further understand

where a business is currently positioned, and allows organisations to start to identify future

market segments they may wish to target.

Political

What local and national government actions are currently impacting, and may in the future

impact on the business

Economic

What fiscal policies such as taxation and interest rates can and are impacting on the

business

Social

What social trends and tolerances are there towards your business' products or services

Technological

What changes are there that may affect demand for your products or services

Legal

What legistation is there that may affect your company, e.g. health and safety law,

employment law and human rights legislation.

International

This is the big picture, where you look at the changing world and how global factors impact

on your business

Environmental

An ever-increasing factor, this part of the PESTLIED model looks at the evironmental factors

that may affect your organisation.

Demographic

This essentially asks companies to look at demographic trends of both customers and the

available workforce to see how this may change the shape or direction of the business

Element Wal-Mart Kauai



P olitical: What are the Local and National Government actions that may affect the organization?

Being a global retailer means that you are exposed to political problems in the countries that you operate in.

During expansion, certain political and legal issues are noticed. The presence of the NAFTA agreement has created opportunities with increased growth and expansion for Wal-Mart, with both American and imported products within their inventory

Specific political parties in power can pose a threat to Entrepreneurs as some parties are more probusiness than others.

Labour legislation revamp to include Employment Equity Act

Various industries have negotiated Black Economic Empowerment charters in an attempt from government to broaden black participation in the mainstream economy

South African firms must comply with unions and their contribution to the economy

Focus on empowerment of Black Women in South Africa

E conomic: What are the fiscal and monetary policy issues (e.g. interest rates and taxation) that may affect the organization?

An opportunity available to the industry is the free trade zone. When the government enters into new trade agreements with foreign countries, businesses in the United States have the ability to offer products from these countries in their stores. This simply increases the markets available to retailers. Other key factors that may affect Wal-Mart is interest rates and taxation

Interest rates and taxation are the main monetary policies that affect Kauai

S ocial: What are the social trends and attitudes toward the organization and its products and services?

Wal-Mart keeps itself involved in whatever social crises comes up, such as Natural Disaster Areas (Haiti, Chile, etc)

Through financial contributions, in-kind donations and volunteerism, the Wal-Mart Foundation supports initiatives focused on enhancing opportunities in our four main focus areas:

o Education

o Workforce Development / Economic Opportunity

o Environmental Sustainability

Kauai has launched a new campaign: “Kauai@school Canteen”. The focus of the campaign is aimed at educating children, parent and teachers about the benefits of healthy eating



o Health and Wellness

The Walmart Foundation has a particular interest in supporting the following populations: veterans and military families, traditionally underserved groups, the disability community and people impacted by natural disasters

T echnological: What are the technological trends that may affect the organization, it’s products and activities?

Wal-Mart tries to stay at the forefront of technology; not only selling the latest technological gadgets available but also making use of advancement in technology to expand their reach into the market

Use of online shopping has allowed for Wal-Mart to offer product to the international market

Improvements in supply chain management between suppliers and Wal-Mart

Wal-Mart makes use of Social Networks such as Facebook, Twitter, etc.

DepletionTechnologyTechnological change (TC) is a term that is used to describe the overall process of invention, innovation and diffusion of technology or processes. The term is redundant with technological development, technological achievement, and technological progress. In essence TC is the invention of a technology (or a process), the continuous process of improving a technology (in which it often becomes cheaper) and its diffusion throughout industry or society.

Kauai makes use of internet for advertising

Kauai makes itself visible on Social Networks such as Facebook, Twitter, etc.

Kauai ensures that they accommodate for changes in technology by training their Franchise branch staff on any new technologies introduced into the company

L egal: What are the legal and legislative issues that a business needs to consider?

Taxation laws & custom duties need to be adhered to both domestically and internationally

Taxation laws is very big in the USA and this is taken very serious by Wal-Mart based on their focus on Customer Satisfaction

E-commerce laws and policies that need to be adhered to by the Wal-

Taxation laws Consumer protection is

growing theme being governed by legislation in South Africa that Kauai has to ensure compliance with.



Mart.com online shopping team.I nternational: What are the internal trends and factors (e.g. exchange rates and international trade laws) that may impact on the organization?

Today, Wal-Mart International is a fast-growing part of Wal-Mart’s overall operations, with 3,913 stores and more than 680,000 associates in 15 markets outside the continental U.S.

Compliance with Exchange Rates and Country Specific International Trade Laws have to be adhered to.

Kauai have not yet expanded outside of the South African boarders; and therefore they have not yet been required to comply exchange rates and international trade laws

Kauai makes use of local suppliers; and thus does not need to consider import anything and all factors related to that (import duties/taxation/exchange rates).

E nvironmental: What are the ‘green’ issues that a company needs to consider when developing and selling its products?

In 2008 the company launched its “Green Box” initiative, a comprehensive approach to minimize the environmental impact of it products by focusing on the designs, materials and methods used in their production process. The packaging firm also plans to buy 100% of its electrical energy from wind power.

Diamond Packaging features a notable commitment to green practices

Diamonds design process incorporates tools such as Wal-Marts package modeling software and ArtiosCAD for structural design, to make greener packaging. Some of the most basic concepts of greener packaging are reduced thickness and square inches of packaging materials used-to reduce raw materials as well as weight and size that increase transportation impacts such as fuel, emissions and wear and tear of vehicle components.

