Thesis (MBA)--Stellenbosch University, 2001 / ENGLISH ABSTRACT: The subject of prediction of business failure from an academic point of view dates back to the turn of the century with the development of a single ratio, the current ratio, as an evaluation of credit-worthiness. Subsequently studies conducted have become complex using different statistical techniques and more than one variable to predict failure. The challenge in these studies has been to establish a reliable model to predict failure. The aim of this report was to find out which financial factors best predicted failure in the South African environment using a matched study by refining some elements of the study conducted by Court (1993). The data used was similar to that of Court (1993), which was independently obtained from the Bureau of Financial Analysis of the University of Pretoria. The variables used in the study were then computed from this raw data. The variables were then imputed into the stataΤΜ statical software package to run a conditional logistic regression model. As a result of a small sample size and a substantial number of missing variables in the sample size, the study did not reveal an accurate indication of the important variable. It was also found that with the instability and general complexity of conditional logistic regression the study need not have been a matched study. The recommendation is that future research be done with a larger sample size using the same methodology. It is also recommended that the data include non-financial variables. / AFRIKAANSE OPSOMMING: Die voorspelling van besigheidsmislukkings as 'n akademiese onderwerp, dateer vanaf die begin van die vorige eeu met die ontwikkeling van 'n enkele verhouding, die bedryfsverhouding, as maatstaf van kredietwaardigheid. Die toepassing van statistiese tegnieke en inkorporasie van meerdere veranderlikes het aan verdere studies 'n hoë mate van kompleksiteit verleen. Die gevolglike uitdaging was om 'n betroubare model te ontwikkel om besighiedsmislukkings akkuraat te kan voorspel. Die doel van hierdie verslag is om aan te dui welke finansiele faktore mees gepas sal wees om besigheidsmislukkings in die Suid Afrikaanse omgewing te voorspel. Die verslag gee weer die bevindinge van 'n gepaarde studie wat gegrond is op 'n verfyning van sekere elemente soos geneem uit die Court studie van 1993. Die data gebruik, is baie soos die wat die Court studie onderlê en is onafhanklik verkry vanaf die Bureau vir Finansiele Analise (Universiteit van Pretoria). Die veranderlikes wat in die studie gebruik is gebaseer op hierdie rou data en is ingesleutel en verwerk deur die stataΤΜ statistiese sagteware program na 'n kondisionele, logiese regressie model. As gevolg van 'n klein steekproef en 'n beduidenswaardige aantal ontbrekende veranderlikes in hierdie steekproef, kon die studie nie 'n belangrike veranderlike met akkuraatheid aandui nie. Dit is ook bevind dat die onstabiliteit en algemene kompleksiteit van die kondisionele, logiese regressie model die gebruik van 'n gepaarde studie onnodig gelaat het. Die aanbeveling is dat verdere navorsing dieselfde metodologie sal toepas op 'n groter steekproef. Dit word ook aanbeveel dat nie-finansiele veranderlikes by die data ingesluit word.

A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, in partial fulfilment of the requirements for the degree of Master of Management, specialising in Entrepreneurship and New Venture Creation Johannesburg, 2017 / This study examined the relationship between business failure and macroeconomic fluctuations within business cycles of South Africa’s economy for the time period 1980 to 2016. The study also sought to understand where, if any, immediate and lag correlations between fluctuations and business failure could be established. To understand this connection, this study used longitudinal data sets of different macroeconomic factors and studied their influence on business failure. The vector error correction model (VECM) was used to determine the long-term relationship between failure and each of the other variables. Additionally, Granger Causality was applied to establish whether the macroeconomic variables investigated in this study can be constructed to predict the probability of business failures. Three classes of macroeconomic predictor variables were considered. Firstly, well-known international variables in the form of GDP and CPI were used. Secondly, the study incorporated the three Composite Business Cycle indicators- leading, coincident and lagging. Lastly, behavioural indicators were used to incorporate the views of the actual businesses and their customers, which for this the study were the Business and Consumer Confidence Indices. After examining the effects the 7 macroeconomic variables had on business failure, the study found that there is a long-run relationship between the Composite Lagging Business Cycle indicator, the Business Confidence and Consumer confidence, which influenced Business Failure. Additionally, it was noted that Business Failure influence the Composite Lagging Business Cycle indicator in the long-run. The study additionally found that Business Failure may Granger Cause the Composite Leading Business Cycle indicator Outcomes of the study are potentially vital for entrepreneurs to understand the timing of entry into markets based on macroeconomic fluctuations through their cycles in certain industries. Business owners can make proactive financial and strategic decisions vital for survival of their business through the expansion and especially in the contraction cycles of the macroeconomic environments. / MT2017

