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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
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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
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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
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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
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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.
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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.
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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
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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
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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
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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’.
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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
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(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.
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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.
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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.
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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
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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.
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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.
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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:
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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
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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.
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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
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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.
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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
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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
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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.
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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.
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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.
Specific learning outcomes
Study reference
Chapter 3 in Smit & Cronje (2011)
After studying this unit, you should be able to:
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.
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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.
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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.
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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.
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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
Self-assessment exercise
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
Familiarise yourself with the following key concepts that are covered in this
section:
Entropy
Macro-environment
Market environment
Micro-environment
Systems approach
Synergy.
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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.
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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.
Specific learning outcomes
After studying this unit, you should be able to:
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.
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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
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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:
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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.
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Key concepts
Familiarise yourself with the following key concepts that are covered in this
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.
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Self-assessment exercise
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.
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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.
Specific learning outcomes
After studying this unit, you should be able to:
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.
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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:
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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.
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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.
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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.
Self-assessment exercise
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.
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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.
Specific learning outcomes
After studying this unit, you should be able to:
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.
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Study reference
Chapter 6 in Smit & Cronje (2011)
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:
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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?
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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.
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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)
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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
Familiarise yourself with the following key concepts that are covered in this
section:
Brainstorming
Decision-making process
Delphi technique
Group decision support system
Nominal group technique
Strategy implementation.
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Self-assessment exercise
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
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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.
Specific learning outcomes
After studying this unit, you should be able to:
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.
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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:
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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
Familiarise yourself with the following key concepts that are covered in this
section:
Decision support system
Electronic commerce
Expert system
Information
Data
Information system
Internet
Intranet
Management information system
Operations information system
World Wide Web.
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Self-assessment exercise
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.
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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.
Specific learning outcomes
After studying this unit, you should be able to:
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.
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Study reference
Chapter 8 of Smit & Cronje (2011)
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.
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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.
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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.
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Key concepts
Familiarise yourself with the following key concepts that are covered in this
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
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Self-assessment exercise
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.
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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.
Specific learning outcomes
After studying this unit, you should be able to:
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.
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Suggest ways that management can overcome resistance to change.
Discuss what an Organisational Culture Analysis entails.
Study reference
Chapter 9 of Smit & Cronje (2011)
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.
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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.
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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
Familiarise yourself with the following key concepts that are covered in this
section:
First order change
Second order change
Organisational culture
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Organisational Culture Analysis (OCA)
Organisational development
Planned change
Reactive change
Resistance to change.
Self-assessment exercise
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.
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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.
Specific learning outcomes
After studying this unit, you should be able to:
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.
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Study reference
Chapter 10 in Smit & Cronje (2011)
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
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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
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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
Familiarise yourself with the following key concepts that are covered in this
section:
Afro centric
Diversity
Competency
Diversity paradigm
Eurocentric
Ethnocentric
Inclusivity
Pluralism
Stereotyping
Cultural bias
Monoculture.
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Self-assessment exercise
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?
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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.
Specific learning outcomes
After studying this unit, you should be able to:
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.
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Study reference
Chapter 11 in Smit & Cronje (2011)
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
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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
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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.
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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
Familiarise yourself with the following key concepts that are covered in this
section:
Behavioural approach to leadership
Charismatic leadership
Attainment of goals
Motivation
Dynamic engagement
Employee-oriented leader
Female leadership
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Political behaviour
Infuse confidence
Task-oriented leader
Transactional leadership
Transformational leadership
Autocratic leadership
Charisma
Judicious use of power
Contemporary perspectives
Leadership trait.
Self-assessment exercise
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.
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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.
Specific learning outcomes
After studying this unit, you should be able to:
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.
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Study reference
Chapter 12 in Smit & Cronje (2011)
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
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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:
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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
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Key concepts
Self-assessment exercise
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
Familiarise yourself with the following key concepts that are covered in this
section:
Ability
Attitudes
Cognitive strategies
Conditioning
Emotional intelligence
Motivation
Prejudices
Values.
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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.
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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.
Specific learning outcomes
After studying this unit, you should be able to:
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.
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Study reference
Chapter 13 in Smit & Cronje (2011)
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.
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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
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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
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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
Familiarise yourself with the following key concepts that are covered in this
section:
Command group
Cross-functional teams
Friendship group
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Group cohesion
Interest group
Group behaviour model
Self-managed teams
Task group
Virtual teams
Organogram
Benchmark.
Self-assessment exercise
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?
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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.
Specific learning outcomes
After studying this unit, you should be able to:
Explain what motivation is and why managers need to be
concerned about it.
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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
Chapter 14 in Smit & Cronje (2011)
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
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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.
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Key concepts
Self-assessment exercise
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:
Familiarise yourself with the following key concepts that are covered in this
section:
Acquired needs
Equity
Expectancy
Hierarchy of needs
Higher order needs
Hygiene factors
Instrumentality
Intrinsic motivation
Job enlargement
Job enrichment
Motivators
Extrinsic rewards
Affiliation.
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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.
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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.
Specific learning outcomes
Study reference
Chapter 15 in Smit & Cronje (2011)
After studying this unit, you should be able to:
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.
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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:
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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.
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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
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Key concepts
Familiarise yourself with the following key concepts that are covered in this
section:
Communication channel
Conflict
Decoding
Electronic mail
Encoding
Feedback
Internet
Interpersonal communication
Negotiation process
Noise
Organisational communication
Receiver
Sender.
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Self-assessment exercise
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.
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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.
Specific learning outcomes
After studying this unit, you should be able to:
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.
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Study reference
Chapter 16 in Smit & Cronje (2011)
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
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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.
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Key concepts
Familiarise yourself with the following key concepts that are covered in this
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.
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Self-assessment exercise
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.
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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.
Specific learning outcomes
Study reference
Chapter 17 in Smit & Cronje (2011)
After studying this unit, you should be able to:
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.
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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:
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Discipline
Transparency
Independence
Accountability
Responsibility
Fairness
Social responsibility
Self-assessment exercise
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.
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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.
Specific learning outcomes
Study reference
Chapter 18 in Smit & Cronje (2011)
After studying this unit, you should be able to:
Understand the reasons why organisations change.
Explain the characteristics of the new emerging organisation.
Identify the challenges facing managers in this new organisation.
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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-
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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.
Self-assessment exercise
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.