OCTOBER 2021 – Assignment

1.1 Discuss the two critical performance measures used to measure organisational performance. (10)

1.2 Apply the SAFe criteria and techniques to evaluate X new strategy. 15
2.1Illustrate a proposed functional structure for Murray and Roberts; allocate proposed functions/roles per department as per the
excerpt above. (15)

2.2 Use a gap analysis model to illustrate how Murray & Robert’s decision to replace their CEO was arrived at. 10

3.1 Name the four types of control systems that organisations normally use; discuss each type in relation to Murray & Roberts strategy
roll out and execution. (20)

3.2 Discuss the potential for structure and systems to feed into strategy; particularly Murray & Roberts

4.1 Describe a functional structure and discuss Brian Bruce’s approach when selecting the key players in Murray & Roberts
leadership. (10)

4.2 List the potential advantages and disadvantages of a functional structure. (10)

MAY 2021 – Assignment

1. Develop a strategy statement for FastGo under the new leadership (covering vision, strategic goals and mission statements).

MAY 2019 EXAM Q6.1 / MAY 2021 ASS

Strategy statement:
 Delivering world class digital logistics services at competitive prices. ✓
Vision:
 To be the transport provider of choice by providing innovative and excellent customer experience with integrity at very
competitive prices. ✓
Goals:
 Ensuring that our people continue to deliver exceptional service to our clients through innovative technology solutions.✓
 Providing our customers with the best customer experience while improving our lead times.✓
 Continue being the employer of choice.✓
Strategic goals:
 Meet and exceed our customer expectations with regards to costing and providing quality services.✓
 Using our own network to get new customers within South Africa and Sub-Saharan Africa.✓
 Constantly seeking new ways of improving our service to customers, while keeping our prices competitive.✓
 Expanding our fleet to reach out to more destinations within South Africa and Sub-Saharan Africa.✓
Mission:
To develop and maintain strong lasting relationships with our clients through:
 World class service delivery.✓
 Maintaining and continuously improving our service and pricing.✓
 Getting it right the first time.✓

2. Prepare a ‘three-horizons’ analysis of FastGo, in terms of both existing activities and possible future ones. Explain how this analysis
might affect its future strategic direction.

Horizon 1 Horizon 2 Horizon 3

Extend and defend
• • Ensure that existing stakeholders are
informed and buy in to the new leadership and
strategy
• • Ease tensions among staff by making them
a part of the new normal and involve them in the
formulation of the new path and direction for the
business
• • Include forecasts and foreseeable growth
and benefits in the new strategy through long term
commitment to stakeholders
Build emerging
• • Introduce new ways to reach
more clients through innovative
technologies
• • Embrace input from staff by
encouraging an owner-manager culture
thus creating pride and brand awareness
• • Recognition based rewards
system that’ll enable people to be more
involved and feel appreciated
Create viable options
• • Introduce a more
technological friendly approach
to reach more clients
• • Explore diverse
revenue str

3. Critically compare the 2 key leadership styles and how each style is key in the envisaged trajectory of FastGo

Transformational leaders Transactional leaders

The company is going through a drastic change in terms of leadership even though This leadership style puts more emphasis on
the company is still within the same family. ✓✓ Mr Go is young, prepared to take systems, structures, financial incentives.✓✓
risks, embrace technology so that he can lead the company to the future. ✓ There’s more emphasis on monitoring individual
The organisational identity that will be created needs to be centred around performance here, thus aligning that to financial
collective values, shared by all the stakeholders. ✓✓ This leadership style will go a reward and incentive to increase revenue. ✓✓
long way in ensuring loyalty, motivation thus impacting performance and a more This will ensure that FastGo is positioned
satisfied customer base.✓ favourably in their competitive space. ✓✓

These types of leadership styles are two ends of a continuum and hand-in-hand can be very beneficial to an organisation wherein
they are diligently practised.✓✓

4. Exploring the strategic changes anticipated, create a change kaleidoscope, and identify the contextual features in relation to
FastGo.

1. Carry out a PESTEL analysis and identify key opportunities and threats. MAY 2019 5.1 EXAM / OCT 2020 1.1 EXAM / MAY 2021 ASS

 POLITICS
 o The organisation receives a sizeable portion of their funding from key government departments and they always have to
build new relationships with new ministerial officials every time a new government is sworn in.
o The organisation has to ensure stability and alignment irrespective of the change in government such that the
beneficiaries whose livelihoods and safety they protect are not affected.
o A global pandemic can negatively such an organisation since overall government response (increase in funding to
vulnerable organisations) can directly affect how such an organisation executes their daily commitment to their
beneficiaries. ✓✓
 ECONOMIC
o A country’s economy can largely impact an organisation like Siyasiza because the number of beneficiaries can be increased
in a dire economic climate;
o similarly a thriving economy can better position the organisation to receive better donations from individuals and the
corporate sector.
o The global pandemic negatively affected the economy and some of their regular donors had to cut down on their CSI
initiatives to save jobs. ✓✓
 SOCIAL
o The country’s economic position has a direct impact on its social standing and quality of life; hence an organisation like
Siyasiza requires a stable social environment because people are at the core of their organisation.
o A global pandemic that enforced certain rules in terms of people movement can negatively affect their daily operations,
some volunteers might not have been available. ✓✓
 TECHNOLOGICAL
o People thrive on engagement during stressful times and social media engagements increase when people are staying at
home more.
o This is a positive effect on the organisation because more people are reached through social media and there’s more
empathy and response from people who wouldn’t have been reached in a normal environment.✓✓
 ECOLOGICAL
o Climate change directly affect certain industries and might thus affect the skills development part of an organisation such
as Siyasiza.
o They would have to consider who they accept donations from, even though these are donations that would greatly impact
their operations and outreach. ✓✓
 LEGAL
o Whenever there are rules imposed (due to a pandemic) there government also introduces fines/punishments for
transgressors, and these affects how people/businesses who would normally donate.
o Volunteers are largely affected when there are restrictions in terms of movements and transport whereas an organisation
like Siyasiza is always in need of assistance. ✓✓

 OPPORTUNITIES
o The fact that they have been approved for more funding that means they are able to help more people who are displaced
by the pandemic. Their ability to upskill their own people within their avenues in the organisation will create a second
layer of donors once said people join the job market. They can use such trends to source more government funding and
reach larger audiences(nationwide) and impact positively. ✓✓
 THREATHS
o The threat to an organisation like this is loss of donors due to an unstable economy thus affecting the vulnerable people
its supposed to help. Volunteers might be less and that would affect not just a financial resource but also a human
resource in terms of their daily operations. ✓✓

2. Construct a forecast analysis (using the 3 fundamental approaches) for Siyasiza guided by the PESTEL analysis.

 SINGLE-POINT FORECASTING The organisation ‘s confidence in their future and their ability to continue with their daily
operations while reaching the vulnerable people is generally stable. The trends are not positive however, there are provisions
being made to alleviate fears by government and business. ✓✓✓
 RANGE FORECASTING There is a range of possible outcomes in the foreseeable future with Siyasiza being able to meet and
exceed their expectation and deliverables both to their stakeholders and their donors. This type of forecasting is more or less
plating it safe so that whichever way the environment and the market fare out, then the organisation can still be able to survive
and be sustainable. ✓✓✓
 ALTERNATIVE FUTURES FORECASTING This type of forecasting involves even less certainty, exploring a scenario wherein the
worst situation in the economy comes to pass. Alternative futures are discontinuous, they happen, or they do not. The future of
the organisation and/or its beneficiaries is at stake and hanging by a thread. The organisation will either survive or it won’t; the
alternative outcomes have to make provisions for the people whose lives they save daily. ✓✓✓.
  Extra marks will be allocated for aligning these with Siyasiza ✓✓✓

3. Critically analyse the implications of the outcome of the PESTEL analysis for the organisation’s strategy.

 The organisation’s strategy has to be aligned with the factors identified in the PESTEL analysis. This will ensure that the
direction the organisation takes is guided by strategic objectives that will equip them for the future.✓✓
 The shift in strategy will require re engagement and for the stakeholders to recommit to the new goals and objectives that the
organisation would seek to follow. ✓✓
 There has to be an element of flexibility from all stakeholders, particularly the donors as there might be a change in the
frequency of needs from the organisation. The onus will be on the Board of Trustees to ensure buy in from the relevant
stakeholders such that when the need arise, they are able to meet their goals and objective. ✓✓

4. Categorise the range of resources and capabilities at Siyasiza’s disposal.

RESOURCES CAPABILITIES Gain of experience, skill and knowledge Build

Board of Trustees Employees relationships Motivate and help others Innovate and fund raise
Volunteers
Donors
Beneficiaries (who get upskilled) ✓✓✓✓

5. Consider to what extent and why these resources and capabilities might be the basis of their survival and sustainability going
forward.

 They are a people-oriented organisation, and their continuity depends on their ability to attract more volunteers✓✓
 More fundraising will ensure that they are able to provide the services they need to provide to vulnerable people who seek
their assistance ✓✓
 Motivated people tend to want to do more and help more, the quality of the work will ensure good rapport. ✓✓
 The good rapport will go a long way in impressing donors to commit more funds towards their initiatives and also attract new
donors. ✓✓

OCTOBER 2021 – Exam

1.1 Describe the key management roles for SweepSouth and indicate the responsibilities under each role. (15) CH 14

CEO:
• The CEO would probably have been involved in the new concept for SweepSouth as he would have been responsible for ensuring
efficiencies in the company. This would involve initiating a strategy for the organisation including the hiring or redeploying of the
key executives who will be appointed in the executive.
• Review the major challenges and make key tough decisions with the executive team to ensure that the strategic objectives are
met. This he would have had to be aware of things like changes to labour legislation, e.g. minimum wages determinations
• Communicate said strategy to the employees including the executives and other external stakeholders. Customers and the staff
would be major stakeholder in this scenario and would need to be advised of the new strategy of flexible working hours. This
could impact what SweepSouth charges its customers because of the decent pay approach.
• Provide leadership and direction to the organisation while ensuring that the strategic goals are met and the overall success is
achieved.
• Seek out new opportunities for the organisation and ensure that the organisation is well perceived in the industry.
Chief Technology Officer - CIO
• SweepSouth is a mobile and web app-based ecommerce company, this office is to ensure that the platform that is utilised by the
clients and the SweepStars is always up and functioning.
• The company app should always be compatible with the hosts’ devices that are on the market. If/when android and Apple users,
or any other device that hosts the app make changes, this office should make sure that they keep up with the trends.
• Third-party connections like electronic payment processing should always work in real time to ensure that trust is built and
maintained.
HR
• The HR manager would also need to be aware of change in labour legislation and establish a strategy to ensure that the new
approaches are efficiently handled; e.g. what the workers are called, that the new mission statement is embedded in the
workers’ approaches to the clients, namely “creating happy homes”. It seems that the company has a consultative approach
because of the “conversations with the domestic workers”.
OPERATIONS COO
• The Ops manager would need to schedules the times and services of the SweepStars to ensure customer satisfaction. This would
involve
o • planning and organising to ensure effective day to day administrative functions are executed.
o • leading and implementing the operational part of the overall company strategy.
o • communicating with the rest of the executives on how their respective functions impact daily operations and ensure
that there’s synergy from all parties to ensure efficiency. 

1.2 Discuss the possibility of structure and systems feeding into strategy for SweepSouth. (10)
• Structure is a crucial part of organising for success.  However, structure is effective when it is supported by formal and
informal organisational systems.
• Systems are there to make sure that there is control over the implementation and execution of a strategy.
• In company like SweepSouth, direct supervision might be key because the SweepStars can receive feedback from the clients
who book them, and this could ensure that the monitoring system in place is used efficiently.  This feedback can go a long way
in ensuring that the SweepStars are appraised accordingly. 
• These systems can be subdivided into input control systems that are usually focused on inputs and would monitor the
allocation of resources that are key in implementing the strategy and ensuring operational efficiency (e.g., financial resources
and human commitment).
• The output control systems are mostly there to ensure that the desired results are achieved though efficient monitoring and
evaluation. 
• SweepSouth has to distinguish between the direct and indirect controls in the said systems. 
This will ensure that the responsibilities are mapped accurately on the structure of the company. The role alignment can ensure
effective accountability from all the relevant departments. 
2.1 Discuss in depth the two key measures that SweepSouth could use to measure organisational performance. (12) CH 12
The two critical performance measures that are used to measure organisational performance are economic performance  and
effectiveness. 

Economic performance
• directly refers to measuring success in terms of economic outcomes; for example, performance in product markets like
growth in sales and/or market share.  or accounting measures in profitability such as profit margin or return of capital
employed. 
• These measures may seem objective; however, they may be conflicting, and they need to be interpreted carefully. For
example, cutting prices might reduce profit margins but there might be an increase in sales growth as a result.

• Measuring performance economically is critical and indicates growth and footprint visibility; however, some organisations
also look at a wholesome comprehensive approach in measuring performance; particularly after a big change in the
organisation. SweepSouth has grown considerably since it started in 2014. However it is something of a concern that the
company has been in operation for 7 years and is not yet profitable. 

Effectiveness
• looks at a broader set of performance criteria rather than just economic performance. Operational efficiency and/or
measures relevant to crucial stakeholders like employees and communities impacted by the organisation’s existence might
be considered.
• This is reflected in the flexible approach to working arrangements that suit both the workers themselves as well as
customers. 
• The most important broad measure of effectiveness that usually considers a customer’s perspective for instance is the
balanced score card. 
• A balanced score card usually considers four perspectives on performance and these perspectives would have weightings
that add up to a 100 to ensure that they are all fairly included in the performance evaluation process. 
• Measures like customer satisfaction, product quality, productivity can be included in a balanced score card.

The triple bottom line is another form of a broad performance measure that is not just about economic performance. Triple bottom line
is three dimensional, in that it looks at corporate social responsibility and the environment as well as the economic measures. In this
regard, SweepSouth appears to take its CSR responsibilities seriously e.g. creating employment. 

2.2 According to the excerpt above, evaluate how SweepSouth is doing on the key measures you identified in Question 2.1. (8)
Economic Performance
• SweepSouth is a fairly new organisation and they are not publicly listed; however, the excerpts states that downloads to date are at
150 000. 
• there 40 000 active users who are likely to book a SweepStar at least once every week depending on the respective family’s need. 
 • The indication is that there should be more SweepStars who are willing to join the platform since they stand to make more income
on the platform than they would if they had regular domestic employment. 
• The company is not yet profitable as all the sales go back to the company to drive growth. 

Effectiveness
• The effectiveness of the company can be dependent on the efficiency of the mobile app or web availability. 
• App store users can rate the app and the users who book SweepStars can give feedback on the SweepStar they book on the
SweepSouth app. 
• This can enable customer satisfaction, product quality and productivity to be included in the overall balanced score card measure. 
• SweepSouth is still in its growth phase as a company and their impact economically would be positive; SweepStars have the
opportunity to earn extra on their platform and thus contribute meaningfully to their families.

2.3 Briefly explain the three main criteria to consider when measuring performance in relation to SweepSouth. (5)
 There are three main comparisons to consider:
 Organisational targets.
 Trends over time
 Comparator organisations
1. Organisational targets – It is common for the company’s management to set up their own targets in their business plan
(forecasts) so that when they approach investors, they are able to give an indication of the envisaged outputs from the
company.  Specific outcomes like sales growth and profitability are tabled in the company projections. Investors are
particularly sensitive to performance against financial criteria because failure to meet these can cast a shadow of doubt on the
executives and thus affect the way the company is perceived going forward. 

2. Trends over time – Investors and other stakeholders are clearly concerned about the trajectory of the company that they invest
in; and this is not necessarily in financial terms but market share or digital footprint in the case of an ecommerce company like
SweepSouth.  The number of downloads and users on the platform indicates that the utilisation is growing month on
month/year on year. In comparison the company tends to do better going forward and there is no decline. 

Comparator organisations – The final comparison is how a company is doing in relation to other companies with a similar offering;
currently SweepSouth is doing relatively well in a previously unexplored way to connect cleaners and clients. It is therefore crucial that
they set the standard so that when new competitors join the market, they have to meet the bar that they set 
3. When making strategic decisions, decision makers must consider five decision-making biases. Discuss these five common biases
under each of the following headings and explain the approaches Funnygalore MNC could use to minimise them. 25
• Type of bias
• Explanation
• Problem
• Example from the scenario
• Solution
Type of bias Explanation Problem Example Solution
Confirmation This is the type of There might be data that The CEO sought the input A fair way to counter this
bias  bias where in the could disconfirm that of his top management confirmation bias is to insist that
official executing favoured course of action team but was eventually alternative options are considered at
or recommending and the danger here is swayed by the division all times during the decision-making
a decision will that the data that head.  Most of the top process.  This then shifts the
seek out data to disconfirms the favoured management team said discussion from whether or not to
support a course of action could be nothing.  take the favoured action, to rather
favoured course completely neglected by how the said action fares when
of action.  the respective official.  compared to alternative. 
Anchoring This type of bias is Managers who rely on The CEO did not have time An effective way to counter this bias
bias  the common error past sales trends which and was being pressured is to introduce different analytical
of being were obviously achieved to make a decision.  The methods into the decision-making
tied/focused on by the sales strategies of scenario indicates that he process. This can give rise to
one piece of the time are at a risk would have requested unacknowledged assumptions and
information in because the trends might additional analysis and insights. 
making a change,.  Making an opinion but he did not. 
decision. initial estimate of a cost or
Anchors are often revenue and allowing that
things that might value to become
have been valid in entrenched in decision-
 the past, however making even though it is
they may not an estimate is a dangerous
necessarily hold way to approach decision-
the same level of making. 
relevance in the
future. 
Saliency bias This type of bias is An example is when There is no evidence of It is key that other analogies are
 when a particular managers perceive a this in the scenario considered, and possible differences
analogy becomes particular project just like need to be explored from the past
unduly influential. a successful project they successful case and the one that is
 might have managed or currently worked on. 
worked on in the past. 
The line of thought here
will minimise the
differences on the analogy
with the past experience
and this success is
automatically expected. 
Affect bias  This type of bias is Having just the ‘leader’ The CEO sided with his It is often advisable to assess the
when managers present the proposal on vocal protégé with little level of enthusiasm from the
become their own maximises the input from the rest of the presenter of the decision, especially
emotionally danger of hearing a executives except for the if it is a team environment.  The
attached to a singular view of the CFO.  recipient of the decision should be
particular option. argument.  able to deduce the level of
 engagement and enthusiasm from all
the team members who are
presenting the decision and thus
balance the work with the body
language and engage in clarity
seeking questions to get the overall
approach from all the members. 
Risk bias  This type of bias is In most cases, managers The CEO put the case to It is key here that instead of relying
when managers can be over-zealous in the board on the basis of on an ‘inside view’; decision makers
hold a distorted assessing their capability the strategic change in should also assess the record of
view of risk.  The to deliver the required direction and the potential other companies’ undertaking of
reason for this is output on projects.  to “transform its whole projects that are similar (outside
that it is much industry”.  It seems that view). 
easier for the CFO’s warning was not
managers to heeded and was thus
acknowledge the unlikely to have been
failure of an presented to the board.
individual holding
a similar role in a
similar company
than doing a self-
introspection and
looking at the
potential risk of
failure. 
4.1 Strategies can be evaluated according to the three SAFe criteria of suitability in view of organisational opportunities and threats;
acceptability to key stakeholders; and feasibility in terms of capacity for implementation. Apply the SAFe principles and techniques that
supported Checkers Sixty60’s decision to enter the e-commerce industry. 15 ch 12

SAFe criteria
a) Suitability
• Does the proposal to focus on ecommerce address the key opportunities and threats faced by the company/industry?
• A strategic shift to establish a new platform for growth and sustainability is at the core of any retail business (that previously
relied on walk-ins) that wanted to survive the lockdown period. 
 • At the heart of any business is a non-negotiable commitment to sustainable earnings growth and value creation. 
• There is an opportunity for Checkers Sixty60 to accomplish this, even though there might be scepticism from current staff and
clients due to the poor unfamiliarity and the fact that they might not be face-to-face with the client.
• The leadership of Checkers Sixty60 has to work extremely hard and show commitment to all stakeholders that the product
offering will not be compromised and that they will be available to clients remotely to ensure a holistic customer experience. 
b) Acceptability
• Does the proposed change to meet the expectations of stakeholders? 
• Checkers Sixty60’s employees would like to keep being employed instead of the company that they have devoted their lives to
going under and not operating due to lockdown
• Any form of risk that the new ecommerce would propose should be deemed acceptable to the shareholders because it seeks to
rebuild the organisation and to keep it in operation, 
• The likely return from a new way of delivering product/service would be a profitable organisation that promises sustainable
earnings growth and value creation. This is acceptable to the stakeholders. 
• Checkers Sixty60’s stakeholders are likely to react positively and be fully supportive of the changes or initiatives that the
leadership team would employ in ensuring that the new strategy works effectively to achieve the envisaged results. 
c) Feasibility
• Would a proposed transition to ecommerce be practical? 
• A proposed transition to ecommerce would work in practice because Checkers Sixty60 has to make the drastic change to
survive.  This would require that the said strategy can be financed and is fully supported by the stakeholders.  Checkers needs
to establish a cohesive, high-level management team that is competent in technology and can handle the challenges that come
with working in an ecommerce service offering.  The members who cannot subscribe to the agreed strategy promoted by the
leadership face a risk of losing their jobs and being under-developed in a highly volatile world where nothing is certain,
especially during a pandemic.

