MNG3702

EXAM PACK
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UNIVERSITY EXAMINATIONS

October/November 2021

Nonvenue-based examination

MNG3702

Strategy Implementation And Control

First Examiner: Prof T Botha

Second Examiner: Mr R Shibiti

Moderator: Prof S Hughes

Date: 9 October 2021 (08:00 – 17:00)

Duration: 9 hours

This paper consists of eleven (11) pages.

Instructions:

(1) This non-venue-based examination is confidential, remains the property of the University of South
Africa and may not be shared.

(2) This is a formal online Unisa examination and all the Unisa examination regulations are applicable.
You may not use any unauthorised material or consultations when taking the examination.

(3) Do not simply copy information from the sources you have consulted. You need to answer the
questions in your own words and cite the sources used. Plagiarism will not be tolerated and may
result in disciplinary action, if detected.

(4) All kinds of misconduct specified in the Students’ Disciplinary Code of the University will not be
tolerated. Visit the following link to learn more about this policy:
https://www.unisa.ac.za/static/corporate_web/Content/Apply%20for%20admission/Documents/U
nisa-Students-Disciplinary-Code-25-April-2014.pdf

(5) Submit your answers as a single document in PDF format. It is preferable for you to type your
answers (Font: Arial 11 or 12) and then convert your document into a PDF file for submission.
However, if this is not possible, you may also write your answers down and scan them to a PDF
file. Please write legibly.

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(6) Start with a cover page stating the module code, your name and student number.

(7) Write only the answers to the questions – there is no need to write an introduction and conclusion.

(8) This paper comprises six (6) paragraph-type questions (with sub-questions) based on a given
case study. All the questions are compulsory. The total marks for the examination is 70.

(9) Make sure that all questions and sub-questions are clearly numbered.

(10) Please ensure that your PDF document is NOT encrypted to a “secured” mode and that it is NOT
password protected as these files cannot be marked. Virus-infected files will also not be marked.

(11) Submit your answers in one PDF document. Answers sent to the lecturer via email will not be
marked.

(12) The answers should be submitted before 18:00 on 9 October 2021. Since the scanning and
uploading of your answers take time, we strongly encourage you to start uploading your answers
well before the deadline. Late submissions will not be accepted - no medical, personal nor
family problems will be considered. Students who are unable to complete this assessment will
automatically fail the module and will have to re-register the module during the next registration
period.

Read the Sappi case study on pages 3 to 9 thoroughly to answer the questions that follow. All the
questions are based on the Sappi case study. Please ensure that you read the questions carefully
before you commence answering. In addition, please take the mark allocation of each question into
consideration when answering this exam question paper.

PLEASE NOTE
No emailed submissions will be accepted.
No late submissions will be accepted.

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Sappi Limited
Sappi is a global diversified woodfibre company focusing on providing dissolving pulp, packaging and
speciality papers, graphic papers as well as biomaterials and biochemicals to their direct and indirect
customer base across more than 150 countries. Sappi’s vision is ‘Intentional evolution’, we will be a
diversified woodfibre group targeting a substantial increase in our earnings through an expanded
product portfolio with increased margins, providing enhanced rewards to all our stakeholders. Sappi’s
mission is ‘Through the power of One Sappi – committed to collaborating and partnering with
stakeholders – we aim to be a trusted and sustainable organisation with an exciting future in woodfibre.’
The company’s values can be summarised as acting with integrity, being courageous, making smart
decisions and executing decisions with speed.

Background

Sappi was founded in 1936 in South Africa to serve South African consumers with locally produced
paper. They have a tradition of innovating and developing new products to meet local demand for
newsprint, graphic papers (paper used for communication purposes that includes printing and writing
papers), packaging papers used to protect their customers’ products (especially in the agricultural
sector) and speciality papers used in the convenience food, confectionery, cosmetic and luxury markets,
and tissue paper for household, medical and industrial use in the Southern Africa region.

Sappi is also the world's largest manufacturer of dissolving pulp (DP). DP is bleached wood pulp or
cotton linters that has a high cellulose content. DP is so named since it is not made into paper, but
dissolved either in a solvent or by derivatization into a homogeneous solution, which makes it
completely chemically accessible and removes any remaining fibrous structure. Once dissolved, it can be
spun into textile fibers (such as viscose, rayon or Lyocell), or chemically reacted to produce derivatized
celluloses, such as cellulose triacetate, a plastic-like material formed into fibers or films, or cellulose
ethers such as methyl cellulose, used as a thickener. DP is used worldwide by converters to create
viscose fibre for fashionable clothing and textiles, acetate tow, (which is used, for example, to keep cthe
quality and aroma of cigarettes) pharmaceutical products as well as a wide range of consumer and
household products. Almost all of the production of their mills in South Africa is exported.

Sappi Southern Africa operates five mills and has a combined production capacity of 102,000 m3 of
structural lumber, 690,000 tons of paper, 633,000 tons of paper pulp and over a million tons of
dissolving pulp per annum. The pulp purchased by their European business is effectively hedged by
Sappi Southern Africa being a net seller of pulp. Sappi’s corporate structure is indicated on page 4. Each
unit indicated (Sappi North America, Sappi Europe, Sappi South Africa and Sappi Trading) also has
functional departments such as finance, human resources and procurement.

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Sappi Limited
Johannesburg

Sappi North America Sappi Europe Sappi South Africa Sappi Trading

Paper, paper and Paper and packaging Paper, paper and

Casting and release
packaging and Dissolving pulp packaging and Biomaterials Forests Dissolving pulp International sales
papers Biomaterials
market pulp structural lumber

Sappi’s Corporate Structure

Strategic Vision for Dissolving Pulp

In 2013, Sappi shifted its South African timber resources into the production of dissolving wood pulp to
meet growing demand for viscose fibre in the Far East, as traditional paper markets decline. With the
recent completion of major expansion and conversion projects at its Ngodwana and Cloquet mills and
the ramp-up of production of dissolving wood pulp, Sappi has re-positioned itself to take advantage of
growing markets for this versatile product.

This strategy is a response to weakening demand around the world for fine paper, which has resulted in
the closure of production lines at Sappi operations in North America, Europe and South Africa. In Europe
alone, demand for fine paper declined by 30 per cent.

"The group has invested substantial money in South Africa and North America into the production of
specialised cellulose," said Alex Thiel, Sappi SA's CEO at the time. "We need to move Sappi's traditional
paper business into areas of more long term, sustainable growth." He pointed out that this does not
mean that Sappi is walking away from its traditional business of producing paper pulp and fine paper.
"There's limited growth potential for graphics paper, so we are adjusting our capacity," said Alex. "We
supply according to the market demand but there is no huge growth. We will optimise our production
and sustain our market share." Alex also sees a bright future for the packaging business and Sappi is
ramping up production for packaging grades, which are manufactured at the Tugela and Ngodwana
mills, utilising softwood fibre. "We're the only virgin container board producer in South Africa, and this
business has a great future," said Alex. Sappi is fully committed to this market.

Sappi is the world's biggest producer of dissolving wood pulp, which is marketed under the name
'Specialised Cellulose', and enjoys a number of competitive advantages in this market. The Saiccor mill
has been manufacturing dissolving wood pulp since 1955 – it was bought by Sappi in 1989 – so there is a

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wealth of expertise and experience at the individual level, both in terms of production and marketing.
Sappi owns extensive plantations in South Africa that are well suited to growing the hardwood fibre
required to supply the mills. Sappi plantations in KwaZulu-Natal and Mpumalanga are already being
converted from softwood to hardwood to meet the growing demand. The company does not own
plantations in North America, but has access to sufficient hardwood timber resources to supply the
Cloquet mill with its raw material requirements.

