Entrepreneurship Assignment - Final

MANCOSA
Entrepreneurship
Assignment
Marvin Horkins
Entrepreneurship
October 4, 2010
Contents
Question 1: Strategic Entrepreneurship...............................................................................3
a) Wal-Mart...........................................................................................................................5
b) Kauai Health Foods & Juice Company..........................................................................13
Question 2: Kauai Franchise Business Plan......................................................................29
1. Executive Summary..........................................................................................................31
2. Mission..............................................................................................................................33
3. Products............................................................................................................................34
4. Market Survey...................................................................................................................36
5. Strategy and Implementation Summary............................................................................38
6. Main Competitors..............................................................................................................39
7. Marketing Strategy............................................................................................................39
8. Sales Strategy...................................................................................................................40
9. Sales Forecast...............................................................................................................41
10. Personnel Plan..............................................................................................................42
11. Financial Plan...................................................................................................................43
12. Important Assumptions................................................................................................44
13. Other Current Assets....................................................................................................45
14. Projected Cash Flow....................................................................................................45
15. Exit Strategy and Risk.................................................................................................47
16. Appendices.......................................................................................................................48
Question 3: South African Policy Framework....................................................................56
a) Support for women-owned enterprises.............................................................................58
b) Broad-based black economic empowerment strategy......................................................59
Bibliography...........................................................................................................................61
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Marvin Horkins Student Nr: 109730
Entrepreneurship
October 4, 2010
Question 1: Strategic Entrepreneurship
Strategic thinking is usually associated with the competitiveness of the organisation, while
entrepreneurial thinking is associated with innovation and creativity to capture opportunities.
Strategic thinking is usually isolated as the “thinking” part of the strategic planning process.
This wrongly implies the removal of the behavioural or “action” component of strategy
thinking from the construct. Strategic thinking, just like the entrepreneurial thinking, is a
mindset that encapsulates thinking, state of mind and way of behaviour.
The concept of strategic entrepreneurship has widely been written about primarily as a
relationship between strategic management and corporate entrepreneurship.
Growth-oriented strategic thinking is essential in the globalised world and is one of the most
important factors in the development of entrepreneurial ventures. Strategy can be defined as
the direction an organization intends to take in the future mindful of its context, resources,
purpose and objectives (Lunch 1997 cited in Venter, Urban and Rwigema 2008:405).
All of the components of this definition are the elements that need to be considered when
developing and embarking on a strategic process:
 Context
 Resources
 Purpose
 Objectives
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Before analyzing this for the two caselets, let us examine each of these elements in a bit
more detail:
Context
Context refers to the external environment within which an entrepreneurial venture operates.
Every organization operates in a context; there is a constant interaction between the
organization and the elements that impact on the business. Sometimes the best way to gain
insight into complex issues is through the use of a model or a tool. Tools that can be used
include the PESTLIED Model and a SWOT analysis.
SWOT Analysis
As part of a business development process, many organisations use a SWOT analysis to

understand the factors that are affecting their buisness, and therefore allow them to
understand the strategies and tactics they should employ to ensure business success.
As a guide to using SWOT:
Internal Factors
Strengths:
When creating objectives and strategies, you should build on strengths
Weaknesses:
When creating objectives and strategies, you should resolve weaknesses
External Factors
Opportunities:
When creating objectives and strategies, you should exploit opportunities
Threats:
When creating objectives and strategies, you should avoid threats.
These tools and factors cover the Context component.
Let us take a look at both Wal-Mart & Kauai’s contextual elements (PESTLIED & SWOT):
a) Wal-Mart
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COMPANY PROFILE
Wal-Mart is the world's number 1 retailer, with more than 4,800 stores, including 1,475
discount stores, 1,750 combination discount and grocery stores (Wal-Mart Supercenters in
the US and ASDA in the UK) and 540 warehouse stores (SAM's Club).
Nearly 75% of its stores are in the US, but Wal-Mart is expanding internationally. Wal-Mart is
the number 1 retail in Canada and Mexico. The company also owns nearly 38% of Japanese
supermarket chain SEIYU.
Below is Wal-Mart’s SWOT Analysis
Strengths
Is it a
Possible Strengths Response
strength?
Tangible Strengths
Consider your assets including Assets are really only shop fittings and stock with No
plant and equipment
two computers and software.
Annual lease in major shopping centers, location

Do you have long-term rental
within the shop is at the will of the center, poor No, same as
contracts for your business
sales will result in a shift to a low foot traffic competition
locations?
location
Are your products unique or No, stock is the same as our competitors. We can
No
market leading? pick and choose what styles to stock.
Have you got sufficient

financial resources to fund any Yes. No
changes you would like to
make?
Do you have any cost No, rents are all pretty standard, one can save on
advantages over your No
rent but loose the foot traffic, so it is all relative.
competitors?
Do you use superior No No
technology in your business?
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Strengths
Is it a
strength?
Yes. Their product is high quality, low margin and
Is your business high volume? Yes
high volume in comparison
Can your scale up your volume Yes. This is in line with agreements with suppliers Yes
if you need to?
Intangible Strengths
Yes, though the brand space is becoming
Do you have or stock strong cluttered with more and more recognizable Yes
recognisable brands brands. Depleting the value of any one brand.
Your reputation - are you

considered a market leader? or Yes Yes
an expert in your filed?
Yes, there is a good connection with its customers,
Do you have good relationship their email list grows and many customers advise
with your customers? Yes
they were referred to us by their friends/family.
(Goodwill) They get a lot of repeat customers.
Yes. They are able to differentiate from their

Do you have strong competitors. We have long term agreements in
relationships with your Yes
place with some suppliers to be their sole
suppliers representative in this region.
No, their
Do you have a positive competitors also
relationship with your Yes have good
employees employee
relations
Do you have any unique Yes, this is made possible with other
alliances with other yes
suppliers/partners
businesses?
Do you own any patents or No No
proprietary technology?
Email news letter with specials and new stock,
Do you have a proven seems to work for retaining customers.
advertising process that works Yes
Most new customers were attracted to the
well? shopping complex as well as the online options.
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Strengths
Is it a
strength?
Do you have more experience Yes Yes
in your field?
Are you managers highly Yes Yes
experienced?
Yes, and they do have a good set of sales skills,
Do you have superior industry particularly up selling and forming relationships. Yes
knowledge? People feel good coming by and seeing us.
Are you involved with industry No No

associations?
Is your business Innovative? Yes No
Summary of Strengths
World's number 1 retailer
Customer service.
Supercenters offer one stop shopping.
Satisfaction guaranteed program promoting customer goodwill.
Company culture and employee motivation.
High bargaining power over supplier.
Sophisticated distribution systems.
Superior information system.
Low price every day.
Geographic presence
Solid financial standing.
Stock ownership and share-profit with employees.
Sells a large variety of brand name products.
Strong community involvement
Weaknesses
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Is it a
Possible Weaknesses Response
Weakness?
Tangible Weaknesses
Is your plant and equipment old or N/A N/A
outdated?
Maybe, we only sell a few of brands of men clothing,
we could stock more accessories, but we don’t want to
Is your product line too narrow? Maybe
confuse the customer about what line of business we
are in.
Have you got insufficient financial Yes, we often think about opening a bigger store, but
resources to fund any changes the rent would be an issue if we did not get immediate Yes
you would like to make? sales
Do you have a high overall unit No No

