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| Review of operations – Bidserv continued |
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| Risks |
Business risks are little changed. The basic nature of many of our services ensures stable or increasing demand across various business cycles.
HIV/Aids is a key risk area. Over the years, we have taken Aids awareness and education to many thousands of workers, distributed condoms and provided confidential counselling and assistance. New initiatives may be necessary to improve the effectiveness of this work.
In the past, we have called for combined service industry initiatives as a means of unlocking economies of scale. There has been little response, but we continue to canvass support for wider initiatives.
Legislative risk and sensitivity to changes in labour law are ever present. Bidserv minimises the risk by being proactive, often raising internal standards ahead of any legislative requirement.
Numerous small, under-resourced and poorly capitalised companies are active in many service industries. Their observance of legislation and good corporate governance practices can be haphazard. Bidserv, in contrast, is known for scrupulous legal compliance.
Exposure to any worsening of the industrial relations climate has already been noted.
Low barriers to entry in some service sectors no longer carry significant risk as Bidserv has limited “bottom-end’’ exposure. |
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| Sensitivity analysis |
Sensitivity to economic variables is judged to be moderately positive. South Africa’s growing commercial base is good for Bidserv business. The effect is to stimulate recurring income for our services.
Rand weakness has little discernible effect and may be a mild “stimulant” as it encourages inbound tourism. Our travel businesses focus on the business traveller rather than the rate-sensitive private consumer. A small uptick in inflation has little impact.
Rising fixed investment is a substantial positive.
Higher trends in wage settlements are a sensitive area. Higher wage scales are a major contributor to service industry inflation, which Bidserv puts at about 7,0% – 8,0%. Client resistance stiffens when annual price increases move above 5,0%, accentuating margin pressure. Bidserv has blue-chip clients, who, as major corporates, aggressively manage their supply-chain costs. |
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| Proudly Bidvest |
Membership of the Group is showcased by investment in corporate image elements, including vehicle liveries. Our role as a key contributor to a major JSE-listed group is a source of reassurance for our corporate customers.
In addition, Bidvest’s status as one of the most empowered companies in the country is important to our clients as most of them put increasing emphasis on BEE procurement. For example, the strong empowerment profile at group level has assisted us in significant new business gains in the public sector. |
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| Differentiation |
| Stature, resources and professionalism are crucial in an often-fragmented service sector. Bidserv’s positioning as a reliable partner is the core element in our value proposition. We offer predictable performance within rigorously managed quality and price parameters by professionals who are here for the long haul. Under-resourced, often opportunistic industry players have trouble competing with this promise. |
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| Training |
Training investment increased by 36,5% to R36,0 million.
Initiatives are being examined to complement internal training with training efforts directed at joint ventures or operations we are partnering as part of our commitment to enterprise development. |
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| Black economic empowerment |
Most individual business units have obtained empowerment ratings or are in the process of doing so. Improvements have been achieved across most elements of the Bidvest BEE scorecard.
Though steady progress is evident in all areas, three specific pillars of empowerment have been targeted for focused attention: training, promotion of black staff into areas of real responsibility and enterprise development.
Many businesses have taken as their model The Bidvest Academy and have set up their own mini-academies. They identify high potential individuals and give them a concentrated course of training in leadership and people management.
“Graduates” are channelled into mentorship programmes. The academies enable staff to progress into senior positions while hands-on mentorship helps retain individuals who have acquired highly marketable skills. The attrition rate of staff with high potential has affected our BEE scores in middle and upper management categories. It is hoped the new initiatives will halt or slow the migration of these staff members.
In the area of enterprise development, we have begun the process of identifying people-intensive operations that are currently housed within Bidserv but could go it alone, given the right type of support. The finalised codes of good practice give continuing credit for this type of intervention, even when the enterprise under development is “set free”.
Some cleaning, laundry and security operations could be developed into independent businesses.
Simultaneously, we have begun discussions with service providers that are already independent but require training support and a recurring income stream. For example, one women’s group that provides technical services can be assisted by refocusing their business on equipment servicing (point-of-sale machines, CCTV cameras and cash-counting machines). This assistance will add another credible BEE supplier to our list and improve our enterprise- development credentials.
Win-win scenarios like this have become a focus area for empowerment efforts. |
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