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MNG2602/1/2021–2023

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CONTENTS

Page
INTRODUCTION v
WELCOME v
GETTING STARTED v
PLANNING AND MANAGING YOUR TIME vi
INTRODUCTION TO THE MODULE vii
CONCLUSION viii
LEARNING UNIT 1: Managers and managing 1
OVERVIEW 1
MANAGEMENT LEVELS, SKILLS AND ROLES 3
MANAGERIAL TASKS AND CHALLENGES 6
CONCLUSION 10
REFERENCES 13
LEARNING UNIT 2: Ethics and social responsibility 14
OVERVIEW 14
STAKEHOLDERS AND RULES FOR ETHICAL DECISION MAKING 16
THE IMPORTANCE OF BEHAVING ETHICALLY 17
ETHICS AND SOCIAL RESPONSIBILITY 18
APPROACHES TO SOCIAL RESPONSIBILITY 23
CONCLUSION 26
REFERENCES 29
LEARNING UNIT 3: Managing diverse employees in a multicultural environment 30
OVERVIEW 30
SOURCES OF DIVERSITY 32
MANAGERS AND THE EFFECTIVE MANAGEMENT OF DIVERSITY 34
APPROACHES TO MANAGING DIVERSITY 35
HOW TO MANAGE DIVERSITY EFFECTIVELY 37
CONCLUSION 40
REFERENCES 41
LEARNING UNIT 4: Managing in the global environment 42
OVERVIEW 42
GLOBAL ENVIRONMENT 44
THE CHANGING GLOBAL ENVIRONMENT 48
THE PROCESS OF GLOBALISATION 48
CONCLUSION 50
REFERENCES 53
LEARNING UNIT 5: Organisational culture 54
OVERVIEW 54
WHAT IS ORGANISATIONAL CULTURE? 56
LEVELS OF CULTURE 59
ELEMENTS OF CULTURE 59
PRINCIPLES FOR MOBILISING YOUR ORGANISATIONAL CULTURE 60

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 NATIONAL CULTURE AND GLOBAL MANAGEMENT 63
CONCLUSION 65
REFERENCES 67
LEARNING UNIT 6: The manager as a planner and strategist 69
OVERVIEW 69
PLANNING AND STRATEGY 71
FORMULATING THE ORGANISATION’S STRATEGY 73
IMPLEMENTING THE FORMULATED STRATEGY 75
CONCLUSION 76
REFERENCES 78
LEARNING UNIT 7: Value chain management: Functional strategies for competitive
advantage 79
OVERVIEW 79
FUNCTIONAL STRATEGIES AND VALUE CHAIN MANAGEMENT 81
IMPROVING RESPONSIVENESS TO CUSTOMERS AND QUALITY 83
IMPROVING EFFICIENCY AND INNOVATION 85
VALUE CHAIN MANAGEMENT AND FUNCTIONAL STRATEGIES FOR A COMPETITIVE
ADVANTAGE 88
CONCLUSION 90
REFERENCES 92
LEARNING UNIT 8: Effective groups and teams 93
OVERVIEW 93
TYPES OF GROUPS AND TEAMS 95
CROSS-FUNCTIONAL TEAMS 98
VIRTUAL TEAMS 101
GROUP DYNAMICS 102
TEAM ROLES 103
CONCLUSION 108
REFERENCES 111
LEARNING UNIT 9: Managing conflict, politics and negotiation 112
OVERVIEW 112
ORGANISATIONAL CONFLICT 114
TYPES AND SOURCES OF ORGANISATIONAL CONFLICT 116
NEGOTIATION 118
POWER AND POLITICS 119
CONCLUSION 122
REFERENCES 124
LEARNING UNIT 10: Project management 125
OVERVIEW 125
CURRENT DRIVERS OF PROJECT MANAGMENT 126
PROJECT LIFE CYCLE STAGES 128
ROLE PLAYERS IN PROJECT MANAGEMENT 130
PROJECT MANAGEMENT TODAY: A SOCIO-TECHNICAL APPROACH 133
CONCLUSION 134
REFERENCES 135

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INTRODUCTION

WELCOME
Dear MNG2602 stakeholder
Welcome to the module, Contemporary Management Issues (MNG2602). To make your
studies easier, and to help you share in our enthusiasm for this field, we urge you to work
through this document in detail. You should also read through your Tutorial Letter 101.
Refer back to these study materials as often as you need to throughout your studies.

The field of management is extremely dynamic and challenging, so we have included

additional learning experiences and case studies in your study guide. This will provide you
with opportunities to explore the latest developments in the field of business management,
and will help you to discover management as it is practised today.

Although you are studying on your own, please contact your lecturers if you have any
problems with this module. The lecturers’ contact details are in Tutorial Letter 101. We
urge you to make use of the information and interaction capabilities on the website
for your module on myUnisa. You will benefit greatly by participating in the discussion
forums and online activities.

We hope that you will enjoy this module and we look forward to witnessing your progress
at a personal and professional level during the year. We wish you a prosperous and fruitful
year of study.

Best regards

Your MNG2602 lecturers

GETTING STARTED
Before continuing, please claim your myUnisa login and set up your myLife e-mail account
if you have not already done so (my.unisa.ac.za). Although most of the online content is
available in this document, you should visit myUnisa regularly, as important information
will be communicated to you via announcements throughout the semester.

Please remember to submit all assignments electronically. Written assignments must

be in PDF format before submission. Assignments that were completed on mark-reading
sheets in a digital format must be submitted by means of a digital device via myUnisa.
Assignments may not be submitted by fax, e-mail or Dropbox, unless you were instructed
to do so.
What to do first – Read through ALL relevant study materials, especially Tutorial Letter 101.
Your studies should commence the moment you receive your study material.

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What to do next – Select the “Discussion Forums” tool on myUnisa (in the menu bar on
the left), go to the “Meet & Mingle” forum and introduce yourself to your fellow students
under the “Introduce yourself!” topic.

PLANNING AND MANAGING YOUR TIME

Attempting to balance your studies, work, family life and extracurricular activities is a
challenge that requires you to manage ever-increasing and competing demands. You
therefore have to plan and draw up a schedule that will suit your needs and circumstances. You
will be able to see the due dates of the assignments under the “Schedule” tool on myUnisa
and in your Tutorial Letter 101. Consider following some of the recommendations below.

Browse the module site

Take time to browse the module site and to familiarise yourself with the requirements
and demands of the module. This will enable you to see the “big picture” of the module.
Enter the assignment due dates and important events relating to the module that you
need to attend in your personal diary.

Compile a study timetable

Decide on strategies for planning ahead and compile your personal study timetable after
you have taken note of all the important due dates and activities for the module.

Approach your studies systematically

Work systematically through the various learning unit activities, self-assessment questions,
case studies and assignments. Make sure that you meet all the requirements for the
learning unit activities. Use the learning outcomes and assessment criteria, the supporting
material and learning unit activities (under “Lessons” on myUnisa) as indicators of the
knowledge and skills that you have to develop.

Contact your lecturer(s) and/or e-tutors

Contact us if you experience difficulties with any aspects of the module, either by e-mail,
telephone or the “Discussion Forums” tool. Our contact details are available on the
home page of the module site.

Contact your peers

You are advised to make regular contact with your peers (via the “Discussion Forums”
tool). Engage with them to clarify and broaden your understanding of challenging
concepts and themes. By participating in the discussions, you will gain new insight into
your module and develop skills that you can apply in the workplace. Students who do
not participate in the discussions miss out on an extremely important facet of learning,

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namely to learn how to use subject terminology and engage in actual discussions about
subject-related challenges.

INTRODUCTION TO THE MODULE

The module is offered by the Department of Business Management and is intended for
students pursuing a career in the field of management. It is a six-month (semester) module
that carries 12 credits towards your qualification.

This module covers various contemporary management principles, such as power and
politics, workforce diversity, strategic management and project management, to name
but a few. The fundamental objective of this module is to give you insight into the role of
the manager in the contemporary organisation which functions in a business environment
characterised by major, ongoing change.

Purpose statement of the module

Students will be able to effectively deal with continuous managerial challenges in a
contemporary organisation by identifying, analysing and solving managerial challenges
in organisational scenarios.

Module outcomes
After working through this module, you will be able to
• address continuous managerial challenges in local and/or global contemporary
organisations
• address continuous managerial challenges associated with the planning process in
contemporary organisations
• address continuous managerial challenges related to stakeholders in contemporary
organisations

Framework for the module

The ten (10) learning units contained in this module are all interrelated. You should consider
them as ten parts of a whole. The framework of this module is as follows:
1. Managers and managing
2. Ethics and social responsibility
3. Managing diverse employees in a multicultural environment
4. Managing in the global environment
5. Organisational culture
6. The manager as a planner and strategist
7. Value chain management
8. Effective groups and teams
9. Managing conflict, politics and negotiation
10. Contemporary project management

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How to master the content
You should not only remember information, but also understand, apply, critically analyse,
synthesise, and evaluate the knowledge, as well as create a coherent or functional
whole. In order to be successful in this module, you have to understand the implications
of the level at which the module is presented. The purpose of studying contemporary
management (MNG2602) is NOT simply to memorise facts, concepts or theories. You have
to develop a deep understanding of important concepts and learn how to apply them
in real situations and communicate effectively using visual, and/or language skills in the
modes of written presentation

In order to develop your understanding, you have to process the information you read.
As you read, you must try to identify the main ideas. You have to think about why they
are important, how they relate to one another and their implications for people in real
work environments. As you work through each learning unit, it is essential for you to
determine whether you understand the ideas and concepts presented in it.

CONCLUSION
In conclusion, we would like to reiterate two things. Firstly, it is important that you do NOT
underestimate this module. It takes time and most importantly, you need to understand
rather than just remember the content. Secondly, embrace the online environment – work
through all the lessons on myUnisa and use the available platforms to communicate with
your lecturers and your peers.

We trust you will take advantage of this opportunity to explore the role of the manager
in the contemporary organisation. In the words of the famous basketball player, Michael
Jordan: “I’ve always believed that if you put in the work the results will come”.

We wish you every success in your studies!

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LEARNING UNIT 1
Managers and managing

OVERVIEW
Look around you and you will see mobile communication devices transmitting information
to and from around the world. As a student, you tweet, post on Facebook, and you may
even have friends in other countries that you have never met. You have information
readily available because you can Google the answer to any question within a minute.
Life was not always like this. Just think about how globalisation and major ongoing
advances in technology affect organisations, managers of organisations and the way
they do business. Think about the amount of changes and complex, diverse and far-
reaching challenges it holds for managers of these organisations. Managers have to
keep pace with ever-advancing technology and they must strive to remain competitive
in the face of increasingly tough competition. They are also required to do more with
less, to implement change rather than maintain stability. Just because managers were
successful in the past does not mean they will be successful in the future. Managers
now need a complex set of skills, knowledge and abilities that help them interpret cues
from the environment and respond accordingly. An organisation is only as good as its
management, and the managers have the primary responsibility of ensuring long-term
sustainability for the organisation.

In this learning unit, we consider what managers do and the skills, knowledge, and abilities
they must possess to lead their organisations effectively in an ever-changing environment.
We also identify the different kinds of managers that organisations rely on to help guide
them. Finally, we consider some of the challenges that managers must overcome to help
their organisations prosper.

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 LEARNING OUTCOMES

Upon the successful completion of this unit, you will be able to

• describe what management is, why management is important, what managers
do, and how managers use organisational resources efficiently and effectively
to achieve organisational goals
• distinguish among the four principal managerial tasks
• explain how managers’ ability to handle each managerial task affects
organisational performance
• classify managers according to three levels of management and understand the
tasks and responsibilities of managers at different levels in the organisational
hierarchy
• distinguish among three kinds of managerial skill and explain why managers
are divided into different departments to perform their tasks more efficiently
and effectively
• examine some major changes in management practices today and why they
occur
• discuss the principal challenges managers face in today’s increasingly
competitive global environment
• apply the theoretical knowledge of the above points to a case study in order
to demonstrate understanding and application of theory to an unknown
situation
• use the information in your job as a manager

WORK THROUGH CHAPTER 1 IN THE PRESCRIBED BOOK.

KEY CONCEPTS

Competitive advantage. The ability of one organisation to outperform other organisa-

tions because it produces desired goods or services more efficiently and effectively than
they do.
Controlling. This is to evaluate how well an organisation is achieving its goals and tak-
ing action to maintain or improve performance – controlling is one of the four principal
tasks of management.
Empowerment. A management technique that involves giving employees more power
and responsibility over how they perform their work activities.
First-line manager. This manager is responsible for the daily supervision of non-man-
agerial employees.
Globalisation. The economic and social interaction process whereby different countries
work together to create a global economy.
Global organisation. An organisation that operates and competes in more than one
country.

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Leading. This is to articulate a clear vision and to motivate and enable organisational
members to understand the part they play in achieving organisational goals – leading is
one of the four principal tasks of management.
Management. The planning, organising, leading, and controlling of human and other
resources to achieve organisational goals efficiently and effectively.
Middle manager. This manager supervises first-line managers and is responsible for
finding the best way to use resources to achieve organisational goals.
Organising. This is to structure working relationships in a way that allows organisational
members to work together to achieve organisational goals – organising is one of the four
principal tasks of management.
Planning. This is to identify and select appropriate goals – planning is one of the four
principal tasks of management.
Top manager. This manager establishes organisational goals, decides how departments
should interact, and monitors the performance of middle managers.
(Adapted from: Jones & George, 2018)

MANAGEMENT LEVELS, SKILLS AND ROLES

Scenario 1

Let us say you are a manager at a large, global organisation. Thabo, Jane and Lerato are
your colleagues and they perform the following activities:
Thabo is responsible for setting budgets and determining the salaries of middle- and
lower-level managers of the organisation. He also evaluates the performance of these
managers and takes corrective action to improve their performance, at the same time
motivating them to perform even better.
Jane is the marketing manager. She conducted market research with a team of employees
and found a gap in the market. She passed this information on to the product development
department of the organisation and initiated the project for the new product and its
launch. She just launched a national advertising campaign to promote the organisation’s
new offering.
Lerato is the organisation’s well-connected public relations manager and is well liked
among employees and all in the industry. She is a very social person and represents the
organisation at community functions and social events, sometimes giving speeches
about the organisation’s current projects and future intentions. She is also the one who
usually welcomes important new customers, building the organisation’s network and
relationships.

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ACTIVITIES

1. Use table 1.1 (Managerial Roles Identified by Mintzberg) in your textbook to

classify the individuals in the scenario according to the different managerial
roles (as identified by Mintzberg). Remember that managers play different
but highly interrelated roles – this means managers do not only have one
role each. List all the roles and sub-roles that Thabo, Jane and Lerato fulfil.
2. Once you are done with the scenario’s classification, select an organisation
of your choice (either one that has provided you with work experience, or
any organisation that have enough information available on the internet)
and repeat the activity by classifying your own duties (if you are a manager),
your manager’s duties, or the duties of managers based on your internet
research.
3. Classify the three managers in the scenario according to the levels of
management. Substantiate your answer with quotes from the scenario.
4. What managerial skills do you think are most evident in the description of
each of your colleagues’ role descriptions?

FEEDBACK
1

When you read about the managers portrayed in the scenario, focus on the
three different sets of job responsibilities as identified by Mintzberg (1975).
Does the person’s role involve decisions and/or problems, does it focus more
on interaction or on the management of information? This will help you to
place the activity in one of the three sets:
The decisional role is the role of entrepreneur, disturbance handler, resource
allocator and negotiator, which will require that you as a manager obtain and
make use of relevant information to make decisions, solve organisational
problems or take advantage of opportunities.
The interpersonal role is when you as a manager adopt the role of figurehead,
leader and liaison when you interact with people inside and outside the
organisation.
The informational role is when you as the manager adopt the role of
monitor, disseminator and spokesperson and focus on collecting, receiving
and communicating important information to people inside and outside the
organisation.

4
Figure 1.1: Three sets of job responsibilities

These roles capture the dynamic nature of managerial work. Managers, despite
their roles and sub-roles, can be grouped into three levels of management.
If you are a manager at the top of the hierarchy in the organisation, you will
have different responsibilities to middle and first-line managers. Different levels
of managers also have different titles. Consider the titles and responsibilities
of your colleagues Thabo, Jane and Lerato and then determine which level
of management these titles and responsibilities indicate. Look at figure 1.1
– here you can see that the organisation’s hierarchy and levels are indicated
in a pyramid shape. The figure provides examples of titles of top, middle and
first-line managers as well as the responsibility of each level of management.
Now read the section "Levels and Skills of Managers" in your textbook and
review your answer for the activity. Did you correctly classify your colleagues?

Figure 1.2: Three levels of managers

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 When considering Thabo, Jane and Lerato’s skill sets, we can say that they need
both education and experience to be able to put the organisation’s resources to
their best use. Their education and experience will help them to acquire three
types of skills namely conceptual, human and technical. Effective managers
need all three kinds of skills to help their organisation perform more efficiently
and effectively. Do you know what the difference is between efficiency and
effectiveness?
Efficiency is doing things right while effectiveness is doing the right things.
Efficiency is performing in the best possible manner with the least waste of
time and effort, while effectiveness is producing the intended or expected
results.

MANAGERIAL TASKS AND CHALLENGES

Scenario 2

Suppose an organisation’s goal is to increase its sales and reach more international
customers. The chief executive officer (CEO) of the organisation, let us call her Jennifer,
decides that in order to reach this goal, they have to do three things: increase their online
advertising, produce more products in anticipation of more sales, and appoint more staff.
Jennifer grouped employees that will handle international customer accounts into a new
department and appointed a manager, Barry, to manage the new team. Barry has authority
because of his position as manager and he allocated different tasks and responsibilities
to the members of his department.
Regular brainstorming sessions were organised by Barry and these sessions also served
to motivate and encourage team members. Ideas were exchanged at every session, and
once a month the top management team joined the department to answer any questions
there might be. Since the department came together, both Jennifer and Barry made it
clear that there is an open-door policy and communication is extremely important –
employees can directly e-mail any of the organisation’s leaders. Barry motivated staff
members by starting a small internal competition, offering a prize for the employee with
the highest sales. The employees were also offered training opportunities which can lead
to promotion after the training has been completed.
Barry is ultimately responsible for reporting back to Jennifer on the sales of his department,
employee morale and suggestions on how to improve any issues there might be. Together
they develop solutions for keeping the international sales on track.

ACTIVITIES

1. From the scenario, identify the activities that form part of each task –
planning, organising, leading and controlling. Use the section "Essential

6
 Managerial Tasks" in your textbook as a base of knowledge and then classify
the activities of Jennifer and Barry.
2. Once you are done with the scenario’s classification, select an organisation
of your choice (either one that has provided you with work experience, or
any organisation that have enough information available on the internet)
and repeat the activity by classifying your own duties (if you are a manager),
classifying your manager’s duties, or classifying the duties of managers
based on your internet research, under the relevant management task.
3. One of the recent changes in management practices is evident in the
scenario. Can you spot it? Discuss this as a technique to increase efficiency
and effectiveness in organisations, and mention the other three techniques,
as per your textbook.
4. Do the “Be the manager” exercise at the end of Chapter 1 in your textbook
and answer the two questions regarding the problems at Achieva.

FEEDBACK
2

Effective managers choose the right organisational goals to pursue and have
the skills to utilise resources efficiently. They do this by performing four tasks
namely planning, organising, leading and controlling. Mostly we only see
the final two but remember that a great amount of planning and organising
happens behind the manager’s door. As portrayed in figure 1.2, you should
think about the tasks as part of an ongoing process, each step building on the
others. Managers must first plan and organise according to that plan before they
can lead others toward the plan, and finally evaluate the plan’s effectiveness.
When done well, these tasks become the reason for organisational success.

(Adapted from: Jones & George, 2018)

Figure 1.3: The four essential management tasks

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 While these four tasks remain the essence of management, a number of
responsibilities have changed in management practices due to global
competition and advances in information technology. You as a manager will
constantly be under pressure to compete for resources locally and globally.
Restructuring, outsourcing, empowerment and self-managed teams are all
techniques that you can use – read the "Recent Changes in Management
Practices" section in your textbook. Try to identify some of these techniques
in your current work environment.

Scenario 3

Read the Bloomberg case at the end of Chapter 1 in your textbook. Use the theory in the
section “Challenges for management in a global environment” and answer the first two
questions by providing a short discussion.

ACTIVITIES

1. What management challenges does the financial services industry face as

more and more jobs are automated?
2. Do you think the focus of managers in this type of business will change
dramatically in the near future? Explain your answer by providing theoretical
knowledge and applying it to the case.
3. Look for managerial challenges in your organisation if you are employed.
Can you spot them? Can you propose innovative solutions? This exercise
will help you reflect on the theory and how to use your knowledge in a
real-life situation.

FEEDBACK
3

Management is about being more effective and efficient. As we have previously

determined, these two factors determine the organisation’s success. If you
are a manager who do not make an attempt to learn from and adapt to
changes in a global environment, you will find yourself reacting rather than
innovating, and your organisation may become uncompetitive and fail.
Excellent examples are provided in your textbook, and you should read
through this section in detail as these challenges and how to manage today’s
organisations form the base of the module. Study this section (Challenges
for Management in a Global Environment) and understand the examples. If
you are aware of the challenges, it will be easier for you to be proactive and
innovative in solving them.

To summarise – as a manager, you should realise there are five major challenges
you will face in today’s world.

8
 1 Building a competitive advantage
You need to do this through
• efficiency – reducing the quantity of resources used to produce goods or
services
• improving quality
• speed, flexibility and innovation – how fast an organisation can bring new
products to market; how easily they can change and adapt the way they
perform their activities to respond to the environment; and can they create
new or improved goods and services
• responsiveness to customers – particularly vital for service organisations

2 Maintaining ethical and socially responsible standards

While managers are under pressure to increase performance, the pressure
should never be so much that they start acting unethically. The issue of social
responsibility centres on the obligations of the organisation toward the
stakeholders. These two challenges are discussed in more detail in the next
learning unit.

3 Managing a diverse workforce

All human resources should be treated fairly and equitably.

4 Utilising IT and e-commerce

New information technology can enable managers and employees to better
perform their jobs.

5 Practicing global crisis management

The causes for crisis management fall into two categories – human (such as
industrial pollution, inattention to employee safety, terrorism, etc) and natural
(such as hurricanes, tsunamis, earthquakes, diseases, etc) causes.

“Sustainability management is the future of management.”

(Cohen, 2018).
The world is overwhelmed with global challenges. There
are poverty, hunger, sanitation, education and employ-
ment crises in our communities, not to mention global
warming and the state of our planet. These issues call
for urgent action from every individual, organisation
and country. In the words of the secretary-general
of the United Nations, Ban Ki-moon (2014),
“There is no Plan B for action as there is no Planet B”.
You as a manager will have to assist in integrating sustainability into the heart of
the organisation that you work for. We, quite literally, have to think about saving the
planet for our children, that is the bigger picture and ultimate goal – to create a high
throughput economy without destroying the planet. Currently, most organisations,

9 MNG2602/1
 managers and members of society recognise that action needs to be taken, but
sustainability plans are often put at the bottom of the to-do-list. Sustainability must be
integrated in the heart of what organisations and managers do – it is the next phase
of management innovation (Cohen, 2018). As a manager that practices sustainable
management, you will need three things (Lipman 2015). First, you need to have respect
for all resources – financial, environmental and human resources. Secondly, you need
to be aware of risk – to sustain your organisation’s strength tomorrow, you need to be
aware of the risk today. Finally, you need to have a long-term perspective – in other
words, see the bigger picture (conserving the planet for future generations).
During the learning units that follow, it is important to keep the concept of sustainability
in mind. Although the module only touches on this concept, it is a very important
one, both for you as a member of society and for you as a manager.

CONCLUSION
Managers experience more pressure today than any other time in history. There are many
changes happening in the world that require you as a manager to cope with complex,
diverse and far-reaching challenges. To do this and in order to lead others successfully,
you need a complex set of skills, knowledge and abilities that will help you to interpret
cues from the environment and respond accordingly. In this learning unit, we examined
how managers manage in contemporary organisations and what the challenges are
that they face – what challenges you will face as a manager in such an organisation. It
is important that you remember the tasks, roles, skills and levels of management when
working through the rest of the learning units.

SELF-ASSESSMENT EXERCISE
1

Case Study
Read the following case study about Ford and answer questions 1 to 7.

The outsider at Ford

Today’s competitive global environment presents many challenges to managers.
One of the main challenges is building a competitive advantage by increasing effi-
ciency and customer responsiveness. This case analysis details the challenges faced
by former Ford Motor Company CEO, Alan R Mulally.
Founded by Henry Ford, the Ford Motor Company had many problems, its bureau-
cratic nature and hostility to new ideas among them. Formerly of Boeing, Alan R
Mulally’s tasks when he took over as CEO at Ford included changing the organisa-
tion’s culture to one that embraces transparent decision making, encouraging once
fractious divisions to work together to produce cars of a better quality, and finding
ways to move faster from design studio to showroom. These changes, however, did
not come without struggle and strife.
As a traditional automobile manufacturer, Ford Motor Company possessed a strong
corporate culture that began with its founder, Henry Ford. Part of this corporate cul-

10
 ture included predominantly family-only management, ventures into luxury brands
like Jaguar and Land Rover, turf wars over brands, and poorly executed decision
making. In light of these issues, Ford needed to enact a turnaround strategy that
included a cohesive and cooperative management strategy.
Because he was an industry outsider, many doubted Alan Mulally’s ability to turn
Ford around when he arrived in 2006. Other outsider executives had tried, mostly
unsuccessfully, to venture into unfamiliar businesses. At Ford, not only were industry
outsiders previously not encouraged, but they were often isolated and even hazed.
Mulally, however, was committed and resolved to be a quick study of the company
and industry. With the assistance of executive chairman Bill Ford, Mulally realised
that major work needed to be done to change a culture in which one’s own career
came before the company’s needs, and employees waited for their leaders to tell
them what to do instead of being proactively involved in the decision-making
process. “That doesn’t work for me”, would be heard when Mulally faced the old
ways of doing things.
Decision making and the management of data became key factors of Mulally’s
new corporate culture. He included more people in the decision-making process
and asked that they be coached as well. Unpopular decisions included reducing
head count and closing factories according to the “way forward plan” so that Ford
could modernise plants in order to handle multiple models rather than just one.
Other decisions included implementing transparency, which made it difficult to
hide problems with the production line. Mulally also mandated a constant stream
of data that could give his team performance information with profit targets. This
constantly changing information was used to anticipate problems and alter strategy.
The changes were successful enough that Ford was the only United States auto
make that did not need a government bailout in 2008 to 2009.
1. Mulally’s factory closures and layoffs combined with the modernisation of plants were
intended to increase .
1 diversity
2 negotiating ability
3 empowerment
4 efficiency
2. One major change instituted by Mulally was an increase in , which oc-
curred as he proactively involved managers to a much greater extent in company
decision making.
1 the empowerment of managers
2 social awareness
3 diversity within the workforce
4 globalisation
3. Mulally demonstrated a strong ability to communicate, coordinate, and motivate his
employees and to form them into cohesive teams. skills are most neces-
sary to achieve these results.
1 Conceptual
2 Entrepreneurial
3 Human
4 Innovation

11 MNG2602/1
4. Mulally, an outsider to both Ford and the automotive industry, was hired to provide
a new vision for the struggling company and to bring in a new approach to planning
and organising in order to improve efficiency and effectiveness. In doing this, Mulally
was engaging in .
1 resource allocation
2 turnaround management
3 global crisis management
4 human and technical skills engagement
5. Mulally’s ability to analyse and diagnose Ford’s problems and to create methods to
solve them demonstrates his high-level skills.
1 corporate
2 conceptual
3 organisational
4 technical
6. One challenge for managers today is the competent use of . Mulally under-
stood the importance of this and provided access to constantly changing information
to teams so that they could anticipate problems.
1 global knowledge
2 surveys
3 technical skills
4 information technology
7. Consider Mintzberg’s managerial roles. Which one of the following best describes
Mulally’s activities as CEO of Ford?
1 Resource allocator and monitor
2 Disturbance handler and liaison
3 Entrepreneur and leader
4 Negotiator and figurehead
Please note that feedback on these questions will be provided on the myUnisa
module site as the semester progresses.

ADDITIONAL LEARNING EXPERIENCES

The following websites will further enrich your knowledge and understanding.
Visiting a Twitter page or watching a YouTube video is, however, not compulsory.
Managers
https://www.youtube.com/watch?v=iB334D7-jOY
Functions of management
https://www.youtube.com/watch?v=AeHuH39M4QQ
Managerial roles
https://www.youtube.com/watch?v=NgkQYRqxKTs
Globalisation
https://www.youtube.com/watch?v=JJ0nFD19eT8

12
 Interesting tweeple (people and/or organisations) to follow on Twitter:
@AMAnet
@HarvardBiz
@Stateofglobe
#globalization
Disclaimer:
We frequently test the URL links provided in this learning unit. At the time of print,
these URL links were working. We are aware that a URL might not work after a
while or that content may be removed from the website. Situations like these are
out of our control.

REFERENCES
Cohen, S. 2018. Sustainability is the future of management. GreenBiz. Available from:
https://www.greenbiz.com/article/sustainability-future-management [Accessed
February 2020].
Jones, G. R. & George, J. M. 2018. Contemporary Management. 10th ed. New York: McGraw
Hill.
Lipman, V. 2015. The best managers practice sustainable management. Forbes. Available
from: https://www.forbes.com/sites/victorlipman/2015/05/21/the-best-managers-
practice-sustainable-management/#6873326c7c00 [Accessed February 2020].
Mintzberg, H. 1975. The manager’s job: Folklore and fact. Harvard Business Review, July-
August 1975:56–62.