Kauai, has joined Virgin Active in a recycling action campaign. Kauai has implemented a system whereby all their 5 Litre juice containers are recycled. “For each recycled plastic bottle, we are saving the equivalent amount of energy to power a 100-watt light bulb for 2 hours,” says Geli Briolas of Kauai. “All wheatgrass containers are reusable and the wheatgrass that is not utilized is returned to the supplier for ground for compost.”

D emographic: What factors related to the workforce need to be considered? These could include the availability of scarce skills or the proximity of

Wal-Mart International need to take Culture into account in each of the International Countries they enter as this will either make or break their operations in that country

Unionization is very prevalent in the US and other countries where Wal-

Compliance to BEE and Afirmative Action related legislation are the two main factors that Kauai has to take into account when entering new business ventures or hiring new staff.



labour to the workplace. Mart has representation; and therefore they have to adhere to the boundaries of country specific labour law in order to comply and keep their workforce satisfied. This includes decisions to close stores down in countries/regions that growth has been hampered

National Government has created a major focus on employment of Black South African women; as well as gender split in management roles within organisations

Purpose

A sense of purpose is what drives an organization forward. It is often characterized by a

vision and/or mission that bind the company together; the leadership style of an organization

as well as the values and ethical framework governed governing the business.

Taking a look at each of these factors for both companies

Element Wal-Mart Kauai

Vision “To become the worldwide leader

in retailing”

“The Kauai vision is to educate South

Africans about how good healthy and

wholesome food can taste and to be

the first choice of millions of quick

service consumers.”

Mission “Wal -Mart's mission is to help

people save money so they can

live better."

“Our mission is to have products that

are recognized by global consumers

and our employees as tasty, healthy,

natural, affordable and convenient - in

an environment that reflects the

natural elements of our products.”

Evaluation basis

is on:

Foresight

Breadth

Uniqueness

Consensus

Action

Mission Statement components:

1. Customers

2. Products or services

3. Markets

4. Technology

5. Concern for survival,

profitability, growth

Kauai’s Vision gives a focus more on

education rather than being a leading

Health Food Fast Food Franchisor. It

does not cover the breadth that one

would expect in a vision; it’s quite

generic (to an educational institution)

but unique for a Health Fast Food



6. Philosophy

7. Self-concept

8. Concern for public image

9. Concern for employees

There is not much available with

regard to Wal-Mart’s Vision.

Based on the bit of referencing I

got on their vision; their vision is

very broad and vague. Although

on the other hand, based on their

current performance, they aren’t

too far away from being the

leading retailer in the world.

Their mission statement is

lengthy and very comprehensive

covering every aspect there is to

cover under a mission statement.

In terms of whether they are

living up to their mission

statement; one can conclude that

they are very much aligned in

action with their mission

statement

Franchisor. My opinion is that the

overall vision lakes a bit of foresight

in line with what they actually do.

Their Mission ties up more with what

can be expected from such a place.

Their décor in their outlets does tie up

with their mission statement; and the

food itself is what they set it out to be.

Leadership The leadership as set out by its

founder, Sam Walton, was very

much in line with what an

organization of this stature

required and still requires today

and in the future: Strong,

Focused, Caring, and Directional

Leader.

Ethics & Values When Sam Walton founded One gets a sense of confidence



the company, he instilled in

his people and his business

the system of belief that is still

very much evident and in

place even today. These

beliefs state with clarity that,

“we respect our customers,

associates and suppliers and

strive to treat them as we

ourselves want to be treated”

and “in building and nurturing

these relationships, as well as

serving the communities

where we live, we've helped

build a better business - one

committed to excellence,

One gets a sense of

confidence that Wal-Mart

does operate within the legal

limits and requirements of

each of it’s operations

(including internationally).

They also do meet society’s

expectations; and conduct

themselves very

professionally; especially

within an industry like this.

In terms of what they consider

important: since Sam Walton

founded Walmart Stores, Inc.,

it has always been a values-

based, ethically led company.

The values that guide our

that Kauai does operate within the

legal limits and requirements of

each of it’s operations. They also

do meet society’s expectations

(although I think there’s a bit more

that they can do in society to

really expand on their branding);

and they conduct themselves very

professionally; especially within an

industry like this.

In terms of what they consider

important:

o The one value that stands out

at Kauai is one of integrity.

What you see is what you get.

o Another core value from their

side is care for their staff.

Kauai has programmes

available to assist promotion

of staff; such that they can get

assisted with finance to one

day co-own/own their own

Kauai store.

o Kauai has a strong concern for

education. One gets this from

their vision and their

involvement in schools and

trying to respond to the

government’s research done

on children being overweight.

o Kauai’s CSI projects also

show forth their desire to make



decisions and our leadership

are the 3 Basic Beliefs:

o Respect for the

Individual

o Service to our

Customers

o Striving for Excellence

Vision Statement: The vision

of the Global Ethics Office is

to promote ownership of Wal-

mart's ethical culture to all

stakeholders globally.

a difference in other parts of

society e.g. “The Red Cross

War Memorial Children's

Hospital”

Objectives:

Strategic vs

Financial

Wal-Mart’s strategic

objectives are definitely

measureable, achievable

flexible and consistent with

their strategy.

Based on the way they have

structured themselves and

the programmes they’ve

implemented to instill a

culture of achieving their

objectives; Wal-Mart has

definitely achieved the goal of

its objectives giving life to the

agreed strategic vision.