Sappi's specialised cellulose product is marketed mainly in the East, where it is used to produce viscose
fibre used in the clothing and textile industries. Alex says that Sappi SA has a competitive advantage
through technical expertise as well as economies of scale in that Saiccor is the biggest single-site
producer in the world and the timber supply is close to both the Saiccor and Ngodwana Mills. There is
also a logistical advantage in exporting to the East from South Africa, he said. This re-positioning has
implications for Sappi's South African forestry operations.

Once it has reached full production, Ngodwana will require two million tons of timber a year, 900 000
tons of which will be hardwoods. Sappi- Saiccor requires 2,8 million tons a year, all hardwood. Wattle
makes up 10% of this raw material, with Eucalyptus making up the rest.Sappi's total timber
requirements in South Africa are 5.5 million tons a year, 70% of which comes from its own plantations
and the balance from private timber growers, small growers and community forestry projects. Alex said
Sappi had sufficient resources in the ground in KwaZulu-Natal to provide for the Saiccor expansion, and
a surplus of hardwoods for Ngodwana. Softwood plantations in both regions are being converted to
hardwoods to ensure a sustainable supply of raw material to the mills.

Sappi is also investing significant resources in research and development to improve planting stock. The
company is significantly expanding its clonal programme with the development of the Clan nursery, so
that they can get more of the right trees in the ground, improving productivity and providing an
opportunity to bring costs down. Thus, there will be a big shift in planting stock over the next few years.

Sappi has strong links with numerous small growers through its Project Grow programme, which
supplies some 2% of its overall fibre requirements. Sappi has also engaged with several community
forestry projects in the Eastern Cape, located within the Saiccor catchment, where they have established
themselves as strategic partners and play a developmental role. They are already involved with
communities with access to 14 000 to 16 000ha, and are targeting 30 000ha in this region over the next
10-15 years.

Around 20% of Sappi's plantation land in South Africa is subject to land claims, which is a potential
threat to the company's access to fibre. However, MD of Sappi Forests at the time, Hendrik de Jongh,
says that they have made a lot of progress with land claims, especially in KwaZulu-Natal, where 38 out of
40 claims have been settled. Hendrik says Sappi is strategic and technical partners with the claimant
communities, but stressed that ownership of the land stays with the communities, with whom they have
timber supply agreements. However, Mpumalanga remains problematic and progress in settling claims
has been slow, admits Hendrik.

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The 56% minimum wage increase for forestry workers that came into effect in April 2013 has inevitably
had a big impact on the cost of fibre delivered to the mills. Hendrik said that Sappi has mechanised 70-
75% of its harvesting operations over the past decade, so there are no big changes in employment
anticipated here. But he said that there will be a lot of mechanisation taking place in silviculture (the
growing and cultivation of trees) operations over the next 12-18 months, which will inevitably mean
reduced employment opportunities. "A line has been crossed and it is now imperative to mechanise.
There are a lot of jobs that should never have been done by hand anyway, like de-barking with an axe,"
said Hendrik. "The only way to survive in this business is to improve productivity," commented Alex.
"The reality is that we need to deliver value for money, otherwise it won't work."

Alex explained that increasing production of specialised cellulose is a first step into the development of
exciting new markets for Sappi. "There's growing value in timber resources for packaging materials,
while its chemical properties can be used in many different applications. Cellulose is a sustainable,
renewable raw material alternative for a wide range of products. Plus there's the potential to produce
byproducts for energy. We're looking for ways to get more value from the trees," he concluded.

Sappi's timber resource is already making a huge impact on the company's energy efficiency. Ngodwana
is energy self-sufficient, and is selling energy back into the grid, while Saiccor is 55% self-sufficient.

Shift in Strategy Paying Off

In 2017, Sappi’s shift to place more emphasis on dissolving pulp and speciality packaging was starting to
pay off. They managed to improve their European and US businesses. In South Africa, the paper business
experienced a strong recovery in sales volumes. In a move to reposition the business, CEO at the time
Steve Binnie said Sappi would undertake some measures to keep the business going in a rapidly
changing global market. He said the traditional glossy-paper business represented only one-third of the
company while two-thirds consisted of dissolving wood pulp and speciality packaging. In South Africa,
Sappi has set itself growth ambitions in an economy set to grow no more than 0.8 percent in 2017.

“The short-term goal is to produce 60000 tons in dissolving wood pulp over the next year in South
Africa. We expect to grow that to 300000 tons in the next three years and we are hoping to increase it
to a million tons by 2025,” said Binnie. Sappi reported a marginal rise in sales to $2.6bn, up from $2.5bn,
while headline earnings per share was higher at 33 US cents a share, up from 31 US cents reported in
2016. The profit came in a $178m, up from $175m a year earlier.

Sustainability and Impact

Sappi is unlocking the power of renewable resources to meet the needs of the planet and people while
seeding prosperity for all. That’s why they have made the United Nations Sustainable Development

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Goals (SDGs) an integral part of their business. The goals define 17 global priorities that challenge all at
Sappi to lean in and apply their creativity and innovation to contribute solutions to challenges – from
climate change to poverty.

Globally, Sappi has identified seven priority SDGs where they believe we can make the biggest impact.
These are the following:

1. Clean water and sanitation. Water is vital to all life, and especially to Sappi’s business. Water
not only nourishes trees but is used to make pulp and paper, generate steam power and so
much more in their mills. That’s why Sappi takes their role as responsible water stewards in the
regions where they live and work so seriously. Sappi’s water reduction target (to reduce specific
water use in water stressed locations by 18 per cent) focuses especially on their mills in South
Africa where they have some of their largest operations.

2. Affordable and clean energy. As an energy-intensive industry, Sappi’s fuel choices have a major
impact on air emissions. They focus on increasing the share of renewable and clean energy
within their energy consumption, while also continually improving their energy efficiency. Their
target is to increase their share of renewable and clean energy by 9 percentage points and
decrease specific total energy by 5 per cent.

3. Decent work and economic growth. As a responsible business operating in many locations
around the world, this broad goal aligns with their focus on being a responsible corporate citizen
and providing a safe working environment in which their employees can reach their full
potential. Sappi’s targets are, inter alia, to achieve zero injuries and to increase the proportion
of woman in management roles by 3.7 percentage points.

4. Responsible consumption and production. Manufacturing products from renewable resources

is the core of Sappi’s business and central to their commitment to the circular economy.
Through Research &Development, practical innovation and new product development, they
continually create new products, solutions and value from natural resources. Their target is to
launch 25 products with defined sustainability benefits and to reduce specific landfilled solid
waste by 14 per cent.

5. Climate action. Taking urgent and appropriate actions to combat climate change and its impacts
is a shared responsibility. Sappi is focused on the continued reduction of their greenhouse gas
emissions. Their target is to reduce specific GHG emissions by 17 per cent.

6. Life on land. With Sappi’s excellence in sustainable forest management and commitment to
stewardship, they want to continue to increase their positive contribution to healthy
landscapes. They practise and promote sustainable forestry because it ensures clean air and
water, protects biodiversity, and defends against climate change, amongst many other critical
benefits. Forest certification validates their forest management practices and those of their
suppliers in the well-managed forests and plantations from which they source woodfibre. They

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strive to continually increase the share of certified woodfibre supplied to their mills. Their target
is to have a share of certified fibre of more than 75 per cent and to increase the enhancement of
biodoversity in conservation areas by 10 per cent.

7. Partnership for goals. While Sappi is already engaged in, and has been contributing to many
partnerships and collaborations, they are looking forward to working more deeply with others
to scale their ambition in pursuit of achieving the Sustainable Development Goals by 2030.

In South Africa, home to Sappi’s global headquarters, they have selected an additional priority SDGs that
reflect the socio-economic development priorities that reinforce their unique and longstanding
investments in people and local communities in the country. Their target is to advance their Broad-
based Black Economic Empowerment to Level 1.

