Man301 2024 01 SG

Management III
MAN301
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ASSIGNMENT
Semester 1 2024
Module name MANAGEMENT III
Module Code MAN301
Due date 22 APRIL 2024
Total Marks 75
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©STADIO Assignment – 2024 Semester 1 MAN301 MANAGEMENT III

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Question 1 (20 marks)
CASE STUDY: ACKERMANS
Ackermans serves most South African urban centres through its national chain of over
300 stores. The stores are in easily accessible locations, are supported by public
transport and are near other essential shopping and customer services. In other
countries, there are 17 stores in Namibia, nine in Botswana and two each in Lesotho
and Swaziland.
Store layout is designed for customer comfort with wide aisles and vibrant, fun
merchandising. Goods are easy to find and are clearly priced. Depth of stock ensures
ongoing availability to customers. Radio ACK is an interactive in-house radio station
broadcasting from the Support Centre to all stores, adding to customer excitement. It
is a very targeted marketing tool.
Ackermans is a value retailer selling everyday, contemporary casual wear at
unbeatable prices, meeting its promise to customers to give “just what you need”. It
offers an exciting range of coordinated mainstream fashion in clothing, footwear,
homeware and accessories that appeal to the mass middle market of value-seeking
consumers. They are mostly women with children wanting to give their families the
very best within their means.
Not only does Ackermans stock a comprehensive range of everyday basics, but
shoppers will find an assortment of more styled items at leading price points, including
well-known national and international brands. To further add to customer excitement,
shoppers can take advantage of star deals, which are the season's "must-have" items
at best prices and star quality.
Ackermans has steadily grown its market share and is also the leading brand in
certain categories of its target market. Ackermans offers the largest babywear brand
in Southern Africa. Its highly successful range of infant wear and accessories appeals
to consumers across the income spectrum, offering mothers everything they need for
themselves and their babies under one roof.
Ackermans also recognises that school uniforms as an essential commodity have to
be kept affordable. It has instituted a policy of either maintaining or lowering prices
year-on-year to keep them within the reach of all Southern African families. This has
resulted in the chain being ranked the number one destination for school wear within
their target market. An added benefit to customers is that items are not priced
according to size but kept at constant prices for defined age groups.
Jay Jays, a subsidiary of Ackermans, is the hottest and most exciting youth retail
alternative to hit South Africa. It is a fast-fashion business selling the same type of
products in the middle market segment in high volumes and at low prices in the South
African market. Originating in Australia and with stores throughout New Zealand, Jay
Jays opened their first store in South Africa in April 2006 in Northgate Shopping
Centre in Gauteng and now has 62 stores nationally - and growing. They are targeting
the high school and university shoppers who don't want to blow their budget.
The chain offers consumers five payment options. Customers can choose to use
cash, lay-by or credit facilities. Ackermans also serves consumers purchasing through
buy-aid schemes. Another option is the A-PLUS credit card, which offers up to 55

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CASE STUDY: ACKERMANS
days' interest-free credit. The A-PLUS club offers the following additional benefits to
its members:
• Lifestyle Family Club magazine every second month.
• Regular competitions and lucky draws.
• 24-hour legal assistance.
• Home assist - assisting with home emergencies.
• Family Care Plan (death benefits).
• Personal health advisor.
• Team Line (advice on studies and peer pressure).
• Trauma counselling.
• Funeral advice.
• HIV protection/treatment service.
In Touch is the cell phone services division of the business, which enables customers
to stay connected by offering handsets and airtime at discounted prices at Ackermans.
Currently, 70 per cent of Ackermans' management staff at store and service level are
black women, reflecting very closely the demographics of the chain's shoppers.
Career growth is actively encouraged through life skills and technical training to create
an ever better, more motivated, skilled and productive staff complement. Ackermans
has developed its own highly sophisticated information system modelled on world-
class examples. It draws on the expertise of the top international retail service
providers, linking suppliers to stores to shoppers and ensuring the delivery of the right
merchandise to the right shops at the right time. Trading in today's environment
requires tough decisions and management competencies.
In this regard Ackermans maintains:
• A very competitive price positioning.
• A stringent quality focus that ensures outstanding value.
• A close understanding of customer needs through regular research.
• A strong fashion identity through its in-house brands, as well as its international
Hang Ten young adult casual wear label.
• A high level of consumer interest by sourcing worldwide exciting ranges sold at
great value prices.
• Consumer comfort through its new generation of colourfully merchandised
stores.
• Strong consumer interest through its interactive live radio station.
• High visibility through tenancy in popular shopping centres and through
localised and national advertising.
• Strategic alliances with suppliers in an effort to contain costs throughout the
supply chain, to maintain inventory levels tailored to the consumer profiles of
each store, as well as to ensure just-in-time deliveries.
• Support of local manufacturers.
• High levels of staff productivity through self-development and life skills courses
and incentive schemes for all staff members
Source: Lazenby, LAA. (Ed.) 2014. Strategic management. A South African

perspective. Van Schaik Publishers. Pretoria. Africa.

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1.1. In terms of assessing the internal capabilities of organisations, identify the
strengths of Ackermans. (8)
1.2. Using a value chain approach and citing examples from the case study,
determine which activities add value to Ackermans. (12)
CASE STUDY: GENDER MAINSTREAMING “NEEDS FAST-TRACKING”
According to Unesco, Gender Mainstreaming was defined by the United Nations

Economic and Social Council in 1997 as "a strategy for making women's as well as
men's concerns and experiences an integral dimension of the policies and
programmes in all political, economic and societal spheres so that women and men
benefit equally and inequality is not perpetuated".
SA women make up 45% of entry-level professionals, against 53% in the US, but
representation is the same at the executive level. Although women are making a
significant contribution to the economy, more could be done to fast-track their
progress through companies, says an expert in the recruitment industry.
"The business case for gender diversity must be recognised and supported from the
very top of the organisation,' said Sandra Burmeister, CEO of Landelahni Recruitment
Group, earlier this week. "Management needs to recognise that companies that
celebrate diversity are best-placed to develop a flexible organisation that can
maximise business opportunities. Transformation and diversity are not a 'nice-to-
have'. They are a business imperative."
A recent report by advisory firm McKinsey on women in the economy found that in the
US, structural blocks and embedded institutional mindsets play a major role in limiting
women's opportunities. Lifestyle issues such as the desire for work-life balance and
individual mindsets also tended to hold women bock. "SA's legislative framework in
terms of black economic empowerment and the advancement of women has had a
significant effect in addressing structural issues and influencing corporates to be more
gender and equity sensitive," Ms Burmeister said.
Although many barriers had been addressed by legislation when it came to lifestyle
issues and personal beliefs, women themselves needed to make the shift, she said.
'Women need to recognise and value their own capabilities and experience and keep
their knowledge current through training and leadership development programmes.

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CASE STUDY: GENDER MAINSTREAMING “NEEDS FAST-TRACKING”
They need to seek sponsors who can help them further their career and to take
advantage of any coaching and mentoring opportunities."
She said it was also important for them to want to feel that their development as
professionals was as important to their organisations as it was to them. "They want to
feel part of a team, they want to be acknowledged for the work they do and they want
to feel they are being paid what they are worth."
Yusuf Bodo, a legal manager at legal insurance company Legal & Tax, said that the
laws had undoubtedly helped to change life for the better for SA's women. Yet the
realities that many women lived with day-to-day did not reflect the progressive laws
that were in place to protect women and their rights. Women needed to inform
themselves of the rights they had under the law, Mr Boda said. He said there were
too many women who worked in companies where they were discriminated against
or were unaware of their rights or too scored to enforce them.
"Mainstreaming" most generally refers to a comprehensive strategy that involves both
women-oriented programming and the integration of women/gender issues into
overall existing programmes throughout the programme cycle.
The critical success factors in implementing any Gender Mainstreaming process
involve a political and technical process with an obligation to produce results, not
merely provide the means, calling for:
• Political will at the highest level
• Support and commitment, including at the individual level
• The existence of specific policies relating to equality of the sexes and egalitarian
laws
• The involvement of women in the decision-making process
• Partnership with and the involvement of NGOs which defend women's interests
• Time-bound strategies to implement the policy
• HR practices that are sensitive to gender interests
Source: Adapted from Lazenby, LAA. (Ed.) 2019. General Management. Van Schaik
Publishers. Pretoria. Pretoria.
Note: You are approached by Legal & Tax to implement a pilot gender mainstreaming
project in the company. This pilot will be a benchmarking exercise to show how gender
mainstreaming should be applied in practice.

Page 6 of 10
2.1. Outline the relevant forces exerting pressure on Legal & Tax as an organisational
system to conform to gender mainstreaming. (8)
2.2. What type of change in terms of strategic, structural, technological, people, etc.
applies to Legal & Tax regarding women in the workplace? Substantiate your
answer. (10)
2.3. You have been approached by the Managing Director at Legal & Tax. She
informs you that she is experiencing resistance to her latest gender change
initiatives, both from a personal and a general perspective. Using examples from
the case study, discuss the advice you would give her on the possible four causes
of the resistance. (12)
CASE STUDY: RETAILER MERCHANTS LIMITED
Introduction
In the past two years, Retailer Merchants Limited has grown into one of South Africa's
largest food retailers. They operate 231 corporate and 106 franchise outlets across
South Africa. They have been listed on the JSE Limited since March 2015.
Now that Retailer is one of South Africa’s major role players in the food retail industry,
they have a new strategic expansion plan: To maintain its position as the leading food
retailer in South Africa and expand into the broader continent. The new vision of
Retailer is to become the leading food retailer on the continent. They want to achieve
this vision by 2030.
With the new vision in sight Retailer’s Board of Directors are considering four key
internal decisions to adapt the organisation’s structure and design to fit the new
expansion The four key decisions concern the Retailer and its organisational
structure, its people and its culture.
Retailer and its organisational structure
The board of directors comprises the Deputy Managing Director and the Chief
Executive Officer. Six general managers (Finance, Information Technology,
Purchasing, Human Resources, Marketing and Statutory and Legal services) report
to them. For the time being, this structure is not going to change. However, the
management board has raised concerns on the current organisational structure

Page 7 of 10
design and if it will still be suitable once the organisation expands into Zimbabwe,
Namibia and Zambia. Especially considering that:
1. They aim to list themselves on the Namibian and Zambian Stock Exchanges.
2. They will need district offices in Zimbabwe, Namibia and Zambia.
3. There are legal and cultural implications for expanding into Zimbabwe, Namibia
and Zambia.
Within the organisation, a high priority is placed on specialisation. Specific tasks are
identified and assigned to individuals or teams who have been trained or are qualified
to do these tasks. In-house training of employees is also structured around the above
(departmental) classifications.
Another high priority is placed on standards and procedures within each department.
For example, staff and management are expected to maintain the highest integrity
and honesty in dealing with customers, suppliers, service providers, and colleagues.
These principles are set out in the Organisation Rules and a document entitled A
Guide to the Code of Conduct for Retailer Merchants Employees. Copies of the
document are made available to the workforce.
Standards and procedures, together with integrated tasks and activities of employees
also ensure that the organisation reaches its goals. Most of the coordination activities
are formal and the Board delegates the day-to-day management of the business to
the chief executive assisted by senior management (the six general managers).
Senior management is invited to attend board meetings; it facilitates the effective
control of the Group’s operational activities, acting as a medium of communication
and coordination between all the various business units and subsidiaries. The Board
is also responsible for ensuring that a comprehensive system of internal control
policies and procedures is operative and for compliance with sound corporate
governance principles.
The Board, working through the Audit Committee, supervises the financial reporting
process. The Board is also responsible for ensuring adequate ongoing procedures
and processes exist to identify, evaluate, manage and monitor key business risks.
This is done through an enterprise-wide risk management plan (EWRM), which has
been implemented in all business units. The EWRM is reviewed regularly. No material
loss, exposure or misstatement arising from a material breakdown in systems
functioning has been reported to the directors in the year 2017.

Page 8 of 10
Retailer and their people

Retailer’s success over the years and the increase in operating profit can primarily be
attributed to what really is the heart and soul of the organisation — its workforce. Each
employee is invaluable to the Group’s continued growth and success. More than 18
500 permanent employees and some 6 800 temporary and casual workers are
currently employed. The Group’s objectives are to appoint the right person to the most
suitable position and to utilise the employee’s skills to maximum effect. They maintain
a productive workforce through training and developing staff to meet the requirements
of their business, through an efficient human resources function, and by ensuring
compliance with all labour-related legislation.
Retailer and its organisational culture
Through a culture of team achievement, the Group has exceeded productivity targets
and shown inflation-beating real growth of over 9% in sales per employee. Staff
turnover remains at low levels and almost 63% of employees have service records of
more than 10 years. This depth of experience in the Group is an important contributor
to productivity and indicates a high degree of job satisfaction with a diverse range of
career advancement opportunities from within. Staff turnover for 2017 stands at
around 10.5%, which is considerably lower than the average of 14.8%.
For Retailer, providing a stimulating and promising career to its employees is of pivotal
importance and numerous training and development programmes are in place,
providing employees with the opportunity to grow and develop. One of the most
effective ways to train employees is through working in teams. Senior managers are
continuously encouraged to form tasks teams once issues arise within their respective
departments.
Transformation in the workplace remains a priority and the Group has a
comprehensive employment equity plan to achieve the necessary goals. The majority
of potential managers are sourced from within the Group and internal promotions have
served as a strong motivation to staff to work their way up through the ranks.
The positive and constructive human resources environment in Retailer is a testament
to the Group’s advanced people management systems. It continues to be at the
forefront of the retail industry through constant renewal and adjustment to nurture a
dynamic workforce.