In terms of their financial

objectives – these too are in

line with their strategic vision;

and can be concluded that it

is because of their financial

objectives together with their

strategic objectives that they

Not much information is available

on Kauai’s objectives; with the

exception of their strategic

objectives related to Corporate

Social Investment.

Their focus on making a

difference in schools through

education and actually making a

difference in some of the schools

they are involved in does give you

a sense that they are focused on

aligning themselves with their

vision and mission.



have been so successful

within the industry locally and

globally.

Resources @ Wal-Mart

Competitive Advantage:

Wal-Mart is a lowest Price leader and they have a competitive advantage in pricing,

distribution center, and store locations. Wal-Mart keeps its promise of everyday low prices,

by having a smooth business cycle maintained by unbeatable distribution center supported

by trucking networks, and excellent store locations. Wal-Mart maintains its slogan of

"Everyday low prices", by keeping its merchandise's prices low.

Wal-Mart has a competitive advantage of having constantly low prices is through having a

solid distribution center that keeps its storage fee low, cuts down items time retain on

shelves, and since the distribution centers are always within a 48 hours reachable area

resupplying the goods for two or three stores within one truck load is not a problem. This

business cycle enables Wal-Mart to get its goods on time, and cuts down on storage

expanses and gets higher product discounts from suppliers and also minimizes backorders

by buying its goods in large quantities and store in huge distribution centers. All these cuts

down from expenses allows Wal-Mart to gain greater bargaining power with its supplies

which allow it to have a higher sales margin to play with against its discounters who rarely is

able to catch up with Wal-Mart's low pricing and strategy.

Another competitive advantage is Wal-Mart's excellent store locations. Most of Wal-Mart's

stores are located in rural areas where populations are hardly enough to allow huge

discounter firms to gain a profit. However again through Wal-Mart's already solid foundation

of able to set low pricing on their products and support from their giant distribution centers,

Wal-Mart was able to still gain a profit in rural metropolitan areas where not many discounter

stores have set foot yet, this allows Wal-Mart to be able to monopolize in many towns in most

metropolitan areas within United States.



Customer Satisfaction:

In the mission statement we target our customers by saying: "Our first responsibility is to

provide all consumers the best products and services." Their customers are their number one

priority.

Wal-Mart has been known for their customer oriented approach. Wal-Mart maintains one of

the best satisfaction guaranteed programs, which promotes customer goodwill. One can

return virtually any product to Wal-Mart without any problems. They simply take the product

back and promptly refund the price of the product, nearly no questions asked. They also

promote goodwill among consumers by employing a tactic, which Sam created known as the

"Ten Foot Rule." This is simply the idea that if a customer comes within ten feet of an

employee, they are required to greet them and ask if they can help them in any way. This is

also evident through employees getting to know customers on a first name basis.

Resources @ Kauai

Customer Satisfaction:

Kauai aims to supply the South African market with nutritious wholesome food unlike any

other health food store in the fast food industry. They focus on ensuring that only the



freshest ingredients and are very conscious of meeting specific dietary requirements; thereby

satisfying a larger majority of the consumer base.

Competitive advantage: Brand

Kauai having its origins from Hawaii, comes with a fresh new feel and look to the health food

market. The brand carries itself as being known for

Their health smoothies have been the one product that saw introduction of smoothies into

the South African market; has propelled them into being seen as having the best smoothie in

the market.



Question 2: Kauai Franchise Business Plan

Kauai Health Food & Juice Bar Co. Tygerberg Business Plan



Contents

1. Executive Summary.......................................................................................................31

2. Mission...........................................................................................................................33

3. Products.........................................................................................................................34

4. Market Survey................................................................................................................36

5. Strategy and Implementation Summary......................................................................38

6. Main Competitors..........................................................................................................39

7. Marketing Strategy........................................................................................................39

8. Sales Strategy................................................................................................................40

9. Sales Forecast............................................................................................................41

10. Personnel Plan...........................................................................................................42

11. Financial Plan................................................................................................................43

12. Important Assumptions...........................................................................................44

13. Other Current Assets...............................................................................................45

14. Projected Cash Flow.................................................................................................45

15. Exit Strategy and Risk.............................................................................................47

16. Appendices....................................................................................................................48



1. Executive Summary

Kauai franchise offers a healthy alternative to fast food franchise. Cash requirements R500

000 (ex VAT) needed for full franchise excluding any lease deposit requirements, including a

franchise fee of R110 000 (ex VAT). The total set-up cost is R1.3 million.

As owner, I am seeking a conventional loan R 1,3 million to complete their start up financing.

Start up funds will be utilized to pay for lease, purchase equipment and inventory, pay labor,

and cover all general, marketing, and administrative costs for the first six months of

operations. Kauai is expected to generate positive net earnings in the fifth month of the first

year of operations.

Kauai will capitalizes on a low number of competing restaurants in the same area, a growing

population with higher-than-average household income in the region, and a large business

population located within a 3 to 10 kilometre radius. Kauai is positioned as a high-value

dining experience with interesting, fresh health conscious meals offered as a healthy

alternative to fast food franchise. Kauai caters to the health conscious, irrespective of race,

gender, age. Kauai menu offers only the freshest and tastiest ingredients are used to prepare

the delicious and nutritious meals you have come to know and love.

The establishment is owned and operated by my wife and I, Marvin and Jo-Anne Horkins,

whom has over 20 years experience in managing successful, upscale family restaurants and

fast food outlets.