Business failure should be of concern in most industralised countries and the importance of accurately evaluating the phenomenon from a management and investment point of view is enormous. Were it possible to predict failure with a certain degree of confidence, steps could be taken to rectify the situation and the benefit would accrue to all of the stakeholders in the macroenvironment. In essence, the profitability of a business is influenced by two sets of variables. In the first instance, it is influenced by a variety of internal (microeconomic) variables which are firm- specific and which management is generally able to control. A further distinction in this regard may be made between the financial and non-financial variables. In the second instance, it is generally accepted that profitability will be influenced by a number of external (macroeconomic) variables which are generally beyond the control of management. In the main, however, the profitability of the firm is generally determined by a combination of both sets of factors. To date, a great deal of research has been undertaken in an attempt to establish a reliable model which may be used to predict failure. This has mainly been confined to the microeconomic variables which can be used to predict failure and attempts have been made to isolate either a single financial ratio or a number of financial and non-financial variables which can be used to model corporate failure. The research has met with a certain degree of success although this appears to be confined to the economic environment to which the models have been applied. The models are less successful when applied to other macroenvironments. Limited research has been undertaken into the macroeconomic variables which contribute to business failure or to a combination of the two types of variables. It is appropriate therefore that further consideration be given to the establishment of a model incorporating ALL the variables which could contribute to corporate failure. The purpose of this research is to undertake an investigation of micro- and macroeconomic variables that are freely available to reserachers and which may be used in a failure prediction model. The intention is to obtain a comprehensive, yet simple model which can be used as an overall predictor of PENDING failure.

A dissertation submitted in fulfilment of the requirement for the Degree of Master of Technology: Business Administration, Durban University of Technology, 2013. / Poverty reduction and employment creation are some of the top United Nations Millennium Development goals as per the UN Summit of 2000. In both the developed and developing world this can best be achieved through an increase in employers. In the developing world, especially in Africa, small, medium and micro enterprises have been found to be the engine driving employment creation, economic development and poverty reduction. Having mentioned the crucial role, small and micro enterprises play in the economy and wellbeing of the people, their sustenance, success and continuity are of vital importance. Many small and micro businesses are started every year but most of them fail in their infancy due to a number of problems they face, especially lack of financial planning knowledge which is the main reason for embarking on this study. The main purpose of this study is to investigate the reality of financial planning knowledge among small and micro enterprises, especially from the perspective of owner-managers. An exploration is undertaken to see and understand their perception and attitude towards financial planning processes. The study proposes to find out what financial planning knowledge the owner-manager has tools they are currently employing in their businesses and whether or not, and to what extent do, they implement the advice from financial experts. The research wants to further explore what financial information is collected, recorded, how it is used (or not) to make business decisions and evaluate the enterprise’s success or failure in relation to what they know, use and implement as far as financial planning is concerned. The study used a quantitative technique to collect data and a questionnaire was personally administered to 100 respondents in the Durban CBD including Warwick Triangle and the response rate was 100%. Descriptive and inferential statistics were used to analyse the data. The overall findings of the study were that most of the small and micro enterprises do not understand what financial planning is or what is involved in financial planning hence their inability to properly plan their finances and manage their businesses accordingly. Some of them were found to be able to calculate a mark-up on their selling price but no records were kept. For those who have a chance to get some advice from a financial expert, do implement the advice given, but in their own way they see suitable for their particular businesses. However, they do not implement the exact advice as given only in the form they see fit for their enterprises.

