BUSINESS MANAGEMENT 2

Question 1: Discuss how the business environment is different and why

traditional theories are still a focus for today.
The answer will discuss a number of areas of the macro environment and of the
micro environment that have changed the way businesses are managed with the
aim of making profits and making sure that the business continues to operate.
a. Technology, the business world has become more dependent and based
on digital technologies, which have taken the place of humans, leading to
unemployment and have also changed workplace dynamics enabling
people to work from remote locations, like working from home. This
means that central offices no longer have the key role they used to have.
Scientific management theories can be seen to be still relevant in such an
environment since people are still paid based on work performed or hours
delivered, which agrees with the piece-rate system created by Frederick
Taylor (CFI, 2015).
b. Competition, technology has changed the way companies compete, with
those able to use technology to obtain information abut customer’s needs
and having capital to find effective ways to meet them performing better
than those without. The requirements for competing in the marketplace
have changed with the market becoming more competitive. Systems
management theory still offers businesses ways of seeing the structure of
the market environment and assess how they can best position themselves
(CFI, 2015).
c. Government policy, policies on business practices, hiring and firing have
become dynamic and more flexible in the new environmental since
companies are changing much to adapt. Bureaucratic management theory
still informs government policy in planning teams that research and help
government coordinate ways of improving the functioning of the
economy (CFI, 2015).
d. Power of buyers, customers now have access to more information about
the products that they buy, where they are sourced and are able to
communicate this information influencing how products can perform in
the market. Max Weber promoted the idea of flatter management
hierarchies that were better responsive to management issues, such as
companies hiring flexible employees who work closely with buyers and
customers and establish close relationships (CFI, 2015).
e. Power of suppliers, through increased connections in supply chains,
suppliers increasingly control the market environment. Business that can

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 perform better are the ones that can understand how the supply chains
work and how they best position their businesses. This approach agrees
with the systems theory, which sees businesses and their environments as
components parts which must work together to achieve goals (CFI, 2015).

Question 2:
2.1. In market development strategy the business aims to grow by introducing
its products to new customers in regions that the business has not reached or is
not currently serving. South African businesses can benefit from African
markets because;
a. Access to larger markets, doing business in other African countries means
that South African businesses can sell their products to a larger market.
They can then produce more output and make more revenues (Signé,
2019).
b. Africa is industrialising through manufacturing and replacing imported
goods, which means that South African businesses that can set up
production of their existing products in such countries can benefit through
gaining market shares in those economies (Signé, 2019).
c. In most African countries, digital technologies are still scarce, such as
access to affordable internet services, South African businesses, who
have been offering internet services with experience can expand their
businesses by entering those markets and finding a new base of
subscribers (Signé, 2019).
d. African countries have been improving on other metrics such as
education, skills and in production of labour intensive goods, which
means that in the future the incomes of many may go up. Larger incomes
means more business for South Africa through exports of goods to those
countries (Signe, 2019).
2.2. Risks and Potential benefits of adding to or divesting of products and/or
markets.
2.2.1. Strategic questions that must be answered
i. How will divesting affect the current product or service range of the
business, are the profits going to stay the same or improve? If the
proposed divesting affects the business units most contributing to
business revenues or traffic, then the divesting decision may be too risky
for the business (Mankins, Harding and Weddigen, 2008).

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 ii. Is the targeted product or business unit linked to other business units and
how will divesting change the business options with other products? This
is important with respect to products or services that are complementary
to other business activities. Complementary means dependence among
business operations, divesting that leaves the company exposed and
vulnerable to other business can potentially the damage the company’s
revenues and profits (Mankins, Harding and Weddigen, 2008).
iii. What transition services will be required in the case of existing customers
for the business unit under consideration and for how long? In the case of
businesses that offer products on contracts, termination of the business
unit or product line will mean putting in place strategies to address needs
of existing business customers to make sure that the conditions of
contracts the business may have entered are honoured. The costs of these
transition services may cause recourse to outsourcing, which may be
increase business operating expenses (Mankins, Harding and Weddigen,
2008).
iv. Is the business part of the core of the company’s business activities?
Companies should only sell those businesses that are not important to
their core activities and have more value to other firms than to their own
(Mankins, Harding and Weddigen, 2008).