With initial start-up capital of, Kauai is forecasting R1,707,711 in gross sales in the first year

of operations, increasing to R3,136,140 in the second year of operations and R3,452,162 in

the third year. Net profits are forecasted at R87,530 in the first year, R190,515 in the second

year and R212,933 in the third year. Net profit from sales is projected at 5.13% in the first

year, 6.07% in the second year and 6.17% in the third year.We project a net cash flow of

R198,339 in the first year, increasing to R299,741 in the second year and R262,581 in the

third year. Net worth is projected at R122,780 for the first year, increasing to R313,294 in the

second year and R526,228 in the third year.



1.1.Objectives

To establish a long-term health food and juice company and be recognized as a unique,

consistently good dining and social experience within the residential and business

communities found in the area. Gross margins, operating ratios, sales, and net revenue

projections are benchmarked against the national industry averages.

To succeed in the long-term and generate revenue appropriate for servicing a conventional

loan obligation, we have established the following goals, which are detailed in this business

plan.

· Maintain a Gross Margin of 65%

· Maintain a Net Profit from Sales of 5% annually

· Maintain a Cost of Goods of less than 36% for food and 25% for beverages

· Maintain a Cost of Labor of less than 25% of revenue

· Maintain a Sales &Marketing budget of 1.9%



Key elements to success:

We will implement strict financial oversight. Management accounting will be provided

by an outside firm specializing in restaurant accounting services. All financial services,

including bookkeeping and payroll, will be outsourced. This strategy will provide better

cost control due to increased reporting, reduced operating expenses due to fewer

payroll obligations, and increased net revenue through improved accounts payable

efficiencies.

We have identified the location as lacking in a comparable health food outlet.

Currently, business people working in the immediate area must travel several miles to

find a similar dining experience. Similarly, individuals and families living in the

immediate area must travel the same distance. Tapping into this opportunity is one of

the keys to Kauai’s success.

Additionally, the Kauai is distinguished from the competition by its distinctive, unique

atmosphere. Kauai has a quaint ambiance and brand will be distinctively one-of-a-

kind, following the successful suggestion of the mother franchise. Kauai’s menu will

offer the same high quality products that are prepared with the freshest of ingredients

and served in interesting presentations, as per the mother franchise. Kauai’s will

provide outstanding service in a fun, unique atmosphere.

Kauai already includes a juice bar, expected to drive 22% of total revenue. The juice

bar will cater to business people meeting after work and to singles during the

weekend specializing in the freshest juices and juice combo; and of course our well

known Kauai Smoothies.

2. Mission

Our mission is to have products that are recognized by global consumers and our

employees as tasty, healthy, natural, affordable and convenient - in an

environment that reflects the natural elements of our products.



3. Products

Only the freshest and tastiest ingredients are used to prepare the delicious and nutritious

meals you have come to know and love, and you can rest assured that all stores abide by

Kauai's Ten Principles of Good Nature:.

1. It’s all fresh: Your servings are made right before your eyes, with only the freshest

ingredients.

2. No, REALLY, it's all fresh: And that applies to their sauces, spreads and dressings

too!

3. As nature intended: They keep their ingredients as close to their whole and natural

state as possible so that they don't lose any of their flavour or goodness.

4. No trans fats: Trans fats are neither good nor natural, which is why you won't find any

in Kauai’s products.

5. No fry zone: None of Kauai’s products are fried – in fact, the oiliest thing in their

kitchen is an avocado!

6. FREE of MSG and Tartrazine: You won't find any MSG or tartrazine in any of their

meals.

7. 100% wheat free: Kauai’s rye bread is, well, rye bread and 100% wheat free.

8. They only pick the best, so that's what you get: Kauai’s supplements are made

from premium choice herbs, minerals & vitamins.

9. No dairy? No problem: All dairy smoothies can be made with GM-free soya milk for

the lactose intolerant.

10.Vegan friendly: Kauai mayo is reduced in fat and egg free - perfect for vegans.

Taste is paramount to Kauai, the good natured food company, and the folk who develop

Kauai’s new products have paid special attention to making their summer menu full of good

nature and flavour. Tantalise your taste buds with their healthy and delicious smoothies,

wraps, sandwiches, burgers and, now, dessert.

From mid November, you will be able to try the new addition to their range of healthy burgers

– the Hawaiian chicken burger, a mouth-watering twist on the traditional variant, made with a



tangy and sweet pineapple relish atop a smoky barbeque tender chicken fillet on a nutritious

linseed bun.

Oh-so-fabulous is the new Oh-Mega Smoothie, a pomegranate, strawberry and pineapple

smoothie rich in anti-oxidants, omega 3 oils and full of fresh fruit flavour. The smoothie

contains an excellent source of omega 3 oils within a special micro-encapsulated omega 3

supplement, beneficial for heart and brain function. Pomegranates are packed with Vitamin

B, C and E - vital for good emotional and mental health; and strawberries offer an excellent

source of magnesium and manganese that combats nervous tension and irritability.

Kauai will also introduce their first dessert, the Berry Dream. Pro-biotic, low fat Berry Dairy

frozen yoghurt, with fresh raspberry puree topped with delicious cranberry & macadamia

biscotti crumble.