13 MNG2602/1
LEARNING UNIT 2
Ethics and social responsibility

OVERVIEW
All of us are faced by those moments when doing what is right is very different from
doing what is easy or what would be most profitable. That is one of the reasons why
organisations have a code of conduct or a code of ethics – so employees know what is
expected of them when they are faced with the choice between right versus easy, ethical
versus profitable. The problem is that so many choices fall in the grey area in between.
What do you do when the ethical choice will almost certainly hurt someone? What if
doing something a little bit wrong will help create a very big “right”?

As a manager, you will be faced with many complex decisions, which will affect not
only you or your organisation, but society. Making unethical decisions will affect your
organisation’s efficiency and effectiveness and will be detrimental to your stakeholders’
well-being. On the other hand, making ethical decisions will increase the organisation’s
performance and society’s quality of life. It is important for you to analyse situations and
act in the right or appropriate way.

In this learning unit, you will learn how organisations can create good corporate governance
practices to fulfil their responsibility to society in an ethical and morally acceptable way.
We consider the relationship between ethics and the law, as well as sources and rules of
ethics that you as a manager need to follow in order to act ethically. You will also learn
to differentiate between the organisation’s different stakeholders and rules to use in
ethical decision making about these stakeholders. Finally, the social responsibilities you
as a manager must consider for your organisation are discussed.

14
 LEARNING OUTCOMES

Upon the successful completion of this unit, you will be able to

• explain the relationship between ethics and the law
• differentiate between the claims of the different stakeholder groups that are
affected by managers and their companies’ actions
• describe four rules that can help companies and their managers act in ethical
ways
• discuss why it is important for managers to behave ethically
• identify the four main sources of managerial ethics
• discuss the 17 sustainable development goals
• explain the King IV report
• distinguish among the four main approaches toward social responsibility
that a company can take
• apply the theoretical knowledge of the above points to a case study in order
to demonstrate understanding and application of theory to an unknown
situation
• use the information in your job as a manager

WORK THROUGH CHAPTER 2 IN THE PRESCRIBED BOOK.

KEY CONCEPTS

Ethical dilemma. The quandary people find themselves in when they have to decide if
they should act in a way that might help another person or group even though doing so
might go against their own self-interest.
Ethics. The inner guiding moral principles, values, and beliefs that people use to analyse
or interpret a situation and then decide what is the right or appropriate way to behave.
Individual ethics. Personal standards and values that determine how people view their
responsibilities with regard to others and how they should act in situations when their
own self-interests are at stake.
Occupational ethics. Standards that govern how members of a profession, trade, or craft
should conduct themselves when performing work-related activities.
Organisational ethics. Guiding practices and beliefs through which a particular organ-
isation and its managers view their responsibility toward their stakeholders.
Shared value. Creating economic value (profit) in a way that also creates value for society
by addressing its needs and challenges.
Social responsibility. The way the organisation’s managers and employees view their
duty or obligation to make decisions that protect, enhance, and promote the welfare and
well-being of stakeholders and society as a whole.
Societal ethics. Standards that govern how members of a society should deal with one
another in matters involving issues such as fairness, justice, poverty, and the rights of
the individual.

15 MNG2602/1
Stakeholders. The people and groups that supply an organisation with its productive
resources and therefore have a claim on and a stake in the organisation.
(Adapted from: Jones & George, 2018)

STAKEHOLDERS AND RULES FOR ETHICAL DECISION MAKING

Scenario 1

Runako Abara thought of himself as enthusiastic and with lots of potential. Runako, his
wife, Tsitsi, and his two children have all grown up in Zimbabwe and Runako was now the
manager of the Star Plastics plant in Gweru, a plant that manufactured plastic parts for
small equipment. The plant employed several hundred workers, which was a substantial
portion of the population of Gweru. Star Plastics had several other plants the size of
Gweru’s. Runako had a good relationship with Masimba, his manager, in Harare, Zimbabwe.
One of the problems at the Gweru plant was that the smokestack emissions were
consistently above guidelines set by government and environmental organisations.
Runako got a call from Masimba four months ago regarding the problem, stating that the
company will be fined if the situation is not improved. Runako admitted the situation was
a continuous problem, but because headquarters would not invest in new smokestack
scrubbers, he did not know what to do. Masimba replied by saying that the margins were
at their limits and there was no money for new scrubbers. He added that other plants
were in worse shape than Runako’s and they were not being fined. Runako ended the
conversation by ensuring Masimba that he would look into the matter.
Runako contacted the managers at other Star Plastics plants. He found that they were
scheduling their heavy emissions work at night so that during the day when sporadic
readings were taken by the authorities, they were within standards. Runako contemplated
this option even though it would result in increasing air contamination levels. After
a month, Runako had still not found a solution. Masimba phoned and expressed his
displeasure with the new fines, reminding Runako that there were very few jobs in the
industry. Masimba gave Runako two options, closing the plant because the fines were too
heavy to keep it open or alternatively correcting the current problems. Runako knew that
closing down the plant would devastate the infrastructure of the city of Gweru. When he
mentioned the possibilities to Tsitsi, she reinforced other concerns. She did not want him
to be responsible for the loss of the jobs of their friends and extended families.

ACTIVITIES

1. Who are the stakeholders in this situation, and what are their stakes?
2. What social responsibility, if any, does Star Plastics have to the city of Gweru?
3. What are the ethical issues in this scenario?
4. What should Renako do? Why?
5. Which rule for ethical decision making do you think he should use?

16
 FEEDBACK
4

Stakeholders are the people and groups affected by how an organisation

and its managers behave. Effective stakeholder management always starts
with the question “who are our stakeholders?” and after that, “what are their
stakes (claims)?”. The main groups of stakeholders are stockholders, managers,
customers, employees, suppliers and distributors, as well as the community,
society and nation.
Once stakeholders have been identified, their claims have to be managed.
These claims should be considered when you as a manager make business
decisions. To help yourself and your employees make ethical decisions and
behave in ways that benefit the stakeholders, you can use four ethical rules or
principles to analyse the effects of your business decisions on stakeholders: the
utilitarian, moral rights, justice, and practical rules. They are summarised below.
Using the utilitarian rule means that you decide on the course that produces
the greatest good for the greatest number of people. This means all courses of
action should be considered and the course of action that provides the most
benefits or the least harm to stakeholders should be taken.
Under the moral rights rule, an ethical decision is the one that maintains and
protects the fundamental rights and privileges of ALL stakeholders – “do unto
others as you would have them do unto you” (the golden rule) can be used to
in this regard.
The justice rule means that the ethical decision you make distributes benefits
and harm among stakeholders in a fair, equitable, or impartial way.
The practical rule is that an ethical decision is one that you as a manager
has no hesitation or reluctance about communicating to people outside the
organisation, because the typical person in society would think it is acceptable.

THE IMPORTANCE OF BEHAVING ETHICALLY

Scenario 2

Work through "The Nature of Ethics" and "Why should managers behave ethically" in your
textbook and then do the next four exercises.

ACTIVITIES

Decide how you would respond to each of the following ethical dilemmas:
1. You are planning to leave your job in order to work for a competitor; your
boss invites you to an important meeting where you will learn about new
products your company will be introducing next year. Do you go to the
meeting? Explain your decision.

17 MNG2602/1
 2. You are the manager of sales in an expensive sports car dealership. A
young executive who has just received a promotion comes in and wants
to buy a car that you know is out of her price range. Do you encourage
the executive to buy it so you can receive a big commission on the sale?
Explain your decision.
3. You sign a contract to manage a young rock band and the group agrees to
let you produce their next five records, for which they will receive royalties of
5 percent. Their first record is a smash hit and sells millions. Do you increase
their royalty rate on future records? Explain your decision.
4. What do you think are the effects of behaving in an unethical manner in
all three of the above scenarios?

FEEDBACK
5

“An ethical dilemma is when a person has to choose between two different
courses of action, knowing that whichever course he or she selects will harm
one person even though it may benefit another” (Jones & George, 2018). It is
important to remember that there is not a right or ethical choice in a dilemma,
only less unethical or illegal choices as perceived by any and all stakeholders.
A good approach or principle to keep in mind is called the golden rule – “Do
unto others as you would have them do unto you” – which is a straightforward,
easy-to-understand principle. It will guide you to behaviour, actions, or decisions
that you think is acceptable or not based on direct comparisons with what
you consider to be ethical or fair. Did you apply this principle when doing the
activity?
Behaving unethical in any circumstances will lead to trust issues amongst the
organisation’s stakeholders whereas when you act ethically, the positive results
of being honest and trustworthy will lead to ethical behaviour becoming a
valued social norm. As a manager, you should always protect the resources under
your control and not only advance your own interests. Unethical behaviour may
potentially lead to a loss of reputation for the manager and the organisation.
Remember that you are part of a larger society and your decisions and actions
affect other stakeholders as well.

ETHICS AND SOCIAL RESPONSIBILITY

Scenario 3

Check out Fortune’s list of the world’s most admired companies (http://fortune.com/
worlds-most-admired-companies/). Fortune puts this list together each year based on
ratings from executives, directors, and analysts.

18
 ACTIVITIES

1. Select a company on the list and go to that company’s web page. How
would you describe the company’s organisational ethics?
2. What do you believe are the occupational ethics of the people who work
at the company?

FEEDBACK
6

Ethics issues arise at different levels. These are listed below.

Societal ethics are standards that govern how members of a society should deal
with one another in matters involving issues such as fairness, justice, poverty,
and the rights of the individual. These will vary among societies – ethics are
different in different countries.
Occupational ethics are standards that govern how members of a specific
profession, trade or industry should conduct themselves when performing
work-related activities.
Individual ethics are personal standards and values that differ from one
individual to the next. These determine how you view your responsibilities
to others, how to act in situations and how to decide what is morally right or
wrong.
Organisational ethics are the guiding practices and beliefs through which
a specific organisation and its managers view their responsibility toward
their stakeholders. The individual ethics of top management will shape the
organisation’s code of ethics.

Scenario 4

This section contains additional information that does not form part of the prescribed
book and is important for the examination. You should understand this section and
doing further reading on your own will provide you (as a manager) with the necessary
knowledge on the South African situation and laws.
What does the law in South Africa say about ethics and social responsibility?
One thing is for certain, a short-term focus on financial gain is not a recipe for long-term
success. An organisation is a part of society in its own right – it can no longer be perceived
as existing in its own narrow universe – it operates in, and forms part of, general society.
The King Codes of Corporate Governance requires listed companies to report annually.
The King IV report was launched in November 2016 and implemented from 1 April 2017.
It follows an “apply and explain” approach, which means organisations should apply the
principles and explain how good governance was practiced. The King IV report sets out
what ethical and effective leadership is. It is designed for application in all organisations
– listed companies, government departments, non-governmental organisations (NGOs)
and small and medium enterprises (SMEs). It promotes good governance, transparency
in leadership and decision making as well as a focus on sustainability.

19 MNG2602/1
A fundamental concept of King IV is sustained value creation – value creation accomplished
in a sustainable manner. King IV does however, not state what sustainable development
is or what it should be. For this you have to refer to the sustainable development goals
(SDGs) and the South African National Development Plan.
The Sustainable Development Goals
The United Nations SDGs, launched in 2015, have a common theme of value creation that
is accomplished in a sustainable manner and provide a universal view on the development
priorities for the next 13 years. The SDGs are a universal call to action to end poverty,
protect the planet and ensure that all people enjoy peace and prosperity. It is composed
of 17 goals and 169 targets to wipe out poverty, fight inequality and tackle climate change
over the next 15 years. All 17 goals (see figure 2.1) are interconnected, meaning success in
one affect success for others. The SDGs are unique in that they cover issues that affect us
all. They reaffirm our international commitment to end poverty permanently, everywhere.
They are ambitious in making sure no one is left behind. More importantly, they involve
us all to build a more sustainable, safer, more prosperous planet for all humanity. We will
only touch on the SDGs in this learning unit as it covers the major challenges of our time.
Here is a short description for each of the goals; however, we strongly recommend that
you read more on this topic in your own time. A good place to start is the United Nations
website – https://www.un.org/sustainabledevelopment/sustainable-development-goals/.
The list below also provides some examples of available statistics linked to each goal.

Figure 2.1: The 17 SDGs

(Source: https://commons.wikimedia.org/wiki/File:Sustainable_Development_Goals.jpg)

SDG1: No poverty – economic growth must be inclusive to provide sustainable jobs and
promote equality. More than 10% of the world population still live in extreme poverty.
SDG2: Zero hunger – we have to rethink and change the global food and agriculture
system in order to nourish the 821 million people who are hungry today.
SDG3: Good health and well-being – ensuring healthy lives and promoting the well-
being at all ages are essential to sustainable development.

20
SDG4: Quality education – obtaining a quality education is the foundation to improv-
ing people’s lives and sustainable development. Altogether 750 million adults still remain
illiterate.
SDG5: Gender equality – gender equality is not only a fundamental human right, but
a necessary foundation for a peaceful, prosperous and sustainable world. Currently, 49
countries still have no laws protecting women from domestic violence.
SDG6: Clean water and sanitation – clean, accessible water for all is an essential part
of the world we want to live in. In 2017, there were 785 million people without even basic
drinking water.
SDG7: Affordable and clean energy – energy is central to nearly all of the major chal-
lenges the world faces today, and as this goal interlinks with other SDGs, is extremely
important. Nearly one billion people are currently functioning without electricity, and
50% of them are found in Sub-Saharan Africa.
SDG8: Decent work and economic growth – sustainable economic growth will require
societies to create the conditions that allow people to have quality jobs. The global un-
employment rate is currently 5%.
SDG9: Industry, innovation and infrastructure – investments in transport, irrigation,
energy and information and communication technology are necessary to empower com-
munities, and for development. An estimated 3.8 billion people still do not have access
to the internet.
SDG10: Reduced inequalities – to reduce inequalities, policies should be universal in
principle, paying attention to the needs of disadvantaged and marginalised populations.
SDG11: Sustainable cities and communities – there needs to be a future in which cities
provide opportunities for all, with access to basic services, energy, housing, transportation
and more. By 2030, 60% of the world’s population will live in cities.
SDG12: Responsible consumption and production – this goal aims at “doing more and
better with less”. Consumers need educating on sustainable consumption and lifestyles
because our planet cannot sustain our current lifestyles.
SDG13: Climate action – climate change affects every one of us and without action,
the world’s average surface temperature is likely to surpass three degrees centigrade
this century.
SDG14: Life below water – the world’s oceans – their temperature, chemistry, currents
and life – drive global systems that make the earth habitable for humankind. Avoid plastic
bags and keep the ocean clean!
SDG15: Life on land – forests should be managed sustainably, desertification should be
combatted and land degradation and biodiversity loss halted. About one million plant
and animal species are at risk of extinction.
SDG16: Peace, justice and strong institutions – people should be free of fear from all
forms of violence. Effective and inclusive public institutions are needed to deliver educa-
tion, healthcare, fair economic policies and inclusive environmental protection.
SDG17: Partnerships for the goals – a successful sustainable development agenda
requires partnerships between governments, the private sector and civil society.
While some of the goals will link more obviously to the operations of your organisation
than others, goals relevant to the needs of society, although not directly impacting on
your operations, cannot be ignored. As the mantra of the World Business Council for

21 MNG2602/1
Sustainable Development states, “businesses cannot succeed in a society that fails”.
Organisations should make sense of these global challenges at a level appropriate to
their organisation.
Apart from sustainable development, the other foundation stones of King IV is ethical
leadership, the organisation in society, corporate citizenship, stakeholder inclusivity,
integrated thinking and integrated reporting. King IV’s objectives are to
• promote corporate governance as integral to running an organisation and delivering
governance outcomes such as an ethical culture, good performance, effective control
and legitimacy
• broaden the acceptance of the King IV by making it accessible and fit for implementation
across a variety of sectors and organisational types
• reinforce corporate governance as a holistic and interrelated set of arrangements to
be understood and implemented in an integrated manner
• encourage transparent and meaningful reporting to stakeholders
• present corporate governance as concerned with not only structure and process, but
also with an ethical consciousness and conduct
King IV has 17 basic principles, 16 of which can be applied to any organisation (one can only
be applied to institutional investors). These principles are listed in the Institute of Directors
Southern Africa (IoDSA) report on Corporate Governance for South Africa 2016, available
at this link: https://c.ymcdn.com/sites/iodsa.site-ym.com/resource/collection/684B68A7-
B768-465C-8214-E3A007F15A5A/IoDSA_King_IV_Report_-_WebVersion.pdf – you can
read through this on your own for additional information.

ACTIVITIES

1. Consider the following two examples and classify each one under the SDG
that you think the organisation is pursuing.

22
 Example 1 Example 2

The Woolworths Educational Palm oil is used widely in everyday

Programmes, launched in 2004,
provide a platform for partners such
as the Department of Education (in
South Africa), schools, and education
specialists to collaborate through
a suite of primary school and high
school initiatives that provide teachers
and learners with educational
resources and a range of experiential
components. More than 2 662 primary
and high schools in KwaZulu-Natal,
Gauteng, Western Cape, and Eastern
Cape, take part in the Woolworths
Educational Programmes. The high
school programme is a design
programme targeted towards
Grades 10 to 12 design learners and
teachers and promotes sustainable
and innovative design. Woolworths
makes an annual contribution of R4
million to run these programmes.
cleaning, cooking, and beauty
products. The growing demand
for this oil has led to numerous
negative environmental and social
consequences. In a significant
milestone for Woolworths, we
are proud to announce that our
range of WBeauty soaps are the
first locally made beauty products
containing RSPO-certified
sustainable palm oil. RSPO
maintains the global standards
for companies throughout the
palm oil supply chain so that
the legal, economic, social, and
environmental impacts of palm
oil manufacture are responsibly
addressed. Woolworths is one
of just seven retailers worldwide
approved to use the RSPO logo.

APPROACHES TO SOCIAL RESPONSIBILITY

Scenario 5

Woolworths: Fishing for the Future

Woolworths remains deeply committed to procuring all seafood from sustainable fisheries
and responsible aquaculture operations. In 2012, Woolworths was among the first retailers
in South Africa to set time bound seafood commitments that all wild-caught seafood
sold in store would be either WWF-SASSI green listed, caught from Marine Stewardship
Council (MSC) certified fisheries, or sourced from fisheries that were undertaking credible
improvement projects by 2015. Further to this, by 2020, all farmed fish species sold by
Woolworths will be either WWF SASSI green-listed, ASC (or equivalent) certified, or from
aquaculture operations that are engaged in a credible improvement project. Of the volume
(tonnage) of farmed species sold by Woolworths, 55% currently meets our aquaculture
sustainability commitments for 2020 and 80% overall meet our 2020 commitments. We
continue to work with a range of partners, including WWF-SA and the Marine Stewardship
Council (MSC), to ensure that we meet our 2020 commitments through focusing on key
strategic species. You can watch the video for Fishing for the Future here:
https://www.youtube.com/watch?v=LqBJCBDISDM&index=16&list=PL36D950224B2081D7

23 MNG2602/1
Woolworths: Reducing environmental impacts
Woolworths, in partnership with Style by SA local fashion designers Rich Mnisi, Thebe
Magugu, Selfi, and AKJP, used SA Fashion week in October 2017 to showcase a capsule
collection made from Better Cotton. The cotton, sourced from the SADC region and
dyed with processes that use only eco-friendly chemicals, was transformed into a range
of fashion items aligned with key seasonal trends. Alongside this, Woolworths created an
immersive installation featuring sustainably sourced cotton sheeting, which was donated
to The Clothing Bank, an organisation that Woolworths supports, which helps empower
unemployed South African women.

ACTIVITIES

Study the theory in the section "Approaches to Social Responsibility" in your

textbook and answer the following questions by providing a short discussion
in paragraph form.
1. What approach to social responsibility is Woolworths following according
to you? Discuss.
2. What are the advantages of projects like these for Woolworths as an
organisation?

FEEDBACK
7

Organisations, in addition to maximising shareholder value, have an obligation to

act in a manner that benefits society. Decisions made by the organisation should
protect, enhance, and promote the welfare and well-being of stakeholders and
society as a whole, along with their own interests (making a profit).
Organisations that choose not to behave in a socially responsible manner, and
rather behave unethically and sometimes illegally, follow an obstructionist
approach. These companies will most likely fail sooner rather than later. Can
you think of a local organisation that followed this approach that was recently
in the news?
Once some commitment to ethical behaviour is evident, for example if managers
stay within the law or the organisation abides by legal requirement, they are
following a defensive approach. If there is still no attempt to exercise social
responsibility, they sometimes still act unethically.
The accommodative approach is when an organisation acknowledges the
need for social responsibility, they agree that members should behave legally
and ethically, and they try to balance the interests of different stakeholders
so that the claims of stock- or shareholders are seen in relation to the claims
of other stakeholders.
When an organisation actively embrace the need to behave in socially
responsible ways, they are following a proactive approach. They go out
of their way to learn the needs of their stakeholders and are willing to use
organisational resources to promote the interests of all stakeholders, not only
shareholders.

24
 Acting socially responsible has many advantages for an organisation. What is the
first one you can think of? I am sure it must be reputation. When an organisation
is known for benefiting their stakeholders they will have a good reputation,
they will attract talented employees and they will have the support of more
customers. In other words the quality of life of society as a whole increases.

Case Study
Read the Bloomberg case at the end of Chapter 2 in your textbook. Use the
theory in the prescribed book and answer the first two questions by providing
a short discussion.
1. Do you think it was unethical that the attendees tweeted information about
11

the new drug and results of the study? Why or why not?
2. Did social media platforms such as Twitter and Facebook change the way
12

we look at confidentiality and social responsibility? Explain and substantiate

your view in a short paragraph.

FUN Activity! (not compulsory)

On your smartphone, download the following two apps:

SDGs in Action
SDG Game
You can learn a lot while playing around on these!

Maybe you are wondering why you or your company

should manage sustainably or why the SDGs are
important. In a McKinsey survey (2010), it was found
that 76% of managers say that engaging in sustainability
contributes positively to shareholder value in the
long term; 94% of the surveyed managers agreed
that investing in sustainability activities helped their
company build its reputation. The majority consider
sustainability important in areas such as product development and marketing, invest-
ments, internal operations, corporate reputation and brands as well as overall strategy.
It is more than just protecting the natural environment, more than being “green”. True
sustainability has four equal components: you have to consider the social, economic
and cultural impact in addition to the environmental impact.
Sustainable business practices should become “common practice” and organisations
not doing their part will be left behind. It is therefore important for you to be
knowledgeable about topics such as corporate social responsibility, sustainability
and the SDGs that were discussed in this learning unit. You are an agent of change,
and you need to be prepared to plan, cope with, and find solutions for issues that
threaten the sustainability of your organisation and our planet.

25 MNG2602/1
CONCLUSION
Organisations are responsible for more than profit to shareholders, and in this learning
unit, we investigated the reason for this. You were also introduced to the concepts of
good corporate governance practices as a way in which organisations could use these
practices to fulfil their responsibilities to society in an ethical and morally acceptable way.

SELF-ASSESSMENT EXERCISE
2

Case Study
Read the following case study about making ethical decisions and answer ques-
tions 1 to 7.

Making ethical decisions

Societal views influence each country’s laws in how members of a society deal with
fairness, justice, poverty, and the rights of the individual. Ethical standards accepted
in the United States are not accepted in all other countries. In some countries, brib-
ery is accepted as the standard practice in getting things done, while in the United
States and other Western countries, bribery is illegal. The following case examines
the managerial ethics of a lighting fixture company in China.
It is generally accepted that managers should behave ethically; however, self-interest
and profit can lead some managers to engage in unethical business practices. In
China, business laws vary from laws enforced in the United States. When businesses
close in China, some business owners decide to forfeit their stakeholders’ interests
by not repaying debts owed and fleeing the country. This action can have devastat-
ing results for the business owner’s reputation, for the suppliers because of lack of
payment, and for the workers because of lack of pay.
By early 2008, China began to experience the effects of the worldwide recession,
which resulted in the closing of many businesses. However, instead of applying for
protection under bankruptcy laws, many Chinese business owners decided to flee
the country, leaving their businesses, stakeholders, and workers in a state of flux
and panic. With factories shutting overnight, thousands of workers were unexpect-
edly out of work. In just one town, 673 companies closed, leaving 113,000 workers
unemployed and owing $44.1 million. Workers protested and creditors confiscated
company goods hoping to recoup some of their losses.
Trust had traditionally been the primary component of a business transaction
in China. Many business deals were made solely based on trust. Because of the
closings, suppliers and investors now actively investigate the financial stability of
companies to ensure repayment of debt. In the United States, factory owners could
file for bankruptcy, which would allow protection from creditors, but in China, the
bankruptcy law is rarely and ineffectively enforced. Because of this, creditors take
matters into their own hands and have been known to storm a factory to grab
anything of value and hold hostage former company executives.
Since some employees live at the factory, when a business suddenly closes, they are
left homeless as well as unemployed, thus exacerbating the situation. Some officials
are encouraging stronger action against business owners by printing their names
in local newspapers, shaming their reputation, and creating a blacklist of fugitive

26
 bosses. However, business owners are not without worry themselves. They fear for
their lives or that their former employees and suppliers will hunt them down and
hurt them.
1. The behaviour of the Chinese factory owners does not maintain and protect the
fundamental rights of people. Their behaviour can therefore be judged unethical
according to the rule.
1 justice
2 utilitarian
3 moral rights
4 practical
2. Chinese factory owners have been shamed publicly and lost their reputations for their
actions. This indicates that their actions are unethical according to the rule.
1 moral rights
2 utilitarian
3 justice
4 practical
3. The factory owners who run off without paying their workers or suppliers are the only
ones not hurt; all the other stakeholders are hurt. Looking at the situation from this
point of view, which rule would be used to demonstrate that this is unethical behaviour?
1 Utilitarian
2 Justice
3 Moral rights
4 Practical
4. Even if these owners were to return and try to get their businesses going again,
they would experience a great deal of difficulty because Chinese business is based
on , which they have destroyed.
1 societal ethics
2 reputation
3 terminal values
4 instrumental values
5. Which one of the following groups does not represent a stakeholder group injured
by the actions of the Chinese factory owners?
1 Employees
2 Customers
3 Community
4 Media
6. Employees who both lived and worked in the closed factories lost both their jobs and
their homes. They suffered more than any other group. Because of this, we can use
the rule to show that the owners acted unethically.
1 social responsibility
2 justice
3 utilitarian
4 practical

27 MNG2602/1
7. Employees, suppliers, and the community all lost their in the factory
owners; and the factory owners lost their .
1 equity; trust
2 investment; profits
3 trust; reputations
4 morality; utility
Please note that feedback on these questions will be provided on the myUnisa
module site as the semester progresses.

ADDITIONAL LEARNING EXPERIENCES

The following websites will further enrich your knowledge and understanding.
Visiting a Twitter page or watching a YouTube video is, however, not compulsory.
Corporate social responsibility
http://study.com/academy/lesson/business-ethics-corporate-social-
responsibility.html
Triple bottom line
https://www.youtube.com/watch?v=Ekf3kDioVPw
https://vimeo.com/groups/17646/videos/5832500
Business ethics
https://www.youtube.com/watch?v=y9VAY6HJ2R4
Stakeholder analysis
https://www.youtube.com/watch?v=uKozswXz7qM
SDGs
https://youtu.be/aLrLcODGMmo
Interesting tweeple that you could follow on Twitter
@GuardianSustBiz
@SustainAbility
@CorpGovLeaders
@GlobalGoalsUN
@SDG2030
#SDGs
#SustainableDevelopmentGoals
#DecadeOfAction
Disclaimer:
We frequently test the URL links provided in this learning unit. At the time of print,
these URL links were working. We are aware that a URL might not work after a
while or that content may be removed from the website. Situations like these are
out of our control.

28
REFERENCES
Institute of Directors Southern Africa. 2016. King IV: Report on Corporate Governance
for South Africa 2016. Available from: https://c.ymcdn.com/sites/iodsa.site-ym.com/
resource/collection/684B68A7-B768-465C-8214-E3A007F15A5A/IoDSA_King_IV_Re-
port_-_WebVersion.pdf [Accessed June 2019].
Institute of Directors Southern Africa. 2016. Sustainable Development Forum: King IV
and the Sustainable Development Goals. Available from: https://cdn.ymaws.com/
www.iodsa.co.za/resource/collection/4B905E82-99EB-48B1-BCDA-F63F37069065/
King_IV_and_the_sustainable_development_goals.pdf [Accessed June 2019].
Jones, G.R. & George, J.M. 2018. Contemporary Management. 10th ed. New York: McGraw
Hill.
KPMG. 2016. King IV Summary Guide. Available from: https://assets.kpmg/content/dam/
kpmg/za/pdf/2016/11/King-IV-Summary-Guide.pdf [Accessed June 2019].
McKinsey & Company. 2010. How companies manage sustainably. Available from: https://
www.mckinsey.com/business-functions/sustainability/our-insights/how-companies-
manage-sustainability-mckinsey-global-survey-results [Accessed February 2020].
Woolworths Holdings Limited. 2018. 2018 Good Business Journey Report. Available from:
https://www.woolworthsholdings.co.za/wp-content/uploads/2018/09/WHL_2018_
GBJ_Report_2018.pdf [Accessed June 2019].