2.2.2. List and discuss primary tasks of the planning process

i. Clarify the organisation’s strategic intent: Vision and mission. The vision
describes the future to which the organisation strives to position itself in
the foreseeable future, while the mission describes the company’s
business, its objectives and its approach to meet those stated objectives
(Bain & Company, 2018).
ii. Assess threats and opportunities, this is carried out using SWOT analysis
with attention being placed on external factors that may affect the
business in the implementation of its plans to reach its objectives. These
may include market changes, government policies, regional policies,
changing state of relations between the country and its neighbours (Bain
& Company, 2018).
iii. Assess strength and weaknesses: Part of the SWOT analysis that looks
into the inner aspects of the business, such as its technology, human
resources, supply chain and its core competencies and how these enables
the business to position itself in the market (Bain & Company, 2018).

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 iv. Set strategic objectives: Describes as the business statement of purpose,
with objectives referring to stated, measurable targets towards achieving
those stated business objectives. The how aspect of achieving those
business aims (TUTOR2U.NET, 2021).
v. Undertake gap analysis: means the examination and assessment of the
business’s current performance for the purpose of finding differences
between the current business performance and where we would like the
business to be in the future (Leconte, 2018).
vi. Develop strategies to fill the profit gap: Increasing market reach to new
and unexplored markets—market penetration and market growth. Or
improving the performance of existing products called product
development (Gressmann, 2017).
vii. Implement the strategies to best fill the profit gap, choosing the best
strategy considering available company resources and then directing
those resources: capital and human to pursue the chosen strategy to make
revenue and fill profit gap (Gressmann, 2017).
viii. Control and diagnose results: Assessing the business performance in
terms of key performance metric such as changes in sales, costs of
production and returns to human resources and so on, to determine if the
business is on course to reaching its set profit or revenue objectives
(Gressmann, 2017).
ix. Repeat the planning process: After evaluating the plan over the course of
the projected period and assessing the results, the plan is revised and
adjusted and implemented again periodically (Gressmann, 2017).

2.3. Changing level of diversification

2.3.1. Corporate level strategy which refers to top corporate management level
decision making in dominant, related and unrelated business firms to provide
direction to an organisation such as allocating resources to strategic business
units. In diversification changing the level of diversification means allocating
resources towards strategic business units (Staude et al., 2018).
2.3.2. Diversification strategy considering adding to or reducing the existing
portfolio of business. This is a strategic decision (Staude et al., 2018).
2.3.3. Rational decision making model; looking at the case presented, since the
business is weighing up risks and potential benefits of adding to or divesting
itself of products in its current portfolio, which means there is a consideration of
alternatives. Furthermore, the decision is important and can influence business

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profits or future possibilities and divesting is done to try and improve the
business position (Lumen-Learning, 2021).
2.3.4. Probability refers to the likelihood or chance that a given event will
happen (Staude et al., 2018).

Question 3.
3.1. Elements to be considered when establishing organisational structure
i. Level of work specialisation: This involves considering the job tasks and
specific duties associated with given job positions. Diving work tasks
among diverse jobs and assigning them to clear set levels is the role of
work specialisation (Leonard, 2018).
ii. Departmentalisation: This refers to grouping workers into teams or
businesses into specific departments with similar overall functions.
Normally they are broken down by broad categories such as functional,
product, geographical, customer and process. In teams there might be
project manager, graphic designer, programmer, security specialist and so
on (Leonard, 2018).
iii. Chain of command: This shows who reports to who in the company’s
human resources structure. Traditionally companies have very clear
department leaders and executives overseeing work. In the modern era
however, companies tend to use more flexible chains where more people
are considered part of the same level of command (Leonard, 2018).
iv. Span of control: Refers to the number of subordinates reporting to a given
executive in the organisation. The people that a given manager can
oversee or supervise. Too many subordinates to a given manager causes
inefficiency while too narrow spans might make the managers
underutilised (Leonard, 2018).
v. Centralisation and decentralisation: refer to the degree to which decision
making is made at one level or at various levels by employees.
Centralised organisations tends to have tall hierarchical structures while
broader structures tend to show much decentralisation in decision making
(Leonard, 2018).