For a wake up call on a hot summer’s day we have a brand new, and brilliantly low in fat,

Iced Latte. Made with quality Espresso, chilled vanilla dairy sorbet, fat free milk and crushed

ice. Double Espresso shots and decaf options are available too.

Kauai products are kept as close to their whole and natural state as possible and are freshly

made in each Kauai. The rye bread is 100% wheat-free and all dairy smoothies can be made

with GM-free soya milk for the lactose intolerant. All products are MSG and tartrazine-free.

No food is fried and Kauai mayonnaise is egg free, making it suitable for vegetarians.

Occupying a leased, 1,500 square foot former restaurant facility, Kauai will provide a total of

30 tables for diners. Diners will choose from indoor seating designed with warm interior

decorations and outdoor seating in a romantic garden setting. The indoor seating area

includes twenty tables. The outdoor seating will include ten tables. The service will be friendly

and professional, with experienced staff trained to emphasize an upscale dining experience.

We believe that the two most important elements in this outlet's value equation are food and

service, followed by price and ambiance. The most important factors in determining our menu

are consistency, creativity, and prices. The menu will be the same as that of the head

Franchise.



4. Market Survey

The restaurant's customer profile represents two segments: residential customers (families

and singles) and business customers. The following analysis is a breakdown of this customer

base that supports the restaurants projected sales revenue.

Kauai Tygerberg will be located in the town of Tygerberg that has a large residential

population of higher-than-average household income. Each household has an average of

2.96 people, with a higher-than-average median income of R65,288 per household, and eat

out an average of 2.5 times per week. This information supports the restaurant's pricing

position of charging a slightly higher than average price per meal. The population is

increasing at a rate of 1.9% annually. Individual residential customers are forecasted to

contribute 33% of the lunch sales and 67% of dinner sales. Additionally, Kauai will be located

in an ideal location, providing the opportunity for a healthy alternative to fast food.

The business community within a 7 to 10 kilometres radius of the outlet has a labour

population of 448,669 individuals. 48% of these individuals are in management or

professional positions that are likely to frequent the restaurant for lunch and dinner meetings.

These individuals eat out approximately 4.3 times per week.

The following table provides a market analysis for the region's total population, along with

projected growth estimates. The table shows that the Compounded Annual Growth Rate

(CAGR) for the combined residential and business population is 2.05%.



Market Analysis CAGR

Potential

Customers

Growth

2011 2012 2013 2014 2015

Individual

Residential

Customers

1.9%

770723 785367 800289 815494 830989

Individual

Business

Customers

2.3%

448,669 458,988 469,545 480,345 491,393

Total 2.5% 1,219,392 1,244,355 1,269,834 1,295,839 1,322,381

Customer Forecast

Seasons will compete with all food establishments and has targeted 2.5% of the total

potential customer base as a fair representation of the market. The combined total population

of potential residential and business customers is 1,219,392 people. The target customer

base is expected to frequent the restaurant two times per year. Individual business

customers are forecasted to contribute 66% of lunch sales and 33% of dinner sales.

The population is broken down into lunch sales and dinner sales. Lunch sales are projected

to have an average revenue per person of $17.00, including beverage. Dinner sales are

projected at $25.00 average revenue per person, including beverage. Bar sales are projected

to generate an additional 22% sales revenue. During the week, the owners anticipate 33% of

lunch sales attributed to residential customers, and 66% to business customers. Weekday

dinner sales are expected to consist of 66% residential customers and 33% business

customers. During the weekend, both lunch and dinner customers are expected to be 100%

residential.

5. Strategy and Implementation Summary



Our priority is to determine a realistic net revenue stream for the outlet. Based on

determining start up costs and an accurate forecasted financial situation, the owners will

secure start up and working capital to proceed with the launch. By identifying a market

opportunity with limited competition, the owners can leverage the successful branding Kauai

nationally carries; together with our management experience into a stable, long-term

business concern with strong financial stability.

After obtaining start up capital, we will begin marketing efforts to establish a presence within

the community. Within the same time frame, we will secure lease arrangements and begin

obtaining equipment and furnishings. Staffing interviews will be conducted, with an emphasis

on recommendations and referrals. The outlet will open for business in the second month

after funding is secured.

a. Competitive Edge

The outlet’s competitive edge is its proximity to a large residential and business population

that is located in the quaint town of Tygerberg; tougher with the interest generated from the

Virgin Active close by for a In-motion branch; we feel that is area under served by similar

Health Food outlets. In conjunction with capitalizing on this business opportunity, the Kauai

will provide a unique atmosphere and menu along with excellent service at appropriate

pricing.

We recognize that the customer's experience and resulting word-of-mouth advertising is

critical to the success of the oulet; in combination with corporate branding from head

franchise. By tapping their successful customer experience of the outlet, we have a distinct

competitive advantage in establishing the outlet’s experience prior to the its launch. The

atmosphere and service will be carefully developed and managed.



6. Main Competitors

Kauai's main competition is represented by all other Health Food and Juice opportunities

currently available to residential and business customers. These segments include all sectors

within this industry, such as fast food, casual restaurants, and fine food establishments.

The main competitive category for the outlet is a full-service, moderately upscale Kauai

experience; experienced at other branches nationally. One similar Health Food/Fast Food

outlets are identified within the immediate area. The following is a price matrix breakdown of

these restaurants compared to our restaurant:

Outlet #1: Medium quality/medium price. Juicy Lucy; menu allows high margins. Limited

seating with a standard sandwich menu. This is an old brand that has been around since

1970 and definitely needs revamping to come close to competing with Kauai.