29 MNG2602/1
LEARNING UNIT 3
Managing diverse employees in a multicultural
environment

OVERVIEW
People are different in a countless number of ways. Consider your colleagues and friends,
their age, gender, race, religion, marital and parental status, their work experience and
educational background. These along with many other factors, cause people to be different.

Diversity can be thought of as “differentness” – it describes those human qualities that

are different from our own and those which are outside the groups to which we belong.
Organisations are increasingly employing a mosaic of different people. As a manager,
you should be aware of these differences, but more importantly, you should value them.
However, you should also control any negative impact it might have on the performance
of the organisation. Managing diversity is about inclusion, which reflects an organisational
culture that recognises and values the differences among employees. Management can
create a competitive advantage for the organisation by supporting and training employees
to work through difficulties they may encounter in coping with diversity.

In this learning unit, you will learn that managers play a central role in the effective
management of diversity. As a manager you need to understand why diversity is both
an ethical and business imperative, be able to distinguish between diversity approaches,
discourage unfair treatment and take the necessary steps to manage diversity effectively.

30
 LEARNING OUTCOMES

Upon the successful completion of this unit, you will be able to

• discuss the increasing diversity of the workforce and the organisational
environment
• explain the central role that managers play in the effective management of
diversity
• explain why the effective management of diversity is both an ethical and a
business imperative
• distinguish between approaches to managing diversity
• discuss how perception and the use of schemas can result in unfair treatment
• discuss the steps managers can take to manage diversity effectively
• apply the theoretical knowledge of the above points to a case study in order
to demonstrate an understanding and application of theory to an unknown
situation
• use the information in your job as a manager

WORK THROUGH CHAPTER 3 IN THE PRESCRIBED BOOK.

KEY CONCEPTS

Distributive justice. A moral principle calling for fair distribution of salaries, promotions,
and other organisational resources based on meaningful contributions that individuals
have made and not personal characteristics over which they have no control.
Diversity. Dissimilarities or differences among people due to age, gender, race, ethnicity,
religion, sexual orientation, socioeconomic background, education, experience, physical
appearance,
capabilities/disabilities, and any other characteristic that is used to distinguish between
people.
Glass ceiling. A metaphor referring to the invisible barriers that prevent minorities and
women from being promoted to top corporate positions.
Overt discrimination. Openly and actively denying diverse individuals access to op-
portunities and outcomes in an organisation.
Procedural justice. A moral principle calling for the use of fair procedures to determine
how to distribute outcomes to organisational members.
Perception. The process through which people regard, organise, understand and inter-
pret what they see, hear, touch, smell, and taste to give meaning and order to the world
around them.
Schema. A cognitive framework or concept that helps with the interpretation and or-
ganisation of information about a person, an event, or a situation.
(Adapted from: Jones & George, 2018)

31 MNG2602/1
SOURCES OF DIVERSITY
Scenario 1

Imagine that you are working in the human resources (HR) department of your company.
You come across the following scenarios in which your input has been sought.
1. Aimee is the mother of a new-born baby. She is very dedicated to her work but
she used to stay for longer hours at work before she had her baby. Now she tries to
schedule her work so that she leaves around 17:00. Her immediate manager feels
that Aimee is no longer dedicated or committed to her work and is considering
passing her over for a promotion.
2. Jack is a married male, while John is single. Your company has an assignment in a
branch in Mexico that would last a couple of years. Management feels that John
would be better for this assignment because he is single and is free to move.
3. Brett, a sales employee, has painful migraines intermittently during the workday.
He likes to take short naps during the day as a preventative measure and he also
needs a place where he can nap when a migraine occurs. His immediate manager
feels that this is unfair to the rest of the employees.
(Source: Adapted from https://courses.lumenlearning.com/suny-hccc-orgbehavior/chapter/2-7-exercises/)

ACTIVITIES

1. Indicate which sources of diversity each of the scenarios demonstrates.

2. Write two paragraphs for each of the three scenarios. In the first paragraph,
describe the factors that should be considered in evaluating this situation.
In the second paragraph, include the specific recommendation that you
make to the manager who is asking your advice.

FEEDBACK
8

The workforce are becoming more diverse due to workers’ differences in age,
gender, race, ethnicity, religion, sexual orientation, socioeconomic background
(social class and income-related factors), capabilities/disabilities, education,
experience, physical appearance and other characteristics such as physical
appearance, parental and marital status.

In South Africa, the fair treatment of the workforce is protected by four laws,
the Constitution Bill of Rights of 1996, the Labour Relations Act of 1995, the
Basic Conditions of Employment Act of 1997 and the Employment Equity Act
of 1998. These are shown in the table below.

32
Table 3.1: Major employment laws in South Africa

Year Law Description

1996 The Constitu- Essence of this Act: human dignity, equality

tion (Bill of and freedom
Rights)

1995 Labour Centrepiece of labour law – all other labour laws

Relations Act are subordinate to the LRA.
(LRA) Purpose: to advance economic development,
social justice, labour peace and a democratisation
of the workplace by fulfilling the primary
objectives of the Act.

1997 Basic Con- Purpose: to advance economic development

ditions of and social injustice by establishing and enforcing
Employment basic conditions of employment (work time,
Act (BCEA) rules, remuneration, etc).

1998 Employment Purpose: to promote equal opportunity and

Equity Act fair treatment; and affirmative action to redress
(EEA) advantages.
Designated groups: Black people (Africans,
Coloureds, Indians), women and people with
disabilities.

(Source: Adapted from ILO, 2002)

Looking at the sources of diversity, we can say that we are all different or diverse
but being different is not wrong. Diversity is desirable and beneficial for an
organisation. The cornerstone for diversity behaviour in organisations is the
platinum rule. Do you remember we discussed the golden rule in the previous
chapter? The platinum rule builds on the golden rule and says: “treat others
as they want to be treated”. This rule demonstrates respecting and honouring
our differences by assuming others may want to be treated differently from us,
taking diversity beyond culture and ensuring that everyone is included and
everyone wins (Brevis & Vrba 2014).

33 MNG2602/1
MANAGERS AND THE EFFECTIVE MANAGEMENT OF DIVERSITY
Scenario 2

Review the section on “Managers and the effective management of diversity” in your
textbook. The following exercise requires you to understand the specific roles of managers
and the effective management of diversity.

ACTIVITIES

1. Classify each of the following managers into their specific managerial role.
You can also refer back to learning unit 1 in this regard.
1.1 At the opening of the new corporate headquarters, Carl let everyone
know that effective management of diversity is a highly valued goal
for the organisation.
1.2 Tawnie always shows respect to diverse employees in order to model
the correct behaviour for the rest of the organisation.
1.3 Javier has been working with representatives of the Muslim and Jewish
workers on methods to increase cooperation between the groups.
1.4 Yuan recently conducted a survey and follow-up interviews to determine
whether or not diverse employees felt they were being treated fairly.
1.5 Alexander holds meetings with new employees to tell them about the
company’s diversity policies and its total intolerance of discrimination.
1.6 Olga frequently speaks to community groups about the diversity
measures in place in the company and talks with individuals of diverse
backgrounds about career opportunities with the organisation.
1.7 Genelle recently attended a conference on diversity management
and is now organising resources to develop a new diversity awareness
program.
1.8 Lisa called two workers into her office after overhearing them make
rude comments about a gay co-worker. She let them know that such
behaviour is not tolerated and could result in losing their jobs.
1.9 Karen adjusted the budget for the next year to ensure that the human
resources department received enough funding for the new diversity
training program.
1.10 Mark has been attending a series of meetings with suppliers to develop
agreements on the implementation of non-discriminatory practices at
those companies with which his organisation will do business.

FEEDBACK
9

The growing diversity of the environment – which, in turn, increases the diversity
of an organisation’s workforce – increases the challenges managers face in
effectively managing diversity. In each of their managerial roles, managers
are critical to this process. Each kind of diversity presents a particular set of
issues managers need to appreciate before they can respond effectively.
Understanding these issues is not always simple, as many informed managers

34
 have discovered. Managers must be aware of the many subtle and unobtrusive
ways in which diverse employee groups can be treated unfairly and the
unconscious biases that might adversely affect them. Managers can take
many steps to become sensitive to the ongoing effects of diversity in their
organisations, take advantage of all the contributions diverse employees can
make, and prevent diverse employees from being unfairly treated.
Managing diversity is both an ethical and a business imperative. When you
look at the ethical advantages, there are two principles that will guide your
efforts: distributive and procedural justice. Distributive justice is about the fair
distribution of resources – everything from salaries, promotions, job titles, office
space – according to the meaningful contributions that individuals have made
to the organisation (time, effort, education, skills, abilities and performance), and
NOT personal characteristics over which the individual have no control (gender,
race or age). Procedural justice requires that managers use fair procedures to
determine how to distribute outcomes to members of the organisation. For
example, who should receive a raise or promotion, or who will be retrenched
if an organisation is forced to downsize.
Why does managing diversity make good business sense? Having a diverse
workforce and managing it effectively have the potential to bring about a
number of benefits to organisations, which can lead to a competitive advantage.
The benefits include
• higher creativity in decision making (as there is a wider range of perspectives)
• better understanding and service of customers
• a more satisfied workforce
• a favourable reputation as prospective employer (resource acquisition – ac-
quiring the best personnel)
• increasing retention of valued employees
• higher stock prices
• avoiding costly lawsuits
• higher company performance

APPROACHES TO MANAGING DIVERSITY

Scenario 3

This section contains additional information that does not form part of the prescribed
book and is important for the examination.

Approaches to managing diversity

In order to identify the dominant diversity perspective of an organisation, we should
look at the specific practices that fit the specific dominant perspective. The table below
indicates the overall aim of the organisation’s diversity policy, the different dimensions
or sources of diversity that is addressed, practices in human resources, communication,
marketing activities and the management structure, and benefits and negative effects
encountered.

35 MNG2602/1
The approach “assimilating minorities” aims at ensuring equal opportunities for
traditionally under-represented groups and legally protected attributes such as disabilities.
The benefits of this approach is that employees are treated fairly and therefore lawsuits
will be avoided, but at the same time minorities might feel that their employment is only
due to their demographic status rather than their qualifications or skills.
In the “integrating diversity” approach, diversity is acknowledged both inside and outside
the organisation, and the organisation adopts actions to address social expectations
voluntarily. There are more sources of diversity involved and practices include, for example,
a greater recruitment pool, better communication and diversity training. This approach
leads to motivated employees and a favourable organisation reputation. However, there
may be conflict between employees who are from different backgrounds.
The third approach, “leveraging variety”, aims to achieve a competitive advantage through
the diverse workforce (their different competencies and knowledge). Practices include
employing heterogeneous teams and fostering employee linkages for organisational
learning. Resulting benefits include an increased capacity to innovate and the development
of new markets for the organisation, while there is a risk that diverse employees are put
in more visible positions just to match the diversity of stakeholders and improve the
corporate image.
Table 3.2: Approaches to managing diversity and its practice-driven indicators

Approach Assimilating Integrating Leveraging variety

indicators minorities diversity

Aim Equal opportuni- Social expectations Competition

ties (regulatory) (ethical) (competitive)

Dimensions Gender, paren- Race, nationality, Capabilities/

(sources of tal status and language, religion, competencies,
diversity) disability sexual orientation, knowledge,
age networks

Practices Quota systems Flexible working, Heterogeneous

work-life balance, teams, employee
expansion of the networks, diverse
recruitment pool, suppliers, employ-
training, partner- ment in innova-
ships with dedicat- tion-related areas,
ed institutions and evaluation of policy
networks, inter- objectives
nal and external
communication

Manage- Barely existent Dedicated role and Dedicated struc-

ment planning ture, planning and
structure budget

36
 Approach Assimilating Integrating Leveraging variety
indicators minorities diversity

Benefits Fair treatment, Employee motiva- Innovation, new

reduced lawsuits tion, corporate markets
image

Negative Lowering of hiring Increased con- Pigeonholing (de-

effects and promotion flicts, reverse ciding someone
standards, negative discrimination belongs to a par-
self-perceptions of ticular type or group
competence without knowing
much about them)

(Adapted from: Ravazzani, 2016:156)

ACTIVITIES

1. Read the following paragraph and classify the organisation’s approach to

managing diversity. Substantiate your answer through direct quotes and
a short meaningful discussion.
When it comes to their employees, Shoprite is looking for people who
demand more. People with intelligence, energy, loyalty and a fearless
nature, who refuse to settle for the status quo. People who want more
for themselves, their families, their communities and their country. Within
Shoprite, the focus is on involving people across the business, either to
develop their ideas, or to become involved in working together to make
ideas happen. This practice greatly increases the quality of communica-
tion within the company. Shoprite values diversity as part of building a
strong brand and a dedicated workforce, welcoming diversity as a part of
creating a strong and innovative corporate culture. They believe that dif-
ferent perspectives of employees produce better decisions and allow for
a more thorough critical analysis of issues. All employees have to attend
diversity training sessions and having a healthy work-life balance is seen
as extremely important.

HOW TO MANAGE DIVERSITY EFFECTIVELY

Scenario 4

RoadLink, based in Kenya, is one of Africa’s leading companies in road surfacing. They are
a key producer of gravel, ready-mixed cement and mortar. The RoadLink brand is well
known in construction projects throughout Kenya and Tanzania. They employ just over

37 MNG2602/1
2000 employees, and as a company in the heavy building materials industry the workforce
traditionally consisted mostly of men. This, however, is changing and many positions are
now open to men and women across a range of job roles.
The culture and vision of RoadLink are now focused on diversity and inclusion since
a diverse workforce better reflects their diverse target market. They have created an
organisational culture that values the differences between their employees as a strategy
to make them feel more included. This culture values the employees’ individuality and
their personal strengths.
While the stereotype of older, male employees remains within the industry, this is not
an inclusive strategy and RoadLink set out to achieve change through effective training
and setting an example of leadership up to chief executive officer (CEO) level. The senior
managers provide diversity and inclusion support, guidance and resources for employees.
The training of employees has led to a superior quality service to their customers, a
strong relationship with their suppliers, more reliable internal systems and more creative
problem solving.
RoadLink’s diversity strategies promote family-friendly working patterns for both male
and female employees, as well as anti-bullying or harassment policies. This approach is
supported by the ongoing commitment to training and development. All employees
receive core training to do their job effectively and safely. Employees all have an annual
performance appraisal which identifies personal goals and training needs. RoadLink also
offers a wide range of internal courses for all levels of staff and there are many opportunities
to gain external qualifications, including degrees. They aim to achieve the exceptional
and this is done through diverse talent and leadership within the company.
While RoadLink is committed to a vision of diversity and inclusion among its employees,
there are challenges that must be addressed. One such challenge is due to diversity being
dynamic, leading to the RoadLink workforce changing regularly. The workforce at one
location may become much less diverse through promotions, resignations and retirement.
While there are no simple solution to this problem, RoadLink has made diversity and
inclusion a central part of its HR and overall business strategy. In an industry which is
usually dominated by men, the need for a diversity policy is even greater. Diversity and
inclusion are not just a set of boxes to be ticked, they are a part of organisational culture
that enables RoadLink to stand out from competitors.

ACTIVITIES

1. What steps do you think this organisation took to effectively manage

diversity?
2. What additional steps would you suggest managers take to manage diversity
more effectively?

38
 FEEDBACK
10

To overcome barriers to managing diversity effectively, managers and other

employees must possess or develop certain attitudes and values as well as the
skills needed to change other people’s attitudes and values. In order to change
the attitudes and values of others, you, as a manager, can take these steps:
• Secure top management commitment – this is crucial, the correct ethical
values and attitudes need to be developed.
• Strive to increase the accuracy of perceptions – as a manager, be open
to other points of view and put your own beliefs and knowledge to a real-
ity test. You should modify your view when necessary and avoid making
judgements without relevant information.
• Increase diversity awareness – become aware of other perspectives, at-
titudes and experiences of others.
• Increase diversity skills – improve how you interact with others (managers
and/or subordinates) and overcome communication barriers.
• Encourage flexibility – be open to different approaches and ways of doing
things, be patient and do not feel threatened by this.
• Pay close attention to how organisational members are evaluated – rely
on objective performance indicators.
• Consider the numbers of minority groups across the entire organisation.
• Empower employees to challenge discriminatory behaviours, actions
and remarks – encourage them to speak up and then rectify the situation.
• Reward employees for effectively managing diversity.
• Provide training by using a multipronged ongoing approach – this can
be done through films, printed materials, forums, group exercises and by
hiring outside consultants.
• Encourage mentoring of diverse employees – advice and guidance should
be provided to less experienced members of the organisation.

FUN ACTIVITY! (NOT COMPULSORY)

Go to the Global Village website http://www.nationsonline.org/oneworld/

global-village.htm and prepare a brief presentation with current global de-
mographics (as if the population of the world were reduced to a village of 100
people). Share the presentation with fellow students on myUnisa, for a broader,
more global look at diversity.

39 MNG2602/1
 The issue of diversity can be linked to three of the SDGs,
namely SDG5 (gender equality), SDG8 (decent work
and economic growth) and SDG10 (reduced inequali-
ties). Diversity is recognised as a core driver of busi-
ness growth and innovation. The DiversityInc top 50
companies for diversity contains excellent examples
of organisations excelling in diversity and inclusion.
For example, the top rated company for diversity in
2019 is AT&T, a multinational telecommunications company. They continue to in-
crease the diversity of people and ideas in their workforce and encourage employees
to talk about their differences with each other to increase their understanding of
their colleagues. AT&T also supports technological programs for underrepresented
populations that provide the skills and experience needed to succeed in these ca-
reers. You can see the full list of DiversityInc here: https://www.diversityinc.com/
the-2019-top-50-diversityinc/.
Organisations that value diversity and increase their diversity efforts are assisting their
countries in achieving important SDG goals. However, it is important to remember
that there is a difference between diversity in the workplace and inclusion of all the
diverse employees. It is not the same thing and as a manager you must know the dif-
ference. You need to know that diversity does not work without inclusion, and that a
diverse organisation cannot be sustainable if there is not an inclusive culture. A lack
of inclusion will block your organisation’s innovation and growth, which means it has
to be a priority for you.

CONCLUSION
Working with people from different backgrounds can be stimulating and educational
but also challenging. You should keep an open mind and develop a sensitivity to the
“differentness” of people. Managing diversity is, however, a critical skill for all contemporary
managers. A significant amount of time, energy and resources should be allocated to
driving workforce diversity and inclusion. Connect with your employees, find out what
motivate them and take advantage of their different viewpoints and backgrounds.

SELF-ASSESSMENT EXERCISE
3

Case Study

Read the Bloomberg case at the end of Chapter 3 in your textbook and answer
questions 1 to 3.
Please note that feedback on these questions will be provided on the myUnisa
module site as the semester progresses.

40
 ADDITIONAL LEARNING EXPERIENCES

The following websites will further enrich your knowledge and understanding.
Visiting a Twitter page or watching a YouTube video is, however, not
compulsory.
Diversity management
https://www.youtube.com/watch?v=m6X_Vt4wej0
Dimensions of diversity
http://www.youtube.com/watch?v=MAQ3KecyDq0
http://www.youtube.com/watch?v=9fS0ebaZMvE
Interesting tweeple that you could follow on Twitter:
@StanfordBiz
@MandelaDaily
Disclaimer:
We frequently test the URL links provided in this learning unit. At the time of print,
these URL links were working. We are aware that a URL might not work after a
while or that content may be removed from the website. Situations like these are
out of our control.

REFERENCES
Brevis, T. & Vrba, M. 2014. Contemporary Management Principles. Cape Town: Juta.
International Labour Organisation (ILO). 2002. National Labour Law Profile: South Africa.
Available from https://www.ilo.org/ifpdial/information-resources/national-labour-
law-profiles/WCMS_158919/lang-en/index.htm [Accessed July 2019].
Jones, G.R. & George, J.M. 2018. Contemporary Management. 10th ed. New York: McGraw
Hill.
OER services. Not dated. Module 2: Managing Demographic and Cultural Diversity from
An Introduction to Organizational Behavior. Available from: https://courses.lumen-
learning.com/suny-hccc-orgbehavior/chapter/2-7-exercises/ [Accessed July 2019].
Ravazzani, S. 2016. Understanding approaches to managing diversity in the workplace:
An empirical investigation in Italy. Equality, Diversity and Inclusion: An International
Journal, 35(2):154–168.

41 MNG2602/1
LEARNING UNIT 4
Managing in the global environment

OVERVIEW
Thanks to the amazing invention of the internet and the possibility of travelling
internationally, it is now possible for organisations to operate on a global as well as a
national (or local) scale. We can now buy a product from another country within seconds,
book a plane ticket to anywhere in the world within minutes, and even study at an
international university from home. For a global organisation, the operating environment
is even more complex as influences not only happen on a national scale (within your
country) but also occur internationally. Think about the previous learning units you
completed – operating globally will influence the diversity efforts, workplace ethics and
sustainability strategies in your organisation. Consumers have become more powerful,
more aware and more knowledgeable on topics such as diversity and sustainability.

As a manager in an organisation, how will you make sure your organisation remains
successful despite these influences or forces of change? Before you can begin to determine
this, it is crucial to understand the environment in which your organisation operates and
the different forces that affect your organisation. When you pay attention to the world
around you through reading or listening to the news, you may notice that these changes
can be categorised according to their influences. Global environment forces have a direct
influence on the operations of the organisation and should constantly be scanned to
identify new forces that could affect the organisation. Once identified, you, as a manager,
should also be able to analyse and interpret the consequences the environmental forces
have on the organisation and respond appropriately.

42
In this learning unit, we will consider what the global environment is and how organisations
function within the environment. We will differentiate between the task environment
and the general environment contained within the global environment. We identify and
discuss the different forces within the task and general environment that has an impact
on organisations. We also discuss the concept of globalisation and how this can have
both positive and negative effects on organisations.

LEARNING OUTCOMES

Upon the successful completion of this unit, you will be able to

• discuss why the ability to perceive, interpret, and respond appropriately to
the global environment is crucial for managerial success
• differentiate between the task and general environments and the manner
in which they influence organisations
• identify and discuss the main forces in the global task and general environments
and provide practical examples of these forces
• describe the challenges that each force presents to managers
• explain why the global environment is becoming more open and competitive
• identify the forces behind the process of globalisation that increases
opportunities, complexities, challenges, and threats managers face
• analyse a practical scenario to determine the forces in the task and the general
environments affecting the organisation
• apply the theoretical knowledge of the above points to a case study in order
to demonstrate understanding and application of theory to an unknown
situation
• use the information in your job as a manager

WORK THROUGH CHAPTER 4 IN THE PRESCRIBED BOOK.

KEY CONCEPTS

Competitors. Organisations that produce goods and services that are similar to a par-
ticular organisation’s goods and services.
Customers. Individuals and groups that buy the goods and services an organisation’s
produces.
Demographic forces. Outcomes of changes in, or changing attitudes toward, the char-
acteristics of a population, such as age, gender, ethnic origin, race, sexual orientation,
and social class.
Distributors. Organisations that help other organisations sell their goods and services.
Economic forces. Interest rates, inflation, unemployment, economic growth, and other
factors that affect the general health and well-being of a nation or the regional economy
of an organisation.

43 MNG2602/1
General environment. The wide-ranging global, economic, technological, sociocul-
tural, demographical, political, and legal forces that affect an organisation and its task
environment.
Globalisation. This is the economic and social interaction process whereby different
countries work together to create a global economy.
Global environment. The set of global forces and conditions that operates beyond an
organisation’s boundaries but affects a manager’s ability to acquire and utilise resources.
They consist of the task environment and the general environment.
Global organisation. An organisation that operates and competes in more than one
country.
Global outsourcing. The purchase or production of inputs or final products from over-
seas suppliers to lower cost and improve product quality or design.
Political and legal forces. Outcomes of changes in laws and regulations, such as the
deregulation of industries, the privatisation of organisations and an increased emphasis
on environmental protection.
Sociocultural forces. Pressures emanating from the social structure of a country or
society or from the national culture.
Suppliers. Individuals and organisations that provide an organisation with the input
resources it needs to produce goods and services.
Task environment. The set of forces and conditions that originates with suppliers, dis-
tributors, customers, and competitors and affects an organisation’s ability to obtain inputs.
Technological forces. Outcomes of changes in the technology managers use to design,
produce, or distribute goods and services.
(Adapted from: Jones & George, 2018)

GLOBAL ENVIRONMENT
Scenario 1

Read through the scenario below and do the five exercises that follow.
Imagine you are a new manager of a major international clothing manufacturing and
distribution store, Fashion Frenzy, that is facing a crisis. This clothing store has been the
leader in its market for the last 15 years. As it has been operating for such a long time,
the processes used to manufacture clothing articles, the marketing strategies and the
accounting software are a bit outdated. The cost of manufacturing the articles has also
begun to increase as the cost for material received from the factory has been slowly
increasing. Fashion Frenzy also makes use of a lot of manual labour, which at times affects
the quality of the products produced. They have storefronts in major cities around the
world where products are sold and have an active presence in these cities based on their
excellent brand image and work in the surrounding communities. Sales have however
declined in the last couple of years.
Three years ago, another major clothing store chain, called Star Fashion, has opened stores
in the same areas as Fashion Frenzy. They have steadily been attracting customers away

44
from your store. Although they are new on the market and do not have as much experience
operating in a global environment, they have other things counting in their favour. Star
Fashion has a large following on social media and uses efficient online marketing to make
customers aware of their new clothing ranges as well as special offerings. Their factories
are mostly automated with suppliers of material in both China and Mexico allowing them
to make clothing items at decreased cost. Recently they started sponsoring a high-ranking
international cricket team which further created awareness of their brand.

ACTIVITIES

1. Identify the different task environment forces visible in the scenario. Motivate
your answer for each force in a few sentences (you can either provide
examples from the case study or give an explanation in your own words).
2. Identify the different general environment forces visible in the scenario.
Motivate your answer for each force in a few sentences.
3. Recommend at least five specific ways Fashion Frenzy can capitalise on the
changes in the technological environment to grow their business.
4. Once you have analysed the environmental forces visible in the scenario,
select an organisation of your choice (either one that has provided you with
work experience, or any organisation that has enough information available
on the internet) and answer the following questions about the organisation:
• Is the organisation a global organisation, or does it only operate in their
local environment?
• What are the major environmental factors that affect the organisation?

FEEDBACK
11

When you read the scenario, remember that the forces in the global environment
have a direct influence on the operations of the organisation. Do you
understand why it is beneficial to organisations to identify forces influencing
their environment? It allows organisations to determine any opportunities
and threats that they can capitalise on or have to counteract. Knowing of the
changes in the environment and successfully adapting to these changes may
mean the difference between the success or failure of the organisation.
Were you able to analyse the scenario and identify the forces that influenced
the clothing store?
Consider each force in the task environment:
• Suppliers (responsible for providing the resources you need to create
products and services): From the scenario, we can identify that suppliers
are impacting the organisation as manufacturing costs are increasing. It is
important to constantly search for better opportunities in terms of suppli-
ers. For Fashion Frenzy this can either mean suppliers of clothing material
at a lower cost or organisations able to supply new equipment with better
technology, enabling increased manufacturing efficiency through automa-

45 MNG2602/1
 tion. Suppliers can affect an organisation’s profitability and competitiveness
within the industry if materials are not obtained at the lowest possible price.
• Distributors (assisting in selling your goods and services): The fourth in-
dustrial revolution has introduced more opportunities for distributing us-
ing online channels. This includes the organisation’s marketing strategy as
well. Organisations neglecting the use of technology as a tool to sell their
products may miss out on an entire target market strictly searching for and
ordering clothing items online. It is therefore crucial for Fashion Frenzy to
adapt to the technological factors (see how the general environment is also
influencing the task environment) and capitalise on the customer base using
these methods to purchase products.
• Customers (buying your goods and services): As discussed above, it is crucial
to ensure your organisation reaches all possible customers. As they are us-
ing outdated marketing and distribution channels, it can be assumed that
they are not reaching their entire target market, especially not on a global
scale. An online presence will assist Fashion Frenzy to reach the maximum
number of customers.
• Competitors (producing and selling similar goods and services): The global
business environment results in fiercer competition because your organisa-
tion is not only competing with similar stores within their physical area, but
all other stores which sell similar products around the world. The importance
of reaching your entire target market, using the cheapest raw materials and
most efficient production methods possible as well as the most efficient
distribution channels, is therefore clear. The success of your organisation can
depend on your ability to successfully implement all these factors.

Now consider each force in the general environment:

• Economic (overall health and financial well-being): In a global arena the
economic environment can affect an organisation far more than local opera-
tions. Consider the exchange rates between different currencies. For example,
suppliers based in countries with stronger currencies than your local currency
may disadvantage organisations in terms of costs, while suppliers based in
countries with weaker currencies may provide a cost advantage. Fashion
Frenzy should consider using a local supplier able to provide raw material at
a lower cost or using a supplier based in a country with a weaker currency.
• Technological (changes how products are designed, produced or distrib-
uted): The fourth industrial revolution has provided the world with many
new and more efficient ways of doing business. This includes all aspects of
business. At times the technological environment changes rapidly, and an
organisation’s ability to adapt to these changes and incorporate this in their
business operations could offer a competitive advantage. Fashion Frenzy
will need to update many systems and processes in order to ensure they
capitalise on the opportunities technology has to offer. More specifically,
they can focus on aspects such as marketing (how would you incorporate
technology in their marketing strategy?), distribution (do you make use of
online channels to purchase clothes?), and their production lines (what about
the production of clothing can improve with the use of technology?).
• Sociocultural (society or culture surrounding the organisation): Once again,
in a global environment, the society your organisation is catering for differs
from that of a local environment. You need to be aware of the different

46
 cultures, lifestyles and trends from around the world. For Fashion Frenzy
these lifestyles may include sensitivity to animal products, for example, fur
or leather, and environmentalism, for example, using sustainable resources
and perhaps recyclable materials to some extent. Paying attention to trends
like these will not only build a brand’s image but can create an entire new
customer base for the products sold.
• Demographic (characteristics of the population): The demographics of your
target market will be affected by factors such as a decrease in births due to
family planning and a decrease in deaths due to improved health care. This
means that the average age of the world population is getting older. Fash-
ion Frenzy should keep this in mind when releasing new clothing ranges.
Furthermore, as they have a well-established image from their store fronts
and the older generation may be more inclined to visit stores instead of
purchasing online, including a range for the older generation in their stores
specifically may offer an advantage.
• Political and legal (laws and regulations applicable to the organisation):
Finally, because Fashion Frenzy is operating in the global arena, they cannot
only comply with their local laws and regulations, but also need to consider
laws and regulations of all the countries they are operating in. Laws and
regulations may influence the manufacturing of clothing, the packaging of
the items, and the distribution of items to other countries. This will become
even more difficult if online distribution is introduced as this may allow many
more countries to purchase their products.