cost relative to your competitors?
Do you use inferior technology in No No
your business?
Yes, it may take a few weeks to replenish stock, less
Do you have low volume and are No, all retailers
early in the season. But late in the season our
restricted in your ability to scale are in the same
suppliers are often out of stock of the quick moving
up? situation
products
Intangible Weaknesses
Yes, maybe our shop name is not a public
Do you have a weak or recognizable brand but our stock is. Some of our Yes
unrecognisable brand? competitors are franchise and everyone knows them
Do you have a weak or No, our shop frontage tends to draw people in No
unrecognisable image?
Do you have a poor or impersonal No, we have great relationships with our customers No
relationship with your customers?
Do you have a poor relationship No No
with your suppliers?
Do you have a poor relationship No No
with your employees?
Is your marketing failing to meet No No
objectives?
Are your managers Yes, I have less than 2 years in Retail Yes
inexperienced?
Do you have low R&D? n/a N/A
Do you lack industry knowledge? No Yes
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No
Do you lack innovative skills? No
Other Weaknesses
Few women and minorities in top management
Pending litigation
Puts smaller retailers out of business.
"Cheap" image
Keep poor performance employee on hand.
Employee and customers theft.
Old fashion store policies.
The congestion of the large stores might deter customers from wanting to go to shop at Wal-Mart
Opportunities
Possible Response Is it an
Opportunities Opportunity?
Industry Opportunities
Can you expand your product Yes, there are no contractual restrictions to us
Yes
range? adding products to the store, store size is an issue
Can you diversify your business Maybe, if we had the funds No

interests?
Can you expand into your No, the customer is the consumer No
customer's field?
Can you expand into your Yes, I don’t have the skills to establish an import
Yes
supplier's field? business
Can you expand your customer Maybe, through internet sales and mail order,
base? (Geographically or through Yes
maybe open another location
new products)
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Do you have placid competitors? Yes, there is not a lot of competitive advertising in Yes
our niche, and price is not so much of an issue to
our customers
Do you have any export No, we import No

opportunities?
Will the total market for your Yes, but not significantly No
products grow?
Macro Opportunities
Are there any favourable changes No No
to legislation pending
Will there be any changes to any No, almost all clothing is imported there is little
import/export constraints that will domestic production and a lack of ability for
No
be favourable for your business? domestic producers to scale up. Any changes will
impact all retail outlets equally.
Is the economic outlook No, however this may play favorably to our
favourable? business as our target market might postpone
larger expenses as a result a greater share of purse No
may be allocated to clothing – this is yet to be
proven.
Are there any favourable cultural Due to increases in housing prices our target
shifts that will benefit you? customer has opted to postpone taking on longer
term debit. Instead to remain in the “nest” for Yes
longer. This trend increases their customer life for
our products.
Are there any changes in the use

of technology that your business Use of internet to increase marketing and online
Yes
can utilise such as Ecommerce sales.
or Internet sales?
Other Opportunities
Consumers want ease of shopping.
Expanding e-commerce.
Expanding into emerging markets
Expanding into urban marketplaces.
Offering new products.
Environment conscious consumers
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Threats
Possible Threats Response Is it a
threat?
Industry Threats
Will low cost imports impact your No, our shop appeals to the middle income bracket
business? who are not interested in low cost alternatives.
No
Though high quality low cost imports will increase our
margin.
Do consumers have a choice to Yes, many other products in the category No

use a substitute product?
Are substitute product sales No more than ours, the market share is reasonably
No
increasing? consistent
Is your market in slow growth or No, our market is relatively stable, maybe slight
No
in decline? growth
Is the power of your customers or No, maybe one supplier is trying to increase prices
suppliers growing, can they above CPI, but we can stop selling their stock and No
dictate price? shift to another supplier of a similar quality product
Are the needs of your buyers Yes, every season fashion changes, however the
Yes
changing? need for medium quality products remains unchanged.
Macro Threats
Will foreign exchange rate Yes, declining dollar will impact us, and all others in
changes affect your imports or our industry, may also reduce sales if we pass price Yes
exports? on to customer
Are there any changes in Maybe an increase in awareness about the behavior
demographics that will impact of governments of low cost producing nations may No
your business eventually impact our supply chain.
Is regulation in your industry No No

increasing?
Other Threats
Industry maturity.
Labor unions.
Growing criticism against Wal-Mart.
Expense of internalization.
Variety of competition nationally, regionally or locally.
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Regulation of Wal-Mart pharmacies.
Substitute products more easily because of intense competition
b) Kauai Health Foods & Juice Company
Company Profile:
Kauai was born in Cape Town, South Africa in 1996 as the brainchild of three friends who
had previously lived on the Hawaiian Garden Isle of Kauai.
Kauai In Motion has been exclusively developed to offer Virgin Active members health on the
go!
The founders’ approach to the task was straightforward: to prepare food they themselves loved to eat
but couldn’t readily find anywhere in South Africa. One of their first creations was the now infamous
Kauai smoothie – it is widely credited with starting the smoothie craze in our country!
Smoothies were complemented with a range of great tasting freshly made food, with the
ingredients always left as close to nature as possible. The range now includes sandwiches,
salads, wraps and snacks.
There are currently 41 Full Concept stores nationwide directly employs over 700 people,
along with 44 Kauai In Motion outlets and two Kauai Schools and we're continuously
growing.
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Below is Kauai’s SWOT analysis:
Strengths
Is it a
strength?
Tangible Strengths
Consider your assets including plant and No, same as
Furniture & Equipment
equipment competition
Do you have long-term rental contracts for Yes, lease contract as per venue
No
your business locations? (Mall/Virgin Active)
Are your products unique or market leading? Yes yes
Yes, financial assistance available
Have you got sufficient financial resources to
from both Kauai HQ & IDC to allow for Yes
fund any changes you would like to make?
expansion to a larger footprint store.
Do you have any cost advantages over your
No no
competitors?
Do you use superior technology in your
No no
business?
No; business volume low relative to
Is your business high volume? no
others in FMCG
Can your scale up your volume if you need to? Yes yes
Intangible Strengths
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Strengths
Is it a
strength?
Yes, strong brand; especially
Do you have or stock strong recognisable
amongst higher income earners yes
brands
concerned with health
Your reputation - are you considered a market
Yes yes
leader? or an expert in your filed?
Do you have good relationship with your Yes, also have initiatives with
Yes
customers? (Goodwill) Schools
Do you have strong relationships with your
Yes yes
suppliers
Do you have a positive relationship with your Yes, have employee assistance
Yes
employees programmes
Do you have any unique alliances with other
Yes, joint venture with Virgin Active yes
businesses?
Do you own any patents or proprietary
Yes, patented menu yes
technology?
yes, use of Schools advertising,
Do you have a proven advertising process that
sponsorships, Joint Ventures, email yes
works well?
ad, ad’s per mall location
Do you have more experience in your field? yes yes
Are you managers highly experienced? yes no
Do you have superior industry knowledge? yes no
Are you involved with industry associations? Yes, department of education yes
Is your business Innovative? Yes yes
Weaknesses
Possible Weaknesses Response Is it a
Weakness?
Tangible Weaknesses
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Is your plant and equipment old or outdated? No no

Is your product line too narrow? No, busy expanding no
Have you got insufficient financial resources
Yes no
to fund any changes you would like to make?
Do you have a high overall unit cost relative
No yes
to your competitors?
Do you use inferior technology in your
n/a n/a
business?
Do you have low volume and are restricted in
Yes yes
your ability to scale up?
Intangible Weaknesses
Do you have a weak or unrecognisable
No no
brand?
Do you have a weak or unrecognisable
No no
image?
Do you have a poor or impersonal
No no
relationship with your customers?
Do you have a poor relationship with your
No no
suppliers?
Do you have a poor relationship with your
No no
employees?
Is your marketing failing to meet objectives? No no
Are your managers inexperienced? No no
Do you have low R&D? Yes yes
Do you lack industry knowledge? A little. yes
Do you lack innovative skills? No no
Opportunities
Is it an
Possible Opportunities Response
Opportunity?
Industry Opportunities
Can you expand your product range? Yes yes
Can you diversify your business interests? Yes yes
Can you expand into your customer's field? Yes yes
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Can you expand into your supplier's field? Yes yes