3.2. Resistance to change by employees and management

i. Mistrust and lack of confidence: This happens when there is growing
distrust between some management personnel or the organisation and its

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 policies in general and its employees. The organisation may have had a
past of making bad policies that badly affected the employees or maybe
employees may feel being that the management team is not thinking
about their best interests. Where change needs to be implemented in such
conditions, organisational reshuffling that puts managers that employees
can trust to steer the process, reduces opposition and improves employee
support to change (Sharma, 2019).
ii. Fear of failure: People will not support a change the feel that they do not
have capacity to sustain because they perceive that they do not have
abilities. Employees feel threatened by their own shortcomings, and they
feel gloomy and demotivated, they protect themselves through mounting
resistance to change. Giving employees the tools to boost their
confidence through knowledge sharing, retraining and workshops prior to
effecting change can dispel fear of failure (Sharma, 2019).
iii. Poor communication: Normally, employees have the habit of
communicating informally with one another concerning perceived
changes in the organisation with hysteria normally associated with those
communications. If the organisation does not communicate the needed
information concerning planned change and create active communication
then resistance to change based on poor communication is likely to be
experienced. Employees will need to know how the change will affect
their welfare and these concerns must be answered (Sharma, 2019).
iv. Unrealistic timelines: Occurs when change is implemented too quickly,
creating rapid sense of urgency without allowing time to transition. This
makes employees resist change since the rapid urgency makes them
suspicious of the organisation’s intentions. Change must be implemented
within a reasonable timeline, with each action mapped and reasonable
deadlines set so that employees have a general idea of how the
transformation will take place (Sharma, 2019).
v. Fear of displacement: Normally associated with technology development
that has a tendency to substitute capital equipment for labour, and
employees begin to fear that machines will displace their skills and hence
lose their source of income. Reskilling and training so that employees can
adapt their skills to changing technology can be important in influencing
positively the rate of technology adoption without resistance from
employees (Sharma, 2019).

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Question 4
4.1. Culture describes the social behaviour and the values, beliefs and norms
found in human societies that quietly influences the way individuals behave and
interact with others at a social level, with the beliefs, values, customs, language,
arts, laws and indigenous knowledge grouping people with cultural similarities
(Lumen-Learning, 2021).
Observable elements Non-observable elements
Founders values seen in vision and Values, values not communicated
mission intrinsic to the holders
Customs: things like greetings Tacit assumptions,
Socialization: new comers learn Processes
norms and values
Narratives; unique stories Beliefs
Practices: taboo, rites, ceremonies History
(Lumen-Learning, 2021).

4.2. Ethical leadership: It is defined as leadership that demonstrates and

promote normatively appropriate principles through personal actions and
interpersonal relations. Ethical leadership differentiates between one being a
boss and being a leader and associates the leader with qualities of inspiration,
guiding and motivating employees to achieve the organisation’s objectives. An
ethical leader thus makes it their responsibility to inspire, guide and build up
their employees to help them become better and they lead by example
(Kuligowski, 2020). In South Africa, transition from a history of segregation in
education, developmental opportunities, inequalities and the major challenges of
corruption hindering good governance. In South Africa, ethical leadership is
mainly associated with effectiveness and good governance.

4.3. Control process in a service business

i. Establishing standards and methods for measuring performance: The
concerns the setting up of standards that define what is acceptable
standards of service offerings, in terms of quality, delivery time and after
sales services and so on. Benchmarks are also set as to how these aspects
can be assessed. Standards then become the criteria for measuring

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 performance and give signals on how things are happening in the service
business (Lumen-Learning, 2021).
ii. Measuring performance: Measuring whether the expected service quality
offerings is being offered to the market by checking aspects that define
service offerings such as employee enthusiasm, customer satisfaction,
demand for service and feedback (Lumen-Learning, 2021).
iii. Determining whether performance matches the standard: assessing
whether performance in service delivery is in alignment with previously
set goal and quality standards. Can be done through customer reviews of
checking company performance against its past performance. The
standards set are compared with the measured results (Lumen-Learning,
2021).
iv. Taking corrective action: this action is undertaken when performance
falls short of expected standards and the analysis indicates that corrective
action is required. Might include changing the service offering process or
a change in one or more activities of the organisation (Lumen-Learning,
2021).

4.4. Reinforcement theory for instance if a worker arrives early to work and
have an early start in working on a project, praising them for such positive
contribution is positive reinforcement. Such praise can make the worker
continue to bring more of the positive contribution. Negative reinforcement is
associated with punishment and negative consequences designed to discourage
workers from engaging in unacceptable behaviour, for example warnings for
coming to work late or disciplinary hearings (Kukreja, 2018).

References
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https://www.managementstudyhq.com/reinforcement-theory-motivation.html (Accessed: 7
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