Post on 13-Nov-2014
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New Venture Creation: Level 2 1
New Venture Creation: NCV Level New Venture Creation: NCV Level
22
New Venture Creation: Level 2 2
New Venture Creation: NCV Level New Venture Creation: NCV Level 22
Module 1: The business environment
Module 2: The markets & needs for a new venture
Module 3: Financial requirements for a new venture
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Module 1Module 1The business environmentThe business environment
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In Module 1 we shall be In Module 1 we shall be covering:covering:
the structure and roles of different organisations
within their own industry in South Africa
the concept of a market and how to market
products and services
what market positioning is
the role of professional associations in the
business sector
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The 3 types of organisationsThe 3 types of organisationsoperating in South Africaoperating in South Africa
Non-profitorganisations
Non-profitorganisationsGovernment
organisations
Governmentorganisations
Private businessorganisations
Private businessorganisations
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Government (public) Government (public) organisationsorganisations
• offer goods & services to the
public
• sometimes compete with
private business
• are fully or partly owned by
the State (the government)
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One example of One example of
a government or a government or
public-ownedpublic-owned
organisation isorganisation is
………………
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Another example Another example
isis
………………
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The role of government The role of government organisationsorganisations
● facilitating economic growth by providing
finance to ‘would be’ entrepreneurs
● protecting the public against malpractice by
private organisations (e.g. Public Protector)
● providing specialised services (e.g. National
Lottery)
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Refuse removal
Refuse removal
Electricity
Electricity
??
???
?
The role of government The role of government organisationsorganisations
Providing Essential ServicesProviding Essential Services
??
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Rail links
Rail links
Sanitation (sewage)
Sanitation (sewage)
??
??
The role of government The role of government organisationsorganisations
Providing InfrastructureProviding Infrastructure
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Non-profit organisationsNon-profit organisations
• aim to uplift & provide support
to communities
• do not seek profits
• rely on financial support from
the communities they serve
• are privately managed by
community groups e.g.
churches
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One example of One example of
a non-profita non-profit
organisation isorganisation is
………………
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Another example Another example
isis
………………
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The role of non-profit organisationsThe role of non-profit organisations
● providing specific medical support to people (e.g. Hospice)
● providing protection for animals (e.g. SPCA)
● protecting the environment (e.g. World Wildlife Fund – WWF)
● providing emergency relief in the case of natural disasters
● supporting the ‘arts’ in the country (e.g. Grahamstown Arts
Festival)
● lobbying for specific causes (e.g. Treatment Action Campaign –
TAG)
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Business organisationsBusiness organisations
• are the driving force of any
free-market economy
• accept risks in pursuit of
profits
• offer products and/or
services on the open market
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An example of An example of
a businessa business
organisation that organisation that
sells sells goodsgoods on the on the
open market isopen market is
………………
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An example of a An example of a
businessbusiness
organisation that organisation that
sells sells servicesservices on the on the
open market isopen market is
isis
………………
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The role of business organisationsThe role of business organisations
● staying in business
● helping to grow the economy
● creating wealth for the country
● creating employment opportunities
● paying taxes to the government
● providing important services
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The value chain of a The value chain of a businessbusiness
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Outputs • products
• services
Outputs • products
• services
Inputs • raw materials
• information
Inputs • raw materials
• information
TransformationTransformation
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Production Production Purchasing
Purchasing
Core activities in the value chainCore activities in the value chain
Distribution Distribution Marketing Marketing
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Production Production Purchasing
Purchasing
Support activities in the value chainSupport activities in the value chain
Distribution Distribution Marketing Marketing
Procurement
Procurement
Technology development
Technology development
HR Management
HR Management
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Shareholders Shareholders
Customers
Customers
Key stakeholders in a businessKey stakeholders in a business
Suppliers Suppliers
Community Community
BusinessBusiness
Employees
Employees
Government
Government
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Business categoriesBusiness categories
Primary
Industries
Primary
Industries
Secondary
Industries
Secondary
Industries
Tertiary
Industries
Tertiary
Industries
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An example of a An example of a
business sectorbusiness sector
in the primaryin the primary
category iscategory is
……………………
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An example of a An example of a
business sector business sector
in the secondary in the secondary
category iscategory is
……………………
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An example of a An example of a
business sector business sector
in the tertiary in the tertiary
category iscategory is
……………………
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The contribution of these categories to the GDP of South The contribution of these categories to the GDP of South
AfricaAfrica
Primary, 11%
Secondary, 24%
Tertiary, 65%
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The contribution of the major business sectors to SA’s GDPThe contribution of the major business sectors to SA’s GDP
2.4%
2.4%
3.7%
6.2%
7.4%
9.7%
13.9%
14.7%
19.5%
20.1%
Electricity/water
Construction
Agriculture
Personal Services
Mining
Transport
W/sal/retail
Govt Services
Manufacturing
Financial Services
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Principles of business marketingPrinciples of business marketing
Business marketing is the decision and effort by a business to develop a
need-satisfying product or service and sell it successfully to customers.