Can you expand your customer base?
Yes yes
(Geographically or through new products)
Do you have placid competitors? No yes
Do you have any export opportunities? Yes yes
Will the total market for your products grow? Yes yes
Macro Opportunities
Are there any favourable changes to
No no
legislation pending
Will there be any changes to any
import/export constraints that will be No no
favourable for your business?
Is the economic outlook favourable? Yes, business is picking up yes
Are there any favourable cultural shifts that
No no
will benefit you?
Are there any changes in the use of
technology that your business can utilise No yes
such as Ecommerce or Internet sales?
Threats
Is it a
Possible Threats Response
threat?
Industry Threats
Will low cost imports impact your business? Yes yes
Do consumers have a choice to use a
Yes yes
substitute product?
Are substitute product sales increasing? Yes yes
Is your market in slow growth or in decline? Slow growth yes
Is the power of your customers or suppliers
Yes yes
growing, can they dictate price?
Are the needs of your buyers changing? No yes
Macro Threats
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Will foreign exchange rate changes affect

n/a yes
your imports or exports?
Are there any changes in demographics that
No No
will impact your business
Is regulation in your industry increasing? Yes yes
PESTLIED Model of Business Analysis
The model of PESTLIED (analysis of Political, Economical, Social, Technical, Legal,

International, Environmental and Demographic factors) is a superb tool to further understand
where a business is currently positioned, and allows organisations to start to identify future
market segments they may wish to target.
Political
What local and national government actions are currently impacting, and may in the future
impact on the business
Economic
What fiscal policies such as taxation and interest rates can and are impacting on the
business
Social
What social trends and tolerances are there towards your business' products or services
Technological
What changes are there that may affect demand for your products or services
Legal
What legistation is there that may affect your company, e.g. health and safety law,
employment law and human rights legislation.
International
This is the big picture, where you look at the changing world and how global factors impact
on your business
Environmental
An ever-increasing factor, this part of the PESTLIED model looks at the evironmental factors
that may affect your organisation.
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Demographic
This essentially asks companies to look at demographic trends of both customers and the
available workforce to see how this may change the shape or direction of the business
Element Wal-Mart Kauai

Political:  Being a global retailer means  Specific political parties in
What are the Local and that you are exposed to political power can pose a threat to
National Government problems in the countries that Entrepreneurs as some
actions that may affect you operate in. parties are more
the organization?  During expansion, certain probusiness than others.
political and legal issues are  Labour legislation revamp to
noticed. The presence of the include Employment Equity
NAFTA agreement has created Act
opportunities with increased  Various industries have
growth and expansion for Wal- negotiated Black Economic
Mart, with both American and Empowerment charters in an
imported products within their attempt from government to
inventory broaden black participation
in the mainstream economy
 South African firms must
comply with unions and their
contribution to the economy
 Focus on empowerment of
Black Women in South Africa
Economic:  An opportunity available to the  Interest rates and taxation are
What are the fiscal and industry is the free trade zone. the main monetary policies
monetary policy issues When the government enters into that affect Kauai
(e.g. interest rates and new trade agreements with foreign
taxation) that may affect countries, businesses in the United
the organization? States have the ability to offer
products from these countries in
their stores. This simply increases
the markets available to retailers.
Other key factors that may affect
Wal-Mart is interest rates and
taxation
Social:  Wal-Mart keeps itself involved in  Kauai has launched a new

What are the social whatever social crises comes up, campaign: “Kauai@school
trends and attitudes such as Natural Disaster Areas Canteen”. The focus of the
toward the organization (Haiti, Chile, etc) campaign is aimed at
and its products and  Through financial contributions, in- educating children, parent
services? kind donations and volunteerism, the and teachers about the
Wal-Mart Foundation supports benefits of healthy eating
initiatives focused on enhancing
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opportunities in our four main focus

areas:
o Education
o Workforce Development /
Economic Opportunity
o Environmental Sustainability
o Health and Wellness
 The Walmart Foundation has a
particular interest in supporting the
following populations: veterans and
military families, traditionally
underserved groups, the disability
community and people impacted by
natural disasters
Technological:  Wal-Mart tries to stay at the  Kauai makes use of internet
What are the forefront of technology; not only for advertising
technological trends selling the latest technological  Kauai makes itself visible on
that may affect the gadgets available but also making Social Networks such as
organization, it’s use of advancement in technology Facebook, Twitter, etc.
products and activities? to expand their reach into the  Kauai ensures that they
market accommodate for changes in
 Use of online shopping has allowed technology by training their
for Wal-Mart to offer product to the Franchise branch staff on
international market any new technologies
 Improvements in supply chain introduced into the company
management between suppliers
and Wal-Mart
 Wal-Mart makes use of Social
Networks such as Facebook,
Twitter, etc.
 DepletionTechnologyTechnological
change (TC) is a term that is used
to describe the overall process of
invention, innovation and diffusion
of technology or processes. The
term is redundant with
technological development,
technological achievement, and
technological progress. In essence
TC is the invention of a technology
(or a process), the continuous
process of improving a technology
(in which it often becomes cheaper)
and its diffusion throughout industry
or society.
Legal:  Taxation laws & custom duties need  Taxation laws
What are the legal and to be adhered to both domestically  Consumer protection is
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legislative issues that a and internationally growing theme being

business needs to  Taxation laws is very big in the USA governed by legislation in
consider? and this is taken very serious by South Africa that Kauai has to
Wal-Mart based on their focus on ensure compliance with.
Customer Satisfaction
 E-commerce laws and policies that
need to be adhered to by the Wal-
Mart.com online shopping team.
International:  Today, Wal-Mart International is a  Kauai have not yet expanded
What are the internal fast-growing part of Wal-Mart’s outside of the South African
trends and factors (e.g. overall operations, with 3,913 stores boarders; and therefore they
exchange rates and and more than 680,000 associates have not yet been required to
international trade laws) in 15 markets outside the continental comply exchange rates and
that may impact on the U.S. international trade laws
organization?  Compliance with Exchange Rates  Kauai makes use of local
and Country Specific International suppliers; and thus does not
Trade Laws have to be adhered to. need to consider import
anything and all factors
related to that (import
duties/taxation/exchange
rates).
Environmental:  In 2008 the company launched its  Kauai, has joined Virgin
What are the ‘green’ “Green Box” initiative, a Active in a recycling action
issues that a company comprehensive approach to campaign. Kauai has
needs to consider when minimize the environmental impact implemented a system
developing and selling of it products by focusing on the whereby all their 5 Litre juice
its products? designs, materials and methods containers are recycled. “For
used in their production process. each recycled plastic bottle,
The packaging firm also plans to buy we are saving the equivalent
100% of its electrical energy from amount of energy to power a
wind power. 100-watt light bulb for 2
 Diamond Packaging features a hours,” says Geli Briolas of
notable commitment to green Kauai. “All wheatgrass
practices containers are reusable and
 Diamonds design process the wheatgrass that is not
incorporates tools such as Wal- utilized is returned to the
Marts package modeling software supplier for ground for
and ArtiosCAD for structural design, compost.”
to make greener packaging. Some 
of the most basic concepts of
greener packaging are reduced
thickness and square inches of
packaging materials used-to reduce
raw materials as well as weight and
size that increase transportation
impacts such as fuel, emissions and
wear and tear of vehicle
components.
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Demographic:  Wal-Mart International need to take  Compliance to BEE and

