Business Management 2 (BM202) - Amazon Web Servicesimm-gsm.s3.amazonaws.com/2014/Docs/semester2...This section addresses the overall content of the module. The Business Management

Business Management 2 (BM202)

The copyright of all IMM Graduate School of Marketing material is held by the IMM GSM. No material

may be reproduced without prior written permission from the IMM GSM.

Revised: December 2010

IMM GSM© Page 2 of 110 BM202

Table of contents

SECTION A

1. Word of welcome……………………………………………………..……....... 4

2. How to use this guide…………………………………………………..…...…. 4

3. Purpose and overall learning outcomes…………………………….…..…... 6

4. National Qualifications Framework specifications……………………...….. 7

5. Relationship with other modules................................................................. 7

6. Prescribed textbook………………………………………………………..…... 8

7. Curriculum……………………………………………………………..….......... 9

8. Specific learning outcomes…………………………………………..…......... 10

9. Critical cross-field outcomes………………………………………..…....…... 18

10. Assessment details…………………………………………………….......… 19

SECTION B

Study Unit 1: Introduction to the nature of management…………..……….....

21

Study Unit 2: Managing in a changing environment……………………...……

27

Study Unit 3: Strategic planning…………………………………...……..………

33

Study Unit 4: Planning…………………………………………………………….

39

Study Unit 5: Creative problem solving and decision making…..………...…..

44

Study Unit 6: Information management……………………………..……...…...

51

Study Unit 7: Organising and delegating……………………………….…….....

55

Study Unit 8: Managing change: Culture, innovation and technology…….…

61

Study Unit 9: Managing diversity……………………………………………..….

66

Study Unit 10: Leadership……………………………………………………..….

71

Study Unit 11: Individuals in the organisation…………………………………..

77


Study Unit 12: Groups and teams in the organisation…………………....……

83

Study Unit 13: Motivation………………………………………………………….

89

Study Unit 14: Communication and interpersonal relationships……..……….

94

Study Unit 15: Controlling…………………………………………………………

100

Study Unit 16: Ethics, corporate social responsibility and corporate governance…………………………………………………………………...…….

105

Study Unit 17: New challenges for management………………………...…….

108


SECTION A

1. Word of welcome

Welcome to Business Management 2. Business Management 2 is indeed a very useful

module in that the course builds on the principles of business management. Students

will be exposed to the concepts, tasks, principles and practices associated with the

discipline of management. Students will elaborate on their understanding of

management, putting them in a position to make decisions related to their discipline,

while considering the impact of management fundamentals on these decisions.

Furthermore, students will gain a sound basis for further study and reading on matters

of a management nature. Students will be introduced to some management

publications and other sources of data and information, to facilitate further expansion of

their own knowledge and abilities.

This learner guide is divided into two sections:

Section A provides all the information needed regarding the course and how it relates

to the South African National Qualifications Framework (NQF).

Section B will guide the student through the 17 study units that make up this course. It

is your responsibility to work through each study unit. The outcomes listed at the

beginning of each unit tell you what to learn, and self-assessment questions are

provided to assist you to track your own progress. Ensure that you work through all the

self-assessment questions, as this will assist you with examination preparation.

2. How to use this guide

The learner guide is especially designed for a student who studies at a distance. The

guide will provide an overview of the total curriculum and will indicate the learning


outcomes, which are essentially the core of this guide. It will provide you with each

major topic that has to be covered, along with the learning outcomes for each topic,

which are systematically explained. The guide will also indicate how the learning

material must be prepared for examination.

The learner guide should be studied in conjunction with the textbook and does not

replace the textbook.

At the end of each study unit you will find some typical examples of examination

questions, which should be used for self-evaluation.

The following icons appear in all of the learning guides of the IMM Graduate School of

Marketing:

indicates learning outcomes.

indicates the sections in the prescribed textbook that you need to

study.

indicates the self-evaluation questions.


indicates key concepts.

3. Purpose and overall learning outcomes

The emphasis of this module is on:

Providing you with the conceptual knowledge necessary to understand the

principles of business management, which are necessary for sound management

application.

Helping you apply the theoretical knowledge when faced with practical

management problems or tasks in an organisation.

Helping you to build your capacity for critical and reflective thinking about the

core/primary and secondary management tasks.

Developing ways of thinking for evaluating and applying a variety of concepts

and techniques in managerial decision-making situations.

The module will focus on enhancing your knowledge in order to improve your

practical application of the four management tasks of planning, organising,

leading and controlling.

Equipping you with a framework for understanding and analysing the nature of

managerial works and the determining factors of managerial success.

This module covers the nature of management, the functional areas of management

and contemporary issues in management, with specific reference to issues relevant in

Africa. The course is designed to examine different management theories, concepts,

techniques and practises in the context of the complex, changing and globalising

business world. This course provides you with an understanding of the management

process in any type of organisation.


As you work through the course outline, ensure that you understand all concepts,

definitions and theories that relate to the principles of Business Management 2, that are

necessary for the practical application in an organisation. You should also be able to

apply the theoretical principles in practical business scenarios.

On completion of this module you will:

Know and understand what is meant by management

Understand and be able to practically apply the concepts of planning, organising,

leading and controlling by management

Understand the importance of sound management in an organisation.

Be able to apply the management tasks in order to meet the changing needs of

the markets and society.

4. National Qualifications Framework specifications

This module forms a compulsory module for the Higher Certificate in Marketing,

Diploma in Marketing Management, Diploma in Export Management, the BBA in

Marketing Management and the BCom in Marketing and Management Science.

In terms of the new National Qualifications Framework (NQF) it is designed as a 20-

credit module offered on NQF level 7.

The IMM Graduate School of Marketing regards Business Management 2 as a second

year module.

5. Relationship with other modules

The topics included in this module will elaborate on your basic principles of Business

Management 1 knowledge that can be applied in any organisation. The four main

management tasks of planning, organising, leading and controlling will be further

expanded on in this module. The principles and practical application of management as


outlined in this module, forms a link that will strengthen and reinforce your

understanding of all the other modules in your course.

6. Prescribed textbook and additional reading

The prescribed textbook for this module is:

Smit, P.J., and Cronje, G.J. 2011. Management Principles: A Contemporary Edition for

Africa. 5th edn. Cape Town: Juta.

The textbook is written in a clear and systematic manner. The textbook provides local

examples and uses South African terminology. Always start your studies by consulting

the learner guide and then study the relevant sections in the prescribed textbook. The

learner guide topics follow the chapter titles in the prescribed textbook. It is unlikely that

you will pass this module if you have only consulted the learner guide without studying

the content of the textbook.

The additional reading list for this module is:

George, J.M., and Jones, G.R. 2006. Contemporary Management: Creating Value in

Organisations. 4th edn. McGraw-Hill.

Hellriegel, D., Jackson, S.E., Slocum, J., Staude, G., Amos, T., Klopper, H.B., Louw,

L., and Oosthuizen, T. 2008. Management. 3rd South African edition. Cape Town:

Oxford.

Le Roux, E.E., De Beer, A.A., Ferreira, E.E., Hubner, C.P. Jacobs, H., Kritzinger,

A.A.C., Labuschagne, M., Stabelberg, J.E., and Venter, C.H. 1999. Business

Management: A Practical and Interactive Approach. 2nd

edn. Heinemann.

Business report: Supplement in the daily and weekend newspapers

Business magazines:

Financial Mail: Weekly business magazine


Finweek: Weekly management magazine

Leadership

Success.

7. Curriculum

This section addresses the overall content of the module. The Business Management

2 module is divided into seventeen study units.

Unit Description Relevant

Chapters

1 Introduction to the nature of management 1 and 2

2 Managing in a changing environment 3

3 Strategic planning 4

4 Planning 5

5 Creative problem solving and decision making 6

6 Information management 7

7 Organising and delegating 8

8 Managing change: Culture, innovation and technology

9

9 Managing diversity 10

10 Leadership 11

11 Individuals in the organisation 12

12 Groups and teams in the organisation 13

13 Motivation 14

14 Communication and interpersonal relationships 15

15 Controlling 16

16 Ethics, corporate social responsibility and corporate governance

17

17 New challenges for management 18


The major topics covered in this module are divided into six parts:

* The nature of management (Chapters 1-3)

* Planning (Chapters 4-7)

* Organising (Chapters 8-10)

* Leading (Chapters 11-15)

* Controlling (Chapter 16)

* Contemporary issues in management (Chapters 17-18)

8. Specific learning outcomes

There are a number of specific learning outcomes for this module, as indicated per

study unit in the table below.

Unit Description Specific Learning Outcomes

1 The nature of

management

Describe and identify the important roles that business

organisations play in modern society.

Portray (with diagrams) the management process and

explain the interactive nature of the components

(functions) that make up the management process.

Depict and analyse the different levels and kinds of

managers in an organisation.

Identify the different areas of management.

Evaluate the different managerial roles.

Evaluate the various managerial skills needed at

different levels of management.

Investigate what comprises ‘management

competencies’.


Present arguments to support the relevance of

management theories for today’s managers in our

country, on the continent and globally.

Suggest ways of mastering management skills and

competencies.

2 Managing in a

changing

environment

Convince an inexperienced manager of the importance

of understanding the business environment when

making management decisions.

Describe the composition and characteristics of the

management/business environment.

Understand and apply the concept of uncertainty in the

environment in terms of the extent of change and the

level of complexity.

Propose ways in which management can prepare for

environmental changes.

3 Strategic

planning

Describe what the concept of strategic planning

encompasses.

Evaluate and apply the strategic planning process to a

business.

Give examples of the differences between the three

levels of strategy.

Scan the external and internal environments of a

business in order to identify opportunities and threats,

strengths and weaknesses.

Analyse the process of choosing a strategy in order to

survive in the volatile business environment.

Compile a strategic plan for a business.

4 Planning Explain the nature and importance of planning a

management task to a junior manager.

Differentiate between strategic (long-term), tactical


(medium-term) and operational (short-term) planning.

Discuss the hierarchy of plans in an organisation.

Draw up a budget as part of the planning process.

Apply different scheduling and monitoring tasks as part

of planning.

Apply the Management by Objectives (MBO) process to

set individual goals in a business.

Recommend ways of overcoming planning barriers.