4.2 The gap analysis is defined as a method of assessing the differences between the actual performance and expected performance in
an organisation or a business. Make use of the gap analysis steps to show how Woolworths could do this to close the gap between itself
and Checkers Sixty60. (10) ch 12

• Gap analysis compares actual or projected performance with desired performance.

• It is useful for identifying performance shortfalls (‘gaps’) and, when involving projections, can help in anticipating future
problems. The size of the gap provides a guide to the extent to which strategy needs to be changed.

• Identify the area to be analysed and identify the goals to be accomplished :

 The most crucial area that had to be analysed by Woolworths that relies largely on walk in business was that the lockdown
imposed certain rules on capacity and as such their sales would be affected.  Woolworths needed to earn revenue for it to be
profitable and sustainable, to keep employees and to keep operations running. 
 Establish the ideal future state.
 Woolworths needs to survive and continue operations through online sales. .
 It needs to maintain its brand while providing a more convenient online shopping experience. 

• Analyse the current state.

 The current state is a state where it has come up against strong competition from Checkers Sixt60 in terms of online shopping.
 Compare the current state with the ideal state.
 Woolworths is not where it wants to be and there might be financial losses suffered as a result.  The leadership needs to be
proactive in navigating the unknown territory that they might find themselves in and be able to find ways to keep the customers
happy even though they are shopping remotely. 
 This would mean that Woolworths would need to do its own follow ups on their clients, even if they make use of a third-party
company for delivery. 
 The product quality that reaches the client is reflective of their brand and they would want the client to experience their product
the same way they would if they were in store.

• Describe the gap and quantify the difference.

 The gap is mainly convenient sales delivery.
 Woolworths would need to explore a delivery method that they did not deem necessary before. 
This might mean a rapid up skilling of employees so that they are able to work on digital platforms that they might not have been
previously exposed to. 
5.1 Identify the four distinct types of control systems and discuss each in relation to Massmart, using the scenario above as a reference.
(20) CH 14
 Direct input
 Planning Systems
 Planning systems plan and control the allocation of resources and monitor their utilisation.
 The focus is on the direct control of inputs.
 These inputs might be financial like budgeting, or human like employee development and technological training. 
 Massmart had excellent historic performance which might be indicative of their sales and customer satisfaction prior to
lockdown, so it would be crucial to ensure that the company employs strategies to catch up and be competent and efficient
in ecommerce so that they are not negatively impacted by lockdown. 
 The ‘playbook’ mentioned by John appears to have been part of the planning, where various strategies such as those used
by Walmart were mapped out. Massmart also leveraged off the experience of Walmart.
 Direct Output
 Performance targeting
 Performance targets is more focused on the outputs like product quality, revenues and profits. 
 An organisation’s performance can be measured internally (balanced score card) and externally (sales/share price). 
 Massmart could monitor targets internally through contracting the departments to achieve certain output levels, which will
in turn influence the overall performance of the organisation. This can be achieved through strategy mapping. 
 The targets that Massmart sets for itself would have to be cascaded down the respective departments; interpreted and
measured in the specific departments to ensure efficiency as well aligned them to the overall expected outputs in the
organisation. 
 Massmart appears to have been closely monitoring its performance outputs as is apparent from John’s mention of the 60%
ecommerce growth and the extent of the online marketing orders that Makro that were delivered.
 Indirect Input
 Cultural systems
 Employees in an organisation usually drive the culture in the organisation and that is expressed through their basic
assumptions, beliefs and norms. 
 This can be displayed through a certain way of doing things that someone who is not accustomed to such might take for
granted. 
 Even though some organisational cultures are not officially defined in official documents, they are key in helping the
managers to have the influence they need to drive the required behaviour. 
 Massmart’s leadership would be accustomed to the way of doing things that the employees are familiar with, but they
would now have the added pressure of a client that is communicating remotely instead of face-to-face. 
 This gives them an opportunity to ensure that trust is not broken, and the quality of the product offering is not
compromised. 
 Indirect output
 Internal markets
 Market systems can be brought inside organisations to control internal activities.  The specialised functional teams
structure appears to address this matter of internal markets.
 Market systems involve some formalised system wherein resources or inputs from other departments are contracted to
other parts of the organisation. 
 This type of control focuses on outputs and in an organisation like Massmart, this would have to be aligned with
performance targets. 
 Holding each other accountable and working as a team is key in driving this, in an organisation that is in the process of
rolling out a turnaround strategy the point of departure would have to be clearly defined by the collaborating
departments.

5.2 Critically discuss the two key implications for Massmart’s managers when analysing strategy. (5) CH 16

When analysing strategy managers have to consider these:

 Design the analysis according to the real purpose:
 The range and quality of people involved, the time and budget allowed, as well as the communication of analysis results
should all depend on an underlying purpose.  In the case of Massmart trying to remain sustainable in a pandemic
environment, the purpose is to continue earning revenue and minimise losses  and to maximise the value of its assets ‘by
enhancing [its] digital sales platforms and last-mile delivery capabilities’.
  Invest appropriately in technical quality:
Improving quality if technical analysis will make a valuable addition to businesses in the current climate and thus positively affect future
strategic decisions.  Insisting on technical perfection will ensure longevity and sustainability of businesses and managers can be able to
also up skill employees to be able to face crisis mode as far as technology is concerned. Massmart’s strategy was to “Develop
transactional and value-adding mobile-first digital solutions that cater to different customer occasions, journeys and segments”.
6.1 Woolworths and Pick ‘n Pay would have needed to communicate their intentions to expand their e-commerce offerings. Discuss the
four factors to consider when effectively communicating a strategy change. (17) ch 16

 Focus:  Communications should focus on the key issues and componentsof the strategy.  Top management has to show that
they are clear on what these are and that they are aligned with the direction the company is taking. If they cannot be clear on
these crucial issues then it will be difficult for them to expect the rest of employees to be attuned.  It is important to use
simple everyday language that the company employees are likely to be comfortable with instead of boardroom jargon that
might need interpreting itself.  An example from the scenario is the “Woolies Dash”.
 Media:  An example from the scenario is the Bottles app. Choosing appropriate media whether internal or external (where
necessary) to convey the strategy is key, especially if the company employs a certain demographic.  Most corporates have
regular bulletins and newsletters; however, it is crucial to differentiate communique that delivering key strategic messages.
Face-to-face interactions are also key, and they give depth to the message both from the conveyer and the recipient of the
messages.  The conveyer is able to assess the reception and the level of engagement from the audience and thus deduce the
level of understanding. 
 Employee engagement: It is often crucial and helpful to engage employees widely when communicating strategy, and thus
personalise the key points so that they are applicable to their respective roles.  This tends to motivate the employees as they
are able to ‘position’ themselves in the company and also understand that their respective input is valued and contributes to
the bottom line. Some companies use more imaginative means to ‘engage’ employees and get them to ‘pledge’ commitment
to the company strategy by stipulating exactly the behaviours that they will changed to be more aligned to the communicated
strategy.  There is no evidence of this in the scenario.
 Impact:  Strategy communication should be impactful and memorable.  A tagline or visual ‘slogan’ e.g. “Woolies Dash” can be
used as this tends to be serve as a refresher to employees whenever they might be deferring on deliverables.  A strong
relatable ‘story-line’ can also help by encapsulating a journey and imagined new futures for the company, its employees and
clients.  There is no evidence of employee communication in the scenario, but one can assume, because of the growth trends
presented, that Woolworths and Pick ‘n Pay would have advertised their offerings.

6.2 With reference to Woolworths and Pick ‘n Pay, evaluate the two primary consequences of poor or non-communication of critical
strategic changes in how a product or service is provided. (8)
 Poor or absent communications are likely to lead to two consequences:
 Strategic intent will be reinterpreted. It is inevitable that people in the organisation will interpret intended strategy in terms of
their local context and operational responsibilities. The more such reinterpretation occurs, the more unlikely it is the intended
strategy will be implemented.
 This would result in everyone doing their own thing and teamwork and morale might be affected due to results not being
achieved.  In addition, there may be protests and strike action
 Established routines will continue. Old habits die hard, so top management may underestimate the need to make very clear
what behaviours are expected to deliver a strategy. Of course, effective communication is only one way in which change can be
managed; the wider lessons of managing strategic change in this regard need to be taken into account
However, the change to ecommerce is a radical change where the staff are bound to feel uncertain about their skills or even their ability
to keep their jobs especially if they are technologically unprepared.  Effective communication is the only way to manage change. 
MAY 2021 - Exam
1.1 With the help of a diagram, map out a governance structure that identifies the key players through to the beneficiaries of the Paulo
Family Restaurant’s good (or poor) performance. (10) CH5

The governance chain shows the roles and relationships of different groups involved in the governance of an organisation.
1.2 With regard to the case study and the governance structure, evaluate the current strategies in place to ensure that the organisation
remains profitable. Allocate strategic tasks and responsibilities to the key players. (15) ch5

Managers () –
 The managers would likely have a good idea of how the restaurants are operating () on a daily basis as they have face to face
interaction with the patrons () who come to dine at the restaurants.
 They are in a better position to assess () and recommend the changes () that Paulo’s Family Restaurant needs to adopt
strategically ().
 Given the fact that they stand to make good earnings should the restaurant do well in terms of sales (), they have a personal
interest in how the restaurant is going to do profit-wise () and the longer they stay with the restaurant chain the closer they
come to benefitting in the loyalty share scheme that is part of the restaurant’s remuneration scheme. ()

CEO () –
 The CEO is also an owner of the family business and he is interested in keeping his restaurant afloat amid the changes in the
current restaurant and hospitality landscape (). He would like to keep their authenticity and the way to do that is to retain
good talent () and evolve without compromising their identity ().. The family restaurant has been in operation for 50 years
and it would be ideal to ta have a succession plan within the family members to ensure continuity. ()
 The CEO is in constant liaison with the shareholders and can better communicate the strategies to them ()

2.1 To what extent do you expect restaurant managers to be: CH16

2.1.1 Knowledgeable about the expectations of beneficiaries? (3)
 The restaurant managers should be quite knowledgeable () about the expectations of the beneficiaries because some of them
are beneficiaries through the company’s share scheme wherein they get allocated shares for years of service.()
 The board/executives would have to communicate the expectations of the beneficiaries to managers periodically so that all the
stakeholders are engaged and are aligned with the direction of the company.

2.1.2 Actively pursuing their own interests? (3)

 The restaurant managers would be expected to be actively pursuing the interests of beneficiaries given that they themselves
are beneficiaries and it would therefore be in their personal interest to succeed as a manager, and to encourage healthy
 competition () amongst other managers.
 Managers would also be incentivised to earn more on the commission-based portion of their respective salaries. () (3)

2.1.3 Keeping the beneficiaries informed? (2) (8)

 It would be expected that information would flow freely since this is a family-owned business. ()
 There would therefore likely be constant communication between the owners, the board and the managers. () (2)

2.2 Outline the five types of external stakeholders and describe how they can each potentially influence the Paulo Family Restaurant.
(17) CH5
• External stakeholders can be usefully divided into 5 (potentially overlapping) types, categorised according to the nature of their
relationship with the organisation and how they might affect the Success or failure of a strategy:
1. Economic stakeholders, including suppliers, customers, distributors, banks and owners (shareholders)
2. Social/political stakeholders, such as policy-makers, local councils, regulators and government agencies that may influence the
strategy directly or via the context in which strategy is developed.
3. Technological stakeholders, such as key adopters, standards agencies and ecosystem members supplying complementary
products or services (e.g. apps for particular mobile phones).
4. Community stakeholders, who are affected by what an organisation does: for example, those who live close to a factory or,
indeed, groups in the wider society. These stakeholders typically have no formal relationship with the organisation but may, of
course, take action (e.g. through lobbying or activism) to influence the organisation.
5. Internal stakeholders, who may be specialised departments, local offices and factories or employees at different levels in the
hierarchy.

3.1 Given the scenario, discuss in detail the leadership style that would be most appropriate to bring about change. (5) ch15

transformational leader
 The type of leadership style that would be most appropriate here would be the transformational leader ()
 as this style is very crucial in getting buy in from existing staff members.
 This would create an organisational identity characterised by collective values and beliefs() to support the company’s family-
oriented vision and energising people to achieve it. ()
 Evidence suggests that this approach to leadership has beneficial impact on people’s motivation and job performance.()
Given that Imagine Tours is a people oriented company, this will go a long in ensuring that they position themselves favourably amongst
their competitors in the industry.()

3.2 Discuss the four change approaches Imagine Tours would need to introduce to continue operating under their current business
operations model. (20) ch15
 Adaptation ()–
o Change is gradual and incremental in nature; it builds on or amends what has been done already in the organisation.()
o It is vital to adapt while looking at what the current business model and organisational structure subscribes to.
o This might include changes to package offerings, methods, and processes currently in use; launch of new campaigns or
related diversification.() (3)
o Adaptation is the most common type of change in most organisations and it is key in ensuring that there’s sustainability in
the continued improvements that come with new ways. ()
o This type of change will be crucial at Imagine Tours since they would need to look at a different way of doing things,
included but not limited to how they interact with clients regularly. () (2)
 Reconstruction (TURNAROUND) () –
o this is a rapid change that involves upheaval in an organisation but still does not fundamentally change the culture or the
business model. ()
o In the scenario given this might apply to changes in organisational structure or there might be a cost-cutting programme
introduced since technology is bound to render some functions redundant. () (3)
o The classic reconstruction is a turnaround strategy where there might be a decline in performance. ()
o The Imagine Tours scenario doesn’t highlight a decline in performance, however there’s a need for an upward trajectory
so as to compete on a global scale and reach a bigger audience. () (2)
 Revolution () –
o This change requires rapid and major strategic and cultural changes; ()
o and old strategy is so bounded by existing culture that even when environmental and competitive pressures might require
fundamental change, the organisation has failed to respond. ()
o Imagine Tours fortunately embraces innovative culture and their owner welcomes innovation that drives overall
improvement. ()The employees recognise the need to constantly evolve in the industry to stay ahead of their peers, as is
 clear from their willingness to make suggestions. ()
 Evolution ()–
o this is a gradual change in strategy that results in positive transformation. ()
o This is arguably the most challenging type of strategic change since it involves building on and exploiting existing strategic
capabilities while also developing new strategic capabilities.()
o A company like Imagine tours will require a certain level of amenability and compromise from existing employees to
efficiently execute this type of change, ()
o and the type of leadership style employed will go a long way in ensuring that the company evolves with no casualties
towards a new envisaged era. ()

4.1 Discuss in detail the change levers that the leadership of Imagine Tours would need to focus on, to ensure efficiency for the future.
(18) ch15 Kotter’s Eight Steps for Change

1. Establish a sense of urgency () – a sense of urgency can be established by tabling a comparison on how the change could
positively impact the company, ()show the gap that exists because of the lack of the change and how capable the company is
to get to the desired level. ()
2. Form a powerful guiding coalition () – the leadership would need to setup a task team that would spear head the small
actions that need daily execution and measure these periodically. ()The coalition would need to be empowered to guide the
company towards the envisaged outcome. ()
3. Create a vision () – the vision has to be straight forward and easily translatable by all the members of the company, even the
most minute detail that is impacted needs to be incorporated into the clear vision. ()
4. Communicate the vision () – the communication of the vision has to be owned by the owner and the task team that is set up
and commitment should be expected from all parties who are expected to execute such vision. ()
5. Empower each other to act on the vision () – If there is a need to train certain individuals such that they are able to hold
themselves and each other accountable for said vision then the company should be able to afford such training. ()
6. Create short-term wins () – The milestones in execution of the vision need to be celebrated to keep the morale high, and the
people motivated to continue pursuing the outcomes of the vision. ()
7. Consolidate gains and build more change () – The gains that are consolidate should give rise to new and better ways of
achieving the outcomes that are yet to be achieved, thus propelling more change and an amenable culture towards change. ()
8. Institutionalise the new approaches () – New approaches need to be made official and adopted into the current status quo
and not just be tabled as part of a vision that might be a once off project. ()

4.2 Evaluate the PROBLEMS potential challenges as a process of a formal change programme. (7) CH15

There are two kinds of potential problem with this formal programmatic approach.
• First, problems can arise from the process itself.
• Second, managers may mistake the relative importance of formal and informal change.

1. The emphasis on planning /Death by planning () – this might be a problem if there is a lot of planning with little execution and
rollout of said plan. ()
2. Loss of focus / organisational exhaustion () – The reason this might pose a serious problem is if the current staff members
lose sight of what is important and get carried away by minute details instead of seeing the bigger picture. ()
3. Reinterpretation/ Behavioural Compliance () – change in a business doesn’t need to introduce a totally new business, but
rather improvements on the current model to make it work more efficiently and effectively to meet and exceed specified
 expectations. ()
4. Disconnectedness / Misreading scruitiny () – this might pose a problem if there’s lack of buy in from existing official, as they
might feel a disconnect to a new strategic direction. ()

5.1 Produce a PESTEL analysis for Progressive School and identify key opportunities and threats for a proposed merger. (20) ch2
MAY 2019 5.1 EXAM / OCT 2020 1.1 EXAM / MAY 2021 ASS

 POLITICS
o Both schools are independent however the size of Tenerra school doesn’t warrant a portion of government
subsidy and as an independent school they cannot make political contributions or support candidates publicly as
this might alienate some parents. ()
o Progressive schools is in bigger in terms of student numbers and are in receipt of their annual subsidy thus
positioning them favourably. ()
o The Tenerra school board might be aware that the more experienced Progressive board might wield power when
they negotiate the terms of the merger, and may insist on some of Tenerra’ board members resigning. ()
 ECONOMIC
o The country’s economy is the main reason why this merger is taking place and the balance of forces in the
negotiation will impact how some of the terms of the merger are agreed upon. ()
o The onus is on Tenerra’s board to have positive discussion with their current stakeholders. They will continue to
have a school in the communities they serve and there will be a need for human resources to provide the required
services in the operation of a school.()
o Progressive has already impressed with their academic results (likely due in large part to the skills of their
employees). As such, the likelihood of teacher job losses is minimal, however there might be demotions for some
administrative roles which could impact salaries.()
 SOCIAL
o The communities will continue to have educational institutions that offer the same quality of education that the
community has grown accustomed to. ()
o Their children are more than likely going to keep the same teachers unless they move. () Socially both schools stand to
benefit from the merger as they both get positive exposure from the merger.()
 TECHNOLOGICAL
o The schools are both technologically advanced, however the bigger school has an advantage of reaching a bigger audience
through their social media platforms an advantage of a variety in extramural activities and a bigger student body, thus
creating an opportunity for more technological engagement. ()
o The students of both schools are likely technologically savvy, so they will be able to adapt to any new proposals that might
arise from the terms of the merger. ()
o There might be a lot ofadjustment from the parents, but the schools should allow for a transition period for all parties so
as to enable a smooth transition.
 ECOLOGICAL
o Climate change is positively impacted by this collaboration because there will be no need for new building construction
and the environment would not get negatively impacted. ()
o Since the value system of both schools is similar, the good practises that they adopt in terms of managing their carbon
footprint post-merger would allow them to reach a bigger audience and thus have a bigger impact. ()
 LEGAL
o There is no legislation that prohibits such a merger but Tenerra school will need to take into consideration the parents
who are behind on fees when they negotiate terms of the merger, () and the Progressive school has to consider the
existing legal contracts that Tenerra has with their respective stakeholders.
o Such issues can be handled during the transition period. ()

 OPPORTUNITIES
o The schools both have great opportunities, Tenerra will be able to pay off creditors and continue providing a learning
service to the communities that they value. () Tenerra’s students can have broader access to extra mural activities that
may not have been previously offered at their school.
o The Progressive school doesn’t have to worry about construction and academic rapport because the school they are
merging with has a similar value system. () They can now reach a bigger audience and instil their good values to more
prospective students. ()
 THREATS
o The main threat would be if the parents of Tenerra don’t buy into the merger and thus threaten to remove their children
from the school. ()
 o However, this can be remedied by choosing an appropriate, central location to ensure that parents would not be affected
in terms of logistics.()

5.2 Point out the implications to the boards of the two organisations of a merged school strategy. (5) ch2

The merged school strategy has to be revised () to include the demographic reach that they didn’t have previously. ()
The current strategic levers have to be examined so that they cover financial (), scale () and access aspects. ()

6.1 Discuss the three strategic motives for the proposed merger between Tenerra School and Progressive School. (15) CH11

1. Extension –
• This merger will extend the reach of the type of educational offering by the school in terms of geography. 
• They will be able to extend themselves financially and meet other strategic objectives since they stand to claim a larger
subsidy from government based on the number of students enrolled. 
• The school’s market share will be positively impacted by the merger and they can favourably position themselves as key
players in the industry. 
2. Consolidation –
• This can be seen as a consolidation of key competitors in terms of academic excellence and good rapport amongst peers in
the industry. 
• This consolidation can increase efficiency through reducing surplus capacity or sharing resources. 
• The greater scale of consolidation may increase production efficiency or bargaining power with suppliers (service providers)
in terms of prices. 
3. Capabilities –
• The school will be more capable as an organisation and there will be more room to position themselves as key player in the
industry. 
• They will have the respect of their peers should they succeed in efficiently managing an institution of their size. 
• As a school, more parents will want to send their children to their doors because they will be considered prestigious. 

