Exam (elaborations)
OTE2601 Assignment 2 Due 7 June 2024
- Course
- OTE2601 (OTE2601)
- Institution
- University Of South Africa (Unisa)
OTE2601 Assignment 2 Due 7 June 2024
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ASSIGNMENT 02QUESTION 1
Every entrepreneur has certain expectations and goals when choosing a business.
1.1 What is a close corporation in business? Give one examples.
A close corporation (CC) in business is a type of legal entity that is similar to a
partnership but has limited liability for its members. It is typically a small business
structure where the owners are involved in the day-to-day operations and
management. In a close corporation, the number of shareholders is limited, and the
shares are not publicly traded. One example of a close corporation could be a family-
owned restaurant where the family members are the shareholders and actively
participate in running the business.
1.2 You are a Grade 7 teacher leading a discussion on the different kinds of
franchising.
1.2.1 What are the issues to consider when discussing about capital
requirement for a franchise
Initial Investment
Franchisees typically need to make an initial investment to purchase the franchise
rights and set up the business. This may include franchise fees, equipment,
inventory, and leasehold improvements.
Ongoing Fees
Franchisees are often required to pay ongoing fees to the franchisor, such as
royalties and advertising fees. These ongoing expenses can impact the franchisee's
cash flow and profitability.
Financing Options
Franchisees may need to explore financing options to cover the initial investment
and ongoing expenses. This could involve obtaining loans from banks or financial
institutions, using personal savings, or seeking investment from partners or
investors.
, Return on Investment
Franchisees need to assess the potential return on investment (ROI) to determine if
the franchise opportunity is financially viable. This involves analyzing the projected
revenue, expenses, and profitability of the business over time.
Risk Management
Franchisees should also consider the level of risk associated with the franchise
opportunity, including market conditions, competition, and the track record of the
franchisor.
1.2.2 Do you agree with the assertion that businesses fail for a number of
reasons? Substantiate on your answer by discussing the following;
1.2.2.1 Incompetent management
1.2.2.2 Lack of experience
1.2.2.3 Poor financial control
1.2.3.4 Inflexibility
1.2.3.5 Unrealistic time frames
Yes, I agree
Incompetent Management
Effective leadership and management are crucial for the success of any business.
Incompetent management can lead to poor decision-making, lack of direction, and
failure to adapt to changing market conditions. When leaders lack the necessary
skills, knowledge, or experience to effectively manage the business, it can result in
operational inefficiencies, missed opportunities, and ultimately, business failure.
Lack of Experience
Experience in the industry or business sector is invaluable for navigating challenges,
making informed decisions, and anticipating market trends. Without sufficient
experience, business owners may struggle to understand their target market,
develop competitive strategies, or effectively manage day-to-day operations. This
lack of experience can hinder the business's ability to compete, innovate, and sustain
long-term success.
Poor Financial Control
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