What factors related to Culture into account in each of the Afirmative Action related
the workforce need to International Countries they enter as legislation are the two main
be considered? These this will either make or break their factors that Kauai has to take
could include the operations in that country into account when entering
availability of scarce  Unionization is very prevalent in the new business ventures or
skills or the proximity of US and other countries where Wal- hiring new staff.
labour to the workplace. Mart has representation; and  National Government has
therefore they have to adhere to the created a major focus on
boundaries of country specific labour employment of Black South
law in order to comply and keep African women; as well as
their workforce satisfied. This gender split in management
includes decisions to close stores roles within organisations
down in countries/regions that
growth has been hampered
Purpose
A sense of purpose is what drives an organization forward. It is often characterized by a

vision and/or mission that bind the company together; the leadership style of an organization
as well as the values and ethical framework governed governing the business.
Taking a look at each of these factors for both companies
Element Wal-Mart Kauai

Vision “To become the worldwide leader “The Kauai vision is to educate South
in retailing” Africans about how good healthy and
wholesome food can taste and to be
the first choice of millions of quick
service consumers.”
Mission “Wal -Mart's mission is to help “Our mission is to have products that
people save money so they can are recognized by global consumers
live better." and our employees as tasty, healthy,
natural, affordable and convenient - in
an environment that reflects the
natural elements of our products.”
Evaluation basis Mission Statement components: Kauai’s Vision gives a focus more on
is on: 1. Customers education rather than being a leading
Foresight 2. Products or services Health Food Fast Food Franchisor. It
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Breadth 3. Markets does not cover the breadth that one

Uniqueness 4. Technology would expect in a vision; it’s quite
Consensus 5. Concern for survival, generic (to an educational institution)
Action profitability, growth but unique for a Health Fast Food
6. Philosophy Franchisor. My opinion is that the
7. Self-concept overall vision lakes a bit of foresight
8. Concern for public image in line with what they actually do.
9. Concern for employees
Their Mission ties up more with what
There is not much available with can be expected from such a place.
regard to Wal-Mart’s Vision. Their décor in their outlets does tie up
Based on the bit of referencing I with their mission statement; and the
got on their vision; their vision is food itself is what they set it out to be.
very broad and vague. Although
on the other hand, based on their
current performance, they aren’t
too far away from being the
leading retailer in the world.
Their mission statement is
lengthy and very comprehensive
covering every aspect there is to
cover under a mission statement.
In terms of whether they are
living up to their mission
statement; one can conclude that
they are very much aligned in
action with their mission
statement
Leadership The leadership as set out by its
founder, Sam Walton, was very
much in line with what an
organization of this stature
required and still requires today
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and in the future: Strong,

Focused, Caring, and Directional
Leader.
Ethics & Values  When Sam Walton founded  One gets a sense of confidence
the company, he instilled in that Kauai does operate within the
his people and his business legal limits and requirements of
the system of belief that is still each of it’s operations. They also
very much evident and in do meet society’s expectations
place even today. These (although I think there’s a bit more
beliefs state with clarity that, that they can do in society to
“we respect our customers, really expand on their branding);
associates and suppliers and and they conduct themselves very
strive to treat them as we professionally; especially within an
ourselves want to be treated” industry like this.
and “in building and nurturing  In terms of what they consider
these relationships, as well as important:
serving the communities
where we live, we've helped o The one value that stands out
build a better business - one at Kauai is one of integrity.
committed to excellence, What you see is what you get.
 One gets a sense of o Another core value from their
confidence that Wal-Mart side is care for their staff.
does operate within the legal Kauai has programmes
limits and requirements of available to assist promotion of
each of it’s operations staff; such that they can get
(including internationally). assisted with finance to one
They also do meet society’s day co-own/own their own
expectations; and conduct Kauai store.
themselves very o Kauai has a strong concern for
professionally; especially education. One gets this from
within an industry like this. their vision and their
 In terms of what they consider involvement in schools and
important: since Sam Walton trying to respond to the
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Entrepreneurship
October 4, 2010
founded Walmart Stores, Inc., government’s research done

it has always been a values- on children being overweight.
based, ethically led company. o Kauai’s CSI projects also show
The values that guide our forth their desire to make a
decisions and our leadership difference in other parts of
are the 3 Basic Beliefs: society e.g. “The Red Cross
o Respect for the War Memorial Children's
Individual Hospital”
o Service to our
Customers
o Striving for Excellence
 Vision Statement: The vision
of the Global Ethics Office is
to promote ownership of Wal-
mart's ethical culture to all
stakeholders globally.
Objectives:  Wal-Mart’s strategic  Not much information is available
Strategic vs objectives are definitely on Kauai’s objectives; with the
Financial measureable, achievable exception of their strategic
flexible and consistent with objectives related to Corporate
their strategy. Social Investment.
 Based on the way they have  Their focus on making a
structured themselves and difference in schools through
the programmes they’ve education and actually making a
implemented to instill a difference in some of the schools
culture of achieving their they are involved in does give you
objectives; Wal-Mart has a sense that they are focused on
definitely achieved the goal of aligning themselves with their
its objectives giving life to the vision and mission.
agreed strategic vision.
 In terms of their financial
objectives – these too are in
line with their strategic vision;
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Entrepreneurship
October 4, 2010
and can be concluded that it

is because of their financial
objectives together with their
strategic objectives that they
have been so successful
within the industry locally and
globally.
Resources @ Wal-Mart
Competitive Advantage:
Wal-Mart is a lowest Price leader and they have a competitive advantage in pricing,
distribution center, and store locations. Wal-Mart keeps its promise of everyday low prices,
by having a smooth business cycle maintained by unbeatable distribution center supported
by trucking networks, and excellent store locations. Wal-Mart maintains its slogan of
"Everyday low prices", by keeping its merchandise's prices low.
Wal-Mart has a competitive advantage of having constantly low prices is through having a
solid distribution center that keeps its storage fee low, cuts down items time retain on
shelves, and since the distribution centers are always within a 48 hours reachable area
resupplying the goods for two or three stores within one truck load is not a problem. This
business cycle enables Wal-Mart to get its goods on time, and cuts down on storage
expanses and gets higher product discounts from suppliers and also minimizes backorders
by buying its goods in large quantities and store in huge distribution centers. All these cuts
down from expenses allows Wal-Mart to gain greater bargaining power with its supplies
which allow it to have a higher sales margin to play with against its discounters who rarely is
able to catch up with Wal-Mart's low pricing and strategy.
Another competitive advantage is Wal-Mart's excellent store locations. Most of Wal-Mart's

stores are located in rural areas where populations are hardly enough to allow huge
discounter firms to gain a profit. However again through Wal-Mart's already solid foundation
of able to set low pricing on their products and support from their giant distribution centers,
Wal-Mart was able to still gain a profit in rural metropolitan areas where not many discounter
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Entrepreneurship
October 4, 2010
stores have set foot yet, this allows Wal-Mart to be able to monopolize in many towns in most
metropolitan areas within United States.
Customer Satisfaction:
In the mission statement we target our customers by saying: "Our first responsibility is to
provide all consumers the best products and services." Their customers are their number one
priority.
Wal-Mart has been known for their customer oriented approach. Wal-Mart maintains one of
the best satisfaction guaranteed programs, which promotes customer goodwill. One can
return virtually any product to Wal-Mart without any problems. They simply take the product
back and promptly refund the price of the product, nearly no questions asked. They also
promote goodwill among consumers by employing a tactic, which Sam created known as the
"Ten Foot Rule." This is simply the idea that if a customer comes within ten feet of an
employee, they are required to greet them and ask if they can help them in any way. This is
also evident through employees getting to know customers on a first name basis.
Resources @ Kauai
Customer Satisfaction:
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October 4, 2010
Kauai aims to supply the South African market with nutritious wholesome food unlike any
other health food store in the fast food industry. They focus on ensuring that only the
freshest ingredients and are very conscious of meeting specific dietary requirements; thereby
satisfying a larger majority of the consumer base.
Competitive advantage: Brand
Kauai having its origins from Hawaii, comes with a fresh new feel and look to the health food
market. The brand carries itself as being known for
Their health smoothies have been the one product that saw introduction of smoothies into
the South African market; has propelled them into being seen as having the best smoothie in
the market.
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Entrepreneurship
October 4, 2010
Question 2: Kauai Franchise Business Plan
Kauai Health Food & Juice Bar Co.

