Research Articles (Business and Finance)

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Business development service: Addressing the gap in the Western Cape, South Africa
(Clute Institute, 2003) Brijlal, Pradeep
A survey was conducted to evaluate utilization of business development services by small businesses in the Western Cape. It was deduced that fairly established businesses do not seem to need or use consultancy /training services. This may be due to the lack of awareness on the owner’s part or perceived value of money. Emerging and stable businesses have a strong demand for financial support, business management advice and skills, market opportunities and technical skills. The new approach to business should entail identifying specific needs of business, considering its degree of sophistication and thereby providing services to meet those unmet needs
Entrepreneurship education and training at the Further Education and Training (FET) level in South Africa
(Education Association of South Africa, 2007) Isaacs, Eslyn; Visser, Kobus; Friedrich, Christian; Brijlal, Pradeep
We assessed the levels of entrepreneurship education and training at the Further Education and Training (FET) level in a South African context. We are of the opinion that entrepreneurship education and training (of necessity) must fulfill a primary role in preparing our youth for their future. Evidence from elsewhere, in particular industrialised countries, indicates that entrepreneurship education and training at school level play important roles in the contribution to economic growth. Experts in the field of entrepreneurship believe that the contribution of small to medium-sized enterprises (SMEs) to the growth of our country can be much higher if entrepreneurship education is implemented at school levels. Entrepreneurship is now one of the outcomes of Grades R – 12. However, our research clearly showed that various problems in schools hinder the effective implementation of entrepreneurship education, some of which are poorly trained educators and lack of adequate resources. Better entrepreneurship education could make a significant contribution to job creation and ultimately to poverty alleviation.
Key changes in profile and characteristics of individual investors on the Johannesburg securities exchange (JSE) over the past two decades
(Academic Journals, 2007) Brijlal, Pradeep
Factors influencing investment behavior in South Africa are a matter of considerable interest among stockbrokers, business strategists, public officials and ordinary people. This paper attempts to characterize and profile the individual investor on the Johannesburg securities exchange (JSE) in order to establish if there have been changes in this grouping over the past two decades. In addition, the paper considers how these changes affect the investment community in current times. The paper draws on data collected in the 1980s as well as data collected by the author more recently. In the latter case, self administered questionnaires were electronically mailed to on-line investors. The responses were analyzed using univariate analysis and frequency tables and the data were compared with those of Firer, who conducted a similar study in the 1980s. Some of the key changes over the past two decades were investors who are now more concentrated in the middle age group, have higher qualifications, hold fewer securities in their portfolio, most invest for the long term, use the all share index to compare performance and feel that they could achieve a much higher return on their investment than previously. These findings provide some opportunities for purveyors of financial services to be selective in their approach to various groups of individual investors.
The state of entrepreneurship education at tertiary institutions in the Western Cape
(Clute Institute, 2008) Brijlal, Pradeep
This paper summarizes, analyses the offerings and gaps on entrepreneurship education at four tertiary institutions in the Western Cape. Most of the offerings were knowledge based. Some of the participants on the programmes were exposed to real businesses and hence had experiential learning. The individual as an entrepreneur seemed to be overlooked. As tertiary institutions’ culture changes it will become more important to understand students’ entrepreneurial needs in order that there is institutional “fit” between higher education offerings and the need for students. The various institutions should collaborate on a frequent basis to establish the needs and share resources. This can include services like consulting, mentoring, training and research by experts in the field and share their experiences with other lecturers and trainers.
Managerial competencies of hospital managers in South Africa: a survey of managers in the public and private sectors
(BMC, 2008) Pillay, Rubin
South Africa has large public and private sectors and there is a common perception that public sector hospitals are inefficient and ineffective while the privately owned and managed hospitals provide superior care and are more sustainable. The underlying assumption is that there is a potential gap in management capacity between the two sectors. This study aims to ascertain the skills and competency levels of hospital managers in South Africa and to determine whether there are any significant differences in competency levels between managers in the different sectors. A survey using a self administered questionnaire was conducted among hospital managers in South Africa. Respondents were asked to rate their proficiency with seven key functions that they perform. These included delivery of health care, planning, organizing, leading, controlling, legal and ethical, and self-management. Ratings were based on a five point Likert scale ranging from very low skill level to very high skill level.