6.2 Draft a proposed strategy statement for the newly merged school. (10) MAY 2019 EXAM Q6.1 / MAY 2021 ASS

Strategy statement:

Vision:
 To be the school of choice with great academic results though innovative learning methods..
Goals:
 Ensuring that our people/ teacher continue to deliver exceptional service to our clients through innovative technology
solutions.✓
 Providing our Students/customers with the best customer experience while improving our lead times.✓
 Continue being the employer of choice.✓ / retain best talent
Strategic goals:
 Meet and exceed our Students/customers expectations with regards to costing and providing quality services.✓
 Using our own network to get new Students/customers within South Africa and Sub-Saharan Africa.✓
 Constantly seeking new ways of improving our service to customers, while keeping our prices competitive.✓
 Expanding our fleet to reach out to more destinations within South Africa and Sub-Saharan Africa.✓
Mission:
To develop and maintain strong lasting relationships with our clients through:
 World class service delivery.✓
 Maintaining and continuously improving our service and pricing.✓
 Getting it right the first time.✓

OCTOBER – 2020 Assignment

1.1 Categorise, according to Mendelow’s matrix, any three of the stakeholder groups of WRL with respect to the decision about the
disposal of the polluted water. You should explain what the power and interests of the three stakeholder groups you have categorised
are likely to be and advise the Board of WRL of the actions it should take to resolve the problem of its stakeholders’ competing
objectives. Note: You are not required to draw the Mendelow matrix. CH5
WRL’s stakeholders may be categorised as follows:
Internal:
 Board of WRL
 Employees working in Eastern mine
Connected
 Shareholders in general
 Minority of shareholders interested in decision
External
 Eastern state government
 Stravia national government

Using Mendelow’s stakeholder mapping approach:

Level of interest low: Level of power low

 Shareholders in general
o This is just one decision made by a multi-national company.
o Many shareholders would probably not even be aware of the decision and so their interest will be low.
o Shareholders acting together have great power but they rarely act together and so have been categorised as having
low power for this decision.

Level of interest low: Level of power high

 None

Level of interest high: Level of power low

 Employees working in Eastern mine
o The employees are dependent and there may not be alternative employment available for them so their interest in the
decision is high. However, a group of indigenous people living ina remote part of a small country are likely only to have
low power in respect of this decision. 
 Minority of shareholders interested in decision
o These stakeholders have a high level of interest in the decision but little power to affect it as they are small in numbers.

 Eastern state government
o The state government has a high level of interest which is why it opposed WRL in the courts. However, it has been
over-ruled by the National Supreme Court and so its power has been revealed as being low. 

Level of interest high: Level of power high

 Board of WRL
o The board has a high level of interest in this decision because it is crucial for the continuance of its mining operations in
Stravia. It is the Board’s decision whether or not to dispose of its polluted water in the lake so its power is high. 
 Stravia national government
o The national government has a high level of interest in this decision as it wishes to develop the economy and it has
received $50 million of royalty payments. These would cease if the mine closes. As it granted the license to mine and
could oppose WRL’s continued operations in its country its power is high. 
 In the answer above, stakeholders were identified using Mendelow’s classifications; the following advice is based on
Mendelow’s prescriptions:

Level of interest low: Level of power low

 Shareholders in general
o Proposal: Minimal effort

Level of interest high: Level of power low

 Employees working in Eastern mine
o Minority of shareholders interested in decision
 Eastern state government
o Proposal: keep informed

Level of interest high: Level of power high

 Board of WRL
 Stravia national government
 o Proposal: because of its high levels of power and interest WRL must ensure that any strategy it pursues is acceptable
to these ‘Key Players’. 
o Other approaches which have been suggested to resolve stakeholders’ competing objectives include:
 Prioritisation: the Board could specify that any decision must, as a minimum, satisfy one or more specific
objectives before it can be considered. In this case, this could mean that, at a minimum, the mining in Stravia
must be profitable: once this criterion is satisfied then WRL could seek to achieve profitability in a socially
responsible way. 
 Weighting and scoring: each stakeholder view is given a weight which reflects its relative importance to WRL
with higher weights meaning higher importance. Each option is scored according to how well it achieves
corporate objectives. A weighted score is calculated for each objective and the strategic option with the
highest score is pursued. 
 Satisficing: the decision would be made to keep all, or at least the most powerful, stakeholders happy.
 Sequential attention: stakeholders are kept happy by taking turns to have their objectives realised.
 Exercise of power: if management is deadlocked because of competing stakeholder objectives, this could be
resolved by one or more powerful figures using their power to force through their preferred option. 

1.2 Discuss the extent to which WRL’s mission statement is consistent with its plan to put the polluted water in the lake.

WRL’s mission statement declares that: ‘WRL exists to make the maximum possible profit for its shareholders whilst causing the least
damage to the environment. WRL will, at all times, be a good corporate citizen’. If there is a conflict, this is because there are arguments
both in favour and against disposing of the polluted water in the lake. These are summarised below:
 Arguments in favour of putting the polluted water into the lake.
• WRL’s mine in Stravia has been operating at a profit. This is consistent with the mission statement and is to the benefit of the
majority of its shareholders. 
• WRL has employed local people, generated a substantial amount of foreign exchange for the national government of Stravia
and has assisted in the development of the economy. WRL has been a good corporate citizen. 
• The cheapest way of disposing of the polluted water is to dispose of it in the lake. If WRL does not put its polluted water in the
lake, the mine would become uneconomic and would have to close to the detriment of some of its stakeholders. 
• The National Supreme Court has upheld WRL’s right to dispose of its polluted water in the lake. Therefore, WRL would be acting
lawfully according to its license in putting its polluted water in the lake. 
Arguments against putting the polluted water into the lake.

• • A minority of WRL’s shareholders are opposed to the plan, so if WRL goes ahead it will not be acting in these shareholders’
interests. 
• • If WRL disposes of its polluted water in the lake it will kill all the Aquatic life. This is not the behaviour of a good corporate
citizen. 
• The decision about the disposal of the polluted water was disputed by the Eastern state government. If WRL proceeds with its
plan, it will be against the wishes of the state government.

Conclusion
• • When the arguments for the disposal of the polluted water are taken into account WRL can be viewed as acting in accordance
with its mission statement. However, when the arguments against the plan are considered, WRL can be judged to be acting contrary to
its mission statement. There is no clear conclusion as to whether or not WRL will be acting in accordance with its mission statement if it
disposes of its polluted water in the lake. It can also be reasonably asserted that if the polluted water is not put in the lake it will also be
uncertain whether or not the mission statement is being complied with. (9)

2.1 Discuss the benefits for C of employing an e-business approach to engage with its customer segments and the importance of
understanding its customer segments. Your answer should include advice to C on the most appropriate ways in which C could segment
its customers. CH3 MARKET segments

DEF: A market segment is a group of customers who have similar needs that are different from customer needs in other parts
of the market.

 This normally involves dividing a broad target market into subsets of consumers who have common needs and
priorities.
 This is important to help with planning and implementing strategies to target these different customer segments
more effectively.

 Segmentation strategies can also be used to figure out who the target customers are and provide data for
 positioning so that the company can target its marketing and advertising information and make sure it is in the right
place for each segment.

The importance of customer segmentation for C would include:

 Assisting in developing new services appropriate to its customers’ needs (for example, the new holiday lodges is a
new service but it is vitally important that these are targeted at the correct customer segment which is interested in
holidaying at C). 
 Creating segmented advertising and marketing communications. Mass marketing can often miss its target audience.
For example, adverts for forthcoming concerts placed in daily newspapers may not be seen by the young people who
attend the concerts. Alternative targeted marketing to this segment would be advisable for example through web
based media. 
 Developing differentiated customer servicing in order to build better customer relationships and assist in developing
greater levels of customer retention. For example, offering discounted family tickets or email offers sent directly to
season ticket holders. 

There are a number of ways in which C could segment its customers:

Geographic Segmentation
 Customers can be split by country, region, language, postcode, or city. These profiles are generally created by combining
geographic and demographic data. Geographic segmentation is critical in international marketing.
Demographic Segmentation
 Age, gender, income, occupation, religion, race and other demographic factors are used to categorize customers. This is a great
strategy for a company like C, whose consumers come from a wide range of demographics. Customer targeting may require
understanding customer behaviors.
Behavioural Segmentation
 It classifies customers into categories based on their knowledge about, attitude towards or use of a service.
Lifestyle Segmentation
 Lifestyle segmentation is determined by client actions, interests, and opinions. C may use this type of segmentation to assess
how its consumers use their leisure time and how they are influenced by external factors. Lifestyle is vital to segmentation since
it identifies the target subject's own interests and lifestyle, or the image it want to convey. Understanding client lifestyle allows
C to build promotional mixes and tourism packages that meet their needs.

The key is for C to determine how to segment its customers in a way that will have the biggest impact on its business. For C, this is likely
to be a mixture of demographic and lifestyle segmentation. This is likely to include an initial segmentation of customers based on age
(young concert goers aged 18-25, single), young families (aged 25-45 married) and retired couples (55+) and also upon lifestyles and how
customers spend their leisure time (for example interests in music/ architecture/ wildlife/ children’s activities/ holidays). From these two
forms of segmentation, C will be able to understand its customers better and will be able to more appropriately target its marketing
activities to build better customer relationships. 
 E-business has been defined as ‘the transformation of key business processes through the use of internet technologies’.
Activities which are often undertaken through an e-business approach would include on-line sales and service booking facilities,
website marketing and online communications facilities such as email contact. C already has a website but it is clear that this is
largely informational and not being effectively employed presently for e-business. 

The potential benefits for C of employing an e-business approach would include:

Enhanced customer service and CRM through online bookings
 Having an online booking facility would allow customer access to C’s services 24 hours a day and therefore makes it easier for
customers to make bookings for events and entry tickets to the attraction. This should encourage customers to make bookings
as they can do this at a time and place which is convenient to them. This is particularly relevant to overseas visitors who are
considering visiting the attraction.
 In addition, a customer feedback facility through the website will enable C to respond more effectively to customer comments
and queries, such as complaints about crowded cafes, and to provide more staff at peak times. This could reduce future
customer complaints as problems are identified early.
Improved information access and communication
 Having a website which allows for 24 hour access and email contact facilities will allow customers more information access and
communication with C. This should improve customer satisfaction and encourage customers to use the website and make use
of the contact facilities available. C could use the website to provide a wide range of information to its various customer
segments but within one website location.
 New attractions, such as night time tours of the castle, could be promoted by the website enabling existing and potential
customers to find out about these new services.
Improved marketing
  E-business could be undertaken through direct email contact with customers and season ticket holders, providing information
and online offers and discounts. Emailing customers
 directly is a very effective way to ensure that customer contact is maintained and retention rates improved. Customers could be
sent email reminders about season ticket renewals and information on concerts and events such as holiday and festive
activities. This would be a highly effective way of marketing services and maintaining customer segment relationships.
Market penetration leading to higher visitor numbers
 C’s website could be used to attract customers from locations which they may not be able to reach through traditional
advertising methods. The website is more likely to attract younger customers who are more comfortable with navigating and
using website technology and making online purchases. E-business also opens up the possibility of a greater reach in terms of
overseas sales and customer access.
Reduced costs of operation
 By increasing the efficiency of payment methods, such as the use of online payment and banking facilities, C should be able to
reduce its transaction, stationery, printing and postage costs. In the longer term C may be able to reduce its advertising
expenditure in traditional areas such as radio advertising and leaflets but this will need considerable research to ensure that C
only reduces traditional marketing activities if they are considered to be ineffective in generating business.
Better information for control
 C’s own management information should improve through the monitoring of website access and sales activities. The use of the
website and customer activity should be carefully monitored by C to assess the level and type of use by different customer
segments and this can then help in formulating a tailored approach to marketing and customer relationship management.

2.2 Recommend, with reasons, two different types of Web 2.0 technologies which could be used by C to engage with its customers
more effectively.
Social media
 C could use social media technology to engage with its customers such as through the use of social media technologies
including Facebook and Twitter. C could have its own Facebook and Twitter accounts where it could advertise forthcoming
events and to provide feedback on recent events. These sites would also allow two way communication with customers and
thus should facilitate an improved customer relationship. 
 Other forms of social media could be the use of YouTube whereby C could post videos of recent events or could use the site to
post short adverts for forthcoming events. It could also be a very useful tool to advertise C’s facilities such as the function room
used for weddings and conferences. 
Smartphone and tablet Application (app)
 C could consider developing a downloadable app for smartphones and tablet computers. The app could be designed to provide
information and booking facilities and also to send out alerts to customers on forthcoming events and offers. An App would be
a very useful tool for C to access a wide range of mobile customers who wish to transact and book tickets online wherever they
are. This could be particularly useful to communicate with younger customers who are frequent users of mobile technologies. 
Website links and affiliations
 C could include within its own website direct links to other useful websites such as national and local tourism sites and links to
google maps for information on directions for and location of C and other areas of interest locally. This provides useful
additional information to C’s customers and helps to build a feeling of trust and confidence in C by its customers. C could also
provide links to informational sites relating to local culture and history, such as historical societies. 
Electronic marketing
 The use of e-newsletters sent directly to customers and email alerts is a commonly used form of Web 2.0 activity used by
organisations and one which could be effectively used by C. Customers who have previously booked through the website would
be required to present their email addresses to C which could be used to allow C direct access to these customers. This would
be very useful to C, particularly for its season ticket holders who will be interested in events and activities which they may wish
to attend. Keeping them regularly informed through email will allow C to target them directly through an e-newsletter facility. 
On-line shopping
 C has a shop on site which sells a range of gifts. C may wish to adopt an e-sales approach whereby it offers these products for
sale through an online shop. This could be very useful to C as it would widen its market for its products to customers who
cannot actually visit the attraction but who may wish to buy its products. This should increase C’s revenue from its range of gift
products on sale. 

3.1 Explain four characteristics of a service business, using P to illustrate your answer and evaluate the current process used by the five
senior partners when reviewing P's performance and the current process used to set targets. You should use Fitzgerald and Moon's
'Building Block Model' to assist in structuring your answer.

The characteristics of a services business, using P to illustrate, can be explained as follows:

• The consultancy services, in the form of expertise and advice provided by P’s IT staff, are largely created and consumed
simultaneously. Their service is perishable in that IT expertise and consultancy cannot be stored. Service perishability means
that services must be rendered on the spot and cannot be stored for later use. 
 • IT consultancy activities will be heterogeneous (variable), in that it is hard to standardise the service since each IT staff member
providing consultancy services will be different and offer a personalised service to clients. The service variability is determined
by the particular client or circumstances surrounding the service. 
• The consultancy service provided by P will be largely intangible in that there is no physical product for sale. The service cannot
be experienced before it is bought by the client.
• There is no transfer of ownership of the service which is provided by P to its clients. Each client's required IT service can only be
received by that client. 
• The reputation of P is maintained by the quality of its IT staff and their skills. A poor area of work for just one client could
damage P’s reputation overnight. Therefore it is imperative for P to train its IT staff in the latest technology and for the
company to be innovative in offering IT advice in new niche markets. 
Fitzgerald and Moon’s building block model aims to improve the performance measurement systems of service businesses such as P. It is
a framework for the design and analysis of performance measurement system based upon three concepts: (1) dimensions, (2) standards
and (3) rewards.

1. Dimensions are the goals for the business and fall into two categories: downstream results (competitiveness and profit
performance) and the upstream determinants of those results (resource utilisation, service quality, flexibility and innovation).
These are the key areas for which P should develop specific performance measures. 
2. Standards are the measures used to assess the performance of the dimensions above. These must be formulated so that
those being measured take ownership of them, preferably through participation in the process of setting the standard.
Importantly, each standard must be achievable in order to motivate the consultant or partner. The standards must also be fair,
based on the realistic assessment of what is achievable by each individual. 
3. Rewards are the motivators for the consultants and partners to work towards the standards set. The reward system should
be clear and understandable by all of P’s staff and should encourage motivation. Any reward system must be related to areas of
responsibility so that the staff have controllability in order to achieve motivation. P’s current performance information does not
cover all the areas of the building block model. For the Dimensions aspect of the model, the downstream results appear to be
addressed as market share and financial performance including monthly revenue and profit performance which are currently
reported and measured by the senior partners at the monthly meetings. However, the upstream determinants aspects of
Dimensions are not covered adequately. P only measures the quality of the services it provides, through the use of client
surveys. Innovation, flexibility and resource utilisation, all key determinants of overall business performance and
competitiveness are not measured by P. This is a serious weakness in P’s current performance measurement system. 

On review of the Standards used, measurement of performance appears to be rather limited. P uses a budget to measure its financial
performance but this will be internally focused and not based upon industry standards. Therefore it will be hard for P to assess its overall
competitive position from this. P can use the market share information to assess its position in the industry and to compare itself with
competitive performance but there appears to be no comparison with profits achieved by competitors. The client surveys used by P
could be a very useful measure of performance but again it is not clear how this information is collected or used. Evaluation of customer
satisfaction is a key aspect of performance management in a service business and it is something which P must develop and focus upon.


The IT staff reward system at P is related to performance which is assessed by the team manager. However, this is likely to be
compromised by the current limited measurement of the dimensions of performance. It is highly unlikely that IT staff will understand
how their performance is being measured as they clearly have no input into the reward system. There is likely to be little motivation
relating to these rewards as they are easily achievable. Therefore, it is likely that the current reward system does not assist in P achieving
improved competitive performance as the IT staff do not have any real incentive to improve their performance. Therefore it is
imperative that new performance measures are introduced to motivate all IT staff to work more effectively and efficiently and to take
ownership of the required service levels. These service levels need to be set using the “SMART” principle to ensure that they are
measureable, achievable and fair. 
The reward system for the 5 partners is based on the performance of the whole business rather than the individual partner’s
contribution to performance. Therefore, it is likely that the reward is not controllable by the partner and this may affect his or her
motivation. 

Overall, the current performance information is not suitable for P taking into consideration its service based activities and its need to be
more competitive within its industry. 

3.2 Recommend, with reasons, two suitable performance measures which could be used to assist P in measuring those areas of its
business in which it must succeed, in order to remain competitive.

Note: Candidates are only required to present two examples of performance measures.

One of the fundamental weaknesses identified in the answer to part (b) was that P only measures the downstream results and not the
upstream determinants of its Dimensions. Therefore, in order to improve its performance information it must devise a range of
performance measures to monitor these key determinants.

Resource Utilisation

• P currently does not seem to measure resource utilisation which is a critical measure of productivity for a service related
business. An example of a performance measure would be the percentage of billable hours worked to the total working hours of the
firm. This would help P’s partners to monitor the productivity of its IT staff and would also form the basis of a better system of rewarding
and monitoring the performance of individual consultants. 

Flexibility
• This is another key determinant of overall performance effectiveness and ability to improve competiveness in the industry.
Clearly, this is an important factor for P as many of its clients require P to respond to their needs 24 hours a day, 7 days a week. A
measure of flexibility could be based upon the speed of delivery of the service. An example of a performance measure could be
punctuality, measuring the percentage of client jobs delivered on time or the percentage of out of office hours calls responded to within
a set deadline. In addition, P could improve its measurement of client satisfaction. The existing client service survey could be analysed to
include the client’s perception of whether objectives were achieved. P could also measure its ability to manage busy periods for example
the levels of overtime worked. 

Innovation
• At the moment, the dimension of innovation is not measured. For a business such as P, operating in a highly technologically
innovative and fast moving industry, innovation is a critical success factor and a key source of competitive advantage. The success of its
innovation activities could be measured by for example: The time taken to launch a new consultancy service or the number of clients (or
percentage) that take-up a new service offered. 

4.1 Evaluate, using Mendelow's matrix, the levels of power and interest of HWS's shareholders in the decision to sell alcohol and
tobacco. You must justify your evaluations. (13)

Mendelow's matrix (shown below) measures the power and interests of stakeholders:

Low power/low interest

Private investors: on average each investor has a shareholding worth less than R1, 000. It is unlikely that most of these shareholders
would take an active interest in HWS’s affairs. Collectively, as they only hold 3% of the equity, they have little power to affect any of
HSW’s decisions. 
Low power/high interest
HWS charitable trust: although this holds 10% of HWS’s share capital, on its own it has a very limited amount of power as
regards the company’s decisions. However, as its recent criticism of the decision to sell alcohol and tobacco demonstrates, it
has a high degree of interest in the company’s affairs. 

HWS employees: like the private investors, the employees have little power to affect any of HWS’s decisions. However, as
their jobs are associated with their shareholdings, which are worth almost R9, 000 on average, they are likely to have a high
degree of interest. 
High power/low interest

Pension funds and investment trusts: there are six of these which have 30% of the equity. If they act collectively they have
a high degree of power. Their investment is worth R135 million at the current market price which suggests they
would have a high degree of interest. However, these investors have not traditionally been interested in the day-to-
day running of the companies in which they hold investments. They are more likely to be passive rather than active
investors. 