Key principles are:
● A product is manufactured
● A service is delivered
● Success will only happen if there is a need for the product or service
e.g. a need for food, clothing, security or social contact
● Success is measured by making a profit while meeting the identified
need
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A product: A product: • is tangible – it can be
seen, felt, held, tasted, smelt and owned
• is bought in exchange for something of value (e.g. money)
• normally comes in some kind of packaging
• is owned by the customer
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A service: A service: • cannot be held, seen or
touched – this is called service intangibility
• cannot be separated from the person providing it – this is called service inseparability
• will depend on how professional the person providing it is – this is called service variability
• Cannot be ‘stored’ for later use like a product – this is called service perishability
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The principles of trade that define The principles of trade that define marketingmarketing
Needs, wants, demands
Needs, wants, demands
Exchange
Exchange
Value
Value
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The difference between needs, wants & The difference between needs, wants & demandsdemands
Needs
Needs
Wants
Wants
Demands
Demands
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Price Price Product
Product
The 4 P’s of marketingThe 4 P’s of marketing
Place Place Promotion Promotion
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In-store promotion In-store promotion
Advertising
Advertising
PromotionPromotion
Direct Marketing Direct Marketing
Personal Selling Personal Selling
• inform• persuade• remind
• inform• persuade• remind
PR (sponsorship)
PR (sponsorship)
PR (brochures)
PR (brochures)
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Market positioningMarket positioning
is based on theis based on the
competitive advantagecompetitive advantage
of a business – for example of a business – for example
a superior ……………….a superior ……………….
……………………………………. is the . is the
competitive advantage ofcompetitive advantage of
Coca-Coca-
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The The internalinternal strengths & weaknesses of a strengths & weaknesses of a
businessbusiness
Strengths
• quality products• cost effective manufacturing• skilled & motivated employees• strong brand identity in marketplace• good business location
Strengths
• quality products• cost effective manufacturing• skilled & motivated employees• strong brand identity in marketplace• good business location
Weaknesses
• limited capital• insufficient staff• limited distribution capacity• too few products
Weaknesses
• limited capital• insufficient staff• limited distribution capacity• too few products
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The The externalexternal opportunities & threats for a opportunities & threats for a
businessbusiness
Opportunities
• growth in chosen market• increase in middle class income• new distribution methods• export market opening up
Opportunities
• growth in chosen market• increase in middle class income• new distribution methods• export market opening up
Threats
• new competitors entering market• customer needs & wants changing• labour unrest in country• economic recession
Threats
• new competitors entering market• customer needs & wants changing• labour unrest in country• economic recession
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Professional associationsProfessional associations
• organisations to which professional people
such as accountants, engineers, lawyers and
teachers belong
• ensure standards of professional ethics &
integrity are maintained amongst members
• provide professional training & accreditation
for members
• provide access to networking opportunities
and job information