Strategic alliance governance in Zimbabwe policy and strategy
(Academic Journals, 2009) Naicker, Visvanathan; Saungweme, Percy
Worldwide interest in strategic alliances has increased dramatically partly because of their potential to expand firms operations in the short run. Among the many issues posed by the increasing interest in strategic alliances, this paper focuses specifically on the dynamics associated with the governance of strategic alliance relationships. Furthermore, due to the constant deterioration of the Zimbabwean economy and the resultant heightened customer expectations, Small to Medium Enterprises (SMEs) have to enter into collaborative relationships which involve a high level of trust, goal alignment and commitment. The research used a multi-method field approach to gather, information on strategic alliances and corporate governance from 50 strategic alliance relationships from a wide spectrum of firms in a variety of industries in Zimbabwe. Ultimately, this paper identifies four critical governance areas into a framework for strategic alliance governance. The advent of the Internet has increased the ease of application or collaboration to form strategic alliances. Factors such as increased competition because of easier market entry, speed of data, and demanding customer requirements are necessitating a revolutionary change in the way that SMEs are managed. The struggling economy of Zimbabwe provides a platform that enables SMEs to extend their alliances to its suppliers thereby forming dynamic industrial districts. These factors, shared with an eagerness to contribute towards information and technology flow, will enable an efficient alliance thereby responding to the needs of customers.
The use of capital budgeting techniques in businesses: a perspective from the Western Cape
(Western Academic Publishers, 2009) Brijlal, Pradeep; Quesada, Lemay
Capital budgeting is one of the most important areas of financial management. There are several techniques commonly used to evaluate capital budgeting projects namely the payback period, accounting rate of return, present value and internal rate of return and profitability index. Recent studies highlight that financial managers worldwide favor methods such as the internal rate of return (IRR) or non-discounted payback period (PP) models over the net present value (NPV), which is the model academics consider superior. In particular this research focused on small, medium and large businesses and investigated a number of variables and associations relating to capital budgeting practices in businesses in the Western Cape province of South Africa. The results revealed that payback period, followed by net present value, appears to be the most used method across the different sizes and sectors of business. It was also found that 64% of businesses surveyed used only one technique, while 32% of the respondents used between two to three different types of techniques to evaluate capital budgeting decisions. The findings show that the more complicated methods such as IRR and NPV are most favored by the large businesses as compared to the small businesses. The majority of the respondents believed that project definition was the most important stage in the capital budgeting process. Implementation stage appeared to be the most difficult stage for the manufacturing sector whereas Project definition, Analysis and selection and Implementation were generally rated as being the difficult stages by the retail sector. Project definition and Analysis and selection were found to be the most difficult stages by the service sector. Most businesses used the cost of bank loan as a basis in capital budgeting and more than two thirds of respondents used non-quantitative techniques to consider risk when making a decision on investing in fixed assets.
Cooperative enterprises as a solution to rural poverty and unemployment case studies of the Heiveld cooperative at Nieuwoudtville in the Northern Cape and die berg vrugteverwerking at Piketberg in the Western Cape province
(University of the Western Cape, 2009-11) Abrahams, Carl
Historically, the poor have always been socially, politically and economically marginalized in society. The South African Government’s Cooperative Act 2005 presents a promising step in the right direction towards addressing poverty and unemployment in rural areas. The research looks at two case studies and site relevant findings. This study gives a brief introductory account of cooperatives with regard to their history and existence, particularly in South Africa. The research report focuses on two case studies, where the organisational structures and business operations will be examined and compared. Finally the report will draw lessons to indicate the possible social and economic viability of these cooperatives and their place in rural development. Based on the findings and conclusions, a number of recommendations are made on cooperatives in the rural sector.
Relationship marketing: Strategic and tactical challenges for SMEs
(Academic Journals, 2010) Saungweme, Percy; Naicker, Visvanathan; Chuma, Watson
This study sought to explore the tactical and strategic challenges, which small and medium sized service firms may face in their bid to successfully practice and implement Relationship marketing. The framework of the requirements for successful practice of relationship marketing propounded by Gronroos (1996) was used in this study to explore likely, the tactical and strategic challenges that small and medium sized service firms face in their endeavour to practice Relationship marketing (RM). A critical literature review was undertaken on the inherent characteristics of SMEs and how they pose the aforementioned challenges. Small and medium sized firms could find it strategically and tactically challenging to meet effectively, the requirements of successfully implementing and practicing Relationship marketing owing to their inherent characteristics and constraints. Researchers are recommended to empirically investigate the applicability of the ''generalized'' requirements for the successful practice of Relationship marketing in small and medium sized service firms. The study viewpoint, which is the first of its kind, demonstrates that the ''one size fit all'' approach as regards the practice of Relationship marketing does not generically apply to all business forms (large and small) hence, may not be generalized to small and medium sized service firms as well across all types of economies.
