BSM 1501 ASSIGNMENT 2 2021

BSM1501 Business Management 1A Assignment 02 for Semester 01 (compulsory) Unique Number Due: 03 April 2020 Note that all answers are extracted from the prescribed book: “ Entrepreneurship and how to establish your own business – sixth edition and / or the study guide. PLEASE NOTE 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: CeleBAKEtion Celest Bennet’s worked in the bakery of a Spar in Pretoria for eight years. Three years ago, she resigned and started her own enterprise, CeleBAKEtion, which she registered as a sole proprietorship. The enterprise was located in a small centre near Hatfield close to the Gautrain station. Her product range consisted only of freshly baked cakes of all shapes, sizes and flavours. Her target market consisted mostly of businesses and people who worked in the immediate vicinity of the enterprise. Celest invested R60 000 of her own capital in the enterprise, but this amount was not nearly enough to cover her expenses. She had to buy ovens, kitchen equipment, counters and a till. To finance this, she took out a loan of R150 000, which she planned to pay back over five years. She also applied for a bank overdraft to finance her initial stock and to pay salaries and expenses for the first few months. Celest employed three employees – a baker, saleslady and administrative assistant. She bought her ingredients such as flour, sugar, butter and eggs, from a wholesaler in Hatfield. Celest’s cakes became well-known in the area. Local cafés and businesses started ordering pies from her. They encouraged her to include other confectionary products in her product range and suggested that she consider catering for small functions in the area. Celest tried it on a trial basis and it was such a success that she started doing it on a full-time basis. Other businesses in the surrounding areas also heard of her catering services and started using CeleBAKEtion to cater for their office functions. Celest’s products became so popular that she could not supply enough to satisfy the growing demand. She realised that the capacity of her enterprise was far too small and decided to move to bigger premises. This decision, however, meant that she would need more employees and more capital. She decided to involve two of her friends in the enterprise to accumulate more capital and they registered the new enterprise as a partnership. Celest invested R60 000 of her own capital in the partnership and her friends contributed R20 000 each. Celest decided to buy a building next to a local shopping centre and 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 also agreed that her customers could use their parking area. Celest’s saleslady, Ellen, 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 to the success of CeleBAKEtion. Celest did not advertise her products. She depended on the fact that her bakery was visible and wellknown in the area. However, when she moved to the new premises, she distributed pamphlets to the local businesses to inform them about her products and placed advertisements in the local newspapers to make consumers aware of her special