Incorporate the use of planning tools when formulating

plans and interpret meaningfully the planning

documents of an organisation.

5 Creative

problem solving

and decision

making

Analyse the difference between problems, problem

solving and decision making.

Contrast the different types of managerial decisions and

decision-making conditions that exist in a business.

Explain and apply the different decision-making models

to a business of your choice.

Evaluate group decision making and make

recommendation on how this can be

improved.

Discuss the tools for decision making under the various

decision-making conditions.

6 Information

management

Explain to your subordinates the importance of

information in the decision-making process.

Differentiate between data and information and list the

attributes of useful information.

Identify the characteristics of useful information.

Classify information systems according to their use in

operational and managerial support.


Explain how management information systems can

support decision making.

Develop a generic information system for managers in a

business of choice.

7 Organising and

delegating

Explain the concept of organising, organisation and

organisation structure.

Evaluate the factors that influence managers’ choice of

an organisational structure.

Evaluate the different organisational structures.

Explain why there is a need to both centralise and

decentralise authority.

Describe the delegation process, the principles of

effective delegation, and obstacles to delegation and

how to overcome them.

Propose recommendations regarding the design or

redesign of jobs as a motivational factor.

Analyse why managers must coordinate and integrate

among jobs, functions and divisions as an organisation

grows.

Provide practical examples to explain why and how

managers who seek new ways to increase efficiency

and effectiveness are using strategic alliances and

network structures.

8 Managing

change: Culture,

innovation and

technology

Explain and provide practical examples of how

environmental changes force the organisation to adapt.

Distinguish between first-order and second-order

change in a business of your choice.

Describe how internal changes can be planned.

Describe and discuss the change process in the

banking industry.


Identify and apply the four main areas of organisational

change.

Suggest different ways of overcoming resistance to

change in a merger between two businesses.

Explain the concept of organisational culture.

Discuss why management of the organisational culture

is important in order to change the organisation.

Explain the importance of aligning the organisation’s

culture with the chosen strategy and structure, when

necessary.

Explain the impact of language on corporate culture and

provide three examples of how this is illustrated when

communicating with the target market.

9 Managing

diversity

Define diversity.

Identify the primary and secondary dimensions of

diversity.

Recommend strategies for managing diversity in a

government department.

Analyse the central role that managers play in the

effective management of diversity in a business.

Analyse the opportunities and challenges presented by

diversity in the South African business environment.

Suggest ways of managing diversity effectively in fast

moving consumer goods organisations.

Recognise and explain the differences between diversity

and cultural diversity in an organisation.

Identify the cultural dimensions of diversity in a South

African business environment.

Analyse the different South African cultural values.


10 Leadership Explain the importance of leadership as a management

task.

Explain the nature and composition of leadership.

Differentiate between leadership and management and

provide examples of business managers who posses

these qualities.

Analyse and identify the traits that show the strongest

relationship to leadership, the behaviours leaders

engage in, and the limitations of the trait and behaviour

models of leadership.

Examine different leadership models and comment on

contemporary perspectives on leadership.

Investigate what leaders really do in a business.

11 Individuals in

the organisation

Explain why knowledge of the way individuals function

in an organisation is essential to the manager.

Investigate the key variables that determine human

behaviour in an organisation.

Recommend ways of improving individual performance

in a business.

Analyse the usefulness of Emotional Intelligence (EI) as

a way of differentiating between superior and average

performers.

Describe various personality traits that affect how

managers think, feel and behave. Investigate what

leaders really do in a business.

12 Groups and

teams in the

organisation

Distinguish between groups and teams in an

organisation.

Evaluate why groups and teams are key contributors to

organisational effectiveness.

Differentiate between the various types of information


and formal groups that are found in an organisation.

Illustrate the stages in group and team development in

an organisation of your choice.

Explain the different variables that influence group and

team behaviour in terms of the group behaviour model.

Analyse the characteristics of a work team.

Identify and provide practical examples of the different

types of groups and teams that help managers achieve

their goals.

13 Motivation Explain what motivation is and why managers need to

be concerned about it.

Differentiate and explain the differences between

content theories, process theories and reinforcement

theories of motivation.

Analyse why and how managers can use money as a

major motivation tool in the workplace.

Make recommendations to the HR manager regarding

the design of jobs in motivating employees in a

business.

Analyse why and how managers can use money as a

major motivational tool in the workplace.

14 Communication

and

interpersonal

relationships

Explain why effective communication is crucial to

organisational success.

Critically review the impact of information technology on

the communication process.

Identify possible causes of conflict and make

recommendations on how to resolve these issues in an

organisation.

Evaluate why negotiation can be used as a conflict

management technique.


15 Controlling Define organisational control and describe the four

steps of the control process.

Evaluate the areas that control should focus on in the

organisation.

Understand and explain the difference between control

at top management and operational levels.

Design a control system for the management of

operations for an organisation.

Discuss how planning and controlling are linked in an

organisation.

16 Ethics,

corporate social

responsibility

and corporate

governance

Analyse what ethics mean in business terminology.

Investigate the importance of corporate social

responsibility to an organisation.

Identify and discuss the primary and secondary

stakeholders in corporate social responsibility.

Investigate what sustainability reporting entails.

Explain what corporate governance means and entails.

17 Challenges for

management

Analyse the reasons why organisations change.

Identify and discuss the forces that stimulate change in

organisations.

Evaluate the features of the new emerging organisation.

Analyse the challenges that managers face in new

emerging organisations in South Africa.

You are encouraged to use the above information for the planning in advance of your

studies and to avoid ’cramming’. It is always wise to set up your own study timetable so

that you can manage your time effectively. When planning your studies, please keep

the submission date for the assignment in mind.


9. Critical cross-field outcomes

The critical cross-field outcomes, also known as transferable skills as identified by the

South African Qualifications Authority (SAQA), are essential for your development as a

student within the education and training system, regardless of the specific area of

learning. It is these outcomes that are deemed critical for your development in the

capacity of life-long learning.

The critical cross-field outcomes adopted by SAQA are as follows:

(1) Identify and solve problems in which responses display that responsible

decisions using critical and creative thinking have been made.

(2) Work effectively with others as a member of a team, group, organisation and

community.

(3) Organise and manage oneself and one’s activities responsibly and effectively.

(4) Collect, analyse, organise and critically evaluate information.

(5) Communicate effectively using visual, mathematical and/or language skills in the

modes of oral and/or written presentation.

(6) Use science and technology effectively and critically, showing responsibility

towards the environment and health of others.

(7) Demonstrate an understanding of the world as a set of related systems by

realising that problem-solving contexts do not exist in isolation.

(8) Reflecting on and exploring a variety of strategies to learn more effectively.

(9) Participating as responsible citizens in the life of local, national and global

communities.

(10) Being culturally and aesthetically sensitive across a range of social contexts.

(11) Exploring education and career opportunities.

(12) Developing entrepreneurial opportunities.

The transferable skills identified in this module are as follows:


Taught Practised Assessed

Problem solving X X X

Working in teams X

Self-management X

Information gathering/research

skills

X X X

Communication skills X X X

Analytical skills X X X

Learning strategies X X X

Responsible citizenship X X

Cultural sensitivity X

Career development X

Entrepreneurship X

10. Assessment details

There are two assessments involved in terms of the Business Management 2 module:

Assignment: The assignment contributes 20% to the overall mark for the module.

Assignments will focus on selected chapters, and need to be typed. Please

ensure that you adhere to the general rules of the IMM Graduate School of

Marketing pertaining to the style and format of assignments. You will be issued

with a separate brief in this regard.

Examination: The exam incorporates all content covered in the learner guide and

constitutes 80% of the final mark for the Business Management 2 module. The

duration of the examination is three hours and the paper will count 100 marks.

The examination paper will consist mainly of paragraph and essay type answers.

Examination results are usually released within six weeks of sitting the


examination.

The final mark, consisting of an assignment mark and an examination mark, is released

in the form of a final percentage (mark out of 100). The grading system is as follows:

Percentage Scale Description

75% or more Pass with Distinction

50% - 74% Pass

0% - 49% Fail

A timetable of the assessment programme for the semester, including dates for the

assignment to be submitted during the course of the year, is available in the Calendar of

Events for that year. Please refer to the current issue of the IMM GSM Prospectus.

This document and the Student Yearbook provide details of the IMM GSM assessment

policy.


SECTION B

Study Unit 1: Introduction to the nature of management

This study unit covers the nature and scope of business management by introducing the

student to the important role business organisations play in satisfying the ever-changing

needs of people. The study unit will provide a student with different views on

management, the management process, the various levels of management, and the

skills required to manage an organisation effectively. This study unit introduces the

student to the four management tasks that form the basis of this module.

Specific learning outcomes

After studying this unit, you should be able to:

Explain and discuss the management process

Explain and discuss the different managerial roles in an organisation

Understand the skills and competencies required at managerial level in

an organisation

Understand the challenges facing management in South Africa


Present arguments to support the relevance of management

theories for today’s managers in our country, on the continent

and globally.

Suggest ways of mastering management skills and

competencies.

Study reference Chapters 1 and 2 in Smit & Cronje (2011)

This study unit comprises an overview of management and the management process.

The unit relates to Chapters 1 and 2 in Smit & Cronje (2007). It is important to define

management: management entails all the activities necessary for the functioning of an

organisation. It is the responsibility of management to determine what has to be done,

how and when it will be done and to check if all the instructions have been carried out.

The basic tasks of management are to plan, organise, lead and control.

The interactive nature of the management process is described in

Figure 1.2 in Smit & Cronje (2011).

It is important that you understand that the tasks are related to and influenced by the

external environment in which a business organisation operates.

As Smit & Cronje (2011) point out, the management tasks involve

planning, organising, leading and controlling.


Planning

Management decides what should be done. They decide what tasks need to be

performed in order to achieve the business’s objectives. Planning allows the

managers to foresee the future and avoid future failures. It is a roadmap for

managers. Planning may be tedious, but in the long term it saves time, money and

effort.

Organising

This means that management has to decide how the plan will be implemented and

who is responsible for what task. Organising includes developing a structure to

indicate how people, materials and equipment should be used to achieve the goals

of an organisation.

Leading (activating)

Management decides when it should be done. Through leading, management can

direct the people in a business and motivate them. Staff are influenced through

good communication and relationships between management and staff. It is

important to note that leaders collaborate with superiors and subordinates to reach

the goals of a business.