Report on review of the current status of the pilot Certificate in School Business Administration (CSBA) 2008-2009: Guidelines for CSBA 2010
(University of the Western Cape: School of Business and Finance, 2010) Naicker, Visvanathan; Combrinck, Theodore; Bayat, Abdullah
Executive Summary: By almost any measure, most South African public schools, and schools in the Western Cape, are underperforming academically. For a number of years, there has existed a wide degree of consensus among education stakeholders, and particular government, that the problems in our schools extend beyond academic under-achievement. Massive budget allocations, overhauling curricular, restoring skewed learning resources, retraining educators and attempting to deal with the more pressing community problems and social ills that influence the results of a school are all necessary interventions. But, unless there is a concurrent improvement of schools from a „business‟ management point of view, there is no guarantee that the resources allocated to schools, both materially and in the form of educators, will be optimally deployed. Principals need to be occupied with the tasks of managing and leading teaching and learning i.e. instruction leadership, not managing routine administration. In recognising the potential of school administrative personnel to provide relief and support for the administrative role of principals, the Western Cape Government initiated a training course – the CSBA – in July 2008 for school business administrators. The ground-breaking pilot programme was completed in February 2010. Thereafter the WCED commissioned an evaluation of the results achieved. The purpose of the evaluation is to inform the WCED‟s plans for development of the course going forward. This report represents a synopsis of the findings of the evaluation.
An evaluation of the present status of the certificate in, school business management
(Academic Journals, 2011) Naicker, Visvanathan; Combrinck, Theodore; Bayat, Abdullah
By almost any measure, most South African public schools, and especially schools in the Western Cape, have under-performed academically. For a number of years, there has existed a wide degree of consensus among education stakeholders, and particularly in government, that the problems in our schools extend beyond mere academic under-achievement. Principals need to be occupied with the tasks of managing and leading teaching and learning, that is, instruction leadership, and not managing routine administrative matters only. In recognising the potential of school administrative personnel to provide relief and support for the administrative role of principals, the Western Cape Government initiated a training course in July, 2008 for school business administrators. The course was modelled on a very successful training course developed in the United Kingdom.
Entrepreneurial perceptions and knowledge: A survey of final year university students
(Academic Journals, 2011) Brijlal, Pradeep
This paper investigated the perceptions and knowledge of final year university students towards entrepreneurship gaining insights regarding a gender, race and faculty perspectives. Students across all faculties believed that entrepreneurship education is important and less than half of the final year students showed interest in becoming entrepreneurs. More male students than female students indicated interest in starting a business. More African students indicated interest in starting a business compared to other race groups (Coloureds, Whites and Indians). There was a significant difference between the male and female students on the knowledge of entrepreneurship. The Economic and Management Science Faculty showed the best results on the knowledge of entrepreneurship. Indian and White students scored the highest in the knowledge of entrepreneurship. This study adds to the debates on the need for entrepreneurship education at tertiary institutions across the different faculties.
The relationship between levels of education of entrepreneurs and their business success: A study of the province of KwaZulu-Natal, South Africa
(SAGE Publications, 2011) Peters, Ricardo M.; Brijlal, Pradeep
The small, medium and micro enterprise (SMME) sector has been widely recognized as an engine of economic growth in South Africa. The implementation of the National Small Business Strategy (NSBS) in 1995 established important objectives for the sector to address such problems as lack of access to markets and procurement, lack of access to finance and credit, low skills and education levels, lack of access to information and a shortage of effective support institutions. In response, the South African government established institutions and programmes designed to improve access to sources of finance, market opportunities, technology, training and development and education. This paper examines whether there is a relationship between the level of education of SMME owners and the growth of their businesses, using labour force and turnover as success indicators. The study adopted a mixed method approach, including questionnaire surveys, observations and face-to-face interviews. The results indicate that in the two years preceding the study there had been a relationship between the owner/manager's level of education and the business's ability to grow by increasing its labour force and annual turnover. This study, conducted in a developing economy, therefore supports the findings of similar studies in developed economies, that the level of education of an entrepreneur and the success of their business are related.