High power/high interest

HWS directors: these have a disproportionate, in relation to their shareholding, amount of power. It was their decision which
is now being criticised and they are able to change it or withdraw it instead of implementing it. 

RCB: private equity fund: this holds a significant proportion of HWS’s equity, 25%. If it held another 5% it would be obliged to
make an offer for the company which may be its intention. This puts RCB in a powerful position. Its motive for investing is to
see short-term profits, so it is likely to have a high degree of interest in the decision. 

RSA clearing bank: this will be interested in the decision because it has both a substantial shareholding worth R90 million and because
HWS is its client. This shareholding gives the RSA clearing bank substantial voting power and it will also have power arising from its
position as HWS’s bank. 

4.2 Recommend to HWS's Board how it could respond to the increasing demands in society for responsible business practice and also
advise HWS's Board of two other stakeholders who would be interested in the decision to sell alcohol and tobacco. You must state the
reason for the interest of these stakeholders.

Stakeholders are defined as ‘Those people and organisations that have an interest in the strategy of the organisation. Stakeholders
normally include shareholders, customers, staff and the local community’. 
Among the stakeholders who are likely to be interested in this decision are HWS’s customers. This is because the decision to sell alcohol
and tobacco products is in response to unsatisfied customer demand. However, other customers of HWS may also be interested in this
decision but not be in favour of it. This is because some people view alcohol and tobacco products as being injurious to health and/or
unsuitable for young people and may not want HWS to offer an additional distribution channel. 
Politicians at local and national level, with a particular interest in public health and health promotion, may also be interested in HWS’s
new retailing strategy because of its possible side effects on the health of HWS’s customers. 
Medical doctors may also have an interest in the new retailing strategy for the same reasons as politicians. 

As the new retailing strategy is forecast to increase profits by 25% to R5 million it will be of interest to potential investors. 
Although the requirement only asked for two other stakeholders this answer has given four for the sake of completeness. Candidates
received marks for any other stakeholders if these were supported by a cogent argument.
The first response that HWS could make to these demands is to acknowledge that they reflect current social concerns and should be
taken seriously. This acknowledgement is implicit in the recognition of the concept of the stakeholder which covers a broader
constituency than that of shareholders. 
A set of guidelines describing principles and standards for responsible business conduct has been published by an international
organisation, the Organisation for Economic Co-operation and Development (OECD). These guidelines are designed to ensure that
companies operate in accord with government policies and strengthen the basis of mutual confidence between companies and society.
The guidelines are voluntary but if HWS adopted them it would show a commitment to responsible business practice. 
HWS could also demonstrate its commitment to responsible business practice by modifying its mission statement to explicitly state, for
example, ‘HWS is committed to responsible business practice’ and/or ‘HWS has adopted the OECD guidelines’. HWS could operationalise
these guidelines and incorporate them into its strategic decision making process. For example, every important capital investment
decision should include an assessment, perhaps in the form of a checklist, to measure the decision’s compliance with the guidelines. 
HWS could designate a director to periodically report on their responsible business practice and the report could be published
externally. This would be a suitable responsibility for a nonexecutive director. 
HWS could provide training for its employees on the application of ‘responsible business practice’. IK

MAY – 2020 Assignment

1.1 Produce a SWOT analysis for HFH. (12) CH4
Strengths
• HFH is well respected in the charity environment and, therefore, in the current climate for mergers, this reputation is a positive
factor for change.
• HFH has an experienced Board of Trustees which is open and willing to embrace change and recognise the need for change.
• Specialist skills with helping homeless people.
• Committed employees and volunteers.
• Board of Trustees with vision to see the need to offer other services.
Opportunities
• • There are obvious opportunities for collaboration in the charities sector.
• • The Government of the country is positively encouraging this form of collaboration and is providing incentives for
collaboration.
• • HFH could develop and work on larger and more innovative projects by working in partnerships.
• • HFH may be able to gain access to new sources of funds and volunteers.
• • Changing needs of beneficiaries opens up new opportunities for new services.
• • Merger with CFC.
• • Offer employment training services.
Weaknesses
• • Limited fundraising capability.
• • Low profile in charity sector.
• • Declining donor base.
• • Inadequate resources to cope with rising demand.
• • Over reliance on limited sources of funding.
• • Employees and volunteers don’t have employment training skills.
Threats
• • Economic recession leading to a general lack of financial stability and reduced funding.
• • Loss of key personnel and volunteers due to pressure.
• • Greater demand putting pressure on scarce resources.
• • With recession, demand may continue to grow and HFH may struggle to provide adequate service and lose its good
reputation.

1.2 Explain two key attributes of CFC which can be used to demonstrate that it is a 'change adept' organisation. (4)

According to Kanter, organisations which are change adept have the following characteristics:
• The imagination to innovate
• The professionalism to perform
• The openness to collaborate
CFC Board of Trustees demonstrates these characteristics in a number of areas.
It is innovative in continually enhancing its services, including helping people to learn new skills such as IT, and it also has always
embraced technology and the use of a sophisticated website to advertise its services.
Therefore, this fits Kanter’s first characteristic of a change adept organisation, as having the ‘imagination to innovate’. ✓✓

The Board of Trustees of CFC has also been open and encouraged collaboration and partnerships with other organisations in Country Z,
in order to develop and enhance the services it offers and to utilise the expertise and knowledge of other complementary organisations.
This aspect of CFC’s activities demonstrates a further characteristic of change adept organisations, in that it has ‘an openness to
collaborate’. ✓✓

1.3 Recommend, with reasons, whether the Board of Trustees of HFH should agree to a merger with CFC. (8)
Benefits for HFH
• Access to employees and volunteers and their greater knowledge of new service areas such as employment training.
• It should allow HFH to expand its services to customers thus improving its service levels.
• Merging should allow for staff retention and a wider access to volunteers.
• It should permit HFH better access to more secure funding.
• CFC provides help to people with IT skills and job interviews and these skills can be passed on to HFH's employees. The two
organisations will have a shared common goal to provide help to people requiring IT skills and jobs.
• • The two organisations would be part of a bigger charity and this may give all of HFH's employees and volunteers an
opportunity to gain wider experience in their career and better job security.
• • It should provide homeless people with access to a wider range of other services.
• • It should allow both organisations to become more efficient and cut central overheads.
• • A merger would help HFH survive in the longer term and be less dependent on its existing source of donations.
• • It raises the profile of the need to provide shelter for homeless people.

Difficulties for HFH

• • There is likely to be staff resistance to change and a fear that they may not be doing the work that they used to do and want
to do - especially relevant for volunteers.
• • When merging the two organisations, their IT systems and different cultures and working practices may cause difficulties in
integration.
• • CFC, as the larger charity, may appear to 'take over' HFH and HFH's employees and volunteers may feel less needed and lose
focus and motivation.
• • There may be loss of identity through a merger with a larger charity.
• • The wider range of services provided by the larger organisations in the new charity, post-merger, may detract from HFH's
main purpose of providing accommodation for homeless people.
• • Management of the change process takes up time and may affect the management's ability to focus on the immediate
problems of the growing demand for shelter in the current recession.
• • Central Government funding usually comes with some form of central Government control meaning that HFH may lose some
autonomy.

1.4 Discuss the benefits and difficulties for HFH of merging with CFC (6)

It would seem to be highly beneficial for HFH to merge with CFC, therefore the recommendation is for the two charities to merge. In fact
it may be the only option for HFH to survive. ✓

In the context of the current climate for mergers and the government positively encouraging mergers it would appear sensible. The two
charities are highly compatible in their areas of work and there appears to be a high degree of synergy. CFC is a good fit for HFH and
both charities share common goals. ✓

In addition, due to the funding and donations problem, if the merger is not agreed, then the combination of increased demand and
falling funding for HFH, which has a low profile, will result in it failing in its fundamental purpose of providing shelter for the homeless. ✓

OCTOBER 2020 – Exam

1.1 Identify TWO models that the team could use to analyse the external environment. Briefly explain the models and evaluate their
usefulness in assisting the team to formulate a wedding package strategy for the Futurist Hotel.(10) CH2/3 MAY 2020 5.1 EXAM / OCT
2020 1.1 EXAM / MAY 2019 2.1
There are two main models used to analyse the external environment:

Porter’s Five Forces model which examines:

1. The rivalry among the industry’s existing firms
2. The threat of new entrants to the industry
3. The threat of substitute services and/or products
4. The bargaining power of the suppliers to the industry
5. The bargaining power of the industry's customers/buyers. 

The other model is usually referred to by an acronym, PEST. This model analyses the external environment in terms of its:
• Political influences: for example, taxation policy
• Economic environment: for example, unemployment
• Social and demographic factors: for example, age structure of the population
• Technological factors: rate of innovation. 

The PEST model has been supplemented by the addition of Ecological and Legal factors producing the PESTEL model.
• The PEST model should assist the team in:
 arriving at an informed understanding of the external environment which should enable the team to devise a strategy that
better fits the needs of the market.
 to understand how the various factors within the model are changing and also the direction of future trends.
 For example, an understanding of the likely future popularity of marriage, a Social factor, will be very important for the
team’s wedding venue strategy.
 The team may also find that some of the factors are inter-linked: if, for example, the popularity of marriage is linked to levels
of unemployment. The team could refine its PEST analysis to identify key drivers for change: these are the factors which are
likely to have a direct important bearing on whether the strategy will prove successful. An example would be trends in
disposable income for people aged 20-30. If incomes are rising customers may be willing to spend more on their wedding
which will influence the price the team will set for the wedding held in the Futurist. 

The Five Forces model can be used by the team

• to assess how fierce the competition is likely to be if the Futurist decides to act as a wedding venue.
 This will then enable the team to appreciate how profitable this new strategy is likely to be and enable it to decide whether
or not it should enter this market. 
 If the Futurist decides to enter the wedding business, it will be competing against seven other hotels which are offering a
range of different prices to different market segments. Therefore, an analysis of the industry via the Five Forces model could
avoid the Futurist making a mistake in respect of its competitive position and enable it to exploit which of the five forces
appear to be favourable. 

• Both of the models can be used by the team in the initial stages of formulating its strategy when it would form part of the
rational approach to strategy.
• The models can also be used as part of a continuous process of environmental scanning.
• This would enable the team to be aware of opportunities and threats as they arise rather than having to wait for a formal strategic
review as under the rational process.
• Environment scanning will be part of an emergent strategy approach. 

1.2 Explain how an understanding of Porter's three generic competitive strategies could help the team design a successful wedding
package strategy for the Futurist hotel. (9) CH7

Porter’s model of three generic strategic approaches comprises the following:

1. Overall cost leadership strategy 
2. Differentiation strategy 
3. Focus strategy 

To achieve overall COST LEADERSHIP STRATEGY : Cost-leadership strategy involves becoming the lowest-cost organisation in a
domain of activity. pursues a relentless low-cost strategy
 the Futurist would have to be able to be the lowest cost producer in its market.
 In order to do this, it would require some resource, competence or advantage not possessed by its competitors.
 It is a new hotel and so its equipment and layout should be modern.
 However, it is unlikely that this will give the Futurist a sustainable competitive advantage.
 In the absence of any other unique advantage a strategy of overall cost leadership will not be applicable for the Futurist. 
A policy of DIFFERENTIATION STRATEGY should be based : Differentiation strategy involves uniqueness along some dimension that is
sufficiently valued by customers to allow a price premium.
 on providing a wedding package that its potential customers will perceive as being unique.
 This would mean that the customers would perceive that they are receiving premium value and so enable the Futurist to charge a
premium price.
 This appears to be the strategy being following by the De Luxe hotel which is situated in a castle in a beautiful rural setting. This
hotel has also won many international awards for its food and its rooms. These attributes of the De Luxe hotel, particularly its
location, have enabled it to charge a premium price of R500 per wedding guest. 
 If the team is able to identify some attributes which would lead its customers to perceive that they were receiving premium value,
then the team could pursue a differentiation strategy. 

If the team wanted to follow a FOCUS OR NICHE STRATEGY :focus strategy targets a narrow segment or domain of activity and tailors
its products or services to the needs of that specific segment to the exclusion of others. then it will have to follow a strategy which
concentrates on
 one or more particular segments of its market rather than try to meet the needs of the entire market with a single service or
product.
 As it seems unlikely that the Futurist will be the overall cost leader in its market, it could apply a Focus strategy to some sort of
differentiated offering.
 Such a strategy appears to be being followed by the Royal Albert hotel which charges R10 per wedding guest. This suggests that it
has targeted a market segment of people whom have low incomes or are very prudent with their money or do not like lavish
wedding celebrations.
 However, depending on this hotel’s capacity to cater for weddings, its margins and the number of weddings it attracts each year, it
could be as profitable as the De Luxe which is serving a completely different market segment. 

Therefore, a Focus strategy could be appropriate for the Futurist to follow. 

1.3 Advise the team how information systems strategies could support Porter’s three Generic competitive strategies in designing a
successful wedding package strategy for the Futurist hotel. (6) OCT 2019 3.1 EXAM

 Information systems can contribute to a generic competitive strategy by means of strategies for:
 Information Systems, Information Management, and Information Technology.
 The information strategies required to support the wedding venue strategy will be a sub-set of the hotel’s information strategy.
 It may also be the case that if the hotel is part of a group its information strategy is a sub-set of a larger group information
strategy. 

 Information systems strategy:

 this strategy is concerned with how the Futurist can use information to support its wedding package strategy.
 This strategy should describe the information needed to formulate the strategy and to maintain it.
 The Futurist would require regular management information reporting on the profitability of whichever wedding package strategy
it decided to implement.
 This reporting should include internal information, for example, performance against budget, turnover and margins achieved. The
management information should also take a strategic focus in placing the Futurist’s performance in an external context.
 Thus, it should report on market growth and share and comparative information about competitors' performance. As well as the
regular reporting there will be a need for ‘ad hoc’ reports, for example, when environmental scanning detects random events
outside the internal environment of the Futurist. 

 Information management strategy:

 the Futurist will require this strategy to describe how the data and information relating to wedding business should be stored and
accessed. As the hotel will have other strategies and information systems, the information management strategy should describe
how these relate to the strategy for the wedding package.
 For example, there will be a requirement to calculate costs and margins for weddings. The hotel will also be calculating these for
other aspects of its business.
 Therefore, the information management strategy should state whether there needs to be a separate system for calculating these
for wedding business or whether the hotel’s other systems can be used for this purpose. 
 The project team designing the wedding package strategy consists of CB the accountant, the hotel’s General Manager and the
Restaurants Manager.
 Once their strategy is being implemented, they will have different levels of involvement and responsibility for it. With regards to
the data and information associated with the strategy, their roles will need to be demarcated. This would be described in the
information management strategy. 
  Information technology strategy:
 this strategy will specify the hardware and software required for the wedding package strategy. The wedding package strategy
may not need a separate strategy for its technology as its needs are unlikely to be different from the needs elsewhere in the hotel,
which will have been specified in an overall information technology strategy. However, it may require some specialist software in
which case this would be stated in this strategy.

2.1 Explain why strategic implementation is included in the Johnson, Scholes and Whittington model. Note: You are not required to
draw the model. (5)

 Implementation has been defined as:

 ‘the conversion of the strategy into detailed plans or objectives for operational units’.
 The model is incomplete without implementation because no matter how good the strategic analysis and strategic choices are, the
organization will not benefit from them.
 Model represents these aspects as being inter-dependent.
 Strategic Implementation is inter-linked with both Strategic Analysis and Strategic Choice.
 The elements affect each other and overlap.
 The model is not linear;
 Strategy can start and end with any one of the aspects because it should be a dynamic process. 

2.2 Identify four Critical Success Factors which would be appropriate to use for TDM, and recommend, with reasons, two Key
Performance Indicators to support each of these factors identified. (20)

 DEF: critical success factors those factors that are either particularly valued by customers or which provide a significant advantage in
terms of costs. (Sometimes called key success factors).
 to turn ‘Blue Oceans’/ Strategy Canvas into ‘Red Oceans’.
 Critical success factors are therefore likely to be an important source of competitive advantage or disadvantage.
 5/6 established critical success factors in this electrical component market
o cost,
o after-sales service,
o delivery reliability,
o technical quality
o testing facilities
o new sixth critical success factor, design advisory

 Definition:
 Critical Success Factors (CSFs) are ‘those components of strategy where the organisation must excel to outperform competition’
 critical success factors those factors that are either particularly valued by customers or which provide a significant advantage in
terms of costs
 It is implicit in the definition that any organisation will not have a great number of CSFs: six or fewer CSFs have been suggested as an
appropriate number.
 In the case of TDM, CSFs have to be identified which are specific to it and which are crucial for its success.
 The following CSFs are recommended:

1.CSF: Customer satisfaction: This CSF could be supported by such KPIs as:
 KPI Student satisfaction: most UK universities now carry out such surveys into this area and TDM could imitate this practice.
 Rate of repeat business: many of TDM’s students will be sponsored by their employers. This KPI will measure if employers
continue to use TDM. 
 It is important that RCH knows how its customers feel about its services. As the CEO of RCH commented ‘...success is built on happy
 customers: we give them what they want’.
 TDM has to ensure that it is getting this aspect right if it is to continue to be successful. It is a truism that without customers TDM
will not have a business. However, it appears to have had a production focus rather than a customer focus and has neglected this
area in the past. One important indicator of customer satisfaction will be the students’ pass rates.  

2.CSF: Employee attitudes: This CSF could be supported by such KPIs as:
 Rate of staff turnover: a high rate of staff turnover is suggestive of dissatisfaction, a low rate of contentment.
 Rate of staff absence: a high rate indicates poor staff morale; a low rate suggests staff that are happy to come to work.
 It is vital that TDM’s Employees are important in every business, but this is particularly the case for TDM where its employees
come into contact with its customers. It is vital that TDM’s employees continue to perform at a high level and so TDM should
monitor their morale and the KPIs above will give an indication of this. 

3.CSF: Product quality (Market share traded profitability): This CSF could be supported by such KPI’s as:
 Market share: TDM has consistently had the largest market share in its sector and both its absolute market share and trends in
market share (Is it increasing? Is it decreasing?) are strongly indicative of success.
 Accreditations: TDM’s courses are open to scrutiny by professional and academic bodies. TDM could measure the accreditations
it receives which reflect outside opinion as to the level of quality it is achieving. 
 Customers will only continue to use TDM’s services if it can demonstrate it is providing courses of a high quality. This can be
measured, to an extent, by the endorsement of external bodies in the form of accreditations. It can also be tracked more
immediately by the market share which TDM has gained.
 This KPI can be routinely calculated, perhaps at monthly intervals, unlike accreditations which will be granted intermittently. 

4.CSF: Brand image: This CSF could be supported by such KPIs as:
 Brand recognition: this KPI could be assessed by means of survey with its customers, past, present and potential. This KPI would
indicate the proportion of customers who are aware of TDM’s brand.
 Brand reputation: as in the case of brand recognition, brand repute could be investigated to discover customers’ feelings about
TDM’s brand. It could be that recognition and repute are contrary. It is possible for many people to know about your brand but
not to like it. Alternatively, few people may know about a brand but those that do like it very much. 
 TDM does not have a strong customer focus and it is in a market where there are continually new entrants. Although it has had
satisfactory performance in the past, ‘it has constantly achieved its sales targets and its students achieve passes on a par with the
national average’ it seems to be an introspective organisation.
 It may not be performing to the best of its ability. In order to counteract these tendencies, TDM could benefit from an awareness of
how it appears to the outside world. 

3.1 Discuss the importance to EEQ of incorporating business ethics and sustainability into its strategic management activities.
(7)

KING IV Principle 1 AND 2: Govern the ethics of the organisation in a way that supports the establishment of an ethical culture. The
ethical tone has to come from the top of the organisation
 Advantage:
o Strong ethical principles can add value to in terms of improving its brand.
o will help to sustain its future viability
o Often organisations which adopt strong ethical approaches will also see an improvement in profitability.
o consideration in a highly competitive global marketplace
o Investing in the future by training a diverse range of suppliers in its ethical business practices.
 will bind these suppliers to EEQ and offer a secure working relationship, resulting in long-term savings. As
opposed to many businesses that run on a daily basis, or are let down by subcontractors that fail to deliver or
perform poorly.
 In order to achieve a better reputation with clients, EEQ should avoid these issues. EEQ expects and demands
all suppliers (services and products, such as building materials) to meet its high standards.

 Disadvantage:
o Failure to act ethically can cause social, economic and environmental damage and undermine X long-term survival.

THEREFORE:
 Ethics must be embedded in its business models, organisational strategy and decision-making processes. 
 senior managers and business leaders must lead by example. Managers will be rewarded for being ethical and creating a
positive organizational culture.
 Corporate communications and reporting on sustainability needs to go beyond a tick box approach and just saying so.
  It is important that the finance professionals play an active role as ethical leaders by questioning the assumptions that drive
business decisions. AND keep up their reputation for being impartial and independent when making business decisions and
choosing the right strategic options.