Controlling

Management ascertains whether the tasks have been carried out effectively and

whether the business is on track to achieve its objectives.

The different areas of management and the managerial roles are

explained by Smit & Cronje (2011).

It is important that the student understands that management happens at different

levels, in different functions of a business organisation and that managers fulfil different

roles in the process. It is important to differentiate between the management tasks and

management functions in a business organisation. The management tasks are

planning, organising, leading and controlling. The management functions in a business


organisation include marketing, finance, administration, procurement, operations and

human resources.

Management can also be classified according to the specific type of function they are

involved with. The following managers have been identified who manage different

functions/departments in a business organisation:

The general manager

Marketing manager

Financial manager

Operations/production manager

Purchasing manager

Human resources manager

Public relations manager

Research and development manager.

The main responsibility of management is the four management tasks. Managers often

need to perform certain additional roles to be able to manage effectively. The following

roles have been identified:

Interpersonal roles

Information roles

Decision roles.

The concept ‘competent’ means that a manager is able to perform

specific tasks successfully. Management competencies indicate

specific skills/abilities/knowledge that enable the manager to

manage specific functions effectively. In South Africa the National

Qualifications Framework (NQF) defines management competency

in terms of eight levels of competency. Successful managers are

required to learn and educate themselves on a daily basis. They


need to prepare themselves for every possible scenario and must

be able to manage organisations, activities and people in a

changing business environment

Key concepts

Familiarise yourself with the following key concepts that are covered in this

section:

Planning

Organising

Leading

Controlling

Management

Decision-making role

Interpersonal role

Management tasks

Management competencies

Management functions.


Self-assessment exercise

1. Why is management needed in a business organisation? Provide examples

to explain your reasoning.

2. Why is business organsiations regarded as a vital participant in

modern society?

3. Explain, by using a diagram, the interactive nature of the

components that make up the management process.

4. Discuss the overlapping roles managers’ play in an organisation.

5. Does the role distribution concept apply equally in a small and in a large

company? Substantiate your answer by way of an example.

6. Mary Owen is being groomed by her father, Patrick, to continue his

management philosophy and to become the MD of Run for Life. Explain

what competencies and skills she should have to become part of the

management team.

7. Explain the interdependence between the management functions of

planning and control in a business of your choice.


Study Unit 2: Managing in a changing environment

The purpose of this study unit is to help you understand that an organisation is an open

system and has specific relationships with its environment. You should also understand

the concepts of systems theory and the systems approach to management, the nature

and essence of the management task and the composition and nature of the

environment in which management operates.


Study reference

Chapter 3 in Smit & Cronje (2011)


Understand the importance of understanding the

environment when making management decisions.

Explain and discuss the characteristics of the management environment.

Explain the variables that comprise the macro, market and micro

environments.

Understand the impact of uncertainty in the environment.

Discuss ways in which management can prepare for environmental

changes.


This study unit explains and describes the constantly changing business environment in

which business organisations have to compete and survive. This environment is made

up of external and internal elements. A business organisation functions as part of a

system. Management must be aware of any changes that occur in the environment, as

they will have an effect on management functions and the performance of the business.

According to Smit & Cronje (2011) a system can be defined as “a

set of interrelated elements functioning as a totality”. This means

that any business can be regarded as an organisation that operates

in a specific environment that will be influenced by changes in that

environment and as a system will influence its direct environment.

There are four important business concepts that you need to know:

An open system: An organisation that acts as a system that is dependent on the

environment in which it operates and the environment also depends on the

organisation’s actions.

A sub-system: A department in an organisation that acts as a system on its own

but is also part of the bigger organisation’s functioning. E.g., the marketing

department of Toyota SA.

Synergy: The working together of all sub-systems that are part of a bigger

system. E.g., the financial department, marketing department and production

department of Toyota SA.

Entropy: When systems disintegrate and the various sub-systems don’t work in

synergy. E.g., if the operations department does not communicate with the

procurement department, you will not be able to meet your obligations. You will

not have enough raw materials to produce products.


The composition of the management/business environment

The management environment (business environment) consists of variables that may

influence all the actions of the organisation.

Figure 3.2 in Smit & Cronje (2011) indicates that the management environment

(business environment) consists of three different groups of variables:

The micro-environment (internal)

The macro-environment (external)

The market environment (external).

The microenvironment of the business includes the following elements:

Vision and mission statement

Goals and organisational strategies

The different management functions (departments)

Organisational resources

According to Smit et. al, 2011, factors of a business such as customers, competitors,

suppliers, regulators and strategic allies are the variables that make up the market or

task environment. The business does not have full control over these variables, but it

will be able to influence them to a certain extent. The market environment has a very

strong influence on the success of the business, so therefore the business need to be

aware of all changes in this environment.

There are different factors (variables) in the macro environment that have an influence

on the business. Some of these variables are: technology, the economy, social

activities, physical factors, legal issues, politics, the government and international trade.


The macro environment cannot be controlled by the business organisation. It is

important that a business organisation constantly monitors these mega trends and

reacts to them.

Different organisations have to deal with different challenges and

changes. It is very important that each organisation prepares itself

for potential changes and challenges in the business environment

by scanning the business environment on a regular basis. There

will always be a degree of uncertainty in all the three business

environments. Management will also be able to control some

changes to a certain degree and others not. The successful

outcome of managing a changing environment will depend largely

on the ways in which management can prepare for these

challenges.

Smit & Cronje (2011) suggest the following ways in which management can prepare for

a changing business environment:

Information management

The environment is changing constantly and it is therefore necessary to complete a

thorough environmental scanning to enable the organisation to identify all the

possible threats to the organisation and compile an extensive information network.

Strategic response

Management often has to make necessary changes to an existing strategy or even

adopt a brand new strategy to enable them to adjust to identified changes and

challenges.


Structural changes

The organisation also has the option to adapt to or redesign an organisational

structure for the organisation. This will lead all employees in a certain direction and

make necessary changes to how things are done in the organisation.

Key concepts


1. All organisations operate in an external (macro) and internal (micro)

environment. Using examples, describe the elements of the external

environment.

2. Describe how the environment can influence the enterprise and how the

enterprise can react. Use any enterprise of your choice as an example.

3. Analyse the micro (internal) and market environments for the


section:

Entropy

Macro-environment

Market environment

Micro-environment

Systems approach

Synergy.


organisation you have selected.

4. Can changes in the macro (external) environment affect this

organisation? Illustrate your answer with one example.

5. Describe the elements of the external macro environment that can impact on a

clothing retailer in South Africa. How should the retailer react to changes in its

external environment?

6. What are the market variables that impact on an organisation?

7. Which is the most important function in a business? If one of the departments of

the business had to be done away with, which one should it be? Are some

departments more important to the success of the business than others? Justify

your reasoning by using a company of your choice as an example.


Study Unit 3: Strategic planning

This study unit deals with the strategic planning process. The objective of this process is

to ensure the long-term survival of the organisation in a changing environment.

Management needs to focus on the future by choosing strategies that will enable the

organisation to sustain itself in a changed environment. Management also has to know

where it is, where it wants to be and how it will get there.

The next step is to formulate a vision and mission statement, or to assess whether

existing vision and mission statements reflect the current situation of the organisation.

Based on these statements, management can formulate long-term goals and choose a

strategy or strategies that will lead to their attainment.



Discuss what strategic planning entails.

Distinguish between the three levels of strategy.

Discuss what needs to be incorporated into a strategic plan.

Explain different ways of formulating a strategic plan.


Study reference

This study unit refers to Chapter 4 from Smit & Cronje (2011).

According to Smit & Jones (2011) strategic planning matches the organisation’s

resources with the threats and opportunities presented by the external environment.

The focus of strategic planning by top management is the changes that might occur in

the future.

According to Smit & Cronje (2011), strategic planning has unique

characteristics, namely:

It is an ongoing activity

It requires conceptual skills and is performed by top management

It focuses on the company as a whole

It is future oriented

It is concerned with the vision, mission, long-term goals and strategies

It aims to integrate all management functions in the business

It focuses on opportunities that can be exploited, or threats that may be dealt with,

through the application of a business’s resources.

The difference between strategic, tactical and operational planning is highlighted.

According to Smit & Cronje (2011) the starting point of the strategic planning process is

the development of the vision and mission of a business organisation. A vision

expresses an organisation’s aspirations and main purpose. It is important for top

management to have a clear inspiring vision to be able to lead the organisation to

success. A vision is therefore what the organisation wants to be and it highlights the


dream the organisation has for the future. The mission is the organisation’s purpose or

reason for existing. A mission provides the answers to the following questions:

Who are we?

What is our business?

What are we about?

The next step would entail conducting a marketing audit so that a SWOT analysis can

be completed. Based on the SWOT analysis and the resources that a business

organisation possesses, the future direction must be mapped out. Scenario planning is

a tool used to create these futures.

The use of the balanced scorecard as an aid to translate the

mission statement into long-term goals. The balanced scorecard is

highlighted in Figure 4.10.

A business organisation has three types of generic strategies to choose from, namely:

Low-cost strategy (by offering a no-frills service, kulula.com offers low cost air

travel)

Differentiation (by offering first-world ground-breaking technology, LG

differentiates itself from other brands)

Focus (by initially only focusing on notebook computers, Acer grew their

business).

These generic strategies will guide a business organisation when choosing a grand

strategy. Smit & Cronje (2011) describe three main grand strategies in Chapter 4 and

these are:


Growth strategies (e.g., Protea Hotels expanded to Ghana)

Decline strategies (e.g., SAA closes unprofitable routes)

Combination (e.g., the Super 14 rugby competition is a combined effort from

South Africa, Australia and New Zealand).

Figure 4.11 illustrates the grand strategies that a business

organisation can implement.

The logical steps that lead to the choice of a suitable strategy are as follow:

Step 1: Identify the present grand strategy

Step 2: Conduct a portfolio analysis by applying the BCG matrix

Step 3: Select a grand strategy according to the outcome of the

portfolio analysis

Step 4: Evaluate the selected strategy by assessing whether the

strategy will achieve the long-term goals of the organisation.