Page 9 of 10
Going forward
Retailer is excited about the future of its business and well positioned to further
increase the Group’s presence in South Africa and other African countries.
Source: Adapted from: Hellriegel, D., Slocum, J., Jackson, S.E., Louw, L., Staude, G.,
Amos, T., Klopper, H.B., Louw, M., Oosthuizen, T., Perks, S. & Zindiye, S. 2017.
Management. 5th ed. South African edition. Cape Town: Oxford University Press
Southern Africa. Juta.
The case study states: “Within the organisation, a high priority is placed on
specialisation. Specific tasks are identified and assigned to individuals or teams who
have been trained, or are qualified, to do these tasks”. Furthermore, Retailer employs
more than 18 500 permanent employees and some 6 800 temporary and casual workers
are currently employed.
Also, according to Botha, Vrba and Smit (2020), several factors influence the
development of and effectiveness of groups and teams in organisations.
Required
Concerning the relevant variables associated with effective group/team functioning,
explain how these group/team structures function within an organisational context. Make
use of relevant examples from the case study to support your explanation.
Assignment Total: 75 marks

Page 10 of 10
Table of Contents
Heading Page number
1
WELCOME
MODULE PURPOSE AND OUTCOMES 3
Topic 1 Strategic Planning (Chapter 4) 5

1.1 Introduction 5
1.2 Background to Strategic Planning 5
1.3 Strategic Planning: What It Encompasses 7
1.4 Different Levels and Aspects of Strategies 8
1.5 The Strategic Planning Process 9
1.6 Formulate the Vision and Mission 9
1.7 Assess the Internal Environment 10
1.8 Assessing the External Environment 12
1.9 Translating the Mission Into Long-Term Goals for the Organisation 14
1.10 Grand Strategies 15
1.11 Selecting Grand Strategies 16
1.12 Factors Affecting Strategy Choice 17
Topic 2 Information Management (Chapter 7) 20

2.1 Introduction 20
2.2 The Link Between Decision-Making and Information 21
2.3 What Is an Information System? 22
2.4 Components of an Information System 23
2.5 Characteristics of Useful Information 24
2.6 Organising Information Systems 24
2.7 Classification of Information Systems 25
2.8 Other Classification of Information Systems 26
2.9 Ethical Issues of Information Systems 27
2.10 The Main Moral Dimension 27
2.11 Developing an Information System 29
Topic 3 Innovation and Technology 32

3.1 Introduction 32
3.2 Change Inside the Organisation 33
© STADIO (Pty) Ltd Management III MAN301

3.3 The Change Process 33
3.4 Areas of Organisational Change 34
3.5 Resistance to Change 35
3.6 Overcoming Resistance to Change 36
3.7 Why Efforts to Change Fail 36
3.8 Culture and Change 37
3.9 Elements That Determine and Express A Corporate Culture 37
3.10 Changing the Organisational Culture 39
3.11 Organisational Development 39
Topic 4 Managing Diversity and Inclusion (Chapter 10) 42

4.1 Introduction 42
4.2 Misconceptions of Diversity 43
4.3 What Are Diversity and Inclusion? 43
4.4 Diversity Defined 44
4.5 Reasons Fortheincreased Focus on Managing Workforce Diversity 45
4.6 The Need for Managing Diversity and Inclusion in South Africa 45
4.7 Diversity Paradigms: Strategies for Diversity Management 46
4.8 Cultural Diversity 47
4.9 South African Cultural Values 48
4.10 Synergistic Solutions to Problems of Cultural Differences 49
4.11 Diversity Training 49
Topic 5 Groups and Teams in the Organisation (Chapter 13) 52

5.1 Introduction 52
5.2 Groups and Teams 53
5.3 Types of Organisational Group 53
5.4 Stages in Group and Team Development 54
5.5 Variables That Influence Group Behaviour 54
5.6 Variables That Influence Group Behaviour 57
5.7 Why Organisations Use Teams 58
5.8 Types of Team 58
5.9 Developing Individuals Into Team Members 58
Topic 6 The Components of Ethical Business (Chapter 17) 61

6.1 Introduction 61
6.2 Business Ethics 63
6.3 Business in Society 65
6.4 Corporate Social Responsibility 66
6.5 Corporate Citizenship 67
6.6 Corporate Governance 68
6.7 Evolution of South Africa’s Corporate Governance Regime 70

Topic 7 New Challenges for Management (Chapter 18) 73
7.1 Introduction 73
7.2 Thetraditional Model of the Formal Organisation 75
7.3 The Neworganisational Model 76
7.4 Characteristics of Contemporary Organisations Model 77
REFERENCES 80

List of Figures
Figure Page number
Figure 1.1 Environments 6

Figure 1.2 Environmental Forecasting 13
Figure 1.3 Selecting Grand Strategies 16
Figure 2.1 Data Is Transformed into Management Information, Which Enables
Decision-Making. 22
Figure 2.2 A System with Three Sub-Systems 23
Figure 2.3 Five Components Framework 23
Figure 2.4 Hierarchy of an Organisation’s Strategy 25
Figure 2.5 The Classification of Information Systems 25
Figure 2.6 The Classification of Information Systems 29
Figure 3.1 Decision-Making Conditions 34
Figure 3.3 Methods to Overcome Resistance to Change 36
List of Tables
Table Page number
Table 2.1 Characteristics of Information 24

Table 2.2 Operations Information Systems 25
Table 2.3 Operations Information System 26
Table 2.4 Operations Information Systems 26
Table 2.5 The IS Development Life Cycle 30
Table 3.1 Categories of Crisis 35
Table 3.2 Reasons for Resistance to Change 35
Table 3.3 Reasons for Resistance to Change 36
Table 3.4 Elements of a Corporate Culture 37
Table 4.1 What Is Diversity? 43
Table 4.2 General Dimensions of Diversity 44
Table 4.3 Worldviews 48
Table 4.4 Cultural Dimensions 48
Table 5.1 Cultural Dimensions 53

Table 5.2 Stages in Group and Team Development 54
Table 5.3 Variables That Define Group Structure 55
Table 5.4 Group Processes 56
Table 5.5 Characteristics of Teams 57
Table 5.6 Types of Team 58
Table 6.1 King Reports 71
Table 7.1 Variables Influencing Organisations 74
Table 7.2 Strong and Weak Points of Bureaucracy 75
Table 7.3 New Organisational Model 76

Welcome
Welcome to Management III (MAN301)
Business Management is one of the majors in the Bachelor of Business

Administration degree. Business Management provides you with information and
competences which are needed in society today. No organisation can operate
and survive without managers.
You have now enrolled for the final module in Business Management, and we
invite you to proceed to postgraduate study – the Honours and Master’s degrees
in Management.
Solid knowledge of Business Management is needed as South African business

managers experience demanding challenges such as a turbulent political
environment characterised by little trust in political leadership, widespread
corruption, and bribery. Trade unions are active, students demand free
education, and processes of transformation are ongoing.
These examples illustrate that managers on all levels need to reflect on

management principles, how to be effective and efficient managers in their
organisations, and how to meet the demands of a changing society.
It is important to base your knowledge on the prescribed textbook. It represents

internationally accepted knowledge of Business Management as a discipline.
Once you have mastered this knowledge, it is useful to gather additional
knowledge from other reliable sources. Mastering textbook knowledge first
enables you to read other information on Business Management critically and to
identify opinions expressed in personal sources published on the internet. It is
preferable to obtain additional information from academic journals, available
from SABINET and EBSCO.
We invite you to join the MAN301 journey by reading, gathering information, and
completing tasks and challenges, and to grow in understanding what Business
Management is about. Studying at NQF Level 7 requires not only understanding
theoretical content, but also being able to apply facts and principles and to solve
problems.

1
MAN301 focuses on the following chapters in your prescribed book:
Chapter Theme
The 6th edition The 7th edition
Chapter 4 Strategic planning Strategic planning
Chapter 7 Information management Information management
Chapter 9 Managing change: culture, Innovation and technology
innovation and technology
Chapter 10 Managing diversity Managing diversity and inclusion
Chapter 13 Groups and teams Groups and teams in the
organisation
Chapter 17 Ethics, corporate social The components of ethical
responsibility and business
corporate governance
Chapter 18 New challenges for New challenges for management
management
Note
The chapters follow one another logically. Strategic planning influences the way
an organisation is structured – structure follows strategy! In the new or revised
structure of an organisation, information systems (IS) play an important role.
These considerations are followed by issues of change in the organisation, which
include managing diversity and the introduction of groups and teams; and due
to the new way of working together, ethics play an important role. This guide
focuses on developments that can be expected in future and that will have an
impact on the workplace and society as a whole.
Each topic requires you to read an academic journal or periodical, followed by

tasks. These will enrich your study experience, broaden your knowledge and
prepare you for postgraduate study.
Remember that the goal is to develop into a competent manager! Chapter 1 of

the 6th edition of the textbook indicates that in 2016 there were 240 000
vacancies in South Africa for competent managers. You should book your position
by applying a diligent work ethic during your Business Management studies.

2
Module Purpose and Outcomes
Qualifying students will be able to understand and apply strategic planning

processes and build further on the planning process by understanding and
implementing an appropriate IS and managing change in an organisation,
especially considering and managing organisational culture. Apart from these
organisational aspects, qualifying students will also be able to understand,
analyse and implement personal aspects that influence the workplace and
respond to new challenges such as diversity, managing teams appropriately, and
implementing corporate social responsibility. They will also consider other new
challenges such as questioning the traditional forms of organisation and artificial
intelligence (AI).
The qualifying student will also be ready to study at the next academic level by
reading, analysing and critically reflecting on journal articles.
1. Understand, differentiate and apply strategic planning processes.
2. Understand and apply key aspects of an information system.
3. Understand the dynamics of change and the role culture plays in an
organisation.
4. Understand, analyse and provide training on diversity issues in the
organisation.
5. Manage teamwork and evaluate different teamwork models.
6. Manage ethical conduct and corporate social responsibility in an
organisation.
7. Understand new challenges facing organisations and be able to forecast
changes which will challenge organisations.
Note
Any reference to masculine gender may also imply the feminine. Singular may
also refer to plural and vice versa.

3
Prescribed Reading
Smit, P. J., Botha, T. & Vrba, M. J. 2020. Management principles. A contemporary

edition for Africa. 7th edition. Cape Town: Juta. ISBN: 978-1-48513-100-7
Recommended Reading
• Hellriegel, Slocum, Jackson, Louw, Staude, Amos, Klopper, Louw,

Oosthuizen, Perks & Zindiye. 2017. Management. Cape Town: Oxford
University Press. ISBN 978 0 19 9077 6
• Erasmus, B.J., Strydom, J.W. & Rudansky-Kloppers, S. 2016. Introduction
to business management. 10th edition. Cape Town: Oxford University
Press. ISBN 978 0 19 1280 7
• Kroenke, D.M. 2015. Experiencing MIS. 4th edition. Hoboken NJ: Pearson.
• Wiese, T. 2017. Corporate governance in South Africa. Claremont: Juta.

4
Topic 1
Strategic Planning (Chapter 4)
Prescribed Reading
Before continuing with this topic, please read the following:

• Smit et al. 2020. Management principles. Chapter 4.
• Ajam, T.2008. Integrating strategic planning and budgeting: A PFMA
perspective. Southern African Journal of Accountability and Auditing
Research 8:45–56.
1.1 Introduction
After completing this topic, you should be able to:

• Define and explain what strategic planning is.
• Differentiate between three levels of strategy.
• Explain the process of developing a strategic plan.
• Compare components of a strategic plan.
• Evaluate different approaches, tools and techniques that can be used when
formulating a strategic plan.
• Draft a strategic plan for an organisation.
This topic deals with the process of developing a strategic plan. A strategic plan
guides all business decisions made in an organisation.
Strategic planning facilitates the long-term survival of an organisation; it focuses

on the future and assists the organisation to plan and survive in a changing
environment. Managers must have knowledge of strategic planning, as it is the
most important tool in managing an organisation.
1.2 Background to Strategic Planning
In the fast-changing business environment, businesses need to plan for future

challenges that could affect them. These changes are part of the macro-, micro-
and market environments, as illustrated in Figure 1.1.

5
Macro Micro
Market
Figure 1.1 Environments
A strategic plan informs all other plans in the organisation, such as tactical and
operational plans. The strategic plan provides focus (direction) for the
organisation to compete in the business environment. It builds on the strengths
of the organisation and aims to minimise weaknesses by dealing with
opportunities and threats identified in the strategic planning process.
Having said this, the question is: What is strategic planning and how important
is it for a contemporary organisation?
The answer must start with how the world has changed and how management
has had to cope with these changes.
Smit et al. (2016) indicate that before World War II there was a reliable business
environment – inflation was unknown, interest rates were steady, and
urbanisation was limited. There was no shortage of natural resources and
technological changes were slow.
After World War II, the situation changed drastically. The business environment
was more turbulent than before. Smit et al. (2016) describe changes today in
the business environment as ‘revolutionary’. Evolutionary environments are
predictable, but revolutionary environments are unpredictable. One of the
contributors to this revolutionary environment is the change in technology.
Communication and information technology have changed the face of the
business world – it has become borderless and fast-paced.
Within this revolutionary environment, strategic planning has a vital role to play.

6
Note
Strategic planning creates and projects. It is concerned not with things as they
are, but with things as they might be and ought to be(Smit et al. 2020:88).
1.3 Strategic Planning: What It Encompasses
Smit et al. (2020) define strategic planning as the process of proactively aligning
the organisation (internal environment) with the threats and opportunities
caused by the changes in the external environment.
Hellriegel et al. (2017:575) describe strategic planning as the process of

diagnosing the organisation’s external and internal environments, deciding on a
vision and mission, developing overall goals, formulating and selecting general
strategies to implement, and allocating resources to ensure that the general
strategies can be implemented in order to achieve the organisational goals.
The focus of strategic planning is dealing with the changing future. Because
strategic planning deals with an environment that is constantly changing, an
organisation needs to be flexible to adapt to these changes.
Smit et al. (2020) indicate the following unique characteristics of strategic

planning:
• It is an ongoing activity.
• Top management needs well-developed conceptual skills.
• It focuses on the whole organisation.
• It is future-oriented.
• It is concerned with the vision, mission, goals and strategies of the
organisation.
• It aims to integrate all management functions.
• It focuses on opportunities to be exploited, or threats to be dealt with.
• It must comply with corporate governance principles.
Activity 1.1
Read p. 87, which gives coal mining as an example of how we need to deal with
the changing future.
Clarify what strategic planning is, using the coalmining industry as an example.