3.2 Evaluate the ethical challenges faced by EEQ if it bids for the contract for the highway construction project with the Government
of Country X. Your answer should: (18) OCT 2019 EXAM
 Address the ethical principles being challenged;
 Include your overall recommendation, with justification, as to whether EEQ should accept the contract if it is offered by
Country X's Government;
 Recommend, with categorisation EEQ follows.

A) ethical principles being challenged

Engaging in a project that will:
 Harm villages with poor compensation packages
 Damage natural environment
 King IV principle 1 integrity
 Confidentiality
 Forego code of ethics

The first challenge faced by EEQ in its early contract negotiations relates to the destruction of the local villages and the natural habitat.
The Government of Country X has stated that it intends to pay minimal compensation to villagers losing their homes and it would appear
that it is not concerned about the damage that the highway construction will have on the surrounding habitat.

Although we do not know the exact details of EEQ’s Ethical Code of Conduct, we can
The Second challenge
KING IV Principle 1 : five guiding principles this is likely to challenge two of its main ethical principles; those of Integrity and
Confidentiality.
 Firstly, the principle of integrity implies dealing fairly and truthfully.
o The threat EEQ faces is that it could be linked to this communication if it won the job.
o One of its main goals is to do business in a socially responsible and ethical way, so this would go against that. We
follow the law, protect the environment, help our communities, and do our best to be good to the people we work
with.
o EEQ could try to get the government to change the route so that it doesn't destroy local villages or damage the
environment, and the government would agree to pay the right amount of compensation and landscaping costs to
keep the damage from looking bad.
 The second ethical principle which is potentially being challenged is that of ‘confidentiality’.
o The Government of Country X has stated that the information relating to the route of the proposed highway and the
destruction of the villages and natural habitat should remain confidential until the contract is finalised.
o From King IV Ethical Code, the principle of confidentiality implies that information should not be disclosed unless
there is specific authority or there is a professional duty to do so.
o However, this principle is challenged when it is required by law or there is a professional duty to disclose in order to
comply with ethical requirements.
o In this case, there is no legal obligation to disclose the information but there may be an ethical one. 
o At this early stage of contract negotiations, EEQ should not disclose this confidential information to anyone outside
EEQ.
o Currently, no construction has been undertaken and the bidding process is still in its early stages and therefore
negotiations could still take place to lessen the impact of the route. However, EEQ should insist that the Government
announce the plans for the road and the route it will take and take steps to invite comments from the local people
and villagers affected by the route.
o The plans should be open and transparent. Whilst the Government cannot please everyone and there is bound to be
criticism and some hostility to the new road, it should try to be open with the citizens of Country X and not keep plans
confidential. This is not a good way to operate. 
 A third principle being challenged could be ‘Objectivity’,
o The government should let EEQ choose its own suppliers based on its ethical values and hire local workers, but only if
they agree to learn about EEQ's ethical principles and meet its ethical rules.
o As a last step, EEQ should ask the Government official to apologise for the alleged bribery in order to get the contract.
Contract talks should not be forced.
o If EEQ were to win the proposal and be asked to take the job, this should be done in a moral way. Not even if some of
the above changes are agreed to by the government, EEQ should not bid on this job. Because of the possible conflict
 between EEQ and Country X, it doesn't look like it can be worked out.

B) recommendation, with justification

 Justification: This contract directly contradicts EEQ's ethical stance, and the Government of Country X appears to contradict
EEQ's ideals. The short-term profit from this one contract's global competitiveness.
 EEQ should pull out of contract negotiations if the Government refuses to change the route or enhance its commitments to
displaced communities and the natural habitat. This would go against its ethical stance and mission statement. Moreover,
unless the proposed route or villages' eviction is illegal, EEQ must maintain confidentiality as mandated by the Government.
 Using the Government's preferred vendors is another component of contract negotiations. EEQ shall ensure that no prejudice
or incentive affects its business or professional judgments. Clearly, this is a bribe to get the government's own important
suppliers on board. Obviously, EEQ cannot accept such a bribe. The negotiation team should inform EEQ's senior management
of the relevance of its supplier ethical training program. EEQ must follow its usual supplier training procedures based on its
ethical code of conduct.
ADDED: Here the justification for social responsibility is that it makes good business sense.
 For most organisations a good reputation in the eyes of customers and suppliers is important to long-term financial success.
 Working constructively with suppliers or local communities can actually increase the ‘value’ available for all stakeholders to
share

C) Recommend, with categorisation

 he definition of an ethical stance is ‘The extent to which an organisation will exceed its minimum obligations to stakeholders’.
EEQ obviously values ethics, sustainability, and community involvement. Therefore, EEQ's ethical stance is one with "many
stakeholder obligations." This ethical position admits that the organization exists for more than shareholder profit. It believes
that because the organization has a social function to play, it must consider all stakeholders. They feel it has a purpose beyond
just financial gain. Because EEQ is committed to long-term community involvement and sustainability, its commitments and
expectations go beyond short-term financial rewards.

4.1 Discuss why the investment in information systems by AAP should be a strategic decision. (8) CH 10

 Def: Entrepreneurship is a process by which individuals, teams or organisations identify and exploit opportunities for new
products or services that satisfy a need in a market.

besides opportunity recognition, the entrepreneurship process typically involves the development of a business
plan , making a feasibility analysis , considering industry conditions and competitors , choosing business model
and strategy and, finally, examining the venture’s financing and funding

STRATEGIC PERSPECTIVE
 Investing could have a significant long-term detrimental effect.
 Whilst face to face customer contact is important, it should no longer be the sole focus for the company.
 AAP needs to continue to be innovative and it cannot sit back and wait for customers to telephone its offices.
 The cost of IT/ IS investment may involve high levels of expenditure for AAP.
 If this investment is not carefully planned and managed, then there is a high risk of costly mistakes.
 Therefore, a strategic perspective is required to ensure that investment is carefully planned and resources are not wasted on
information systems investment. 

CURRENT ECONOMIC CLIMATE

 Need to differentiation in order to beat competitors for its survival.
 Strategic investment in information systems could give a competitive advantage.
 Thus must be part of strategic decision-making process.
 This is not a decision that should be taken on an ad hoc basis.
 The use information systems could be a core driver of its competitive advantage and therefore is a critical part of its strategic
decision-making process. 
 Technology in this industry is rapidly developing, with the introduction of Apps and the Web 2.0 technologies which can be used.
 Therefore,
o AAP must continually monitor and develop its information systems to remain competitive and up to date.
o Although customers may want a good face to face service it is also likely that they will be increasingly moving towards a greater
reliance on information systems to assist them in researching and reviewing properties.
o the speed in the development in technology and the fact that key stakeholders are embracing this technology means that AAP
must consider investment in information systems as a strategic decision. 
 Leadership for the current developments is coming from the top of the organisation, via the Marketing Director.
 Information systems are opening up new possibilities for the estate agency industry.
 Without investment in new Information Systems, AAP may lose customers and see a further decline in profits.
 Therefore, investment in XX can be considered to be strategic as the long-term impact of not investing will threaten the future
success of the company. 

 Information systems are likely to be highly complex, requiring the integration of many different forms of technology, such as internal
estate agency software, customer and property databases, intranets, external links to other services and websites and website
management.
 Therefore, this will require extremely careful planning and management which must be done at a strategic level otherwise it is likely
that technology will become out of control and unmanageable.

There are two further considerations for AAP, which are:

1. Does AAP have the funding to support the necessary expenditure?
2. Does AAP's management team have the necessary expertise to manage a more sophisticated IT system? 

4.2 Prepare a memorandum for the Marketing Director evaluating the advantages and challenges of developing an e-business strategy
for AAP. (9) CH 10

E-business has been defined as ‘the transformation of key business processes through the use of internet technologies. The general
estate agency business environment has clearly been affected by the development of e-business, with the recent technological
developments identified by the Marketing Director.

Benefits to AAP
• An e-business strategy ensures that information systems are considered by the organisation to be a critical and strategic aspect of
its business survival. This will focus all staff and management attention on its importance and significance to AAP. 
• An e-business strategy would allow AAP to be more responsive to its customer needs and improve its customer relationship
management through integrating and improving its business processes to focus on its customer needs both face to face and via
technological interface.
• It will enable customers to gain information in a way they prefer, at a time they want, perhaps out of office hours, and this may
result in customers recommending AAP to friends. Therefore, the customer experience will be improved. 
• Using e-business will present AAP with potential new business opportunities - including the advertising and selling of overseas
properties. A global presence rather than just a national presence could be achieved if e-business was considered. 
• By using its website more effectively with the development of an integrated customer database, AAP can use e-business to
understand customer buying behaviour more effectively and build up a detailed picture of customer requirements and needs such
as popular locations, space requirements and individual customer tastes in types and styles of property required. 
• AAP would have a greater ability to interact with customers across a range of media - emails, blogs, social media, feedback forms;
allowing greater dialogue with more customers via media that they are likely to use regularly. 
• Other competitors are likely to already be doing this, so AAP will be left behind if it does not follow an e-business strategy. 
• Sale and purchase of a property is a process that most people undertake infrequently, therefore their experience is vital if
customers are to be satisfied. The ability to access AAP's website to get all the required information could result in a positive
experience and repeat business at a later date. 
Problems
• The Board of AAP believes that the key to AAP's continued survival is excellent customer service, as it supplies a specialist service
to a niche market. The nature of the business means that face to face contact is crucial in moving customer awareness into action.
Therefore, this limits the ability of e-business to replace such personal contact, particularly with older, more traditional buyers. 
• Cost of investment in e-business may be prohibitive. However, as AAP already has an online presence and uses technology to
some extent already with its estate agency software, additional e-business activities are therefore unlikely to be too costly for AAP.

• A focus upon technology and not on customers' needs may reduce AAP's personal service which may put some customers off.
• Currently, AAP is likely to have a lack of expertise in e-business. This is something which it must get right but currently is not likely
to have the expertise to develop an e-business strategy. Lack of current expertise in AAP of e-business may cause resistance
amongst AAP's staff who feel that they should be focusing upon the customer and not on e-business and technology. 
• The ability to effectively increase the customer base as house purchase and sales is an infrequent transaction for most home
owners. There may be limited opportunity for repeat business for several years. 
• Some staff and managers may be skeptical about the benefits that e-business can offer AAP. However, conversely, many younger
staff may welcome and embrace the change.

4.3 Explain to the Marketing Director, with reasons, why the use of digital technologies is essential in the modern business. (8) CH 10
Web 2.0 refers to the generation of web developments that facilitate communication, information sharing, interoperability and
collaboration using the World Wide Web (WWW). It refers to the cumulative changes in the way that technology developers and end-
users utilise the WWW.
The two Web 2.0 technologies recommended for AAP in the first instance are:

1. ‘Mash-ups’
This is where websites can now mix and match their web content and services to suit customer needs. For example, AAP can use
interactive maps from geographical information programs from software providers such as Google Earth. These could be used together
with links to local government information on school catchment areas or information on local planning application processes. Mash-ups
allow individual websites to make use of a range of interactive technologies to enhance the website for optimum customer interaction,
without heavy investment. For an estate agency business this is particularly useful as links to external geographical location or
information sites are important informational and advice tools for potential customers. 

2. Blogs - Information Sharing

An internal blog is a web log that any employee can view. Many blogs are also communal, allowing anyone to post to them. The informal
nature of blogs may encourage:
• Employee participation
• Free discussion of issues
• Collective intelligence
• Direct communication between various layers of an organisation
• A sense of community
Internal blogs may be used in lieu of meetings and e-mail discussions and can be especially useful when the people involved are in
different locations, or have conflicting schedules. Blogs may also allow individuals who otherwise would not have been aware of or
invited to participate in a discussion to contribute their expertise. 
An external blog is a publicly available blog where company employees, teams, or spokespersons share their views. It could be used by
AAP to announce new properties on the market or to announce new services or to explain and clarify policies, or to react on public
criticism on certain issues. It also allows a window to AAP’s culture and is often treated more informally than traditional press releases,
though a corporate blog often tries to accomplish similar goals as press releases. In some corporate blogs, all posts go through a review
before they are posted. Some corporate blogs, but not all, allow comments to be made to the posts. 

In addition, other forms of Web 2.0 technology which could be discussed are:

Social media
By using popular social media network sites such as Facebook, Myspace, Twitter and YouTube, AAP could advertise its services. AAP
could set up its own Facebook page where customers could access the latest company adverts and messages and also access message
boards where they could contact AAP directly.

Peer to peer networking (P2P)

This is a technique used to share files over the internet or within a closed set of users. As AAP does not make use of an intranet, this
could be a very useful form of Web 2.0 technology for AAP to adopt. Currently, email is the main form of communication and file
transfer between staff in different locations. P2P would distribute files across many machines meaning that files would be accessible
across the network and not just on one user’s machine.

Competence syndication AAP could open up a portion of its website for use by other firms of property related companies such as
furniture removal companies, lawyers, interior designers and builders to advertise their services. 

5.1 Advise PPP's Board of the reasons why the proposed acquisition is likely to be resisted by PPP's staff. (8)

• PPP staff will be affected by the change of ownership as they may have to re-locate and undertake additional training. Thus, their
location and responsibilities may change and therefore this could be a source of resistance. 
• QZZ is proposing to move towards more online production and delivery of books and many staff will be unfamiliar with this type of
product. PPP currently operates very traditionally and therefore this will have a significant impact upon the jobs and roles of the
remaining staff. They are likely to resist this. 
• The changes to the methods of operating may seem to be implied criticisms of the current family ethos of the business and this may
cause resentment by the staff and the family members still working in the business. This may cause resistance. 
• Re-location of employees has implications for each employee's family, housing and children’s schooling. Is the relocation within
reasonable commuting distance or is it to another part of the country? This impact on the wider family will likely be highly resisted. 
• Potentially, there could be redundancies in the long term if QZZ acquires PPP and clearly all of the staff in PPP will be resistant to
this. Many of the staff of PPP will resist change due to the obvious concerns about their jobs. 
• focus this to a much narrower audience. This proposal to reduce the readership is likely to be resisted by the Board and the staff. 
• The work of the staff may now become less interesting if the business moves towards electronic delivery of books. This will affect
morale and thus will create resistance. 
• The break-up of the ‘family ethos’ is likely to meet with strong resistance from staff. Staff have valued the family ethos in PPP and
are used to the company culture and have helped to establish PPP’s good reputation. Now all of their hard work and commitment to
the company, shown through low staff turnover and low absenteeism, will not count at all in the future. 

5.2 Discuss the possible ethical considerations for QZZ if it were to acquire PPP. (8)
• QZZ intends to reorganise PPP and to change its methods of operating. This is not unethical as it would appear necessary to
safeguard the long-term survival of PPP. However, the way in which QZZ manages this acquisition could have ethical implications. In
the UK, TUPE (Transfer of Undertakings/ Protection of Employment) provides legal protection to employees in relation to transfer of
their employment contracts to a new employer. It can be assumed that the country in which PPP operates will have a similar legal
protection for employees. As well as following its legal obligations, QZZ must also consider its ethical obligations to the employees of
PPP. 
• QZZ should insist that the staff of PPP are informed by the Board of PPP prior to acquisition. Staff should be informed of the
potential acquisition so that they can have a full understanding of the acquisition process and have a better opportunity to make the
correct decision for themselves. If they wish to leave prior to the acquisition to improve their own job prospects, then they should be
allowed to do so even if this means breaking a contractual agreement between the employer and employee. It could be considered
unethical to not inform staff in appropriate time for them to make the best decisions for themselves. Therefore, staff must be
informed immediately that a potential acquisition is being considered by the Board.  
• QZZ must treat employees with consideration for the potential stress that they are likely to be going through. Some staff may be
fearful of using new technology. Employees should be offered appropriate re-training in e-business, with which they may not be
familiar. This must be handled sensitively and with care. Staff should be encouraged to participate as this gives them new skills. They
must not be forced to re-train with the threat of re-location or redundancy as this will not encourage them to embrace these new
skills. This could result in stress-related illness causing them to take time off work and cost QZZ more and may be considered
unethical behaviour. Staff should be encouraged and rewarded for a positive attitude to re-training and offered incentives. QZZ
should consider offering incentives such as flexible working arrangements or bonus payments for training courses attended. 
• QZZ should consider its ethical obligations to the staff of PPP, many of whom have only ever worked for PPP and will have no other
working experience. Therefore, they may find it difficult to work within a new environment for new employers. Training in the
culture of QZZ may be required in order to familiarise PPP’s staff with the new working culture required. 
• QZZ has stated that if staff refuse to re-train or relocate then they could face redundancy. It could appear to be acting unethically if it
offered staff no alternative options before redundancy. For example, QZZ should consider offering incentives such as flexible working
arrangements or additional payments for travelling costs. It is likely that staff will be resistant to such major changes to working
arrangements and therefore QZZ must try to incentivise the staff. Volunteers for re-location could be identified as a starting point.
Also, assistance with re-location both financial assistance and support during the move such as finding housing, temporary
accommodation, schools etc would be an appropriate approach. 
• However, it is important to remember that QZZ is making a rational business decision and difficult decisions regarding employees
sometimes have to be made. This does not necessarily make them unethical but QZZ must ensure that any actions it undertakes
which affect employees are sensitively handled. 

5.3 Recommend, with reasons, how QZZ and the Board of PPP should manage the change process in order to ensure that the acquisition
process progresses with minimal resistance from PPP's employees. (9)

• It is recommended that staff are notified that an acquisition is being negotiated as soon as possible. Any changes which will impact
upon them should be communicated so as to keep them informed, as speculation, gossip and fear of what is about to occur is often
worse than the actual truth about the changes. Therefore, QZZ needs to be mindful of the commitment of PPP’s employees and
recognise that they are key assets to the company. Staff need to be motivated and encouraged to change and re-train in order to
make the acquisition a success. 

Unfreeze
• It is recommended that the Board of PPP must communicate immediately with the staff regarding the reasons for change. It must
make it clear that PPP does not have the resources or the skills to operate in the current environment and that if PPP does not
change through acquisition then it is likely that the company will close. The Board needs to clearly demonstrate to staff the changing
market conditions and the clear change in the buying behaviour of customers for books. PPP can use the closure of the chain of
book-stores as clear evidence of this. 

Change
• Changing the behaviour of staff is likely to be complex and a range of methods will be needed. It is recommended that effective and
regular communication must be carried out with staff regarding not only the redundancy process but also the opportunities the
acquisition will bring. Meetings must take place with all staff to discuss the potential impact on them of the closure of the printing
facility and the process of taking up new appointments. 
• Those staff who could be made redundant should be offered counselling. The Board of PPP must try to persuade QZZ that it must
offer appropriate redundancy terms and should also invest in some form of assistance for staff. These staff have been highly loyal to
PPP and if QZZ wishes to maintain a feeling of loyalty it must prove that it intends to treat its staff well. Morale is going to be a major
driver of whether the acquisition will succeed or not and therefore encouraging up-beat morale should be a key consideration during
the change process. 
• Re-training and re-location should be carefully managed. Staff may fear new technologies and methods of operating and therefore
regular training must be carried out. Incentives and assistance should be provided for re-locating staff. 

Re-freezing
• It is recommended that incentives must be offered to those staff accepting the change. Bonuses should be offered to those staff who
clearly accept the change. 
It is recommended that regular communications with staff regarding acquisition negotiations should be carried out so that staff are fully
informed throughout the process and commitment and motivation is maintained. After the acquisition, further communication should
be carried out regularly to highlight improvements which have occurred. 
6.1 Evaluate, using Ansoff’s product market scope matrix, the alternative strategies XZY could follow to maintain its growth rate in
profits and share price. Note: Ansoff’s model is also described as the growth vector matrix. You are not required to draw this model.
(12) CH 8


Ansoff’s Product/market growth matrix is a classic corporate strategy framework for generating four basic directions for
organisational growth.
 Ansoff has four cells in his matrix which is formulated with axes based on:
• Present and new products/services
• Present and new markets
(ZONE A)
 The CEO has described XZY’s strategy as being based on ‘selling what we know to who we know’ = (ZONE A)
 Although this has been a successful strategy in the past in terms of profitability and share price, XZY is now finding growth difficult
to sustain.
 This suggests that one of the cells of the matrix, Zone A consolidation: choose between penetrating further within zone A Market
Penetration, is approaching the point where it cannot offer any further growth to XZY. 

(ZONE B) Product development

In the context of Ansoff’s matrix the remaining options are:
 Product development: (ZONE B) this implies the launch of new products to existing markets.
 XZY would need to analyse the cause of its reduced growth.
 If it is because its existing products are coming to the end of their life-cycles, then launching new products in its existing markets
could be an appropriate way forward. If the slow-down in growth is due to some structural problem with Asian markets, for
example recession, then offering new products to existing markets may not restore growth. 

(ZONE C) Market development

 Market development: this option would mean that XZY would offer its existing products to new markets, for example Australia and
Europe.
 This would be appropriate if the products were still vibrant and the reason for the slow-down in growth was that the Asian markets
had become saturated or were suffering from structural problems. 

 Diversification: according to Ansoff’s matrix XZY’s remaining option would be to diversify which would commit XZY to making new
products for new markets which could restore growth; for example, XYZ could offer a business service within Europe.