Tygerberg Business Plan
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October 4, 2010

Contents
1. Executive Summary........................................................................................................31
2. Mission.............................................................................................................................33
3. Products...........................................................................................................................34
4. Market Survey..................................................................................................................36
5. Strategy and Implementation Summary.......................................................................38
6. Main Competitors............................................................................................................39
7. Marketing Strategy..........................................................................................................39
8. Sales Strategy..................................................................................................................40
9. Sales Forecast..............................................................................................................41
10. Personnel Plan.............................................................................................................42
11. Financial Plan..................................................................................................................43
12. Important Assumptions.............................................................................................44
13. Other Current Assets.................................................................................................45
14. Projected Cash Flow..................................................................................................45
15. Exit Strategy and Risk...............................................................................................47
16. Appendices......................................................................................................................48
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1. Executive Summary
Kauai franchise offers a healthy alternative to fast food franchise. Cash requirements R500
000 (ex VAT) needed for full franchise excluding any lease deposit requirements, including a
franchise fee of R110 000 (ex VAT). The total set-up cost is R1.3 million.
As owner, I am seeking a conventional loan R 1,3 million to complete their start up financing.
Start up funds will be utilized to pay for lease, purchase equipment and inventory, pay labor,
and cover all general, marketing, and administrative costs for the first six months of
operations. Kauai is expected to generate positive net earnings in the fifth month of the first
year of operations.
Kauai will capitalizes on a low number of competing restaurants in the same area, a growing
population with higher-than-average household income in the region, and a large business
population located within a 3 to 10 kilometre radius. Kauai is positioned as a high-value
dining experience with interesting, fresh health conscious meals offered as a healthy
alternative to fast food franchise. Kauai caters to the health conscious, irrespective of race,
gender, age. Kauai menu offers only the freshest and tastiest ingredients are used to prepare
the delicious and nutritious meals you have come to know and love.
The establishment is owned and operated by my wife and I, Marvin and Jo-Anne Horkins,
whom has over 20 years experience in managing successful, upscale family restaurants and
fast food outlets.
With initial start-up capital of, Kauai is forecasting R1,707,711 in gross sales in the first year
of operations, increasing to R3,136,140 in the second year of operations and R3,452,162 in
the third year. Net profits are forecasted at R87,530 in the first year, R190,515 in the second
year and R212,933 in the third year. Net profit from sales is projected at 5.13% in the first
year, 6.07% in the second year and 6.17% in the third year.We project a net cash flow of
R198,339 in the first year, increasing to R299,741 in the second year and R262,581 in the
third year. Net worth is projected at R122,780 for the first year, increasing to R313,294 in the
second year and R526,228 in the third year.
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1.1. Objectives
To establish a long-term health food and juice company and be recognized as a unique,
consistently good dining and social experience within the residential and business
communities found in the area. Gross margins, operating ratios, sales, and net revenue
projections are benchmarked against the national industry averages.
To succeed in the long-term and generate revenue appropriate for servicing a conventional
loan obligation, we have established the following goals, which are detailed in this business
plan.
· Maintain a Gross Margin of 65%
· Maintain a Net Profit from Sales of 5% annually
· Maintain a Cost of Goods of less than 36% for food and 25% for beverages
· Maintain a Cost of Labor of less than 25% of revenue
· Maintain a Sales &Marketing budget of 1.9%
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Key elements to success:
 We will implement strict financial oversight. Management accounting will be provided

by an outside firm specializing in restaurant accounting services. All financial services,
including bookkeeping and payroll, will be outsourced. This strategy will provide better
cost control due to increased reporting, reduced operating expenses due to fewer
payroll obligations, and increased net revenue through improved accounts payable
efficiencies.
 We have identified the location as lacking in a comparable health food outlet.

Currently, business people working in the immediate area must travel several miles to
find a similar dining experience. Similarly, individuals and families living in the
immediate area must travel the same distance. Tapping into this opportunity is one of
the keys to Kauai’s success.
 Additionally, the Kauai is distinguished from the competition by its distinctive, unique
atmosphere. Kauai has a quaint ambiance and brand will be distinctively one-of-a-
kind, following the successful suggestion of the mother franchise. Kauai’s menu will
offer the same high quality products that are prepared with the freshest of ingredients
and served in interesting presentations, as per the mother franchise. Kauai’s will
provide outstanding service in a fun, unique atmosphere.
 Kauai already includes a juice bar, expected to drive 22% of total revenue. The juice
bar will cater to business people meeting after work and to singles during the
weekend specializing in the freshest juices and juice combo; and of course our well
known Kauai Smoothies.
2. Mission
Our mission is to have products that are recognized by global consumers and our
employees as tasty, healthy, natural, affordable and convenient - in an
environment that reflects the natural elements of our products.
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3. Products
Only the freshest and tastiest ingredients are used to prepare the delicious and nutritious
meals you have come to know and love, and you can rest assured that all stores abide by
Kauai's Ten Principles of Good Nature:.
1. It’s all fresh: Your servings are made right before your eyes, with only the freshest
ingredients.
2. No, REALLY, it's all fresh: And that applies to their sauces, spreads and dressings
too!
3. As nature intended: They keep their ingredients as close to their whole and natural
state as possible so that they don't lose any of their flavour or goodness.
4. No trans fats: Trans fats are neither good nor natural, which is why you won't find any
in Kauai’s products.
5. No fry zone: None of Kauai’s products are fried – in fact, the oiliest thing in their
kitchen is an avocado!
6. FREE of MSG and Tartrazine: You won't find any MSG or tartrazine in any of their
meals.
7. 100% wheat free: Kauai’s rye bread is, well, rye bread and 100% wheat free.
8. They only pick the best, so that's what you get: Kauai’s supplements are made
from premium choice herbs, minerals & vitamins.
9. No dairy? No problem: All dairy smoothies can be made with GM-free soya milk for
the lactose intolerant.
10. Vegan friendly: Kauai mayo is reduced in fat and egg free - perfect for vegans.
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Taste is paramount to Kauai, the good natured food company, and the folk who develop
Kauai’s new products have paid special attention to making their summer menu full of good
nature and flavour. Tantalise your taste buds with their healthy and delicious smoothies,
wraps, sandwiches, burgers and, now, dessert.
From mid November, you will be able to try the new addition to their range of healthy burgers
– the Hawaiian chicken burger, a mouth-watering twist on the traditional variant, made with a
tangy and sweet pineapple relish atop a smoky barbeque tender chicken fillet on a nutritious
linseed bun.
Oh-so-fabulous is the new Oh-Mega Smoothie, a pomegranate, strawberry and pineapple