Research and development

Sappi is the largest South African Research & Development (R&D) performer in pulp and paper and the
biggest producer of fine paper in the world. Sappi is part of the Gauteng Province Innovation Hub,
where it has a pulp R&D laboratory. Its research center in Kwazulu-Natal specializes in genetically
improved planting stock. Sappi sponsors chairs in forest genomics and tree pathology at the University
of Pretoria. The Tree Protection Cooperative Programme brings together all forestry companies,
Forestry South Africa and the Ministry of Agriculture, Forestry, and Fisheries. Sappi collaborates on
genetically modified breeding with the Forest Molecular Genetics Programme of the University of
Pretoria. The independent, “quasi-public” Institute for Commercial Forestry Research is supported by
contributions from its members and hosts its own forty-five-person R&D lab.

Sources:

Corporate structure Sappi Group. Available online https://cdn-s3.sappi.com/s3fs-public/Diagram-Sappi-

corporate-structure-Landscape-Standalone.pdf [Accessed 28 September 2021]

Harnessing Public Research for Innovation in the 21st Century. Available online
https://www.cambridge.org/core/books/harnessing-public-research-for-innovation-in-the-21st-
century/south-africa/F85853E0EE44C6D2A8CAEF1148E42498/core-reader [Accessed 29 September
2021]

More hardwood required as Sappi shifts to dissolving pulp. Available online

https://saforestryonline.co.za/articles/business_profiles/more_hardwood_required_as_sappi_shifts_to
_dissolving_pulp/ [Accessed 27 September 2021]

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New sustainability targets for a thriving world. Available online https://www.sappi.com/new-

sustainability-targets-for-a-thriving-world [Accessed 27 September 2021]

Sappi 2015 sustainability report. Available online https://cdn-s3.sappi.com/s3fs-public/2015-Sappi-

Southern-Africa-Sustainability-Report.pdf [Accessed 28 September 2021]

Sappi’s shift in strategy is paying off. Available online https://www.iol.co.za/business-

report/companies/sappis-shift-in-strategy-is-paying-off-9159533 [Accessed 27 September 2021]

QUESTIONS

Question 1

In 2013, Sappi shifted its South African timber resources into the production of dissolving wood pulp
to meet the growing demand for viscose fibre in the Far East, as traditional paper markets decline.

1.1 What, in your opinion, was the main driver of the decline in traditional paper markets?
Substantiate your answer in no more than 20 words. (2 marks)

1.2 Draw a strategic map for Sappi’s strategic objective to focus on dissolving pulp, specifying
objectives for each element of Kaplan and Norton’s Balanced Scorecard. In your answer, you
need to clearly indicate each element of the Balanced Scorecard and at least two appropriate
objectives for each element to achieve the company’s strategic objective. You should also
indicate, with arrows, how the achievement of each indicated objective will lead to the
achievement of the next objective. (14 marks)

1.3 Sappi’s vision is indicated as ‘Intentional evolution’. In your opinion, is this an appropriate vision
for the company? Substantiate your answer in no more than 20 words. (3 marks)

[19]

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Question 2

Organisation learning is crucial to the success and survival of organisations.

2.1 Make a judgment with regards to the absorptive capacity of Sappi by applying the four
dimensions that determine absorptive capacity of an organisation to the company. Substantiate
your answer with appropriate facts from the case. (11 marks)

2.2 Define the term ‘double-loop learning’ in organisations and identify an example of the
application thereof at Sappi. (2 marks)

[13]

Question 3

No strategies can be implemented without resources.

3.1 Define the term ‘resource allocation’. (2 marks)

3.2 Resource allocation for strategy implementation can be seen to consist of a number of key
elements that should be considered as a whole. Apply these key elements (there are five
elements) to Sappi. In your answer, you should (i) identify each of these key elements, (ii)
provide a brief explanation of each element; and (iii) apply the element to Sappi’s strategic
vision for dissolving pulp. (15 marks)

[17]

Question 4

Every organisation has its own unique culture.

4.1 Define the term ‘organisational culture’. (2 marks)

4.2 Based on your answer provided in question 4.1, describe the corporate culture at Sappi. (2
marks)

[4]

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Question 5

Strategic leaders have a number of responsibilities towards all the stakeholders of their organisations.

5.1 Would you regard the strategic leaders of Sappi as responsible leaders? Substantiate your
answer in no more than 20 words. (3 marks)

5.2 Organisations respond to challenges of responsibility and sustainability, either by taking a

position on or by moving through six levels or phases of commitment. Explain these levels of
commitment. Then, identify Sappi’s level of commitment and substantiate your answer. (8
marks)

[11]

Question 6

Organisations of all types in all industries are faced with business risks, which they need to manage.

6.1 List the various risk responses that an organisation can implement. (3 marks)

6.2 Around 20 per cent of Sappi's plantation land in South Africa is subject to land claims, which is a
potential threat to the company's access to fibre. Identify Sappi’s response to this risk and
explain the measures that the company took in implementing the response. (3 marks)

[6]

EXAMINATION TOTAL: 70 MARKS

©
Unisa
2021

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MNG3702 EXAM OCTOBER 2021

QUESTION 1

1.1.

The rapid growth in technology contributed immensely to the decline in the use
of traditional paper. Generally, there has been shift in the market from the
reliance in physical papers to more digitized platforms. Now days people are
subscribing to digital newspapers, digital magazines. Even mails have shifted
to emails and text massaging. Therefore technological advancement have been
a huge contribution to this shift.
 1.2.

Strategic Map

Financial

 Providing an opportunity to bring costs down

Improving productivity and
 Increase revenue and profits especially in the
growing demand for viscose fibre in the Far
East

Internal business
Customer process
Increase global brand Converting Softwood
architecture Strategic plantations to
objective hardwoods plantations.
Increase awareness as
of
global industry leader Mechanisation taking
dissolving
pulp place in silviculture
operations over the next
12-18 months.

Learning and growth

Increase expertise to meet the changes
as silviculture
Optimize technology in the operations
as de-barking to deliver value for
money

1.3.

The company vision in appropriate since it is implementing some changes to

upgrade and improve its internal processes one that advances consciously and
intentionally.
QUESTION 2

2.1

Absorptive capacity is an organisation’s ability to identify, assimilate, transform,

and use external knowledge, research and practice. In other words, absorptive
capacity is the measure of the rate at which an organisation can learn and use
scientific, technological or other knowledge that exists outside of the
organisation itself. It is a measure of an organisations ability to learn. Zahra &
George (2002) identified four dimensions of absorptive capacity: acquisition,
assimilation, transformation and exploitation.

Dimensions of absorptive capacity in relation to Sappi:

1. Acquisition of external information

Acquisition is defined as being the capacity to recognize, understand the

importance of, and acquire the external knowledge needed for the operations
of an organization. Acquisition can be seen as being a generator of knowledge
for an organization. Acquisition can occur as a result of investment in R&D or
through prior knowledge. The better the quality of the information and the
sooner it is obtained, the better the organisation’s chances of developing some
sort of advantage from it. Sappi managed to see the changes in the external
environment on the changes in demand for traditional paper and also acquire
the information on the increase demand for viscose fibre in the Far East.

2. Assimilation of acquired information

Assimilation refers to a firm's capacity to integrate external knowledge using

routines and processes that allow it to understand, analyse, process and
interpret information obtained from external sources. Sappi managed to realise
the impact of the decline of demand for traditional paper and that it can lead to
the company lose some money if they continue investing in that area. The facts
in the case indicates that Sappi put in place a strategy in response to weakening
demand around the world for fine paper, which resulted in the closure of
production lines at Sappi operations in North America, Europe and South Africa.
 3. Transformation of knowledge

Transformation is a firm's capability to develop and refine the routines that

facilitate combining existing knowledge and the newly acquired and assimilated
knowledge. This goal can be achieved by the addition or suppression of
knowledge, or the reinterpretation of existing knowledge. It requires two
fundamental elements: internalization and conversion. Sappi made several
changes to the production and operational process in response to the
information acquired.