7
1.4 Different Levels and Aspects of Strategies
Strategic planning is performed on three levels:

• corporate
• business
• functional
Corporate-level strategic planning focuses on the organisation as a whole to

specify which aspect of business the organisation should focus on. Smit et al.
(2020) refer to the City Lodge Hotel Group, which decided to focus on four
businesses: Courtyard, City Lodge, Town Lodge and Road Lodge. The corporate
strategy focuses on the organisation’s scope of activities and resource
deployment to create synergy (Smit et al. 2020:90–92.)
Business strategy determines how best to compete in a particular industry or

market. A business strategy develops strategies for each unit or business within
an organisation.
Functional-level strategies build on business-level strategies. A function is a

department or unit in an organisation where people have the same types of skill
or use the same resources, such as knowledge of computers and software,
marketing, finances etc.
These three levels of strategy correspond with three types of strategy:

• Corporate strategies correspond with strategic planning performed by top
management.
• Business strategies correspond with tactical planning performed by middle
management.
• Functional-level strategies correspond with operational strategies
performed by functional (first-line) managers.
Note
An important aspect here is that all three types of strategy must be aligned as
part of the strategic planning process.

8
1.5 The Strategic Planning Process
Smit et al. (2020) indicate that strategic planning includes the formulation of the
vision and mission of the organisation, the assessment of external and internal
environments, the formulation of long-term goals and the choice of strategy.
The authors further explain that strategic planning is a process, which starts
with:
1.6 Formulate the Vision and Mission
Smit et al. (2020) make a distinction between a vision and a mission:
• A vision should provide a clear sense of what the organisation hopes to

become. The vision is the end – not the means of getting to the end.
• A vision is important to an organisation:

o It communicates the dream an organisation has for the future.
o It promotes change.
o It provides a basis for a strategic plan.
o It assists decision-making.
o It should motivate managers and staff.
o It should lead to job satisfaction, commitment, loyalty and pride.
• A mission statement reflects the vision of the future and asks three
questions:
o What is our business?
o Who is our client?
o How will we provide a service to the client?
• The mission statement should also cover the following considerations:

o concerns for survival
o philosophy and values
o public image
o employees and stakeholders
o distinctive competence

9
Activity 1.2
Read pp. 95–121 in the textbook.
Formulate a vision and mission statement for a company of your choice. It should
include value statements.
Use the example of Ethiopian Airlines mission statement (p. 93), and Lockheed
Martin’s values to guide your value formulation.
1.7 Assess the Internal Environment
After formulating a vision and mission, a SWOT analysis is performed to

determine the strengths, weaknesses, opportunities and threats facing the
organisation. A SWOT analysis has three steps:
Step 1: Identify strategic internal factors.
Managers identify and examine key aspects of the organisation’s strategic

internal factors such as basic capabilities, limitations and characteristics. These
factors can vary between organisations.
The question is: How do managers decide which factors are truly strategic for
the survival of their organisation? According to Smit et al. (2018), the following
approaches can assist managers with this task:
• Evaluate functional segments such as marketing, financial and human

resources, research and development functions.
• The value-chain approach is intended to transform inputs to outputs. The

value chain can be divided into primary and secondary activities.
• Take a resource-based view of an organisation – there are three types of

resource: tangible, intangible and the ability to turn inputs into outputs. A
resource must be:
o superior to those of competitors
o scarce
o difficult to imitate

10
o under control of management
o slow to depreciate
o difficult to substitute
• Use the product/market evolution – the organisation applies the product life
cycle to identify strengths and weaknesses in the internal environment.
• Use financial analysis – organisations use balance sheets and income

statements in their financial analyses.
Key financial ratios are:

• liquidity
• leverage
• activity
• profitability
Step 2: Evaluate strategic internal factors.
Once the strategic internal factors have been identified, the next issue is to
identify the potential strengths and weaknesses of the organisation.
• A strength is a competency or a competitive advantage for an organisation.
• A weakness is something the organisation has done poorly.
Management may use one or a combination of the following to identify

weaknesses and strengths:
• a comparison with the organisation’s performance in the past
• a comparison with competitors’ performance
• a comparison with industry ratios
• benchmarking
Activity 1.3
1. Compare the value chain approach with the resource-based view to identify
strategic factors.
2. Evaluate the four methods to identify weaknesses and strengths of an
organisation.

11
Note
Five approaches to determining an organisation’s strengths and weaknesses

(internal assessment) are:
• functional approach
• value-chain approach
• resource-based view
• product/market evolution
• financial ratios
Step 3: Develop input for the strategic planning process.
The results of Step 2 can be applied to determine the internal factors, which:
• provide an edge over competitors.
• identify capabilities, which are important.
• identify current weaknesses in the organisation.
Please note: Step 3 together with the analysis of the external environment
provides inputs to the strategic planning process.
Activity 1.4
Read pages 103–106 in the textbook.
Study the external environment.
1.8 Assessing the External Environment
‘It is not the strongest nor the most intelligent of the species that survive: it is
the one most adaptable to change.’(Charles Darwin)
The same can be said of the organisation in the constantly changing business.
Topic 3 contains more information about this part of the strategic planning
process.

12
Organisations do not operate in a vacuum. They must be aware of their external
environment, as there are external forces which affect their success. These forces
are evident in:
• the macro environment –these are political, economic, social, technological,
international and ecological / environmental (PESTIE) forces that change
constantly.
• the market environment– competitors, customers, suppliers, potential
entrants, and substitute products (Porter’s five forces model). These factors
change constantly.
The survival of an organisation depends largely on the ability of management to

anticipate trends in the macro and market environments. Management must
select critical environmental variables, which could be a threat and/or an
opportunity for the organisation.
The external environment analysis should result in an environmental profile – a

summary of key environmental factors that has the potential to impact on the
operations of the organisation.
Scenario development is a common tool used to predict the future and plan for
these possible scenarios. More information on scenarios is on p. 104 of the
textbook.
Select Evaluate Develop an

Select environ- Monitor
sources of forecasting environmental
mental variables forecasts
information techniques profile
Figure 1.2 Environmental Forecasting
The changing face of competition
Until very recently, competition was visible and direct. Car manufacturers
competed with other car manufacturers, banks competed with other banks and
travel agents had to outwit other travel agents. In most cases, competition was
benign, giving an organisation ample opportunity to respond to and recover from
competitors’ new strategies.
However, cross-industry competitors are powered by technology; they can come

from anywhere.

13
Consider, for example, the following industries:
• Banking: M-Pesa, a mobile phone-based money transfer service, has
become the dominant way of transferring funds in countries such as Kenya.
It is giving traditional bricks-and-mortar banking institutions a serious run
for their money.
• Taxi business: This industry is facing tough competition from Uber. Uber is
an excellent example of the on-demand economy, making simple promises:
reliable and affordable transportation at the push of a button.
• Male grooming: Gillette has established global dominance in the men’s
shaving market by investing heavily in research and development and
innovation. Today it finds a challenge in the form of a global fashion trend
that has young men sporting stubble or maintaining a beard.
Source: Smit et al.2020:104
Activity 1.5
Perform a SWOT analysis of an organisation of your choice. Ensure that you

understand the process and approaches you could follow to do this task.
1.9 Translating the Mission Into Long-Term Goals for the

Organisation
The mission statement needs to be translated into measurable, long-term goals

to ensure that it is clearly understood by everyone in the organisation.
The slogan is: ‘What you measure is what you get’ (Kaplan & Norton, 1992 in
Smit et al.2018:105).
Organisations use the balanced scorecard (BSC) for formulating goals that are
measurable.
There are four perspectives included in the BSC, which are closely related:
• a financial perspective
• a customer perspective
• perspective on internal business processes
• a learning and growth perspective

14
1.10 Grand Strategies
Choose a realistic strategy
It is important to choose a realistic strategy to enable the organisation to achieve

its goals (Smit et al. 2016:90–121). The selection of a strategy or strategies is
guided by the mission statement and the long-term goals. This is also called a
‘generic strategy’ (Smit et al. 2018:107).
There are three types of generic strategy (or core ideas):

• low-cost leadership – maximise sales by minimising costs
• differentiation – expand the size of the organisation, for example make
more products
• focus – focus on a specific product line
Once a generic strategy is formulated, an organisation must decide on a specific

strategy or strategies for the organisation. This is called a grand strategy (Smit
et al. 2018:107).
A grand strategy could be:

• An internal growth strategy:
o a concentration growth strategy (improve on what you are doing or
attract new customers)
o market development (grow the business)
o product development (modify current products or create new
products)
o innovation (new processes, new marketing methods)
• An external growth strategy:
o backward vertical integration (increased control on supply sources)
o forward vertical integration (distribution of products)
o horizontal integration (purchasing similar organisations)
o diversification growth strategy (variety of products or services)
o concentric diversification ((acquiring a business/product related to the
existing business)
o concentration diversification (acquiring a business/product not related
to the existing business)
• A decline strategy:
A decline strategy is considered when a business suffers setbacks. It is
justified when organisations need to:
o Refocus activities on core business.
o Eliminate operational inefficiencies.

15
o Obtain funds to pay off debts.
o Focus on other opportunities.
o Restrategise.
• A decline in profits could lead to the following strategies:
o turnaround strategy (eliminate inefficiencies)
o divestiture (sell a business or parts of it)
o harvesting (maximise cash flow)
o liquidation (organisation ceases to exist)
Corporate combinations
The corporate combination strategy includes (Smit et al. 2020:116-–17):

• joint ventures (joining forces with another organisation)
• strategic alliance (two or more organisations join resources to attain a
specific goal, i.e., Star Alliance)
• mergers and acquisitions (total pooling of resources by two or more
organisations)
1.11 Selecting Grand Strategies
The choice of a strategy reflects the current preferences in terms of risks which
an organisation feels comfortable with, the time horizon of the strategy and the
personalities of management involved.
According to Smit et al. (2020:117), a grand strategy is selected as follows:
Identify the Conduct a Figure 1.3

Select a grand Evaluatie the
present grand portfolio analysis Selecting
startegy selected strategy
startegy grand strategies
Figure 1.3 Selecting Grand Strategies
Note
Factors that can influence the choice of a strategy are:

• corporate governance guidelines pertaining to risk management
• previous strategies chosen
• dependence on external factors

16
• attitude towards risk
• personalities of strategists
• alignment with the organisation’s mission and long-term goals
• proper timing
1.12 Factors Affecting Strategy Choice
The following factors influence the decisions management must make on

strategies to follow:
• King IV Report – the board of an organisation must ensure that the
organisation has implemented a process to identify risks and measure its
impact on the environment, society and economy (triple bottom line).
• The personality of the Chief Executive Officer – leaders should put the
success of the organisation above their own interests or aspirations.
• Top management’s attitude to risks –some members of management prefer
not to take risks, while others are willing to do so. These attitudes influence
decisions.
• Pressure from an organisation’s mission, goals and organisational culture
influences decisions.
• Proper timing – a good strategy may be a disaster at the wrong time, for
example a strategy to focus on first-time homeowners may be a disaster if
there is a sharp increase in interest rates.
Activity 1.6
Apply the process of choosing a grand strategy to an organisation of your choice.

Take the formulation of a mission, SWOT analysis and long-term goals into
consideration, as in Activities 1.2, 1.3 and 1.4.
Consult the examples of Pfizer (p. 109), Toyota (p. 110), Virgin (p. 113), and
Star Alliance (p. 116) for assistance.

17
Summary
The strategic plan informs planning at tactical and operational level. There should
be an alignment between vision and mission, formulation of long-term goals, and
the choice of strategies.
As indicated, strategic planning is a process to ensure that all relevant

information is gathered to inform decisions and strategies.
Management should take realistic decisions: first a generic strategy, followed by

more specific strategies for each function of the organisation.
Note
The focus of the systems approach is to ensure that managers view the
organisation not as consisting of silos, but of interrelated parts that impact on
each other.
Self-Assessment Questions
1.1 Define a mission statement and each component of a mission statement.

1.2 Comment on the slogan of Kaplan and Norton: ‘What you measure is what
you get’. Explain how the balanced scorecard could contribute to
formulating measurable goals.
1.3 In table format, indicate the meaning of:
o joint venture
o strategic alliance
o merger
o acquisition
1.4 Case Study:
Read the case study in your textbook on p. 123. Then answer the related
questions:
SAPPI
From the Annual Report of SAPPI:

18
SAPPI is a global company focused on providing dissolving wood pulp, paper
pulp and paper-based solutions to its direct and indirect customer base
across more than 160 countries. Our dissolving wood pulp products are used
worldwide by converters to create viscose fibre for fashionable clothing and
textiles, acetate tow, pharmaceutical products, as well as a wide range of
consumer and household products.
The wood and pulp needed for our products are either produced within Sappi
or bought from accredited providers.
Sappi has a tradition of innovating and developing new products to meet

local demands.
As part of our strategy to rationalise declining business, focus on business

where we have a competitive advantage and strengthen our balance sheet,
we entered into agreements to sell both our Enstra and Cape Kraft Mills.
After the end of the financial year, we received approval from the
Competition Commission and both transactions were realised in October
and November 2015 respectively.
1. Do you consider the above excerpt to be strategic, tactical or

operational? Provide sound reasons for your answer.
2. Briefly discuss the internal growth strategies that the case study refers
to.
3. Identify and discuss the decline strategy that the case study refers to.
4. Based on the information on Sappi provided in the case study, explain
why the company decided to sell some of its businesses.
1.5 Academic journal article:
1. Read the article Integrating strategic planning and budgeting: a PFMA
perspective by T Ajam, available on SABINET. Consider the statement
below and do the task:
2. It is conventional wisdom that plans and budgets should be integrated
in order to improve operational effectiveness rather than solely for
compliance reasons. Plans are highly unlikely to be realistic and
affordable unless they are crafted within budget constraints. On the
other hand, scarce budgetary resources should be allocated to the
priorities articulated in a department’s strategy and plans. Budgeting
is therefore, in essence, merely the resourcing of strategic plans (Ajam
2008).
3. Elaborate on how budgeting influences strategic plans and the impact
it has on successfully implementing strategies.