As a manager you need to understand the influence each force can have and constantly scan
the environment to identify new forces. Once identified, you should be able to analyse and
interpret the consequences the force will have on the organisation and respond in such a
way that they capitalise on possible opportunities and ward off threats to the organisation.

Identifying changes in the general environment could prove to be more difficult than
identifying changes in the task environment. Although organisations have no control
over forces within the general environment, a manager’s ability to analyse the forces
and adapt to them could see organisations gain a competitive advantage. As for the task
environment, managers that are able to identify and adapt could succeed in capitalising
on possible opportunities and ward off threats to the organisation.

Sharpen your skills: Global environment

Watch the news or read the newspaper and try to identify the forces currently affecting
South Africa. Were you able to identify some?
Feedback
Forces that you are probably able to identify are economic and political in nature. An
example of these forces is the volatile nature of governments and the ruling party
often influences the strength of the South African rand. Socio-cultural forces may
include the high unemployment rate and poverty-stricken areas neglected by the
government.

47 MNG2602/1
THE CHANGING GLOBAL ENVIRONMENT
The global environment confronts an organisation with both increased sources of
threats and opportunities. As a manager, you should be able to compete within a global
environment and recognise the possible opportunities and threats which exist. As the
environment is always changing, this should be done on a constant and on-going basis.

The global environment essentially means that the organisation is competing for customers
with every other competitor in the world; therefore, you as manager is also competing
with the abilities of every other manager. If you are not able to recognise how the
changes in the global environment will influence your organisation, you will not be able
to exploit opportunities or ward off threats, leading to a global competitive advantage
or competitive disadvantage.

For example, the ability of Fashion Frenzy to obtain material from an international
supplier at a lower cost will not only increase their profitability but could provide a global
competitive advantage. However, if competitors can obtain cheaper materials, this will
be a threat to your organisation.

Work through the section "The Changing Global Environment" in your textbook for a
discussion of the changing global environment.

THE PROCESS OF GLOBALISATION

Globalisation motivates managers and employees of global companies to try and produce
products or services that customers all over the world would want to buy. Globalisation
involves the flow of capital moving through companies and regions to create wealth.

ACTIVITIES

Work through the section "The Process of Globalisation" in your textbook and
ensure you understand the process of globalisation, then do the following
exercise.
1. Go back and read the Fashion Frenzy scenario. Identify how the different
forms of capital flow in the organisation. Motivate your answer for each
form of capital in a few sentences.
2. Choose an industry you are familiar with or interested in. Using examples,
explain how globalisation has affected that industry.

12 FEEDBACK

1. When you read the scenario, remember that globalisation forces managers
to think of and adapt to influences and opportunities far greater than that
of their local surroundings.
Were you able to analyse the scenario and identify the forms of capital
that occurred in the clothing market?
Now let us consider each form of capital that occurs in a global arena:

48
 • Human capital (the flow of people around the world): Human capital
does not only involve people physically moving to other destinations,
it also involves the use of knowledge and skills from people around the
world. Technology once again plays an important role in this, as it allows
people to communicate and work together without being in the same
location (e.g. skype, e-mail and conference calls).
• Financial capital (the flow of money across the world): Organisations will
always strive to make money, whether it is profit-driven or non-profit
organisations, and the procurement of money likely remains one of the
organisation’s goals. In the discussion on economic forces, we touched
on the influence of exchange rates, which also have an influence on the
flow of financial capital when operating in a global arena.
• Resource capital (the flow of natural resources around the world): Re-
sources will also be necessary to perform a service or produce a product.
Resources no longer have to be sourced from local sources but can be
obtained from around the world. This means an organisation can source
resources cheaper from international suppliers leading to a reduction
in production costs.
• Political capital (the flow of power and influence around the world): This
refers to the influence and power one has over others.
There are some factors that increase the rate at which capital flows between
companies on a global scale. The faster the flow of capital, the more
value can be created from this capital. The factors that have advanced
globalisation include declining barriers to trade and investment, declining
barriers of distance and culture, and the effects of free trade.
2. An example of an industry significantly impacted by globalisation is the food
industry. Before globalisation, food production and distribution occurred on
a local scale; with urbanisation and expansion, food is now produced and
distributed globally. In many ways this shift has increased food availability,
affordability, and diversity; it is now easier and cheaper to ship food to most
locations. This provides consumers in developed countries with a wider
array of choices and convenience; bridging cultural and geographic barriers.

49 MNG2602/1
 The Global Reporting Initiative (GRI) states that “a sus-
tainable global economy should combine long-term
profitability with social justice and environmental care
…”. Can you see how this relates to SDG16 (peace, justice
and strong institutions) and SDG17 (partnerships for the
goals)? Consider these two examples from a leading
technology company, Microsoft (adapted from Lane
& Maznevski, 2019):
11. Microsoft has a programme called “Children out of mining” in the Democratic
Republic of Congo (DRC), which is aimed at reducing and eventually eliminating
child labour in mining. There was a 77 to 97 percent reduction in children working
in the mines between 2014 and 2016. For this programme, Microsoft (based in the
USA) had to partner with the mines (in the DRC) to address a social issue.
22. Microsoft is committed to shared value (refer to learning unit 2 for a definition) by
empowering their stakeholders throughout their value chain. They increase their
spending amount with suppliers owned by ethnic or racial minorities and women
in the different countries in which it operates. They also assist their suppliers with
empowerment programmes for the local communities in 14 different countries.
Governments are no longer the only responsible agent in building sustainable societies.
It is the responsibility of every organisation to use creativity and innovation to address
sustainable development challenges. There is a guide, the SDG Compass, which can be
used by organisations to align their strategies with the relevant SDGs, and measure
and manage their impacts. Have a look here:
https://sdgcompass.org/wp-content/uploads/2015/12/019104_SDG_Compass_
Guide_2015.pdf.

CONCLUSION
Change is the only constant in a global business environment. As a manager, you will face
changes in the global environment on a regular basis and it is crucial that you will be able to
identify the opportunities and threats these changes hold for the organisation. Your ability
to do this means opportunities could be capitalised on to strengthen your organisation’s
position in the competitive market, while threats can be warded off to prevent or minimise
devastating damages that could occur. In this learning unit, we examined the global
environment and how organisations function within their environment. We differentiated
between the task environment and the general environment contained within the global
environment and the forces within each that have an impact on organisations. It is
important that you are mindful of changes occurring within organisations when working
through the rest of the learning units.

50
SELF-ASSESSMENT EXERCISE
4

Case Study
Read the following case study about Emira Airlines and answer the questions that
follow.
Emira Airlines
Soaring fuel costs, escalating wages, tightened security and the great recession –
all these issues profoundly affect every air carrier in the world today. Perhaps no
industry has experienced such tumultuous change so quickly and dramatically as
the airline industry since the terrorist attacks of 9/11 (11 September 2001).
Emira Airlines is no exception. Bombarded with external pressures, the airline also
struggled with organisational and management problems. Pilots threatened to
strike, passengers’ luggage was routinely lost, and huge planes were committed
to wrong routes and arrived at destinations with empty seats, draining profits. In
short, skyrocketing costs nearly broke Emira. Emira Airlines is listed on the JSE in
South Africa and on the New York Stock Exchange in the US with Wall Street analysts
whispering liquidation. But Emira’s management had other ideas. CEO Gerald Grin-
stein made some hard decisions and took the company into turnaround, hoping his
firm could emerge leaner, more profitable and able to compete. “Generally airlines’
experience in bankruptcies was not good,” Grinstein recalls. However, Grinstein
and his management team approached bankruptcy differently: with speed. They
understood that the faster they could pilot Emira through the process, the better
off the organisation would be in the long run.
“We knew that the longer you stay in bankruptcy, the harder it is to adapt to the
environment once you come out,” says Grinstein. So his team set a target date for
the firm to re-emerge in less than two years. To meet the goal, Grinstein’s team
had to avoid long and costly litigation. “The bankruptcy process is usually like a
bunch of pit bulls fighting with each other,” he explains with distaste. “We did not
want to get into that.” So the firm dealt with creditors directly, avoiding formal
claims. Meanwhile, Emira was almost forced to shut down completely by pilots who
threatened to strike over proposed wage cuts. Emira’s pilots were initially under
the impression that their salaries had to be cut to accommodate pressure for an
increase from flight attendants.
In 2006 the National Safety Council named Emira as that year’s Occupational In-
dustry Leader – the first airline recognised for this prestigious award. In addition,
the JD Power Customer Satisfaction Survey ranked Emira second overall of all the
network carriers for its excellent customer service. Business Traveller readers selected
the company as the best performer in the following categories: “Best Frequent
Flyer Programme”, “Best Airline Web Site” and “Best Airport Lounge”. Emira Airlines
continues to advance its customer service undertakings with frequent flights avail-
able to West and Southern Africa, the Asia Pacific region and Canada. Emira is an
international, integrated airline that leverages the talent and expertise of more than
3000 men and women striving for excellence in 26 countries.
(Adapted from: Bateman & Snell, 2009)

51 MNG2602/1
1. Escalating wages can be categorised as a(n) force of change for Emira
Airlines.
1 task
2 general
3 international
4 sociocultural
2. For Emira Airlines, their flight stewardesses and pilots are .
1 suppliers
2 customers
3 distributors
4 competitors
3. The 9/11 attacks (on September 2001) can be categorised as a(n) force.
1 global
2 sociocultural
3 international
4 political legal
4. An organisation that operates in more than one country is known as a
organisation.
1 global
2 multinational
3 sociocultural
4 demographic
5. The preference of a customer for the products of a particular organisation is known
as .
1 a barrier to entry
2 customer relations
3 boundary spanning
4 economies of scale
6. In general, the the barriers to entry into an industry, the the
number of competitors in that industry and the the threat of competition
within that industry.
1 lower, greater, lower
2 lower, smaller, higher
3 higher, smaller, lower
4 higher, greater, higher
7. How has the lowering of barriers to trade and investment affected managers?
Please note that feedback on these questions will be provided on the myUnisa
module site as the semester progresses.

52
 ADDITIONAL LEARNING EXPERIENCES

The following websites will further enrich your knowledge and understanding.
Visiting a Twitter page or watching a YouTube video is, however, not compulsory.
Task environment
https://www.youtube.com/watch?v=wTH1kTfY5O4
General environment
https://www.youtube.com/watch?v=Rfn_gfWJloQ
Globalisation
https://www.youtube.com/watch?v=JJ0nFD19eT8
Interesting tweeple (people and/or organisations) to follow on Twitter:
@ChiefExecCoach
@HarvardBiz
@RAInternational
#businessenvironment
#globalization

Disclaimer:
We frequently test the URL links provided in this learning unit. At the time of print,
these URL links were working. We are aware that a URL might not work after a
while or that content may be removed from the website. Situations like these are
out of our control.

REFERENCES
Bateman, T.S. & Snell, S.A. 2009. Management. 8th international edition. New York:
McGraw-Hill.
Jones, G.R. & George, J.M. 2018. Contemporary management. 10th ed. New York: McGraw
Hill.
Lane, H.W. & Maznevski, M.L. 2019. International management behaviour: global and sus-
tainable leadership. 8th ed. United Kingdom: Cambridge University Press.

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LEARNING UNIT 5
Organisational culture

OVERVIEW
If you consider the people near to you in life, you will realise that you have a similar way
of thinking about the world around you and are interested in some of the same things.
With immediate family, this will likely stem from being raised by your parents, instilling
certain values, manners and principles in all their children, as their parents instilled these
in them. When choosing friends, we often gravitate towards individuals that are similar
to us. This may include similar upbringing and social class, similar interests or personality
traits. Culture, as a concept, encompasses all these characteristics – it is seen as shared
beliefs, values, and norms among people. In our personal lives, it is easy to choose who
you spend time with, but what about at work where you have no choice?

The fact that for the most part in your workplace, you are unable to choose who you work
with and that you and your colleagues do not necessarily have the same beliefs, values,
and norms, can create challenges. As a manager, it is of the utmost importance not only
to understand the differences among employees, but to foster a culture most employees
can relate to and to promote that culture throughout the organisation. Culture not only
ensures unity among staff members, but if it is aligned with your organisation’s goals and
strategies, it can cohesively assist in achieving these goals. When people feel connected
to their workplace culture, they become productive and engaged.

Culture is also an enabler and a driver of sustainability. We have already mentioned in

previous learning units that sustainability is now a strategic imperative. Organisations
have to strive to be sustainable in every way. One way to do this is to develop a strong
culture of sustainability. Bateman (2019) states that “a strong sustainability culture exists
if people share a belief in sustainability’s importance and behave in ways that support it”.

54
Top management should set an example in this regard – the employees’ perception and
interpretation of management’s actions for sustainability will set up the organisation’s
sustainability culture. Read the “Sustainability spotlight” section for more on this topic.

In this learning unit, we consider what organisational culture is and why it is important
within an organisation. We discuss how managers can create a culture within their
organisation and also how culture influences the management of that organisation. We
look at the levels, elements and sources of culture and what is meant by having a strong
or a weak culture. Culture is also discussed from a global perspective by referring to
Hofstede’s model of national culture.

LEARNING OUTCOMES

Upon the successful completion of this unit, you will be able to

• Upon the successful completion of this learning unit, you will be able to
• describe organisational culture
• explain how managers both create and are influenced by organisational
culture
• discuss the four sources of organisational culture
• explain why and how a company’s culture can lead to competitive advantage
• discuss why national cultures differ
• analyse a practical scenario to determine and interpret the culture used
within the organisation
• apply the theoretical knowledge of the above points to a case study in order
to demonstrate understanding and application of theory to an unknown
situation
• use the information in your job as a manager

WORK THROUGH CHAPTER 5 IN THE PRESCRIBED BOOK.

KEY CONCEPTS

Achievement orientation. A worldview that values assertiveness, performance, success

and competition.
Collectivism. A worldview that values subordination of the individual to the goals of the
principle that people should be judged by their contribution to the group.
Individualism. A worldview that values individual freedom and self-expression and ad-
herence to the principle that people should be judged by their individual achievements
rather than by their social background.
Long-term orientation. A worldview that values thrift and persistence in achieving goals.
National culture. The set of values that a society considers important and the norms of
behaviour that are approved or sanctioned in that society.
Norms. Unwritten, informal codes of conduct that prescribe how people should act in
particular situations and are considered important by the group.

55 MNG2602/1
Nurturing orientation. A worldview that values the quality of life, warm personal friend-
ships, and services and care for the weak.
Organisational culture. The shared set of beliefs, expectations, values, norms and work
routines that influences how individuals, groups and teams interact with one another and
cooperate to achieve organisational goals.
Organisational ethics. The moral values, beliefs, and rules that establish the appropri-
ate way for an organisation and its members to deal with each other and with people
outside the organisation.
Organisational socialisation. The process by which newcomers learn an organisation’s
values and norms and acquire the work behaviours necessary to perform jobs efficiently.
Power distance. The degree to which societies accept the idea that inequalities in the
power and well-being of their citizens are due to differences in individuals’ physical and
intellectual capabilities and heritage.
Short-term orientation. A worldview that values personal stability or happiness and
living for the present.
Uncertainty avoidance. The degree to which societies are willing to tolerate uncertainty
and risk.
Values. Ideas about what a society believes to be good, right, desirable or beautiful.
(Adapted from: Jones & George, 2018)

WHAT IS ORGANISATIONAL CULTURE?

As suggested in the overview section, culture can be regarded as an organisation’s
personality: the values, norms and beliefs that it stands for, and it even includes the
work ethic and routines. Culture is the way employees relate to one another as it creates
common interests among them. Essentially, it is the distinctive way the organisation’s
employees perform their job and carry themselves in and around the organisation.

Sharpen your skills: Organisational culture

Think of the organisation you work for or an organisation you are very familiar with.
What is the organisational culture in this company? Do you think the organisational
culture represents your values, norms and personality characteristics?

Feedback
In a strong culture, the values and norms of the organisation form part of the central
direction of the organisation and influence how things are done. If your values and
norms are not in line with that of the organisation, it can cause internal friction, like
trying to befriend someone whom you have nothing in common with. This might lead
to irritation, frustration and an overall negative view towards your job. It is beneficial
to you as individual and to the organisation to employ people with similar values and
norms as the organisational culture.

56
Scenario 1

The Walt Disney Company (WDC)

“Every leader is telling a story … about what he or she values” – Walt Disney.
One of the most recognisable brands in the world, Walt Disney, is almost synonymous
with magic. Their organisational culture is set apart by the unparalleled heritage, pride
and community that have been built through the ages. The WDC believes in providing
amazing growth opportunities and instilling an atmosphere of creativity. Through a
stringent hiring process they hire people only if they align with what their strong brand
stands for. Disney’s human resources (HR) practices focus on recruiting, hiring and training
the right employees and empower them to create loyalty. Employees are equipped with
training and knowledge and are introduced to the social norms and shared beliefs of the
company. The training also focusses on three key aspects to improve communication
and customer service:
Be show ready. During the day, the custodians are hard at work, constantly cleaning,
sweeping and picking up. Managers and employees are also trained to make neatness
everybody’s business. This ensures the parks are always spotless and portray a magical
realm outside the gum wrappers, popcorn or soda cans we see in our everyday lives.
Garbage is also transported using “the tunnels”, an underground system, which ensures
guests remain magically oblivious to the realities of employees’ tasks.
Make every customer feel important. Disney employees are trained to be “assertively
friendly”. Disney team members are encouraged to actively seek contact with guests.
For example, they will approach an individual who appears confused instead of waiting
to be asked for directions.
Provide communications training. Every team member at Disney Parks is trained to be an
effective communicator. For example, everything at Disney runs right on time — rides,
shows, and trains. If the train is a second late leaving the station, the conductor gets on the
speaker and explains exactly why the train is delayed and how long it will be until it gets
going. The staff is also trained to answer common questions, even if it is “not their job”.
Ultimately the WDC’s culture is an environment rich in strategies that weave Disney’s
values into the minds and behaviours of its employees. These strategies aim to inspire
the employees so that they, in turn, inspire the customers. People can tell when their
company cares for them and sees them as more than an employee code. Moreover, as is
the case with Disney, they care back.
The WDC succeeded to include their core values and norms throughout the organisation.
They consistently and constantly refer back to these values saying, “the Walt Disney
Company declares that their value, innovation, quality, community, storytelling, optimism
and decency are present in everything that we do”.
Walt Disney can be seen as one of the great and most predominant sources of culture for
the Disney franchise. His vision of creating a magical world through movies and theme
parks will be present forever, guiding his descendants in the right direction. His influence
and legacy are celebrated on his birthday every year to bring homage to the founder. The
culture further remains intact because as time progresses, the shared values and norms
are socialised to the company’s new employees by more senior members.

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Adapted from:
https://www.linkedin.com/pulse/walt-disneys-dream-culture-tara-mapes/,
https://www.slideshare.net/elliekaye114/disney-a-culture,
https://www.forbes.com/sites/carminegallo/2011/04/14/customer-service-the-disney-
way/#70213ce678f8https://surveysparrow.com/blog/7-fabulous-organizational-culture-examples/
(accessed 2019/06/12)

ACTIVITIES

After working through the section "Organisational Culture" in your textbook,

do the next exercises.
1. Identify the three main factors that shaped the WDC’s organisational culture.
2. Can you identify whether the WDC has a strong or weak culture? Motivate
your answer by creating three arguments from the case study.
3. How does the Walt Disney Company ensure they remember and celebrate
their founder Mr Walt Disney?

13 FEEDBACK

It is clear from the WDC case study that members of the organisation are all
on board and share in the values and norms of the organisation, ensuring a
strong organisational culture. They receive extensive training and knowledge to
further ensure that people are treated the same in and outside the organisation.
Their culture was created with the establishment of the company by Mr Walt
Disney. This culture is maintained by being passed down from generation to
generation of employees and through socialising new members.

Sharpen your skills: Management and culture

Think about what kind of culture your everyday actions will promote if you were a
manager in an organisation. What cultural values would you have liked to promote?

Feedback
Although culture is subjective and to a degree influenced by the industry you work
in, there are still core company values that can shape a strong culture and inspire
employees. These values could include commitment to customers, passion and trust.
As a manager, it is crucial to ensure your organisation’s values espouse a positive work
environment, and that you embrace these values through your actions.

Scenario 2

This section contains additional information that does not form part of the prescribed
book and is important for the examination.

58
LEVELS OF CULTURE
You may have heard of organisational culture being described as an iceberg. Three distinct
levels of culture will be visible in every organisation (Brevis & Vrba 2014). It is important
that managers within the organisation make sure that the levels of culture portray and
contribute to the organisational culture identified and cultivated.

Level 1: Artefacts
Artefacts are the visible aspects of the organisation, just like the tip of the iceberg is visible
above the water. It is what you feel and observe when you enter an organisation. Aspects
included are the physical layout and look of the buildings or properties, the dress code
of the employees, and how employees communicate with one another.

Level 2: Values
This level is not as prominent as artefacts and cannot be seen – it is underwater. The values
of the organisation include the norms, moral principles and goals of an organisation.
Organisations will often communicate these values in their annual statements on their
website. With regard to recruiting employees, organisations should consider their values
before appointing individuals who will not uphold the unwritten rules, behaviours and
ideals cherished by the organisation.

Level 3: Taken-for-granted assumptions

At the core of the organisational culture – far below the surface of the water – lies the
taken-for-granted assumptions. These assumptions can only be distinguished when
carefully observing employees’ behaviour. Assumptions often have historic roots and
are passed on from veteran employees to new employees over time.

ACTIVITIES

1. Read the WDC scenario again and identify the three levels of culture from
the scenario. Motivate your answer for each level in a few sentences (you
can either provide examples from the case study or give an explanation
in your own words).

ELEMENTS OF CULTURE
Organisations should take note of the different elements of culture in their organisation.
The elements should be guided to be in support of the organisational culture identified
and cultivated by management. Any cultural element not in support of the overall
organisational culture should be expelled.

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Symbols
A symbol communicates meaning. It can therefore be an idea, process or physical entity
within an organisation. A symbol can be the trademark or logo of an organisation,
communicating status (e.g. Mercedez Benz), quality (iPhone), safety (an electricians sign-
off on an establishment) or any other values an organisation stands for. It is important
that individuals inside and outside the organisation understand the meaning portrayed
by the symbols used.

Stories
Stories are often told to newcomers to communicate specific strengths, weaknesses,
successes and failures of the organisation. The way in which these stories are told and
how idols or legendary founders, norms and values are portrayed reflects the prevailing
culture.

Language
Language conveys culture internally as it includes the unique terms used by employees
as well as rituals often practiced. Only internal staff will understand the language used
and this will be passed down to newcomers over time. Language can serve as a binding
factor for members of the same organisation and culture.

Rituals
Rituals are a set of actions performed for their symbolic value within an organisation and
often underpin the values of the organisation. Rituals can include a year-end function to
show gratitude for employees’ hard work or weekly progress meetings where staff are
encouraged and assisted by management.

ACTIVITIES

1. Read the WDC scenario again and identify the elements of culture from the
scenario. Motivate your answer for each element in a few sentences (you
can either provide examples from the case study or give an explanation
in your own words).

PRINCIPLES FOR MOBILISING YOUR ORGANISATIONAL

CULTURE

This section contains additional information that does not form part of the prescribed
book and is important for the examination.

60
Scenario 3

As a manager you can improve your organisation’s culture in a manner that will increase
the odds of financial and operational success. But how can an organisation go about
improving its culture (creating a “new” culture)? There is no magic formula that will
guarantee results, but by adopting certain principles your organisation can learn to deploy
and improve its culture. What people do is more important than what they believe and
say, and therefore organisations have to work on changing the behaviours of employees
for the better. With time, this altered behaviour will create new habits and produce better
results, and the mind-set of the employees will adapt as well. Katzenbach, Oelschlegel
and Thomas (2016) identified ten principles organisations can use to deploy an improved
organisational culture in such a way that it increases the odds of permanent change.

1. Work with and within your current cultural situations

It is important for managers to realise that an organisation’s culture, especially a deeply
embedded one, cannot be replaced immediately. As a manager, you should therefore
work within the frame of the “old” culture, while attempting to alter behaviours over time.
Identifying the components of the “old” culture and establishing components which
provide advantages to the organisation and which act as brakes can further assist in first
addressing the most destructive behaviours, followed by improving the components
that provide possible advantages.

2. Changed behaviours and mind-sets will follow

Not everyone agrees that behaviour changes follow a mental shift. This is also why
organisations often attempt to change the mind-set of their employees in order to change
their cultural behaviours. It is ineffective to try and persuade employees through top-
down messaging or training and development. Changes that are tangible, measurable and
observable are needed. These changes start with top management and allow employees
to, in turn, change their behaviour as well. Examples of these changes are reducing the
number of approvals needed for decisions, empowering employees or setting up easy
mechanisms to work on joint projects and promoting collaboration.

3. Focus on a critical few behaviours

As mentioned before, managers should not attempt to change the organisational culture
at once, but gradually implement changes while working in the frame of the “old” culture.
While it is important to change the destructive behavioural patterns of employees, even
more so can be identifying behaviours that create a positive effect in the organisation.
At times, there are a few key behaviours able to positively affect business performance
but they are practiced by only an insignificant number of people. Implementing these
behaviours throughout the organisation could have an immense positive effect on the
culture as a whole and the organisation’s performance. Managers should ensure that
these positive behaviours are aligned with the organisation’s overall strategy and establish
whether employees feel good about performing these behaviours to ensure an emotional
commitment to the change.

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4. Deploy your authentic informal leaders
Managers should take care to recognise authentic leaders and use these individuals to
drive culture. Leadership is a natural attribute someone possesses. It is the art of leading,
guiding, motivating and influencing people to act toward achieving a common goal.
Leaders can be informal (someone who has no formal authority but can influence and
lead members of the organisation) or formal (someone who was given authority by his
position in the organisation). Not all managers are leaders, and not all leaders are managers.

5. Do not let formal leaders off the hook

It is crucial that the managers and leaders of the organisation demonstrate the change they
want to see in the organisation. If there is a disconnection between what is advertised by
the “new” culture and the behaviour of management, employees will often opt to mimic
the behaviours of management instead. Leaders should reinforce cultural alignment and
be held responsible for any deviations.

6. Link behaviours to business objectives

Management should always “link” the cultural components to the work of the employees.
Many times, altering the culture fails as employees are unsure how these behaviours
should translate into the work they do. Managers can offer tangible examples of how
the cultural interventions can lead to improved work performance. Behaviours should
be measurable over time.

7. Demonstrate impact quickly

When employees are informed of high-profile initiatives and changes made to the
organisational culture but they do not see any activities or measurable progress regarding
this, they will start to grow cynical and disengage from the process. Managers should
provide constant information of business performance increases due to the cultural
changes effected. This will not only show that the initiatives are still being implemented
and are seen as important but will also motivate employees to continue practicing positive
behaviours.

8. Use cross-organisational methods to go viral

Ideas have the ability to spread virally throughout an organisation. This does not necessary
happen only through management, but also through informal leaders whose opinions
may carry weight among their peers. Individuals are often more open to change if the
information is shared and recommended by friends or colleagues, rather than information
shared by someone whose job it is to sell the initiative. Deploying informal leaders
(discussed in principle 4) is a crucial tool managers could use to spread information
regarding the cultural changes and to create buy-in.

9. Align programmatic efforts with behaviours

It is important to match the new cultural direction with existing ways of doing business.
Cultural interventions should complement and integrate with the formal organisation
components such as design and structure.

62
10 Actively manage your culture situation over time
Organisations who wish to retain a successful organisational culture should actively
monitor, manage, care for and update their culture. Managers should consider that even
if their current culture is sufficient today, changes may be needed to ensure its efficiency
tomorrow.

ACTIVITIES

Check out Forbes’s list of the World’s Top 25 Companies

(https://www.forbes.com/pictures/edjl45efeik/
the-worlds-top-25-companies/#61ebf7344da2).
1. Select a company on the list and go to that company’s web page. How
would you describe the company’s organisational culture?
2. Look at the ten principles for mobilising your organisational culture. Can you
identify any principles the chosen company used to mobilise their culture?

FEEDBACK
14

Organisational culture is determined by the core values, norms and beliefs of the
organisation. These values should also be present and depicted in the mission,
vision and strategy of the organisation. Part of mobilising an organisation’s
culture is to have strategic and operational goals closely linked to the values
and norms set out by the organisational culture.
Although smaller companies may not be able to implement, or have access to,
all the principles of mobilising their organisational culture, companies should
strive to implement as many as possible. Larger organisations with elaborate
strategies, large number of employees and more resources available may find
it easier and more essential to mobilise their organisation’s culture using these
ten principles.