Key concepts


section:

Balanced scorecard

Decline strategy

Differentiation strategy

External environment assessment

Focus strategy

Growth strategy

Internal assessment

Low-cost leadership strategy

Strategic planning process

Strategic management

Strategy implementation.



1. You are formulating a strategic plan for a manufacturer of cement bricks. What

do you think are the important external environmental variables to consider when

formulating a strategic plan? Where would you obtain the information?

2. What are the external growth strategies available to a low-cost airline?

3. Steers is thinking of expanding its fast food outlets. What are the critical factors

that will determine the location of the new outlets?

4. Study Figure 4.11 in Smit & Jones (2011) (Grand Strategies) and provide

examples for each type of grand strategy.

5. Distiinguish between primary and secondary activities in the value chain for your

local SPAR supermarket.


Study Unit 4: Planning

This study unit will assist you in explaining the nature of planning and the reasons that

managers need to plan. Planning becomes the primary management task with

organising, leading and controlling as secondary management tasks. You should be

able to describe the various kinds of plans that managers formulate, demonstrate an

understanding of the planning process, identify and discuss barriers to planning, and

recommend ways of overcoming these barriers. The study unit will further provide you

with insight into goal formulation and the tools available to management when setting

goals.



Explain why planning is important to management.

Understand the difference between strategic, tactical and operational

plans.

Discuss the hierarchy of plans in a business.

Apply the MBO process in order to set goals for individuals in an

organisation.


Study reference

This study unit deals with Chapter 5 of Smit & Cronje (2011).

Planning is the most basic managerial function. It sets the direction for the organising,

leading and controlling functions. All managers are involved in planning, whether it is

informally or formal. When we use the term planning in this study unit, we specifically

refer to formal planning which involves specific ways of planning like goal formulation

and developing strategies.

Planning occurs in all organisations and at all levels. Planning is the primary

management function and sets the path for how organising, leading and controlling are

done. Planning is necessary for:

Structuring the organisation

Determining what kind of people are needed

Determining how the tem should be lead and

Setting specific standards of control

Figure 5.2 illustrates the three kinds of plans in a business organisation, namely:

strategic plans

tactical plans

operational plans

The planning process is outlined in identifiable steps:


Step 1: Identify changes in the business environment that necessitate

planning

Step 2: Formulate the goals that will enable the organisation to make

necessary changes

Step 3: Drawing up premises that are approved by all managers

Step 4: Developing various courses of action by deciding on

alternative plans

Step 5: Evaluating various courses of action and options by weighing

them up against one another.

Step 6: Choose the best course of action

Step 7: Formulating supporting plans

Step 8: Setting the budget

Management is often not effective in their planning. There are

various reasons for that:

The business environment changes daily and managers need to keep track of

this.

Managers don’t know the business environment they are operating in.

They don’t always realise the intensity and importance of the changes in the

business environment.

They are often reluctant to make changes or sometimes even resist change.

There are a few important aspects that managers need to keep in mind when they

have to make necessary changes to their organisation:

Top management should set the example.

Managers need to realise the importance of effective planning.

All levels of management must be involved in the planning process.


There are various tools that management can use to assist them in the

planning process. These tools are often used in combination to plan various

actions.

The three main tools are:

Forecasting:

This involves the predicting, projecting or estimating of future events and

possible changes. Forecasting is mainly concerned with conditions beyond the

organisation’s control.

Budgeting:

This is the process of identifying proposed expenditures in an organisation and

linking them to set goals. Budgets usually express the rand costs of various tasks

or resources.

Scheduling and monitoring:

Two tools/techniques are used to monitor changes. They are:

o The Gantt chart – a graphic planning and control method

o The PERT module – using of a network to plan projects involving various

activities.

An organisation’s goals specify what the organisation wants to achieve. Goal

formulation is the second step in the planning process and is therefore a crucial part of

planning by management. Goals provide direction for making decisions in the

organisation and it is therefore very important that management spend quality time in

formulating realistic and attainable goals.

Goals need to meet certain criteria in order to fulfil their managerial

purpose.


A technique designed to achieve organisations’ goals is called Management by

Objectives (MBO).

This technique is based on the belief that participation by all managers and employees

in the setting of goals for the organisation will motivate all the employees to achieve the

goals and therefore be part of the success of the organisation. MBO managers focus

on the end result and not the activity.


1. Give six reasons why managers at all levels should plan.

2. Discuss the different types of operational plans.

3. What are the distinguishing characteristics of long-term, medium-term and short-

term plans?

4. You are the assistant to the marketing manager of a leading alcohol

manufacturer. He has asked you to assist him in the planning of a launch for a

new beer. Discuss the planning process by highlighting the various steps and

explain how you would apply it in planning the launch of this new beer aimed at

18-24 year old female consumers.


Study Unit 5: Creative problem solving and decision making

This study unit will help you to understand why managers at all levels of an organisation

need to make decisions. The quality of the decisions that managers make ultimately

determines the organisational performance. This study unit discusses the nature of

creative problem solving and managerial decision making under different conditions.

Some models of the decision-making process are examined and some techniques that

can help managers to make better decisions are explored. Finally, managers should

promote organisational learning and creativity and improve the quality and performance

of decision making throughout the organisation.



Analyse the difference between problems, problem

solving and decision making.

Contrast the different types of managerial decisions and

decision-making conditions that exist in a business.

Explain and apply the different decision-making models to

a business of your choice.

Evaluate group decision making and make

recommendations on how this can be improved.

Discuss the tools for decision making under the various

decision-making conditions.


Study reference


From the outset it is important that you understand the core terminology that forms the

basis of this unit.

From the outset it is important that you understand the core terminology that forms the

basis of this unit.

Problems: A problem exits when management of an organisation

are not able to achieve set goals.

Problem solving: This is defined by Smit & Cronje (2011 p. 166) as: “The process of

taking corrective action that will solve the problem and that will realign the organisation

with its goals.”

Decision-making: . Smit & Cronje (2011 p. 166) defines decision making as: “The

process of selecting alternative courses of action that will solve a problem.”

In most decision- making situations the manager goes through several stages that help

him/her think through the problem and develop the best alternatives for solving a

problem.

The following process can be applied when making a decision and solving problems:


Identify the problem or opportunity

It is important that the problem is identified before it can be solved. There is a problem

if goals set are not achieved. So management has to sit down and find out what is the

problem that is hindering the achievement of the goals to be able to make the correct

decision.

Analyse the problem to find the cause

Understanding what the cause of the problem is makes it easy to find the suitable

solutions.

Collect relevant information relating to the problem

- Find out which department is affected by the problem

- What effect will the problem have on the growth of the business?

- How much is the problem costing the business?

Evaluate alternative courses of action and brainstorm possible solutions to the

problems

Management has to sit down and consider all possible solutions. If necessary

experts and people that specialise in a specific industry or field could be

employed.

Evaluate the options and choose the most suitable to solve the problem

Consider the solutions chosen taking the following into consideration

- The cost of implementing the solution

- Advantages and disadvantages of the solutions

- Will the solution solve the problem?


Select and implement the solution

Appropriate steps should be taken to ensure that it is properly

implemented.

Follow up and evaluate the decision

Find out whether the solution has solved the problem or not, if not perhaps use an

alternative solution

Creative problem solving helps us look at problems in a practical and different way. It

also helps to genenerate good ideas and solutions.

Conditions for decision making

The conditions under which managers and individuals in an organisation make

decisions reflect the environmental forces that individuals cannot control but that may in

the future influence the outcomes of their decisions.

The conditions under which decisions can be made can be classified as certainty, risk

and uncertainty.

Certainty can be explained as the condition under which individuals are fully informed

about a problem (changes in the business environment) and alternative solutions to the

problem.

Uncertainty can be defined as the condition under which an individual does not have the

necessary information to assign possible solutions to unpredicted changes in the

business environment.


Risk is the condition under which individuals can define a problem, determine possible

solutions but will be uncertain if the problem will be solved fully.

Decisions are not just made by individuals. Management should

involve the employees in the decision-making process. This will

lead to a shared vision by all the workers and management and

also create a positive attitude throughout the organisation.

The advantages and disadvantages of group decision making are highlighted in Smit &

Cronje (2011) Chapter 6.

There are many ways which business managers can use to solve a problem. For the

purpose of our study we will only focus on four, namely:

Brainstorming (a technique to gather as many possible options to solve an

organisational problem)

The nominal group technique (when using this group technique, the interaction

between individuals is limited)

The Delphi technique (use confidential questionnaires to gather solutions, and

respondents do not have to be in same location)

Group decision support systems (respondents use computer terminals to provide

their input).

Various tools are available to assist managers in conducting the evaluation of

alternative sources of action.

The quantitative tools for decision making include:

Linear programming (this is a tool for optimally allocating scarce resources

among competing options in order to maximise benefits and minimise losses)

Queuing theory (this is a tool for analysing the cost of waiting in queues)


Probability analysis (this tool estimates the likelihood that an outcome will occur)

Pay-off matrix (this tool indicates possible returns from different outcomes)

Decision tree (this tool is a graphic illustration of different solutions to a problem)

Break-even analysis (this tool involves calculating the volume of sales that will

lead to a profit being made)

Capital budgeting (this tool evaluates alternative investment opportunities)

Simulation (this tool imitates a real life scenario, so that the possible outcomes

can be compared).

Smit & Cronje (2011) explain the Kepner-Fourie method as a further alternative for

decision making. This method combines the objective quantitative approach with some

subjectivity. The subjectivity comes from determining must and want criteria. Each

criterion is assigned a value weighting.

Key concepts


section:

Brainstorming

Decision-making process

Delphi technique

Group decision support system

Nominal group technique

Strategy implementation.



1. Discuss the decisions that an owner/manager will have to make before opening a

restaurant.

2. What decision-making techniques would you use to select a good business

proposition?

3. Conditions under which decisions are made vary. Explain this statement.

4. Analyse the various alternatives in purchasing a small car (under R150 000). Use

the ‘Kepner-Fourie’ method and identify the ‘must’ and ‘want’ criteria for yourself.

Which car meets your criteria? Explain. (Use the grid provided below to outline

the different criteria and follow the specific procedure.)