4. Applying new knowledge

The real benefit of absorptive capacity occurs when organisations use the
transformed knowledge and new insights to improve their business operations
and to develop new innovations and business ventures (Venter & Botha, 2019).
For example, in the case study, it is indicated that, “Softwood plantations in both
regions are being converted to hardwoods to ensure a sustainable supply of
raw material to the mills.” Also indicated that, “Sappi is also investing significant
resources in research and development to improve planting stock. The
company is significantly expanding its clonal programme with the development
of the Clan nursery, so that they can get more of the right trees in the ground,
improving productivity and providing an opportunity to bring costs down.”

1.2

Double-loop learning is considered to be critical for innovation as well as the

continuous success of an organisation or business. Double-loop learning is
when the organisation questions the fundamental elements or rules governing
the situation leading them to re-evaluate their own mental models, the goals,
values and beliefs they hold (Venter & Botha, 2019). For example, in the case
study, Sappi encouraged challenging the existing mental models to make use
of more technology in the operations.
QUESTION 3

3.1

Resource allocation is the process of assigning and scheduling available

resources in the most effective and economical way possible. Resource
allocation includes managing tangible assets such as hardware to make the
best use of softer assets such as human capital. Resource allocation is a central
management activity that allows for strategy execution. The real value of any
resource-allocation program lies in the resulting accomplishment of an
organization's objectives

3.2

Key elements of resource allocation for strategy implementation are as

follows:

1. Align organisational units with strategic direction

All the dimensions in the hierarchy of organisational strategy such as the

organisational, strategic business units and functional units should be aligned
and should support one another. Ultimately, the contributions of each functional
unit and each strategic business unit should contribute to the strategic direction
of the organisation and should lead to the attainment of the organisational
goals, mission and vision (Venter & Botha, 2019). This concept was shown in
the case study when softwood plantations in both regions are converted to
hardwoods to ensure a sustainable supply of raw material to the mills.

2. Align individual behaviour with strategic direction

The behaviour and outputs of each individual employee should also be aligned
with the strategic direction of the organisation. In other words, the contributions
of each worker, each functional unit and each strategic business unit should
contribute to the strategic direction of the organisation and should lead to the
attainment of the organisational goals, mission and vision (Venter & Botha,
2019). The application of this concept in Sappi since they have to recruit or
provide training to the existing employees so as to meet the demands of the
new operations as the company is converting from softwood plantation to
hardwood plantations.

3. Implement strategic initiatives

Implement key projects or programmes focused on achieving a specific

objective or improving performance to achieve a performance target (Venter &
Botha, 2019). In the case study, it is indicated that, Sappi hasengaged with
several community forestry projects in the Eastern Cape, located within the
Saiccor catchment, where they have established themselves as strategic
partners and play a developmental role. They are already involved with
communities with access to 14 000 to 16 000ha, and are targeting 30 000ha in
this region over the next 10-15 years.” “Sappi has strong links with numerous
small growers through its Project Grow programme, which supplies some 2%
of its overall fibre requirements.

4. Implement enablers of resource allocation

This involves the implementation of three enablers, namely to communicate the

strategy, to learn and adapt, and to allocate adequate resources. For example,
in the case study, it is indicated that, “there will be a lot of mechanisations taking
place in silviculture (the growing and cultivation of trees) operations over the
next 12-18 month which will inevitably mean reduced employment
opportunities.”

5. Align strategy with the internal environment

This involves the alignment of all organisational units and employees with
organisational strategies and its strategic direction. For example, in the case
study it is indicated that, “Softwood plantations in both regions are being
converted to hardwoods to ensure a sustainable supply of raw material to the
mills.” It is also indicated that, “The group has invested substantial money in
South Africa and North America into the production of specialised cellulose.”
QUESTION 4

4.1

Organizational culture is the collection of values, expectations, and practices

that guide and inform the actions of all team members and how things are done
will impact on success (Venter & Botha, 2019).

Organizational culture helps improve workflows and guides the decision-

making process. It also helps teams overcome barriers of ambiguity. Team
members who are informed and knowledgeable about certain processes are
often more motivated to finish projects. Having a clear culture that unifies
employees and promotes organized work structures helps people work together
with purpose.

4.2

Sappi organisation believe in sustainable operations and values integrity, being

courageous, making smart decisions and executing decisions with speed.

QUESTION 5

5.1

Yes.

Strategic management of Sappi can be regarded as responsible leaders since

they are able to deliver value to all the stakeholders by delivering on triple
bottom line, the social, environmental and financial dimensions.

5.2

Organisations respond to the challenges of responsibility and sustainability

either by taking a position on, or by moving through, six levels or phases of
commitment (Dunphy, Griffiths & Benn 2003):
Phase 1: Rejection. A focus on exploiting all resources (human and ecological)
for the sake of maximising profit. Strategic leaders here would not accept
responsibility or listen to sustainability arguments, and would actively work
against possible regulation or activism.

Phase 2: Non-responsiveness. Characterised by a lack of awareness or

ignorance of sustainable or social issues, rather than active opposition to these
issues.

Phase 3: Compliance. Complying with laws and regulations to avoid risk, or

complying with self-regulatory measures to avoid legislation which may limit the
activities of the organisation

Phase 4: Efficiency. Sustainability is seen as a cost reduction and efficiency

strategy. Principles of sustainability are incorporated into everyday business
practice.

Phase 5: Strategic pro-activity. Sustainability is viewed as potentially giving

competitive advantage as well as ensuring cost efficiencies. Leaders here see
sustainability as a strategic route to taking a position of leadership in an
industry, and thus maximising returns.

Phase 6: The sustaining organisation. One that is committed to the principles

of social and ecological sustainability, that is maintaining returns, but is focused
on meeting the needs of the present without compromising the opportunities of
future generations.

Sappi’s level of commitment and substantiate is Phase 6, the sustaining

organisation as it is indicated in the case study that Sappi is unlocking the power
of renewable resources to meet the needs of the planet and people while
seeding prosperity for all. The organisation has made the United Nations
Sustainable Development Goals (SDGs) an integral part of their business.
QUESTION 6

6.1

Risk avoidance

This strategy is used to make the risk cease to be a possibility. Risk avoidance
is the elimination of hazards, activities and exposures that can negatively affect
an organization's assets. Whereas risk management aims to control the
damages and financial consequences of threatening events, risk avoidance
seeks to avoid compromising events entirely.

Risk transfer

Risk transfer is a risk management and control strategy that involves the
contractual shifting of a pure risk from one party to another. One example is the
purchase of an insurance policy, by which a specified risk of loss is passed from
the policyholder to the insurer.

Risk acceptance

Accepting risk, or risk acceptance, occurs when a business or individual

acknowledges that the potential loss from a risk is not great enough to warrant
spending money to avoid it. Also known as "risk retention," it is an aspect of risk
management commonly found in the business or investment fields.

Risk exploitation

This refers to a situation where a particular event or risk has a positive

consequence on the organisation and relevant stakeholders and should then
be exploited.

Risk mitigation

Risk mitigation involves taking action to reduce an organization’s exposure to

potential risks and reduce the likelihood that those risks will happen again.
6.2

Sappi’s response to this risk is the risk acceptance. The company partners with
the claimant communities, but stressed that ownership of the land stays with
the communities, with whom they have timber supply agreements.
References

Dunphy, D, Griffiths, A & Benn, S. 2003. Organisational change for corporate

sustainability. Abingdon: Routledge.