NATIONAL CULTURE AND GLOBAL MANAGEMENT

The national culture is the set of values that a society considers important and the norms
of behaviour that are approved or sanctioned in that society. This therefore extends
beyond the organisation to an individual level. Although the world is becoming a “global
village”, cultures are still different in different countries because of norms, values, attitudes,
beliefs, moral principles, etcetera.

The following article contains guidelines for entrepreneurs conducting business in Africa.
Read through it as an example of national culture:
https://www.africa-business.com/features/changing.html.

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 ACTIVITIES

After working through the section "The Role of National Culture" in the pre-
scribed book, do the next exercises.
1. In your opinion, does organisational culture affect national culture, and
vice versa?
2. Why does national culture differ from one nation to another?
3. What implications do differences in national culture have for managers?

FEEDBACK
15

If you consider organisational culture and national culture as “living” systems

that continuously interact with one another, they can influence one another.
Think of the culture in a different country – in the same way as speaking a
different language in that specific region, the people in that region may also
think, believe and do things different than you would. Before the internet and
international travel were part of our everyday lives, each country established
their own values and norms. These were passed down from parents to their
children through generations. Although some slight changes may have occurred
due to the interaction with foreigners or information about other national
cultures, the basic values and norms most likely persisted. Geert Hofstede
(1990 in George & Jones, 2018) developed five dimensions along which national
cultures can be placed: (1) individualism vs collectivism; (2) power distance; (3)
achievement vs nurturing orientation; (4) uncertainty avoidance; and (5) long-
term vs short-term orientation. This is where the difficulty lies for managers.
You will never be able to conform to all national cultures. The question now
remains, would you do business with an international organisation if you know
their culture not only differs from yours, but contradicts it?

Sustainability is no longer only a buzzword; it is now an

economic opportunity for organisations. A sustainability
culture attracts the next generation of both customers
and employees who (1) prioritise ethical business
practice; and (2) have both an immediate concern and
hope for the future. Becoming a sustainable business
does not happen overnight but setting sustainability
goals and making it an intrinsic part of organisational
culture is a good start. There are many ways to anchor sustainability into your organi-
sation’s culture, to name a few (Schlatter, 2017; Bateman, 2019):

64
 • Follow a sustainability vision – it will offer a sense of meaning and purpose. Share
it widely, proudly and often.
• As a manager, you should “walk the talk’ – be a sustainability role model, make the
right personal choices to send strong signals to your employees.
• Communicate with your employees about sustainability topics.
• Recognise and support internal change makers – those who are eager to contribute
to increase the sustainability within the company.
Sustainability is culturally ingrained when people, the planet and profit are considered
in every major business decision.

CONCLUSION
Organisations are more than just the products sold or services offered. They are made up
of employees and managers, that work together to achieve the organisational goals and
strategies. These individuals all have their own values and norms which guide the way
they do things. Similarly, the organisation also has values and norms for which it stands,
which dictate the operations of the organisation.

SELF-ASSESSMENT EXERCISE
5

Case Study
Read the following case study about Volvo IT and answer the questions that follow.

Volvo IT
Volvo IT is a global company based in Gothenburg, Sweden. Its primary role is to
provide IT services and support teams to the global network of Volvo industries.
They proactively worked with their culture starting in 2000, led by a full-time cul-
ture manager. This case study covers their culture transformation and development
journey during the course of eleven years (2000 to 2011). The core of the culture
journey was the Culture Ambassador Program, initiated in 2001. Over the following
years, Volvo IT trained more than 500 culture ambassadors who actively developed
the culture throughout the organisation. The fundamental intention and belief with
this Culture Ambassador Program was to empower and train all formal and informal
leaders to develop their capability to grow a desired culture. It was an on-going
journey to find, define, grow and care for their espoused core values.
The focus of the culture work evolved over time, as they responded to changing
market conditions, strategic ambitions and the needs of the organisation, employ-
ees and stakeholders. Here are the themes in their culture journey that emerged
over time.
Grow one company: the Volvo IT identity (2000–2002): At the start of the journey,
Volvo IT was a newly formed company created by consolidating the IT departments
from seven Volvo business units plus the Group IT department. The first challenge
was to form a shared culture for the new organisation, mainly located in Sweden,
Belgium and the USA. Teams were identified with their old business units so there
was not a shared identity. This led to internal positioning and competition. Their key

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 challenge was to develop a shared set of values and culture among the dispersed
teams and create one Volvo IT identity.
Grow customer focus (2003–2008): Once the cultural norms had been established
internally, they began to focus more externally. Because they became a separate
entity from Volvo, the former internal relationships became customer/supplier
relationships, which called for new behaviours and attitudes. Additionally, Volvo IT
started to have external customers. During this period, Volvo IT grew from 3000 to
7000 employees at its peak in 2009.
Ensure resilience: culture in downturn (2008–2010): As soon as the financial
crises hit, Volvo and Volvo IT experienced a significant decline in business. They had
to make urgent decisions in order to cope with the situation. As a consequence,
they had to let go 2000 of their 7000 employees and consultants in six months’
time to adjust to reduced business volume. While it was a difficult time, leadership
was conscientious about living their values, to maintain their desired culture and
not erode trust. Employees knew that it was a matter of long-term sustainability.
Employee satisfaction rates remained around 90 percent.
Culture as an enabler (2010–2011): Once the market began to recover, Volvo IT
grew again to reach 7000 employees and contractors in 2011. During this period,
the focus of the culture was on fulfilling their strategy while continuing to develop
and care for their culture. During these ten years, Volvo IT continually trained their
Culture Ambassadors to co-creatively work with their teams to secure their strategic
objectives and culture.
Adapted from:
https://www.valuescentre.com/wp-content/uploads/PDF_Resources/Transform_Culture_Larger_
Orgs/BVC_TransformingCulture_ENG_WEB.pdf (accessed: 2019/06/30)

1. The process through which Volvo IT passed down their organisational culture to new
members is called .
1 training
2 induction
3 socialising
4 culture adaption
2. Volvo IT subscribes mostly to the dimension of Hofstede’s model.
1 collectivism
2 individualism
3 nurturing orientation
4 long-term orientation
3. Distinguish between values and norms and explain how they both influence national
culture.
4. List the five dimensions upon which Hofstede placed national culture. Discuss the
necessity for managers who work with different national cultures to acknowledge
these dimensions.
5. Are cultural differences within an organisation an opportunity or a threat to organ-
isational success?
Please note that feedback on these questions will be provided on the myUnisa
module site as the semester progresses.

66
 ADDITIONAL LEARNING EXPERIENCES

The following websites will further enrich your knowledge and understanding.
Visiting a Twitter page or watching a YouTube video is, however, not compulsory.
Organisational culture
https://www.strategy-business.com/
feature/10-Principles-of-Organizational-Culture?gko=1f9d7
Hofstede’s National Cultures
https://www.youtube.com/watch?v=Fwa1tkH7LEI
Interesting tweeple (people and/or organisations) to follow on Twitter:
@HuffPostArts
@HarvardBiz
@hofstedeInsights
Disclaimer:
We frequently test the URL links provided in this learning unit. At the time of print,
these URL links were working. We are aware that a URL might not work after a
while or that content may be removed from the website. Situations like these are
out of our control.

REFERENCES
Bateman, T. 2019. Five ways to create a strong sustainability culture. Available from: https://
www.greenbiz.com/article/5-ways-create-strong-sustainability-culture [Accessed
February 2019].
Brevis, T. & Vrba, M. 2014. Contemporary management principles. Cape Town: Juta.
Eneroth, T. & Munday, A. nd. Transforming culture in larger organisations. Available from:
https://www.valuescentre.com/wp-content/uploads/PDF_Resources/Transform_Cul-
ture_Larger_Orgs/BVC_TransformingCulture_ENG_WEB.pdf [Accessed June 2019].
Fin24. 2019. Everything you need to know about the national minimum wage. Online avail-
able from: https://www.fin24.com/Economy/everything-you-need-to-know-about-
the-national-minimum-wage-20190101 [Accessed July 2019].
Gallo, C. 2011. Customer service the Disney way. Available from: https://www.forbes.com/
sites/carminegallo/2011/04/14/customer-service-the-disney-way/#70213ce678f8
[Accessed June 2019].
Jones, G.R. & George, J.M. 2018. Contemporary management. 10th ed. New York: McGraw
Hill.
Katzenbach, J., Oelschlegel, C. & Thomas, J. 2016. Ten principles of organisational culture.
Online available from: https://www.strategy-business.com/feature/10-Principles-of-
Organizational-Culture?gko=1f9d7 [Accessed June 2019].
Mapes, T. 2017. Walt Disney’s dream culture. Available from: https://www.linkedin.com/
pulse/walt-disneys-dream-culture-tara-mapes/ [Accessed June 2019].
Schlatter, I. 2017. Creating a corporate culture of sustainability. Available from: https://
www.southpole.com/blog/creating-a-corporate-culture-of-sustainability [Accessed
February 2020].

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SlideShare. 2017. Disney: a culture. Available from:
https://www.slideshare.net/elliekaye114/disney-a-culture [Accessed June 2019].
Unilever. 2019. Rethinking plastic packaging – towards a circular economy. Available from:
https://www.unilever.com/sustainable-living/reducing-environmental-impact/waste-
and-packaging/rethinking-plastic-packaging/ [Accessed July 2019].
Zacharias, C. 2019. Seven fabulous organisational culture examples you can learn from.
Available from: https://surveysparrow.com/blog/7-fabulous-organizational-culture-
examples/ [Accessed June 2019].

68
LEARNING UNIT 6
The manager as a planner and strategist

OVERVIEW
Management is a fundamental part of everyone’s everyday life. Even in our personal lives
we need to manage numerous aspects. You may manage your finances, which may include
a budget that you follow every month. You also need to manage your time, to ensure you
spend sufficient time on work responsibilities, home responsibilities and visiting friends
and families. For this, you may use a calendar to assist you in keeping track of your plans.

The same applies to an organisation as it has different aspects that need to be managed.
Yes, the finance department will use a budget to plan and keep track of organisational
finances and individuals may be expected to make use of calendars to ensure they meet
deadlines and attend scheduled meetings. But what about the organisation as a whole?
How can we determine what the organisation should achieve and in what period of time?
This is done through strategy. A strategy is the plan or blueprint for the organisation
which includes the goals the organisation wants to achieve and the action plans on how
they will achieve it. These strategic decisions are mainly made by the manager(s) of the
organisation.

In this learning unit, we differentiate between the steps in the planning process and consider
the relationship between planning and strategy and how it will assist an organisation in
attaining its goals.

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 LEARNING OUTCOMES

Upon the successful completion of this learning unit, you will be able to
• identify and differentiate between the three main steps of the planning
process
• report on the relationship between planning and strategy and how it assists
in attaining organisational goals
• differentiate between the different business-level strategies and explain how
using the correct strategy can give an organisation a competitive advantage
• differentiate between the different corporate-level strategies and explain
how they are used to improve an organisation’s business-level strategies
• analyse a practical situation to determine business- and corporate-level
strategies used within the organisation and motivate why this is the correct
or incorrect strategy followed given the situation
• discuss the role of managers in the strategy implementation process
• analyse a practical situation and critique the manager’s actions towards
strategy implementation
• apply the theoretical knowledge of the above points to a case study to
demonstrate understanding and application of theory to an unknown situation
• use the information in your job as a manager

WORK THROUGH CHAPTER 6 IN THE PRESCRIBED BOOK.

KEY CONCEPTS

Business-level planning. Long-term goals, strategies and structures within an organisa-

tion’s divisions are made by divisional managers.
Business-level strategy. This plan indicates how the division will compete in the industry.
Corporate-level planning. Normally decided by top management, regarding the mis-
sion, strategy and structure of the organisation.
Corporate-level strategy. This plan indicates the industry and markets the organisation
will compete in.
Differentiation strategy. Distinguishing an organisation’s products from that of its
competitors.
Diversification. When expanding an organisation into new industries and produce new
goods or offer new services.
Focused strategy. Categorised into focused low-cost and focused differentiation strategies.
Franchising. Selling the rights to use the brand name for a lump-sum payment and
profit share.
Functional-level plan. The actions and decisions taken by functional managers in order
to achieve the business-level goals.
Functional-level strategy. This involves plans to ensure each function within the or-
ganisation will perform to the best of their abilities and add value to the organisation.

70
Global strategy. Selling the same product using the same marketing approach on an
international scale.
Hypercompetition. Competition in an industry brought on by advancements in
technology or customer trends. This competition is intense and ongoing.
Licencing. Allowing an external company to take charge of manufacturing or distribut-
ing of a product in exchange for a fee.
Low-cost strategy. Cost lower than that of rivals.
Mission statement. A statement that identifies “what we do” in the organisation. This
includes the products sold, customers targeted and how the organisation differs from
their competition.
Multidomestic strategy. Customising products and marketing approaches to each
national area.
Planning. One of the principal tasks of management, this includes identifying goals and
the actions needed to attain these goals.
Scenario planning. Forecasts of possible future conditions and how the organisation
will respond to these conditions.
Strategic alliance. Two or more companies pool their resources and know-how together
to start a new venture.
Strategic leadership. The CEO and top management’s ability to communicate the vision
to the organisation.
Strategy. The group of decisions that describes the goals to be pursued, the actions
needed to attain these goals and how resources will be used to achieve this.
Strategy formulation. Developing the corporate, business and functional strategies
which allow the organisation to achieve its goals.
SWOT analysis. A planning exercise to identify the strengths, weaknesses, opportunities
and threats of the organisation.
Time horizon. Duration of the plan.
Vertical integration. When expanding the organisation’s operation backwards (to pro-
duce products needed) or forward (as distributor or seller).
(Adapted from: Jones & George, 2018)

PLANNING AND STRATEGY

Planning is an important component for any organisation. Not only does it provide you
with the plan moving forward, but also encapsulates the goals that the organisation
strives to achieve. This in turn creates unity among staff members as everyone is working
towards the same result or outcome. This further ties in with organisational culture, that
we discussed in learning unit 5.

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ACTIVITIES

1. The first step in planning for an organisation is

1 procuring raw materials and human resources
2 analysing situations and formulating strategies
3 determining the organisation’s missions and goals
4 allocating resources and responsibilities to achieve strategies
2. Visit the official Unisa website (https://www.unisa.ac.za/sites/corporate/
default/About/Who-we-are) and state what their mission statement is.
3. Discuss the four reasons why planning is necessary and important.
4. Define the three levels of planning and their respective strategies. For an
organisation of choice, give an example of a strategy that can be applied
at each level and motivate why this will be an appropriate strategy for the
organisation.

16 FEEDBACK

When answering the multiple-choice question (MCQ), you first need to determine
what your organisation does and what it wants to achieve before you can plan
how you want to get there. Hence, first develop the mission statement and
the overall goals of the organisation. This will guide your strategic decisions.
Most organisations display their mission statement online and in their offices.
Look for your organisation’s mission statement or find some other organisations’
statements that you frequently visit or work with.
For managers, planning is an important step in deciding where the organisation
is going, what needs to be done to achieve this and to measure how far the
organisation progressed. For an organisation to be and remain successful,
managers need to ensure that all staff members work towards the position the
organisation would like to be in. But how will you communicate this if there is
no clearly identified goal to achieve and clear tasks to do to achieve the goal?
And how will you keep staff motivated if you are not able to show progress
made in terms of these goals?
The three business levels consist of corporate-level plans containing top
management’s decisions. Managers of each division create business-level
planning that details the goals to be achieved to meet corporate goals. At
functional level, the business-level plan provides the framework within which
functional managers devise their plans.
When giving examples regarding your chosen organisation, keep in mind that
the chosen strategies should correspond to the purpose of the organisation:
the market it chooses to compete in, a plan to give it an advantage over its
rivals, and a plan to improve a department’s efficiency.

72
FORMULATING THE ORGANISATION’S STRATEGY
Now that it is clear how important planning is in an organisation, it is important to
determine how to formulate these needed plans through formulating strategies. The
strategies the organisation must formulate are corporate-level strategies, business-level
strategies and functional-level strategies.

Scenario

Power House Stores

Power House Stores is a well-known South African retailer selling clothing and homeware,
as well as an increasing number of digital products. Power House Stores Financial Services,
with the help of ABSA bank, also offers financial services in the form of store cards or loans.
Power House Stores recently expanded to sell groceries as well. They now offer a full
range of home accessories and soft furnishings. This includes kitchen and bathroom ware,
crockery and vases, sheeting, curtaining and, in a limited number of stores, furniture.
Recently, Power House Stores started focussing on broadening their range and improving
the quality of their homeware whilst keeping prices low through more strategic buying
policies.
Because Power House’s retail stores are mainly located in rural areas, they decided to
provide their customers with as much variety in products and services as possible, further
saving customers money in terms of expensive transport costs.

ACTIVITIES

1. Look at table 6.1 in the prescribed book. Using these questions as a guideline
and the information in the scenario, do a SWOT analysis for Power House
Stores. Identify and discuss two questions that address Power House Stores’
strengths, opportunities and possible threats. Motivate each question with
examples from the case study in no more than two sentences each.
2. From the information in scenario 1, identify the business-level strategy
that Power House Stores used. Motivate your answer in a short paragraph
including a relevant quote from the scenario. Identify three stores you visit
frequently with a similar business-level strategy.
3. Identify the corporate-level strategy that Power House Stores implemented
when expanding their offering to include groceries. Motivate your answer
in a short paragraph including a relevant quote from the scenario.
4. Power House Stores’ retail outlets are in multiple locations, operating under
the same name – this indicates that they are
1 franchises
2 joint ventures
3 licences
4 departments

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5. Power House Stores providing financial services with the help of ABSA is
seen as a
1 franchise
2 joint venture
3 licence
4 strategic alliance

FEEDBACK
17

When you read the scenario, remember that planning involves different facets.
All these different facets may not be applicable at all times, depending on
the organisation itself. For example, a small, local company that only recently
started may not have an expansion plan as it is not applicable to their situation.
Similarly, organisations that have shown tremendous growth in the past year
may decide to follow a number of different corporate-level strategies such as
integration, diversification or franchising.
A SWOT analysis is used to identify the position of the organisation in terms
of its strengths, weaknesses, threats and opportunities. The outcome can
then be used to determine the corporate-, business- and functional-level
strategies the organisation chooses. As discussed in learning unit 4, changes
in the organisation’s external environment can provide opportunities to take
advantage of or threats that the organisation should ward off. The SWOT analysis
therefore remains a relevant and important planning tool for all organisations.
In terms of business-level strategies, it is important to consider the location of
the company and the market the company serves. If an organisation is a café in a
poor neighbourhood a low-cost strategy might be the best choice as the market
you serve will not have the funds available to enable your customers to buy
differentiated products possibly at a higher price. Similarly, if the organisation
is located in a high-end urban area with large or international businesses in
the surrounding area, the market may need to be enticed with products that
are different and unique, even if this is at a higher cost. Then the organisation
should consider using a differentiation or focused-differentiation strategy.
While reading the case study, think about Power House Stores’ location as well
as the target market and the business-level strategy you would use.
A corporate-level strategy involves choosing which industries the organisation
should invest its resources in. These corporate-level strategies should strengthen
the organisation’s business-level strategies by responding to changes and
improving performance. The principal corporate-level strategies that managers
can use to do this are the following:
1. concentration on a single industry – increasing market share in existing
markets;
2. vertical integration – backward or forward to make products unique or
to lower the costs of making and selling them;
3. diversification – related or unrelated to add new products that are similar
or new to the organisation’s offering; and

74
 4. international expansion – either using a global strategy whereby the
organisation will sell the same standardised product in different national
markets; or adopting a multidomestic strategy to customise the product
and marketing approach for each national market. This can be done through
importing and exporting, licensing and franchising, strategic alliances and
joint ventures or wholly owned foreign subsidiaries.
When answering question 4, consider the definition of a franchise. The rights
to use the brand name was sold to each Power House Stores opened in a
different location.
When answering question 5, consider that Power House Stores and ABSA agreed
to share ownership and the risk of the financial services offered. If someone
defaults on their loan, for example, both Power House Stores and ABSA are
held responsible for revenue lost.

IMPLEMENTING THE FORMULATED STRATEGY

Once the strategy has been formulated, it needs to be implemented. This requires the
contributions of every staff member in the organisation. Implementation is dependent
on and determined by the strategic choices made during the planning phase.

ACTIVITIES

1. After several months of planning new strategies for the organisation, the
managers have finalised their plans and they are ready to implement the
new strategies. However, they are not done with the process. In a paragraph
of at least five sentences elaborate on additional planning the managers
will also need to complete.

18 FEEDBACK

It is important to realise and remember that although strategies provide the

organisation with the plan to follow, many other aspects should also change
when the strategies change.

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 The Intergovernmental Panel on Climate Change
sends a clear message: We have about 12 years left to
avoid some of the most devastating impacts of climate
change. How scary is that? Currently, coral is dying,
insects are disappearing, and the fate of major ecosys-
tems looks dim. Entire towns are wiped off the map by
extreme weather (such as fires in California, a typhoon
in the Philippines and parts of China, and Cape Town
almost running out of water).
How does this all connect to business and strategy? For some sectors, it is obvious:
the food and agriculture industry will have trouble feeding us without pollinators,
and tourism takes a big hit without coral and other wildlife. But more broadly, society
will not thrive in a world where entire pillars of planetary support are collapsing. And
if society cannot thrive, neither can business (Winston, 2018).
Integrating sustainability into your organisation’s strategy is important to “futureproof”
business. Organisations must recognise that making themselves more sustainable will
make them more successful. Comprehensive strategies that extend to all aspects of the
business are required – from the boardroom, to employees, to suppliers, to consumers.
The UN Global Compact’s Roadmap for integrated sustainability provides guidance for
organisations on how to integrate sustainability-related goals and strategies across
the organisation. Have a look here:
https://www.unglobalcompact.org/take-action/leadership/integrate-sustainability/
roadmap.

CONCLUSION
This learning unit shows how important planning is within an organisation. It lets the
organisation’s staff members know where the organisation is going and what is expected
of them in order to get there. The three-step planning process was explained as well as
the staff members responsible for the levels of planning.

SELF-ASSESSMENT EXERCISE
6

Case Study
Read the following case study about Unilever and answer the questions that follow.

Unilever rethinking plastic

Plastic has become part of our everyday lives. Every minute the equivalent of one
rubbish truck of plastic leaks into streams and rivers, ultimately ending up in the
ocean. And the problem is set to get worse. But how can we stop the cycle of single-
use plastic and non-recycled plastic when our modern-day society and businesses
rely so heavily on it? For Unilever, coupling core business functions with the envi-
ronmental impact is what the Unilever Sustainable Living Plan is all about. This plan
targets to reduce the wight of our packaging by one third by 2020 and halving the
waste associated with the disposal of our products by 2020.

76
 The goal for 2025 is to ensure that 100% of our plastic packaging will be designed
to be fully reusable, recyclable or compostable and to increase the recycled plastic
content in our packaging to at least 25%. New goals that were added include halving
the amount of new or “virgin” plastic we use in our packaging and collecting and
processing more plastic packaging than we sell. This will also be attained by 2025.
Unilever has set out a detailed plan to allow the goals and strategy to be achieved.
These goals involve every individual in the organisation and what each department
needs to change and implement in order to achieve the goals that have been iden-
tified in the detailed plan.
(Source: Adapted from: https://www.unilever.com/sustainable-livng/reducing-environmental-
impact/waste-and-packaging/rethinking-plastic-packaging/)

1. Unilever attempting to reduce the overall plastic used within the organisation can
be seen as a
1 corporate-level plan
2 functional-level plan
3 corporate-level strategy
4 functional-level strategy
2. For Unilever to identify the “plastic usage problem” they likely used as
planning method.
1 diversification
2 the SWOT analysis
3 scenario planning
4 the five forces model
3. The level of management responsible for drawing up Unilever’s detailed plan would
likely be
1 investors
2 top-management
3 departmental heads
4 functional-management
4. Identify and motivate the business-level strategy Unilever is using.
5. Define rolling plans, standing plans, and single-use plans. Provide examples of stand-
ing plans and single-use plans.
6. Differentiate global strategy from multi-domestic strategy for a business and discuss
the advantages and disadvantages of each strategy.
7. Did top management implement the strategy successfully? Motivate your answer
by elaborating on the five steps of strategy implementation and providing evidence
from the case study to support your discussion.
Helpful hint:
If you identify steps in the implementation process that were not implemented success-
fully this can also be discussed. To motivate your answer, you can discuss how you would
implement them successfully within the situation.
Please note that feedback to these questions will be provided on the myUnisa
module site as the semester progresses.

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 ADDITIONAL LEARNING EXPERIENCES

The following websites will further enrich your knowledge and understanding.
Visiting a Twitter page or watching a YouTube video is, however, not compulsory.
Levels of strategy
https://www.youtube.com/watch?v=-bhbESGOs3Y
SWOT analysis
https://www.youtube.com/watch?v=JXXHqM6RzZQ
Designing a sustainability strategy
https://www.youtube.com/watch?v=gVimMEI2u2w
Strategy 101: Solving global challenges (webinar)
https://www.youtube.com/watch?v=FqrnhemvjHk&feature=youtu.be
Interesting tweeple (people and/or organisations) to follow on Twitter:
@BI_Strategy
@Strategic_Mgmt
Disclaimer:
We frequently test the URL links provided in this learning unit. At the time of print,
these URL links were working. We are aware that a URL might not work after a
while or that content may be removed from the website. Situations like these are
out of our control.

REFERENCES
Jones, G.R. & George, J.M. 2018. Contemporary management. 10th ed. New York: McGraw
Hill.
Unilever. 2019. Rethinking plastic packaging – towards a circular economy. Available from:
https://www.unilever.com/sustainable-living/reducing-environmental-impact/waste-
and-packaging/rethinking-plastic-packaging/ [Accessed: July 2019].
Winston, A. 2018. The story of sustainability in 2018: “We have about 12 years left”. Harvard
Business Review. Available from: https://hbr.org/2018/12/the-story-of-sustainability-
in-2018-we-have-about-12-years-left?referral=03759&cm_vc=rr_item_page.bottom
[Accessed: March 2020].

78
LEARNING UNIT 7
Value chain management: Functional strategies for
competitive advantage

OVERVIEW
From the discussion in learning unit 6 we know that an organisation relies on different
types of plans and strategies. This indicates what the organisation wants to achieve and
in what time frame. It is difficult to implement the overall strategies for the organisation;
therefore, the strategies are broken down into shorter-term strategies known as functional-
level strategies allowing goals and action plans to be created for implementation. An
organisation’s functional level is where business practices are developed and tasks are
assigned on an individual level, all working towards achieving functional goals set.

Functional-level strategies focus on the product or service offered and how managers
can achieve superior efficiency, quality, innovation, and responsiveness to customers,
ultimately building a competitive advantage for the organisation. The value chain supports
functional-level strategies and adds value to the organisation’s products or services. It
encompasses the whole process of designing, making, marketing and selling the product
or service to customers that value that particular item. Managing the value chain in
such a way that it speaks to all the organisation’s strategies is therefore vital to ensure a
competitive advantage.

In this learning unit, we discuss the role of functional-level strategies, the value chain
and how managing these aspects can effectively create a competitive advantage for the
organisation. Responsiveness to customers is described and the importance of superior

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quality and efficiency is highlighted. The importance of innovation as a means to achieve
a competitive advantage is an important aspect in any organisation.

LEARNING OUTCOMES

Upon the successful completion of this learning unit, you will be able to
• elaborate on the role of functional strategy and value chain management
in achieving superior quality, efficiency, innovation, and responsiveness to
customers
• describe what customers want and explain why it is so important for managers
to be responsive to their needs
• explain why achieving superior quality is so important
• demonstrate understanding of the challenges facing managers and
organisations that seek to implement total quality management
• analyse a practical situation and identify management challenges faced in
terms of implementing total quality management
• explain why achieving superior efficiency is so important
• demonstrate understanding of the different kinds of techniques that need
to be employed to increase efficiency
• differentiate between two forms of innovation, and explain why innovation and
product development are crucial components of the search for competitive
advantage
• apply the theoretical knowledge of the above points to a case study to
demonstrate an understanding and application of theory to an unknown
situation
• use the information in your job as a manager

WORK THROUGH CHAPTER 7 IN THE PRESCRIBED BOOK.

KEY CONCEPTS

Customer relationship management. Maximising the value an organisation can deliver

through developing an ongoing relationship with customers.
Facilities layout. Increase operating system efficiency through redesigning the machine-
worker interface.
Flexible manufacturing. Techniques used to decrease costs associated with manufac-
turing products or delivering a service.
Functional-level strategy. This involves plans to ensure each function within the organ-
isation will perform to the best of its abilities and add value to the organisation.
Incremental product innovation. Gradually improving existing products as new tech-
nology becomes available.
Inventory. Stock of inputs and raw materials.