Our Restaurant: High quality/high price. Fresh, diverse menu with engaging atmosphere

catering to business, family, and single demographic. Bar and restaurant expect to gain

overflow from other restaurants.

7. Marketing Strategy

We as owners-to-be recognize that the most important marketing strategy is word-of-mouth

advertising by satisfied customers. All products and services will reflect this understanding,

with only the highest of standards maintained.

The marketing strategy will include advertising in local print publications, flyers distributed to

residences and business within a 3 to 10 kilometre radius, advertising on local radio also co-

supported by the branding support received from head franchise. Advertising in the local

yellow pages with a coupon will also be another marketing strategy.

Print ads will appear in local newspaper and business publications beginning six weeks prior

to the restaurant's grand opening. A print campaign will be ongoing. Direct Mail will be used

to distribute advertisements to residences and business within a 3 to 10 kilomtre radius

beginning two weeks prior to the restaurant grand opening; and to include the local Virgin

Active Health Club and other Gyms in the area.



Local restaurant reviewers will be invited to attend a pre-opening event and provided with

copy material for reviews and articles. Press releases will be distributed to all business and

community newspapers and publications within the county.

8. Sales Strategy

We will maintain a pricing strategy that limits the cost of goods to 36% of total sales for food

and 25% of total sales for beverages. We are projecting an average lunch ticket of R60.00

per person (including beverage).

a. Pricing and Profitability

Menu Pricing

Kauai's value proposition is positioned as high-quality with mid-range pricing. Because the

restaurant has limited geographic or comparable service competition, the menu will carry the

same pricing strategy as is seen nationally.

The owners are estimating the cost of food at 36% and the cost beverages at 25%.

Pricing follows a full-cost strategy that reflects the establishment's actual costs. The following

formula will determine menu pricing: Menu Price = Cost of Food divided by Food Cost

Percentage.



9. Sales Forecast

The owners will begin preparing the restaurant and bar in December for an expected January

opening in 2011. No revenue is projected for January. As the restaurant is a start up

business, the owners expect sales at 20% of the projected total for the restaurant's opening

month, increasing by 10% each month until reaching the total projected units in December of

the first year.

Gross sales for the first year, including food and bar, are projected at R1,707,711, with Cost

of Goods projected at R607276.

After reaching capacity in during the second year, sales are projected atR3,136,140 with a

Cost of Goods at R1,114,843. In accordance with industry statistics, sales are projected to

increase by 5% annually.



10. Personnel Plan

The restaurant industry is labour intensive, with traditionally high turnover rates that often

result in lower hiring standards. To circumvent this problem, we are targeting production

payroll, including wait- and kitchen-staff, at 25% of total sales annually. The owners are also

designating 3.4% of total sales for employee benefits to retain long-term employees.

In the first year, the restaurant will have 8 full-time and 4 part-time employees, with total

hours worked increasing incrementally as sales volume increases. Total payroll for the first

year is projected at R431,467, increasing to R784,035 in the second year and R863,041 for

the third year. Payroll Tax is projected at 10% of Payroll.

Employee categories include:

· General Manager

· Front Manager

· Head Chef

· Supporting Chef

· Cooks

· Prep Cooks/Dishwashers

· Waitpersons

· Busboys (for deliveries)



11.Financial Plan

The Financial Plan includes:

· Important Assumptions

· Start Up Costs

· Break Even Analysis

· Projected Profit and Loss

· Projected Cash Flow

· Projected Balance Sheet

· Exit Strategy

The Appendix of this plan includes 12-month projections for Sales, Profit and Loss, Cash

Flow, and Balance Sheet.

Based on statistics from the Restaurant Association of South Africa, the restaurant is

expected to see an annual increase in sales of 5% annually.



12. Important Assumptions

All projections are compared against industry averages as provided by the Restaurant

Association of South Africa.

The start up funding requirements are R500,000. The following is a breakdown of start up

costs and required funding, which reflects a cash balance of R290,500 after start up

expenses.

Start-up Requirements

Legal R2,500

Insurance R5000 Rent &Security Deposit R10,000

Phone &Gas Deposit R750 Cleaning R2,000

Other $0 Total Start-up Expenses R20,250

Start-up Assets Needed

Cash Balance on Starting Date R30

000

Other Current Assets R155,750

Total Current Assets R185,750

Long-term Assets $0 Total Assets R185,750

Total Requirements R206,000

Funding

Investment Owner Equity R20,000

Owner Equity R20,000 Total Investment R40,000

Current Liabilities

Accounts Payable $0 Current Borrowing R150,000

Other Current Liabilities $0 Current Liabilities R150,000

Long-term Liabilities $0

Total Liabilities R150,000

Loss at Start-up (R14,750) Total Capital R35,250

Total Capital and Liabilities R185,250



13. Other Current Assets

The line item 'Other Current Assets', which totals $155,750 in the Start Up table, is included

in the Balance Sheet for depreciation purposes. The following is a breakdown of these items,

which are targeted specifically for start up expenses and will be purchased in the same

month that loan proceeds are distributed for use.