Understanding retail strategy and shopping behaviour: Perspectives from a developing country
(Academic Journals, 2012) Naicker, Visvanathan; Brijlal, Pradeep
This research indicates that in order for retailers to achieve their primary objective of increasing the amount of customer traffic into their stores, some powerful, highly effective and strategic tools that retailers possess need to be utilised in an effective manner – in order to meet their objectives. This research has been developed to examine the strategies that retailers can utilise – in order to influence the customers’ preference to shop in their stores. From the multitude of strategic choices available for each decision, a retailer can choose any combination. A survey was conducted, in order to collect data on customer behaviour, recruiting, store design, retail marketing, Supply chain management (SCM), customer relationship management (CRM) – as well as a few other criteria – in the South African retail sector. This descriptive study establishes whether a retailer who makes an initial choice about which strategy to implement, complies with the existing understanding on the customers’ preferences. Patterns and trends were detected when studying the determinants of various strategic retail combinations for retailers. The data indicated asymmetric evaluations of choices, in combination with a few distinct patterns. Additionally, a few associations between store preferences and price were identified with specific locations for the customers. Some combinations are more alike than others; and a concern exists that the pricing strategy in isolation fails to portray a complete picture. The study reveals that retailers should be more customer-focused; while at the same time, providing the requisite skills to their employees, in order to retain their existing customers, and to attract new customers.
Understanding retail strategy and shopping behaviour: Perspectives from a developing country
(Academic Journals, 2012) Naicker, Visvanathan; Brijlal, Pradeep
This research indicates that in order for retailers to achieve their primary objective of increasing the amount of customer traffic into their stores, some powerful, highly effective and strategic tools that retailers possess need to be utilised in an effective manner in order to meet their objectives. This research has been developed to examine the strategies that retailers can utilise in order to influence the customers' preference to shop in their stores. From the multitude of strategic choices available for each decision, a retailer can choose any combination. A survey was conducted, in order to collect data on customer behaviour, recruiting, store design, retail marketing, Supply chain management (SCM), customer relationship management (CRM) - as well as a few other criteria - in the South African retail sector. This descriptive study establishes whether a retailer who makes an initial choice about which strategy to implement, complies with the existing understanding on the customers' preferences. Patterns and trends were detected when studying the determinants of various strategic retail combinations for retailers. The data indicated asymmetric evaluations of choices, in combination with a few distinct patterns. Additionally, a few associations between store preferences and price were identified with specific locations for the customers. Some combinations are more alike than others; and a concern exists that the pricing strategy in isolation fails to portray a complete picture. The study reveals that retailers should be more customer-focused; while at the same time, providing the requisite skills to their employees, in order to retain their existing customers, and to attract new customers.
The spatial practices of school administrative clerks: making space for contributive justice
(University of the Western Cape, 2012-12) Bayat, Abdullah
The article aims to contribute to our analysis of social justice by suggesting that we broaden our focus on social justice to include issues of contributive justice. It highlights how those who are denied contributive justice do not simply lie down and accept their fate but that they actively counter the contributive injustice visited upon them. Contributive injustice is where workers’ opportunities for self-development, gaining self-esteem and recognition by others is thwarted by the unequal division of labour that assigns them simple, mindless, and routine tasks (Gomberg, 2007; Sayer, 2009, 2011). I agree with the assertion by the proponents of contributive justice that the unequal division of labour leads to the curtailing of opportunities for self-development for those who are denied complex work (Sayer, 2011). However, I posit that administrative clerks do not passively accept this inequality of opportunity but through their agency, reflexivity and tactics, carve out spatial practices of self-development and, in the process, gain self-esteem and recognition at school level. Literature on the practice of school administrative clerks in South Africa is sparse (Van der Linde, 1998; Naicker, Combrinck & Bayat, 2011). These clerks suffer inequalities of opportunity because of the division of labour which relegates them to a role that offers low remuneration, little recognition and limited participation. Studies of the roles of administrative clerks in schools (Casanova, 1991; Van Der Linde, 1998; Thomson, Ellison, Byrom & Bulman, 2007; Conley, Gould & Levine, 2010; Naicker, Combrinck & Bayat, 2011), higher education institutions (Szekeres, 2004; Mcinnis, 2006; Whitchurch & London, 2004) and businesses (Fearfull, 1996, 2005; Truss, 1993) found that they are regarded as marginal and invisible even though their contributions are essential for the smooth running of their workplaces.