19
Topic 2
Information Management (Chapter 7)
Prescribed Reading

• Smit et al. 2020. Management principles. Chapter 7.
• Kroenke, D.M. 2015. Experiencing MIS. 4th edition. Hoboken, NJ: Pearson.
• Van Aardt, J.L. &Van den Berg, P.H. 1997. Critical success factors for
management information systems.SBL Research Review 1 (9):75–80.
2.1 Introduction

• Explain the link between decision-making and information management.
• Describe all elements of an information system (IS).
• Discuss the characteristics of useful information.
• Classify IS according to their use to support operations and managers.
• Evaluate the role managers play as end-users of the IS.
• Develop a generic IS for managers.
Computer-based IS play an important role in the operations, management and

strategic success of an organisation. IS transform data obtained from the
external and internal environments into information that can be used in decision-
making.
In 2020, the World Economic Forum published Davos 2020: The future of work
(Smit et al. 2020:191).
As highlighted by Davos 2020: The future of work, information is a clear

indication that the world of work is changing and technological factors play a
major role as drivers of these changes. For example, the number of options
available to solve problems is much greater today than ever before because of
improved technology and communication systems.

20
Second, the cost of making errors in decisions may be excessive because of the
complexity and magnitude of operations, automation, and the domino effect of
an error in decision-making throughout the organisation. By the same token, the
benefits may be numerous, if the correct decisions are being made.
Because of these trends and changes in the fourth industrial revolution, it is

extremely unwise to rely on a trial-and-error approach to decision-making.
Managers need to become more sophisticated – they must learn how to manage
the information in their fields. In what follows, we focus on computer-based IS
that support managerial decision-making in organisations.
There is a history behind the term ‘fourth industrial revolution’. The first industrial
revolution began between 1760 and 1820 and ended in 1840. This period of
industrialisation focused on the use of water and steam to power machinery (e.g.
the steam train).
The second industrial revolution began between 1840 and 1870 and lasted until
1914. It focused on replacing water and steam with electric power.
The third industrial revolution lasted from the late 1950s until the late 1970s.
The focus was on information technology.
We are currently experiencing the fourth industrial revolution, which focuses on

computer hardware robotics and computing power to expand information
technology. We see developments in genetics, nanotechnology, AI, 3D printing
and biotechnology.
The point is that the developments in information technology are changing the
world of work. Organisations need to be aware of these changes and the
implications they have for organisations: they create opportunities as well as
threats.
2.2 The Link Between Decision-Making and Information
The decision-making role of managers is based on information derived from the

internal and external environment. An IS is required to translate data into
management information to assist with decision-making, as illustrated in
Figure 2.1:

21
Internal and Data Enabling
transformed mamagers
•External •Information • Decision-
environments system making
Figure 2.1 Data Is Transformed into Management Information, Which

Enables Decision-Making.
Note
Also see Smit et al. (2020:193), The relationship between an organisation’s

information system and decision-making. Furthermore, on p. 196 there is a
figure (7.2) showing the IS model.
Activity 2.1
Read the information box on the Discovery Health medical scheme (p. 193) and
answer the questions below:
1. How is this data or information provided?
2. How does the information provided assist managers to take decisions?
2.3 What Is an Information System?
Smit et al. (2020:194) define an IS as ‘The people, procedures, and other

resources used to collect, transform and disseminate information in an
organisation’.
Kroenke provides another definition: ‘an information system (IS) is a group of

components that interact to produce information’ (Kroenke 2015:10).
It is important to differentiate between data and information. Data is raw,

unanalysed numbers and facts about events or conditions from which
information, such as financial statements or statistics, is drawn. Information is
data which is analysed and processed.

22
Management information is timely, accurate, and relevant to a particular
situation.
A system comprises sub-systems that form a whole. These sub-systems are

linked and interact in such a way that they achieve a goal.
INPUT PROCESS OUTPUT

Figure 2.2 A System with Three Sub-Systems
2.4 Components of an Information System
Please note the process of the IS model (Figure 7.2 in the textbook). An IS uses
hardware, software and human resources to perform the basic activities of input,
processing, output, feedback, control and storage (Smit et al. 2020:195).
Kroenke (2010:10) indicates five components:
Hardware Software Data Procedures People
Figure 2.3 Five Components Framework
The four main categories of computer system components are:

• input devices – keyboard, optical scanning devices and magnetic ink
character readers which allow one to communicate with the computer.
• a central processing unit (CPU) –the brain of the computer. It consists of
electronic components that interpret and execute the computer’s
instructions.
• output devices – printers, audio devices and display screens
• auxiliary storage – magnetic discs and tapes, optical discs
A further important aspect is the software part of an MIS. Software is the

programs or detailed instructions that operate computers:
• System software manages the operations of a computer.
• Application software performs specific data-processing or text-processing
functions such as word processing or payroll programs.
• Procedures include operating instructions for users of an IS.

23
The last component of the MIS as a system is human resources, which could be
described as specialists and end-users:
• Specialists are people developing and operating the IS, such as system
analysts and programmers.
• End-users are people who use the information produced by a system, such
as managers.
2.5 Characteristics of Useful Information
Information must add value to raw data to be considered a benefit to the

organisation. The following characteristics turn data into useful information:
Table 2.1 Characteristics of Information
Characteristic Explanation
Quality It should portray reality accurately.
Relevance Information is relevant when it can be used directly to
solve a current problem.
Quantity Quantity is having enough information available when
users need it.
Timeliness Timeliness is receiving information when needed while
it is still current and useful.
2.6 Organising Information Systems
In many organisations, information technology supports all functional units in a

variety of ways. In most organisations IS has the same status as other functions.
IS as one of the strategies of an organisation may have various sub-strategies,

such as ITC.
IS support all three strategy levels in an organisation, as illustrated in the

adapted Figure 7.3 (Smit et al.2020:197).

24
Corporate
strategy
Divisional or
business startegies
Functional strategies
Figure 2.4 Hierarchy of an Organisation’s Strategy
2.7 Classification of Information Systems
The classification of IS described by Smit et al. (202:198) is summarised

(adapted) in Figure 2.5:
Information
systems
Management
Operations Other
information
Information classifications
systems
Figure 2.5 The Classification of Information Systems
2.7.1 Operations Information Systems
Table 2.2 Operations Information Systems
Major Categories Explanation

Transaction-processing Records and processes data resulting from business
system (TPS) transactions – sales, purchases, inventory changes
Process control system Decisions adjusting a physical production process
(PCS) are automatically made.
Office automation OAS transforms traditional manual office methods
systems (OAS) and paper communication media – electronic mail,
desktop publishing, teleconferencing
(Smit et al. 2020:197–198)

25
Table 2.3 Operations Information System
Major Types Explanation

Information reporting Provide managerial end-users with information they
systems (IRS) need for making decisions, such as information from
TPS and data from the external environment.
Decision support Managers explore possible options and receive
systems (DSS) tentative information based on different assumptions.
The support system to assist managers in making
decisions is:
• analytical models
• specialised databases
• decision-makers’ own insights
• an interactive computer-modelling process
Executive information Provide strategic information to top management on
systems (EIS) critical success factors to achieve goals.
(Smit et al. 2020:198–199)
2.8 Other Classification of Information Systems
Table 2.4 Operations Information Systems
Major Categories Explanation

Expert systems A package of computer hardware and
software systems using AI to provide
expert advice to solve complex
problems
Business function IS Supports business functions such as
accounting, finance, human resource
management, administration,
marketing, purchasing etc.
The internet A web of computer networks which
enable emails, telnet, file transfer
protocol, and world wide web
The extranet A wide area network that links
employees, suppliers, customers and
others electronically
The intranet An internal network where access is
limited to employees of an
organisation
Electronic commerce A process of buying and selling goods
and services electronically by means
of computerised business
transactions
(Smit et al. 2020:199–206)

26
2.9 Ethical Issues of Information Systems
According to Smit et al. (2020:206), ethics deals with what is generally

considered right or wrong. A number of technology trends are responsible for a
rise in ethical issues. The following are considered the most important current
trends:
Ethical issues
Dependence on computerised information

Dependence on IS and their vulnerability to system errors and poor data quality
have increased.
Decline in data storage costs

Databases are maintained by private and public organisations. Advances in data
storage have made routine violation of individual privacy cheap and effective.
Advances in data analysis

Advances in data analysis techniques for large pools of data make it possible for
organisations to access highly detailed personal information about individuals.
Networking advances
The growth in the use of cell phones and especially smart phones raises other
ethical issues.
2.10 The Main Moral Dimension
Information rights: privacy and freedom in the internet age

Information technology and systems threaten individual rights to privacy and
freedom by making an invasion of privacy cheap, profitable and effective.
Property rights: intellectual property

Information technology has made it difficult to protect these since computerised
information can be so easily distributed and copied on networks. Organisations
should, in their code of conduct, cover patents, copyrights and trade secrets.
Accountability, liability and control

Along with privacy and property rights, new information technologies are
challenging existing liability laws and social practices for holding individuals and
institutions accountable.

27
Systems quality: data quality and system errors
Debate over liability and accountability for unintentional consequences of system
use raises a related but independent moral dimension: What is an acceptable,
technologically feasible level of system quality? At what point should system
managers accept minor system errors and release their product to the market?
Quality of life: equity, access and boundaries

Negative social costs of information technologies and systems are beginning to
mount. Many of these negative social consequences are not violations of
individual rights or property crimes. Nevertheless, these negative consequences
can be extremely harmful to individuals and societies.
Unemployment: what happens after the end of jobs?

As we have invented ways to automate jobs, we could create room for people to
assume more complex roles, moving from the physical work that dominated the
pre-industrial globe to the cognitive labour that characterises strategic and
administrative work in our globalised society.
Inequality: how do we distribute the wealth created by machines?

By using AI a company can rely much less on the human workforce, and this
means that revenues will go to fewer people. Consequently, individuals who have
ownership in AI-driven companies will make all the money, others not.
Humanity: how do machines affect our behaviour and interaction?

Artificially intelligent robots are becoming better and better at modelling human
conversation and relationships. When used correctly, this could evolve into an
opportunity to nudge society towards more beneficial behaviour. However, in the
wrong hands, it could prove detrimental.
Artificial stupidity: how can we guard against mistakes?

If we rely on AI to bring us into a new world of work efficiency and security, we
need to ensure that the machine performs as planned, and that people cannot
overpower it to use it for their own ends.

28
Racist robots: how do we eliminate AI bias?
Although AI is capable of a speed and capacity of processing that is far beyond
that of humans, it cannot always be trusted to be fair and neutral.
Security: how do we keep AI safe from adversaries?

More powerful a technology becomes, the more can it be used for nefarious
reasons as well as for good reasons. AI systems can cause damage if used
maliciously.
How do we protect against unintended consequences?

What if AI itself turned against us? How do we stay in control of a complex
intelligent system? Human dominance is almost entirely due to our ingenuity and
intelligence. The question is: will AI have some advantage over us one day?
Robot rights: how do we define the humane treatment of AI?

We understand the basic mechanisms of reward and aversion. We share these
mechanisms with even simple animals. In a way, we are building similar
mechanisms of reward and aversion in systems of AI. Once we consider machines
as entities that can perceive, feel and act, it is not a huge leap to ponder their
legal status. Should they be treated like animals of comparable intelligence? Will
we consider the suffering of ‘feeling’ machines?
2.11 Developing an Information System
Most managers are end-user of an IS. This does not mean that end-users should
be excluded from its design. Manager’s performance, decision-making and
problem-solving abilities depend on the quality of the IS support they receive.
For this reason, managers should be co-designers of an IS. The is development

life cycle is described in Figure 2.6:
Systems implementation,
Systems investigation Systems analysis Systems design
maintenance and security
Figure 2.6 The Classification of Information Systems

29
Table 2.5 The IS Development Life Cycle
Development Process Explanation

Systems investigation Determine the nature and scope of the need for
information; conduct a feasibility study.
Systems analysis Study information requirements of the end-user;
understand scope of problem at hand; and
determine the system requirements for the IS.
System implementation, Acquire hardware and software; test programs
maintenance and and procedures; develop documentation; conduct
security post-audit; control access.
Activity 2.2
Study Chapter 7 in Smit et al. (2020) to understand all aspects of an IS.
In addition, read the case study on ACE, a consumer products company (p. 214)
and answer questions 1–4 on p. 205.
Summary
Chapter 7 of the textbook provides information on how IS could assist managers

in taking decisions and solving problems. IS use resources such as hardware,
software and people to perform input, processing, output, storage and control
activities that transform data into information products.
Data is first collected (input), then processed or manipulated into information

(processing), stored for future use (storage), or communicated to the user
(output) according to correct processing procedures (control).
2.1 Explain how information management links to decision-making.

2.2 Define the term ‘information management’ and compare the components
thereof as presented by Smit et al. (2018) and Kroenke (2015).
2.3 Provide a classification of IS in tabular form and explain each classification.
2.4 Design a process to develop an IS for your workplace. Ensure that all steps
are included, with examples of what needs to be done.

30
Read the article Critical success factors for management information
systems by J.L. van Aardt and P.H. van den Berg, available at SABINET.
Consider the statement below and perform the task:
2.5 Development and implementation of a management IS is a complex and
expensive process and the risk is high that cost and schedule overruns
would occur or that the users' requirements would not be met. It is therefore
essential that the process should be treated as a formal project and that
the principles of project management should be fully applied (Van Aardt &
Van den Berg 1997).
Consider the success factors described by the authors and apply them to
your workplace. Will they help to successfully implement an MIS?

