Understanding+business3
Page 1: Introduction
Understanding Business and Entrepreneurship
Title: "Follow the Money"
Date: February 2024
Page 2: Presenter Information
Accounting Information Systems
Presented by: Kudzai Matiashe
Office number: FNB 136
Email: Kudzai.matiashe@wits.co.za
Page 3: Administrative Matters
Assessments
Quiz scheduled from Thursday to the following Tuesday.
April Test 1 date: 26 March 2024, 8am-10am.
General Administrative Matters
Importance of attendance in lectures and tutorials.
Overview of the tutorial system.
Class representatives and methods of communication.
Page 4: Learning Objectives
Identify and explain various types of business entities.
Explain the central goals of a business entity.
Identify various stakeholders and explain their relationships with the entity.
Discuss the stakeholder model versus the shareholder wealth maximization framework and identify their differences.
Define business models and their importance.
Identify and explain the "six capitals" and their roles in business models.
Explain the Business Model Canvas, its components, and its impact on business models.
Page 5: Types of Entities
Overview of South African Entities
For-Profit Entities:
Sole Proprietor
Partnership
Close Corporations
Private Companies
Personal Liability Companies
Public Companies
State-owned Companies
Non-Profit/Government Entities:
Non-profit organizations
Non-governmental organizations (NGOs)
Community-based organizations (CBOs)
Faith-based organizations (FBOs)
Legal Perspectives
Distinction between Natural Persons and Juristic Persons.
Page 6: Specific Types of Entities
Detailed list of entities includes:
Sole Proprietor
Partnership
Close Corporation (CC)
Private Company (Pty) Ltd
Personal Liability Company (Inc)
Public Company (Ltd)
State-owned Company (SOC Ltd)
Page 7: Entity Types Explained
Definitions and Characteristics
Sole Proprietor
Natural entity; trades under personal name; unlimited liability.
Partnership
Managed by multiple partners, joint liability but shares in profits.
Close Corporation (CC)
Juristic entity; limited liability; up to 10 members; no audit requirement.
Private Company (Pty) Ltd
Incorporated; limited liability; at least one shareholder, no upper limit on shareholders.
Personal Liability Company (Inc)
Similar to private companies with extra liability coverage for directors.
Public Company (Ltd)
Large shareholder base; shares traded on stock exchange.
State-Owned Company (SOC Ltd)
Owned by state or municipality; limited liability.
Page 8: Goals of Business Entities
Overall Goals
For-Profit Entities:
Maximize shareholder wealth.
Create stakeholder value.
Minimize negative impacts on society and the environment.
Nonprofit/Government Entities:
Efficient resource use to create value.
Page 9: Stakeholders
Stakeholder Definition
Any group or individual affected by the achievement of business goals.
Page 10: Evolution of Business Goals
Historical Perspective
Shareholder Wealth Maximization:
Earlier focus on maximizing shareholder wealth (Friedman, 1970).
Modern Perspective
Stakeholder Theory (Freeman, 1983):
Engage with stakeholders for accountability.
Aim for long-term sustainable value.
Page 11: Strategy and Corporate Citizenship
Strategy Definition
Direction and scope of an organization; aims for competitive advantage.
Corporate Citizenship
Refers to a business's commitment to legal, ethical, and economic responsibilities.
Page 12: Business Model and Value Creation
Business Model Definition
A system of inputs, processes, outputs designed to create stakeholder value.
Value creation depends on resources, stakeholder relationships, and environmental considerations.
Page 13: The Six Capitals
Description of Capitals
Financial Capital
Manufactured Capital
Human Capital
Intellectual Capital
Natural Capital
Social and Relationship Capital
Page 14: Financial Capital Explained
Components of Financial Capital
Fund usage in production/services; can be from debt, equity, or operations.
Manufactured Capital Explained
Components
Physical assets like buildings, equipment, and infrastructure.
Intellectual Capital Explained
Key Attributes
Organizational knowledge, intellectual properties, and procedures.