80
Just-in-time (JIT) inventory system. Inputs and raw material only arrive at the organisa-
tion when they are needed, not before.
Product development. Bringing new products and services to the market through
managing value chain activities.
Product development plan. A plan containing important information needed to decide
whether to proceed with the product development efforts.
Process re-engineering. Radical redesign and fundamental rethinking of business pro-
cesses to improve performance.
Quantum product innovation. Fundamental shifts in technology causing the delivery
of radically different and new kinds of goods and services.
Six sigma. Improving an organisation’s quality by improving how value chain actions
are performed. Analysis are conducted to measure the improvement.
Total quality management. Management focuses on improving the quality of the or-
ganisation’s products and services.
Value chain. The series of actions on a functional level that transform inputs into the
finished goods or services for customers to purchase.
Value chain management. Developing functional-level strategies that work towards
achieving the organisation’s business-level strategy and strengthen its competitive
advantage.
(Adapted from: Jones & George, 2018)

FUNCTIONAL STRATEGIES AND VALUE CHAIN MANAGEMENT

The core purpose of any business-level strategy is to enable the organisation to add value
to its products or service offering, thereby ensuring an advantage over their competitors.
Organisations can add value by either providing their offerings at a lower cost than
competitors, or they can differentiate their product to stand out from competitors enticing
customers to choose the product.

ACTIVITIES

1. An organisation gains competitive advantage when it differentiation.

1 lowers costs and decreases
2 lowers costs and/or increases
3 increases costs and increases
4 increases costs and/or decreases
2. A -level strategy is a plan of action to improve the ability of
each of an organisation’s departments to perform its task-specific activities
in ways that add value to an organisation’s goods and services.
1 corporate
2 divisional
3 functional
4 business

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3. In a paragraph of five sentences, discuss what a value chain is.
4. Define value chain management and list the various functions along the
value chain in a paragraph each. Further reflect in a few sentences on what
would happen if an organisation fails in any of the value chain functions.
5. Mr D Food is a South African food delivery service. Their drivers collect your
food order from the restaurant you ordered from and deliver it to your door.
Visit the website, www.mrdfood.com for more about the organisation.
Mr D Food will likely focus on the value chain function to
obtain a competitive advantage.
1 quality
2 efficiency
3 production
4 customer service

19 FEEDBACK

When answering question 1, keep in mind that managers can lower costs and/
or increase differentiation to obtain a competitive advantage
When answering question 2, keep in mind that a functional-level strategy is a
plan of action to improve the ability of each of an organisation’s functions to
perform its task-specific activities in ways that add value to an organisation’s
goods and services.
A company’s value chain is the coordinated series or sequence of functional
activities necessary to transform inputs such as new product concepts, raw
materials, component parts, or professional skills into the finished goods or
services customers value and want to buy. It therefore encompasses the whole
process of designing, making, marketing and selling the product or service to
customers that value that particular item.
To better understand the function of the value chain and the effects they
have on the business, consider the following example. Let us assume that an
organisation has an excellent product but fails to market the product in the
correct way. This could result in the target audience not being aware of the
product, lowering sales. This is especially crucial if you aim for a competitive
advantage through product differentiation, with a small target market. In the
same sense, if the services you offer depend largely on return business, you
may lose potential long-term customers if the customer service is not on par. It
is therefore crucial not only to develop strategies for each value chain function,
but to manage the implementation of these strategies.
When answering question 5, keep in mind that as Mr D Food provides a service
that is based on customer demand (customers first need to order a meal
before it can be delivered), and the organisation relies on repeat business to
succeed, customer service should be of high importance. Unsatisfied customers
are not likely to use the same service again, especially if there are alternative
organisations offering the same service.

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IMPROVING RESPONSIVENESS TO CUSTOMERS AND QUALITY
Responsiveness to customers means that the organisation is listening to what the target
market wants, or what a new target market may want, and manages its value chain
accordingly. The organisation therefore does not have a product-oriented approach but
rather a market-oriented approach. In turn, attaining superior design, reliability, features
and after-sales support increases the quality of the product. But although customers prefer
a high-quality product, they also prefer this at the lowest cost possible. Organisations who
can therefore create a product higher in quality for the same cost will have an advantage
over competitors.

ACTIVITIES

1. Attaining superior includes all the other methods of achieving

competitive advantage.
1 efficiency
2 quality
3 innovation
4 responsiveness to customers
2. is a technique that uses IT to develop an ongoing relationship
with the purchasers or buyers of an organisation’s product to maximise the
value an organisation can deliver to them over time.
1 Effective reliability management (ERM)
2 Organisational efficiency management (OEM)
3 Total quality management (TQM)
4 Customer relationship management (CRM)
3. What is Six Sigma? In a paragraph of five sentences differentiate between
Six Sigma and TQM.

FEEDBACK
20

When answering question 1, keep in mind that achieving superior quality,

efficiency, and innovation is part of attaining superior responsiveness to
customers. Customers want value for their money, and managers who develop
functional strategies that result in a value chain capable of creating innovative,
high-quality, low-cost products best deliver this value to customers.
When answering question 2, keep in mind that customer relationship
management is a technique that uses IT to develop an ongoing relationship
with customers to maximise the value an organisation can deliver to them
over time.
Think of Six Sigma’s purpose within the organisation and what it can help the
organisation to accomplish. Six Sigma shares with TQM the focus of improving
value chain processes to increase quality.

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Scenario 1

JCK Solar
Since the rise in electricity costs and an increasing outcry for alternative energy, JCK Solar
opened its doors, manufacturing solar panels for residential and commercial use.
In order to ensure that customers receive a reliable product, the company performs strict
and precise quality checks throughout the entire production process. Recently they
realised that their defects per million parts percentage are too high and on the increase.
As the organisation’s aim is to have a percentage of less than 15 percent, management
decided to focus on improving the quality of their outputs. They arranged a meeting with
all employees as well as pertinent suppliers to find a solution and develop a strategy. They
emphasised that quality is a life-long attribute to strive for and that the whole organisation
should take on the responsibility to cultivate a culture of quality.

ACTIVITIES

1. JCK Solar followed a(n) approach when developing their solar

panels.
1 product-oriented
2 customer-oriented
3 marketing-oriented
4 innovation-oriented
2. In order to get close to customers and understanding their needs, a
technique JCK Solar likely used was a(n) system.
1 total quality management (TQM)
2 continuous innovation management (CIM)
3 customer relationship management (CRM)
4 organisational efficiency management (OEM)
3. One way in which JCK Solar can increase their productivity and ease their
production is to ensure they .
1 adopt a challenging quality goal
2 design products that have fewer component parts
3 increase the average number of customer queries solved per day
4 decrease the number of employees performing a particular task
4. Briefly explain how producing higher quality solar panels can lead to lower
costs for JCK Solar.
5. From the information in the scenario, identify and discuss the TQM steps
JCK Solar implemented. Motivate each step with examples from the case
study in no more than two sentences each.

84
 21 FEEDBACK

When answering question 1, keep in mind that the opening of JCK Solar was
due to the outcry for alternative energy. They therefore heard the need for
their product and developed it around this need. They developed solar panels
for both residential and commercial use which further substantiated that they
were driven by the demand of their target market.
When answering question 2, keep in mind that customer relationship
management (CRM) is a technique that uses IT and technology to develop an
ongoing relationship with customers to maximise the value an organisation
delivers to them over time. CRM systems have three interconnected components:
sales and selling, after-sales service and support, and marketing.
When answering question 3, keep in mind that the more steps required to
assemble a product or provide a service, the more opportunities there are for
making a mistake. It follows that designing products that have fewer parts or
finding ways to simplify providing a service should be linked to fewer defects
or customer complaints.
Higher product quality means less employee time to make defective products
that must be discarded or to provide substandard services, and thus less
time have to be spent fixing mistakes. This translates into higher employee
productivity, which also means lower costs.
While reading the case study, remember that a TQM system focusses on
improving all the functions in an organisation’s value chain. For a TQM to be
most successful, all ten steps should be implemented. This was not the case
with JCK Solar. Consider each step carefully while reading the case study.

IMPROVING EFFICIENCY AND INNOVATION

The way an organisation uses its resources is an important measure of the efficiency with
which it operates. If the organisation uses fewer inputs, products can be produced with
a higher level of efficiency. The more efficient, the lower the production costs and the
higher the profits. Innovation is the use of technology in such a way that it improves the
way the value chain functions and innovates new kinds of goods and services.

ACTIVITIES

1. Which of the following should an organisation do to obtain a competitive

advantage through superior efficiency?
1 Make products that are much more reliable than the products available
in the market.
2 Reduce the number of inputs it requires to produce a given amount of
outputs.
3 Use technology to make its product unique and different when compared
to its rivals’.
4 Conduct surveys to determine whether a product will be successful in
the market.

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 2. In a paragraph of ten sentences, list and briefly explain the three basic
facility layouts or ways of arranging workstations with an example of the
kind of products produced by each type.
3. Which of the following should an organisation do to obtain a competitive
advantage through superior innovation?
1 Set up a strong team to handle after-purchase support.
2 Reduce the number of components used in its products.
3 Produce products with technologies that have not been used previously.
4 Decrease the number of product attributes and lower the price of its
products.
4. Define the two principal types of innovation and differentiate between them.

22 FEEDBACK

When answering question 1, keep in mind that efficiency is a measure of the

amount of inputs required to produce a given amount of outputs. The fewer
the inputs required to produce a given output, the higher the efficiency and
the lower the cost of outputs.
The three different layouts include product layout, used for instance with mass
production; process layout, often suited to produce custom-made products,
each tailored to the needs of a different kind of customer; and fixed-position
layout, commonly used for complex products difficult to assemble.
When answering question 3, keep in mind that successful innovation gives an
organisation something unique or different about its products that rivals lack
and helps an organisation gain a competitive advantage.
The two types of innovation include quantum product innovation resulting
in the development of goods and services because of fundamental shifts
in technology; and incremental product innovation resulting from gradual
improvements and refinements of existing products.

Scenario 2

Amazon
This e-commerce giant combines high-powered software with logistics to provide a
timely experience to customers. Amazon is known for their efficiency when it comes to
grouping and delivering packages.
The core of the organisation’s efficient warehouses is not Amazon’s automated shelf-
moving warehouse robots, which is the innovation that gets the most attention. And it
isn’t, on its surface, something that you would associate with a well-oiled machine. It is
not even a breakthrough technology.
The answer lies in Amazon’s inventory system that organises products randomly, rather
than in order, while meticulously keeping track of every item in the warehouse. This

86
system allows each item to be simultaneously in several locations across the warehouse,
making the product pick-up faster, which, in turn, speeds up the whole shipping process.
Randomness is also preferable when it comes to managing the wide range of items
customers now order online, most practically by saving space. Amazon warehouses carry
a huge variety of items that can be ordered at any moment, but they do not carry a huge
number of each item. “They may only have one box of Cheerios,” says Tom Galluzzo, who
makes warehouse robots. “If you were to have a space for every product, you would need
a gigantic warehouse. Reserving empty space on the ‘toothpaste shelf’ while waiting for
the next shipment of toothpaste would mean its warehouses would need to be even
bigger than it is now. It is more efficient to use any free shelf space available.”
(Source: Adapted from https://classic.qz.com/perfect-company-2/1172282/
this-company-built-one-of-the-worlds-most-efficient-warehouses-by-embracing-chaos/)

ACTIVITIES

1. Amazon makes use of (a) to improve efficiency.

1 process layout
2 fixed-position layout
3 just-in-time inventory
4 flexible manufacturing
2. Discuss how Amazon accomplished process re-engineering to attain more
efficiency.
3. Amazon portrays product innovation.
1 quantum
2 stage-gate
3 incremental
4 development

FEEDBACK
23

When answering question 1, keep in mind that Amazon wants to save as much
warehouse space as possible and therefore keeps little stock of each item sold.
They therefore rely on small batches being delivered when needed.
Remember that the organisation will always strive to improve their performance
and process re-engineering can assist greatly with this task. Think how Amazon
was able to use process re-engineering to do things differently in order to
provide better customer service at greater speed.
When answering question 3, keep in mind that although Amazon provides
a service, quantum product innovation is still relevant as the change in their
warehouses meant that they can provide their service in a radically different
way. This was also due to the transformation of technology which made it
possible to arrange the warehouse in this efficient but unorthodox manner.

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VALUE CHAIN MANAGEMENT AND FUNCTIONAL STRATEGIES
FOR A COMPETITIVE ADVANTAGE
Managing the value chain means developing functional strategies that not only supports
the business-level strategy chosen (either low-cost or differentiation) but also increases
the organisation’s competitive advantage. Functions along the value chain should be
managed in such a way that it allows for superior efficiency, quality, innovation and
responsiveness to customers.

Scenario 3

LUSH beauty products

LUSH is unlike any other make-up brand in the marketplace. This cosmetics maker has
international reach with a local “warm and fuzzy” approach that is not afraid to push the
boundaries.
So, what makes LUSH so different from the likes of Sephora or even Etsy? Handmade
products. Advocates of LUSH are committed to ethical buying and are obsessed with
the purity that comes from a handmade item. The company’s biggest success is knowing
that its core buyers value social and corporate responsibility over a luxurious and out-
of-reach image.
LUSH’s branding is simple and genuine, with great contrast between visuals that is simply
not seen elsewhere. For that reason, the company has a massive brand-loyal following.
(Source: Adapted from https://blog.hubspot.com/insiders/branding-differentiation)

ACTIVITIES

1. LUSH beauty products used superior to differentiate their

products.
1 quality
2 efficiency
3 innovation
4 responsiveness to customers
2. Because LUSH sells handmade products, they are least likely to use superior
to differentiate their products.
1 quality
2 efficiency
3 innovation
4 responsiveness to customers
3. Discuss the necessity of satisfying customer demands. How does LUSH go
about satisfying their customers’ demands?

88
 24 FEEDBACK

When answering question 1, keep in mind that in the LUSH case study we see
that they did not focus on high quality or luxury when it comes to their products,
but rather what their target market believes and values. They therefore focus
on what the customer wants and needs in beauty products, instead of what
society leads one to believe. Innovation could also be considered as a way they
differentiated. However, the innovation was still based on the values and wants
of their customers, bringing it back to their responsiveness and commitment
to their target market.

When answering question 2, keep in mind that efficiency in the production

becomes more feasible when using a production or manufacturing line. Large
factories have been dedicated to enable organisations to produce products
at a faster rate and at a similar quality. Often it also allows production at a
lower cost. Selling handmade products means that factors such as technology
and speed are not on the forefront. Making each product individually and by
employees takes up more time and can create inconsistencies in the quality
of the products.

Consider what would happen if you are unhappy with a retailer or organisation’s
products or service. Would you recommend them to others or even support
them again yourself? As an organisation, it is important to produce outputs
consumed by customers. The customers in turn provide the monetary resources
most organisations need to survive.

It is important to make sustainability an integral part

of business – from sourcing, producing, marketing and
selling of products all the way to how they are con-
sumed, and how waste can be reused and recycled. The
organisation’s approach to sustainability should cover
the entire value chain. An excellent example of this is
Heineken that looks at “Brewing a Better World”, “from
barley to bar” in every one of their activities. They try
to improve sustainability in the following areas:
• The growing of ingredients – by working with farmers to improve crop yields
and overall quality. In Africa, barley is not often available, so they use other local
ingredients such as cassava and sorghum.
• Production – increasing energy and water efficiency and switching to more
environmentally friendly energy sources.

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 • Packaging – by optimising the production of packaging, changing the design and
increasing recycling and re-use of cans, bottles and kegs.
• Distribution – producing products in the countries they are sold to reduce
environmental impacts and wherever possible change the form of transport to
reduce impacts.
• The way the products are consumed – since beer should be served cooled, Heineken
have dedicated programmes aimed at reducing emissions from refrigeration.
They also develop strong relationships with:
• Employees – more than 85000 people in 70 countries. Heineken is committed to
increasing diversity and working conditions.
• Suppliers – who need to adhere to their supplier code for creating a sustainable
future for their business.
• Communities – making a positive contribution to the communities where they
source, work and sell their products.
(Adapted from: Heineken, 2020. Available from: https://www.theheinekencompany.com/
our-sustainability-story/our-value-chain-and-un-sdgs)

CONCLUSION
In this learning unit we have discussed what the value chain is and the importance of
functional strategies that support and improve the overall value chain. Managing the
value chain supports the organisation’s business-level strategy (low cost or differentiation)
to strengthen its competitive advantage. Each function along the value chain has an
important purpose and should be optimised to ensure efficiency, quality, innovation and
responsiveness to customers.

SELF-ASSESSMENT EXERCISE
7

1. An organisation that increases its quality can improve its profits by the
prices of its products due to increased reliability and its operating costs
due to increased productivity.
1 decreasing; reducing
2 reducing; increasing
3 increasing; increasing
4 increasing; reducing
2. In order to improve the quality of their product’s design and reliability an organisation
should implement a(n) system.
1 total quality management (TQM)
2 product manufacture management (PMM)
3 customer relationship management (CRM)
4 organisational efficiency management (OEM)

90
3. Which one of the following is essential for good value chain management?
1 The materials management function should hold greater inventories in order to
increase costs.
2 The production function should locate customers and persuade them to buy the
company’s products.
3 The marketing function should define business in terms of customer needs rather
than the type of products.
4 The sales function should control the movement of physical materials from the
procurement of inputs to delivery to the customer.
4. is a measure of how well an organisation’s input resources are used to
produce its outputs.
1 Quality
2 Efficiency
3 Reliability
4 Flexibility
5. is a strategy based on the use of IT to reduce the costs associated with
the product assembly processor the way services are delivered to customers.
1 Six Sigma
2 Process re-engineering
3 Total quality management (TQM)
4 Flexible manufacturing technology
6. An organisation manufactures custom-made furniture based on customer specifica-
tions. The facilities layout would best suit the organisation’s needs.
1 product
2 process
3 sequential
4 fixed-position
7. Describe the possible changes in the operation of a grocery store in a small town that
recently implemented a customer relationship management system.
8. Describe the effect of flexible manufacturing and just-in-time inventory on efficiency.
Please note that feedback on these questions will be provided on the myUnisa
module site as the semester progresses.

ADDITIONAL LEARNING EXPERIENCES

The following websites will further enrich your knowledge and understanding.
Visiting a Twitter page or watching a YouTube video is, however, not compulsory.
Competitive advantage
https://www.youtube.com/watch?v=-JfWsYLJMlU&t=30s
Heineken sustainability (see Sustainability Spotlight)
https://www.youtube.com/watch?v=3TXuGJco_m8
Sustainability in the value chain
https://www.youtube.com/watch?v=cpYhgqPRivw

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 Interesting tweeple (people and/or organisations) to follow on Twitter:
@DrGPeakPerform
@HarvardBiz
@Action_Sustain
#sustainability

Disclaimer:
We frequently test the URL links provided in this learning unit. At the time of print,
these URL links were working. We are aware that a URL might not work after a
while or that content may be removed from the website. Situations like these are
out of our control.

REFERENCES
Amazon. Nd. Amazon: This company built one of the world’s most efficient warehouses by
embracing chaos. Available from: https://classic.qz.com/perfect-company-2/1172282/
this-company-built-one-of-the-worlds-most-efficient-warehouses-by-embracing-
chaos/ [Accessed: August 2019].
Heineken. 2020. Our value chain and UN SDGs. Available from: https://www.theheinek-
encompany.com/our-sustainability-story/our-value-chain-and-un-sdgs [Accessed
March 2020].
HubSpot. 2019. Ten companies that brilliantly differentiated themselves from the competi-
tion. Available from: https://blog.hubspot.com/insiders/branding-differentiation
[Accessed: August 2019].
Jones, G.R. & George, J.M. 2018. Contemporary management. 10th ed. New York: McGraw
Hill.

92
LEARNING UNIT 8
Effective groups and teams

OVERVIEW
We know that the uniqueness of an organisation’s members creates a competitive
advantage for the organisation. In contemporary organisations, individuals form groups
and teams that can be used to innovate and improve organisational effectiveness. Managers
can use groups and teams in small and large organisations to enhance performance,
increase responsiveness to customers, increase innovation and motivate employees. It
is important that you remember that all teams are groups, but not all groups are teams.
While people in groups merely interact with each other to accomplish certain goals, a
team works intensely with one another to achieve a common goal.

People join groups and teams for different reasons – to satisfy their need for security,
status, self-esteem, affiliation and power, and to achieve goals they cannot achieve on
their own (Brevis & Vrba 2014). The groups you join when working in an organisation can
either be a formal or informal group. Formal groups and teams are created by management
to achieve organisational goals such as completing a certain project or solving a specific
problem. Organisational members can, however, also form informal groups. If you and
a few colleagues have lunch together or enjoy playing cards or soccer together in the
afternoons, that is an informal group. Informal groups form to help individuals meet their
own needs – it can be for the sake of friendship (social interaction) or because of common
interests among these individuals (cards or soccer).

In this learning unit, you will learn the importance of groups and teams, and how they
contribute to organisational effectiveness. You will also see that there are different types
of groups and teams each with different dynamics and levels of cohesiveness. We will

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discuss how individuals fulfil different roles in groups and the fact that each member
needs to be motivated in order for social loafing to be reduced.

LEARNING OUTCOMES

Upon the successful completion of this unit, you will be able to

• explain why groups and teams are key contributors to organisational
effectiveness
• differentiate between types of groups and teams that help managers and
organisations achieve their goals
• explain how different elements of group dynamics influence the functioning
and effectiveness of groups and teams
• explain why it is important for groups and teams to have a balance of
conformity and deviance and a moderate level of cohesiveness
• describe how managers can motivate group members to achieve organisational
goals and reduce social loafing in groups and teams
• apply the theoretical knowledge of the above points to a case study to
demonstrate understanding and application of theory to an unknown situation
• use the information in your job as a manager

WORK THROUGH CHAPTER 8 IN THE PRESCRIBED BOOK.

KEY CONCEPTS

Command group. A group composed of subordinates who report to the same supervisor.
Division of labour. Splitting the work to be performed into particular tasks and assign-
ing tasks to individual workers.
Formal group. A group that managers establish to achieve organisational goals.
Friendship group. An informal group of employees who enjoy one another’s company
and socialise with one another.
Group. Two or more people who interact with each other to accomplish certain goals
or meet certain
needs.
Group cohesiveness. The degree to which members are attracted to or loyal to their
group.
Group norms. Shared guidelines or rules for behaviour that most group members follow.
Group role. A set of behaviours and tasks that a member of a group is expected to per-
form because of his or her position in the group.
Informal group. A group that managers or non-managerial employees form to help
them achieve their own goals or meet their own needs.
Interest group. An informal group of employees seeking to achieve a common goal
related to their membership in an organisation.

94
Role making. Taking the initiative to modify an assigned role by assuming additional
responsibilities.
Self-managed work team. A group of employees who supervise their own activities
and monitor the quality of the goods and services they provide.
Social loafing. The tendency of individuals to put forth less effort when they work in
groups than when they work alone.
Synergy. Performance gains that result when individuals and departments coordinate
their actions.
Task force (or ad hoc committee). A committee of managers or non-managerial employ-
ees from various departments or divisions who meet to solve a specific mutual problem.
Task interdependence. The degree to which the work performed by one member of a
group influences the work performed by other members.
Team. A group whose members work intensely with one another to achieve a specific
common goal or objective.
Virtual team. A team whose members rarely or never meet face-to-face but rather interact
by using various forms of information technology such as e-mails, computer networks,
telephones, etcetera.
(Adapted from: Jones & George, 2018)

TYPES OF GROUPS AND TEAMS

Scenario 1

Groups and teams at Star Fashion

Star Fashion
Star Fashion is a fashion retailer based in South Africa, employing over 16 000 people. Their
aim is to offer customers the best quality fashion at the best price. The Star Fashion group
consists of different divisions: buying, planning, trend and design, visual merchandising,
information technology, supply chain and logistics.

Buying
In this group members share responsibility for hunting down the best quality merchandise
across the globe and negotiating with suppliers for the price. Individuals in this division
follow up on fashion trends identified by trend and design teams and buy the hottest
new designs in order to create a range of fashionable, well-priced quality merchandise.

Planning
This division works together with trend and design, as well as the buyers to develop a
strategy for each season. Approval from this division is sent to the buyers, the CEO, as well
as the heads of the marketing, finance and operations departments to have a discussion
and usually reach a consensus before having discussions with the buyers through video

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conferencing or Skype once a month. Information provided by the trend and design
division is considered, as well as the available budget.

Trend and design

This division consists of creative individuals that interpret the global fashion trends. They
are known as the “crystal ball” of Star Fashion as they research future trends and fashion
for the next season. This section also offers performance bonuses for design staff who
come up with trendy designs.

Visual merchandising
This division is responsible for ensuring all the stores always look amazing and impossible
for the consumer to resist. This division consists of individuals who previously worked in
different Star Fashion stores. They have a meeting every month to discuss more effective
and innovative ways of drawing customers to the stores, as well as the layout of the
stores. The discussion feedback is always sent to the senior merchandising manager for
approval before implementation.

Information technology
This division provides daily support to all departments of the group, including the online
store. They ensure that the online store runs smoothly, that it is user friendly for customers,
and that support is provided quickly and efficiently. This division ensures that Star Fashion’s
IT systems are operational and handles any IT matters that may arise.

Supply chain and logistics

This division is extremely well organised. Groups coordinate efforts to achieve quick
delivery and transport economies of scale by creating efficient transportation networks
and making final decisions on all Star Fashion group transportation matters. The groups
are divided according to the types of store and merchandise, and each group has a group
leader who facilitates the allocated logistics chain. The group leaders meet every morning
to schedule and keep track of logistics matters, and then meet with their respective group
to allocate tasks to members and ensure that the right products, in the right sizes, goes
to the right stores, in the right quantities, at the right time.

ACTIVITIES

1. Classify all the Star Fashion divisions under either a formal or informal group.
Next, state the specific type of group each division can be classified under
and provide evidence by quoting from the scenario.
2. In the scenario, three contributions that groups make to the organisation’s
effectiveness are evident. Identify which divisions these contributions are
most prominent in and provide quotes to support your answer.

96
 FEEDBACK
25

You must remember that all teams are groups but not all groups are teams. It
is important to understand the difference between the two. Table 1 highlights
the main differences between a group and a team in terms of different criteria.
Table 8.1: The difference between a group and a team

Criteria Groups Teams

Leadership Strong individual Shared

Goals Shared interests Mutually agreed

Commitment Low; more self-centred High commitment to team

and organisation

Relationship Interactive and shared Cohesive, co-ordinated and

interdependent

Contributions Individual Collective

Accountability Individual Individual and shared

Purpose Discrete for each Specific team orientated

member

Skills Complementary Varied

Meetings Information focus Problem-solving focus

Performance Indirectly through Directly

measure other indicators

Information- Share and delegate Discuss and work together

sharing

(Source: Adapted from Hellriegel, Slocum & Jackson, 2017)

As you can see from the table above, groups focus more on the individuals and
their characteristics and responsibilities, whereas in teams, individuals work
together and a collective effort is important. We will now distinguish between
the classifications of informal and formal groups.
Informal groups generally consist of a small number of individuals that frequently
participate in activities together to meet their mutual needs. Types of informal
groups include interest, friendship and reference (any group against which a
person evaluates him- or herself) groups. Formal groups on the other hand, have
the intention to complete a specific role or task and consist of a small number
of interdependent, identifiable employees. In our Star Fashion scenario, there

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 are various formal groups. Different types of formal groups are summarised
below. Look at your answers for question 1 – did you correctly categorise each
of Star Fashion’s divisions?
• Cross-functional teams
– composed of members from different departments of the organisation
• Cross-cultural teams
– composed of members from different cultures or countries
• Top management teams
– composed of the CEO or president and the heads of the most important
departments
• Research and development teams
– members have the expertise and experience needed to develop new
products
• Command groups
– composed of subordinates who report to the same supervisor
– often called departments or units
• Task forces
– sometimes called ad hoc committees – they only form a team to accom-
plish specific goals or solve specific problems and then disband
• Self-managed work teams
– members are empowered and have responsibility and autonomy to
supervise and monitor their own work
• Virtual teams
– members rarely or never meet face-to-face but rather interact through
technology

All of these types of groups and teams can contribute to organisational

effectiveness and lead to the organisation gaining a competitive advantage.
Groups and teams can enhance performance, increase responsiveness to
customers, increase innovation and increase motivation and satisfaction of
members.

CROSS-FUNCTIONAL TEAMS
Scenario 2

Creating a cross-functional team

Analyse the following scenario and then do some critical and reflective thinking before
completing the activities.
Imagine that you are part of a group of managers in charge of food services for a large
local university in South Africa. Recently, a survey of students and staff was conducted
to evaluate customer satisfaction with the food services provided by the university’s
five cafeterias. The results were disappointing, to put it mildly. Complaints ranged from

98
dissatisfaction with the type and range of meals and snacks provided, operating hours,
and food temperature, to frustration about unresponsiveness to current concerns about
healthy diets and the needs of vegetarians. You have decided to form a cross-functional
team that will further evaluate reactions to the food services and will develop a proposal
for changes to be made to increase customer satisfaction.

ACTIVITIES

It is important that you do this activity after doing critical thinking. This means
that you need to consider the above situation, analyse the information objec-
tively and draw conclusions. Firstly, analyse the scenario – what information is
available? Then, talk to fellow students or colleagues and share your thoughts
if possible. Finally, come up with a creative solution and be open-minded.
1. Indicate who should be on this important cross-functional team and explain
why.
2. Compile a list of goals that your team should strive to achieve.
3. Describe the different roles that will need to be performed on this team.
4. Discuss the steps you will take to help ensure that the team has a good
balance between conformity and deviance and has a moderate level of
cohesiveness.