smoothie rich in anti-oxidants, omega 3 oils and full of fresh fruit flavour. The smoothie
contains an excellent source of omega 3 oils within a special micro-encapsulated omega 3
supplement, beneficial for heart and brain function. Pomegranates are packed with Vitamin
B, C and E - vital for good emotional and mental health; and strawberries offer an excellent
source of magnesium and manganese that combats nervous tension and irritability.
Kauai will also introduce their first dessert, the Berry Dream. Pro-biotic, low fat Berry Dairy
frozen yoghurt, with fresh raspberry puree topped with delicious cranberry & macadamia
biscotti crumble.
For a wake up call on a hot summer’s day we have a brand new, and brilliantly low in fat,
Iced Latte. Made with quality Espresso, chilled vanilla dairy sorbet, fat free milk and crushed
ice. Double Espresso shots and decaf options are available too.
Kauai products are kept as close to their whole and natural state as possible and are freshly
made in each Kauai. The rye bread is 100% wheat-free and all dairy smoothies can be made
with GM-free soya milk for the lactose intolerant. All products are MSG and tartrazine-free.
No food is fried and Kauai mayonnaise is egg free, making it suitable for vegetarians.
Occupying a leased, 1,500 square foot former restaurant facility, Kauai will provide a total of
30 tables for diners. Diners will choose from indoor seating designed with warm interior
decorations and outdoor seating in a romantic garden setting. The indoor seating area
includes twenty tables. The outdoor seating will include ten tables. The service will be friendly
and professional, with experienced staff trained to emphasize an upscale dining experience.
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We believe that the two most important elements in this outlet's value equation are food and
service, followed by price and ambiance. The most important factors in determining our menu
are consistency, creativity, and prices. The menu will be the same as that of the head
Franchise.
4. Market Survey
The restaurant's customer profile represents two segments: residential customers (families
and singles) and business customers. The following analysis is a breakdown of this customer
base that supports the restaurants projected sales revenue.
Kauai Tygerberg will be located in the town of Tygerberg that has a large residential
population of higher-than-average household income. Each household has an average of
2.96 people, with a higher-than-average median income of R65,288 per household, and eat
out an average of 2.5 times per week. This information supports the restaurant's pricing
position of charging a slightly higher than average price per meal. The population is
increasing at a rate of 1.9% annually. Individual residential customers are forecasted to
contribute 33% of the lunch sales and 67% of dinner sales. Additionally, Kauai will be located
in an ideal location, providing the opportunity for a healthy alternative to fast food.
The business community within a 7 to 10 kilometres radius of the outlet has a labour
population of 448,669 individuals. 48% of these individuals are in management or
professional positions that are likely to frequent the restaurant for lunch and dinner meetings.
These individuals eat out approximately 4.3 times per week.
The following table provides a market analysis for the region's total population, along with
projected growth estimates. The table shows that the Compounded Annual Growth Rate
(CAGR) for the combined residential and business population is 2.05%.
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Market Analysis CAGR
Potential
Customers 2011 2012 2013 2014 2015
Growth
Individual 770723 785367 800289 815494 830989
Residential
Customers
1.9%
Individual 448,669 458,988 469,545 480,345 491,393
Business
Customers
2.3%
Total 2.5% 1,219,392 1,244,355 1,269,834 1,295,839 1,322,381
Customer Forecast
Seasons will compete with all food establishments and has targeted 2.5% of the total
potential customer base as a fair representation of the market. The combined total population
of potential residential and business customers is 1,219,392 people. The target customer
base is expected to frequent the restaurant two times per year. Individual business
customers are forecasted to contribute 66% of lunch sales and 33% of dinner sales.
The population is broken down into lunch sales and dinner sales. Lunch sales are projected
to have an average revenue per person of $17.00, including beverage. Dinner sales are
projected at $25.00 average revenue per person, including beverage. Bar sales are projected
to generate an additional 22% sales revenue. During the week, the owners anticipate 33% of
lunch sales attributed to residential customers, and 66% to business customers. Weekday
dinner sales are expected to consist of 66% residential customers and 33% business
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Entrepreneurship
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customers. During the weekend, both lunch and dinner customers are expected to be 100%
residential.
5. Strategy and Implementation Summary
Our priority is to determine a realistic net revenue stream for the outlet. Based on
determining start up costs and an accurate forecasted financial situation, the owners will
secure start up and working capital to proceed with the launch. By identifying a market
opportunity with limited competition, the owners can leverage the successful branding Kauai
nationally carries; together with our management experience into a stable, long-term
business concern with strong financial stability.
After obtaining start up capital, we will begin marketing efforts to establish a presence within
the community. Within the same time frame, we will secure lease arrangements and begin
obtaining equipment and furnishings. Staffing interviews will be conducted, with an emphasis
on recommendations and referrals. The outlet will open for business in the second month
after funding is secured.
a. Competitive Edge
The outlet’s competitive edge is its proximity to a large residential and business population
that is located in the quaint town of Tygerberg; tougher with the interest generated from the
Virgin Active close by for a In-motion branch; we feel that is area under served by similar
Health Food outlets. In conjunction with capitalizing on this business opportunity, the Kauai
will provide a unique atmosphere and menu along with excellent service at appropriate
pricing.
We recognize that the customer's experience and resulting word-of-mouth advertising is

critical to the success of the oulet; in combination with corporate branding from head
franchise. By tapping their successful customer experience of the outlet, we have a distinct
competitive advantage in establishing the outlet’s experience prior to the its launch. The
atmosphere and service will be carefully developed and managed.
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6. Main Competitors
Kauai's main competition is represented by all other Health Food and Juice opportunities
currently available to residential and business customers. These segments include all sectors
within this industry, such as fast food, casual restaurants, and fine food establishments.
The main competitive category for the outlet is a full-service, moderately upscale Kauai
experience; experienced at other branches nationally. One similar Health Food/Fast Food
outlets are identified within the immediate area. The following is a price matrix breakdown of
these restaurants compared to our restaurant:
Outlet #1: Medium quality/medium price. Juicy Lucy; menu allows high margins. Limited
seating with a standard sandwich menu. This is an old brand that has been around since
1970 and definitely needs revamping to come close to competing with Kauai.
Our Restaurant: High quality/high price. Fresh, diverse menu with engaging atmosphere
catering to business, family, and single demographic. Bar and restaurant expect to gain
overflow from other restaurants.
7. Marketing Strategy
We as owners-to-be recognize that the most important marketing strategy is word-of-mouth

advertising by satisfied customers. All products and services will reflect this understanding,
with only the highest of standards maintained.
The marketing strategy will include advertising in local print publications, flyers distributed to
residences and business within a 3 to 10 kilometre radius, advertising on local radio also co-
supported by the branding support received from head franchise. Advertising in the local
yellow pages with a coupon will also be another marketing strategy.
Print ads will appear in local newspaper and business publications beginning six weeks prior
to the restaurant's grand opening. A print campaign will be ongoing. Direct Mail will be used
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October 4, 2010
to distribute advertisements to residences and business within a 3 to 10 kilomtre radius