31
Topic 3
Innovation and Technology
Prescribed Reading

• Smit et al. 2020. Management principles. A contemporary edition for Africa.
Chapter 9. Cape Town: Juta.
Oosthuizen, Perks & Zindiye. 2017. Management. Cape Town: Oxford
University Press.
• Letsholo, R.G.& Pretorius, M.P. 2016. Investigating managerial practices for
data and information overload in decision making. Journal of Contemporary
Management 13:767–792.
3.1 Introduction

• Explain how environmental changes force the organisation to adapt in order
to survive.
• Plan and perform internal changes.
• Overcome resistance to change.
• Discuss the concept of organisational culture and organisational culture
analysis.
• Manage organisational culture.
• Analyse the relationship between organisational culture and structure and
strategy.
Change happens every day and we have to cope with it. Changes can be dramatic
or less dramatic. Dramatic changes are urbanisation, changes in technology,
changes in the climate and environment, water shortages, and the shift in
economic power to Brazil, Russia, India and China (BRIC).
Examples of less dramatic changes are closing a major supplier of goods, change
in legislation, relocation of a main route bypassing a small town, and new
competitors.

32
Although change could be characterised as dramatic or less dramatic, people’s
response to change is mostly natural resistance. This signals that organisations
and managers need to develop the ability to manage change.
To do this, managers must understand the difference between evolutionary

change and revolutionary change.
3.2 Change Inside the Organisation
Smit et al. (2020) indicate that evolutionary change is localised; for example, a
courier company may decide to make deliveries using electric vehicles. This
represents an evolution from fuel-driven vehicles that could save operational
costs.
When a courier company decides to change from fuel-driven vehicles to

delivering packages using drones, this could be described as revolutionary –
employees need new skills, new administration systems, new ways of contacting
customers.
Hellriegel et al. (2017) refer to two types of change: anticipatory change

(planned change) and reactive change.
Anticipatory change is designed and implemented in an orderly and planned

manner. Reactive change occurs when an organisation changes as a response to
internal and external forces.
Activity 3.1
Read the information box on Covid-19 (p. 258).
Explain the consequences of the external environment.
3.3 The Change Process
Managers must understand how change affects the organisation and must know
when and how to initiate a change process.

33
Smit et al. (2020:262) illustrate the change model in Figure 3.1:
The trigger for change
Determine the desired outcome of the change

intervention
Diagnose the causes
Select an appropriate change technique
Plan for implementation
Implement
Evaluate and follow up
Figure 3.1 Decision-Making Conditions
Lewin’s change model could be added to the change process illustrated in Figure
3.1 (see p. 263). Lewin’s change model comprises three steps:
• Unfreezing current behaviour – opening up possibilities for change
• Changing behaviour – e.g. training interventions
• Refreezing behaviour – after successful changes have been made (Smit et
al. 2020:263)
3.4 Areas of Organisational Change
There are four areas where change in an organisation occurs:

• Change in strategy brings about changes in functional strategies and other
areas of change.
• Changing the organisational structure follows changes in strategy such as

reducing management levels, decentralisation, and streamlining the
organisation to give effect to new strategies.
• Technological changes are the introduction of new equipment and processes

and change in strategies.
• Changing people involves changes in job descriptions, new competencies,

attitudes, beliefs, values and behaviour in general (Smit et al. 2020:263–
265).

34
Table 3.1 Categories of Crisis
Category Meaning
Economic crises
Physical crises
Personnel crises
Criminal crises
Information crises
Reputation crises
Natural disasters
3.5 Resistance to Change
Change triggers emotional reactions because of the uncertainty involved in terms

of job security, possible retrenchments, and new reporting lines.
There are several reasons why employees resist change (Smit et al. 2020:265–
266):
Table 3.2 Reasons for Resistance to Change
Reasons for Resisting Explanation

Change
Threatened self- Fear of losing jobs and status in the workplace and
interest society
Uncertainty Resistance is created by the possible repercussions
of change.
Lack of trust and Distrust and suspicion result in rumours and
misunderstanding distorted information.
Different perceptions Employees do not have clear and full information on
changes that will take place.
Low tolerance for Fear of being unable to develop the competencies
change necessary to perform well
General Reasons
Inertia Employees want to continue with the old ways of
doing things.
Timing The change is poorly timed.
Surprise The change is sudden, unexpected or extreme.
Temporary fad Changes are made to impress others and not for the
benefit of the organisation.
Peer pressure People are anti-management.

35
3.6 Overcoming Resistance to Change
Education and communication

• Communicate to employees by means of one-on-one,
group and forum discussions .
• Audiences must understand reasons and processes
involved.
Participation and involvement

• Employees are brought into the decision-making process.
• Employees are given the opportunity to express their
fears.
Facilitation and support

• Provide required resources to carry out change.
• Give psychological support to employees.
Negotiation and rewards

• Negotiation means conceding something to the other
party in order to reduce resistance.
• Drastic intervention is removing those persons resisting
change from negotiations.
Figure 3.3 Methods to Overcome Resistance to Change
3.7 Why Efforts to Change Fail
Any organisation operates within its own context. It has a history of doing things,
an organisational culture that has been built over time. Acknowledging this
history is important in managing change. According to Smit et al. (2020), Kotter
singles out the reasons why change in an organisation may fail, as shown in
Table 3.3:
Table 3.3 Reasons for Resistance to Change
Reasons Why Efforts to Change Fail Explanation

Too much complacency
Failing to create sufficient coalition to
make change happen

36
The absence of an exciting vision
Under-communicating the vision
Permitting obstacles to block the
vision
Failing to create short-term wins
Neglecting to anchor changes firmly
in the corporate culture
Activity 3.2
Complete Table 3.8 by adding the explanation for each reason why efforts to
change fail.
3.8 Culture and Change
According to Smit et al. (2018), the culture of an organisation plays an important

role in an organisation’s performance and how it plans and reacts to change. An
organisation should align its culture to its strategy and structure. If not, culture
could become a source of resistance.
Definition of the concept of culture
Each organisation has its own personality – its corporate culture. Smit et al.
(2018) define corporate culture as ‘the beliefs and values shared by people in an
organisation’. This definition refers to a set of basic assumptions that are upheld
as the correct way to do things or to understand the problems in the organisation.
The term ‘basic assumptions’ refers to:
• beliefs or convictions about the world and how it works.
• values, which are the organisation’s assumptions about which ideals are
worth pursuing, such as striving for success or avoiding debt.
3.9 Elements That Determine and Express A Corporate Culture
Table 3.4 Elements of a Corporate Culture
Element Explanation
Symbols
Rituals
Ideologies
Language

37
Tales
Assumptions
Relationships
Humour
(Smit et al. 2020:270–272)
Activity 3.3
Complete Table 3.9 by adding the explanation for each reason why efforts to
change fail.
Organisational culture analysis (OCA)
According to Smit et al. (2020), organisational culture analysis (OCA) is a way

to determine the difference between the current culture and what is desired. It
is an analysis of whether conditions of competence exist, and if not, which
conditions oppose them. This analysis also examines whether planned changes
have any flaws.
The OCA measures three conditions for competence in terms of an organisational

culture:
• Collaboration –leadership values, accessibility and credibility of leaders
• Commitment –the extent to which sharing power is formalised, the extent
to which people are allowed to do what needs to be done, and the extent to
which mutual reliance and respect (such as team values)are established.
• Creativity – the extent to which personal control over work is allowed,
excitement is created, and the way problems are solved (Smit et al.
2020:272).
An analysis of organisational culture is important, as culture could be an asset

or a liability to an organisation.
Organisational culture is an asset when:

• it enables communication (people know how things are done)
• it facilitates decision-making (people know what to do)
• it makes control more effective (people know what is expected of them, and
it may generate pride and cooperation)
Organisational culture is a liability when beliefs and values interfere with the
strategy and structure of the organisation (new managers distrust current

38
employees and vice versa; new ideological beliefs cannot always match the
dominant ideology of an organisation’s culture).
3.10 Changing the Organisational Culture
Dr L. Hrebiniak is Emeritus Professor in the Department of Management at The

Wharton School of the University of Pennsylvania and a member of the Strategy
Group. According to Smit et al. (2020), he believes that change in culture cannot
be made by using teambuilding exercises; instead, it should focus on four
factors:
• Structure and process – a change in structure and processes can change
organisational culture. Responsibility and decision-making functions can be
decentralised with a positive effect on employees.
• People–appointing new people can have a positive effect on the
organisation’s culture, as they do not carry the baggage of the past.
• Incentives – rewarding desired behaviour and performance, rather than
rewarding doing the same things as in the past, can lead to culture change.
• Changing and enforcing controls – evaluation of employee performance
must focus on achieving new organisational strategies and goals. This will
shape new behaviours and new ways of thinking and establish a culture of
learning (Smit et al. 2020:273–274).
3.11 Organisational Development
Smit et al. (2020) define organisational development as the ongoing and planned
effort by managers and leaders to manage change as a way of improving
organisational performance.
Organisational development interventions include a range of diagnostic activities

to assess the current condition of the organisation:
• surveys
• training and development
• intergroup activities
• teambuilding sessions
• conflict resolution
• re-engineering projects
• coaching
• consultation
• counselling

39
Organisational development is more than change management. Interventions
focus on process, not problems, and behavioural interactions and patterns that
cause problems. They are also time-consuming.
Activity 3.4
Comment on the following:

‘Don’t try to change an organisation culture per se. Focus on changing some of
the factors and conditions that affect culture, rather than directly on culture
itself.’(Professor Hrebiniak, University of Pennsylvania)
Motivate your comments using information from the textbook.
Summary
It is critical to understand the relationship between organisational strategy,

structure and culture. Strategy determines structure, which in its turn influences
organisational culture.
This relationship between strategy, structure and culture is a decisive factor in

managing change within an organisation. It is a complex issue for an organisation
that needs to be managed well.
Read the case study on page 276: Change management: The City Lodge Hotel
Group. Then answer the five questions below.
3.1 In the case study, Mr Cliff Ross refers to ‘behavioural changes’ that had to
be managed across all hotels in the group. What behavioural changes could
he be referring to?
3.2 According to the literature, what are the major benefits that the CLHG could
have wished for with this change initiative? Which benefit does Mr Ross
specifically refer to in the case study?
3.3 Based on the information in the case study, was a culture change required
in order to attain the hotel group’s goals? Give at least two reasons for your
answer.

40
3.4 Identify four factors that CLHG had to focus on to ensure that a culture
change took place in all their hotels.
3.5 Identify the information in the case study that deals specifically with these
four factors.

41
Topic 4
Managing Diversity and Inclusion (Chapter 10)
Prescribed Reading

• Smit et al. 2020. Management principles. A contemporary edition for Africa.
Chapter 10. Cape Town: Juta.
• Hellriegel et al. 2017. Management. 5th edition. Chapter 10. Cape Town:
Oxford University Press.
• Rawat, P.S. & Basergekar, P. 2016. Managing workplace diversity:
Performance of minority employees. Australian Journal of Public
Administration 77(2):222–235.
4.1 Introduction

• Differentiate between what diversity is and is not, and what it entails.
• Motivate strategies for managing diversity.
• Explain challenges to diversity in terms of ethnocentrism and stereotyping.
• Analyse cultural differences and their impact on diversity.
• Manage diversity in the workplace.
• Provide training in diversity issues in the organisation.
Smit et al. (2020) refer to a story told by an African professor lecturing in the
US. To illustrate the different views people have based on their experience, she
posed a simple problem:
‘There are five birds sitting in a tree. You take a slingshot and shoot one of them.
How many birds are left in the tree?’ Most of the American students said ‘four’.
They said: ‘one subtracted from five is four’. Almost all the African students said:
‘If you shoot one bird, the others will fly away.’
This illustrates one of the fundamental aspects of managing people with different
life experiences – they may interpret reality differently.

42
One of the challenges facing organisations in South Africa is managing diversity.
South Africa is described as a ‘radical pluralist society’, which comprises every
conceivable kind of human plurality.
The workforce holds different values, attitudes, beliefs, perceptions, languages,

and customs, which could contribute to misunderstanding, miscommunication,
misperception, misinterpretation, and misevaluation (Smit et al. 2020:282).
Activity 4.1
Read the statistical information on pp. 283–284.
Identify the most important diversity issues you derive from the statistics.
4.2 Misconceptions of Diversity
Smit et al. (2000:285–288) indicate a number of misconceptions:

• Diversity is not culture; culture is only one dimension of diversity.
• Diversity is neither equal opportunities nor affirmative action; it is
maximising employee potential.
• Diversity is not absence of standards; it is an emphasis on people’s
capabilities.
• Diversity is not a vendetta against white males; it focuses on changes in
the management environment regarding diversity and forces organisations
to change.
4.3 What Are Diversity and Inclusion?
Table 4.1 What Is Diversity?
Diversity is: Explanation

About demographics
About profitability
About values
About behaviour
A long-term process
(Smit et al. 2020:289–290)

43
Activity 4.2
Read pp.289–290 and complete Table 4.3 by giving the explanation foreach
aspect of what diversity is.
4.4 Diversity Defined
Smit et al. (2018:177) define diversity as: ‘The mosaic of people who bring a
variety of backgrounds, styles, perspectives, values, and beliefs as assets to the
groups and organisations with whom they interact.’
This definition has three aspects:

• Diversity is a mosaic of people (not a melting pot).
• Diversity includes everyone (it is not exclusionary).
• Diversity is an asset (being different is not wrong).
The platinum rule
The well-known golden rule is:

• Treat others as you wanted to be treated.
The platinum rule is:
• Treat others as they want to be treated.
The platinum rule is the cornerstone of diversity behaviour. It demonstrates

respecting and honouring our differences by assuming others may want to be
treated differently from us. It implies that we need to ask others what they want,
and others need to ask us what we want.
General dimensions of diversity
Table 4.2 General Dimensions of Diversity
General
Explanation
Dimensions
Gender issues Women increasingly enter the workforce.
Age The number of new entrants is at an all-time high.
Marital status It is a variable which adds complexity (e.g. single-parent
families).
Physical ability Managers must focus on abilities and not disabilities.
Language Language policies must be sensitive to all languages.
(Smit et al. 2020:291–292)

44
4.5 Reasons Fortheincreased Focus on Managing Workforce
Diversity
Microsoft South Africa and Siemens Southern Africa spend vast amounts of
money on programmes to sensitise their workforce to diversity issues. The
question is why?
Activity 4.3
Read pp.293–297 and answer the following question: Why is there an increased
focus on managing diversity in the workplace?
4.6 The Need for Managing Diversity and Inclusion in South Africa
Smit et al. (2020) describe South Africa as a radically pluralist society where race
and ethnicity are the most visible dimensions of its diversity. Even more complex
than race and ethnicity is the fact that there are cultural differences, not only
between ethnic groups but also within each ethnic group. Each of these groups
shares a common history, while at the same time maintaining its own uniqueness
(Smit et al. 2020:294).
Imbalances in the South African business world
Apart from economic imbalances, there are also managerial imbalances. The
following need attention from managers:
• Affirmative action – focus on organisations reflecting the character of the
country as a whole and correct imbalance.
• Economic empowerment – transferring control of financial institutions could
change the ownership of economic power.
• New management philosophy – management theories of developed
countries (Europe, America, Asian industrialised countries) may not serve
developing countries (Africa).
These imbalances emphasise the need to implement diversity management.

