Abstract
M.Com. (Business Management)
The aim of this research study was to suggest the business sophistication levels of
the informal sector hairdressing salons in Cosmo City. This aim was achieved
through two research objectives, namely; identifying the characteristics that
categorise the hairdressing salons as informal sector enterprises under the umbrella
of Small, Micro and Medium Enterprises (SMMEs), and determining the business
management practices that are currently implemented by the hairdressing salons.
South Africa’s informal sector has the potential to contribute towards poverty
alleviation and employment amongst the semi–skilled and unskilled poor. However,
businesses in this sector apply less developed business management practices as
compared to their formal counterparts. Furthermore, the challenges faced by these
enterprises in implementing sound business management practices contribute to a
lack of sophistication in their business operations, which in turn reduces their
performance and sustainability. The adoption of good business management
practices can have a significant impact on the performance of an enterprise, as well
as on its productivity and output. This is true for an enterprise of any size. As a
business becomes more mature in the implementation of business management
practices, the longer that enterprise’s sustainability horizon may become.
The research was conducted amongst Cosmo City’s hairdressing salon and the data
was collected by means of interviewer–administered questionnaires. A total of 24 out
of the 36 hairdressing salons that were identified to participate in the research study
completed the questionnaires. The study employed a qualitative research approach
during the data collection process; however the data analysis was quantitative in
nature.
In support of the first research objective, it was confirmed that the hairdressing
salons operated within the informal sector, specifically in the lower end Business
Sophistication Measures (BSM) categories 1, 2 and 3. With regards to the second
research objective, it was confirmed that particularly because the informal sector
hairdressing salons had low BSM they lacked good business management practices.
Due to the size and nature of their operations, low managerial competence and
skills, limited business support, small–scale marketing initiatives, the lack of
documentation of policies and procedures and inadequately maintained business
information; the informal sector hairdressing salons are too undeveloped to embrace
good business management practices and as such have lower to low medium
business sophistication levels that may prevent further growth and sustainability.