Considerations for a start-up SMME in the water quality management arena in South Africa

Mackintosh, Grant S. (2004-03)

Thesis (MBA)--Stellenbosch University, 2004.

Thesis

ENGLISH ABSTRACT: South Africa’s efforts to ensure safe drinking-water provision to all have resulted in an admirable reduction in the backlog in drinking-water provision since 1994. However, in the non-metro areas of South Africa poor drinking-water quality is common and, combined with inadequate sanitation, results in a significant and deleterious primary health impact. Given the South African government’s commitment to co-operative government and good governance, and a willingness to both mobilize government funds and to involve the private sector in addressing poor water services delivery by local government, it can be expected that a significant opportunity exists for a “service/product” combination that assists local, provincial and national government in both, (i), the progressive realization of suitable drinking-water quality via a consultative audit, and (ii), an environmental governance function to ensure that acute and chronic issues are timeously identified and resolved. Drinking-Water Quality Management (DWQM) procedures developed and operated by the government research organization, CSIR, have been shown to be effective in achieving (i) and (ii) above. However, CSIR is not the appropriate business environment from which to roll out a commercialized service. This study assesses the prospects of a start-up Small, Medium and Micro Enterprise (SMME) to access and develop the DWQM market in South Africa. A thorough review of the role of governance in the delivery of water services in South Africa is provided, and it is confirmed that DWQM procedures can be expected to contribute towards improvement in drinking-water quality in non-metro South Africa and satisfy government’s requirement of demonstrated good governance (co-operative and regulatory governance) and co-operative government. A situational analysis of the internal (CSIR) and external business environment confirms that a win-win opportunity exists for entrepreneurs from within CSIR to “spin-out” the DWQM services, and thereby fulfill CSIR’s mandate of supporting SMME’s and Black Economic Empowerment (BEE). A summary of considerations for a start-up SMME in South Africa emphasizes the importance of some key factors. A key factor for a SMME selling services to government is the satisfaction of BEE requirements. Additional key factors include the business marketing factors of customer relationship management, delivering value and ongoing evolvement of marketing strategy. A case study involving Stellenbosch Municipality is used to demonstrate the customer centric nature of DWQM, and the positive Value Impact delivered to the client. The above are used to critically consider a Business Action Plan (which has a focus on the first year of operation) and to identify amendments required for the future and separate preparation of a full Business Plan. The short term focused Business Action Plan (BAP) confirms that market forces and opportunities combine with the skills and the background of the start-up team to provide a positive prospect for the startup SMME. Conversion of the BAP to a fully fledged Business Plan will require the development of a full business strategy, and supportive marketing strategy, as the short term focus strategies are inadequate. Importantly, adjustments to the black equity holding should be brought in line with the requirements of the Broad-Based BEE Act.

AFRIKAANSE OPSOMMING: Suid-Afrika se deurlopende pogings om veilige drinkwater te verskaf het gesorg vir ‘n benydenswaardige vermindering in die agterstand in verskaffing van drinkwater sedert 1994. In die nie-metropolitaanse areas van Suid-Afrika is swak drinkwater gehalte egter steeds algemeen en is verantwoordelik, saam met ontoereikende sanitêre infrastruktuur, vir beduidende en dodelike primêre gesondheidsrisikos. Die Suid-Afrikaanse regering is toegewyd tot samewerking met die private sektor en die toepassing van goeie besigheidsbeginsels. Dit is ook gewillig om regeringsfondse beskikbaar te stel indien die betrokkenheid van die privaat sektor kan help om swak waterdienste lewering deur die regering aan te spreek. Daar kan dus verwag word dat ‘n daadwerklike geleentheid bestaan om ‘n “diens/produk” kombinasie daar te stel wat plaaslike, provinsiale en nasionale regering sal bystaan in beide die: (i), progressiewe verwesenliking van geskikte gehalte drinkwater deur middel van ‘n konsultatiewe oudit, en (ii), ‘n omgewings oorsig funksie om te verseker dat akute en kroniese probleme tydig geidentifiseer en opgelos word. Drinkwater Gehalte Bestuur (DWGB) prosedures ontwikkel en toegepas deur die regeringsnavorsingseenheid, die WNNR, is bewys as effektief in die bereiking van (i) en (ii) soos hierbo gemeld. Die WNNR is egter nie ‘n geskikte besigheids-omgewing vir die wyer kommersiële toepassing en verskaffing van sodanige dienste nie. Hierdie studie evalueer die vooruitsigte van Klein, Medium en Mikro Ondernemings (SMME) om die DWGB mark in Suid-Afrika te betree en te ontwikkel. ‘n Deeglike oorsig van die rol van etiese bestuur in die verskaffing van waterdienste in Suid-Afrika word gedoen. Daar word bevestig dat DWGB prosedures na verwagting sal bydra tot die verbetering van drinkwater gehalte in die nie-metropolitaanse Suid-Afrika, maar ook sal voldoen aan die regering se vereistes van daadwerklike en sigbare etiese bestuur (samewerkings en regulatoriese etiese bestuur) en samewerking van die regering en derde partye. ‘n Omgewingsondersoek van die interne (WNNR) en eksterne sake omgewing bevestig dat ‘n wen-wen geleentheid bestaan vir entrepreneurs binne die WNNR om DWGB dienste af te stig, en sodoende ook vir die WNNR om sy mandaat te vervul, by name die ondersteuning van SMME’s en Swart Ekonomiese Bemagtiging (SEB). ‘n Opsomming van die saaklike kwessies vir die stigting van ‘n SMME in Suid-Afrika lei tot die identifisering van ‘n aantal sleutel suksesfaktore se belangrikheid. ‘n Sleutel suksesfaktor vir ‘n SMME, wat dienste aan die regering verkoop, is die voldoening aan SEB vereistes. Verdere sleutel suksesfaktore sluit in die sake bemarkingsfaktor van kliënte verhoudingsbestuur, die lewering van waarde en die volgehoue evolusie van bemarkingstrategie. ‘n Gevallestudie waarin Stellenbosch Munisipaliteit betrokke was word gebruik om die kliënt-gesentreerde toepassing van DWGB te demonstreer, en die positiewe waarde wat aan die kliënt gelewer is, word uitgelig. Laastens word die bogenoemde gebruik om ‘n kritiese evaluering te doen van ‘n Besigheids Aksie Plan (met ‘n fokus op die eerste jaar se bedrywighede). Veranderinge wat vereis sou word vir die voorbereiding van ‘n toekomstige en afsonderlike volledige Besigheids Plan word geidentifiseer. Die korttermyn gefokusde Besigheids Aksie Plan (BAP) bevestig dat marktendense en geleenthede tesame met die vaardighede en agtergrond van die Kleinsake-span ‘n positiewe verwagting skep vir die voornemende kleinsake-bedryf. Die omskakeling van die BAP na ‘n volledige Besigheids Plan vereis ‘n volle Sakestrategie en ‘n ondersteunende Bemarkingsplan, aangesien die korttermyn gefokusde strategieë ontoereikend is. Verdere aanpassings tot die swart aandeelhouding moet gedoen word om te voldoen aan die vereistes van die breëbasis SEB-wetgewing.

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