Human Capital Explained
Key Attributes
Skills, experience, and motivation of personnel.
Social and Relationship Capital Explained
Key Attributes
Networks and relationships that enhance well-being.
Natural Capital Explained
Components
Renewable/non-renewable resources vital for prosperity.
Page 15: The Six Capitals - Shoprite Case Study
Application
Illustration of how Shoprite utilizes the six capitals in practice.
Page 16: The Six Capitals - Shoprite (Continued)
Further Analysis
Continued insights into capital management by Shoprite.
Page 17: The Business Model Canvas
Overview
A framework to identify and understand business concepts on one page.
Page 18: Value Proposition
Definition
Central concept exchanging value between businesses and customers.
Critical Questions
What problem does the business solve?
How does it fit into the customer’s needs?
Page 19: Business Model Canvas Components
Key Partners: Suppliers and collaborators.
Key Activities: Activities crucial for delivering value propositions.
Value Propositions: What unique value is delivered to customers?
Additional Components
Customer Relationships and Customer Segments analysis.
Page 20: Business Model Canvas Structure
Visual representation including Key Partners, Activities, Value Propositions, Relationships, Resources, Channels, Costs, and Revenue Streams.
Page 21: Important Infrastructure Considerations
Key Partners
Partnerships are vital for achieving key activities.
Key Activities
Actions to deliver customer value.
Key Resources
Resources necessary for key activities and linking to the six capitals.
Page 22: Customer-Centric Components
Customer Relationships
How businesses interact with customers (e.g., assistance types).
Customer Segments
Dividing customers based on their specific needs.
Page 23: Financial Components
Revenue Streams
How business generates income from various strategies (e.g., asset sales).
Cost Structure
Cost factors impacting business operations.
Page 24: Entrepreneurship Overview
Core Elements of Entrepreneurship
Problem identification and definition.
Business model.
Funding model.
Execution.
Rewards.
Page 25: Risks and Rewards of Entrepreneurship
Risks Involved
Demand issues, competition, supply chain problems, etc.
Rewards
Potential wealth, recognition, influence, and self-fulfillment.
Page 26: Qualities of an Entrepreneur
Key Qualities
Resilience to failure and confidence in abilities.
Discipline and the ability to focus on business growth.
Creativity and open-mindedness towards various possibilities.
Page 27: Business Plan Overview
Purpose
A tool for planning, resource allocation, and obtaining financing.
Page 28: Purpose of the Business Plan
Objectives
Persuade investors by demonstrating the feasibility and viability of the business.
Page 29: Intended Audience
Understanding Stakeholders
Tailoring the message to appeal to different capital providers (debt vs. equity).
Page 30: Audience Considerations
Variations by Audience
Different expectations between debt and equity providers.
Page 31: Components of a Business Plan
Essential Sections
Executive summary
Business description
Ownership and management overview
Product/services offered
Market analysis and sales strategy.
Page 32: More on Components
Importance of executive summary and business description in attracting interest from readers.
Page 33: Ownership and Management Team
Focus Areas
Description of legal structure and management experience.
Page 34: Product and Market Analysis
Critical Insights
Unique features of products and market positioning.
Page 35: Facilities and Resources Required
Overview of manufacturing processes, equipment, and supply chain considerations.
Page 36: Business Model Section
Lean Start-up Concept
Ability to sustain without heavy capital while pursuing expansion.
Page 37: Funding and Milestones
Outline of required funding and utilization timelines.
Page 38: Financial Data and Forecasts
Essential Information
Expectations regarding financial performance and underlying assumptions.
Page 39: Stakeholders and Risk Management
Description of Stakeholders
Impact of business on various stakeholders and associated risks management practices.
Page 40: Conclusion
Summary Points
Business plan as a marketing tool, highlighting investment attractiveness and future expectations.
Page 41: Closing
Thank You
Contact information: FNB 136, Email: Kudzai.matiashe@wits.co.za