Venter, P & Botha, T (eds). 2019. Practising strategy – a Southern African

context. 2nd ed. Cape Town: Juta. ISBN 9781485125150

Zahra, S. and George, G. (2002) Absorptive Capacity: A Review,

Reconceptualization and Extension. Academy of Management Review, 27,
185-203
 UNIVERSITY EXAMINATIONS

October/November 2020

Nonvenue-based examination

MNG3702

Strategy Implementation And Control

First Examiner: Mr R Shibiti

Second Examiner: Prof T Botha

Moderator: Prof S Hughes

DATE: 27 November 2020 (18H00) – 28 November 2020 (20H00)

Time: 26 hours

This paper consists of twelve (12) pages.

Instructions:

(1) This non-venue-based examination is confidential, remains the property of the University of South
Africa and may not be shared.

(2) This is a formal online Unisa examination and all the Unisa examination regulations are applicable.
You may not use any unauthorised material or consultations when taking the examination.

(3) Please complete the Honesty Declaration, which you will find on page 3 of this examination
question paper, and submit it together with your answers. Please note that your answers will not
be assessed without the submission of a completed and signed Honesty Declaration, together
with your answers. We will not accept Honesty Declarations submitted after the examination via
email, personally or in any other format.

(4) Do not simply copy information from the sources you have consulted. You need to answer the
questions in your own words and cite the sources used. Plagiarism will not be tolerated and may
result in disciplinary action, if detected.

(5) All kinds of misconduct specified in the Students’ Disciplinary Code of the University will not be
tolerated. Visit the following link to learn more about this policy:
https://www.unisa.ac.za/static/corporate_web/Content/Apply%20for%20admission/Documents/U
nisa-Students-Disciplinary-Code-25-April-2014.pdf

Open Rubric
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(6) Submit your answers, together with the Honesty Declarations as a single document in PDF
format. It is preferable for you to type your answers (Font: Arial 11 or 12) and then convert your
document into a PDF file for submission. However, if this is not possible, you may also write your
answers down and scan them to a PDF file. Please write legibly.

(7) Start with a cover page stating the module code, your name and student number.

(8) Write only the answers to the questions – there is no need to write an introduction and conclusion.

(9) This paper comprises three (3) paragraph-type questions based on the given case studies. All the
questions are compulsory. The total marks for the examination is 70.

(10) Make sure that all questions and sub-questions are clearly numbered.

(11) Please ensure that your PDF document is NOT encrypted to a “secured” mode and that it is NOT
password protected as these files cannot be marked. Virus-infected files will also not be marked.

(12) Submit your answers in one PDF document by using the Assessment Info tool under myAdmin
on myUnisa. Answers sent to the lecturer via email will not be marked.

(13) The answers should be submitted before 20H00 on 28 November 2020. Since the scanning and
uploading of your answers take time, we strongly encourage you to start uploading your answers
well before the deadline. Late submissions will not be accepted - no medical, personal nor family
problems will be considered. Students who are unable to complete this assessment will
automatically fail the module and will have to re-register the module during the next registration
period.

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HONESTY DECLARATION

I, ________________________________(Student number): ________________am

a student registered for (degree)______________________and module:
_________________in the year __________. I hereby declare the following:
 I know that plagiarism means taking and using the ideas, writings, works or
inventions of another as if they were one’s own. I know that plagiarism not only
includes verbatim copying, but also the extensive use of another person’s ideas
without proper acknowledgement (which includes the proper use of quotation
marks). I know that plagiarism covers the use of material found in textual sources
and from the Internet
 I declare that this examination is my own original work. Where I have used
someone else’s work, I have indicated this by using the prescribed referencing
style. Every contribution to and quotation in this assignment/proposal from the
work/s of other people has been referenced accordingly
 I acknowledge and understand that plagiarism is wrong
 I understand that my examination must be accurately referenced
 This research proposal/assignment is my own work. I acknowledge that copying
someone else’s research, or part of it, is wrong, and that submitting identical work
to others constitutes is a form of plagiarism
 I have not allowed, nor will I in the future allow, anyone to copy my work with the
intention of passing it off as their own work
 I will not plagiarise my future work and will adhere to the Policy on Academic Integrity
and Policy on Plagiarism Prevention

Student signature: ________________________ Date: ______________________

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QUESTION 1

IMPORTANT:

This question is based on the information provided in the case study below. You are
expected to provide FULL SENTENCES (not merely a list of concepts) and show insight into
the application of strategy implementation and control theory as related to the
information in the case study.

Top learning organisations – 4 businesses that do it right

In this module, you have read about a learning organisation, the benefits of a learning
organisation and the best practices for becoming a learning organisation. Becoming a
learning organisation and sustaining a strong learning culture can seem overwhelming. Below
are four real-world examples of businesses that are doing it right.

1. Adobe Inc
Adobe Inc. is an American multinational computer software company that has consistently
been recognised by Fortune Magazine as one of the “Best 100 Companies to Work For”.
Along with the company’s stated commitment to the wellbeing of its staff (and the numerous
benefits the company offers to support employees), its leadership insists on integrity,
transparency and open lines of communication with staff.

Additionally, the company works to recruit talent from underrepresented minority

communities. They recognise the value of having a diverse staff with a variety of ideas,
experiences and talents working together. The Adobe Life blog shares (among other news)
stories about staff achievements, so that everyone in the company is aware of individual and
group successes.

Adobe also provides many learning opportunities for staff at the company through on-
demand online courses, mentorship and leadership development programmes and education
reimbursements. But Adobe does not stop there, they have also created an award-winning
programme, Kickbox that encourages innovation and risk-taking, no matter what the
outcome. Any staff members, who request it, are given a red cardboard box containing
stationery, snacks, and a $1,000-pre-paid credit card to explore an idea - no questions asked.
Currently, 1,000 employees have taken advantage of the opportunity, and 23 of these
employees received additional investment in their projects.

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2. Google
Google is an American multinational technology company that specialises in internet-related
services and products, including online advertising technologies, a search engine, cloud
computing, software and hardware. The company is a standout when it comes to serving as a
model for a corporate learning culture. Google’s employees are given the flexibility to set
their schedules to work when it suits them and, in a way that maximises their productivity
and creativity. The staff is made up of talent across all different fields of technology, so
everyone can work with and learn from each other.

This growth mindset, and opportunities for collaboration results in a staff that works to
constantly improve themselves and the company. Google values employee contributions and
risk-taking, even when it leads to failure.

Google also values great managers. They recognise the importance of leaders who
demonstrate their commitment to, and confidence in their employees. Google decided they
wanted to understand what makes a manager great. Researchers in the company first tried
to find evidence that managers were not important, that a manager had no impact on a
team’s work. (That’s outside-the-box thinking!) They looked at manager performance ratings
and feedback on Google’s annual employee survey and found that (of course) managers
mattered: teams with great managers were productive and happy.

3. Publix
Publix Super Markets Inc, commonly known as Publix, is an employee-owned, American
supermarket chain. It is the world’s largest employee-owned company that has spent 21
consecutive years on Fortune’s 100 Best Companies to Work For list. All of its employees (and
former employees) are controlling shareholders, with an 80% stake in the company, worth
$16.6 billion. All employees who work an average of 20 hours per week receive company
stock after working for the chain for a year, and additional stock every year thereafter.
Employees have a vested interest in the company’s success and know that they are valued by
company leadership.

Collaboration and communication are among the company’s core values, and employees are
supported in pursuing career goals and reaching out to colleagues for assistance. They are
also encouraged to work in the company’s various divisions to learn new skills, information,
and aspects of the business.

The company further demonstrates its commitment to its employees by promoting internally
in most cases. Perhaps it is no surprise then, that the company’s annual voluntary turnover
rate is 5%, compared with the national average of 65%.

