Truworths Business Model

Introduction

Integrated reporting is an important communication mechanism to provide stakeholders of a business with information regarding the organization’s strategy, governance, performance and visions, to create of value in the short, medium and long term.

Included in the integrated report of a company, is the value creation process which is based on the business model of the company.

Section A of this essay provides a theoretical overview of the business model as well as the value creation process used in integrated reporting. Section B is focussed on the integrated report, specifically the business model of Truworths International Limited.

Section A

1. What is a business model: A business model gives a description of the

(IIRC 2013)

A good and effective business model must be sustainable and therefore usable in the long term without a need for it to be changed. (IIRC 2013) The model has to provide valuable information to its users while protecting the strategies of the company against competitors. (IIRC 2013)

3 Users of a business model:

Stakeholders will use the business model of a company to evaluate whether the company’s conduct truly reflects its strategies and goals as stated in the business model.

These stakeholders include managers, directors, current and potential investors, employees and customers. Potential and current shareholders of a company value the information included in a company’s integrated report as it provides them with the necessary information to make good financial and investment decisions.

By compiling a business model, the company is forced to contemplate on long-term goals of the company as well as the ways of reaching these goals. Thus, the managers and other decision makers of the organisation will especially benefit from a business model.(IIRC 2014)

4. Value creation through a business

Human capital performs the key activities including marketing, sale activities and managing and operating the stores. (Ernst & Young Inc. 2014)

Truworths International Limited mainly follows a value-driven cost structure and costs are incurred to create the best possible value for customers and other stakeholders. (Ernst & Young Inc. 2014)

2.3 Outputs

A centralised distribution model is used and online shopping and retail stores across Africa in prime locations form the channels used by the Company. Manufactured capital is thus a key source. (Ernst & Young Inc. 2014)

Truworths Group generates income from the sale of fashion accessories and clothing of which the prices are based on a fixed menu pricing mechanism. Sales comprise of a 71:29 credit to cash ratio. Intellectual capital is used as a resource. (Ernst & Young Inc. 2014)

Truworths offers a diverse range of brands to customers and creates value by satisfying the need for modern fashion and accessories. Intellectual capital adds value to the customers. (Ernst & Young Inc.