M.Tech. (Construction Management) / This research was conducted to investigate the causes of construction company failure in the Free State Province, for the reason that there are many risks involved in running a construction company due to the nature of the construction industry. The study focused on four major factors involved in common business failures which are Managerial, Financial, Expansion and Economic environmental factors. The objectives of this research were achieved by means of a questionnaire that was distributed to 120 small and medium contractors in the Free State Province. These contractors were identified in the CIDB website and were listed as expired, suspended or deregistered then randomly selected. 102 questionnaires were received and 6 questionnaires were spoilt which meant that the total workable questionnaires were 96 which was at a return rate of 80%. The data analysis that was used was done by quantitative method. The data gathered include the main four factors (managerial, financial, expansion and economic environment) of the study. Financial factors were found to be amongst the leading causes of company failures, whereby most respondents said that their companies did not have adequate cost and accounting practices and systems in place. Delay in payment from clients was also a amongst the major causes for failure because the respondents said their companies always had cash flow problems and had heavy debts to their suppliers.

This study examines the factors that contributed to the failure of retrenched Telkom workers to start and run successful businesses after the company had provided them with start-up capital and also funds for training. Many of the factors contributing to the majority of Telkom retrenched employees not establishing businesses will be identified and recommendations that companies could implement in the future to limit the failure of businesses of retrenched employees will be made. The study was descriptive, exploratory and qualitative in nature. Semi-structured interviews and a survey questionnaire specifically developed for this study were used to gather data. The study was conducted on ex-employees of Telkom residing in and around the townships and suburbs situated on the western side of Johannesburg (Mogale City, Randfontein and Soweto). Telkom provided retrenched employees with funds to attend external training so that they could be equipped to start and run their own businesses. Subsequently, Telkom also provided start-up capital so that these employees could start small businesses after they had left the company. Although the funds were provided, most employees did not utilise them to start their businesses and the few that did access the funds and start businesses experienced the failure of their businesses within a very short period of time. Three major issues of concern were identified: many of these ex-employees did not utilise the funds that were allocated for training; many did not make use of the start-up capital and the majority did not start businesses. The study investigated the following issues: a) Why the retrenched employees did not make use of the funds allocated for training b) Why the ex-employees did not make use of the start-up capital c) Why the ex-employees did not start businesses d) Of those that did start businesses, why did they fail within such a short period of time? The findings of the study confirm that most of the retrenched employees did not access either the training or the start-up funds. Detailed reasons for why the funds were not made use of are given and recommendations are also made for what the company should do in future if deciding to embark on a similar exercise. / Business Management / M. Tech. (Business Administration)

This study examines the factors that contributed to the failure of retrenched Telkom workers to start and run successful businesses after the company had provided them with start-up capital and also funds for training. Many of the factors contributing to the majority of Telkom retrenched employees not establishing businesses will be identified and recommendations that companies could implement in the future to limit the failure of businesses of retrenched employees will be made. The study was descriptive, exploratory and qualitative in nature. Semi-structured interviews and a survey questionnaire specifically developed for this study were used to gather data. The study was conducted on ex-employees of Telkom residing in and around the townships and suburbs situated on the western side of Johannesburg (Mogale City, Randfontein and Soweto). Telkom provided retrenched employees with funds to attend external training so that they could be equipped to start and run their own businesses. Subsequently, Telkom also provided start-up capital so that these employees could start small businesses after they had left the company. Although the funds were provided, most employees did not utilise them to start their businesses and the few that did access the funds and start businesses experienced the failure of their businesses within a very short period of time. Three major issues of concern were identified: many of these ex-employees did not utilise the funds that were allocated for training; many did not make use of the start-up capital and the majority did not start businesses. The study investigated the following issues: a) Why the retrenched employees did not make use of the funds allocated for training b) Why the ex-employees did not make use of the start-up capital c) Why the ex-employees did not start businesses d) Of those that did start businesses, why did they fail within such a short period of time? The findings of the study confirm that most of the retrenched employees did not access either the training or the start-up funds. Detailed reasons for why the funds were not made use of are given and recommendations are also made for what the company should do in future if deciding to embark on a similar exercise. / Business Management / M. Tech. (Business Administration)