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4. WD-40
WD-40 is the manufacturer of household and multi-use products, including its signature
brand, WD-40. Chances are you have a blue-and-yellow bottle of WD-40 under your kitchen
sink or in the garage, but you do not necessarily think about the company that produces it.
Garry Ridge, the company’s CEO, is intensely committed to learning, and requires all
employees to take the pledge: I am responsible for taking action, asking questions, getting
answers, and making decisions. I will not wait for someone to tell me. If I need to know, I am
responsible for asking. I have no right to be offended that I did not “get this sooner.” If I am
doing something others should know about, I am responsible for telling them.

When Ridge became CEO in 1997, the company’s signature product was in 4 out of 5
households in the U.S., along with countless businesses. But the company’s omnipresence
was also its liability. It was sold only in the U.S. and most of its profits was paid as dividends.
By 2016, the product was being sold worldwide, and sales had exploded. The company has
also expanded its product offerings.

Ridge requires his employees to ask questions, to innovate, collaborate with each other, take
risks and not be afraid of failure.

Adapted from https://knowledgeforceconsulting.com/top-learning-organizations-4-businesses-that-do-it-right/

(Accessed on 9 September 2020)

Question 1.1
Discuss the ten mechanisms that can be implemented to assist an organisation to become a
learning organisation and apply the theory to the case study above.

In your answer, you need to explain the mechanisms (10 marks) and provide relevant examples
from the case study (15 marks). (25)

TOTAL: 25 MARKS

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QUESTION 2

IMPORTANT:

This question is based on the information provided in the case study below. You are
expected to provide FULL SENTENCES (not merely a list of concepts) and show insight into
the application of strategy implementation and control theory as related to the
information in the case study.

ABOUT UNILEVER SOUTH AFRICA

Unilever South Africa provides personal care and food products. The company offers products
such as soups, sauces, noodles, meals, ice creams, tea-based drinks, margarines, oral care,
soaps, washing, deodorants and skincare products. Over two billion people choose a Unilever
product globally on any given day, from feeding their family to keeping their homes clean and
fresh. Throughout their history, Unilever has been a purpose-driven company and this spirit
has shone through in every step of their journey. It all started back in 1887, when William
Lever, the founder of Lever Brothers, registered the Sunlight trademark in South Africa (SA).
Undaunted by a crippling drought that prevailed on his first visit, and an as-yet undeveloped
economy, Lever saw a manufacturing future for the country and it wasn’t long before the
company set up its first South African factory at Maydon Wharf, in Durban, in 1911.

Unilever has always believed in “doing well by doing good” and they are working every day to
make the world a little better. They are determined to be a catalyst for change that enhances
livelihoods and embeds sustainable values, in harmony with the nation’s ubuntu spirit. They
are bringing transformation through an innovative business that reduces their environmental
footprint, sources raw materials sustainably, invests with social awareness and uses
technology responsibly.

As the proud employer of 0.28% of the country’s workforce, and manufacturing 95% of their
products right here at home, they occupy a unique place in the lives of South Africans and they
are honoured to help them thrive through their products. Their R4 billion investment in new
and refurbished manufacturing facilities across South Africa demonstrates their confidence in
economic growth. They are preparing young South Africans, eager to apply their minds in the

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workplace, through their Youth Employability Programme – and their target is to help one
million young people in Africa by 2020. They have already trained 200 000 young job seekers
in the last year, in South Africa. One hundred Unilever managers are enrolled to serve and
mentor the youth.

Many of the key levers for socio-economic change, identified by President Ramaphosa are
aligned with projects that Unilever has already embarked on. One of these is the focus on
revitalising the township economy by training and employing youth through inclusive growth
models with SMMEs and start-ups. This builds sustainable businesses within the Unilever value
chain, creating new local economies and linking people to opportunities in the formal business
sector. The prosperity of township communities is linked to the long-term success of their
business and they are actively learning how best to add value, serve the people and utilise their
considerable economic footprint to build this prosperity. At Unilever, they believe that
women's empowerment is one of the greatest enablers of human development for economic
growth. By promoting the formal and active participation of women throughout their business,
they aim to transform lives, families, communities and the South African economy. This will
ensure growth in their markets, brands and business while simultaneously driving positive
change in society.

Their “Brands with Purpose”, such as Lifebuoy, Domestos and Mentadent, create a brighter
future for all, though initiatives such as the National Schools Hygiene and Sanitation
programme, in partnership with the Department of Basic Education, which aims to touch
15,000 public primary schools and more than one million learners in the next 5 years. They
promote safety for women in the communities they serve through their Joko Tea programme
aimed at reducing gender-based violence. Their partnership with the Department of
Environmental Affairs and Wildlands Conservation has created 10 000 “Greenpreneurs” who
turn waste into useful products and together, they have planted more than one million trees
since 2015. They support programmes helping the unskilled and unemployed to gain jobs and
dignity, such as their OLA Vendor programme, which currently employs close to 3 000
individuals.

President Ramaphosa has invoked the moving lyrics of the revered late Hugh Masekela and
the spirit of service expressed in the words, Thuma Mina, igniting the #SendMe movement
across the country. They say, “Send Unilever” - where they can share their knowledge and
experience for quick action and impact, where they can serve and help to usher in South
Africa’s promise of a “New Dawn”.

Adapted from: https://www.unilever.co.za/about/who-we-are/about-unilever-south-africa/ (Accessed on 02 March

2020)

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Question 2.1
Discuss organisational culture as one of the strategy implementation elements that Unilever
introduced.

In your answer, you need to define the term organisational culture (1 mark), explain the various
layers of organisational culture (3 marks) and provide two examples from the case study for each
element of the layers of organisational culture (10 marks). (14)

Question 2.2
Which type of strategic change can mostly be associated with the socio-economic changes that
were implemented by Unilever in the above case study (1 mark)? Substantiate your answer (1
mark). (2)

Question 2.3
Discuss the balanced scorecard (BSC) as a strategic planning and control tool that Unilever can
adopt.

In your answer, you need to describe the BSC (1 mark), discuss the four perspectives of the BSC
(4 marks) and provide practical examples of what each perspective should address (4 marks). (9)

TOTAL: 25 MARKS

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QUESTION 3

IMPORTANT:

This question is based on the information provided in the case study below. You are
expected to provide FULL SENTENCES (not merely a list of concepts) and show insight into
the application of strategy implementation and control theory as related to the
information in the case study.

AFRICAN RAINBOW CAPITAL (ARC)

ARC is a fully black-owned and controlled company focusing on the South African and African
financial services industry and businesses. It is an investment company that seeks to utilise its
empowerment credentials, balance sheet strength, the business track record of its leadership
team and brand to invest in financial services distribution businesses, to take strategic equity
stakes in underlying financial services product providers and to acquire majority or significant
minority interests in non-financial services businesses. To ensure that ARC Investments is
permanently black-controlled, ARC holds a voting-only B share in ARC Investments. The
structure ensures that new and existing investee companies treat the ownership from the ARC
Fund as if the ownership were held by black investors.

When considering investments, they seek significant minority stakes with strong minority
protections, subscription for primary capital into each new investment, synergies and cross-
selling opportunities within existing investments, and early-stage businesses with significant
capital growth potential.

ARC Fund (an en commandite partnership) has been established in South Africa as an
evergreen (open-ended) investment vehicle. ARC Investments holds a diversified portfolio of
high-quality investments valued at R4.5 billion. They focus on unlisted, attractive financial
services platform assets. The strong pipeline of investment opportunities is an opportunity to
create significant scale and portfolio diversification.

A culture of good corporate governance is instilled at the board level and applies to the entire
organisation. They engage their stakeholders with transparency, honesty and respect and
conduct their business ethically. It is not sufficient to just follow codes, rules and policies, but

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rather that those charged with oversight, by their nature, are trustworthy and ambitious to act
in the best interest of the company and its stakeholders.

