Explain what a viable business idea is.

Please refer to the business plan for Ntombi’s Milk Market (Appendix A)

of your prescribed book ( pages 333—352) when answering the following questions:

QUESTIONS: CASE STUDY 2

Nr:

Question:

Mark:

20.

a. Explain what a viable business idea is.

b. If the average Mamelodi household (Average income = R3000 p.m.) spends 2% of their monthly income on milk, and the business- to- business market amounts to R80 000 per month, calculate the potential rand value of Ntombi’s Milk Market’s (NMM) market.

c. Define indirect costs and give 3 examples of NMM’s indirect costs

2

3

3
21

a. Calculate the break-even point for NMM.

b. How can NMM lower their break-even point? Explain at least two ways.

4

3
22.

a. Classify all NMM’s products in terms of the consumer product category.

b. To which category (according to your text book) of the product-service mix does NMM belong? Give a reason for your answer

5

2
23

a. What factors may have affected the pricing of NMM’s products?

b. What pricing objective do you think NMM has adopted? Give a reason for your answer.

4

2
24

a. Discuss the types of channels of distribution that a business can use.

b. What type of channel does NMM use? Please motivate your answer.

5

2
25

Calculate the Re-order point (ROP) for a small dairy shop that buys milk from NMM. The shop has an average monthly demand of 105 litres of milk. The order lead time is one week and the safety stock is five litres.

5

Total case study 2

40

TOTAL:SECTION C

75

TOTAL SUMMATIVE ASSIGNMENT 3

200