Thesis (MBA)--Stellenbosch University, 2005. / ENGLISH ABSTRACT: Against the backdrop of recent co-operative challenges, it may not be very pragmatic to paint a euphoric picture of things in the world of co-operatives. The distaste from co-operative scamp will continue for some time but, despite all that has happened in the recent past, co-operative activity particularly in the rural context will remain the answer to poverty in the rural areas. The spirit and principles that lead to the formation of co-operatives make sense and have a global appeal. If they are applied in properly structured and well managed environments, they can add value towards the improvement of the quality of lives in the rural communities. This work explains the failure, hopes and fears, potential and inadequacies of the co-operative effort in the Limpopo Province. The recommendations made by the researcher are linked to the data of the study and should not be read as bland generalisations. The new economic outlook in the province makes it all the more imperative that an understanding of the individual initiative should be reinforced by co-operative struggle in the rural areas where no other option seems to be more promising. The Limpopo Province will benefit from big irrigation projects to be implemented in the various districts. All well-wishers of co-operatives focus their attention on the future potential and try to forget the bitterness of the past. Any significant success in co-operatives in Limpopo Province will send good signals everywhere in South Africa. / AFRIKAANSE OPSOMMING: Teen die agtergrond van die onlangse koöporasie uitdagings, kan dit dalk uiters pragmaties klink om 'n euforiese siening in die wêreld van koöporasies te skilder. Die teensin in koöporasie-ongerymdhede sal nog vir 'n geruime tyd voortduur, maar ten spyte van alles wat in die verlede gebeur het, bly samewerking, veral in die plaaslike konteks, die antwoord vir die armoede in die platteland. Die geesdrif en beginsels wat lei tot die ontstaan van koöperasies maak sin en het wel 'n algemene trefkrag. Indien hulle in behoorlike strukture, en goed bestuurde omgewings toegepas word, kan hulle waarde tot die verbetering in die lewensgehalte van gemeenskappe in die landelike gebiede voeg. Hierdie navorsing verteenwoordig die mislukking, hoop, vrese, potensiaal en ongelykhede van koöporasiepogings in die Limpopo Provinsie. Die aanbevelings wat deur die navorser gedoen word, is gekoppel aan die inligting van die studie en behoort nie as veralgemenings gesien te word nie. Weens die nuwe ekonomie uitkyk in die provinse is dit noodsaaklik dat die inisiatief van die individu versterk word, deur die samewerking stryd in die platteland gebiede. Die Limpopo Provinsie sal baat vind by groot besproeiingsprojekte in die verskillende distrikte. Alle voorstanders van koöporasie-aksie moet op die pontensiaal vir die toekoms fokus en die griewe van die verlede probeer vergeet. Enige noemenswaardige kooporasie aksie in Limpopo Provinsie sal goeie seine wyd en syd stuur.

Thesis (MBA (Business Management))--University of Stellenbosch, 2007. / ENGLISH ABSTRACT: Fidentia became an active player in the South African financial services industry in 2005, only a few years since its inception. This was achieved through aggressive take-overs and a favourable public image boosted by employing known sports personalities and sponsorships of various sports teams, charities and other events. The Fidentia group seemed to go from strength to strength under the leadership of Mr. Arthur Brown assisted by his senior management team of which none more prominent than Mr. Graham Maddock. The group’s main business is Fidentia Asset Management (FAM) which, during 2003 and 2004, secured two of the biggest clients in Fidentia’s history. In 2003 the Transport Education Training Authority (TETA) invested R200,3 million and R1,2 billion of the Mineworkers Provident Fund was placed under its’ management in 2004. The Fidentia group was placed under final curatorship on 27 March 2007, based on reports by the then provisional curators and the Financial Services Board which claimed that their inspectors could not trace R680 million of almost R2 billion under the management of FAM. The analysis of the unfolding Fidentia case will show that without proper strategic planning and management, as well as adherence to suggestions on good corporate governance stakeholders’ risk exposure can be increased. NOTE: The information available till end August was analysed. / AFRIKAANSE OPSOMMING: Fidentia was teen 2005 ‘n aktiewe speler in die Suid-Afrikaanse finansiële dienste industrie, slegs ‘n paar jaar nadat dit gestig is. Dit is bereik deur aggresiewe oornames en ‘n publieke beeld wat versterk is deur bekende sportpersoonlikhede aan te stel en verskeie sportspanne, liefdadigheidsorganisasies en ander gebeurlikhede te borg. Die Fidentia groep het skynbaar van krag tot krag gegaan onder die leierskap van Mnr. Arthur Brown, ondersteun deur sy senior bestuurspan waarvan niemand meer prominent as Mnr. Graham Maddock. Die groep se hoofbesigheid is Fidentia Asset Management (FAM) wat gedurende 2003 tot 2004 twee van die grootste kliënte in Fidentia se geskiedenis verseker het. Gedurende 2003 het die “Transport Education Training Authority (TETA)” R200,3 miljoen by FAM belê en R1,2 biljoen van die “Mineworkers Provident Fund” is in 2004 onder FAM se bestuur geplaas. Die Fidentia group is op 27 Maart 2007 onder finale kuratorskap geplaas gebasseer op verslae deur die destydse voorlopige kurators en die Finansiële Dienste Raad wat beweer het dat hul inspekteure nie R680 miljoen van die amper R2 biljoen onder FAM se bestuur kon opspoor nie. Die analise van die Fidentia saak soos dit ontvou, sal wys dat sonder behoorlike strategiese beplanning en bestuur, asook die voldoening aan voorstelle van goeie korporatiewe bestuur belanghebbendes se blootstelling aan risiko kan verhoog. NOTA: Die inligting beskikbaar tot einde Augustus 2007 is ontleed.