Breakdown of 'Other Current Assets'

Stationary R3,000

Office Supplies R1,250

Cash Register/Software R25,000

Leasehold Improvements R30,000

Furniture and Tableware R70,000

Refurbishing R20,000

Food and Beverage Inventory

R30,000

Kitchen Supplies R15,000

Advertising R2,500

Total Other Current Assets $155,750

14. Projected Cash Flow

We project a net cash flow of R198,339 in the first year, increasing to R299,741 in the

second year and R262,581 in the third year. Net cash flow is projected to be positive for each

month, with the exception of the sixth month of operations. Net cash flow falls to (R845) due

to increase cost of goods reflecting anticipated sales growth.

Cash balance is projected at R227,839 in the first year of operations, increasing to R527,579

in the second year and R790,160 in the third year.



Pro Forma Cash Flow

2011 2012 2013

Cash Received

Cash from Operations:

Cash Sales R1,707,711 R3,136,140 R3,452,162

Cash from Receivables R0 R0 R0

Subtotal Cash from Operations R1,707,711 R3,136,140 R3,452,162

Additional Cash Received

Sales Tax, VAT, Received R102,463 R188,168 R207,130

New Current Borrowing R0 R0 R0

New Other Liabilities (interest-free) R0 R0 R0

New Long-term Liabilities R0 R0 R0

Sales of Other Current Assets R0 R0 R0

Sales of Long-term Assets R0 R0 R0

New Investment Received R0 R0 R0

Subtotal Cash Received R1,810,174 R3,324,308 R3,659,292

Expenditures 2011 2012 2013

Expenditures from Operations:

Cash Spending R0 R0 R0

Payment of Accounts Payable R1,574,622 R2,881,509 R3,167,947

Subtotal Spent on Operations R1,574,622 R2,881,509 R3,167,947

Additional Cash Spent

Sales Tax, VAT Paid Out R0 R102,463 R188,168

Principal Repayment of Borrowing R37,213 R40,596 R40,596

Other Liabilities Principal Repayment R0 R0 R0

Long-term Liab. Principal Repayment R0 R0 R0

Purchase Other Current Assets R0 R0 R0

Purchase Long-term Assets R0 R0 R0

Dividends N/A N/A N/A

Subtotal Cash Spent R1,611,835 R3,024,568 R3,396,711

Net Cash Flow R198,339 R299,741 R262,581



Cash Balance R227,839 R527,579 R790,160

15. Exit Strategy and Risk

We have integrated 20 years of experience in the restaurant business into developing a

detailed business plan that supports the launch of Kauai Health Foods and Juice Co

Tygerberg. Based on this, we believe that the financial forecast supports our investing

R40,000 of our personal savings. We anticipate developing a successful, long-term

restaurant/outlet that will provide sustainable net revenues and viable jobs for the

community. We plan to hold the restaurant for the long-term. If Kauai Tygerberg is

successful, the owners will consider establishing a second outlet in the nearby Virgin Active.

We recognize the risk involved in a restaurant of this nature. In the event that Kauai

Tygerberg can not achieve profitability, we will attempt to sell the restaurant, with the

proceeds used to pay any debts. If we are unable to sell the restaurant, the owners may be

forced to default on their outstanding loan obligation.



16. Appendices

a) General Menu

















Question 3: South African Policy Framework

The promotion of entrepreneurship and small business remains an important priority of the

government of South Africa. Government’s commitment is to ensure that small businesses

progressively increase their contribution growth and performance of the South African

economy in critical areas such as job creation, equity and access to markets.

Since 1994, with the advent of a new democratic era, government has taken measures to

ensure that small business development becomes a key policy focus. In March 1995 an

important milestone was achieved when government released its White Paper on national

strategy for the development and promotion of small business in South Africa, the first time a

comprehensive policy and strategy on small business development was formulated in the

country.

These included:

Creating an enabling legal framework

• Streamlining regulatory conditions

• Facilitating access to information and advice

• Facilitating access to marketing and procurement

• Facilitating access to finance

• Facilitating access to affordable physical infrastructure

• Providing training in entrepreneurship, skills and management

• Improving industrial relations and the labour environment

• Facilitating access to appropriate technology

• Encouraging joint ventures

• Capacity building and institutional strengthening

• Introducing differential taxation and other financial incentives



Since then, government owned institutions and programmes have evolved all three spheres

with the aim of providing comprehensive support to small business.

These institutions have made progress in delivering a wide range key support services.

These services continue to benefit an increasing number of small businesses year after year.

Government will continue to lead efforts to increase the level of entrepreneurship through

supporting small business creation, but we are mindful that this important task cannot be

successfully undertaken by one player alone.

Recently, a number of new government policies with a bearing on aspects of

entrepreneurship and small business development have emerged. These policies, by their

nature, affect this integrated entrepreneurship and small business development strategy. Key

to these policies is the National Industrial Policy Framework. The National Industrial Policy

Framework is not a new policy direction but a logical evolution of government economic

policy.



a) Support for women-owned enterprises

One such initiative that Government has implemented is Support for women-owned

enterprises:

The Government has initiated various measures to increase women entrepreneurship and to

support women in business. These include: Sawen (South African Women En trepreneurs’

Network), a Department of Trade & Industry -initiated national networking forum for

individuals and organisations committed to the promotion andadvancement of women

entrepreneurs.

