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BSM1501 Assignment 02 2021 AS PER UPDATED TUTORIAL LETTER
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BSM1501 Assignment 02 2021 AS PER UPDATED TUTORIAL LETTER. This document includes the assignment questions, answers, and page references.

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  • February 23, 2021
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  • 2020/2021
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Business Management 1A
BSM1501
Department of Business Management
Assignment 02 2021 AS PER UPDATED TUTORIAL
LETTER (compulsory)
Unique Number: 394693
Due Date: 20 August 2021




Study Chapters 1 to 6 thoroughly before you answer this assignment.

Read the case study below and answer all the questions that follow.

Case study: Fred’s Pie in the Sky
Fred Kotze worked in the bakery of a Checkers in Pretoria for twelve years. Three years ago,
he resigned and started his own enterprise, Fred’s Pie in the Sky, which he registered as a
sole proprietorship. The enterprise was located in a small shopping centre near Hatfield,
close to the Gautrain station. His product range consisted only of freshly baked, pies of all
shapes, sizes and flavours. His target market comprised mostly commuters and people who
worked in the immediate vicinity of the enterprise.

Fred invested R120 000 of his own capital in the enterprise, but this amount was not nearly
enough to cover his expenses. He had to buy ovens, kitchen equipment, counters and tills.
To finance this, he took out a loan of R160 000, which he planned to pay back over five
years. He also applied for a bank overdraft to finance his initial stock and to pay salaries and
expenses for the first few months.

,Fred employed three persons – a baker, a saleslady and an administrative assistant. He
bought his ingredients such as flour, salt, sugar, butter, eggs, various meats, vegetables and
fruit from a wholesaler in Hatfield. Fred’s products became well known in the area. Local
cafés and businesses started ordering pies from him. They encouraged him to include other
pastry products in his product range and suggested that he consider catering for small
functions in the area. Fred tried it on a trial basis and it was such a success that he started
doing it on a full-time basis. Other businesses in the surrounding areas also heard of his
catering services and started using Fred’s Pie in the Sky to cater for their office functions.
Fred’s products became so popular that he could not supply enough to satisfy the growing
demand. He realised that the capacity of his enterprise was far too small and decided to
move to bigger premises. This decision, however, meant that he would need more
employees and more capital. He decided to involve two of his friends in the enterprise to
accumulate more capital and they registered the new enterprise as a partnership. Fred
invested R120 000 of his own capital in the partnership and his friends contributed R40 000
each.

Fred decided to buy a building next to a local shopping centre and he applied for a long-
term loan to buy the new premises. The premises already had water and electricity and the
building was big enough to be divided into a kitchen and a sales area. The shopping centre
management also agreed that his customers could use their parking area.

Fred did not advertise his products. He depended on the fact that his pastry shop was visible
and well-known in the area. However, when he moved to the new premises, he distributed
pamphlets to the local businesses to inform them about his products and placed
advertisements in the local newspapers to make consumers aware of his special offers. He
also sent e-mails to businesses that made use of his catering services on a regular basis to
inform them about his new location.

Fred also decided to change his supplier, as his current supplier was unreliable. One of his
clients told him about a wholesaler in Centurion who specialised in the supply of baking
ingredients. Although the location of this supplier was further away than the one he had
been using, they provided a delivery service and their products were much cheaper and of
the highest quality.

Fred realised the importance of his social responsibility towards the community of Hatfield.
Since the type of products that he sold always had to be fresh, he decided to donate the
products that have not been sold by the end of the day, to an old-age home close by.
Fred’s relocation to the new pastry shop, however, had one disadvantage. His pastry shop
was now farther away from the Gautrain station and he, therefore, lost the support of some
of his clients. Fred’s saleslady, Jossine, came up with the idea of opening a coffee shop as
the sales area was big enough for a few tables and chairs. The coffee shop made a huge
contribution towards the success of Fred’s Pie in the Sky.
Preview of question 1 and answer 1:
Chapter 1

, 1. Jossine could be regarded as a/an _______ because she came up with the idea of
opening a coffee shop.
1) entrepreneur
2) intrapreneur
3) small business manager
4) franchisor

Answer:

Textbook: Paragraph 1.4
Option 2 is the correct answer, as Jossine is only an employee with entrepreneurial abilities.
Therefore, Jossine could be regarded as an intrapreneur because she came up with the idea
of opening a coffee shop.

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