beginning two weeks prior to the restaurant grand opening; and to include the local Virgin
Active Health Club and other Gyms in the area.
Local restaurant reviewers will be invited to attend a pre-opening event and provided with
copy material for reviews and articles. Press releases will be distributed to all business and
community newspapers and publications within the county.
8. Sales Strategy
We will maintain a pricing strategy that limits the cost of goods to 36% of total sales for food
and 25% of total sales for beverages. We are projecting an average lunch ticket of R60.00
per person (including beverage).
a. Pricing and Profitability
Menu Pricing
Kauai's value proposition is positioned as high-quality with mid-range pricing. Because the
restaurant has limited geographic or comparable service competition, the menu will carry the
same pricing strategy as is seen nationally.
The owners are estimating the cost of food at 36% and the cost beverages at 25%.
Pricing follows a full-cost strategy that reflects the establishment's actual costs. The following
formula will determine menu pricing: Menu Price = Cost of Food divided by Food Cost
Percentage.
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9. Sales Forecast
The owners will begin preparing the restaurant and bar in December for an expected January
opening in 2011. No revenue is projected for January. As the restaurant is a start up
business, the owners expect sales at 20% of the projected total for the restaurant's opening
month, increasing by 10% each month until reaching the total projected units in December of
the first year.
Gross sales for the first year, including food and bar, are projected at R1,707,711, with Cost
of Goods projected at R607276.
After reaching capacity in during the second year, sales are projected atR3,136,140 with a
Cost of Goods at R1,114,843. In accordance with industry statistics, sales are projected to
increase by 5% annually.
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10. Personnel Plan
The restaurant industry is labour intensive, with traditionally high turnover rates that often
result in lower hiring standards. To circumvent this problem, we are targeting production
payroll, including wait- and kitchen-staff, at 25% of total sales annually. The owners are also
designating 3.4% of total sales for employee benefits to retain long-term employees.
In the first year, the restaurant will have 8 full-time and 4 part-time employees, with total
hours worked increasing incrementally as sales volume increases. Total payroll for the first
year is projected at R431,467, increasing to R784,035 in the second year and R863,041 for
the third year. Payroll Tax is projected at 10% of Payroll.
Employee categories include:
· General Manager
· Front Manager
· Head Chef
· Supporting Chef
· Cooks
· Prep Cooks/Dishwashers
· Waitpersons
· Busboys (for deliveries)
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11. Financial Plan
The Financial Plan includes:
· Important Assumptions
· Start Up Costs
· Break Even Analysis
· Projected Profit and Loss
· Projected Cash Flow
· Projected Balance Sheet
· Exit Strategy
The Appendix of this plan includes 12-month projections for Sales, Profit and Loss, Cash
Flow, and Balance Sheet.
Based on statistics from the Restaurant Association of South Africa, the restaurant is
expected to see an annual increase in sales of 5% annually.
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12. Important Assumptions
All projections are compared against industry averages as provided by the Restaurant
Association of South Africa.
The start up funding requirements are R500,000. The following is a breakdown of start up
costs and required funding, which reflects a cash balance of R290,500 after start up
expenses.
Start-up Requirements
Legal R2,500
Insurance R5000 Rent &Security Deposit R10,000
Phone &Gas Deposit R750 Cleaning R2,000
Other $0 Total Start-up Expenses R20,250
Start-up Assets Needed
Cash Balance on Starting Date R30 Other Current Assets R155,750
000
Total Current Assets R185,750
Long-term Assets $0 Total Assets R185,750
Total Requirements R206,000
Funding
Investment Owner Equity R20,000
Owner Equity R20,000 Total Investment R40,000
Current Liabilities
Accounts Payable $0 Current Borrowing R150,000
Other Current Liabilities $0 Current Liabilities R150,000
Long-term Liabilities $0
Total Liabilities R150,000
Loss at Start-up (R14,750) Total Capital R35,250
Total Capital and Liabilities R185,250
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13. Other Current Assets
The line item 'Other Current Assets', which totals $155,750 in the Start Up table, is included
in the Balance Sheet for depreciation purposes. The following is a breakdown of these items,
which are targeted specifically for start up expenses and will be purchased in the same
month that loan proceeds are distributed for use.
Breakdown of 'Other Current Assets'

Stationary R3,000
Office Supplies R1,250
Cash Register/Software R25,000
Leasehold Improvements R30,000
Furniture and Tableware R70,000
Refurbishing R20,000
Food and Beverage Inventory
R30,000
Kitchen Supplies R15,000
Advertising R2,500
Total Other Current Assets $155,750
14. Projected Cash Flow
We project a net cash flow of R198,339 in the first year, increasing to R299,741 in the
second year and R262,581 in the third year. Net cash flow is projected to be positive for each
month, with the exception of the sixth month of operations. Net cash flow falls to (R845) due
to increase cost of goods reflecting anticipated sales growth.
Cash balance is projected at R227,839 in the first year of operations, increasing to R527,579
in the second year and R790,160 in the third year.
Pro Forma Cash Flow

2011 2012 2013

Cash Received
Cash from Operations:
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Cash Sales R1,707,711 R3,136,140 R3,452,162

Cash from Receivables R0 R0 R0
Subtotal Cash from Operations R1,707,711 R3,136,140 R3,452,162

Additional Cash Received
Sales Tax, VAT, Received R102,463 R188,168 R207,130
New Current Borrowing R0 R0 R0
New Other Liabilities (interest-free) R0 R0 R0
New Long-term Liabilities R0 R0 R0
Sales of Other Current Assets R0 R0 R0
Sales of Long-term Assets R0 R0 R0
New Investment Received R0 R0 R0
Subtotal Cash Received R1,810,174 R3,324,308 R3,659,292

Expenditures 2011 2012 2013
Expenditures from Operations:
Cash Spending R0 R0 R0
Payment of Accounts Payable R1,574,622 R2,881,509 R3,167,947
Subtotal Spent on Operations R1,574,622 R2,881,509 R3,167,947

Additional Cash Spent
Sales Tax, VAT Paid Out R0 R102,463 R188,168
Principal Repayment of Borrowing R37,213 R40,596 R40,596
Other Liabilities Principal Repayment R0 R0 R0
Long-term Liab. Principal Repayment R0 R0 R0
Purchase Other Current Assets R0 R0 R0
Purchase Long-term Assets R0 R0 R0
Dividends N/A N/A N/A
Subtotal Cash Spent R1,611,835 R3,024,568 R3,396,711

Net Cash Flow R198,339 R299,741 R262,581
Cash Balance R227,839 R527,579 R790,160
15. Exit Strategy and Risk
We have integrated 20 years of experience in the restaurant business into developing a

detailed business plan that supports the launch of Kauai Health Foods and Juice Co
Tygerberg. Based on this, we believe that the financial forecast supports our investing
R40,000 of our personal savings. We anticipate developing a successful, long-term
restaurant/outlet that will provide sustainable net revenues and viable jobs for the
community. We plan to hold the restaurant for the long-term. If Kauai Tygerberg is
successful, the owners will consider establishing a second outlet in the nearby Virgin Active.
We recognize the risk involved in a restaurant of this nature. In the event that Kauai
Tygerberg can not achieve profitability, we will attempt to sell the restaurant, with the
proceeds used to pay any debts. If we are unable to sell the restaurant, the owners may be
forced to default on their outstanding loan obligation.
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16. Appendices
a) General Menu
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Question 3: South African Policy Framework
The promotion of entrepreneurship and small business remains an important priority of the
government of South Africa. Government’s commitment is to ensure that small businesses
progressively increase their contribution growth and performance of the South African
economy in critical areas such as job creation, equity and access to markets.
Since 1994, with the advent of a new democratic era, government has taken measures to
ensure that small business development becomes a key policy focus. In March 1995 an
important milestone was achieved when government released its White Paper on national
strategy for the development and promotion of small business in South Africa, the first time a
comprehensive policy and strategy on small business development was formulated in the
country.
These included:
 Creating an enabling legal framework

