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BSM1602 Assignment 02 2021 AS PER UPDATED TUTORIAL LETTER (to be used as a guideline only) R50,00
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BSM1602 Assignment 02 2021 AS PER UPDATED TUTORIAL LETTER (to be used as a guideline only)
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  • May 24, 2021
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  • 2020/2021
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Business Management 1B
BSM1602
Department of Business Management
Assignment 02 for 2021 (compulsory)
Due Date: 23 June 2021




CASE STUDY: MTB JOURNEY

Ronald Joss is a cycling and extreme sports enthusiast from Johannesburg. Feeling trapped in his
nine-to-five desk job, Ronald knew that he could not continue doing this for the rest of his life
and needed a change. He always had a good eye for an opportunity in the market and
endeavoured to make a success of every opportunity that came his way. Ronald and his friend
Stephen always talked about opening up a bicycle shop, but the idea was never realised. It was
only until Ronald felt trapped in his job, that this idea became more lucrative. Ronald and
Stephen put all of their expertise and ideas together in order to start this new enterprise. After
careful planning, months of saving, and Ronald and Stephen leaving their jobs, they finally
managed to open their own bicycle shop, and registered the enterprise as a partnership under
the name MTB Journey.

In order to finance the new enterprise, MTB Journey applied for a business loan from the bank
for R200 000, payable within five years. The bank did, however, require some form of security on

,the money lent to MTB Journey. Ronald and Stephen also both invested R50 000 of their own
personal savings, in order to get the enterprise going.

Situated in the heart of Randburg, MTB Journey specialises in the selling of mountain bikes,
bicycle parts and bicycle repair services. To differentiate themselves from their competitors,
looking for a different approach to ensure growth of the enterprise and save customer costs,
Ronald and Stephen also opened MTB Journey online, where they sell bicycles and bicycle parts
online. By doing so they spotted an opportunity to cut out the traditional route to reach the
target market. Ronald and Stephen firmly believed that, by also selling bicycles and parts online,
they could bring products to the marketplace at a fraction of the price. To do so, however, they
had to overcome the natural human inclination to want to physically touch and appraise any
potential purchase.

During the first few weeks of operation, MTB Journey experienced various problems. In order to
solve these problems, Ronald and Stephen had to first determine the root of the problems. They
then approached these problems by grouping all the possible causes into certain categories,
which then pointed out the root of their problems. This technique proved to be successful, as
they immediately solved complex problems without too much of a disruption. The two also
strongly believe that teamwork is of the highest importance in order to reach their goals and
objectives. Ronald and Stephen ultimately strived to satisfy their consumers’ wants and needs,
while simultaneously meeting the business objectives of the enterprise.

Although Ronald and Stephen have the knowledge and expertise to repair and service bicycles,
they did not have the necessary tools or time to customise painting on bicycles. This is a
specialised skill, and only a few people require these customised bicycles. As a result, Ronald and
Stephen decided that this specific function should be done by Ryan, who does not work for MTB
Journey, but does customised painting as a hobby. Ryan will get paid for the work done, and MTB
Journey will only take a small percentage of the profit. The handcrafted bicycles sold at MTB
Journey are all imported from a supplier in Italy and sold at a premium price, as these bicycles
cannot be bought anywhere else in South Africa.

MTB Journey decided to divide the total market into smaller segments and to target specifically
middle-class customers between the ages of 20 and 35, who are mountain bicycle enthusiasts
and follow an active lifestyle. MTB Journey operates in a fairly competitive market, and it is for
this reason that Ronald and Stephen had to constantly think of ways to attract new customers,
and retain existing customers.

Due to the retail nature of the enterprise, Ronald and Stephen had to appoint more people in
order to successfully run MTB Journey, and satisfy the demand. They decided to appoint a sales
consultant, who will specialise in the sales of mountain bicycles. They also decided to appoint a
cashier who will be responsible for receiving payments and answering the phone. For the sales
consultant position, Stephen decided to advertise the position on the local community forum’s
Facebook page, using the following advert:

,Ronald, however, recommended that they appoint his sister-in-law, Lizzy, as the cashier.
Cameron, a sales consultant with experience in the mountain bicycle industry, immediately
applied for the sales consultant position advertised on Facebook. Stephen organised an
interview with Cameron, and they immediately decided to appoint Cameron.

As part of Adventure Cycle’s public relations function, Ronald and Stephen decided to launch a
public relations campaign. This campaign involves continuously informing customers about the
importance of water and nature conservation, and ways to reduce your carbon footprint. The
campaign was launched as a digital campaign, on their Facebook page, and company website.
MTB Journey has now been in operation for six years, and Ronald and Stephen are excited to see
what the future holds for this enterprise.

ASSIGNMENT 02 MULTIPLE- CHOICE QUESTIONS:

Chapter 1: Introduction to business management for the entrepreneur

1. Which of the following are reasons why Ronald can be regarded as an entrepreneur?

a) Ronald was willing to take a risk to start MTB Journey.
b) Ronald is only responsible for managing MTB Journey on a day-to-day basis.
c) Ronald manages change by introducing the online shop for selling bicycles and parts.
d) Ronald had the self-confidence and passion to start MTB Journey.

Choose the correct combination:

1) a, c, d
2) a, b, c
3) b, d
4) a, b, c, d

Answer:

, Refer to page 2 of the prescribed textbook:

1.2 Entrepreneur vs manager
Entrepreneurs spot opportunities and organise resources to create new businesses. They have
the vision, business skills and courage to take risks, and possess the necessary leadership
qualities to overcome problems. Entrepreneurs normally have a strong internal locus of control
(their destiny and success are determined by their own actions), self-confidence, passion,
determination and the management skills to plan and control the entrepreneurial process.

Refer to page 4 of the prescribed textbook:

Small business management is essentially the management of a small business on a day-to-day
basis.

Refer to page 4 of the prescribed textbook:

The entrepreneur’s role, however, differs from that of the small business manager in that the
entrepreneur manages change by, for example, introducing a new product, buying a new
business, deciding which risks to take, introducing new management systems and moving into
new markets.

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