Each of the options above implies moving into new areas, to a greater or lesser extent, and so represents increased risk for XZY with
diversification being the riskiest.

The CEO, who has a fiduciary duty to act in the best interest of XZY’s shareholders, should examine whether it is necessarily a bad
thing if the company’s growth rate slows down. It could be better from the shareholders’ viewpoint than the endless pursuit of growth
which, in the long-term, is an unrealistic aspiration. 

6.2 Considering the CEO’s concerns that re-organisation does not always achieve its intended results, compile a memorandum dealing
with the following aspects:
6.2.1 Advise the CEO of the challenges which may be encountered in changing the organisational structure of XZY and reducing
employee numbers. (5)

• As the reorganisation is aimed at reducing headcount, staff will resist change either informally by negotiation and lobbying or
 perhaps formally by recourse to legal action. 
• Many reorganisations do not fulfil their objectives and the new structure may damage XZY’s profit. This may occur as the
workload may not reduce but will have to be carried out by fewer staff and this could result in poorer quality. This could adversely affect
XZY’s share price. 
• The reorganisation and its attendant difficulties may distract XZY’s management from its normal business and its customers
might suffer as a result. 
• The reorganisation may not be tackling XZY’s underlying problems, for example, that its products are at the end of their life-
cycles or that the Asian market has structural problems. Thus, the CEO might be misled into putting his attention in the wrong areas. 
• Although the reorganisation is designed to save money, in the short term it will cost money and the financial benefits may take
longer to emerge.  There is a possibility that the reorganisation might, in the short term, produce the opposite result to that which is
intended

6.2.2 Recommend how the CEO could manage the process of changing the organisational structure with a view to avoiding the
challenges identified (8)

A number of writers have suggested models or procedures to deal with change.

One well known model was proposed by Kurt Lewin and this would be appropriate for XZY to use. Lewin suggested that successful
change could be achieved by the following three steps:
• Unfreezing: at this stage the CEO and his team would need to make the organisation aware of the need for change and its
necessary preparations. 
• Change (Move): the organisation will have to understand its new structure and learn to function. It will involve people in
learning new ideas and approaches, particularly about their own jobs. At this stage, XZY would be in a state of transition as it moves
towards its final desired, post-reorganisation form. 
• Freeze (Refreeze): when this stage is reached, the changes have to become embedded in the organisation. All the staff
remaining after the reorganisation and the headcount reduction must understand their new role and put this into practice. Therefore, it
is at this point that the changes must be consolidated. 

There are many other models and approaches to change that are available. Candidates are given credit for any suitable model used
appropriately.
In addition to the use of a model to structure the reorganisation and headcount reduction, the CEO needs to consider tactics that would
contribute towards making this change successful. It would be helpful if XZY had a person identified as being the champion of the
change. This needs to be an influential person and the most obvious person in this case would be the CEO who would be able to
demonstrate that there was top-level support for the change. However, this role might be delegated to another Board member if the
CEO has too many calls on his time. 

The change champion could be supported by a project team who would be involved in the operational aspects of effecting the change. 

The motivation of XZY employees could be influenced by providing incentives and disincentives to participants in the change. As well as
incentives, or inducements, people could be encouraged/pressured to accept change if there are disincentives; for example, their
promotion could be blocked for those who resist change. 
It would be important throughout the three stage process that XZY emphasised good communications about the change with its staff. It
would also assist motivation and embedding of the change if staff were allowed to contribute to the change process and its outcomes
rather than simply being told what will happen to them. 

MAY 2020 – Exam

Not available
OCTOBER 2019 – Exam
1.1 Discuss how the recent actions of Mr Fox would compromise M's requirement that its suppliers act in accordance with M's high
ethical standards. (7) CH5 OCT 2020 EXAM Q3.1

It would appear that a number of ethical principles are being compromised by the behaviour of B, in particular by Mr Fox, the owner.

• Firstly, the principle of INTEGRITY is being challenged,

 through Mr Fox encouraging the staff to be dishonest to M’s inspectors.
 The principle of integrity requires organisations to be truthful in all business dealings.
 Mr Fox is encouraging his staff to provide the inspectors with incomplete and misleading information regarding the unpaid
overtime situation and this will clearly affect their assessment of B’s ability to comply with its high ethical standards.
 Furthermore, Mr Fox’s threatening undertone that staff will lose their jobs if they do not win this order is compounding staff
behaviour through instilling fear, which clearly is very unethical and would not meet M’s standards of expected supplier
behaviour.
  M requires the fair and proper treatment of staff and this pressure through fear would certainly be contrary to this. 

• Secondly, M’s staff must ensure that their judgement is not affected through the offer of gifts and inducements and that OBJECTIVITY
must be maintained at all times.
 M’s strict ethical policy expressly states that suppliers are prohibited from using bribes, gifts, or favours to gain a competitive
advantage with M.
 The gifts offered to inspectors and the offer of paid trips to restaurants and local attractions would clearly be considered to be a
bribe to take on the order. This is clearly against M’s high ethical standards and would compromise the principle of objectivity.

 Most of B’s management team have worked for B for fewer than 5 years.
 This is probably [or could be] due to Mr Fox’s dictatorial management style and the little respect Mr Fox has for his managers
resulting in high staff turnover.
 If managers are not allowed to make decisions, or influence Mr Fox’s decisions, they will be frustrated and will leave the
company. This treatment of senior staff is unlikely to meet M’s high ethical standards. 
• In addition, other activities, such as not paying employees overtime for work done would also be unethical and would compromise
M’s high ethical standards in relation to the fair and proper treatment of staff. Paying the national minimum wage is clearly within the
law but the refusal to pay overtime for work undertaken and the reduction in health and safety training would not meet M’s ethical
standards of behaviour. 

1.2 Evaluate each of the relevant aspects of B's current cultural web and advise on the ways in which it would need to change to enable
B to meet the high ethical standards M sets for its suppliers. (9) CH6

DEF: The cultural web shows the behavioural, physical and symbolic manifestations of a culture that inform and are informed by the
taken-for-granted assumptions, or paradigm, of an organisation.

 There are a number of features embedded within B’s current culture which are likely to make it difficult for B to work in accordance
with M’s high ethical standards. These can be analysed using the cultural web model.

 Stories
 These are the core beliefs of the company and often are based upon the history of the business and its successes and failures or
its heroes and villains. B’s stories are largely founded upon its sense of strong family tradition which, Mr Fox, the current owner
is very proud of. This is likely to have created a strong culture of conformity and the need for staff to believe and follow the
leader's beliefs and traditional family values. This has had a very positive effect on the business as it has created a high degree
of loyalty from staff which may have been a factor in its high quality workmanship, as staff are highly experienced and take
pride in the firm’s tradition. This culture of tradition and conformity is likely to make it very difficult to instill a need for change
in B. However, it may be seen as a positive cultural aspect of B by M and the loyalty and high quality is in fact something to be
encouraged to continue within the business. 
 Routines and rituals
 These are the regular routines which occur in the business which often lead to regularised activities and behaviour. In B, the
owner uses monthly bulletins placed upon notice boards to re-enforce conformity and the core beliefs of family traditions in the
business. However, the bulletins have an undertone of threatening behaviour in that they remind staff of their need to be loyal
 to B as employment elsewhere in the country is difficult to find. Although it is probably very effective in creating loyalty it does
so through fear of losing their jobs and this would likely be viewed by M as not meeting its high ethical standards for suppliers.
 B has reduced its training activities in the last three years and this will go against M’s ethical standards in relation to its
expectations that suppliers must provide staff healthand safety training. Providing minimal training compounds the staff
feelings of fear of redundancy as with no training, alternative employment will be difficult. 
 Power/ organisational structure
 Mr Fox has what would appear to be a very authoritarian approach to management. Although there is a senior management
team, Mr Fox makes most of the key decisions without any consultation with the other members of the team. Therefore power
rests largely with Mr Fox. It would appear that this has had a negative effect upon the senior management team as most of the
senior managers have been with B for fewer than 5 years, indicating a high turnover of senior management staff. This is not
likely to be an effective way for B to manage its strategic decision making and M would be likely consider this approach to
strategic management as not meeting its high ethical standards. The fair and proper treatment of its senior management team
is equally as important to B’s success as the fair and proper treatment of its general staff. Therefore, this aspect of B’s current
culture is likely to have to change if M is going to work effectively with B.
 The organisational structure needs to change with an HR manager responsible for all HR activities and a factory manager
responsible for manufacturing output. More liaison between the factory manager and HR is required to motivate all factory
employees. 
 Control systems
 Currently, control within the business appears to be carried out through threat and fear of redundancy. Although it does not
state that Mr Fox explicitly tells staff that they will be made redundant, there is an underlying culture of controlling staff
behaviour through the fear that they may lose their jobs. Most of B’s staff are over 50 and there is currently a high rate of
unemployment in the country where B is located. Most staff have few qualifications and B offers them no other form of
qualification or staff development and therefore if they were to lose their jobs then re-employment would be likely to be
difficult. Therefore, Mr Fox can control their behaviour through this underlying sense of fear. Again, this will have to improve if
M is to agree to place an order with B as this is likely to go against their high standards of ethical behaviour for suppliers. 
 Overall Paradigm
 B’s current culture is one of conformity and tradition. The overriding assumptions are the strong family tradition and staff
loyalty but this is driven by an underlying culture of authoritarian power and fear of redundancy. Although the strong family
tradition and sense of loyalty and high quality are likely to be features of B’s culture which M will wish to exploit and retain, the
aspect of fear and power dominance are aspects which M is likely to consider weaknesses of B and areas which need to be
changed if M is going to be able to successfully work with B as a supplier. M expects fair treatment of staff. 
 Summary
 At present, B is not a suitable supplier for M as it does not meet many of M’s ethical standards. Many changes will need to
occur over a reasonable period of time, perhaps over 6 months to 1 year, in order for the management styles and
organisational structure to change and settle down before M could choose B as a supplier. If B really wants to be a supplier to
M, which operates with high ethical standards, then it needs to demonstrate its commitment to business ethics by making the
necessary changes and by no longer intimidating its staff.

1.3 Recommend, with reasons, 3 ways in which M could assist Mr Fox to improve his and B's ethical standards. (9)

 M must clearly communicate with Mr Fox that he needs to manage his management team only and not interfere with factory
employees or bully his staff. M should suggest a suitable training session on the importance of delegation and motivation of
employees.
 M needs to work very closely with Mr Fox in re-educating him in his own behaviour and management style. Mr Fox clearly
understands the importance of orderliness in his business and its continuity but he appears unaware that his behaviour is likely
to be unethical and against M’s own ethical expectations. Mr Fox must be trained in M’s ethical standards and its expectations
of suppliers. He should also be trained in management systems and styles which would be the most effective for his business.
He has an incredibly loyal workforce which may be due to the economic conditions but more likely to do with the make-up of
the staff. It is important that staff at all levels of the business are happy as well as loyal. M could train Mr Fox to help him
understand the benefits of ethical behaviour and fair treatment of his staff and senior management team. He is likely to be
reluctant to do this but if M insists that his re-training would be part of the contract then this might persuade him. 
 In addition Mr Fox should ensure that training is provided to B’s staff in health and safety in particular. This is a clear aspect of
M’s high ethical standards and suppliers are monitored regularly in their health and safety training and compliance. Currently B
provides minimal training to staff. This is likely to result in the higher potential for staff accidents and could be seriously
damaging to the business.
 Good practice in health and safety activities is not only ethical but also likely to improve overall morale and an improvement in
performance. Mr Fox should therefore run a series of initial health and safety workshops and presentations to both senior
managers and staff. This then needs to be monitored regularly and a formalised system must be set up by B, with the help of Mr
Fox, to monitor and report on health and safety issues and progress. 
 M must also encourage B to introduce a fair payment system to its staff. As this order will guarantee work for B for the next two
 years, M must ensure that it offers a fair system of payment for the work done and that M’s contract does not itself put
pressure upon B for its staff to have to work overtime with no extra payments. Therefore M and B must work closely together
to develop a fair system of payment and a work schedule which will allow B to undertake the contract within agreed and
specified deadlines and productivity schedules. Remuneration and work scheduling by M for this work undertaken by B should
be fair and encourage loyalty and commitment and should discourage Mr Fox from forcing staff to work overtime with no
payment. M should insist that any overtime worked in order to fulfil its own requirements must be paid at a fair overtime rate
and their own payments to B must reflect this. It is important that M regularly monitors compliance of B’s payments to its staff.

2.1 Analyse the strengths and weaknesses of JGS using the value chain model. Ch4
Note: You are not required to draw a value chain diagram in any part of your answer to this question. (8)

DEF: The value chain describes the categories of activities within an organisation which, together, create a product or service. Most
organisations are also part of a wider value system, the set of inter-organisational links and relationships that are necessary to create a
product or service. Both are useful in understanding the strategic position of an organisation and where valuable resources and
capabilities reside.

Using the categories of Porter’s value chain the business has the following strengths and weaknesses:

PRIMARY ACTIVITIES:
Primary activities are directly concerned with the creation or delivery of a product or
service. For example, for a manufacturing business
 Inbound logistics: Inbound logistics are activities concerned with receiving, storing and distributing inputs to the product or service
including materials handling, stock control, transport, et
 No information given, so unable to classify this.
 Operations: Operations transform these inputs into the final product or service: machining, packaging, assembly, testing, etc.
 The business has outgrown the need for shop premises. The owners are unable to attend antiques fairs which have very good
business potential. WEAKNESS. 
 Outbound logistics: Outbound logistics collect, store and distribute the product or service to customers; for example, warehousing
 The assumption is that storage and distribution is carried out at the shop premises. Mention was made in the case of the
increasing cost of security, as the antiques require protection from theft. It could be that the shop premises are no longer the
best place to store and distribute antiques. Possible WEAKNESS. 
 Marketing & Sales: Marketing and sales provide the means whereby consumers or users are made aware of the product or service
and are able to purchase it.
 The owners used to gain their business because of their location, but this is no longer as important. Latterly, they have built
up a reputation and have many repeat customers.
 However, their use of the Internet is primitive and does not contribute to their business. This was a strength now turning into
a WEAKNESS. 
 Service: Service includes those activities that enhance or maintain the value of a product or service, such as installation, repair
 As the owners have a national reputation and many repeat customers, this is classified as a STRENGTH. 

SUPPORT ACTIVITIES:
support activities to improve the effectiveness or efficiency of primary activities:
 Firm infrastructure: Infrastructure. The formal systems of planning, finance, quality control, information management and the
structure of an organisation
 The owners have had a long history of profitable trading. However, recently they have made losses. WEAKNESS. 
  The owners’ premises, if sold, would enable them to realise ‘a substantial capital gain’.STRENGTH.
 Human Resource Management: Human resource management. This transcends all primary activities and is concerned with
recruiting, managing, training
 The owners work in the business and there are no employees. Their long survival in the business and their reputation as
experts are STRENGTHS.
 However, the people are the business and there is little possibility of succession. Further if the owners have been in business
since 1980 they may be approaching retirement age. WEAKNESS. 
 Technology development: Technology development. All value activities have a ‘technology’, even if it is just knowhow.
 This seems to have been neglected. See Marketing & Sales. 
 Procurement: Procurement. Processes that occur in many parts of the organisation for acquiring the various resource inputs to the
primary activities
 No direct evidence of this but longevity of business suggest that this has been a STRENGTH.

2.2 The owners propose to convert their website to facilitate e-commerce in order to increase turnover and profit.
Advise the owners of JGS what they will have to do immediately, and also on a continuing basis, to implement this e-commerce solution.
(8)

 The owners have recently set up a website but this only has some basic information about their business. Although the website has
received many hits, it hasn’t led to any increase in business.
 This suggests there is a wide degree of interest in their business but the website does not enable anyone who is remote from
the town where JGS is based to do any business with the owners.
 The obvious inference is that if they converted their website to facilitate e- commerce their business would increase in both
turnover and profit. 

 INITIAL STEPS to take in the introduction of e-commerce would include

 preparing a project plan and also identifying the level and source of funds which would be required.
 If the owners are to set up a website with e-commerce capability they will need to catalogue, photograph and enter their
stock onto the web site.
 The website would need continual up-dating as stock is sold and new stock acquired.
 They would have to ensure that their server had adequate capacity to cope with the forecast level of traffic. The website
would need to have good security to protect against viruses and fraud, and the owners would need to have a secure method
of receiving payments to facilitate their customers’ transactions.
 If the owners do not have the requisite expertise, they will need to employ a consultant to help them establish the website, to
give them some training and to be available to help with website modifications and emergencies. 
 All of the above will require a significant financial investment.

2.3 Evaluate how the introduction of e-commerce could affect JGS’s value chain. (9)
 A move to e-commerce for the owners would affect the value chain of the owners in the following ways. If trading via the website
takes off, the owners do not need to keep their shop. They will no longer be tied to a specific location and they could move their
business.
 They will also save money on the shop’s fixed costs if they relocate to a cheaper area. Thus, their OPERATIONS will have altered. 

 The OUTBOUND LOGISTICS of the business will be affected in a similar way to Operations. 
 MARKETING & SALES: e-commerce represents a new way of doing business. It should lead to increased business as the owners are
no longer subject to geographical boundaries and their antiques will be displayed on the web. 
 FIRM INFRASTRUCTURE: the change to e-commerce could mean that the owners could return to profitability. They will also be
able to realise their inherent capital gain on disposal of the shop and should benefit from an injection of cash. 
 HUMAN RESOURCE MANAGEMENT: e-commerce implies a new way of working for the owners. They can now attend fairs and
travel which they have not been able to do previously as they will no longer be tied to their shop. 
 TECHNOLOGY DEVELOPMENT: with the adaption of e-commerce this aspect of the value chain will now be an important part of
the business. 
 Procurement: the owner’s new website will put them in touch with a greater number of customers. This could give them access to
new sources of supply of antiques. 
Assuming Y secures the hotel contract:
3.1 Discuss whether she will be able to maintain her lifestyle business strategy. (5)
 The opportunity offered by the hotel contract can be characterised as a transformational change. Johnson, Scholes and
Whittington defined transformational change as change that is radical and will move the organisation outside its existing
paradigm (way of thinking). This implies a significant cultural shift for Y which she is going to have to deal with. 
 Y has operated her business on a small scale in order to give her a particular lifestyle and she has not been interested in growth
 so she has turned away new business. As her personal circumstances are due to change, and she has no other options, she is
trying to win the hotel contract. If she is successful she will have to employ at least 4 staff. She will then have responsibilities to,
and for, four other people. Her business will, therefore, be more complex and her current administrative systems inadequate.
However, her income will increase. 
 The lifestyle that Y has enjoyed will change if she obtains the hotel contract and she will no longer be able to maintain her
lifestyle business strategy. 

3.2 Advise Y of the purposes and benefits of using the following in her business: OCT 2020 1.2 EXAM
 an information systems strategy;
 an information technology strategy;
 an information management strategy. (12)

 Information systems can contribute to a generic competitive strategy by means of strategies for:
 Information Systems, Information Management, and Information Technology.

 Information systems strategy: ISS

 An information systems strategy should define the long-term use of information within Y’s business
 This strategy should describe the information needed to formulate the strategy and to maintain it.
 The ISS will enable Y to specify the systems that will facilitate the use of information to support her in her new business strategy
 When Y has decided what her new long-term goals are then the ISS can express what systems (in the broadest sense of the
word) are needed to support those goals.
 The ISS is a long-term approach expressing how information will be used to support Y’s business strategy and/or create new
strategic options.
 The process of defining her ISS will be an interactive one with that of defining her new business strategy: each strategy
should inform the other.
 A benefit of Y looking at information strategically is that it may give her ideas about new ways of doing business and could
lead to her securing a competitive advantage. 
 When Y is operating the hotel contract, she will have a need for real-time information to ensure she stays within the
contract’s specifications. An ISS should define how she will do this.

 Information management strategy: IMS

 the Futurist will require this strategy to describe how the data and information relating to wedding business should be stored and
accessed. As the hotel will have other strategies and information systems, the information management strategy should describe
how these relate to the strategy for the wedding package.
 For example, there will be a requirement to calculate costs and margins for weddings. The hotel will also be calculating these for
other aspects of its business.
 Therefore, the information management strategy should state whether there needs to be a separate system for calculating these
for wedding business or whether the hotel’s other systems can be used for this purpose. 
 The project team designing the wedding package strategy consists of CB the accountant, the hotel’s General Manager and the
Restaurants Manager.
 Once their strategy is being implemented, they will have different levels of involvement and responsibility for it. With regards to
the data and information associated with the strategy, their roles will need to be demarcated. This would be described in the
information management strategy. 

 Information technology strategy: ITS

 this strategy will specify the hardware and software required for strategy.
 The strategy may not need a separate strategy for its technology as its needs are unlikely to be different from the needs elsewhere
in the hotel, which will have been specified in an overall information technology strategy.
 However, it may require some specialist software in which case this would be stated in this strategy.
 Clearly, Y’s diary and mobile phone will be inadequate in these circumstances, has to move from a position where she relies
on her mobile phone to a much more complex business where she will have to have real-time control information.
 Y’s IT requirements will increase and by drafting an ITS, Y would define what computers, peripherals, communication links
and software she would use in her new expanded business.
 As the acquisition of IT will involve Y in increased investment in technology her ITS will enable her to define her
technological needs and identify how and where these will be met. Part of her ITS will be a budget which she can use to
control expenditure and provide ‘feedforward’ information for future acquisitions. This will benefit her in the future as
lessons learnt from IT acquisition should help make better acquisition decisions.