ARC's business philosophy has dual aims – benefitting its stakeholders and positively
contributing to the lives of South Africans. ARC makes a difference on a much broader front by
supporting deserving communities and causes through wide-ranging social and corporate
investment initiatives.

Its vision is to be a leading provider of financial services, covering the full spectrum of fiscal
needs, such as life insurance, health care, asset management, general financial services, short-
term insurance, property and banking. They do this by building strategic partnerships, both in
South Africa and further afield, by obtaining equity stakes in product providers. Astute capital
management is used to create the best possible return on equity. In this way, they create value
for their stakeholders.

Adapted from: https://www.africanrainbowcapital.co.za (Accessed on 9 September 2020)

Question 3.1
Discuss the organisational structure that can mostly be associated with how ARC has been
structured.

In your answer, you need to identify (1 mark) and explain (3 marks) the organisational structure.
Substantiate your choice (1 mark). (5)

Question 3.2
Responsible strategic leadership is the art of building and sustaining morally sound relationships
with all relevant stakeholders of an organisation.

Identify (4 marks) and explain (4 marks) four stakeholders that have been covered by the
information in the case study and provide one example from the case study for each stakeholder
(4 marks). (12)

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Question 3.3
For ARC to achieve its strategic objectives, its resources should be prudently allocated to its
subsidiaries.

Explain the three key elements of resource allocation for strategy implementation. (3)

TOTAL: 20 MARKS

EXAMINATION TOTAL: 70 MARKS

©
Unisa
2020

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 MODULE :MNG 3702 STRATEGY IMPLEMENTATION AND CONTROL IIIB
NOVEMBER 27, 2020 EXAMINATION

1|Page
Question One

1.1 The ten mechanisms that can be implemented to assist an organisation to become
a learning organisation are outlined below. They can be used together to help an
organisation become a learning organisation.

Leadership commitment to learning is whereby the organisational leaders themselves

commit to learning and promoting of organisational learning. They are the drivers of
learning and use the learning in line with the strategies in order to achieve the best
business results.

An example from the case study would be with WD-40 whereby the company’s CEO
Gary Ridge is “intensely committed to learning”. He is the organisational leader and thus
committed to learning.

Building shared visons another mechanism refers to leaders developing a real vison
that would inspire their employees. This has to be achievable and not just look good in
writing. The vision cannot be dictated to the employees but rather employees be able to
believe it can be achieved and thus the employee would work towards this vison
through difficult and good times. This vision would assist the organisation by creating a
sense of togetherness in the long run through a common vision and ensuring
responsibility and accountability are distributed. Employees involved when setting the
vision would be engaged to achieve it.

In the case study of Publix , “all employees who work an average of 20. hours a week
receive company stock after working for the chain for a year , an additional stock every
year thereafter .” Hence “the employees have a vested interest in the company’s
success” . By making all its employees shareholders , the employees are definitely
involved in making sure the company is successful and they are inspired to achieve the
vision whilst taking responsibility and accountability .

2|Page
Encouraging diversity is whereby organisational leaders should encourage diversity in
terms of age, gender, race, cultural background & educational backgrounds in their own
teams and through the organisation in order for people to have different views and thus
bring about teamwork and change. It is also easy for top management to be stuck in the
dominant management logic so thus diversity should start at the top.

In the Adobe Inc organisation “the company works to recruit talent from
underrepresented minority communities. They recognise the value of having a diverse
staff with a variety of ideas, experiences and talents working together.”

At Google , the company allows for flexible working hours and “ the staff is made up of
talent from all different fields of technology so everyone can work with and learn from
each other”.

Encouraging double loop learning occurs when persisting failure causes the
organisation to question the rules governing the situation and thus causing individuals
and organisations to revaluate their own mental models which is the goals, values and
beliefs they hold. the questioning of the fundamental underlying assumptions is known
as double loop learning. This differs from single loop learning as with single loop
learning the individuals of organisations fail at achieving their goals, they evaluate what
went wrong then try different ways and after much failure and exhaustion of ideas would
then challenge their mental models. This is when double loop learning occurs as an
individual would have to self-reflect, unlearn the current mental model and understand
as well as challenge their own mental models in order for change to take place.

In the Google case study, they value great managers. The notion was researched
whereby evidence suggested that managers were not important and that managers did
not have an impact on a team’s work. Google carried out their own employee survey
and challenged the notion above. It was discovered that teams with good managers
were productive and happy.

3|Page
Develop system thinking capabilities is whereby one develops the ability to see the
bigger picture as that is what system thinking is about. System thinking also includes
being able to see a pattern instead of just a single event. As an organisation that applies
system thinking, they would understand how we are interlinked to the world, our place in
the environment, how we are influenced by it and how we can influence it in turn.

With the D -40 case study, the company in 1997 only sold its products within the USA
and most of its profits were paid as dividends. The company sought to expand
worldwide, had an increase in sales and expanded the products it offered. This
company sought to find its place in the global economy.

Encouraging individual and team learning

Commitment to lifelong learning is an important part of a learning organisation. Learning

occurs through on the job training whilst other opportunities for a more formal learning
should be provided for growth. The individual should strive to be the best in their
careers according to Peter Senge who promotes the idea of personal mastery. This
would ensure a sense of commitment and excitement in one’s career whereby they
would be more engaged. Managers in top positions can be encouraged to add to their
educational experiences through sabbaticals for example. Team learning needs to
happen in order for organisations to learn and function together. Teams work towards
the goals, the results required of these goals as well as being able to achieve the goals.

Publix in the case study “encourage their employees to pursue career goals and reach
out to colleagues for assistance. They are encouraged to works in the company’s
various divisions to learn new skills, information and aspects of the business.”

With the Google case study, “The company is a standout when it comes to serving as a
model for corporate learning culture.” The growth mind-set mentioned results in staff
that works to constantly improve themselves and the company and the different talent

4|Page
pool of staff in the various technologies enable everyone to work with and learn from
one another .

At Adobe Inc, “Adobe also provides many learning opportunities for staff at the
company through on demand online courses, mentorship and leadership development
programmes and education reimbursements.”

Legitimising dissent

Individuals should be able to think and contribute ideas and question business
practices. This should not be only the job of management. Creating questions and
dialogue on a whole is important in a learning organisation. Double loop learning is also
encouraged as it enables individuals and organisation to challenge the mental models
that organisations use when making decisions.

With WD-40 CEO, Garry Ridge, is intensely committed to learning, and requires all
employees to take the pledge: I am responsible for taking action, asking questions,
getting answers, and making decisions. I will not wait for someone to tell me. If I need to
know, I am responsible for asking. I have no right to be offended that I did not “get this
sooner.” If I am doing something others should know about, I am responsible for telling
them. Ridge encourages his employees to ask questions in various aspects.

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Encouraging experimentation

Organisations and individuals need to make use of their failures as stepping stone to
learn. Without experimentation and no risks taken, one cannot learn. It is important for
organisations to encourage experimentation and in the case of failures, encourage
individuals to learn and improve on this. With regard to managers, even though projects
might be unsuccessful, they should be assessed by their managerial skills to encourage
learning.

The Adobe Inc company encourages innovation and risk taking with their Kickbox
programme that allows them the freedom to explore an idea with no questions asked.
Currently, 1000 employees have taken up the opportunity and 23 of the employees
received an additional investment in their projects.

Google looked at manager’s performance ratings and values great managers. “Google
values employee contributions and risk taking even when it leads to failure.”

Collaboration

Many organisations encourage collaboration i.e. working together with other individuals
or teams, their suppliers, competitors or customers to promote a learning organisations.
There has to be a trust relationship formed and a specific mind-set otherwise no
learning will occur. The collaboration should be valued and rewarded.