Thesis (MBA (Business Management))--University of Stellenbosch, 2008. / ENGLISH ABSTRACT: To date, there has been significant research completed on the topic of corporate financial distress. Two pioneering researchers in the field of predicting financial distress was Beaver in 1966 and Altman in 1968. More recent research, based on companies listed on the JSE has been that of Steyn-Bruwer and Hamman (2006). This project, based on the latter authors’ work, has been formulated with one main research objective and two subordinate research objectives. The main research objective is to prove that different modelling techniques provide better prediction accuracies than others. The two subordinate research objectives are firstly to prove that there is a difference in the overall predictive accuracy if the data (provided by Steyn-Bruwer and Hamman) is subdivided according to “year before failure” and not according to economic period and secondly to prove that more optimised, independent variables would provide a better overall predictive accuracy. This research report summarises several significant papers on the topic; and draws the conclusion that research on financial distress is fragmented with very little consensus on any of the major definitions, assumptions and findings. In order to contextualise these differences; this research report defines and discusses corporate financial distress and considers the major issues associated with the field of research. An interesting observation from the literature survey was the fact that existing literature does not readily take consideration of the number of Type I and Type II errors made. As such, this research report introduces a novel concept (not seen in other research) called the “Normalised Cost of Failure” (NCF) which takes cognisance of the fact that a Type I error typically costs 20 to 38 times that of a Type II error. In order to satisfy the main research objective several different modelling techniques were selected based on their popularity in the literature surveyed. They are: Multiple Discriminant Analysis (MDA), Recursive Partitioning (RP), Logit Analysis (LA) and Neural Networks (NN). A summary of each of the different techniques is provided in Chapter 4 of this research report. The research by Steyn-Bruwer and Hamman forms the departure point for this research and their work is summarised in Chapter 5 of this report. Chapters 6, 7 and 8 use the data from Steyn-Bruwer and Hamman along with the above mentioned modelling techniques to verify the main and subordinate objectives. In terms of the main research objective, the results of these chapters show that the different analysis techniques definitely produce different predictive accuracies. Here, the MDA and RP techniques correctly predict the most “failed” companies; and consequently have the lowest NCF. This research report also shows that LA and NN provide the best overall predictive accuracy. In terms of the first subordinate research objective; this research shows that using the year before failure rather than the economic period as a subdivision provides superior predictive accuracy. With regard to the second subordinate research objective: there is no difference in the predictive accuracies if the independent variables are further optimised. These results were disappointing and consequently disprove the second subordinate objective that widening the number of input variables actually improves the predictive accuracy. In fact, the results indicate that the information contained in the independent variables seems to saturate after the most important (key predictor) independent variables have been included in the model. It is important to take cognisance of the fact that each predictive technique has its own strength and weakness. It is proposed by the author that the strengths and weaknesses of these predictive techniques be combined to provide a better overall predictive methodology. / AFRIKAANSE OPSOMMING: Heelwat betekenisvolle