3.3 Recommend what actions Y will have to take to implement each of the three strategies referred to in question 3.2. (8)
 Information systems strategy
 In order for this strategy to be produced Y will have to articulate her new business strategy as she moves away from managing a
lifestyle business. Although she does not have any employees who will be affected by the new strategy it would be appropriate to
discuss it with her husband who will be affected by it. 
 In producing the ISS she should examine how information could contribute to her long-term success. Y has details of all the
work she has done in the past three years recorded in her diaries. She should analyse this data to discover for example, trends in
customers’ demands, profitability of customers, and seasonality of demand. Y’s success has been built on creativity and reliability. In her
ISS she should specify how these attributes could be recorded and acted upon as they will also be important for her future success. 
 Information technology strategy
 In the future, as well as her current customer base, Y will be dealing with a demanding customer, the hotel, which expects very
close adherence to its contract specification. Therefore, the scale and complexity of Y’s business is going to change in such a way that
her current information technology, a mobile phone and a diary, will be inadequate. Y will need to budget for her technological
requirements. 
 Information management strategy
 Y will need to purchase at a minimum:
  A wireless / wifi enabled computer for her administrative assistant
  (Possibly) a laptop for herself
  A router
  A printer
  Software comprising programs for email, word processing, data base and spreadsheet
  A landline

It may be useful for Y to establish an Intranet. 

4.1 Evaluate the benefits to NSF of undertaking an environmental analysis each year. (8) CH2

NSF would benefit from a more formal, and systematic, approach to the gathering and analysis of information which is external to the
organisation. This process of environmental screening would enable it to gather information under the broad categories of PEST:
Political, Economic, Societal and Technological. Alternatively, it could use the categories described by one of the many other acronyms
which exist for environmental factors.

The benefits NSF would gain are:

 P -  It would assist NSF in having a greater awareness of political priorities and their potential funding. Political policies tend
to be cyclical and dependent on the views of the incumbent political party. By understanding the political context of the environment,
NSF will be able to more effectively predict its future funding and therefore predict the potential threats that it could face. 
  It would help NSF to identify and capitalise upon potential opportunities. It would, hopefully, be aware of the increasing
importance of technology in society and could consider looking at ways to harness technology to increase awareness of sport. A greater
exploitation of technology could be investigated. Similarly, an awareness of the ageing population could lead to directing more sporting
activities towards this section of society. NSF could work in partnership with other public sector and voluntary bodies in health care to
exploit this opportunity. 
  NSF can acquire a base of objective, qualitative information. It would then have a deeper understanding of its market
segments and its potential customers. This could avoid significant cost incurred in the developing of future strategies which are
unsuitable. Understanding its changing market segments (such as the retired people) and their needs is critical for NSF and therefore
having a reliable and up to date database of information would be of assistance. 
  By undertaking environmental analysis, NSF will have the capacity to be more sensitive to the changing needs of the
population. Again, this should raise the company’s awareness of the changing demographics. Exploiting technology to generate interest
in the younger participants for example would help NSF to be more sensitive to its environment. 
  Environmental analysis provides information for the strategy making process. This should improve the quality of strategy
formulation and, as a consequence, reduce risk. NSF should be leading the sports in Country Z and not reacting to changes after the
event. It must become more pro-active in its outlook and approach. 
  NSF could be provided with a good, broad based, education and awareness of the sector in which it operates and the related
industries. If NSF had been carrying out environmental analysis then the rate of societal change might not have been such a surprise. 
  Regular environmental analysis, at least annually, will help the Board of NSF to identify and monitor new trends and
changing interests in different sports. For example, newer sports (such as ultimate Frisbee) require an investment in facilities, trainers
and coaches to try to introduce young people to the new sport. Awareness of different approaches to sport and fitness (such as low
impact exercise for people with injuries or back problems) would help NSF to be fully aware of where funding needs to be considered
and assistance focused on new trends and developments. 
  All commercial businesses undertake SWOT analyses as part of their annual planning cycle and there is no reason why a not
for profit government body such as NSF should not do so. 
  Promotion and marketing of sport. Engaging in sport is a good way to meet people and to build a healthier lifestyle and
combat stress. Health education and promotion of sports should be undertaken by the NSF as this will help it to achieve its overall goals.
Environmental analysis will help NSF target areas where local people are less inclined to engage in sport. 
4.2 Explain the concept of foresight and two techniques (other than scenario planning) which could be used by NSF in the development
of foresight. (5)
 Foresight has been described as the ‘art and science of anticipating the future’. For organisations such as NSF, foresight not only
means predicting the future, but also developing an understanding of all potential changes which, if managed properly, could
produce many new opportunities. There are a number of techniques which can be used to improve the foresight of an organisation.
 These include:

 Visioning
 A possible or desirable future state of the organisation is developed as a mental image by the management of the organisation.
This vision may start off vaguely as a dream but should be firmed up into a concrete statement of where the organisation wants to be.
The critical point is that the vision articulates a view of a realistic, credible and attractive future for the organisation, which is viewed as
being an improvement on the current state of affairs. 
 Issues analysis
 Issues arise through the convergence of trends and events. A trend is a trajectory that an issue takes because of the attention it
receives and the socio-political forces that affect it. This convergence usually manifests itself because there are unfavourable events,
which are sudden and unanticipated, public interest develops and becomes more important or there is increased political pressure. The
issues should be analysed in terms of their impact on the organisation and their probability of occurrence. 
 Role Playing
 This is where a group of people are given a description of a hypothetical future situation and are asked to behave as though
they believe that the situation is true and happening. 
 Delphi Technique
 This seeks to avoid the group pressures of conformity that are inherent in other group based forecasting methods. It does this by
interrogating a panel of experts individually and sequentially and is based on the premise that knowledge and ideas possessed by
some, but not all, of the experts can be identified and shared and this forms the basis of future interrogations. 

 Others which could be discussed are:

 • Opportunity mapping
 • Cross impact analysis
 • Relevance trees
 [Note: Candidates were only required to explain two of the above techniques]
 [numerous marks available, maximum of 5 to be awarded for discussing two techniques]

4.3 Analyse each of the key stages that would be included in a scenario planning process which could be used by NSF. (12)

Scenario planning, as a tool, will provide NSF with a better understanding of what could happen in the environment in which it operates
and help to minimise surprises.
The stages could be as follows:
1. Define the scope of the scenario
NSF will need to decide what knowledge is most important to it. Consideration of its most important market segments and
customers and the time frame it wishes to consider (i.e. how far into the future) should be paramount. It will need to decide
whether the scenario is to be focussed on a specific issue e.g. the impact of the technology on the participation of children or a
more blue sky approach where it asks a question such as; ‘what is the future of community participation in sport in Country Z?’

2. Identify and map the major stakeholders
A consideration of who the main stakeholders are in the sporting environment should be undertaken and how they are likely to
drive change over the period under consideration. For NSF this would most probably include the Government of Country Z (as
the main funder), its volunteers and its customers. All of these stakeholders would need to be evaluated in terms of their
impact and power to influence the future activities of NSF. 
3. Identify the basic trends and uncertainties affecting the business
In assessing the trends and factors that would be identified in an environmental analysis and considering how they may change
in the future, NSF would most probably want to focus upon the technological advances and the increasing use of the internet by
children and young adults and its effect upon sport participation. Since it is very dependent upon the Government for its
revenue it would also consider the trends in the economy which would affect its income. Also the changing demographics
would be a major consideration for NSF. 
4. Identify the key trends and uncertainties
Of the basic trends that have been identified NSF would need to decide which the key uncertainties are. These trends and
uncertainties will be the ‘drivers for change’ which will require contingency planning activities and will shape the future of the
industry. In the case of NSF this would certainly include the declining Government funding and societal and demographic
changes. These will be the main drivers forcing change in NSF. 
 5.Construct initial scenario themes, or skeleton outlines
Possible future scenarios should then be created by forming the key trends and uncertainties into coherent themes. Usually two
alternative scenarios are produced but more can be identified if necessary. NSF might develop one scenario where the economy
continues to be depressed and funding continues to decline with sport becoming less important to society.
This would be the ‘negative’ scenario. The alternative ‘positive’ scenario might feature a booming economy with many
members of society both volunteering and actively participating in sport activities. 
6. Check for plausibility and internal consistency
Effective scenarios are both internally consistent and plausible. This means that different directions that the trends have taken
in the scenario could logically happen together and the events described could happen within the timescale chosen. 
7. Develop learning scenarios
The next stage would be to ‘flesh out’ the scenarios so that they become full descriptions of the sector and conditions that are
expected to prevail in the future timeframe. This is often done by writing a detailed piece of narrative.  The managers of NSF
would need to consider the detailed aspects of each scenario in terms of impact upon NSF’s staff, possible plans for re-training,
more detailed financial analysis and an overall view of the sporting environment in Country Z. 
5.1 Advise the management of JALL:
5.1.1 Why it might encounter resistance to the change in ownership. (6)

A number of reasons for people resisting change have been identified by researchers. One source of resistance could be that JALL did not
properly prepare for the change in ownership. If the staff of JALL do not understand the reasons for the change in ownership and these
have not been explained to them it is likely that they will resist the change. The idea of resistance to change is central to the approach of
Lewin to change management and his idea of ‘Force field Analysis’.
Senior identified the following main sources of individual resistance:

 Fear of the unknown

o There has not been a definitive announcement about the change of ownership of JALL nor the reasons for it. Some of JALL’s
stakeholders, its staff, customers and suppliers may suffer from fear of the unknown which could lead them to resist the
change. In the case of the suppliers and customers this could lead them to take their business elsewhere. 
 Dislike of uncertainty
o To the extent that JALL’s stakeholders dislike uncertainty; they are likely to resist the change. 
 Potential loss of power
o The staff are most likely to be faced with a loss of power in that they may lose their jobs as a result of the changes. The
suppliers and customers have more autonomy as there are other retailers of office products. 
 Potential loss of rewards
o For the staff, this factor is similar to the potential loss of power. 
 Potential lack of or loss of skills.
o This is most likely to affect the staff and the suppliers. If the new owners of JALL intend to carry out the business differently to
how JALL did business in the past, this may require new skills. For example, under its new owners, JALL may carry out its
business using the Internet and this would require IT skills from both JALL’s staff and suppliers which they may not possess.
This could inspire resistance to the change from both the staff and suppliers: in the case of the suppliers they may choose not
to do business with JALL in the future. 

An alternative grouping suggests that the main reasons for people resisting change are:
 An incomplete understanding of the nature of the change and/or the reasons for it:
o JALL’s staff have not been informed about the reasons for the change.
 Individuals believing that the results of the change could threaten their own personal interests and ambitions:
o JALL’s staff do not know if their jobs are safe.
 Differing assessments of the costs and benefits of the change to the organisation:
o It is difficult for JALL’s stakeholders, its staff, customers and suppliers, to make any assessment about the costs and benefits of
the change as they lack information about it.
Lack of trust in those initiating the change and their motives:
o It is not clear who has initiated the change so it would be difficult for the stakeholders to invest trust.

5.1.2 How it could overcome this resistance to change. (7)

 The notion of resistance to change is embedded within Lewin’s Force field analysis. Within this context, resistance could be
overcome by strengthening the driving forces, such as increasing management pressure or by weakening the forces that restrict
output, such as adopting a more humane style of management. It would also be feasible to pursue both strategies simultaneously. 
 Kotter and Schlesinger (1979) identified the following ways to reduce resistance to change which occupy a continuum ranging from
the persuasive to the highly authoritarian:
 Education and communication
 o If the resistance has been caused by a lack of understanding of the reasons for the changes, JALL could communicate the
reasons for the change of ownership to its stakeholders. 
 Participation and involvement
o This approach could gain the co-operation of staff involved in the change. However, not everyone wants to be participative.
JALL could offer its stakeholders the opportunity to influence the change, for example, its staff could suggest a timetable for
integrating JALL into the national chain. 
 Facilitation and support
o JALL could offer training and counselling to support its staff in their new roles. JALL could also prepare staff for their life
outside the organisation if they are to be made redundant, by providing help with CV preparation, job searching and tax
advice if redundancy pay is to be offered. 
 Negotiation and agreement
o This is an alternative to imposing change upon a workforce. If JALL's workforce is given the opportunity to express its
concerns and this is met by a genuine response to resolve these by management, it is likely that resistance will be reduced.
JALL could assist this process on an ad hoc basis. Alternatively, JALL could use the services of a third party, for example, a
trade union or a mediator to help it manage the process. 
 Manipulation and 'co-optation'
o This is an ethically questionable approach as resistance is reduced by means such as presenting misleading or incomplete
information. It is likely that such an approach would infringe Code of Ethics and, therefore, could not be recommended.
o Some of the people resisting the change could be persuaded to support it by being offered inducements such as promotion. 
 Explicit and implicit coercion
o This last approach is the most brutal as it involves actual or implied threats: for example, the management might threaten to
close part of its business and to sack employees if the proposed changes are resisted. Many enlightened managers would not
employ this approach or only use it as a last resort. 

5.2 Advise the management of LNR:

5.2.1 How it could use the Balanced Scorecard to manage its strategic performance. (6)

 The new management of JALL also has to ensure its continued success within the national chain. As success for any organisation is a
multi-dimensional concept, JALL’s performance needs to be measured by a multi-dimensional model and the Balanced Scorecard
enables this.
 Central to the Balanced Scorecard is the organisation’s vision and strategy and this would probably be formulated for JALL by its
new owners. Allied to the vision and strategy are four perspectives designed to support the organisation’s vision and strategy. The
perspectives are:
o Financial
o Customer
o Learning and growth
o Internal business
 All of the four perspectives could include both qualitative and quantitative measures which could be reported upon periodically. The
measures chosen for the reporting would be those most crucial for the delivery of JALL’s vision and strategy. These should be
reviewed regularly and other ones substituted if they have more relevance. 
 The Balanced Scorecard would, therefore, become a part of JALL’s normal periodic reporting system. A summative integrated report
reflecting the performance of JALL regarding all four of the Balanced Scorecard’s perspectives could be prepared and this would give
senior management the opportunity of tracking the achievement of JALL against the overall vision and strategy. 
 More detailed reports on each of the four perspectives should be prepared for operational managers so they would be made aware
of the degree to which the area for which they are responsible is contributing to overall success. 

5.2.2 How it could construct targets for JALL's staff within an incentive scheme and use these targets to support the Balanced
Scorecard. (6)

 Within the Balanced Scorecard a variety of control measures can be identified. If JALL is operating a participative management
culture, these measures and targets would be the result of discussion and negotiation with those staff that are being held
responsible for JALL’s performance. If the culture is ‘top-down’ (autocratic) the measures and targets would be imposed upon those
who are held responsible for their achievement. 
 Whatever the process by which the targets have been established, these could then be integrated into a reward system for staff.
This could be done by means of performance related pay. A manager could agree (in a participative organisation) or be told (in an
autocratic one) targets or objectives for a future period. If the manager achieves these objectives he/she would be rewarded.
Usually this would be with extra pay but the reward can take other forms: for example, promotion and fringe benefits. 
 Similarly, staff could be given (autocratic) or agree (participative) targets for the future which, if met, would help JALL achieve its
vision and strategy. Performance against these targets could be rewarded in a way similar to those for the managers. 
 The important link with the Balanced Scorecard is that the manager’s objectives should reflect the control measures that have been
 identified within the Balanced Scorecard to help achieve the organisation's vision and strategy. An example of how an individual
manager and her/his performance related pay is integrated with the Balanced Scorecard is shown below:
o Vision and Strategy: To be the region's leading retailer of office products
o Customer perspective: Capture new markets
o Marketing manager: Personal objective
o Carry out market research to identify new market segments capable of delivering R300, 000 additional sales per year. 
6.1 Categorise, under the headings Operational, Management and Strategic, the recent criticisms made about MNI. Advise the Vice-
Chancellor how control measures could assist in the successful implementation of the new strategic plan. (7)

MNI has been subjected to eight different criticisms. These can be categorised as:
 Operational
  It could not accurately produce a head-count of the number of students on roll.
  The internal control of cash receipts was defective and in several areas there had been discrepancies. 
 Management
  Its expenditure exceeded its income.
  Student drop-out and failure rates were greatly in excess of the national average.
  The level of student complaints was very high and increasing.
  It had a large amount of debtors, mainly ex-students, and was not doing anything to collect outstanding amounts.
  It had an abnormally high level of staff turnover. 
 Strategic
  The audit of the quality of education provided by MNI awarded MNI the lowest rating of ‘Poor’. 
 [Points to note: These categories are indicative rather than definitive as some criticisms could fit more than one category,
for example, a high level of staff turnover can be viewed as both an Operational and a Management criticism. Candidates
were not expected to rigidly adhere to these categories; other sensible categories gained marks.]

The Vice-Chancellor has been instructed to prepare a new strategic plan for the period 2011- 2016. The new strategic plan has to
address the eight criticisms and it is reasonable to assume that the Vice-Chancellor wishes to eradicate the eight criticisms. The role of
the control measures will be to monitor performance in these eight areas and provide feedback and feed-forward information to enable
managers to take appropriate action. 

In general, the control measures should be designed to align performance with the strategic goals, values and vision articulated within
the new strategic plan. The control measures are likely to take the form of Critical Success Factors (CSFs) which could be supported by
Key Performance Indicators (KPIs). The reporting of performance against these control measures should be incorporated within the
periodic management control reporting and could also be reported within a Balanced Scorecard framework. 

6.2 Recommend, with reasons, what controls the university could use to assist in the improvement of any three of the areas criticised in
the recent audit. (9)
 Operational
o The operational areas which were criticised are most amenable to direct action and should be the quickest to rectify. These
represent areas of the university’s work which is going wrong on a daily basis and so immediate action is required. 
o Inaccurate head-count of the number of students on roll.
o If the university does not know how many students it has, this will have adverse implications for many aspects of the
university’s work ranging from time-tabling to funding.
o Control action:
 the university should issue an identity card for each student and each student should be registered on a central
database which is continually up-dated. If students are not in possession of a valid identity card they would be
prevented from using university services, such as the library or the computer network. 
 Internal control of cash receipts was defective and in several areas there had been discrepancies.
o The university will have a large number of cash transactions every day, for example in its restaurants, libraries and sports
centres. If cash control is inadequate there is a danger of theft.
o Control action:
 as far as possible restrict the use of cash for university transactions. Limit the amount of cash balances held within
the university. Insist all cash over a sensible working balance is banked daily or more frequently if necessary.
Separate duties, wherever possible, of staff handling cash and those responsible for accounting for cash. 
o Management
 Management problems are more complex and not as amenable to quick solutions as are the operational ones
 MNI’s expenditure exceeded its income.
o This is not sustainable in the long-run because there is a danger that the university could become insolvent. Although the
actions taken to address the operational criticisms will help, they will not be sufficient to align the university’s income and
 expenditure. Other actions, which will take longer to implement, are required. 
o Control action: review all areas of expenditure, institute a cost reduction programme, consider increasing prices wherever
possible and reduce investment in working capital.
 Student drop-out and failure rates were greatly in excess of the national average.
o Student drop-outs and inflated failure rates indicate dissatisfaction with the university which will damage the university’s
reputation. They also point to inefficiencies in the teaching and learning process and will damage the university’s cash flow.

o Control action: conduct exit interviews with students who are leaving the university, review recruitment procedures and
requirements, institute an academic audit of university programmes.
 MNI’s level of student complaints was very high and increasing.
o Similarly, to the student drop-out and failure rates, this indicates dissatisfaction with the university’s processes. 
o Control action: review the complaints procedures and address any systematic cause of complaints, for example,
examination regulations. Survey the current students to identify areas of potential complaint. 
 MNI had a large amount of debtors, mainly ex-students, and was not doing anything to collect outstanding amounts.
o This criticism may be related to the university not accurately knowing how many students it has on roll. Once a student has
left the university it will become more difficult to collect outstanding amounts. These debtors represent a loss to the
university’s cash-flow.
o Control actions: establish a target level of debtors and institute actions to reduce the outstanding level of debtors. 
 MNI had an abnormally high level of staff turnover.
o Staff are a vital part of every organisation because they deliver the strategy. An abnormally high level of staff turnover
indicates problems within the organisation. Staff turnover creates expense for the university and whilst it is normal for
some staff to leave the university the abnormally high level will create an abnormally high expense and may impact on
MNI's level of quality.
o Control action: conduct exit interviews with all staff that leave the university. Survey the existing staff and rectify any
general causes of dissatisfaction. 
o At this level, the criticisms represent the most complex problems faced by the university. They cannot be resolved by single
actions but will require holistic solutions.
 MNI had received the lowest possible rating for the quality of its education: ‘Poor’.
o This rating represents a public criticism of the university which is likely to affect its reputation. Externally, this could result
in worsening recruitment of students. Internally, this implies that the university’s current students are receiving a sub-
standard education. If this rating is not improved the university’s new strategic plan will be undermined.
o Control action: establish a department responsible for quality. Codify existing quality procedures and produce new ones as
necessary. Carry out periodic internal quality audits. Allocate investment in the new strategic plan to address areas of
quality weakness. Make quality targets a part of all members of staff’s performance management objectives.