Car A Car B Car C

Must criteria

Want criteria


Study Unit 6 – Information management

In the previous study unit you looked at management decision making at different levels

of management. Sound business decisions require that managers rely on a steady

stream of reliable, accurate and timely information from inside and outside the

organisation. We are in an era where information is freely available and managers run

the risk of being overloaded. The purpose of this unit is to enable you to appreciate

ways of managing information that will be used in the decision-making process.



Understand the link between making decisions and information

management.

Explain what constitutes useful information.

Discuss how information management can be applied in various

interactions between a business and consumers.


Study reference

Chapter 7 of Smit & Cronje (2011)

The business environment in which the organisation needs to operate is very complex

and volatile. The problems that managers need to face are also complex. Information

management as discussed in Chapter 7 of Smit & Jones (2007) enables the

management to transform data from the business environment into information that can

be used to adapt to the changing and complex business environment.

Figure 7.1 illustrates the relationship between information systems

and decision making.

Data can be gathered from the internal environment and the external environment. This

data can be transformed via an information system.

The basic components of an information system will consist of hardware, software and

human resources to perform the basic activities of input, processing, output, feedback,

control and storage.

Information is regarded as more useful and valuable as data. There are certain

characteristics that information should adhere to and these are explained in

Chapter 7 of Smit & Cronje (2011).

Smit & Cronje (2011) classify information systems in three categories, namely:


Operations information systems (this system is used for transaction processing,

process control and office automation)

Management information systems (this system is used for information

processing, decision support and executive information)

Other classifications (these would include the expert system, business function

system, the Internet, the extranet, the intranet and electronic commerce).

Key concepts


section:

Decision support system

Electronic commerce

Email

Expert system

Information

Data

Information system

Internet

Intranet

Management information system

Operations information system

World Wide Web.



1. The type of information needed in an organisation can be classified by the type of

decision made at each management level. Describe the information required by

the different management levels.

2. What kind of information would you require to help you decide to start the

following businesses? Where would you find this information?

a) A computer repair store

b) A weekend newspaper

c) A plumbing service

d) A repair and maintenance service for the telecommunications

industry

3. You are a manufacturer of Nestle baby food products in South Africa. Explain

what information you would be able to source on the Internet if you want to

launch your products in Zimbabwe.


Study Unit 7 – Organisation and delegation

This is the first study unit on organising. We will deal with aspects which impact on

organising, such as culture, innovation and technology, and managing diversity in

subsequent study units.

In order for managers to achieve their goals, specific tasks and responsibilities must be

allocated to them and their employees. The tasks and responsibilities must be clearly

defined to ensure that all efforts contribute to the attainment of the organisation’s

mission. This study unit deals with organisational structure, control systems, and human

resource management that, together, determine how efficiently and effectively

organisational resources are used.



Explain why organising, as a management function, helps a business

achieve objectives.

Discuss the various organisational structures that can be implemented

in a business.

Understand the role of delegation in a business.

Suggest guidelines for the implementation of the delegation process in

an organisation.


Study reference


In Chapter 8 of Smit & Jones (2011) they distinguish between the concepts organising,

organisation and organisational structure. Organising indicates how activities are

coordinated in order to achieve the objectives of an organisation. An organisation is

the end result of the organising process. An organisational structure gives structure to

the organisation and will stipulate the responsibilities and tasks of all employees.

When choosing a specific organisational structure, managers use

the principles to guide them. The principles of organisation are

depicted in Figure 8.1 of Smit & Cronje (2011).

When choosing an organisational structure, the following process takes the manager

through six basic steps.

Organising means that management has to decide how the plan

will be implemented and is therefore a vital part of management’s

functions. There are several reasons that we can state to confirm

the importance of organising:

It highlights the responsibilities of each employee.

It establishes the communication channels.

It helps managers to deploy resources effectively.


It enables management to effectively delegate.

It is a mechanism for effective coordination of tasks and responsibilities.

These are a few reasons why organising is so important.

Authority gives the right to a manager to mak- View the vision, mission, goals and

strategies of the organisation.

- Outline tasks and activities

- Design jobs and assign to employees

- Define worker relations

- Develop an organisational design

- Implement control mechanisms

e certain decisions. Managers at different levels in the organisation have different levels

of authority.

The difference between centralised and decentralised authority is in who makes the

important decisions in the organisation. Top management normally makes the most

important decisions in centralised authority and in decentralised authority other level

managers (tactical and operational) also make important decisions from time to time.

The main responsibility of a manager is to achieve set goals through the efforts of

employees. Delegation of tasks is the process where managers assign specific tasks

and responsibilities to workers. Although managers assign these tasks and delegate

responsibility, they still remain accountable for the completion of the job and achieving

goals.

There are different ways of structuring an organisation.


Organisational design refers to the different arrangement of positions into departments

and the interrelationship among them within an organisation.

Departmentalisation can be based on different aspects, namely:

Functions (e.g., HR; marketing; procurement)

Products (e.g., food brands; personal hygiene brands)

Locations (e.g., Europe; USA; Africa)

Customers (e.g., household; industrial)

Networks (e.g., different departments work via a central hub).

Once the organisational structure is in place, management must think about the

different job designs, job specialisation and job expansion.

The job of a manager is to get work done through the efforts of others. Delegation is

used to assign parts of a job to other staff members.


Key concepts


section:

Accountability

Authority

Centralisation

Decentralisation

Chain of command

Coordination

Downsizing

Division of work

Span of control

Unity of command

Departmentalisation

Product departmentalisation

Job design

Network structures

Organisation chart (organogram)

Organisation design

Organisation structure

Virtual organisation

Delayering

Division of work

Span of control

Unity of command

Departmentalisation



Line function

Functional authority

Specialisation

Standardisation

Referent power

Staff function

Job description.

1. What are the five main steps of the organising process? Illustrate your answer

with examples.

2. Describe the barriers to delegation. Discuss how you would remove these

barriers, using practical examples.

3. Clothing retailer, Edgars, uses products to structure its departments. Do you

agree with this form of departmentalisation? Substantiate your answer.

4. What factors do you believe can influence the organisational design of a

retailer?

5. Analyse why managers must coordinate and integrate among jobs, functions

and divisions as an organisation grows.


Study Unit 8 – Managing change: Culture, innovation and technology

This study unit examines change management by dealing with the following issues:

environmental forces that require organisations to change, the different types of

change, the process to follow to bring about change in the organisation, and how to

overcome resistance to change. Change in the environment is usually responsible for

the internal pressures to change or modify a part of the organisation. Organisations

should follow a planned change process to modify major areas, viz. those of strategy,

structure, technology and people. Organisational development is the planned effort by

managers to manage change as a means of improving organisational performance.

Reactive change is the response to unexpected change and can often be avoided if

planned change is in place. This will anticipate future change. This is the essence of a

learning organisation. You should understand the concept of organisational culture and

how to align it with the chosen strategy and the organisational structure.



Discuss how change in the environment affects a business and how

these organisations should adapt.

Explain the change process.

Discuss the main areas of organisational change.


Suggest ways that management can overcome resistance to change.

Discuss what an Organisational Culture Analysis entails.

Study reference


The business and the environment in which it operates are not closed systems; they

depend on each other for survival. The organisation cannot function independently and

needs to adjust and formulate strategies to manage changes and challenges in the

micro-, macro-, and market environment.

A manager can react to the internal need for change in one of two

basic ways, namely, through reactive change or proactive (planned)

change.

Planned change is a change process that is planned with great care and executed in

anticipation of future events and changes. This requires going through the following

change process:

Recognise/identify the trigger for change

Determine the desired outcome of the change intervention

Diagnose the causes

Select an appropriate change technique

Plan for the implementation

Implement

Evaluate and follow-up.


Any change in the organisation is often rejected by employees because of the

uncertainty. The change often has an emotional impact on them and influences

employees’ productivity.

When planning for change management needs to take resistance into consideration,

this can be done by identifying and understanding the reasons why people resist

change.

The reasons are as follow:

People resist change because of the fear that they will be disadvantaged by the

change.

Uncertainty of the future causes them to resist change.

There might be a lack of trust between the parties involved.

People have different perceptions of change.

People fear they will not be able to develop along with the change.

People also don’t want to be surprised and often feel the timing of the change is

inconvenient.

The following methods may be useful in decreasing the resistance to change:

Training and education

Involvement and participation

Facilitation and support

Negotiation and rewards.

The importance and alignment of organisational culture

The culture of an organisation plays a very important role in the performance and

change of the organisation. The culture should be well aligned with the organisation’s

strategies, goals and structures.


An Organisational Culture Analysis (OCA)

The OCA is a method used by management to determine the difference between the

current culture of the organisation and the desired culture for the organisation.

Changing the culture of the organisation involves a change in the content and the

strength of the existing organisational culture. Management can follow different

approaches when attempting to change the organisational culture. They could:

Convince people to buy into the changes.

Employ people who will fit into the new culture and remove people who deviate

from the culture.

Inform people, making use of appropriate communication methods and effective

training.

In severe cases merge with another organisation to create a new organisational

culture.

Key concepts


section:

First order change

Second order change

Organisational culture


Organisational Culture Analysis (OCA)

Organisational development

Planned change

Reactive change

Resistance to change.


1. Describe reasons for resistance to change in an organisation of your choice,

such as a business or a community-based organisation (school or church) using

the six elements described in your textbook as a model.

2. What forces of change would impact a business like a dry cleaning store? How

would you adapt your business to deal with these environmental changes?

3. Identify and apply the four main areas of organisational change.

4. Suggest different ways of overcoming resistance to change in a merger between

two businesses.

5. Explain the concept of organisational culture.


Study Unit 9 – Managing diversity

This is the last study unit on organising. It is designed to make you aware of the

differences between culture and ethnicity in the work environment, and the importance

of managing these differences. You will come across different, equally valid views on

managing diversity. The purpose of this study unit is to highlight the management of

diversity as a mechanism to improve organisational effectiveness. Creating an

environment that allows all workers to contribute optimally to organisational goals will

improve profitability and contribute to the workers’ personal growth. In a pluralistic

society, such as South Africa, managing employees from a variety of ethnic, racial,

religious and other backgrounds presents a challenge to management.



Understand what the concept of diversity implies.

Suggest strategies to manage diversity in an organisation.

Understand the different opportunities and problems presented by

diversity in an organisation.

Make recommendations for managing diversity in the workplace.