Sawen represents and articulates the aspirations of women entrepreneurs, and holds

organised educational and trade missions for members. Business linkages between SA

women entrepreneurs and their counterparts in other parts of the world have also been

facilitated. Sawen continues to be an advocacy network for women in business, ensuring that

policies and strategies are sensitive to gender issues. TWIB (Technology for Women in

Business) is a Department of Trade & Industry initiative that supports the advancement of

women in business through the application of science and technology in their ventures. This

is aimed at overcoming constraints to enterprise innovation and growth, as well as fostering

local and global competitiveness. The sector departments have also developed initiatives to

give targeted support to women in business. These have led to a grid of sector-specific

women in business networks, including Sawic (construction sector), Woesa (oil and energy

sector), and Sawima (mining sector).



b) Broad-based black economic empowerment strategy

Several objectives of the B-BBEE strategy bear relevance to small business development

and therefore to this strategy. These are:

• achieving a substantial increase in the number of black people who have

ownership and control of existing and new enterprises

• achieving a substantial increase in the number of black people who have

ownership and control of existing and new enterprises in the priority sectors of

the economy, which government has identified in its macro-economic reform

strategy

• achieving a significant increase in the number of new black enterprises

• increasing the proportion of ownership and management of economic activities

vested in community enterprises and co-operatives.

Besides increasing enterprise ownership by blacks, the B-BBEE strategy also outlines

measures to increase procurement from black-owned enterprises, and to strengthen the

supply capacity of black-owned firms.

This shows the commitment of government towards developing an entrepreneurial culture

within South Africa.

This sort of support benefits a new franchise from a finance perspective; and this actual

supports the financial backing that Kauai is willing to commit to their employees as well as

any interested franchisee.

The IDC is there to support financially in getting small medium enterprises started financially

and assisting in sustaining them; based on agreements signed between both parties.



Aspect relevant tosmall businessdevelopment

Current or proposed B-BBEE strategy action

Preferentialprocurement

measurespreferential

procurement policies

Review of government procurement policy in order to enhance its impact on BEE.

Setting clear targets to increase the levels of preference to black-owned enterprises.

Enabling legislation on BEE, requiring all government departments, state-owned enterprises and public agencies to take into account code of practice issues emanating from the legislation in determining and implementing their preferential procurement policies

Strengthening smallbusiness capacity to

benefit fromprocurement

initiatives

Government is to expand its supplier development programmes to ensure that more black enterprises are created and enabled to meet the requirements of purchasers in the public sector.

Financingmechanisms

The Department of Trade & industry is to lead better co-ordination

of incentive grants that target SMME initiatives, and establish an

administration system that links the incentive grants to other

financial and non-financial support mechanisms in order to

maximize SMME access and BEE impact. New incentive grant

schemes and amendments to existing ones are also being

considered – the focus of these schemes is on those targeting

entrepreneurship, supplier development, and enterprise

development, including self-help schemes and co-operatives, skills

development, and the acquisition and development of new

technology.

State-facilitated lending is to be driven by Khula and Samaf.

Project financing is to be driven by the IDC.

Empowerment transaction financing is to be driven by NEF.

Government will facilitate specific venture-capital projects in

particular sectors.



Bibliography

A Business Owner’s Secret Weapon: SWOT Analysis,from www.sbiformation.about.com. [Accessed: 30 September 2010]

Burke, R. 2006. Small Business Entrepreneur, Burk Publising.

Kaplan, J. M. 2004. Patterns of Entrepreneurship, Singapore. John Wiley and Sons.

Kroon, J. (editor) 1998. Entrepreneurship. Start your own business, Cape Town. Kagiso Education.

Rwigema, H. and Venter, R. 2004. Advanced Entrepreneurship, Cape Town. Oxford University Press.

SWOT Analysis: Lesson, www.marketingteacher.com/lessonstore.htm .Wal-Mart SWOTAnalysis , 2007, Datamonitor [Accessed: 31 September 2010]

http://www.doh.gov.za/docs/policy/gender.pdf

www.dti.gov.za

Virgin Active and Kauai tackle recycling issues together.

. [Accessed: 16 August 2010.]


http://www.enviropaedia.com/news/article/default.php?pk_news_type_id=1&pk_news_id=358&pg=10

http://www.enviropaedia.com/news/article/default.php?pk_news_type_id=1&pk_news_id=358&pg=10

http://www.dti.gov.za/

http://www.doh.gov.za/docs/policy/gender.pdf

http://www.marketingteacher.com/lessonstore.htm

http://www.sbiformation.about.com/


http://www.gutenberg.org/files/17405/17405-h/17405-h.htm . [Accessed: 31 September 2010]

www.kauai.co.za/ . [Accessed: 31 September 2010]

www.kidzhospital.co.za. [Accessed: 27 September 2010]

www.malmartstores.com/GlobalWMstoresweb . [Accessed: 22 September 2010]

www.money.cnn.com/magazine/fortune500. [Accessed: 21 September 2010]

www.wikipedia.org/Walmart#Competitors . [Accessed: 21 September 2010]

www.wikipedia.org/wiki/Walmart#Competition . [Accessed: 21 September 2010]

www.walmartstores.com/globalWMstoresWeb . [Accessed: 22 September 2010]


http://www.walmartstores.com/globalWMstoresWeb

http://www.wikipedia.org/wiki/Walmart#Competition

http://www.wikipedia.org/Walmart#Competitors

http://www.money.cnn.com/magazine/fortune500

http://www.malmartstores.com/GlobalWMstoresweb

http://www.kidzhospital.co.za/

http://www.kauai.co.za/

http://www.gutenberg.org/files/17405/17405-h/17405-h.htm

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