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BSM1602 Assignment 2 Semester 1 2019
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Business Management IBBSM1602
Department of Business Management
Assignment 02 for Semester 01 (compulsory)
Unique Number: 849007
Due Date: 16 April 2019
CASE STUDY: VR POWER SOLUTIONS
Load shedding and power cuts have become a daily occurrence in South Africa and people
need to plan their daily routines around Eskom’s load shedding schedule. This has a serious
effect on the business sector as well - without power, no manufacturing, trading or service
delivery can take place. Enterprises are suffering massive financial losses, and have no other
choice but to find alternative power solutions.
After months of consideration, thorough market research and careful planning, Victor
Richards decided to enter the lucrative market of alternative power solutions. He started his
own enterprise offering a small range of different alternative power solutions at prices
affordable to both households and small businesses. His product range includes: small
generators that can provide power for an average household’s basic needs for at least four
hours, slightly bigger generators for small businesses, solar power banks and various solar-
powered lights, batteries and charging stations available over the counter. The generators
and solar power banks have a life span of approximately five years. The solar lights,
batteries and charging stations have a life span of approximately two years.
,Victor decided to register the new enterprise as a sole proprietorship under the name, VR
Power Solutions. It was fairly easy for him to start this type of enterprise as initial start-up
costs were low, and he found the ideal office and storage space available to rent for R15 500
per month. The lease agreement was granted for 12 months, and renewable each year after
that. The office was close to his home, in Johannesburg, and had more than enough storage
space to keep inventory at optimum levels. He had a small truck that he inherited from his
grandfather which would be perfect for deliveries. Victor had personal savings of R180 000
in his bank account. He used this money to cover the costs of: the first consignment of
generators and solar power banks he had to import from Japan, the solar-powered lights,
batteries and charging stations he purchased from a local manufacturer, office furniture,
computers, stationery and the first month’s rent and electricity. However, he soon realised
that his personal savings would not be enough to cover all the costs involved in running his
own enterprise, and applied for an additional loan of R250 000 from the bank.
Victor decided to include his niece, Catherine, in the new enterprise as she was in dire need
of employment. Catherine would have to handle all the enquiries, general over-the-counter
sales, administration, placing orders with the suppliers and import arrangements for VR
Power Solutions. Victor also realised that he needed technicians and a technical supervisor.
He advertised these positions on an online job portal, and received numerous applications.
After the interview and selection process, he appointed a team of three technicians and one
technical supervisor who would be responsible for the delivery, assembly and installation of
generators and power banks. Once inventory arrives at the office, Catherine and the
technicians have to unpack the products and Victor does the final quality inspection,
checking the orders against the invoices and handling any discrepancies. Victor is also
responsible for the financial function, overall supervision and management of VR Power
Solutions.
VR Power Solutions works on an order basis. Clients need to contact Catherine and indicate
what product/s they need, how many they need and when they need it. Victor then works
out a schedule for the technical team indicating where they have to be and what they need
to install. The technical team is then sent out to the clients to do final assembly and
installation. It takes the technical team one hour to fully assemble and install one generator
and three hours to install the solar power bank. The maximum number of installations the
team can handle on one day is three solar power banks and eight generators. After the
installations have been done Victor personally checks them to ensure that everything is in
working condition and that clients are satisfied with the finished product.
The need for alternative power will definitely not decline in the near future, as Eskom has
indicated that there is no short-term solution to the shortage of electricity in South Africa. Eskom
is in fact warning all South Africans of a possible black-out situation. However, Victor is aware of
the fact that if VR Power Solutions wants to survive over the long term, he will need to extend
the target market to other suburbs as well. This means that Victor will have to launch a
marketing campaign to make potential consumers in neighbouring suburbs aware of VR Power
Solutions’ products and services. As part of this campaign, Victor also aims to educate the market
on the importance of saving electricity on a daily basis.
MULTIPLE- CHOICE QUESTIONS
, Answer all the questions on the mark-reading sheet or online on myUnisa.
Chapter 1: Introduction to business management for the entrepreneur
1. Based on the information in the National Small Business Amendment Act 26 of 2003, VR
Power Solutions can be classified as a __________ enterprise.
1) small
2) micro-
3) medium- sized
4) very small
Answer:
As no information was given about the annual turnover of VR Power Solutions, information
is based on the number of permanent employees. Based on the case study, VR Power
Solutions employs six permanent employees, for this reason, it is regarded as a very small
enterprise.
Please refer to page 4 in the prescribed textbook.
2. Victor Richards can be classified as an entrepreneur because he:
a) is responsible for the profit and survival of VR Power Solutions.
b) started his own enterprise called VR Power Solutions.
c) is responsible for the growth of VR Power Solutions.
d) did not need to take any risks.
e) is creative and innovative.
Choose the correct combination:
1) a, b, c
2) a, d, e
3) b, c, e
4) a, b, c, d, e
Answer:
An entrepreneur is someone who starts his/her own enterprise, takes risk, is creative and
innovative and is responsible for the growth of the enterprise. A business manager is
someone who manages the enterprise, does not have to take risks, does not require
creativity and innovation and is responsible for the profit and survival of the enterprise. For
this reason, only options b, c and e are correct.
Please refer to page 3 in the prescribed textbook and page 4 in the study guide.
3. Power cuts and load shedding are variables which can be found in the __________
environment, which VR Power Solutions has __________ control over.
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