45
The benefits of diversity management
As indicated in the statistics in Table 10.1 (pp. 283–285), South Africa is not,
generally speaking, very successful in managing women and cultural diversity in
the workplace. This means that these designated groups are not progressing,
and their full potential is not developed.
Activity 4.4
Consider the statement: ‘South Africa is not, generally speaking, very successful
in managing women and cultural diversity in the workplace.’
Consider the information provided and the six arguments listed in Table 10.5 and
comment on the above statement.
4.7 Diversity Paradigms: Strategies for Diversity Management
Smit et al. (2020:299) refer to a theoretical paradigm developed by Thomas and

Elythat includes different perspectives on how organisations perceive the task of
managing diversity.
Thomas and Ely classify the perspectives as:

• discrimination and fairness
• access and legitimacy
• learning and effectiveness
Thomas and Ely found that most organisations implement two of the three
perspectives: discrimination and fairness, and access and legitimacy. But it is
only the third perspective, learning and effectiveness, which will enable an
organisation to benefit from diversity management (Smit et al. 2018:284–285).
Activity 4.5
Consider the statement: ‘Learning and effectiveness is the most important

perspective that will enable an organisation to benefit from diversity
management.’

46
Consider the information provided on pp.285–286, the lessons learned, and
Table 10.6 (p. 300), and comment on the above statement.
4.8 Cultural Diversity
Smit et al. (2020) indicate that co-workers from diverse cultures run the risk of
misinterpreting one another on the basis of language, non-verbal messages,
cultural values pertaining to time, work styles, presentation styles, and
understanding the organisational culture. These misunderstandings are called
‘cultural collisions’. But what is culture?
A definition of culture
Smit et al. (2020:302) define culture as:

• A shared system of meanings. Culture dictates which groups of people pay
attention to how the world is perceived; how the self is experienced; and
how life itself is organised. Individuals in a group share patterns that enable
them to see things in the same way, and this holds them together.
• It is relative. There is no cultural absolute. People in different cultures
perceive the world differently and have different ways of doing things; and
there is no set standard for considering one group as intrinsically superior
or inferior to any other.
• It is learned. Culture is derived from the social environment, not from
genetics.
• It is a collective. Culture is a collective phenomenon that is about shared
values and meanings.
Activity 4.6
Consider the statement: ‘Culture is learned.’
Consider the information provided on p. 303 and the onion principle in Figure
10.3 and comment on the above statement.
Different responses from different worldviews
Culture forms our perceptions of self and the perceptions of the world around us.
We all develop our own worldviews. Cultural values are the standard we use to
determine whether something is right or wrong.

47
Problems arise when we believe that only our own culture makes sense, has the
right values, and represents the right and logical way to behave.
The following are some worldviews that have been identified in organisations:
Table 4.3 Worldviews
Worldview Explanation
Ethnocentrism The belief that one’s own culture is superior to other
cultures. It includes stereotyping, generalisation and
prejudice.
Monoculture A culture that accepts only one way of doing things
Pluralism Accommodating several cultures
Ethno-relativism All cultures/groups are inherently the same
(Smit et al. 2020:304–305)
4.9 South African Cultural Values
Hofstede and Trompenaars identify two categories of cultural values in South

Africa: Afrocentric and Eurocentric. Each category has cultural dimensions – see
Smit et al. (2020:306). These are listed in Table 10.7.
Table 4.4 Cultural Dimensions
Cultural Dimensions Explanation

Ethnocentrism
Social orientation
Power distance
Uncertainty avoidance
Goal orientation
Relationship and rules
Degree of involvement
and expression of feelings
How status is accorded
Time orientation
Activity 4.7
Read pp. 306–307 and add your explanation for each of the dimensions listed in
Table 4.12.

48
4.10 Synergistic Solutions to Problems of Cultural Differences
Smit et al. (2020:313) suggest two general guidelines to doing business across
cultures:
• Obtain appropriate information.
• Be formal and respectful.
Activity 4.8
Consider the solutions to different cultural approaches described on pp. 313–

314. Are these guidelines realistic and implementable?
4.11 Diversity Training
Organisations worldwide engage in diversity training for the following reasons:

• Customer population is diverse.
• Employee population is diverse.
• Organisations need to retain top talent.
• Organisations wish to minimise the risk of litigation.
• It is the right thing to do in terms of corporate social responsibility.
• It fosters learning and effectiveness in organisations.
In South Africa, organisations ignore the complexities of diversity and instead

implement a homogenous approach – as if all people are culturally the same.
The outcome is usually poor performance by both individuals and the
organisation. This situation calls for diversity training.
Approaches to diversity and inclusion training
The purpose of diversity training is to enable members of an organisation to

function optimally in a diverse and multicultural workforce.
Diversity training should focus on:

• Programmes designed to raise participants’ consciousness and awareness
of differences in values, attitudes, patterns of behaviour, and
communication that may exist across cultures
• Programmes designed to develop new skills and competencies, including
communication competence
• Exposure to other cultures to help create awareness and understanding

49
Management support
Management must be involved in diversity training. Management support should

create synergy and do the following:
• Include a declaration of commitment to diversity in the mission statement.
• Create an organisational climate that supports diversity.
• Develop competent managers to manage diversity.
• Raise diversity awareness.
• Provide peer support for managers.
• Ensure open communication about diversity issues.
• Recognise employee development in diversity skills and competencies.
• Recognise employee contributions to enhancing diversity goals.
• Reward managers’ implementation of diversity goals.
Summary of spheres of activity for diversity management
Smit et al. (2020) emphasise that successful diversity management depends on

the commitment of the whole organisation.
Once management accepts the need for a strategy to develop a diverse

workplace, three steps are involved:
• building a corporate culture that values diversity
• changing structures, policies, and systems to support diversity
• providing diversity awareness and cultural competency training
Activity 4.9
Read pp. 315–317 and do the following task:

1. Analyse the need for diversity in your workplace.
2. Outline a training programme that you think will address the difficulties
experienced in the workplace.
3. Decide how you will engage with management to obtain their support.

50
Summary
What constitutes human culture, language, worldviews and differences is a

sensitive but important issue that needs to be considered and managed. Doing
this will create positive attitudes, understanding and effectiveness in the
organisation.
Some important points made in this unit are moving from a ‘melting pot’ to a
‘mosaic’ approach; radical pluralist society; stereotyping and misconceptions;
cultural values; approaches to managing diversity; synergistic solutions; and
diversity training.
These considerations give us much to think about – and more important, much
to do in the workplace.
Read the case study on p.320, Virtual Learning incorporated (VLI) takes a
proactive approach to diversity and inclusion, then answer the questions.
Support your answer with specific information from the case study, text and
personal experience.
4.1 In what ways has VLI taken a proactive approach to supporting and
encouraging diversity and inclusion?
4.2 Can you identify any diversity dimensions from the case? Explain.
4.3 How do you suggest that Mr Dlamini move forward in addressing the
findings of his report in line with Nkosi’s vision?

51
Topic 5
Groups and Teams in the Organisation
(Chapter 13)
Prescribed Reading

• Smit et al. 2020. Management principles. Chapter 13. Cape Town: Juta.
Oosthuizen, Perks and Zindiye. 2017. Management. Cape Town: Oxford
University Press.
5.1 Introduction

• Differentiate between groups and teams in the organisation.
• Explain the roles different groups play in the organisation.
• Critique the variables that influence group behaviour.
• Describe the characteristics of a work team.
• Explain how organisations could use teams effectively.
• Differentiate between problem-solving, self-managed, cross-functional and
virtual teams.
• Evaluate ways to develop individuals into team members.
Having discussed diversity management in detail, we now turn to the functioning

of groups and teams in the organisation. Within the more focused operations of
a small group of people, diversity – among other elements of teamwork – needs
to be managed.
In addition to diversity management and the value it has for teamwork, we pay
attention to the optimum use of groups and teams in the workplace. The ability
to develop, support, facilitate and lead groups and teams to attain organisational
goals is a core function of managers.

52
5.2 Groups and Teams
Management literature distinguishes between groups and teams. According to

Smit et al. (2020:396), groups and teams are related:
• A group is two or more people interacting with each other and
interdependent, who come together to attain a particular goal.
• A team is a special kind of group. A work team consists of a small number
of employees with complementary competencies who work together on a
project, are committed to a common purpose, and are accountable for
performing tasks that contribute to attaining organisational goals (p. 386).
• According to Hellriegel et al:
o A group is two or more individuals who share a common interest.
o A team is a group with complementary skills who are committed to a
common purpose to achieve goals (Hellriegel et al. 2017:275).
5.3 Types of Organisational Group
Table 5.1 Cultural Dimensions
Types of Group Explanation

Interest
Informal group
groups Friendship
group
Work
group
Formal Command
groups group
Task
group
Activity 5.1
Read pp.386–389 and add the explanation for each of the types of group listed
in Table 5.1.

53
5.4 Stages in Group and Team Development
A newly formed group, or an existing group that has changed its composition,
develops in stages.
These stages are:
Table 5.2 Stages in Group and Team Development
Stage Explanation
Forming
Storming
Norming
Performing
Adjourning
Activity 5.2
Read pp.398–400 and add the explanation for each of the stages of group and
team development listed in Table 5.2.
5.5 Variables That Influence Group Behaviour
Organisational context
Smit et al. (2020) note that managers need to understand the organisational
context in which groups operate. Variables in the organisational context that
influence group functioning are:
• Goals and strategies: the strategic goals of the organisation define the goals
that groups in organisations must attain within a specific timeframe. This
could include competing with other groups to obtain resources to perform
tasks.
• Authority structures: the organisational structure determines the authority
relations and the place of a group in the organisational hierarchy, its leader
and the relationships between groups.
• Policies, procedures, rules and regulations: groups operate within the
boundaries and guidelines of policies, procedures, rules and regulations of
the workplace. These could enhance or limit the effectiveness of group
activities.

54
• Organisational resources: resources such as suitably skilled people, finance,
raw materials, equipment and information affect group performance.
Groups have to compete for resources, which increases the possibility of
conflict.
• Personnel selection process: the composition of groups in terms of
personality types, level of motivation and creativity could impact group
performance. One person’s behaviour could change the dynamics of the
group.
• Performance management system: the performance evaluation and reward
system can focus on individual performance and reward, or collective
performance and reward. The choice between these two systems could
affect the group positively or negatively.
• Organisational culture: it defines how organisational members are expected
to behave and determines the norms of behaviour against which individuals
and groups evaluate their own actions and the actions of others. If there is
a dysfunctional culture characterised by internal politics, it could prevent
groups from attaining their goals.
• Physical work setting: the physical layout of the workspace can create
barriers to or opportunities for interaction with and between groups. Close
proximity could enhance interaction between members of a group and with
other groups.
Group member resources
For a group to perform effectively, members need technical knowledge

associated with their specific tasks, and interpersonal, problem-solving, decision-
making and conflict resolution skills, among others.
Group structure
A group structure defines the positions of individual members in the group and
their allocated responsibilities. It has the following seven variables:
Table 5.3 Variables That Define Group Structure
Variables Explanation
Leadership
Roles
Norms
Status
Cohesiveness
Size
Diversity

55
Group processes
The effectiveness of group processes influences the performance of groups.
Activity 5.3
Read pp.400–403 and add the explanation of each of the variables influencing
group structure listed in Table 5.3.
Table 5.4 Group Processes
Group Processes Explanation

Group decision-making
Communication
Power, interests, influence, politics
Conflict
Activity 5.4
Read pp.406–408 and add the explanation for each of the group processes as
listed in Table 5.4.
Group tasks
According to Smit et al. (2020), the tasks that groups perform range from simple
(routine and standardised) to complex (new and non-routine). Stocktaking or
following Standard Operating Procedures are examples of routine tasks.
Implementing an electronic inventory control system, for example, is more
complex.
Tasks also vary in terms of the degree of interdependence between members

and between more than one group. A high degree of task interdependence
requires effective communication and low levels of conflict. Task
interdependence consists of three kinds of interaction:
• Pooled interdependence – it operates with little interaction; the outputs of
the units (groups) are pooled at organisational level.
• Sequential interdependence – the output of one section becomes the input
for another section. One section must complete its task before the next
section can use the information or results for its tasks.