6.3 Advise the Vice-Chancellor how information systems could support the successful implementation of the new strategic plan. (9)

The university's information systems could support the successful implementation of the new strategic plan at a number of levels.
Robert Anthony produced a hierarchy of control which was founded on a base of transactions processing. Above this was the level of
operational control, above that management control and, at the highest level, strategic planning.

This model has obvious applicability to MNI and each level identified by Anthony will require support from university information
systems. 

Strategic
 The new strategic plan should identify Critical Success Factors which are those aspects of the university's operations that the plan
has identified as being vital for its success: an example of a CSF would be that the university should operate at a surplus. It was
criticised for being in deficit: its expenditure exceeding its income. This CSF could be monitored by means of a Key Performance
Indicator, which in this case would be the university's operating position which could be reported upon monthly. The monthly
reporting would entail use of an information system. 

[Points to note: Additionally, information systems have, in themselves, been identified as an important strategic variable. This is for a
number of reasons, the first being that information systems, together with their associated hardware infrastructure, are likely to be a
significant proportion of the university's operating and capital costs. The information systems can also be an important competitive
variable in that they can affect the way in which the university carries out its business: an example of this would be the university
replacing lectures by webcasts.]

Thus, the information systems and the new opportunities they offer could be a source of competitive advantage. For these reasons the
new strategic plan should incorporate within it an information strategy. 
Management
 The university’s information systems should support the management of MNI by providing reporting and monitoring functions to
demonstrate performance against the targets and KPIs identified in the new strategic plan. An example of this would be periodic
reporting of the university’s income and expenditure. Student drop-out and failure rates could also be reported periodically to
managers with responsibility for these areas. The university would also need to know periodically the number of its debtors to check
that its corrective actions were succeeding. 
Operational
 The university’s information systems should provide real-time information about key operational performance. It is important that
the university should accurately know, at any time, how many students it has on roll and it should continually and accurately be able
to account for its cash. This implies a need for immediate data capture which would be facilitated by devices such as the student
identity card. 

MAY 2019 – Exam

1.1 Using the above case study, discuss the responsibilities of a strategic leader. (10)

 Communicating the vision and strategic direction to all employees and other stakeholders of the organisation. 
 Developing an appropriate vision or strategic direction for the organisation in which as many stakeholders as possible have
participated. 
 Designing appropriate reward systems and organisational structures together with top management. 
 Developing and maintaining an effective organisational culture. 
 Ensuring with managers that the organisation continually incorporates good corporate governance principle into its strategies and
operations. 
 Inspiring and motivating employees to achieve the strategies and operations. 

1.2 Why is organisational structure important and how does structure itself become a source of competitive advantage? (15) CH13

DEF
 Organisational structures are the roles, responsibilities and reporting relationships in organisations.
o These are likely to reflect power structures and how they manifest themselves.
o Formal hierarchical, mechanistic structures may emphasise that strategy is the province of top managers and everyone
else is ‘working to orders’.
o Structures with less emphasis on formal reporting relationships might indicate more participative strategy making.
Highly decentralised structures (as discussed in Chapter 14) may signify that collaboration is less important than
competition and so on.

Organisational structure has always been considered important for any aspect of the business as it stipulates responsibility and
authority, as well as accountability and how work is organised. There are four basic types of organisational structure, as given in
figure 13.3 of the textbook

Advantages of the organisational structure will include:

 Structure allows the effective deployment of strategy within the organisation, and if managed well leads to cost efficiencies,
and can be used to gain an edge over its competitors. 
 Structure is a medium-term activity, and should be rigorous enough to support strategy, but also flexible enough to allow
Modifications to it to support changes to the organisation’s changing strategy, as a consequence of the changing
environments. 
 More recently, the importance of ‘organising’ has been regarded (by people like Pettigrew) as synonymous with the
organisation; in other words, the way companies are organised can be a competitive advantage over others if performed well.

   The Japanese are well-known for their use of cross-functional structure, as part of quality management, organisational
effectiveness and process management. 

2.1 Using the five forces framework, evaluate the competitive environment in which McDonald’s operates, considering some of the
facts discussed in the above scenario. (15) CH3

Porter’s Five Forces model which examines:

1. The rivalry among the industry’s existing firms
2. The threat of new entrants to the industry
3. The threat of substitute services and/or products
4. The bargaining power of the suppliers to the industry
5. The bargaining power of the industry's customers/buyers. 

 DEF: Porter’s Five Forces framework is a means of analysing an organisation’s competitive environment.
o The intensity of each force is determined by the nature and development stage of the market, the relative numbers of
buyers, suppliers and competitors, and the barriers to entry and any imitations that exist.
 Evaluate its competitive environment. Discussions of concepts:
o such as backward integration (buyer power),
o high capital investment (barriers to entry),
o forward integration (supplier power) and
o aggressive pricing (potential new entrants) could all be relevant and rewarded.

THREATS OF RIVALRIES (CENTER)

 The more competitive rivalry there is, the worse it is for incumbents are.
 A company's competitive position is determined by the number and power of its competitors. Obviously, in today's global
market, competition are the biggest threat. McDonald's sees this as a purpose to attain. 
 Five factors tend to define the extent of rivalry in an industry or market
o Competitor concentration and balance: There is a risk that competitors will act very competitively, for example by
aggressively cutting prices.
o Industry growth rate: A company's growth is likely to come at the price of another company, causing strong opposition.
There are a lot of low-growth markets where prices are very competitive and there aren't a lot of jobs. An industry's
life cycle affects how quickly and how well it grows and competes.
o High fixed costs: Companies that are very competitive have a lot of fixed costs. Companies will try to spread costs by
increasing the number of products they make, which usually means cutting prices, which forces other businesses to do
the same. This leads to price wars that hurt everyone in the industry.
High exit barriers: Closed or disinvested industries tend to promote rivalry.
o Low differentiation: In a commodity market, where customers can easily switch between companies, price competition
is the only option to compete.

THREAT OF NEW ENTRANTS.

 Barriers to entry are the factors that need to be overcome by new entrants if they are to compete in an industry
o high capital investment (barriers to entry),
 New entrants in the market can be very dangerous for existing businesses. If the New entrants have a good brand, the existing
company's profit, market share, and value will be affected.
 For example, Suppose that rival opens a new store close to its competitor. This will make things difficult for that competitor. On
the other hand, it can be hard to find a good place to open a store in a new place.
 Other barriers can include:
o Scale and experience: network effect
o Access to supply or distribution channels: Control over suppliers / e-commerce have upper hand
o Capital requirements: high capital investment / finances resources in order to compete /such as research
o Legislation or government action: legislation strain / Patent protection
o Expected realisation: aggressive pricing (potential new entrants) could all be relevant and rewarded. could take the
form of price war or marketing Blitz

POWER OF SUPPLIERS (Opposite of buyers)

 Suppliers are people who give the company the things it needs to make the product or service.
 The company needs the correct raw materials. Because raw materials are frequently given by others, the producer is reliant on
them.  So the company's relationship with its suppliers is very different. McDonald’s realises this truth and practices friendly
relationship with its suppliers. 
  Supplier power is likely to be high in places where there are more people::
o Concentrated Suppliers: Suppliers have more power over buyers when there are only a few producers
o High switching costs: the buyer is more likely to be dependent on one supplier and less likely to be able to do anything
about it. 
o Supplier competition threat: Suppliers have more leverage when they can enter the industry directly or bypass buyers.
This is called forward vertical integration or getting closer to the end user.
o Differential products: Suppliers gain authority by offering distinctive products or services. Even while Walmart and
other budget stores are powerful, suppliers with strong brands, like P&G with Gilette, still have a lot of negotiating
power. 

BUYERS’ POWER
 Buyers are the company's first customers, but they aren't always the final customers. The more powerful the buyers are, the
more they can ask for low prices or big changes to products or services.
 In the restaurant business, customers are playing the role of buyers. In this case, buyers are powerful because they have
thousands of alternatives on which they can spend their money. They choose the quality food with cheap price and high
standard of service.
 Buyers have a lot of power when the following four things happen:
o Concentrated buyers: Buying a large quantity of a product or service increases the buyer's leverage since they are
more likely to "search around" for the best price and so "pressure" suppliers than smaller purchases.
o Low switching costs: Buyers who can quickly switch suppliers have a strong negotiation position and can squeeze
suppliers desperate for business. Generally low for standardised and undifferentiated products
o Buyer competition threat: The buyer is likely to be powerful if it can provide for itself or has the possibility to do so. It
can say to its suppliers that it will do their work if they don't.  If you can't get good prices or quality from your
suppliers, you might move backward vertically. This is called backward vertical integration, and it could happen if you
can't find good suppliers.
o Low buyer profits and impact on quality: First, if the Companies buyer isn't making a profit and is under pressure to cut
costs. Second, if the quality of the buyer's product or service isn't affected by what they buy. This makes them more
price sensitive and increases their risk.

THREATS OF SUBSTITUTES
 Substitutes are items or services that are similar in nature but not identical. A basic risk of substitution caps an industry's prices.
 An easy-to-substitute product may harm the company.
 For example, if other restaurant can produce the product with same effect, it will lose its customers. As a result, the firm must
produce something efficient and long-lasting.
 NB considerations for Substitutes include:
o Extra-industry effects: The concept of substituting is good because it makes managers think about threats and
constraints that aren't in their own field.
o The price/performance ratio: As long as the substitute has performance advantages that customers value, it can still be
dangerous even if it costs more.

The Five Forces model can be used by the team

 to figure out how hard the competition will be if the XX decides to act like a XX.
 The team will then be able to figure out how profitable this new strategy will be and whether or not it should enter this marke.
 If the Futurist decides to get into the wedding business, it will have to compete with seven other hotels that have different
prices for different groups of people. In this way, the Futurist could avoid making a mistake when it comes to its competitive
position and be able to take advantage of which of the five forces appear to be the best.

2.2 Discuss the limitations of using the five forces framework. (10) CH3

When each of the five forces has been considered, he next step is determining what the implication are.

limitations
 Porter's model has also been criticized for not taking into account the unique talents and capabilities that each company brings
to the table.
 It has been said that the model is a framework that should be used with the Resources and Capabilities model or another.
 Porter also said that:
o the presence of government regulation in the market affects the models' reliability; and
o the presence of increased globalization and technology may have significantly changed the dynamics of economic
growth and competition since the model's inception.
Other limitations to review, Could be based around: 
 “Snapshot” issues and questions about its flexibility 
 Oversimplifying the situation
 It symbolises a positioning approach.
 Whatever the industry, these five forces influence the profitability as they affect the prices, the costs, and the capital
investment essential for survival and competition in industry.
 This is particularly important to the supply chain and elements within it.
 The five forces model also helps in making strategic decisions as it is used by managers to determine an industry’s competitive
structure. 

In addition Porter ignored a sixth significant factor – COMPLEMENTARY SUPPLIERS

 There is a lot of trust between two companies whose products work well together, and this term means that. Strong
compliments could have a big impact on the business. Another problem with the Five Forces model is that it doesn't take into
account the importance of innovation and the uniqueness of each company. As the main answer scheme points out, this model
looks at competition in a "stagnant way."
3.1 With reference to the above scenario, explain what is meant by the term ‘strategic drift.’ (9) ch6

DEF: strategic drift the tendency for strategies to develop incrementally on the basis of historical and cultural influences, but fail to keep
pace with a changing environment (p. 180)
Strategic drift also highlights some significant challenges for managers that, in turn, point to some important lessons.

 Strategic drift is the situation where successive strategies fail to address the strategic issues of the organisation and performance
gradually deteriorates. 

 There are a number of reasons for strategic drift:

 changes in the environment are greater than the incremental changes in the organisation’s strategy;
o reacting to changes in the environment rather than innovating in a proactive way;
o the cultural paradigm of the organisation restricts the ability of the organisation to change at the rate or to the extant which
is necessary. 
 Planned strategic change, often of a transformational nature, is the means of overcoming this strategic drift. Candidates should
provide a broad definition and give a fairly in-depth analysis of this key strategic term. 
 Strategic drift is a concept of strategic management that refers to the response of organisation when experiencing a changing
environment.  Different situations and unexpected challenges are very common aspects that may arise anytime when driving and
developing strategic change within the organisation.
 Strategic drift can be defined as those situations where organisations fail in respect of the expected strategic outcome. 
 It occurs when management loses focus on the actual strategic plan and gets involved in another course of action that is less
significant. Sometimes senior management becomes a victim of strategic drift and then starts to give priority to a minor aspect,
ignoring the actual problem which is more critical than the minor one on which focus is placed.
 Strategic drift usually arises from a combination of factors, including:
  Business failing to adapt to a changing external environment (for example social or technological change)
  A discovery that what worked before (in terms of competitiveness) doesn’t work anymore
  Complacency sets in – often built on previous success which management assumes will continue
  Senior management deny there is a problem, even when faced with the evidence
3.2 Evaluate how effective change management can address strategic drift. (16)

 In terms of change management and strategic drift, there are a number of different issues that could be appraised (meaning: a
minimum of strengths and weaknesses) These could include:
o types of change (transformational or incremental, managed or imposed); implementation issues (strategy, structure, systems,
staff, skills and shared values);
o restraining and facilitating forces; change management techniques (communication, education, collaboration, early
involvement, direction or coercion); change roles; change agents;
o cultural issues; timing and top management support;
o reinforcement, monitoring and review. 
 Change management depends mainly on the speed at which changes are being implemented and taking into consideration the
present and enormous challenge being faced by the organisation. Many companies are experiencing a skills shortage, which are
caused by a number of factors, including the transition to a more transient workforce than in previous generations; a lack of training
company employees to take on other tasks and transfer into new positions; and a failure to train younger staff to replace people
when they retire. For an organisation like Nokia, to operate effectively, there has to generally accepted set of assumptions which in
effect represents the
 collective experience without which people would have to ‘reinvent their world’ for the different circumstances. 
 In some organisations, strategic drift occurs because professionals have their own perspectives, independent of what the firm’s
leaders may think. Sometimes professionals view themselves as running their own businesses. So, strategic drift is inherent in the
professional model. Whether it becomes problematic and costly depends on how it is managed and certainly more and more
purchasing objectives are now reflecting corporate goals. [The direct element is not referred to in the question, but examples
relating to strategic management will be rewarded].
Using the scenario above and giving examples to illustrate your answer, assess the organisation in terms of its approach to:
4.1 Strategy (9)
Candidates could attempt a broad definition here along the lines of strategy being the direction and scope of an organisation over the
long-term, which achieves advantage for the organisation through its configuration of resources within a challenging environment, to
meet the needs of markets and to fulfil stakeholder expectations. There are a number of different definitions of “strategy” and
candidates may wish to assess, such as those of Grant, Ohmae, Johnson & Scholes and Mintzberg among others, with application to the
scenario.

4.2 Strategic planning (8)

Every organisation or unit [candidates could use a purchasing example] occasionally has to make some momentous decisions; the sort of
decisions that affect the entire destiny of the organisation for years into the future. Effective strategic planning articulates not only
where an organisation is going and the actions needed to make progress, but also how it will know if it is successful.  These decisions
are designed to address the biggest and most important issues facing an organisation. Strategic planning, therefore, must have
something about big decisions indicating some form of deliberate action, therefore a discussion of Johnson & Scholes rational planning
model of analysis, choice and implementation may be in order.  [Application to scenario]

4.3 Strategy development(8)

Strategy development recognises that strategy is not always what is planned, therefore the emergent and instrumentalist approaches of
Mintzberg and Quinn may be covered. Realised strategy often results from a combination of planned, deliberate action and unplanned
emergent themes. [Application to the scenario] 

In any three elements of responses marks could be awarded therefore for mention of:
  Corporate Strategy - is concerned with the overall purpose and scope of the business to meet stakeholder expectations. This
is a crucial level since it is heavily influenced by investors in the business and acts to guide strategic decision-making throughout
the business. Corporate strategy is often stated explicitly in a “mission statement”.
  Business Unit Strategy - is concerned more with how a business competes successfully in a particular market. It concerns
strategic decisions about choice of products, meeting needs of customers, gaining advantage over competitors and exploiting
or creating new opportunities etc.
  Operational Strategy - is concerned with how each part of the business is organised to deliver the corporate and business-unit
level strategic direction. Operational strategy therefore focuses on issues of resources, processes and people etc.]
5.1 Provide guidance to the Vodacom leadership team and its CEO for overcoming resistance to change. (7) OCT 2019 5 EXAM
  Education and Communication – Communication helps people to understand why it is important / necessary to change and
mutual trust is really important.
  Explicit and Implicit Coercion – Coercion is not a positive way to manage resistance to change. It may work in the short-term
but it is unlikely that it will change the result in a long-term commitment on the part of the employee.
  Facilitation and Support – The building of support networks through the organisation is helpful in overcoming resistance to
 change.
  Giving Clear Direction – Authority may be used to set the direction and impose the necessary means to implement the
change.
  Manipulation and Co-optation – Manipulation is an attempt to influence or force people into accepting the necessity to
change; co-optation involves the “buying off” of formal leaders by giving them personal rewards to accept and promote change.
  Negotiation and Agreement – Is normally linked to incentives and rewards,
  Participation and Involvement – People will be more supportive of the strategic changes when they form part of the strategy
formulation process.

5.2 Propose effective change management methods and theories that the CEO could have used within Vodacom to ensure the supply
chain transformational project overcame any obstacles to its future success. (18)

Overcoming barriers to change:

The staff at Vodacom across the different functions, territories and brand/product operations needed good strong leadership as
barriers included:
  Fear of the unknown
  Uncertainty
  Changing priorities and roles
  Lack of skills that fit with the changing company
  Unwillingness to change – ‘this is the way we have always done it’ mentality.

Methods that the CEO could have used to overcome these barriers include:
  Good clear communication – regular updates of progress
  Encouraging employee feedback e.g. forums, questionnaires, suggestion
 schemes etc.
  Incorporating good ideas from staff to gain bargaining power for other key
 aspects that need introducing
  Cross functional team working
  Project Management – defined and achievable objectives, realistic
 timeframes and regular monitoring and review.
  Celebrating successes.

Effective Change Management methods:

 A number of tools and techniques can be used to ensure the change is assessed and delivered successfully.
These include but are not restricted to:
  Analysing the change situation – PESTLE and SWOT
  Force Field Analysis – to determine the level of support for the change and
 level of resistance against the change
  The change equation
  Building a compelling vision
  Kotter and Schlesinger, ‘Overcoming resistance to change approaches’
  Lewin’s un-freeze-change-refreeze (behavioural modification) model
  French, Kast and Rosenzweig – Eight components of a planned change programme
Basing your answers on the above scenario:
6.1 Discuss the dangers of a mismatch between corporate image and corporate identity. What strategies are possible for closing the
gap? (9)
Corporate image and corporate identity are different things: the former refers to what the organisation is understood to be by the
stakeholders (as receivers), and the latter refers to the organisation’s self-image.  It is common for there to be a mismatch
between the two, particularly when the marketing efforts of the organisation are not effective. In this case it is important that
the organisation is not prone to making a bad public impression. 

6.2 Is there a perfect alignment between James Hardie’s purpose and culture? Explain your answer. (8)
 There may be a mismatch between the true intention of the organisation’s purpose and its culture mainly due to the lack of
clarity of the former. 
 The purpose normally influences the culture of the organisation as the purpose exists first and then people who are appointed
to the position are natured to the needs of that purpose. However, for reformed organisations, such as those resulting from
non-organic growth (merger and acquisition activity), the cultures may have existed first through a legacy of the merged
companies and the newly established purpose may not be consistently or well aligned with them.  There are three levels of
 culture (artefacts, espoused values, and basic underlying assumptions) which must be managed differently by the manager
concerned, and if these are not managed properly are likely to result in misalignment with the organisational purpose.  To
help managers think more seriously about managing the culture of the organisation, the cultural web may be instrumental to
that process.

6.3 Who are the typical stakeholders in an organisation, and how do they affect the purpose and management of the organisation? (8)
 The typical stakeholders of an organisation include, but are not restricted to: lenders, customers, government, employees,
owners, etc. Their influence upon the organisation varies depending on the industry to which the organisation belongs and the
nature of that industry (particularly if it is either a high or low velocity industry). 
 Indeed, some organisations may not have some of these stakeholders at all and in some cases their presence is only implicit.
 The key stakeholders are the customers, suppliers and employees. The clarity and orientation of the purpose of an organisation
may be affected if one or more of the stakeholders have a strong influence over the way the organisation works. For example,
in the case of public services the safety or economic regulator has control over the standards of services expected by the
companies, and so the
 purpose of the organisation should be aligned with their expectations. Similarly, in industries of high competition, customers
may be more demanding and so they may be able to sway the future direction, and thus influence even to a small degree the
purpose of the organisation. 