Study reference


Diversity is a complex term that can be described by the following issues:

Demographic changes

Increasing productivity and profitability in the organisation

Relating to people’s values and norms (culture)

Valuing differences in other people and respecting those values

Training and informing people about the concept in the long-term process.

There are primary and secondary dimensions of diversity. The primary dimensions

include:

Age

Gender

Race

Physical disability

Sexual orientation

Ethnicity.

The secondary dimensions include:

Education

Marital status

Parental status

Work background

Income

Geographic location


Military experience

Religion.

The following are strategies to deal with diversity:

Discrimination and fairness

Learning and effectiveness

Access and legitimacy.

Every manager faces a challenge when managing diversity. It is management’s

responsibility to create a work environment in which different lifestyles, cultures, work

styles and personalities are accommodated. Managing diversity effectively can cause

positive results in innovation, new ideas and improved levels of productivity in all

departments of the organisation.

Managing diversity effectively is a challenge for every manager.

There are six arguments in favour of managing diversity.

Managing diversity:

Creates a cost advantage for the organisation

People are willing to work for an organisation that acknowledge all people

Has a marketing advantage because people from other countries might have

more knowledge

Improves creativity in the organisation

Helps solving problems – more diversity, more ideas

Makes the system more fluid

Cultural diversity refers to the full mix of cultures and subcultures to which members of

an organisation belong. Managing culture differences in one organisation is quite a


challenge for management. Culture differences often lead to miscommunication and

misconception of certain issues.

It is essential for managers in South Africa to have a broad knowledge of the different

cultural dimensions of diversity.

Key concepts


section:

Afro centric

Diversity

Competency

Diversity paradigm

Eurocentric

Ethnocentric

Inclusivity

Pluralism

Stereotyping

Cultural bias

Monoculture.



1. Compare and contrast labour legislation (affirmative action, employment equity)

and diversity management. Why should diversity management be part of

organising within a business concern?

2. Discuss the merits of employing immigrants to fill vacancies in the hospitals of

KwaZulu-Natal in terms of their suitability from a cultural perspective.

3. You are the human resources manager for the City of Cape Town. You have

been instructed to fill the following vacancies:

Electrical engineer

Electrical meter reader

Accountant responsible for collections.

What would your criteria be in terms of diversity management in selecting

potential employees?


Study Unit 10: Leadership

The key ingredient in effective management is leadership. When leaders are effective,

their subordinates or employees are highly motivated, committed and high performing.

They focus their efforts on the attainment of the organisation’s goals. Leadership,

therefore, is a key ingredient for managerial success, for both large and small

organisations. You should know the factors that contribute to a manager being an

effective leader.

This study unit will examine the theoretical foundations of leadership, focusing

specifically on the traits, behaviour and situational approaches. It will also describe how

managers can use transformational leadership to dramatically affect their organisations.



Understand leadership as part of the management functions in

an organisation.

Explain why leadership is important in an business.

Discuss the difference between leadership and management.

Evaluate the different approaches to leadership.

Understand contemporary views on leadership.


Study reference


Leading or leadership involves communicating and motivating subordinates to perform

their tasks and responsibilities successfully.

Leadership is therefore a responsibility of the manager to lead employees into a specific

direction according to the vision and mission of the organisation.

An organisation will only be successful if it is managed by a strong leader. A manager

needs to be able to lead the organisation to greater heights. Leadership is a unique

characteristic and not all managers are good leaders.

According to Smit & Cronje (2011) successful leadership depends on the

leader establishing trust, clarifying the direction in which people should be

headed, communicating so that people feel confident that they can make

the right decisions, encouraging others to take risks and finally, leaders

must have a source of power.”

Leaders have the ability to influence other people by applying the components of

leadership. Effective leaders will apply all components at different times in the

organisation.

The different components of leadership are:

Authority

Power

Influence


Delegation

Responsibility and accountability

Management and leadership are very closely related. Management ensures that the

work is done and leadership is the ability to encourage and motivate other people in a

specific environment.

A manager manages people and actions within the business and a leader focus on

leading people into a specific direction and help them to develop according to their full

potential.

What is a manager?

A leader guides, directs, supports and motivates people. He/she has many positive

qualities e.g.: intelligent, has vision, honest and confident.

What is a leader?

A manager ensures that work is done and completed successfully by taking

responsibility for the following tasks such as planning, organising, leading and control.

New approaches to leadership:

Charismatic leadership: This leader uses charm, emotion and inspiration to lead and

influence other people. An excellent example of such a leader is Mr. Nelson

Mandela.

Transformational leadership: This leader focus on what he can accomplish (his

vision). Archbishop Desmond Tutu is a good example of such a leader.

Super leadership: This leader leads others to lead themselves. This style focuses on

empowering other people and is characterised by the ability to lead in different ways

according to the situation Mr. Raymond Ackerman – Pick a Pay


Activity Management Leadership

Planning Establish goals and

formulate strategies

Developing a vision and

mission

Organising Developing a structure Motivating people

Leading Follow procedures and

processes

Dealing with changes

Controlling Evaluate actions and

take corrective measures

Steering people in the

right direction

Smit & Cronje ( 2011 p. 315)

Behavioural models of leadership focus on differences in the actions of effective and

ineffective leaders. This is base on the actions of leaders and what they actually do to

lead people.

Studies at Michigan found two basic forms of leadership behaviour,

namely autocratic and democratic leaders. The following have been

identified as contemporary models of leadership:

Fiedler’s theory of leadership

Hersey and Blanchard’s cycle model

Path-goal theory

Vroom-Yetton-Jago model

Some contemporary perspectives on leadership that create new models are:

Transactional leadership – its stipulates the different management functions

Charismatic leadership – this style is applicable for a person who acts as role

model for other people. This style requires specific characteristics such as vision

for the future.

Transformational leadership – this leadership style takes specific actions to lead

and guide people into a certain direction.


Female leadership – women bring a different leadership style forward.

Dynamic engagement – highlights those leaders that do extraordinary things.

Attribution theory – these leaders want to see proof of why subordinates act in a

certain way.

Substitutes for leadership – Subordinates will only perform if leaders do.

Organisations without effective leader s do not operate well in a changing environment.

People need the skills of an effective leader to show the direction they need to follow.

Leaders are people who are in contact with their changing environment and think of

creative ways to solve problems and make decisions. Leaders inspire people and

support their actions by often making their dreams reality. Leaders are also risk takers

who are willing to face a challenge and motivate people to accomplish their best.

Key concepts


section:

Behavioural approach to leadership

Charismatic leadership

Attainment of goals

Motivation

Dynamic engagement

Employee-oriented leader

Female leadership


Political behaviour

Infuse confidence

Task-oriented leader

Transactional leadership

Transformational leadership

Autocratic leadership

Charisma

Judicious use of power

Contemporary perspectives

Leadership trait.


1. Describe the various kinds of powers that predominate in the following leadership

positions:

a. The headmaster of a school

b. The pastor of a parish

c. A branch manager of a bank

d. A general in the South African army

e. The chief executive of Anglo American Corporation.

2. Are managers also leaders? Explain the differences and give examples to

illustrate your understanding of these concepts.

3. Explain why managers, who use power effectively, are also described as strong

leaders.

4. Define the leading function for the manager of your local post office.


Study Unit 11 – Individuals in an organisation

This study unit is about the key variables that determine the behaviour of individuals in

the workplace: their values, attitudes and perceptions, how they learn, what motivates

them, how their personalities differ, and their different abilities. In other words, we focus

on the manager as a feeling, thinking human being. The goal of this unit is for you to

appreciate how the personal characteristics of managers influence the process of

management in general. Emotional intelligence as a way of differentiating between

average and superior performance is discussed.



Understand why managers need knowledge regarding the individuals

who work in an organisation.

Discuss the variables that have an impact on human behaviour in a

business.

Explain how the performance of individuals can be improved in the

workplace.

Explain how mentoring and coaching can be used to guide individuals

in a business to reach their full potential.


Study reference


One of the main responsibilities of the manager is to manage people in an organisation.

They must learn how to manage people and to be able to do that, they need to know

how individuals functions in the workplace.

The following points must be taken into consideration when managers deal with

individuals in the workplace

:

The main reason why people work is to satisfy their personal needs and wants.

People must be seen as resources that will be implemented in the organisation to

achieve the goals of the organisation.

People need to continuously update their abilities, knowledge and skills.

An organisation cannot function without people.

Every individual is unique with unique characteristics, unique needs and

personality. Managers must also have a good understanding of the factors

that will influence behaviour of employees. The following factors are of

importance:

attitude

values

ability

motivation

learning

personality

perception


Management can improve employees individual performance in the workplace by

focussing on the key variables discussed above.

Values and attitudes: Management should realise that employees have different values

and that it is quite difficult to change their value system. It is very important that

managers respect workers’ values and attitude. Managers can try to change workers’

negative attitude by focussing on factors such as:

Career opportunities

Remuneration (salaries and benefits)

Training

Relationships with co-workers

Personal needs and aspirations.

There are different factors that will influence job satisfaction of the

employee. It is suggested that once the employee is a satisfied worker,

the organisation will experience higher productivity, lower staff turnover

and a decline in absenteeism.

Emotional intelligence (EQ) can be described as “the ability to access, manage, and

make use of one’s own feelings in the workplace – as well as those of other people.”

Why is it useful?

Having a thorough knowledge of emotional intelligence enables the manager to manage

people more effectively and in the long run make a success of the organisation. A

manager has to know how to distinguish between average performers and superior

performers. His/her aim is to employee only the superior performers.

Emotional competencies that distinguish between average performers and superior

performers are:


Self-awareness: People know and are able to identify what they feel.

Self-management: People that are able to manage anxiety and stress related

issues.

Social awareness: This enables people to “read” other people accurately.

Relationship management: This is the social skills of people and entails the

ability to have good healthy relationships with other people.

Personality traits of managers

Traits are individual personality characteristics that can affect a person’s job

performance. Each manager has a unique style and approach, which is determined by

his/her personality.

The following possible personality traits can be found in managers.

Managers can be:

Frank, decisive and a leader

Develops and implements comprehensive systems to solve organisational

problems

Good at reasoning and talks intelligent

Good at public speaking


Key concepts


1. Describe what it is like for you to work when a manager is in a negative mood.

What can be done to improve his/her individual performance?