26 FEEDBACK

Remember, this is a reflective thinking exercise and you should be creative

and consider all the possibilities. This is our model answer but yours could be
different and still be correct. Discuss any differences in your WhatsApp group
or on the Discussion Forum.
1. Since the team is cross-functional, team members should come from a
variety of departments. The team should have a member who is responsible
for monitoring costs and maintaining the food services budget. The team
should also include at least one of the eight cafeteria managers who is
knowledgeable about the day-to-day operations of the cafeterias. A faculty
member or graduate student from the management department on campus
might be brought onto the team for consultation in providing quality
customer service and efficient food delivery. An experienced cafeteria
worker might be included on the team to give an employee’s perspective
on problems within the cafeterias. A nutritionist could be brought in to give
suggestions for new, more healthful menu items. A student representative,
who would be able to give the team ideas for meals and snacks that would
appeal to students, should also be a part of the team. An administrator
may be helpful to suggest hours that are most convenient for faculty and
students. And, of course, one of the cooks who prepares the meals should
be included as he or she will have insights into the feasibility of preparing
a particular food item for large numbers of people.
2. The goals that the team should strive to achieve should be the ones that
remedy the problems that the cafeterias are experiencing. The faculty
and students have responded to the survey, and have expressed their

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 dissatisfaction with the current schedule, menus, and service. The team
should try to improve the menu in the cafeterias. This improvement should
result in a wider range of choices and the addition of more healthy items.
The team should try to devise a vegetarian and a low-fat, high-fibre menu
that appeals to both the students and faculty. The team should also try to
improve quality and ensure that cafeterias deliver food that is appropriately
prepared and served at the appropriate temperature. Another goal is to
have operating hours that are convenient for a large segment of the campus
population. The main goal is to increase customer satisfaction with the
services of the cafeteria, while trying to maintain a reasonable budget and
controlling costs to the students and faculty. Additionally, managers and
employees of the cafeterias should be motivated and satisfied with their jobs.
3. Group roles are sets of behaviours and tasks that members of a group are
expected to perform because of their positions in the group. Members of
this team should be performing behaviours and tasks that are related to
their special areas of expertise. The nutritionist should propose menu ideas
and conduct an analysis of the nutritional content of the current cafeteria
menus in order to determine where changes need to be made. The student
should make suggestions and give feedback based on experience as a
cafeteria patron. The cafeteria worker might offer suggestions for more
efficient operation in the kitchens or food lines. The management consultant
could devise a strategy to motivate cafeteria workers to provide quality
customer service. The administrative employee could research the times
when most students are likely to be at the cafeterias, for example, during
breaks between classes, and make suggestions for operating schedules.
The cafeteria manager may have the most experience in the day-to-day
operations and may serve as the group leader.
4. A good balance between conformity and deviance is essential to ensure
that a group can control members’ behaviour and channel it in the direction
of high performance and group goal accomplishment. This balance also
ensures that dysfunctional norms or behaviours are discarded in favour
of more functional ones. The leader of the group may ensure tolerance of
deviance and conformity to group norms by acting as a role model for the
group. The cafeteria manager can encourage and accept team members’
suggestions for changes in menu items, service, and operating hours.
Second, the manager should assure team members that suggestions are
considered and implemented to the best of his or her ability. The manager
should communicate his or her vision for an improved food service system
and the belief that changes will benefit both employees and patrons.

The manager can ensure that the group has a moderate level of cohesiveness
by making sure that the group is only as large as is necessary, limiting the
number of group members to ten or less. The cafeteria manager can also make
sure that the diversity of the team is managed in such a way that everyone
feels accepted and instrumental in achieving group goals. Students may have
different ideas than faculty or administration, and these differences must be
managed fairly. Another tactic that may be employed to ensure a moderate
level of cohesiveness is to form a group identity that makes members feel
appreciated and fortunate to be included in the process.

100
VIRTUAL TEAMS
Scenario 3

You were recently hired in a boundary-spanning role for the global unit of an educational
and professional publishing company. The company’s headquarters is in Johannesburg,
South Africa (where you work), and has divisions in multiple countries. Each division is
responsible for translating, manufacturing, marketing, and selling a set of books in its
country. Your responsibilities include interfacing with managers in each of the divisions in
your region (Africa), overseeing their budgeting and financial reporting to headquarters,
and leading a virtual team consisting of the top managers in charge of each of the
divisions in your region (other African countries). The virtual team’s mission is to promote
global learning, explore new potential opportunities and markets, and address ongoing
problems. You communicate directly with division managers via telephone and e-mail,
as well as written reports and memos. When virtual team meetings are convened,
videoconferencing is often used.
After your first few virtual team meetings, you noticed that the managers seemed to be
reticent about speaking up. Interestingly enough, when each manager communicates
with you individually, primarily in telephone conversations and e-mails, he or she tends
to be forthcoming and frank, and you feel you have a good rapport with each of them.
However, getting the managers to communicate with one another as a virtual team has
been a challenge. At the last meeting, you tried to prompt some of the managers to raise
issues relevant to the agenda that you knew were on their minds from your individual
conversations with them. Surprisingly, the managers skilfully avoided informing their
teammates about the heart of the issues in question. You are confused and troubled.
Although you feel your other responsibilities are going well, you know your virtual team
is not operating like a team at all; and no matter what you try, discussions in virtual team
meetings are forced and generally unproductive.

ACTIVITIES

1. How are you going to address this problem?

Consider the characteristics of a virtual team as well as the theory on group
dynamics and mention the following in your answer:
• the stage of development this team is currently in
• how the team can move to the next stage of development
• what the challenges of virtual teams are
• suggestions on how the challenges can be overcome
2. Prepare a plan of action that you will present at the next top management
meeting at the organisation’s headquarters. In this discussion, you need to
make suggestions on how you plan to motivate your virtual team to achieve
the organisation’s goals. Write at least two paragraphs that support your
suggestions to convince other top management members.

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 27 FEEDBACK

1. Even though this group is virtual, it still will go through the same formation
sequences as any other kind of group. There is also the added complexity
of both the national culture and the company’s internal culture. You must
first make sure that the group members know each other and trust the
process. Consider creating a chat room that everyone in the group can
use to exchange information they see of value or just to get acquainted. In
addition, the compensation and incentive structure must be known by all
and designed so all group members will help and not hinder each other.
If too much competition develops within the group because the rules are
not clear, it will never get past the storming stage. It may be useful to ask
each team member why he or she did not want to raise the issues in the
virtual team meetings. It may be that the corporate culture, national culture
or reward system of the company prohibits managers from discussing
problems with others. Finally, it may be useful to hold one in-person meeting
where all team members can meet each other face-to-face.
2. To ensure groups and teams perform at a high level and contribute to
organisational effectiveness, managers can
• ensure that members benefit when the group performs
• implement individual and group-based incentives
• make monetary rewards and extra resources available
• assign high performance tasks to interesting and important new projects
• put into practice time off and year-end parties, encourage field trips and
incorporate fun at work

Which of these have you identified in your plan of action? Be specific when
proposing your ideas to the top management team.

GROUP DYNAMICS
Scenario 4

Work through the "Group Development over Time" section in your textbook and do the
following activity.

ACTIVITIES

Consider the following group members and their activities. Then match the
names with the appropriate phase of the group development process during
which the activity would occur. You need to complete this activity in table
format.
Glenna – hosts a dinner to thank the team members for all their hard work on
the project.

102
 Nola – is pleased that the team now makes decisions as frequently as possible
by consensus rather than majority rule.
Neo and Trinity – both want to be team leader, and each disagrees strongly
with the other as to the direction the team should take and the processes it
should use.
Elisha – is the leader of a self-managing work team. He makes sure team mem-
bers are empowered and have enough responsibility and autonomy.
Cyrus – calls a group meeting specifically to tell each member why he or she
was chosen for this team and why each is important to the achievement of
the team goals.
The entire team – often meets for drinks and dinner and socialises with each
other even on weekends. They have become good friends.
Duncan – submits the final report prepared by his task force with recommen-
dations for improving emergency response procedures.
Devlin – has a barbeque at her home where everyone discusses their back-
grounds, skills, work commitments – other than those to this group – and
personal goals.
Nick and Nora – argue vehemently with the other team members against a
three-times-a-week meeting schedule.
Tripp – is the leader of a command group and must now ensure that the group
members continue to be motivated.

TEAM ROLES
This section contains additional information that does not form part of the prescribed
book and is important for the examination.

Scenario 5

Research has shown that the most successful teams were made up of a diverse mix of
behaviours. Dr Meredith Belbin and his team discovered that there are nine clusters of
behaviour – these are called team roles and can be seen in table 8.2. The table also indicates
the strengths and allowable weaknesses (a flipside of the behavioural characteristics,
which is allowable in the team because of the strength which goes with it) of each role.

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Table 8.2: Belbin’s nine team roles

Role Characteristics Strengths Allowable

weaknesses

Re- Has an inquisitive nature Outgoing May be over optimistic

source and brings ideas back to Enthusiastic Can lose interest once
investi- the team the initial enthusiasm
gator Explores opportunities
has passed
Develops contacts
May forget to follow up
a lead

Team Helps the team to gel Co-operative Can be indecisive in

worker (concerned with the Perceptive crunch situations
welfare of the team), Tends to avoid
uses their versatility to Diplomatic
confrontation
identify the work re- Good listener
quired and completes it
Averts friction
on behalf of the team

Co-or- Focuses on the team ob- Mature Can be seen as

dinator jectives, draw out team Confident manipulative
members and delegate May offload their own
the work Identifies talent
share of the work
Clarifies goals (over-enthusiastic
delegation)

Plant Highly creative individu- Creative May ignore incidentals

al who is good at solving Imaginative May be too preoccu-
problems in unconven- pied to communicate
tional (unorthodox) ways Free-thinking
effectively
Generates ideas
Could be forgetful
Solves difficult
problems

Monitor Provides a logical eye, Sober Sometimes lacks the

evalua- making impartial judge- Strategic drive and ability to
tor ments where required inspire others
and weighs up the Discerning
Can be overly critical
team’s options in a dis- Sees all options and
passionate way judges accurately

Special- Brings an in-depth Single-minded Tends to contribute on

ist knowledge of a key area Self-starting a narrow front
to the team Can dwell on
Dedicated
technicalities
Provides specialist
knowledge and skills

104
 Role Characteristics Strengths Allowable
weaknesses

Shaper Provides the necessary Challenging Can be prone to

drive to ensure that the Dynamic provocation
team keeps moving and May sometimes offend
does not lose focus or Thrives on pressure
people’s feelings
momentum Has the drive and
courage to overcome Risk of becoming
obstacles aggressive in their
attempt to get things
done

Imple- Needs to plan a work- Practical Can be a bit inflexible

menter able strategy and carry Reliable Can be slow to respond
it out as efficiently as to new possibilities
possible Efficient
Turns ideas into action
Organises work that
needs to be done

Com- Most effectively used at Painstaking Can be inclined to

pleter the end of tasks to polish Conscientious worry unduly
finisher and scrutinise the work Reluctant to delegate
for errors, subjecting it Anxious
to the highest standards Searches out errors May take his/her per-
of quality control fection to extremes
Polishes and perfects

(Adapted from: Belbin, 2019. Available from https://www.belbin.com/about/belbin-team-roles/ and

https://www.belbin.com/media/1488/team-roles-in-a-nutshell.pdf.)

The resource investigator, team worker and co-ordinator (indicated in green) can be
identified as social roles, while the plant, monitor evaluator and specialist (indicated in
yellow) are seen as thinking roles, and the shaper, implementer and completer finisher
(indicated in blue) are action roles.
While teams need access to each of the nine roles, it does not mean a team requires nine
people. Most people have a number of “preferred” roles or behaviours that they frequently
and naturally display and can fulfil two or three roles in the same team. We also have
“manageable” roles, which may not be the most natural course of behaviour for us, but
which we can assume if required. Our roles in teams can also change over time as the
team moves forward to accomplish a goal. The roles are not always required at the same
time; they change as the tasks need to be undertaken. Understanding the team roles
enable team members to better understand themselves and their strengths, leading to
communication that is more effective between colleagues and managers (Belbin, 2019).

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ACTIVITIES

Shopnow’s top management: a dynamic team

Shopnow’s headquarters is located in the Western Cape, South Africa. The top
management team consists of the CEO, Dr J Dresden; the deputy managing
director, Mr CG Aplin; the chief financial officer (CFO), Mr M Cooper; and the
chairman of the board, Dr C Nel. This team is a dynamic group of people, each
bringing their own strengths to Shopnow’s top management. As a team, they
interact to share information and make decisions that will help each member
perform within his own area of responsibility. Dr Dresden presides over the team
and is driven, energetic and self-motivated. Since he takes the time to get to
know all his colleagues personally, he is well liked and respected by everyone.
Mr Aplin, while introverted, is very imaginative and intelligent. In contrast, Mr
Cooper is extroverted and sociable and liked by all his subordinates, while Dr
Nel is supportive and understanding. Mr Aplin is an avid rummy player and
when all the team members are having a quiet day, they often meet to play
cards during their lunch hour. As an extroverted, sociable person, Mr Cooper,
the CFO, uses friendliness and humour when making requests to his depart-
mental managers. Together with Mr Cooper, these departmental managers
form the financial team at Shopnow’s head office.
1. Dr Dresden fulfils the team role.
1 plant
2 shaper
3 monitor-evaluator
4 resource-investigator
2. Mr Cooper fulfils the team role.
1 shaper
2 chairpersons’
3 team worker
4 resource-investigator
3. Mr Aplin fulfils the team role.
1 plant
2 team worker
3 company worker
4 monitor-evaluator
4. Dr Nel fulfils the team role.
1 plant
2 shaper
3 team worker
4 monitor-evaluator

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 5. When the top management team plays cards together on a quiet day, they
can be seen as a/an , type of group.

1 informal; friendship
2 formal; command
3 informal; interest
4 formal; work

6. The financial team at Shopnow’s head office is a type of team.

1 virtual
2 command
3 self-managed
4 cross-functional

By now, you should know that sustainability is about

far more than simply being “green”. It is about the tri-
ple bottom line – people, the planet, and making a
profit. However, during early sustainability integration
efforts, a good starting point can be to create a “green
team” – getting together a group of individuals in your
organisation who are passionate about the topic of
green or the environment. When creating this team,
this team, there should be top management support. If at least one member of the
team is part of top management of the organisation, decisions can be made quicker
and the direction and funding of the team can be set. The other members of the team
should be from different departments and levels of employees. Only a small team is
needed, even if the organisation is large – employees on this team can always start
their own team in their own department.
The first phase is all about the internal business of the organisation. Basic ideas of
a green team may include recycling programmes and energy efficiency measures.
The team may undertake an environmental awareness program for all employees to
understand the impact of their choices on the environment in their personal lives and
at work. The second phase is about what is happening outside of the organisation
– opportunities in the industry, what competitors are doing and considering what
customers demand in terms of sustainability. The different actions that the green team
identify in the two phases should have listed benefits and risks when presented to
top management. After implementation it is important to celebrate successes and
encouraging all employees toward environmental sustainability for the organisation
and for themselves.
(Adapted from: McManus, 2009. Available from: https://www.greenbiz.com/news/2009/05/05/
how-build-green-team-first-step-sustainability)

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CONCLUSION
Groups and teams are one of many ways for an organisation to organise its employees.
While groups and teams can contribute to organisational effectiveness, it is not the
answer to all problems. It can, however, enhance performance, increase responsiveness
to customers, increase innovation and be a source of motivation for employees. In this
learning unit, we looked at different types of groups, both informal and formal. We also
considered the different dynamics, or group characteristics and processes, and how this
influences how they function effectively. Ways to motivate groups to perform at a high
level were also discussed.

SELF-ASSESSMENT EXERCISE
8

Case Study
Read the following case study about Elizabeth’s retail business and answer ques-
tions 1 to 5.
Groups and teams
Not all groups are teams, yet all teams are groups. Therefore, distinguishing between
teams and groups involves identified characteristics of the teams and groups. In
addition, within teams and groups, it is important to reduce social loafing to help
members achieve organisational goals.
The goal of this exercise is to demonstrate your ability to identify the difference be-
tween groups and teams as well as key contributors to organisational effectiveness
at Elizabeth’s retail business. You will also show understanding of how managers
can motivate group members to achieve organisational goals and reduce social
loafing in groups and teams.
Read the following case study and answer the questions that follow.
Elizabeth McKay is the CEO of her retail business, a medium-sized company in a lo-
cal community of less than 50,000 residents. She has been in business for over 20
years and has managed and grown her business from one manager to three vice
presidents (VPs) and 300 employees. The VPs are
y Kent Linn, business department’s VP, and he supervises John Chely, accountant;
Katie Meyer, assistant accountant; and Judy Shirecome, administrative assistant.
y Jennifer Lathrop, customer service department’s VP, and she supervises Kelly
Clapton, customer service manager; Mary Nickolaou, assistant customer service
manager; and Evan Dunn, administrative assistant.
y Robert Pagonez, operations VP, and he supervises Rachel Johns, operations
manager; Emily Kolahi, assistant operations manager; and Evangalia Laurens,
administrative assistant.
Elizabeth’s concern is in regard to complaints received from customers indicating
the following issues: (1) incorrect billing statements; (2) incorrect products being
shipped; and (3) lack of timely response to customers’ complaints.
Elizabeth created a business initiative where the VPs met to discuss possible responses
to the issues. They determined that an increase in responsiveness to customers, an
increase in innovation, and an increase in employee’s satisfaction will resolve the

108
 immediate problems. Therefore, a subcommittee was formed where all employees
from each department met to determine an action plan to fulfil the CEO’s initiative.
Employees from each department were considered a team as they worked together
to meet departmental goals and organisational objectives. However, the group
that was formed to outline action plans to achieve the initiative included all nine
employees from all three departments. This group of nine worked together for six
months to achieve the action plans to fulfil the initiative.
During the six months of work, resolution was achieved. John, Katie and Rachel
agreed that creating a new technology programme would ensure that the billing
statements would be correct with a 99 percent success rate. Judy reported that she
will create the program and share it with all employees within 30 days.
Kelly, Mary, Rachel and Emily agreed that closer supervision needs to occur in the
operations division with a “double-check” idea to ensure correct products are be-
ing shipped, every time. During this discussion, it was noted that Rachel was clearly
distant in her interactions with the group. She consistently used her phone during
meetings and would not offer ideas for resolution. However, after one month of this
type of behaviour, Kelly, Mary, and Emily asked Rachel to retrieve documentation
from her department regarding the process in which products were being shipped.
Rachel brought all departmental reports to the next meeting and also submitted
an Excel spreadsheet showing how individual packages were being shipped.
Judy, Evan and Evangalia agreed that responses to customer complaints occurred
through the operations and customer service departments. One of the problems
with this particular issue is lack of motivation among workers to respond quickly
to the numerous complaints. While this will be resolved somewhat with the new
technology program and closer supervision within the operations division, it will only
solve the problem with fewer complaints in the future. Responding to customers
more effectively or more immediately will occur when overall employee satisfaction
is supported. Therefore, Judy, Evan and Evangalia decided that a timely response
to customer complaints should be implemented. When employees respond within
24 hours to a complaint, the new technology system will tally these responses and
employees with the highest number of timely responses in a month will receive a
R3000 check and recognition.
The entire team agreed that these resolutions will allow the company to thrive.
In addition, an employee satisfaction survey will be issued yearly to keep track of
employee concerns with a team in place to review the survey data and report rec-
ommended solutions to the CEO.
1. When the vice presidents from Elizabeth McKay’s retail business met to discuss pos-
sible solutions to the customers’ complaints, the meeting attendees were considered
a(n) .
1 top management team
2 command group
3 interest group
4 task force

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2. John Chely, Katie Meyer, and Judy Shirecome all work within the business department
and are considered a(n) .
1 top management team
2 command group
3 interest group
4 group
3. How did the team increase organisational effectiveness through innovation?
1 It responded to customers more effectively or more immediately.
2 It recommended that closer supervision needed to occur in the operations
department.
3 It created a new technology program that ensured billing statements were correct
at a 99 percent rate.
4 It obtained documentation from the operations department regarding the process
in which products are shipped.
4. How did the team reduce social loafing by Rachel Johns?
1 It kept the team at an appropriate level.
2 It emphasised Rachel’s valuable contribution.
3 It directed Rachel to lead the team to effective solutions.
4 It made Rachel’s individual contributions to the group identifiable.
5. How did the business motivate workers to achieve organisational goals?
1 Employees with the highest number of timely responses in a month will receive a
R3 000 check and recognition.
2 There will be closer supervision in the operations division with a “double-check”
idea to ensure correct products are being shipped every time.
3 It created a new technology program that would ensure billing statements would
be correct with a 99 percent success rate.
4 It issued a yearly employee satisfaction survey.

Please note that feedback on these questions will be provided on the myUnisa
module site as the semester progresses.

ADDITIONAL LEARNING EXPERIENCES

The following websites will further enrich your knowledge and understanding.
Visiting a Twitter page or watching a YouTube video is, however, not compulsory.
Types of teams
https://www.youtube.com/watch?v=BxCykDs6VC8
Successful teams
http://humanresources.about.com/od/involvementteams/a/twelve_tip_team.
htm
Belbin’s teams
https://www.youtube.com/watch?v=B5oB8PhS64Q
https://www.belbin.com/media/1489/things-to-do-and-not-to-do.pdf

110
 Group dynamics
https://www.youtube.com/watch?v=uL6x99-VSBA
https://www.youtube.com/watch?v=LzPyN11zB-c
Green teams (see Sustainability Spotlight)
https://www.youtube.com/watch?v=O0uAIqoOhpE
Interesting tweeple that you could follow on Twitter
@Entrepreneur
@NTUEnvironment

Disclaimer:
We frequently test the URL links provided in this learning unit. At the time of print,
these URL links were working. We are aware that a URL might not work after a
while or that content may be removed from the website. Situations like these are
out of our control.

REFERENCES
Belbin. 2019. Team Roles. Available from https://www.belbin.com/about/belbin-team-
roles/ [Accessed September 2019].
Belbin. 2019. Team Roles in a Nutshell. Available from https://www.belbin.com/media/1488/
team-roles-in-a-nutshell.pdf [Accessed September 2019].
Brevis, T. & Vrba, M. 2014. Contemporary Management Principles. Cape Town: Juta.
Hellriegel, D., Slocum, J. & Jackson, S. 2017. Management. 5th ed. South Africa: Oxford.
Jones, G.R. & George, J.M. 2018. Contemporary management. 10th ed. New York: McGraw
Hill.
McManus, B. 2009. How to build a green team: The first step to sustainability. Available from:
https://www.greenbiz.com/news/2009/05/05/how-build-green-team-first-step-
sustainability [Accessed March 2020].

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LEARNING UNIT 9
Managing conflict, politics and negotiation

OVERVIEW
Conflict will occur in any organisation – not only because of cultural and personality
differences as discussed in learning unit 5, but conflict can also occur in the workplace if
individuals or groups have different ideas, goals or interests, which can often work against
one another. Ultimately the goal will be to find a win-win solution so that all the parties
involved in the conflict can still adhere to their ideas, goals or interests to some extent,
but also work together. This is done through negotiation.

Think about a relationship you may have had with either a friend or a significant other.
Because you are different people with different interests, conflict may have arisen at
some point, for example, one would like to watch a romantic comedy film, while the
other prefers action films. You may have negotiated to first see the romantic comedy but
agreed to see an action film the next time. This constitutes negotiation. Similarly, in an
organisation individuals or groups that need to accomplish the same goals, or different
goals which contradict one another, will have to find a way to work together. There are
also different ways for parties to negotiate, which we will discuss in more detail.

Managers play an important role not only in negotiations but also in driving the organisation
in a general direction (to achieve the organisation’s goals). Organisational politics is often
viewed in a negative light and may cause employees to resist whatever changes the
managers want to implement. However, managers that use their power effectively and
strive to make the organisation a better place to work can rally employees behind them
to increase their political power.

In this learning unit, we will discuss conflict in an organisational setting and how managers
can work towards resolving conflict. Negotiation, which often assists in resolving conflict, is

112
also discussed as well as the manager’s role in the negotiation process. Finally, organisational
politics, managers’ power and the strategies managers can use to become politically
skilled are explored.

LEARNING OUTCOMES

Upon the successful completion of this learning unit, you will be able to
• discuss why conflict arises
• discuss the types and sources of conflict
• describe conflict management strategies that management can use to resolve
conflict effectively
• analyse a practical situation and identify the types and sources of conflict
and how managers can resolve the conflict
• discuss the nature of negotiation
• elaborate on why integrative bargaining is more effective than distributive
negotiation
• describe ways in which managers can promote integrative bargaining in
organisations
• explain why managers need to be attuned to organisational politics
• describe the political strategies that managers can use to become politically
skilled
• apply the theoretical knowledge of the above points to a case study in order
to demonstrate an understanding and application of theory to an unknown
situation
• use the information in your job as a manager

WORK THROUGH CHAPTER 9 IN THE PRESCRIBED BOOK.

KEY CONCEPTS

Accommodation. One party gives in to the demands of the other party.

Avoidance. Parties ignore the problem and do not attempt to resolve their differences.
Compromise. Parties are not only concerned with achieving their own goals but also
the goals of the other party – give-and-take and concessions.
Competition. Each party tries to better their own situation without considering the
other party.
Collaboration. Managing conflict with both parties and working to satisfy their goals
by finding a better way to cooperate to accommodate important issues for both parties.
Disruptive negotiator. Negotiation where parties attempt to win the most while con-
ceding as little as possible.
Integrative bargaining. Cooperation in negotiation where parties attempt to find a
resolution that is good for all the parties involved.

113 MNG2602/1
Negotiation. Conflict resolution where parties attempt to reach an acceptable solution
to all involved.
Organisational conflict. This occurs when there is incompatibility between the values,
interests or goals of individuals within an organisation.
Organisational politics. Activities allowing managers to increase their power and use
this power to achieve their goals.
Political strategies. Tactics to influence others and gain support for what they believe in.
(Adapted from: Jones & George, 2018)

ORGANISATIONAL CONFLICT
Conflict is when two or more individuals or groups have different goals, interests and
values, but are required to either work together on the same task or different tasks which
conflict with one another. As a manager, you should manage conflict instead of eliminating
it – you therefore need to be skilled in conflict resolution strategies.

ACTIVITIES

1. Define organisational conflict. In a paragraph, discuss how conflict can

benefit the organisation.
2. Which of the following is true about the impact of conflict on organisational
performance?
1 A lack of conflict increases organisational performance.
2 Organisational performance is at its peak when there is an optimum
level of conflict.
3 Organisational conflict must be avoided in order to achieve peak
organisational performance.
4 Organisational performance is at its peak when an organisation has
dysfunctionally high levels of conflict.
3. conflict takes place between different departments of the
same organisation.
1 Intergroup
2 Interpersonal
3 Intradepartmental
4 Inter-organisational
4. is when differences are resolved by compromise or collaboration
between the parties in disagreement.
1 Retributive justice
2 Status inconsistency
3 Distributive negotiation
4 Functional conflict resolution

114
5. occurs when the parties in conflict attempt to resolve the
conflict without making concessions but, instead, attempt to resolve their
differences in ways that leave all parties better off.
1 Avoidance
2 Compromise
3 Collaboration
4 Accommodation
6. Identify and discuss the four conflict management strategies focused
on individuals that managers can use to reduce conflict in organisations.
Provide a practical example of how each of these strategies could be used
by a manager.

28 FEEDBACK

Consider your own work environment. Have you ever had conflict with a
manager or co-worker? Did it arise from differences in goals, interests, or values
of the different individuals? Further, consider whether conflict can be beneficial
to an organisation. Managers with different views may provide new ideas which
can help the organisation to grow. It is therefore necessary for managers to
allow and encourage an optimum level of conflict within an organisation.
When answering question 2, consider that if an organisation has an optimum
level of conflict, managers are likely to be open to, and encourage, a variety
of perspectives; look for ways to improve organisational functioning and
effectiveness; and view debates and disagreements as a necessary ingredient
of effective decision making and innovation.
When answering question 3, remember to consider between which individuals
or groups the conflict takes place.
When answering question 4, take into account that functional conflict resolution
means the conflict is settled by compromise or by collaboration between the
parties in conflict.
When answering question 5, consider that with collaboration efforts parties
try to satisfy their goals without making any concessions but, instead, come
up with a way to resolve their differences that leaves them both better off.

Increasing awareness of the sources of conflict

Different linguistic styles may lead some men in work teams to talk more and
take more credit for ideas than the women in those teams. These communication
differences can cause conflict when the men incorrectly assume that the women
are uninterested or less capable because they participate less, and the women
incorrectly assume that the men are bossy and not interested in their ideas
because they seem to do all the talking. By increasing people’s awareness of
this source of conflict, managers can help resolve conflict functionally.

115 MNG2602/1
 Increasing diversity awareness and skills
Older workers may feel uncomfortable or resentful about reporting to a younger
supervisor; a Hispanic person may feel singled out in a group of non-Hispanic
workers; or a female top manager may feel that members of her predominantly
male top management team band together whenever one of them disagrees
with one of her proposals. Managers must effectively manage diversity and
resolve these conflicts.

Practicing job rotation or temporary assignments

A financial analyst may be required to submit monthly reports to a member
of the accounting department. These reports have a low priority for the
analyst, who typically turns them in a couple of days late. On each due date
the accountant calls the financial analyst, and conflict ensues as the accountant
describes in detail why she must have the reports on time and the financial
analyst describes everything else he needs to do. If the financial analyst spends
some time working in the accounting department, he may appreciate better
the need for timely reports. Similarly, a temporary assignment in the finance
department may help the accountant realise the demands the financial analyst
faces and the need to streamline unnecessary aspects of reporting.