• Streamlining regulatory conditions
• Facilitating access to information and advice
• Facilitating access to marketing and procurement
• Facilitating access to finance
• Facilitating access to affordable physical infrastructure
• Providing training in entrepreneurship, skills and management
• Improving industrial relations and the labour environment
• Facilitating access to appropriate technology
• Encouraging joint ventures
• Capacity building and institutional strengthening
• Introducing differential taxation and other financial incentives
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Since then, government owned institutions and programmes have evolved all three spheres
with the aim of providing comprehensive support to small business.
These institutions have made progress in delivering a wide range key support services.
These services continue to benefit an increasing number of small businesses year after year.
Government will continue to lead efforts to increase the level of entrepreneurship through
supporting small business creation, but we are mindful that this important task cannot be
successfully undertaken by one player alone.
Recently, a number of new government policies with a bearing on aspects of

entrepreneurship and small business development have emerged. These policies, by their
nature, affect this integrated entrepreneurship and small business development strategy. Key
to these policies is the National Industrial Policy Framework. The National Industrial Policy
Framework is not a new policy direction but a logical evolution of government economic
policy.
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a) Support for women-owned enterprises
One such initiative that Government has implemented is Support for women-owned
enterprises:
The Government has initiated various measures to increase women entrepreneurship and to
support women in business. These include: Sawen (South African Women En trepreneurs’
Network), a Department of Trade & Industry -initiated national networking forum for
individuals and organisations committed to the promotion andadvancement of women
entrepreneurs.
Sawen represents and articulates the aspirations of women entrepreneurs, and holds
organised educational and trade missions for members. Business linkages between SA
women entrepreneurs and their counterparts in other parts of the world have also been
facilitated. Sawen continues to be an advocacy network for women in business, ensuring that
policies and strategies are sensitive to gender issues. TWIB (Technology for Women in
Business) is a Department of Trade & Industry initiative that supports the advancement of
women in business through the application of science and technology in their ventures. This
is aimed at overcoming constraints to enterprise innovation and growth, as well as fostering
local and global competitiveness. The sector departments have also developed initiatives to
give targeted support to women in business. These have led to a grid of sector-specific
women in business networks, including Sawic (construction sector), Woesa (oil and energy
sector), and Sawima (mining sector).
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b) Broad-based black economic empowerment strategy
Several objectives of the B-BBEE strategy bear relevance to small business development
and therefore to this strategy. These are:
• achieving a substantial increase in the number of black people who have

ownership and control of existing and new enterprises
• achieving a substantial increase in the number of black people who have
ownership and control of existing and new enterprises in the priority sectors of
the economy, which government has identified in its macro-economic reform
strategy
• achieving a significant increase in the number of new black enterprises
• increasing the proportion of ownership and management of economic activities
vested in community enterprises and co-operatives.
Besides increasing enterprise ownership by blacks, the B-BBEE strategy also outlines
measures to increase procurement from black-owned enterprises, and to strengthen the
supply capacity of black-owned firms.
This shows the commitment of government towards developing an entrepreneurial culture

within South Africa.
This sort of support benefits a new franchise from a finance perspective; and this actual
supports the financial backing that Kauai is willing to commit to their employees as well as
any interested franchisee.
The IDC is there to support financially in getting small medium enterprises started financially
and assisting in sustaining them; based on agreements signed between both parties.
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Aspect relevant to
small business Current or proposed B-BBEE strategy action
development
 Review of government procurement policy in order to enhance

its impact on BEE.
Preferential  Setting clear targets to increase the levels of preference to
procurement black-owned enterprises.
measures  Enabling legislation on BEE, requiring all government
preferential departments, state-owned enterprises and public agencies to
procurement policies take into account code of practice issues emanating from the
legislation in determining and implementing their preferential
procurement policies
Strengthening small Government is to expand its supplier development programmes to
business capacity to ensure that more black enterprises are created and enabled to meet
benefit from the requirements of purchasers in the public sector.
procurement
initiatives
 The Department of Trade & industry is to lead better co-ordination
of incentive grants that target SMME initiatives, and establish an
administration system that links the incentive grants to other
financial and non-financial support mechanisms in order to
maximize SMME access and BEE impact. New incentive grant
schemes and amendments to existing ones are also being
considered – the focus of these schemes is on those targeting
Financing entrepreneurship, supplier development, and enterprise

mechanisms development, including self-help schemes and co-operatives, skills
development, and the acquisition and development of new
technology.
 State-facilitated lending is to be driven by Khula and Samaf.
 Project financing is to be driven by the IDC.
 Empowerment transaction financing is to be driven by NEF.
 Government will facilitate specific venture-capital projects in
particular sectors.
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Bibliography
A Business Owner’s Secret Weapon: SWOT Analysis,from www.sbiformation.about.com.

[Accessed: 30 September 2010]
Burke, R. 2006. Small Business Entrepreneur, Burk Publising.
Kaplan, J. M. 2004. Patterns of Entrepreneurship, Singapore. John Wiley and Sons.
Kroon, J. (editor) 1998. Entrepreneurship. Start your own business, Cape Town. Kagiso
Education.
Rwigema, H. and Venter, R. 2004. Advanced Entrepreneurship, Cape Town. Oxford

University Press.
SWOT Analysis: Lesson, www.marketingteacher.com/lessonstore.htm .Wal-Mart

SWOTAnalysis , 2007, Datamonitor [Accessed: 31 September 2010]
http://www.doh.gov.za/docs/policy/gender.pdf
www.dti.gov.za
Virgin Active and Kauai tackle recycling issues together.

http://www.enviropaedia.com/news/article/default.php?
pk_news_type_id=1&pk_news_id=358&pg=10 . [Accessed: 16 August 2010.]
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Entrepreneurship
October 4, 2010
http://www.gutenberg.org/files/17405/17405-h/17405-h.htm . [Accessed: 31 September 2010]
www.kauai.co.za/ . [Accessed: 31 September 2010]
www.kidzhospital.co.za. [Accessed: 27 September 2010]
www.malmartstores.com/GlobalWMstoresweb . [Accessed: 22 September 2010]
www.money.cnn.com/magazine/fortune500. [Accessed: 21 September 2010]
www.wikipedia.org/Walmart#Competitors . [Accessed: 21 September 2010]
www.wikipedia.org/wiki/Walmart#Competition . [Accessed: 21 September 2010]
www.walmartstores.com/globalWMstoresWeb . [Accessed: 22 September 2010]
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MANCOSA

Question 1: Strategic Entrepreneurship

As part of a business development process, many organisations use a SWOT analysis to

As a guide to using SWOT:

These tools and factors cover the Context component.

Below is Wal-Mart’s SWOT Analysis

Annual lease in major shopping centers, location

Have you got sufficient

Your reputation - are you

Yes. They are able to differentiate from their

Are you involved with industry No No

Customer service.

Supercenters offer one stop shopping.

Satisfaction guaranteed program promoting customer goodwill.

Company culture and employee motivation.

High bargaining power over supplier.

Sophisticated distribution systems.

Superior information system.

Low price every day.

Solid financial standing.

Stock ownership and share-profit with employees.

Sells a large variety of brand name products.

Strong community involvement

Do you have a high overall unit No No

Do you lack industry knowledge? No Yes

Pending litigation

Puts smaller retailers out of business.

"Cheap" image

Keep poor performance employee on hand.

Employee and customers theft.

Old fashion store policies.

Can you diversify your business Maybe, if we had the funds No

Do you have any export No, we import No

Are there any changes in the use

Expanding e-commerce.

Expanding into emerging markets

Expanding into urban marketplaces.

Offering new products.

Environment conscious consumers

Do consumers have a choice to Yes, many other products in the category No

Is regulation in your industry No No

Labor unions.

Growing criticism against Wal-Mart.

Expense of internalization.

Variety of competition nationally, regionally or locally.

Regulation of Wal-Mart pharmacies.

Substitute products more easily because of intense competition

b) Kauai Health Foods & Juice Company

Below is Kauai’s SWOT analysis:

Is your plant and equipment old or outdated? No no

Can you expand into your supplier's field? Yes yes

Will foreign exchange rate changes affect

The model of PESTLIED (analysis of Political, Economical, Social, Technical, Legal,

Element Wal-Mart Kauai

Social:  Wal-Mart keeps itself involved in  Kauai has launched a new

opportunities in our four main focus

legislative issues that a and internationally growing theme being

Demographic:  Wal-Mart International need to take  Compliance to BEE and

A sense of purpose is what drives an organization forward. It is often characterized by a

Taking a look at each of these factors for both companies

Element Wal-Mart Kauai

Breadth 3. Markets does not cover the breadth that one

and in the future: Strong,