case study

Question

Mr noemdo is a level 4 tvet college students. to subsidise his income while studying, he has been working part-time as a waiter at a local restaurant. he saw a gab in the market at the college he attends as there is no tuck shop operating on the college premises. he therefore decided, after research, to open up a small tuck shop in the back room of a friends house which is opposite the the college campus. he employs a person to run the tuck shop while he is attending college. he buys the required stock every afternoon after college as he does not have much capital to buy stock in bulk. within the first few weeks of opening, he experience problems as he is trading as an unlawful vendor as per the rules and regulations of the local municipality.

3.1.1 using information from the case study above draw up a swot analysis for mr noemdo. remember this is specific to his tuck shop. you need to give one example of each swot.
3.1.2. explain two ways in which networking can assist mr. noemdo in his new business.
3.1.3. mr noemdo could experience risks in relation to stock and other business assets. discuss three risk in relation to stock and assets with relevant examples.
3.1.4. identify and discuss two tax responsibilities that any business will have to comply with.

mr noemdo does research by speaking to other tuck shop owners:

3.2.1. identify three basic asset requirements and their cost estimates which mr.noemdo would need to purchase in order to run the tuck shop.
3.2.2.as mr noemdo battled to get finance from the bank to buy the assets identified. discuss three lawful ways he could obtain finance to purchase the basic assets he requires.

3.3. as mr noemdo employs a person to run the tuck shop while he is at college, he will require a code of ethics for his employee.

keeping the principles of the code of ethics in mind, draw up a code of ethics explaining nine factors that mr noemdo should include in relation to a tuck shop.

Answer 1

3.1.1 SWOT Analysis for Mr. Noemdo's Tuck Shop

Strengths:

• Market Gap: There is no tuck shop operating on the college premises, which allows Mr. Noemdo to fill a need among fellow students.

Weaknesses:

• Limited Capital: Mr. Noemdo has limited funds to purchase stock in bulk, which may affect inventory levels and pricing competitiveness.

Opportunities:

• Growing Demand: As more students seek convenience, the demand for quick snacks and beverages can increase, leading to potential higher sales.

Threats:

• Legal Compliance: Mr. Noemdo faces challenges regarding local municipal regulations, which may lead to fines or the closure of the tuck shop if he continues to operate unlawfully.

3.1.2 Networking Benefits for Mr. Noemdo

1. Building Connections with Suppliers: Networking with local suppliers could provide Mr. Noemdo with better deals, discounts, or credit terms, allowing him to stock his tuck shop more affordably.

2. Peer Support and Business Knowledge: Networking with other tuck shop owners can offer Mr. Noemdo valuable insights into best practices, challenges faced in the industry, and effective marketing strategies to attract more customers.

3.1.3 Risks Related to Stock and Business Assets

1. Stock Obsolescence: If Mr. Noemdo sells perishable items (such as snacks or drinks) and they do not sell quickly, they might expire, resulting in a financial loss. For example, if he buys bread that has a short shelf life and cannot sell it in time, he would lose the investment.

2. Inventory Theft: There is a risk of theft by customers or even employees. If Mr. Noemdo’s employee isn’t trustworthy, they might steal stock, which would lead to reduced profits. For instance, if the employee takes items like drinks or snacks without recording them, it directly impacts revenues.

3. Damage or Loss of Assets: The tuck shop could suffer losses due to damages such as a burglary or fire. For example, if a storm damages the equipment or goods in the tuck shop, Mr. Noemdo could face significant financial losses due to the inability to replace them quickly.

3.1.4 Tax Responsibilities for a Business

1. Value Added Tax (VAT): Businesses that reach a certain turnover threshold must register for VAT and charge it on sales, which they need to report and remit to the tax authorities on a regular basis.

2. Income Tax: Mr. Noemdo will need to pay income tax on his earnings from the tuck shop, declaring profits on his annual tax return. This obligation requires keeping proper financial records to accurately report income and expenses.

3.2.1 Basic Asset Requirements and Cost Estimates

1. Refrigerator: Estimated cost: $500 - $800 (for storing perishable items).

2. Display Shelves/Counters: Estimated cost: $200 - $300 (for displaying items to customers).

3. Point of Sale (POS) System: Estimated cost: $300 - $500 (to facilitate transactions and manage sales data).

3.2.2 Lawful Ways to Obtain Finance

1. Personal Savings: Mr. Noemdo could use his personal savings, which would not involve any debt or repayment terms, allowing full ownership of the tuck shop assets.

2. Crowdfunding: He could set up a crowdfunding campaign to raise small amounts of money from many people interested in supporting local businesses, particularly those associated with the college.

3. Partnership with Investors: Mr. Noemdo could look for small investors willing to provide capital in exchange for an ownership percentage or a share of the profits, which can alleviate the pressure of repaying a loan.

3.3 Code of Ethics for Mr. Noemdo's Tuck Shop

1. Integrity: Always be honest in all transactions and avoid any deceptive practices.

2. Respect: Treat customers, suppliers, and colleagues with respect and courtesy.

3. Quality Products: Ensure all products sold are of high quality and comply with health regulations.

4. Confidentiality: Safeguard any sensitive information about customers and employees.

5. Responsibility: Accept responsibility for actions and decisions made within the tuck shop.

6. Fair Pricing: Maintain fair pricing practices and avoid price gouging on essential items especially during peak times.

7. Community Engagement: Actively participate in and support school and local community events.

8. Compliance with Regulations: Adhere to all local laws and regulations governing food sales, health licenses, and business operations.

9. Sustainability: Promote environmentally-friendly practices such as minimizing waste and using sustainable products where possible.

Implementing these principles in a code of ethics can help establish a positive reputation and foster trust with customers and employees.