56
• Reciprocal interdependence –a situation where the outputs of one section
become the inputs for another section, and vice versa. For example: in a
hospital, the intensive care unit provides inputs to the surgical unit. After
surgery, patients are sent back to intensive care (see Chapter 8, p. 219 for
more information).
Another variable that influences performance of groups is task uncertainty. This

occurs when groups are unsure of the direction in which the organisation is
heading, or how future events may affect their activities.
5.6 Variables That Influence Group Behaviour
Characteristics of effective work teams
The characteristics of work teams differ from those of work groups in a number
of vital aspects. It is therefore important that you do the task below.
Table 5.5 Characteristics of Teams
Characteristics Explanation
Complementary
competencies
Commitment to the
common purpose
Shared mission and
collective responsibilities
Individual and mutual
accountability and rewards
Synergy
Shared leadership
Equality
Size
Selection
Activity 5.5
Read pp.409–413 and add the explanation of each of the group processes listed
in Table 5.5.
What contribution do Belbin’s team roles make to the composition of work teams?

57
5.7 Why Organisations Use Teams
According to Smit et al. (2020), the use of teams in an organisation is effective

when the following conditions exist:
• The problem is relatively complex, uncertain and holds potential for conflict.
• The problem requires intergroup cooperation and coordination.
• The problem and its solution have important organisational consequences.
• There are tight but not immediate deadlines.
• Widespread acceptance and commitment are critical to the successful
implementation of a response to a situation.
When operating under correct conditions, teams could have the following
advantages for organisations:
• innovation – teams enhance creativity
• speed – teams can reduce the time required to complete a task
• costs – teams can respond faster to customer requests and thereby reduce
costs
• quality – commitment and accountability feed into quality work
5.8 Types of Team
The following types of teams are common to organisations:
Table 5.6 Types of Team
Type of Team Explanation

Problem-solving
Self-managed
Cross-functional
Virtual
Activity 5.6
Read pp. 413–415 and add the explanation for each of the types of team listed
in Table 5.6.
5.9 Developing Individuals Into Team Members
The selection process

58
The team selection process should identify those staff members who have inter
personal skills which will contribute to an effective team. These skills are:
• finding areas of common understanding with other members of the team
• communication skills
• planning and administration skills
• relevant technical skills
• global awareness
Organisations may use the Belbin method to ensure that teams represent all
eight specified roles (see p. 388).
Training
Teambuilding programmes or interventions are used to develop teams to cope

with rare and unexpected events. They usually train members to perform a
variety of managerial and leadership activities and enhance team cohesiveness.
Reward system
The evaluation and reward system of an organisation influences the effectiveness

of a team. A reward system indicates to the team how and where they must
direct their energies and reinforces desired performance. Rewards could be
monetary or non-monetary.
A critical aspect of a reward system is determining which portion of an individual’s

remuneration should be linked to the performance of the team, and which portion
should be allocated for individual performance.
Summary
This topic emphasised the importance of using groups and teams in the
workplace. The differences between groups and teams were discussed, with an
indication of the variables, characteristics and skills needed. The contribution of
Belbin’s personality types to the composition of teams is an important aspect
that could contribute to the success of a team.
Working together as a group or as a team means that there are rules which
govern and direct people’s behaviour in the organisation. The next topic looks at
the ethical aspects of an organisation.

59
5.1 Read the case study on pp. 418–419 and answer the related question on p.
419.
5.2 Differentiate between types of group in the organisation.
5.3 Explain why organisations should use teams and under which
circumstances.
5.4 Differentiate between problem-solving, self-managed, cross-functional and
virtual teams.
5.5 Write an essay on the variables influencing group behaviour in
organisations.
5.6 Read the journal article Creativity from constraint? How the political
correctness norm influences creativity in mixed-sex work groups by
Goncalo, Chatman, Duguid and Kennedy, available at EBSCO, then answer
the question below based on the following statement made by the authors:
‘Our research shows that men and women both experience uncertainty
when asked to generate ideas as members of a mixed-sex work group: men
because they may fear offending the women in the group and women
because they may fear having their ideas devalued or rejected’ (Goncalo et
al. 2015).
Question:
What is the solution to having men and women contribute freely when
working together in a team? How does this solution compare to your
workplace practices for work teams?

60
Topic 6
The Components of Ethical Business
(Chapter 17)
Prescribed Reading

Oosthuizen, Perks and Zindiye. 2017. Management. Cape Town: Oxford
University Press.
• Du Plessis, T.& Boshoff, M. 2008. Preferred communication methods and
technologies for organizational knowledge sharing and decision making.
South African Journal for Information Management 10 (2):1–18.
6.1 Introduction

• Describe the interplay between business ethics, corporate social
responsibility and corporate governance.
• Define morality, ethics and business ethics using examples.
• Explain the three most common approaches to normative ethics.
• Describe how the micro-economic and the macro-economic levels impact
on business ethics.
• Define and explain the case for the narrow and broad views of corporate
social responsibility.
According to Smit et al. (2020:502), business ethics comprise an evaluation of

the standards that we employ to distinguish between right and wrong, good and
bad, and what deserves respect and what does not, within the specific context
of business operations.
In South Africa, three documents define the requirements for ethical business
and governance practices.
• Companies Act of 2008
• Companies Regulations of 2011

61
Both of the above are statutory documents, which legally mandate the
introduction of social and ethics committees for certain categories of
organisation.
The third document is:

• The King IV Report on Corporate Governance for South Africa
In the King IV Report, ethical values and practices find their expression in three
areas of an organisation, namely ethical leadership, ethical culture and
responsible corporate citizenship. Good governance requires that leaders direct
and control organisational operations in an ethical and effective manner. This
can only be achieved if:
1. Leaders live by the cardinal values of integrity, competence, responsibility,
accountability, fairness and transparency.
2. Ethical management practices and policies engender and promote an ethical
organisational culture.
3. Boards exercise responsibility for the organisation’s social and ethical
performance to ensure that the organisation is a good corporate citizen.
What all of the above implies is that good governance is inextricably interwoven
with sound business ethics and social responsibility practices, which have a
bearing on the organisation’s internal operating environment (including values,
policies, processes and culture) and the organisation’s external operating
environment (that is, the social, economic and environmental domains). Good
governance further requires that leaders practise stakeholder inclusivity, which
means taking cognisance of, and balancing, stakeholders’ interests and needs in
order to create value for all those parties that affect, or are affected by, an
organisation’s activities.
Activity 6.1
Identify policies, other documents and activities in your workplace which deal
with ethics and social responsibility.
Are these policies, documents and activities effective in enhancing ethical

thinking in your workplace?

62
Ethics and corporate social responsibility are significant contemporary
management issues. They are not identical concepts, but they are related.
Socially responsible decisions often require sound ethical judgements.
Apart from the relationship between ethics and corporate social responsibility,
corporate governance is a system of reference underpinning ethical judgement
and control of the organisation (Smit et al. 2018:476). Companies do not operate
in a vacuum; they have an effect on society and the environment in which they
operate. Society becomes a stakeholder of companies (Wiese 2017:2).
This means that companies must act to the benefit of society and the
environment – and this is an ethical and social responsibility issue.
6.2 Business Ethics
Smit et al. (2020:502) provide the following discussion on business ethics:
Morality, ethics and business ethics
• Morality is a person or group’s standard for determining right and wrong,

good and bad, and what deserves respect and what does not.
• Ethics refers to the evaluation of these moral standards. It constitutes a
type of meta-activity, in which we try to analyse our moral beliefs
objectively and critically in order to determine whether they are based on
sound or unsound principles.
There are two dimensions of ethical analysis that are especially important in
business ethics:
• the normative dimension
• the descriptive dimension
Normative ethical theories and moral decision-making
According to Smit et al. (2020:503),an important dimension of business ethics

concerns the normative foundation of, and justification for, our individual and
group decisions.
Different normative ethical theories prescribe different principles for morally

correct action, but the three most common approaches to normative ethics are:
• Consequentialism, where the morality of an action is judged according to
the positive long-term consequences that it holds.

63
• Deontology, where the morality of an action is judged according to its
adherence to a rule or set of rules.
• Virtue ethics, where the morality of an action is the outcome of the moral
agent’s virtuous nature.
Note
• Normative ethics is a branch of ethics that defines and systematises the

principles that we employ when making moral decisions and judgements.
• Consequentialism defines a morally correct action as one which promotes
good consequences (assessed in terms of happiness or utility) over the long
term.
• Deontology defines a morally correct action as one which adheres to
universally accepted moral rules, such as human rights, rather than
focusing on the consequences of the action.
• Virtue ethics defines a morally correct action as one which a person with
good moral character and practical wisdom would perform (Smit et al.
2020:503).
Descriptive ethics and contextual influences
According to Smit et al. (2020:506), moral standards pertain to the beliefs held
by individuals or groups of individuals. However, the contexts in which decisions
are enacted also affect our perceptions of appropriate or inappropriate behaviour.
When we shift our focus from normative ethics (how people ought to act) to
descriptive ethics (how people actually act), the ethical analysis also shifts from
defending ethical principles to investigating the moral attitudes of individuals and
groups empirically.
These attitudes are, in part, informed by contextual features. This means that
within the business environment, the internal (micro-economic) and external
(macro-economic) operating environments should also be subject to ethical
investigation and scrutiny.

64
Note
• Descriptive ethics is a branch of ethics that empirically investigates the

moral attitudes and decision-making processes of individuals and groups of
people.
• The micro-economic level is the level at which the ethical evaluation of the
economic activities within organisations is studied, including the informal
norms, formal policies, decisions and actions that occur within business.
• Organisational culture comprises the tacit and explicit organisational norms
and rules that direct individual behaviour.
• The macro-economic level refers to the level of study and evaluation of the
social, economic, political, environmental and cultural systems (and the
interrelations between these systems), which enable and constrain business
activities and shape business practices (Smit et al. 2020:506).
6.3 Business in Society
According to Smit et al. (2020:508), ethical business, constituted by a solid

values-based foundation, also necessitates the effective and ethical management
of business practices in the interest of society and stakeholders.
Note
• The promissory relation is the agreement that executives will act in the
economic interest of shareholders.
• Externalities comprise the unintended consequences that an economic
transaction has on an independent third party.
• The social contract is the implicit agreement whereby society grants
business the ‘licence to operate’ through public consent, in the expectation
that business will address certain societal needs.
Activity 6.2
Read the case study on p.504: Markus Jooste: Portrait of a charismatic, yet
unethical, leader.
In view of the preceding theory, evaluate what went wrong.

65
Activity 6.3
Consider the following situations and determine which of the three areas of
behaviour are applicable to them:
1. You overcharge a customer for a product or service rendered. You can either
keep quiet or correct the situation.
2. You are the person responsible for completing tenders. Some contractors
suggest that they will pay you to award the tender to them. You desperately
need some money.
3. You are a manager in a company. Your brother owns a company and you
award a tender to him (Smit et al. 2018:477–478).
6.4 Corporate Social Responsibility
Smit et al. (2020:508) provide the following discussion on business ethics:
The narrow view of CSR
In the narrowest sense, a corporation’s responsibilities are limited to making

profits for its shareholders. That means that business has no social
responsibilities other than to maximise profits within the legal framework of
society.
The broad view of CSR
The broad view of CSR argues that, at the very least, business has a negative
duty to refrain from harming society. Business transactions often result in
externalities, which are the unintended positive or negative consequences that
an economic transaction between two or more parties can have on a third party.
‘Social responsibility implies that a business decision-maker in the process of
serving his own business interests is obliged to take action to protect and
enhance society’s interests. The net effect is to improve the quality of life in the
broadest possible way, however quality is defined by society’ (Smit et al.
2020:509).
This means that managers must consider both the economic outputs of the
organisation and the effect of the organisation’s activities on society.

66
A third justification for the broader view of CSR concerns businesses’ economic
influence.
A fourth justification for extending CSR concerns businesses’ responsibility

towards stakeholders.
Activity 6.4
Read pp.508–512.
Summarise the meaning of:

1. The narrow view of corporate social responsibility
2. The broader view of corporate social responsibility
Stakeholder theory
Stakeholder theory argues that the goal of business is to create value for its
stakeholders and that, in order to do so, one should integrate business and ethics
within a complex set of stakeholder relationships rather than treating ethics as a
side constraint on making profits.
The harm inflicted on both shareholders and other stakeholders by unethical

practices, as demonstrated by the near collapse of Steinhoff for example, is proof
of the importance of good CSR practices. They should not be viewed in isolation
from the environments in which they are embedded (Smit et al. 2020:512).
Note
Stakeholder theory is a theory of the moral management of organisational

stakeholders (Smit et al. 2020:512).
6.5 Corporate Citizenship
Smit et al. (2020:512) provide the following discussion:
There has been a move away from CSR towards corporate citizenship.

67
The idea of the organisation as a corporate citizen is an appealing way to draw
attention to an organisation’s rights, duties, privileges and responsibilities within
local and global contexts.
African businesses operating in a post-apartheid context are expected to

contribute to socio-political reform and development.
The negative argument is that, unlike natural persons, corporations cannot vote
or hold public office. This brings into play the power differentials between
corporations and people.
Nevertheless, there is another way in which to understand the notion of corporate

citizenship. This broader understanding of corporate citizenship implicitly
acknowledges the extended role that corporations play within many modern-day
societies.
Note
Corporate citizenship is a concept that draws attention to the rights, obligations,

privileges and responsibilities that organisations have in the societies within
which they are embedded (Smit et al. 2020:512).
6.6 Corporate Governance
Smit et al. (2020:514) provide the following definition:
Corporate governance concerns the systems and processes according to which

organisations are directed and controlled.
There is tension between these two functions:

• Directing a company requires future-orientated strategies.
• Control requires conforming to codes and policies.
However, when a healthy balance must be struck between these two functions:
• corporate governance provides the basis to protect shareholders and
• create transparency and accountability for managers.