navorsing oor die onderwerp van maatskappye se finansiële verknorsing is tot op hede voltooi. Twee baanbreker-navorsers op die gebied van vooruitskatting van finansiële verknorsing was Beaver in 1966 en Altman in 1968. Meer onlangse navorsing, gebaseer op maatskappye wat op die JSE genoteer is, was dié van Steyn-Bruwer en Hamman (2006). Hierdie navorsingsverslag, gebaseer op die voorgenoemde outeurs se werk, is geformuleer met een hoofnavorsingsdoelwit en twee ondergeskikte navorsingsdoelwitte. Die hoofnavorsingsdoelwit is om te bewys dat verskillende modelleringstegnieke beter voorspellingsakkuraatheid as andere het. Die twee ondergeskikte navorsingsdoelwitte is, eerstens, dat daar ʼn verskil is in die oorhoofse voorspellingsakkuraatheid as die data (verskaf deur Steyn-Bruwer en Hamman) onderverdeel word volgens die “jaar voor mislukking” eerder as volgens die ekonomiese tydperk; en tweedens, om te bewys dat meer geoptimiseerde, onafhanklike veranderlikes kan lei tot ʼn beter oorhoofse voorspellingsakkuraatheid. Ten einde hierdie verskille te konseptualiseer, het hierdie navorsingsverslag finansiële mislukkings van maatskappye bespreek en gedefinieer en aandag geskenk aan die belangrikste aspekte geassosieer met die navorsingsveld. ʼn Interessante waarneming uit die literatuurstudie was die feit dat die huidige literatuur selde indien enige, oorweging skenk aan die aantal Tipe I- en Tipe II-foute wat gemaak word. As sulks het hierdie navorsingsprojek ʼn nuwe begrip (nog nie in ander navorsing gesien nie) ontwikkel, wat beskryf word as die “Genormaliseerde Kostefaktor”; wat die feit dat ʼn Tipe I-fout tipies 20 tot 38 maal die koste van ʼn Tipe II-fout beloop, in ag neem. Ten einde te voldoen aan die hoofnavorsingsdoelwit is verskillende modelleringstegnieke wat op grond van hul gewildheid in die literatuur voorgekom het, gekies. Hulle is: Meervoudige Diskriminantanalise (MDA), Herhalende Verdeling (RP), Logit-Analise (LA) en Neurale Netwerke (NN). ʼn Opsomming van elk van hierdie verskillende tegnieke word in Hoofstuk 4 van hierdie navorsingsverslag verskaf. Die navorsing wat deur Steyn-Bruwer en Hamman gedoen is, vorm die vertrekpunt van hierdie navorsing en hulle werk is gevolglik in Hoofstuk 5 van hierdie verslag opgesom. Hoofstukke 6, 7 en 8 gebruik die data van Steyn-Bruwer en Hamman tesame met die bovermelde modelleringstegnieke ten einde die hoof- en ondergeskikte doelwitte te bewys. In terme van die hoofnavorsingsdoelwit, het die resultate van hierdie hoofstukke getoon dat die verskillende analitiese tegnieke definitief verskillende voorspellingsakkuraatheid oplewer. Hier het die MDA- en RP-tegnieke die grootste aantal mislukte maatskappye korrek voorspel, en gevolglik die laagste Genormaliseerde Kostefaktor gehad. Die navorsingsverslag toon ook dat LA en NN die beste oorhoofse akkuraatheid van voorspelling het. In terme van die eerste ondergeskikte navorsingsprobleem het hierdie navorsing getoon dat, om die jaar voor mislukking te gebruik as onderverdeling, eerder as die ekonomiese tydperk, beter voorspellingsakkuraatheid het. Wat die tweede ondergeskikte navorsingsdoelwit betref, is daar bevind dat daar geen verskille in die voorspellingsakkuraatheid bestaan as die individuele veranderlikes verder geoptimaliseer word nie. Hierdie resultate was teleurstellend en het gevolglik die tweede ondergeskikte probleem, naamlik dat as die aantal inset-veranderlikes sou vergroot word, dit die vooruitskattingsakkuraatheid behoort te kan verhoog, verkeerd bewys. Tewens, die resultate het getoon dat die inligting soos vervat in die onafhanklike veranderlikes klaarblyklik versadiging bereik nadat die belangrikste (hoof-vooruitskatter) onafhanklike veranderlikes in die model opgeneem is. Dit is belangrik om kennis te neem van die feit dat elke vooruitskattingstegniek sy eie sterk en swak punte het. Die skrywer stel dus voor dat hierdie sterk- en swakpunte gekombineerd gebruik word om ʼn beter oorhoofse vooruitskattingsmetodologie daar te stel.