2. Suggest a few situations in which a manager is likely to act in accordance with

his/her personal values and norms, and situations in which he/she is likely to act

against his/her values and norms.

3. You are part of the top management team of a medium size company that

manufactures cardboard boxes and other packaging materials. Your company is

not doing well and profits have declined significantly. You have tried to cut costs


section:

Ability

Attitudes

Cognitive strategies

Conditioning

Emotional intelligence

Motivation

Prejudices

Values.


without laying-off workers. Your company has not retrenched workers for the past

20 years. Your boss is putting pressure on you to retrench workers. You sense that

the workers are worried and you are about to meet them to address this problem.

a. Develop a list of options and potential courses of action

b. Choose your preferred course of action and justify why you will take this route.

c. Describe how you will communicate your decision to the workers.

d. If your preferred option involves retrenchments, justify this. If it does not involve

retrenchments, explain why.


Study Unit 12 – Groups and teams in organisations

This study unit focuses on the use of a group of employees to help the organisation gain

a competitive advantage. We look in detail at how groups can contribute to

organisational effectiveness and the types of groups and teams used in organisations.

By the end of this study unit you will appreciate why the effective management of

groups and teams is a key ingredient for organisational performance and a vital source

of competitive advantage.



Explain the difference between teams and groups in an organisation.

Understand the important role groups and teams play in contemporary

organisations.

Discuss the stages of group formation.

Explain work groups and the characteristics they display.

Distinguish between the various types of groups that exist in

organisations.


Study reference


Groups can be defined as “two or more individuals, interacting and

interdependent, who come together to achieve particular goals.”

It must be remembered that people join groups for many different

reasons.

A team on the other hand is a special kind of group.

The organisation as a whole is regarded as a team that all work together to achieve

certain goals set according to the vision and mission of the organisation. The

management of an organisation has the responsibility of develop, support, facilitate and

lead the various groups within the organisation. In study unit 8 we have studied the

importance of effective delegation. Delegation of responsibilities and tasks by top

management is not possible if an organisation doesn’t have teams (departments) that

can take the responsibility for specific tasks.

Groups consist of informal groups and formal groups. An informal group consist out of a

small number of individuals who frequently participate together in activities and share

feelings for the purpose of the meeting of mutual needs. A social group is an example of

an informal group.


A formal group is also known as a work group and organisations deliberately cerate

these groups to perform certain tasks and achieve set goals. There ate tow types of

formal groups.

A team goes through the following stages before it can be fully

developed.

Forming

At this stage group members discuss the objectives of the group and how they

will go about achieving these objectives. The various activities, which need to be

performed by the team, are divided into little tasks, which each member will have

responsibility for. Members also get the opportunity to know each other.

Storming

By now members know each other well. Members start to see each other’s faults

and this result in conflict and tension.

Norming

At this stage teams work out a way in which they can deal with the conflict. They

might even have to revisit the objective for working as a team.

Performing

Teams are now comfortable working with each other. A level of trust has

developed amongst the members. They adhere to the rules set for the team, as

a result they complete the tasks set at hand successfully

There are variables that have an influence on the behaviour of groups in an

organisation. Organisational context:

What is the context in which the group operates?

Factors that will influence organisational context are:

o Goals and strategies

o Authority structures

o Policies, procedures and rules


o Organisational resources

o Personnel selection process

o Performance management system

o Organisational culture

o Physical work setting

Group member resources:

Members in the group must be skilled I issues like problem solving,

communication etc.

Group structure:

What is the structure of the specific group?

Factors influencing a group structure are:

o Leadership

o Roles

o Norms

o Status

o Cohesiveness

o Size

o Diversity

Group processes:

What will improve the productivity of the group?

The following factors need to be considered:

o Group decision-making

o Communication

o Power and politics

o Conflict


Group tasks:

What are the responsibilities of the group?

Work teams have the following characteristics:

Members of the team should be informed and have certain skills and value

orientation.

Individual members of the team must all be committed to one common purpose.

The team members must all be informed about the mission and goals for the

team and they need to take responsibility for it.

Team members are individually and mutually rewarded for their efforts.

The performance of the team must be greater that the individual performance by

each member.

Teams share leadership.

Teams are characterised by equality where self - interest is absent.

The most common teams that assist management are: problem-

solving teams, self-managed work teams, and cross-functional

teams. An additional team that are now used worldwide in

organisations is the virtual team.

Key concepts


section:

Command group

Cross-functional teams

Friendship group


Group cohesion

Interest group

Group behaviour model

Self-managed teams

Task group

Virtual teams

Organogram

Benchmark.


Read the following and answer the questions that follow:

Think about the last dissatisfying or discouraging experience you had as a member of a

group or team. Perhaps the group did not accomplish its goals; perhaps group

members could not agree on assigned tasks; perhaps there was too much social

loafing.

1. What type of group was this?

2. How large was the group? What group roles did members play?

3. What were the group’s norms and how cohesive was the group?

4. Was social loafing a problem in this group? Why or why not?

5. If you were selected as the group’s leader or manager, what would you have

done differently to increase group effectiveness?

6. What do you think the group members could have done differently to increase

group effectiveness?


Study Unit 13 – Motivation

An organisation will only be effective if its members are motivated to perform at a high

level. The best strategy and appropriate organisational structure will not achieve

organisational goals without full commitment, which is derived from the high motivation

of employees. One reason why leading is such an important managerial activity is that it

involves ensuring that each member of an organisation is motivated to perform highly

and help towards the achievement of the company’s goals. A key challenge for

managers of both large and small organisations is to encourage employees to perform

at a high level.

In this study unit we describe what motivation is, where it comes from, and why

managers need to promote high levels of it. We look at some important theories of

motivation that provide managers with important insights into how to motivate staff. It is

important to remember that these theories are complementary: each focuses on

different aspects of motivation. By focusing on all the theories holistically, managers can

gain an understanding of the many issues and problems needed to encourage high

levels of motivation throughout an organisation. Lastly, the use of pay as a motivation

tool and the design of jobs to motivate workers are discussed.



Explain what motivation is and why managers need to be

concerned about it.


Differentiate and explain the difference between content theories,

process theories and reinforcement theories of motivation.

Make recommendations to the HR manager regarding the design of

jobs in motivating employees in a business.

Analyse why and how managers can use money as a major

motivational tool in the workplace.

Study reference


Motivation in other word is often the driving force behind people’s productive actions.

If managers have knowledge of what motivates workers, they can influence the worker’s

work performance. Different factors motivate different people. Sometimes money and

remuneration packages motivate employees and sometimes promotion possibilities

drive them to perform.

The elements of the motivation process are;

An employee that has an unfulfilled need

An employee has a specific desire to be promoted

The employee will be motivated by the need he/she has

His/her behaviour will have certain consequences

The employee could be satisfied or unsatisfied

If the employee is unsatisfied the motivation process will restart


The different motivation theories can assist managers in motivating employees because

it gives the manager a good indication of how people might behave in different

situations. Motivation theories are classified in terms of content, process, and

reinforcement theories.

Smit & Cronje (2011) lists Maslow’s hierarchy of needs, Herzberg’s

two-factor theory and the Acquired needs model as content

theories. Process theories consist of the Equity theory and the

Expectancy theory, whilst the Positive, Avoidance, Punishment and

Extinction theories all form part of the reinforcement theories.

Will money motivate employees to work harder and to be productive in the long run?

This question can only be answered by studying the different theories discussed

previously. As mentioned before, people are different and different factors motivate

them. Management theorists often downplay the role of money and are of the opinion

that other factors motivate employees. Research on the other hand has shown that

money influence people’s work performance.

Organisation should base a balance reward system that satisfies the different needs of

the workforce.

Organisations must design jobs in such a way that greater scope for personal

achievement and recognition is built in to the tasks. Management must focus on job

enlargement, job enrichment and job characteristic model.


Key concepts


1. Jobs can be designed to motivate the workers who perform them. Use some

practical examples to describe the techniques used to create jobs that motivate.

2. Think about the ideal job that you would like to obtain upon completion of your

studies. Describe this job, the kind of manager to whom you would like to report

and the kind of organisation you would be working for. Answer the following

questions:


section:

Acquired needs

Equity

Expectancy

Hierarchy of needs

Higher order needs

Hygiene factors

Instrumentality

Intrinsic motivation

Job enlargement

Job enrichment

Motivators

Extrinsic rewards

Affiliation.


a) What would be your levels of expectancy and instrumentality on this job?

b) Which outcomes would have high valence for you on this job?

c) What steps should your manager take to influence your levels of

expectancy, instrumentality and valence?

d) What goals would you strive to achieve on this job and why?

e) What role would your manager play in determining your goals?

f) What behaviours would your manager positively reinforce on this job and

why?

g) What positive reinforcements would your manager use?

h) You have been promoted. Your manager instructs you to redesign your

current job in order to motivate your replacement.

3. Describe the job characteristics that you would consider in redesigning a job.

4. Why, in relation to motivation, are the opinions of employees more important than

those of management?

5. Research has shown that employees tend to be more satisfied and motivated

working for smaller companies. Would you agree with this finding? Justify your

reasoning by using a company of your choice to explain your thoughts.


Study Unit 14 – Communication and interpersonal relationships

This study unit explores organisational communication, ways in which managers can

become better communicators, and the impact of information technology on the

communication process. This study unit also looks at interpersonal relationships in an

organisation, as well as the potential for conflict that can arise and ways of managing

conflict in an organisation. We will also focus on negotiation as a means of managing

conflicting interests in an organisation.


Study reference



Explain why communication is of paramount importance in a business.

Discuss the barriers to communication in an organisation and how

managers can overcome this problem.

Explain the impact of the latest technological advancements on

communication in business.

Understand conflict and how it can be resolved in a business.


When managers engage in planning, organising, leading and controlling activities in an

organisation, they must communicate with staff and other stakeholders in the business.

All the activities involved in managing an organisation needs to be communicated.

The communication process has is the process of transmitting

information and meaning. The steps in the communication process

are interactive and they do not occur in a sequential order.

The communication process indicates that communication takes place between a

sender of a message and a receiver of a message. The sender of the message will

encode the message using a series of symbols that can include words or pictures. The

sender will also decide on the channel to be used to transmit the message.