Potential gains from predicting the timing of stock market persistence and mean reversion
(Business Perspectives, 2013) Hsieh, Heng-Hsing
This paper undertakes to investigate the effectiveness of market timing between prior winners and losers in the global equity markets using Monte Carlo simulation over the period from 1 January 1999 to 31 December 2009. The winner and loser portfolios of 100 stocks are constructed based on the prior 36-month U.S. dollar returns of the Dow Jones (DJ) Sector Titans Composite constituents. The market timer is assumed to have varying accuracy in predicting market persistence and mean reversion, and switch between the winner and loser portfolios on a quarterly basis based on his/her predictions. Sensitivity analysis is conducted to determine whether it is more important to predict the timing of persistence versus mean reversion. The study results reveal that an effective market timing strategy could be devised for market timers with modest ability to predict the timing between global equity market persistence and mean reversion. Greater benefits are derived from improvements in the mean reversion timing accuracy versus persistence timing accuracy, even though only 19 out of 44 quarters are classified as periods of mean reversion in the examination period. The results from sensitivity analysis support the view that it is more important to predict the timing of mean reversion correctly than persistence. This outcome could be attributed to the resilient nature of the loser portfolio in turbulent times. The observation that the majority of the persistent quarters are bullish (65.52%) while the majority of the mean reversion quarters are bearish (60%) provides evidence of investor overreaction in the global equity markets.
Nonlinearities in stock return prediction: A Blended Approach
(The Clute Institute, 2013) Hodnett, Kathleen; Hsieh, Heng-Hsing; Van Rensberg, Paul
Our prior research indicates that there are periods within which nonlinear stock selection models outperform their linear counterparts in the South African equity market. In order to explore the nonlinearities in stock return prediction, we propose a blended stock selection technique that has the potential of diversifying the risk of inaccurate forecasts of the linear and nonlinear models. The proposed technique has an objective of optimizing the Qian and Hua (2003) information ratio, which constitutes to the maximization of the forecasting accuracy per unit of forecasting volatility. The blended stock selection model is found to outperform the respective linear and nonlinear models in an out-of-sample fractile analysis on a risk-adjusted basis for South African stocks over the period from 2002 to 2007.
Education and SMME Business Growth: A Gender Perspective from South Africa
(The Clute Institute, 2013) Brijlal, Pradeep; Naicker, Visvanathan; Peters, Ricardo
Entrepreneurship is becoming an increasingly important source of employment for women in many countries. Policymakers and other stakeholders typically fail to differentiate between the needs of different SMME sectors when designing support programmes. Using survey data obtained from SMME owner managers in the Western Cape, this article attempts to identify whether the level of education and gender has an impact on business growth. A survey instrument in the form of a questionnaire was utilized to capture the data from 369 face-to-face interviews. The findings from this research reveal a positive relationship between the level of education of business owners and their respective business abilities to increase business growth. There were no significant differences between men and women in relation to business growth. The research has implications for policymakers seeking to understand the factors that influence business growth.
Beneficial ownership provisions in tax treaties between developed and developing countries: the Canada/South Africa example
(Clute Institute, 2013) Steenkamp, Lee-Ann
In the years since the Organisation for Economic Cooperation and Development (OECD) adopted its first draft tax treaty in 1963, the world has experienced an astonishing surge in international trade and investment. The tax treatment of these cross-border transactions is affected by double tax agreements. As tax treaty networks will likely continue to expand, concerns about tax treaty abuse might be expected to grow. The extent to which a country’s tax treaty policy favours developing countries - or not - depends upon the extent to which the country is prepared to adopt provisions from the UN model tax convention as opposed to the OECD model. Developing countries, in particular, should carefully consider the design of their tax treaties so as to effectively combat tax avoidance without sacrificing foreign direct investment. To this end, the Canada/South Africa tax treaty is compared and contrasted with these two models. The concept of beneficial ownership is reviewed in this context. It is contended that a general definition in South Africa's Income Tax Act of 'beneficial ownership' would assist in the interpretation of the term for the purposes of South Africa's tax treaties. It is submitted that the scope for the source taxation of passive investment income (viz. dividends, interest and royalties) in the developing country could be magnified through treaty negotiations.

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