68
Good corporate governance increases integrity and effectiveness. This matter for
many reasons, including:
• avoiding business scandals, which damage trust in business
• the value placed on good corporate governance by institutional investors
• growing involvement of the private sector in service delivery
• the need for systems to prevent and deter corruption in developing
countries
• the deregulation and integration of capital markets
• recognising the importance of harnessing domestic savings for economic
growth
• the risk of financial crisis and contagion
Statutory approach to corporate governance
According to Smit et al. (2020:515),one of the most significant developments in

corporate governance was the passing of the Sarbanes-Oxley Act of 2002 (SOX).
The SOX is an attempt to institutionalise best practice through legislation, thus

following the statutory approach.
Voluntary approach to corporate governance
The voluntary approach is currently followed in most EU and African countries,

including South Africa.
This is a qualitative, principle-based approach, which means that good

governance practices are recommended, but companies have discretion in
determining how these practices are implemented.
However, the voluntary approach has also been criticised because it cannot
guarantee ethical behaviour.
In South Africa, the Companies Act legislates many of the recommendations

made in the King IV Report.
Note
The statutory approach to corporate governance defines compliance with

governance requirements as a prerequisite.

69
The voluntary approach to corporate governance encourages organisations to
exercise intellectual honesty in the application of governance principles (Smit et
al.2020:515).
Note
In the stakeholder-orientated governance model, the board is responsible for the

organisation’s stakeholders, as opposed to only the organisation’s shareholders.
A sustainability report is a standalone report, presented alongside the financial
report that presents information on an organisation’s economic, environmental
and social impact.
An integrated report consolidates the financial and sustainability reports into one,
which comments on the organisation’s value creation over time (Smit et al.
2020:517).
6.7 Evolution of South Africa’s Corporate Governance Regime
Smit et al. (2020:518) explain the evolution of South Africa’s corporate

governance regime as follows.
• Africa has adopted a stakeholder-orientated, voluntary governance model.
• The first King Report (King I) of 1994 on corporate governance in South
Africa was an attempt ‘to reinforce the fundamentals of a capitalist
corporate system … and a means of aligning the economy with international
trends and imperatives’…. an inclusive approach, stating that boards are
responsible to all stakeholders – not only to shareholders.
• The King II Report of 2002 continued with the trend: a ‘distinctive feature
[of King II] … was the attention placed on non-financial corporate
governance concerns and that companies should also release annual
sustainability reports’.
• The King III Report (released in 2009) adopted the same overall stance as
the King II Report but heightened the requirements for non-financial
disclosure. An integrated report discloses both financial and non-financial
performance in one report.
• King IV continues to recommend integrated reporting, as well as a move
towards inclusive capitalism: ‘Inclusive capitalism views capitalism as the
engine of shared prosperity’ and a trigger of ‘profound change, in that the
focus is not only on financial capital, but also on human, intellectual, social,
relationship and natural capitals (the so-called six capitals).

70
Activity 6.5
Read The adoption of the voluntary approach in South Africa on p. 517.
Evaluate the effectiveness of the ‘voluntary approach’ as a tool for corporate

governance.
Table 6.1 King Reports
King Report Explanation

King I
King II
King III
King IV
Activity 6.6
Read the section on the King Reports in Chapter 17 and add the explanation for
each of the four versions of King in Table 6.1.
Summary
We examined the related concepts of ethics, social responsibility and corporate

governance. The argument is that ethics is the basis of good corporate
governance. Only when an organisation implements ethical principles, devises
structures and tools to implement these principles and grows them into an
organisational culture, are shareholders, stakeholders, society, and the
environment protected.
6.1 Discuss the broader view of corporate social responsibility.

6.2 Explain the link between business ethics and corporate social responsibility.
6.3 Essay question: Ethical considerations are prevalent at the micro-, meso-
and macro-economic levels. Define these levels and discuss the business
ethical considerations that are relevant to each level.

71
6.4 Essay question: It is stated that: ‘Good corporate governance increases the
integrity and effectiveness of the private sector and helps markets to
operate more effectively’. Explain this statement with reference to the
definition of corporate governance, the general outcomes of good
governance, the King IV Report and the Steinhoff affair.
6.5 Read the article Ethics in the workplace start with honesty by Asacker,
available at EBSCO. Then comment on the following statement:
‘Maybe ethics in the workplace starts with plain old honesty with
others’ (Asacker, 2004:43).
Which solutions does the author suggest that will foster ethics in the
workplace?

72
Topic 7
New Challenges for Management (Chapter 18)
Prescribed Reading

• Grosz, B.& Stone, P. 2018. A century-long commitment to evaluate Artificial
Intelligence and its impact on society. Communications of the ACM 61:12.
7.1 Introduction

• Explain why organisations change.
• Compare forces that stimulate change.
• Analyse why bureaucratic management fails modern organisations.
• Describe features of contemporary organisations.
• Evaluate challenges managers of contemporary organisations face.
Smit et al. (2020) mention that changes that occur in the world are so radical
that some theorists refer to new organisational forms that are emerging,
including the structure or design of organisations. Modern or contemporary (new)
organisations are flatter in structure, more networked, global and diverse.
This part of the study guide focuses on the features of modern organisations
which are needed to survive in a turbulent and ever-changing global business
environment.
Variables influencing contemporary organisations to change
Smit et al. (2020: 529) indicate a number of variables that influence change.
These are presented in Table 7.1:

73
Table 7.1 Variables Influencing Organisations
Variable Explanation
Globalisation Defined as the worldwide integration of markets and cultures,
and the global the removal of legal and political barriers to trade, and the
economy death of distance as a factor limiting material and cultural
exchanges.
A current aspect (second phase) of globalisation is the shift
in economic power to Asia, especially China. It poses threats
and opportunities for competing markets.
Technological Nanotechnology, biotechnology, IT, neuroscience and
advances robotics transform sectors such as healthcare, nutrition and
logistics. New industries could appear with the destruction of
some existing ones.
3D printing is an example of a new industry.
Radical Changing work environments challenge organisations to work
transformation better, faster and cheaper. Organisations focus on core work
of the world of using autonomous teams and strategic alliances and
work
outsource non-core work.
Resources required are knowledge, information and ideas.
Temporariness enters the workplace – updating knowledge,
temporary work teams, and downsizing.
Increased Technology allows customers to compare services and prices
power and locally as well as internationally, creating global competition.
demands of Managers need to accommodate the needs of customers.
customers
An example is the new Airbnb industry.
Growing Critical factors for production used to be land, labour and raw
importance of materials. More prominent now is intellectual capital and
intellectual creating knowledge workers and knowledge organisations or
capital and
‘learning organisations’.
learning
Other terms coming into play are: knowledge management,
collective intelligence, and IS.
New role and Knowledge workers expect organisations to meet their need
expectations for an autonomous work environment.
of workers Workers are diverse and expectations vary between five
generations: the silent generation, baby boomers,
generation X, generation Y (millennials), and digital natives.
Environmental The world’s resources (such as oil and coal) are running out,
crisis and industrialisation and production processes have damaged
the environment. There is pressure to limit carbon footprints.
World recession or depression is likely. Managers need to
create sustainability for their organisations.

74
Digital The digital era changed how we use media, organise data,
revolution and communicate. Collective power is enabled by social
media.
Leadership practices have changed to peer-to-peer
leadership where organisations use interconnected central
networks.
The digital revolution has disrupted structural organisational
boundaries and created flatter, networked and decentralised
organisations. An example is Uber.
Demographic International migration increases as the age of the workforce
change in developed countries rises due to low population growth,
which creates the opportunity for employment in other
countries.
Organisations need to find new talent and deal with new
social structures and welfare systems.
Activity 7.1
Read pp.529–539 and comment on the following:

1. How will 3D printing change the way we live, work and play in future?
2. How does the knowledge era change the way we do our work?
3. Use the examples of Airbnb and Uber to explain how the digital era crosses
all boundaries.
7.2 The traditional Model of the Formal Organisation
The traditional model of organisations was developed by Max Weber, a German

sociologist. His model was called ‘rational-legal bureaucracy’. The bureaucracy
has several strong and weak points, summarised in Table 7.2:
Table 7.2 Strong and Weak Points of Bureaucracy
Strong Points Weak Points

Predictability and reliance Rigid rules and red tape
Impartiality Protection of authority
Expertise Slow decision-making
Clear lines of control, efficiency and Incompatibility with technology and
consistency workers’ values
Routine tasks, rules and procedures, Not suitable for unstable
suitable for stable environments environments

75
Activity 7.2
Read pages 540-541 in the prescribed textbook and do the following task:
Comment on the strong and weak points of your work environment, considering
its suitability to operate in a stable and unstable environment.
7.3 The Neworganisational Model
Smit et al. (2020:540) describe the features of the new organisational model and
show in Table 18.2 how it differs from the traditional organisational model. The
features of the new model are:
Table 7.3 New Organisational Model
Dimensions New Model

Critical tasks Mental (knowledge)
Relationships Lateral
Information flow Horizontal and vertical
Decision-making Where information resides
Systems and processes Flexible
Levels Few (flat structure)
Boundaries Permeable
Competitive thrust Networked
Management style Participative
Culture Commitment and results
Mindset Global
Workforce Diverse
Strategic focus Innovation
Activity 7.3
Explain what needs to be done to introduce the most important features of a

modern organisation in the organisation where you work.

76
7.4 Characteristics of Contemporary Organisations Model
Global
Globalisation poses challenges to organisations, as discussed in Table 7.1.
Activity 7.4
Read p. 541 of the textbook.
Write a paragraph on the challenges facing management posed by globalisation.

What qualities should managers have?
Networked
Digitisation enabled disruption of structural boundaries, as seen in Table 7.1. It

allows communication inside (stakeholders) and outside (customers, suppliers)
the organisation.
Activity 7.5
Read pp.541–542 of the textbook.

1. Write a paragraph on the challenges posed by networked organisations
facing management in terms of:
o working with teams; and
o forming and maintaining alliances with outside organisations.
Flat and lean
There are three major reasons why organisations must introduce a flatter
organisational structure:
• They need to be flexible and respond more quickly to changes.
• IS replaces the traditional role of middle management (controlling
operations).
• There is increased global competition and pressure on financial
performance.

77
Activity 7.6
Read pp.542–543 of the textbook.
Write a paragraph on the challenges management faces when introducing a flat

organisational structure.
Flexible
Organisations need to be flexible to respond to changes in their environments.

Flexible organisations have the following features:
• Respond to customer needs and intense competition.
• Cater for needs of the workforce.
• Systems and processes are flexible to respond quick to demands.
• Have fewer rules and standard operating procedures.
• Managers and employees work on more than one project at a time.
Activity 7.7
Write a paragraph on how management could be innovative and creative in

creating a flexible organisation.
Diverse workforce
Diversity in contemporary organisations has the following features:

• The workforce consists of full-time staff, consultants, part-time workers and
home-based workers.
• Diversity provides a rich variety of viewpoints, experiences and cultures to
stimulate creativity and innovation.
• Management of human resources attends to the different needs and
expectations of the workforce.
Activity 7.8

78
Write a paragraph on how management could retain talent and increase
productivity working with a diverse workforce.
Summary
We trust that this topic provided some ideas on how organisations operate in
modern times, how they need to respond to new challenges, and how managers
need to respond to the demands made by changes in the internal and external
environments.
Read the case study on The Alphawave Group and answer the question on pp.
548–549.
7.1 Explain why current and future advances in technology, such as the work
performed by Alphawave, force organisations to change and adapt to a
business environment characterised by disruption and change.
7.2 Explain how contemporary organisations differ from traditional
organisations.
7.3 Write a paragraph on how Millennials could challenge the traditional
organisation.
7.4 Differentiate between a networked organisation and a flat and lean
organisation.
7.5 Read the article A century-long commitment to evaluate Artificial
Intelligence and its impact on society by Barbara Grosz and Peter Stone and
comment on the statement they make:
‘While noting that Artificial Intelligence (AI)-capable systems will
replace people in some kinds of jobs, the report predicts AI capabilities
are more likely to change jobs by replacing tasks than by eliminating
jobs’ (Grosz & Stone 2018).
How does AI impact on society negatively and positively, according to the
AI100 report?

79
References
Ajam, T.2008. Integrating strategic planning and budgeting: A PFMA perspective.

Southern African Journal of Accountability and Auditing Research 8:45–56.
Asacker, A. 2004. Ethics in the workplace start with honesty. American Society
of Training and Development 43–44.
Buick, F., Blackman, D.& Johnson, S. 2017. Enabling middle managers as change
agents: Why organisational support needs to change. Australian Journal of Public
Administration 77(2):222–235.
Goncalo, J.A., Chatman, J.A., Duguid, M.M. & Kennedy, J.A. 2015. Creativity
from constraint? How the political correctness norm influences creativity in
mixed-sex work groups. Administrative Science Quarterly 60:1–30.
Grosz, B. & Stone, P. 2018. A century-long commitment to evaluate Artificial

Intelligence and its impact on society. Communications of the ACM 61:12.
Hellriegel, Slocum, Jackson, Louw, Staude, Amos, Klopper, Louw, Oosthuizen,

Perks & Zindiye. 2017. Management. Cape Town: Oxford University Press.
Kroenke, D.M. 2015. Experiencing MIS. 4thedition. Hoboken, NJ: Pearson.
Rawat, P.S. & Basergekar, P. 2016. Managing workplace diversity: Performance

of minority employees. Australian Journal of Public Administration 77(2):222–
235.
Smit, P.J., Botha, T., & Vrba, M.J. 2018. Management principles. Cape Town:
Juta.
Van Aardt, J.L. & Van den Berg, P.H. 1997. Critical success factors for
management information systems. SBL Research Review 1(9):75–80.
Wiese, T. 2017. Corporate governance in South Africa. Claremont: Juta.

80

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Management III

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Retailer and their people

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MODULE PURPOSE AND OUTCOMES 3

Topic 1 Strategic Planning (Chapter 4) 5

Topic 2 Information Management (Chapter 7) 20

Topic 3 Innovation and Technology 32

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