It must be remembered that noise interferes with the transmitting of a message. The

receiver of the message will have to decode the message. Decoding can be described

as the process in which the receiver interprets the message and translates it into

meaningful information. The final step in the communication process is feedback.

The following three forms of managerial communication exists,

namely:

intra-personal

interpersonal

organisation communication

There are various barriers to effective communication in an organisation. These

barriers can be placed in four categories:


Category 1: Intra-personal factors

- Perception

- Individual differences in communication skills

Category 2: Interpersonal factors

- Climate

- Trust

- Credibility

- Sender/receiver similarity

Category 3: Structural factors

- Status

- Serial transmission

- Group size

- Spatial constraints

Group 4: Technological factors

- Language and meaning

- Non-verbal cues

- Media effectiveness

- Information overload

The developments in the information technology industry, is changing the ways of

communication available to managers and the stakeholders in an organisation.

Different communication channels are available to use when making decisions or

communicating with subordinates. Some major changes include the development of the

Internet, email, business portals, databases, wireless communication and

teleconferencing.


Many organisations uses e-mail as a medium and it has become popular for the

following reasons:

relatively inexpensive

response times are shorter

increases productivity by reducing paper-handling in the communication process

A common phenomenon in the workplace is conflict between co-workers;

management and staff as well as staff and consumers. Conflict can arise

in an organisation as a result of the interpersonal relationships that exist in

the work environment. Conflict can be defined as the interaction of

interdependent people who perceive opposition of goals, aims, and

values, and who see the other party as potentially interfering with the

realisation of these goals.

According to Smit et al (2011) the three main characteristics of conflict are: incompatible

objectives, interdependence and interaction. Conflict can be managed by way of

avoidance, formulating shared objectives and negotiation.

The steps in the negotiation process are:

- setting goals

- analysing the situation

- identifying issues

- analysing information on opponents

- considering the legal and financial implications

- deciding on tactics

- scheduling feedback


Key concepts


section:

Communication channel

Conflict

Decoding

Electronic mail

Encoding

Feedback

Internet

Interpersonal communication

Negotiation process

Noise

Organisational communication

Receiver

Sender.



1. Listed below are four communication situations. You are required to select the

most appropriate channel for transmitting the message:

a) You need to explain a product launch to staff.

b) One of your staff members has been taking a company laptop home each

evening, in order to complete non-work related activities.

c) The receptionist arrives late for work on a daily basis.

d) Management has decided to close a division.

2. Email has become a popular way of communicating with staff, suppliers,

customers and friends. Discuss this statement and focus on the advantages and

disadvantages of this medium.

3. Two of the senior employees are not in agreement on how to split the workload

between them. As the HR manager, you are required to make suggestions to

their manager on how to resolve this conflict.


Study Unit 15 – Controlling

The purpose of organisational control is to provide managers with a means of directing

and motivating subordinates to work towards achieving organisational goals. Controlling

is, in fact, the important link to the process of planning. When management knows how

successfully the plans have been executed and the extent to which goals have been

reached, it will be able to continue with the cycle of planning, organising, leading and

controlling.

The areas of control relate to the organisation’s resources, viz. physical, financial,

human and information. The levels of control refer to strategic control at top

management and operations control throughout the other levels of management.

By the end of this study unit you will appreciate the variety of control systems available

to managers and understand why developing an appropriate control system is vital to

increasing the performance of an organisation and its members.



Explain the control process in a business.

Understand how control fits in with the other management functions.

Discuss the areas that can be controlled by a business.

Explain how to design an effective control system.


Study reference


Control involves the methods to ensure that the organisation’s goals have been

achieved successfully. It therefore measures the performance and behaviour of

individuals, and teams that are responsible for the successful completion of specific

tasks. Control is the last step in the management process and is an important link in the

cycle of the process. No manager’s task is completed without implementing an effective

control mechanism.

Control is an ongoing process and is regarded as one of the most

important functions of management.

The purpose of control can be explained in three points:

It informs management of how activities are proceeding and whether it is according

to plan

Management will be able to know if they need to adjust existing plans

Management will know if they need to do new planning

Smit & Cronje (2011) explains that the control process consists of the following four

steps, namely:

Setting standards derived from goals

Measuring actual performance

Evaluate deviations (performance gap)

Rectifying deviations (corrective measures


The focus areas of control provide the answer to “what should be

controlled?” Management must identify the key areas that should

be controlled. These are the areas responsible for the effective

operation of the entire organisation.

The key areas of control are human resources, physical resources, information

resources and financial resources.

Management is responsible for the control of the organisation as a whole. They need to

focus on individuals, groups, and departments in the organisation. The two basic levels

of control within an organisation are strategic control at top level and operational control

at the lower level management.

It is clear from the previous discussions that the control system that management apply

must be effective. A control system is effective when it is integrated with planning, and

when it is designed according to other criteria. The other criteria for an effective control

system are:

The control system should be able to accommodate change and be flexible

according to changes that might occur in the management environment.

The control system must provide an accurate picture of a situation and must be

targeted at the goals of the organisation.

A control system must be effective to use over a long period of time.

The control system must be easy to implement and not unnecessary complex.


Key concepts


section:

Benchmarking

Budgets

Control process

Economic Order Quantity (EOQ)

Just-in-Time (JIT)

Materials requirements planning

Operations control

Performance management

Market share

Ratio analysis

Discrepancy

Intrinsic control

Quality circles

Quality control

Strategic control

Statistical control methods.



1. What is the relationship between planning and controlling? Illustrate your answer

by using your workplace or any community activity with which you are familiar.

2. Why is it important for managers to involve subordinates in the control process?

3. What are the main performance measures that a manager uses to evaluate how

well the organisation is achieving its goals?

4. Explain why a company such as BMW would need an effective control system.


Study Unit 16 – Ethics, social responsibility and governance

This study unit will deal with the much-debated contemporary management issues of

ethics, social responsibility and corporate governance as it affects organisations in

South Africa and the world over. These principles guide organisations in being

responsible citizens of the world. The actions of organisations affect the prosperity of all

their stakeholders and the health of environments in which they operate. Future

managers need to understand these issues as they guide the behaviour of managers

and workers, ensuring that they act in the interests of the organisation and all involved.


Study reference



Define ethics.

Understand why ethical behaviour is important in a business.

Explain corporate social responsibility and defend the merits of it to

management and staff.

Explain what sustainability reporting entails.

Discuss good corporate governance in light of the King II report.


Ethics can be described as that which entails the code of moral principles and values

that directs the behaviour of an individual or a group in terms of what is right or wrong.

In an organisation different approaches to ethical decision-making exist, and these

include the utilitarian approach, human rights approach and justice approach.

The eight steps in the ethical decision-making process entails:

- Identify the problem

- Determine whose interests are involved

- Determine the relevant facts

- Determine the expectations of those involved

- Weigh up the various interests

- Determine the range of choices

- Determine the consequences of these choices for those involved

- Make the choice

Corporate social responsibility, implies that a manager must consider the impact of the

business’s actions on society and that they are obliged to take actions that will protect

and enhance society’s interests. In an organisation, social responsibility will comprise

of different levels, namely social obligation, social reaction and social responsiveness.

In 2002, in South Africa, the King commission formulated a report on corporate

governance. According to Smit & Cronje (2011) corporate governance is the system

by reference to which organisations are managed and controlled and from which their

ethics and values stem from.

The King II report highlights the following seven characteristics of good corporate

governance:


Discipline

Transparency

Independence

Accountability

Responsibility

Fairness

Social responsibility


1. Identify and discuss the primary and secondary stakeholders in corporate social

responsibility for Coca-Cola.

2. Investigate what sustainability reporting entails and find three companies that

follow this approach.

3. Read the King II report on corporate governance. Analyse any three Proudly

South African companies and analyse whether they meet these requirements.


Study Unit 17 – New challenges for management

This study unit highlights the challenges faced by many managers today.

Organisational hierarchies are different from organisational structures ten years ago. It

is important that we understand why organisations change and which elements are

affected the most. Many ‘new’ South African organisations are global companies at the

technological forefront, that focus on quality and service excellence, and that align

performance of individuals and groups to strategic goals of the business. These

organisations are innovative and they manage change effectively.


Study reference



Understand the reasons why organisations change.

Explain the characteristics of the new emerging organisation.

Identify the challenges facing managers in this new organisation.


There are six reasons for change in an organisation. These reasons include

globalisation and the global economy, technological advances, transformation of the

world of work, increased power and demands of the customer, growing importance of

intellectual capital and learning in the work place, and the new roles and expectations of

staff.

The classic model of the formal organisation was discussed in

chapter two of the prescribed text.

The following are features of the new organisation and the challenges it presents to

management:

- Organisations operate in a global economy. Managers must have an

understanding of the differences between local and international environments.

The differences include cultural diversity, as well as political and legal factors.

Managers will need leadership skills to manage a diverse workforce and

communication will be a challenge as different organisational structures will be in

place.

- Organisations are networked. Managers will have to take note of the

interdependence across individuals, groups and sub-units in its environment.

These networks can be established through strategic alliances or outsourcing. It

must also be remembered that organisations can, as a result of technological

advances, establish virtual organisations. Managers must develop their skills as

team leaders.

- Organisations have become flatter and leaner. Businesses have removed

several layers of management and have employed fewer people. The

challenges presented to management, involves authority relationships, decision-


making at different levels and implementation of these decisions in the work

environment.

- Organisations need to be more flexible. Managers need to work on more than

one project at a time. The challenge that management face, include balancing

work and non-work activities, being innovative, and how to improve productivity.

The greatest asset of the new organisation is knowledge.

- Workforce diversity is another challenge facing organisations. Organisations are

becoming more heterogeneous in terms of gender, race and ethnicity.

Managers must move away from treating all employees the same, to recognising

the differences that exist between staff. A key element for management is to

listen to the differences between people and their needs and expectations.


1. Analyse the reasons why organisations change and explain how change impacts

on all the role-players in the industry.

2. Evaluate the features of new emerging organisations, and explain the impact of

these features on a company of your choice.

3. Analyse the challenges that managers face in the new organisations in South

Africa.

Documents

Business Management 2 (BM202) - Amazon Web Servicesimm-gsm.s3.amazonaws.com/2014/Docs/semester2...This section addresses the overall content of the module. The Business Management