Using permanent transfers or dismissals when necessary

Two first-line managers who work in the same department are always at each
other’s throats; frequent bitter conflicts arise between them even though
they both seem to get along well with other employees. No matter what their
supervisor does to increase their understanding of each other, the conflicts
keep occurring. In this case, the supervisor may want to transfer one or both
managers so they do not have to interact as frequently.

TYPES AND SOURCES OF ORGANISATIONAL CONFLICT

ACTIVITIES

Scenario 1
Analyse each short scenario below and identify the type or source of organ-
isational conflict.
1. Michelle, the manager of human resources at KLP Consulting, and Carlos, the
vice president of operations at the same organisation, are in disagreement
about their company’s diversity policy.
This is an example of conflict.
2. Two managers in the marketing department of SGR Inc disagree on whether
their organisation should spend the bulk of its advertising budget on print
advertising or internet marketing.
This is an example of conflict.

116
3. Managers at Delaware Appliances feel that an advertisement of one of
their major competitors is false and tarnishes the reputation of Delaware
Appliances.
This can lead to a(n) conflict.
4. Kevin, the production manager at Hexavex Systems, prefers long production
runs of thousands of units in order to drive the cost per unit down. However,
Andrea, the marketing manager, prefers shorter production runs of a few
hundred units in order to deliver the product more quickly to a key customer.
The source of conflict between the two managers is .
5. Both the marketing division and the corporate communications department
of Value Homes, a real estate company, claim responsibility for developing
corporate marketing strategies.
could be a potential source of conflict between the two divisions.
6. The marketing department needs the production department to manufacture
the goods it attempts to sell, while the production department needs the
marketing department to find customers for the goods it produces.
is a source of conflict between the marketing and the production
departments.
7. Which two conflict resolution strategies should be used to resolve conflicts
that arise when individuals do not understand the work demands that
others face?

FEEDBACK
29

1. Interpersonal conflict is conflict between individual members of an

organisation, occurring because of differences in their goals or values.
2. Intragroup conflict arises within a group, team, or department.
3. Interorganisational conflict arises across organisations.
4. Different goals. An important managerial activity is organising people and
tasks into departments and divisions to accomplish an organisation’s goals.
Almost inevitably this grouping creates departments and divisions that have
different goals and time horizons, and the result can be conflict.
5. Overlapping authority. When two or more managers, departments, or
functions claim authority for the same activities or tasks, conflict due to
overlapping authority is likely.
6. Task interdependence exists when group members are dependent on other
members’ contributions to complete the project.
7. Sometimes conflicts arise because individual organisation members simply
do not understand the work activities and demands that others in an
organisation face. In situations such as these, job rotation or temporary
assignments, which expands organisation members’ knowledge base and
appreciation of other departments, can be a useful way of resolving the
conflict.

117 MNG2602/1
NEGOTIATION
This is an important conflict resolution technique as it involves parties attempting to find
alternative ways to allocate resources and the best way forward for all parties involved.
They therefore not only consider their own needs but also the needs of the other party
or parties. Managers can act as a third party to mediate or arbitrate the situation should
it be necessary.

ACTIVITIES

1. In a paragraph of about ten sentences, define negotiation and describe the

two major types of negotiation that managers can use within organisations
to resolve conflicts.
2. What are the five strategies that managers can use to facilitate integrative
bargaining and avoid distributive negotiation?
3. A(n) is an impartial individual with expertise in handling conflicts
and who helps parties in conflict reach an acceptable solution.
1 opinion leader
2 task-oriented leader
3 third-party negotiator
4 transformational manager
4. Which one of the following statements is true about emphasising
superordinate goals?
1 It helps parties in conflict to meet their demands instead of their interests.
2 It helps parties in conflict to focus on getting the majority share of the
available resources.
3 It is inconsistent with integrative bargaining and can easily lead both
parties to a distributive negotiation mode.
4 It helps parties in conflict to keep in mind that they are working together
for a larger purpose despite their disagreements.
5. Which one of the following statements is true about the integrative
bargaining strategy that emphasises creating new options for joint gains?
1 It helps parties in conflict to meet their demands instead of their interests.
2 It helps parties to come up with new alternatives that will expand the
resource pie.
3 It leads the parties in conflict to focus on getting the majority share of
the available resources.
4 It helps parties in conflict to perceive that they have a “fixed pie” of
resources that they need to divide.

30 FEEDBACK

With disruptive negotiation each party realises that he or she must concede
something but is out to get the lion’s share of the resources. In integrative
bargaining, the parties perceive that they might be able to increase the resource
pie by trying to come up with a creative solution to the conflict. They do not

118
 view the conflict competitively, as a win-or-lose situation; instead, they view it
cooperatively, as a win-win situation in which both parties can gain.
Managers in all kinds of organisations can rely on five strategies to facilitate
integrative bargaining and avoid distributive negotiation: emphasising
superordinate goals; focusing on the problem, not the people; focusing on
interests, not demands; creating new options for joint gain; and focusing on
what is fair.
Third-party negotiators are impartial individuals who are not directly involved
in the conflict and have special expertise in handling conflicts and negotiations.
Superordinate goals help parties in conflict to keep the big picture in mind
as well as the fact that they are working together for a larger purpose or goal
despite their disagreements.
Once two parties to a conflict focus on their interests, they are on the road to
achieving creative solutions to the conflict that will benefit them both. This
win-win scenario means that rather than having a fixed set of alternatives from
which to choose, the two parties can come up with new alternatives that might
even expand the resource pie.

POWER AND POLITICS

We have already discussed how conflict can be resolved and that you as a manager
can play an important role in resolving and managing organisational conflict. However,
what happens if managers differ on issues such as the best strategy for the organisation?
Organisational politics are tactics used by managers to resolve these types of conflicts
in their favour. Similarly, during the elections in South Africa where a new ruling party is
chosen, they need to create buy-in from employees and other managers (South African
voters) to increase their power and resolve the conflict in their favour (win the election).

ACTIVITIES

1. The political strategy, , helps managers increase and maintain

their power.
1 increasing diversity
2 focusing on demands
3 controlling uncertainty
4 focusing on people, not problems
2. Which of the following is true about managers using the political strategy
of being in a central position?
1 They lose their power and influence over other employees.
2 They are mediocre performers and have a limited knowledge base.
3 Other members of the organisation have control over crucial decisions.
4 The success of the organisation as a whole is seen as riding on these
managers.

119 MNG2602/1
3. Which one of the following is an advantage of managers exercising power
unobtrusively?
1 It results in the sharing of power between managers and employees.
2 It helps employees understand that the decisions of managers will not
benefit them.
3 It ensures that other members of an organisation are unaware of the
fact that the managers are using their power to influence them.
4 It helps parties in conflict to stay focused on the problem and avoid
the temptation to discredit one another.
4. In a short paragraph, elaborate on how various political strategies enable
managers to increase and maintain their power.

FEEDBACK
31

Managers who use political strategies to increase and maintain their power are
better able to influence others to work toward achieving group and organisational
goals. By controlling uncertainty, making themselves irreplaceable, being in a
central position, generating resources, and building alliances, managers can
increase their power.
Managers in central positions are responsible for activities that are directly
connected to an organisation’s goals and sources of competitive advantage and
often are located in central positions in important communication networks
in an organisation. Other organisation members depend on them for their
knowledge, expertise, advice, and support, and the success of the organisation
as a whole is seen as riding on these managers.
When managers exercise power unobtrusively, other members of the
organisation may not be aware of the fact that the managers are using their
power to influence them.
Managers who use political strategies to increase and maintain their power
are better able to influence others to work toward the achievement of group
and organisational goals. Managers can increase their power by controlling
uncertainty, making themselves irreplaceable, being in a central position,
generating resources, and building alliances.

ACTIVITIES

Scenario 2
Analyse each short scenario below and identify the political strategy for gain-
ing and maintaining power or the strategy for exercising power that could be
used in the organisation.
1. Maya is a manager at a manufacturing company. She is responsible for
activities that are directly connected to the organisational goals and sources
of competitive advantage.
Maya should use a strategy to increase and maintain her power.

120
2. Ty is a marketing manager at JP Inc. He develops mutually beneficial
relationships with other managers in order to accomplish the goals of the
organisation.
Ty is using a strategy to increase his power and gain support.
3. Kathleen, the director of Hebron International School, conducts meetings
in such a way that she strongly influences the alternatives considered for
making important decisions.
Which political strategy does Kathleen use?
4. Jaden, the head of the human resources department, reduces the list of
candidates to be considered for a position in his department to include
only those applicants who are acceptable to him.
Jaden uses as a strategy to exercise his power.
5. Joel’s subordinates do not realise that he is using his power to influence
them. They support Joel because they believe the decisions he makes are
appropriate.
Joel is politically skilled and exercises his power .

32 FEEDBACK

Political strategies that can be followed include

1. Managers in central positions are responsible for activities that are directly
connected to an organisation’s goals and sources of competitive advantage.
2. When managers build alliances, they develop mutually beneficial relationships
with people both inside and outside the organisation.
3. Managers can exercise power unobtrusively by controlling the agenda,
influencing which alternatives are considered or even whether a decision
is made.
4. When managers influence the alternatives that are considered, they can
make sure that each considered alternative is acceptable to them and that
undesirable alternatives are not in the feasible set.
5. When managers exercise power unobtrusively, other members of an
organisation may not be aware that the managers are using their power
to influence them.

Read the case study at the beginning of chapter 9

in your textbook – it is an excellent example of how
organisations can collaborate on a sustainability ini-
tiative instead of being in conflict with one another.

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CONCLUSION
In this learning unit we discussed conflict, which inevitably surfaces in every organisation.
We further explored why conflict arises and the strategies managers can use to resolve
conflict. Negotiation is a useful tactic to resolve conflict and managers could also have
the responsibility to act as a third-party negotiator should negotiations not be successful.
Finally, if managers are involved in a difference of opinion, organisational politics can play
a role to gain support and power in order to allow for a resolution in their favour.

SELF-ASSESSMENT EXERCISE
9

Case Study
Read the case study and answer the self-assessment exercises below.

Amazing Hair and Nails

Kopano is the managing director of a hair and styling salon sponsored by the
Sasol Impi Foundation as part of its corporate social investment (CSI) initiative. He
started the salon with capital from the Foundation and decided to turn it into an
internationally recognised hair salon known as Amazing Hair and Nails. However,
the administrative manager, Jane, and the stylist, Sonia, are experiencing conflict.
Sonia and her team schedule styling and cutting sessions according to their own
needs, which interfere, in terms of time, with the programme arrangements of some
of the nail technicians. Sonia says that the equipment is expensive and that she is
responsible for utilising it optimally to make money for the company.
The situation reached a boiling point when Jane threatened to fire Sonia during
a quarrel. Sonia replied that personnel appointments and dismissals were the
responsibility of the managing director. Jane replied that she dealt with all the ad-
ministrative problems and threatened to refer the matter to the managing director.
This conversation ended in chaos when Sonia started to cry and Jane stormed out
of the room.
1. Discuss five strategies that can be used to resolve the conflict between Jane and Sonia
and identify how Kopano could apply each strategy.
2. Outline four causes of conflict that emanate from interpersonal sources. Why is each
of them relevant to the case study?
3. In which of the following types of negotiations do parties in conflict strive to get
the majority share of the available resources without considering their interpersonal
relationship?
1 Accommodation
2 Integrative bargaining
3 Integrative negotiation
4 Distributive negotiation
4. In integrative bargaining, conflicts are handled through collaboration and .
1 avoidance
2 competition
3 compromise
4 accommodation

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5. helps managers gain support for their initiatives and goals.
1 Competition
2 Accommodation
3 Organisational conflict
4 Organisational politics
6. is/are a threat for individuals, groups, and whole organisations and can
interfere with effective performance and goal attainment.
1 Alliances
2 Uncertainty
3 Power distance
4 Legitimate power
7. Which one of the following statements is true about the political strategy that em-
phasises building alliances?
1 Building alliances requires distributive negotiation.
2 Alliances can help managers achieve their goals and implement needed changes
in organisations.
3 Building alliances can help create beneficial relationships inside an organisation
but not outside the organisation.
4 Partners to alliances often withdraw support because they know that managers
might not support them in the future.
Please note that feedback on these questions will be provided on the myUnisa
module site as the semester progresses.

ADDITIONAL LEARNING EXPERIENCES

The following websites will further enrich your knowledge and understanding.
Visiting a Twitter page or watching a YouTube video is, however, not compulsory.
Organisational conflict
https://www.youtube.com/watch?v=iRg-HbqqBxI
Negotiation
https://www.youtube.com/watch?v=XfiNOu8O_vM
Organisational politics
https://www.youtube.com/watch?v=0wEUmlDHpBA
Interesting tweeple (people and/or organisations) to follow on Twitter:
@HarvardBiz
@StanfordGSB
Disclaimer:
We frequently test the URL links provided in this learning unit. At the time of print,
these URL links were working. We are aware that a URL might not work after a
while or that content may be removed from the website. Situations like these are
out of our control.

123 MNG2602/1
REFERENCES
Jones, G.R. & George, J.M. 2018. Contemporary management. 10th ed. New York: McGraw
Hill.

124
LEARNING UNIT 10
Project management

OVERVIEW
“All of mankind’s greatest accomplishments – from building the great pyramids to dis-
covering a cure for polio to putting a man on the moon – began as a project” (Larson
& Gray, 2018).

Everyone has participated in a project, be it a complex work-related project or a simple

school project. During these projects, you might have been the project manager or merely
part of the project team. Managers often make use of projects to implement strategies,
and project management allows strategies to be broken down into programmes. These
programmes are further broken down into smaller projects, which are easier to plan,
organise, implement and control. Put simply, project management is the profession of
planning, organising and managing many things, including people and projects. Do you
want to drive new product growth in your organisation? That is a project. Do you want to
do a charity event for your community? That requires project management. Are you looking
to building a new home for your family? A project. Do you have a group assignment for
another Unisa module? Even that is a project. So, you can see that project management
is evident even in our everyday lives, not just in the workplace.

In this learning unit, you will learn the importance of project management in contemporary
organisations, the characteristics and life cycle stages of projects as well as the role
players in project management. You will also see that there are two dimensions to project
management and that you need to have technical expertise as well as certain social skills
in order to be a successful project manager.

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 LEARNING OUTCOMES

Upon the successful completion of this unit, you will be able to

• discuss why project management is crucial in today’s world
• distinguish a project from routine operations
• identify current drivers of project management
• distinguish between the different stages of a project life cycle
• explain the importance of projects in implementing organisation strategy
• identify important role players in project management
• balance the technical and sociocultural dimensions of project management
• apply the theoretical knowledge of the above points to a case study in order
to demonstrate an understanding and application of theory to an unknown
situation
• use the information in your job as a manager

WORK THROUGH CHAPTER 10 IN THE PRESCRIBED BOOK.

KEY CONCEPTS

Project. A temporary endeavour undertaken to create a unique product, service, or result.

Project life cycle. The stages found in all projects – definition, planning, execution and
delivery.
Programme. A group of related projects designed to accomplish a common goal over
an extended period.
(Adapted from: Larson & Gray, 2018)

CURRENT DRIVERS OF PROJECT MANAGMENT

Scenario 1

The future promises an increase in the importance and the role of projects in contributing
to the strategic direction of organisations. There are several reasons why this is the case.
Consider the following scenario and answer question 1.

The Woolworths water conservation project

In 2018, South Africa experienced a major water crisis, especially in the Western Cape.
Woolworths introduced a new greywater-safe and quick-rinse bath-time range to help
customers save water at home. It also included “water-wise” displays at the end of all
food aisles for the first time, enabling customers to view all products which will help
them save water.

126
The threat of Cape Town running out of water hit global headlines as the reality of
taps running dry became a real possibility. The consequence of a persistent multi-year
drought in the city’s catchment areas presented one of the most significant risks ever
faced by Woolworths, which is headquartered in Cape Town. To deal with this extreme
risk, Woolworths invoked an emergency taskforce, led by senior business management,
to develop requisite business continuity plans. Mr Tholo Moshao was at the head of the
taskforce, and he was responsible for ensuring that project objectives were met within
the project constraints. While still maintaining required levels of hygiene, he incorporated
the following processes into operating plans:
• back-up supply tanks for all stores in the Western and Eastern Cape
• reviewed cleaning processes and maintenance scheduling
• upgrading of heavy water-use machinery, investment in improved infrastructure at
distribution centres
• switching off all non-essential water uses, for example, fountains
• updating processes in stores to reduce and reuse water, for example, water for cut
flowers, ice at fish counters
Although narrowly avoided in 2018, the threat of “day zero” has refocused Woolworths’
efforts to ensure that its operations operate as water-efficiently as possible. As a result
of this, water consumption in the Western Cape was reduced by 36%, 42% and 53% for
stores, head office and distribution centres respectively, in 2017 compared to 2015 levels.
(Adapted from: Woolworths Holdings Limited https://www.woolworthsholdings.co.za/wp-content/
uploads/2018/09/WHL_2018_GBJ_Report_2018.pdf [Accessed October 2018.])

ACTIVITIES

1. Which current driver of project management is evident in the scenario?

Substantiate your answer with a discussion and quotes from the scenario.

FEEDBACK
33

There are five drivers of project management that you should consider when
working through this learning unit. Firstly, one of the most significant driving
forces behind the demand for project management is the shortening of the
product life cycle. This means that speed becomes a competitive advantage
– the faster you get the product to the market, for example, the faster you can
start making a profit.
Secondly, there is currently a massive growth in knowledge in organisations,
which increases the complexity of projects. Specifications, materials, equipment
and required specialists are all areas in which complexity has increased, and
project management has emerged as an important discipline to integrate
these complexities.
The triple bottom line (people, planet, profit) is the third driver, because doing
responsible, sustainable business is crucial in today’s world. Organisations can no
longer simply focus on maximising profit to the detriment of the environment

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 and society. Efforts to achieve more responsible business practices can be
achieved successfully through project management.
There is currently an increased focus on customer satisfaction in organisations.
Customers are more demanding, wanting customised products and services.
Project management is critical both to development of customised products
and services and to sustaining relationships with customers.
The final driver is the fact that small projects represent big problems. For
an organisation to remain competitive, it is sometimes necessary to create a
multi-project environment. This means that it is now necessary to share and
prioritise resources across many different projects, which becomes a major
challenge.
A multi-project environment can be challenging to manage. Centralisation
is key when managing multiple projects, and this entails governance of all
project management processes and practices. “Governance” means applying
a set of knowledge, skills, tools, and techniques to a collection of projects to
move the organisation toward its strategic goals. Projects must be aligned with
organisational strategy; otherwise, it is a waste of scarce resources (people,
capital and equipment).

PROJECT LIFE CYCLE STAGES

Scenario 2

Consider the following examples of stages in an organisation's Mandela Day project life
cycle.
1. The need for a Mandela Day initiative is recognised and staff members are invited
to participate in the project. A project manager is appointed, and staff volunteers
are divided into teams. At the first meeting, the work breakdown structure (WBS) is
used to assign responsibilities.
2. Teams report back and share their experiences with other teams to conclude the
project.
3. Plans are made for the teams to visit the selected beneficiaries. Time cost and
specification measures are used for control throughout this stage. During this stage,
groups visit the selected beneficiaries who were identified.
4. Team members of the various groups work together by using a PERT network diagram
to determine the schedule constraints and to identify whom the project will benefit.

ACTIVITIES

1. Classify each example under the heading “life cycle stages” under a project
life cycle stage.
2. Consider the characteristics of a project in your textbook. Next, browse an
online news website and identify one project based on these characteristics.

128
34 FEEDBACK

Project life cycle

There are four stages through which a project typically passes. From the starting
point, the effort slowly builds to a peak and then declines to the delivery of the
project to the customer. The four stages are illustrated in figure 10.1.

Figure 10.1 The project life cycle

During the defining stage, specifications such as the goals and objectives,
team tasks and major responsibilities are defined. Then, in the planning stage,
the level of effort increases, and the schedules, budgets, resources and risks
of the project are determined. The executing stage is when the largest part
of the work takes place – the product or service is produced, and time, cost
and specification measures are used for control. During this phase it should
be determined whether the project is on track in terms of the schedule and
budget. In the closing stage, the project product is delivered to the customer
(client) and a post-project review should take place. If it is necessary to train
the customer, it should also be done during this phase, and the project team
members should reflect and evaluate the outcome (Larson & Gray, 2018).

Project characteristics
A project
• has an established objective – it is not a repetitive operation being performed.
• has a defined life span with a beginning and an end – there is always a de-
fined endpoint.
• usually involves several departments and professionals – the combined ef-
forts of a variety of specialists are required.
• typically, does something that has never been done before – it is nonroutine
and has unique or customised elements.
• has specific time, cost and performance requirements – these triple con-
straints impose a higher degree of accountability.

Examples of projects can be seen in Snapshot from practice 10.2 in your

textbook. The most important thing that you should remember is that projects
are not everyday work, it is not routine or repetitive work – it is only done once
and a new product or service exists when the project is complete.

129 MNG2602/1
ROLE PLAYERS IN PROJECT MANAGEMENT
Scenario 3

This section contains additional information that does not form part of the prescribed book
and is important for the examination.
There are two types of role players in any project: key and supporting role players. These
role players are critical to a project’s success and are summarised in figure 10.1.

Figure 10.2: Project management role players

(Adapted from: Brevis & Vrba, 2014)

The diagram above demonstrates that there are different types of roles to be played by
project management participants. Supporting role players include specialists, experts
and representatives. Key role players include strategic managers, programme managers,
project managers, project sponsors, the project team, the project management office
and the client. These role players will be discussed more fully in the next section (Brevis
& Vrba, 2014).

Strategic manager or programme director

The strategic manager and the rest of the managerial team analyse the internal and
external environments to define the strategic direction and priorities of the organisation
as a whole. This person is usually the closest link to the head of the organisation.

Programme or tactical manager

This manager manages at the tactical level – he/she translates the strategic priorities
(formulated by the strategic manager) into potential programmes, consisting of various

130
projects. The programme manager assists the various project managers with any issues
that may occur during the execution stage of the project and is responsible for ensuring
all his/her projects produce the expected benefits.

Project sponsor
The project sponsor mediates at the strategic level on behalf of the project manager/team.
This person is usually well-connected and an influential senior person in the organisation
who can remove obstacles encountered by the project team during the entire project
life cycle.

Project or operational manager

The project manager is mainly responsible for the completion of the project as planned,
in other words, the project manager is responsible for all the stages (defining, planning,
execution and closing) of their project. This manager’s responsibilities include: (1) ensuring
the project objectives are met on time; (2) making sure the project stays within budget
constraints; (3) ensuring the organisation’s resources are optimally used; and (4) stakeholder,
communication and risk management of the project.

The project team

The project team is a cohesive group of individuals identified by the project manager to
work together on a project. The individuals will have different skills and will likely be from
different departments and areas of expertise. Everyone is assigned responsibilities that
contribute to the project’s implementation and execution. When the project is completed,
the individuals join other projects or return to their own department/functional area of
work.

The project management office (PMO)

The PMO is a group of people responsible for the overall quality of internal project
management – they oversee standards and ensure the standardisation of project
management practices to improve the overall project success rates. The PMO is also the
administrative hub for all project-related activities (monitoring, control and reporting on
projects and programmes).

The client
The project client is the organisation/business unit/department/community, etcetera
for whom the project is being undertaken. The client is the recipient of the project
deliverables and can be an internal or external client with a need that will be satisfied
by the successful completion of the project. The client plays an active role in approving
project plans, requesting changes, raising issues, releasing payments and accepting (or
declining) the final deliverables of the project.

ACTIVITIES

1. Complete the following diagram for key role players in project management
by answering questions 1.1 and 1.2.

131 MNG2602/1
 1.1. Complete options (i) and (ii) in the figure above.
1 (i) Strategic manager; (ii) Programme sponsor
2 (i) Strategic manager; (ii) Tactical manager
3 (i) Tactical manager; (ii) Project sponsor
4 (i) Tactical manager; (ii) Project team
1.2. Complete options (iii) and (iv) in the figure above.
1 (iii) Tactical manager; (iv) Project team
2 (iii) Project manager; (iv) Project sponsors
3 (iii) Operational manager; (iv) Project team
4 (iii) Strategic manager; (iv) Project sponsors
2. Classify all the key role players that are evident in this short scenario on the
Mobile Soup Kitchen programme. You should identify which of the seven
possible key role players are evident in the scenario and state who this role
player is in the context of the programme.

The Mobile Soup Kitchen programme

The Mobile Soup Kitchen programme aims to distribute daily meals of nutritious soup
and bread to the poorest communities in South Africa to alleviate the plight of especially
children and senior citizens, as well as the thousands of families affected by unemployment.
The managerial team of the Mobile Soup Kitchen project analyses the environment to
determine where help is needed in South Africa, and each soup kitchen works on a different
project. Ms Estelle Morena is responsible for overseeing all the projects. She appointed

132
Mr Ettienne Botha to be responsible for one of the soup kitchens located near Brits, in
the North West, where a residential fire recently caused great destruction. Mr Botha’s
responsibilities include the planning, execution and control of this soup kitchen. His goal
is to provide people who have lost their homes with a warm meal until they are able to
cook for themselves again. His team consists of five other individuals, who help to prepare
the soup and distribute it to the local Brits community, as well as cleaning up afterwards.
The programme also counts on a number of partners for support of this project, namely
Royco (producer of dehydrated soup and meal mixes), Albany (bread bakery), Mercedes,
Toyota, Volkswagen, UD Trucks and Fuso (for transportation).

PROJECT MANAGEMENT TODAY: A SOCIO-TECHNICAL

APPROACH
Scenario 4

Managing a project is a two-dimensional process: technical and sociocultural. The

technical dimension consists of the formal, disciplined, logical parts of the process and
includes planning, scheduling, and controlling projects. Clear project scope statements
are written, and work breakdown structures (WBS) facilitate planning and monitoring
of the project’s progress. An integrated information approach will ensure that you as a
project manager are successful in managing the technical side of project management.
The sociocultural dimension stands in stark contrast to the technical dimension – this
dimension involves the world of implementation. It centres on creating a temporary social
system within the larger organisational environment that combines diverse individuals
and has to shape a project culture that stimulates teamwork and high levels of motivation.
This dimension also involves managing relationships and building a cooperative social
network between the organisation, customers, contractors, suppliers and so forth.
To be a successful project manager, you have to master both the “science” (technical
aspects) and the “art” (sociocultural aspects) of project management.

ACTIVITIES

1. Think about a project that you have been a part of. Identify both dimensions
in your project.

133 MNG2602/1
 Visit and explore the #recipe4change food project by
visiting this website:
https://www.sdgfund.org/our-food-projects. This pro-
ject is a collaboration between Ebro Foods and the
Sustainable Development Goal Fund (SDGF) and it
aims to contribute to SDG 2 – zero hunger. Participants
were asked to provide recipes based on five different
challenges linked to sustainable cooking and food preparation.
There are many amazing examples of projects that focus on the SDGs, helping our
organisations and societies to be more sustainable. See if you can identify one by
doing your own research, and then share it on the myUnisa discussion forum.
The sustainable development and SDG topics are very important for you as a manager
and as an individual. Sustainability issues influence us every single day, and there is
no denying that we need to change the way we are doing things. The “sustainability
spotlight” sections were put in the module not only to inspire you, but to make you
aware of the basic concepts. It will hopefully cause you to read further on the topic,
to spread the knowledge, and make a change in your personal lives.

CONCLUSION
Projects play an important role in contemporary organisations. Projects are, however,
constrained by time, cost, requirements, quality and risk. In this learning unit, you learned
that project management is a process, with different stages and a predefined start and
finish. You now know that there are certain important role players and different drivers
for project management. Project managers are needed in almost all industries, and to
be a successful project manager you need to master different skills. These skills range
from the technical expertise to soft social skills such as communicating like a professional,
being your team’s biggest fan and being cool under pressure.

10 SELF-ASSESSMENT EXERCISE

1. Read case 10.1 “A day in the life” in your textbook and do some reflective thinking on
Rachel’s day – did she spend it effectively? What does this case tell you about what it
is like to be a project manager?
2. Read case 10.2 “The Hokies lunch group” in your textbook and answer the following
questions:
2.1 For each part (A, B and C), what phase of the project life cycle is each project in?
Substantiate your answer by providing a theoretical basis and quoting from the
case study.
2.2 What are the two important things you learned about working on projects from
the case? Why are they important?

Please note that feedback on these questions will be provided on the myUnisa
module site as the semester progresses.

134
 ADDITIONAL LEARNING EXPERIENCES

The following websites will further enrich your knowledge and understanding.
Visiting a Twitter page or watching a YouTube video is, however, not compulsory.
Project management
https://www.youtube.com/watch?v=qkuUBcmmBpk
https://www.youtube.com/watch?v=rBSCvPYGnTc
Interesting tweeple that you could follow on Twitter
@PRINCE2PROJECT
@ProManagement2
@ManageProjects
@PMInstitute

Disclaimer:
We frequently test the URL links provided in this learning unit. At the time of print,
these URL links were working. We are aware that a URL might not work after a
while or that content may be removed from the website. Situations like these are
out of our control.

REFERENCES
Brevis, T. & Vrba, M. 2014. Contemporary management principles. Cape Town: Juta.
Larson, E.W. & Gray, C.F. 2018. Project Management: The managerial process. 7th ed. Boston:
McGraw-Hill.
Woolworths Holdings Limited. 2018. Good Business Journey report. Available online:
https://www.woolworthsholdings.co.za/wp-content/uploads/2018/09/WHL_2018_
GBJ_Report_2018.pdf [Accessed October 2018].

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