The in WD-40 case the CEO Garry Ridge requires his employees to innovate,
collaborate with each other.

The staff at Google is made of different talent across different fields of technology so
everyone can work with and learn from one another. “Googles’ growth mind-set, and
opportunities for collaboration results in staff that works to constantly improve
themselves and the company.” Google values employee contributions.

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With Publix , “collaboration and communication are amongst the company’s core
values. Employees have a vested interest in the company’s success by their controlling
stock and know that they are valued by company leadership.”

Knowledge management is a management system that shares organisational

knowledge and supports organisational learning. It is a management function that
creates knowledge, manages the flow of knowledge with the organisation and ensures
that the knowledge is used effectively and for the long term benefit of the organisation.

The process is comprised of four steps, firstly the discovery of knowledge in the
organisation by internal and external scanning, new employees & training and
development.

The second step capturing the knowledge in a way that it is able to be shared across
the organisation and various departments, thirdly sharing the knowledge throughout the
organisation, and finally applying the knowledge to solve business problems and make
decisions.

The case study with Adobe Inc., “The Adobe Life blog shares (among other news)
stories about staff achievements, so that everyone in the company is aware of
individual and group successes.”

Also stated in the Adobe Inc case study :

“It’s leadership insists on integrity, transparency and open lines of communication with
staff.”

At Publix, the company supports employees in their career goals they promote internally
their staff thus reducing turnover rates which can be a challenge for some companies
thus they solve a business problem.

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Question 2

2.1 Organisational culture is defined as accumulated shared learning of a group as it

solves its problems of external adaption and internal integration, which has worked well
enough to be considered valid and therefore to be taught to new members as the
correct way to perceive, think feel and behave in relation to those problems (Schein .
E.H with Schein.pP.2016. Organisational Culture and Leadership ,5 th ed . San
Franciso ,John Wiley & Sons. ) . An organisations culture is not something that will
develop overnight but evolves over time and it is the end result of accumulated and
shared organisational learning.

The layers of organisational culture are Visible artefacts, espoused norms and values,
and taken for granted assumptions.

Visible artefacts are everywhere and visible throughout the organisation. They have
three important dimensions which are instrumentality, aesthetics and symbolism. This
according to Edward Hall’s iceberg analogy of organisational culture would be the tip
above the water as one can easily see this. With Unilever they have visible aesthetics
as they have refurbished the manufacturing facilities across South Africa. Their
business process is visible in that they aim to reduce their environmental footprint,
source raw materials sustainably, invest in social awareness and use technology
responsibly in relation to instrumentality. Symbolism aspect of artefacts with Unilever is
that have built their brand globally and two billion people chose a Unilever product on
any given day.

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Espoused norms and values would be the part just below the water in the iceberg
analogy and refers to a collection of values and norms shared by people who work
together. Beliefs and behaviours such as the way an organisation operates would also
be included. In Unilever they have always believed in “doing well by doing good” and
they are working every day to make the world better.

They are determined to be a catalyst for change that enhances livelihoods and embeds
sustainable values, in harmony with the nations spirit of Ubuntu. Their values
incorporate sustainability and socio-economic change by the projects they have
embarked on. They create new local economies and the prosperity of township
communities is linked to the long term success of their business and they are actively
learning how to best add value, serve people and utilise their considerable economic
footprint to build this prosperity.

Thirdly taken for granted assumptions would lay below the espoused norms and values
of the iceberg. This layer would be hidden further down. The previous two layers
discussed give rise to assumptions that determines how an employee operates within
an organisation. When a solution to a problem works repeatedly, it is taken for granted.
This thus becomes the centre of an organisations culture. Taken for granted
assumptions are not easy to identify. In Unilever case they have developed an
organisational culture of giving back to the communities, promoting socio-economic
growth and aligning this with their business strategy by the planned change
programmes they have rolled out.

Unilever has a commitment to sustainability , and promoting socio economic growth

whilst growing their business . This can be viewed as their organisational culture that
has emerged .

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2.2 Strategic change occurs when an organisation decides to change strategic direction
in light of internal and /or external factors and thus this leads to large scale changes in
an organisation. At Unilever, Adaptation change is the strategic change implemented. It
involves realignment of the way the organisation operates and is implemented through a
series of steps. It happens over a period of time according to changing circumstances.
In South Africa the president addressed the need for socio economic change and
Unilever had already been incorporating this into their organisational strategy thus
making their business model easily adapt to the change of the current situation at hand.

Many of the key levers for socio-economic change, identified by President Ramaphosa
are aligned with projects that Unilever has already embarked on.

Their “Brands with Purpose”, such as Lifebuoy, Domestos and Mentadent, create a
brighter future for all, though initiatives such as the National Schools Hygiene and
Sanitation programme, in partnership with the Department of Basic Education, which
aims to touch 15,000 public primary schools and more than one million learners in the
next 5 years.

Thus due to the changing socio economic environment, Unilever has already had some
projects in place and the timeline for the “Brands with purpose” is over five years. They
have partnered up with the Department of Environmental Affairs and have the Youth
Employability programme running. The change is not disruptive or immediate to the
organisation.

2.3 Balanced score card (BSC) enables management to monitor and evaluate
performance from the financial perspective, internal perspective, learning and growth
perspective and customer perspective in order to see whether strategic goals are being
achieved in a balanced way. With each perspective managers can choose various
measures. For each goal, the organisation has to identify how it will be measured, what

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target it wants to achieve in the given time frame and the strategic initiatives that it will
implement to achieve the set targets. Individual performance can also be measured
through the BSC.

The financial perspective measures the financial dimensions including growth and
profits and the market value of the organisation. It should be able to answer to the
shareholders as to what they require in terms of financial information from Unilever and
the projects they have embarked on. The scorecard can be used to determine the future
success of Unilever as well as complementing traditional financial measures. The new
projects at Unilever should have financial projections in order to measure the
sustainability of the projects embarked on.

The internal business perspective is in line with satisfying the organisations customers
also taking into account how customers see the organisation and at Unilever they are
building their brand through the sustainable business within their value chain. The
strategy of the organisation has to be understood and communicated to all employees

Learning and growth perspective is linked to employees and the capacity to achieve its
goals. Unilever promotes women’s employment through the formal and active
participation of women through their business. This would help promote their brand,
growth in their markets and business. Unilever should also invest in the training and
development of their current employees not just outside the organisation and get
feedback and make adjustments through processes in the organisation as a benefit.

Customer perspective involves the perceptions of service quality and efficiency in the
processes of the organisation. Through their brands, Unilever would have to have a
high quality of products or develop good quality products as customers have chosen to
buy the Unilever brand products. A way to improve on this would be technology e.g.
online ordering of products and ensuring availability of products on the shelves of
various stockists.

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Question 3

3.1 The organisational structure that can be associate with ARC is that of a holding
company structure. In this structure the headquarters of the organisation acts as an
investment company. The operations of the different individual companies are largely
independent and would also apply to organisations who which to restructure their
strategy, buy or sell and take over other organisations

This structure as seen with ARC pursues a strategy whereby they would aim to acquire
majority or significant minority interests in a non-financial business

The case study states that ARC is an investment company. ARC investments holds a
diversified portfolio and its vision is to be a leader of financial services.

3.2 The four stakeholders in the ARC case study identified are Employees, Customers,
the Social environment and Shareholders

With regard to employees as a stakeholder at ARC, the strategic leaders are the leaders
who move people and lead teams to achieve the performance that is required to
achieve the strategies of the organisation. A good leader has to do so in an ethical
manner and at ARC the culture of good governance is instilled at Board or top
management level. They engage the other stakeholders with transparency, honesty and
conduct business ethically as well as act in the best interest of the stakeholders.

Customers who are another stakeholder in the ARC case study are taken into
consideration by responsible strategic leaders and the organisation would ensure that
the customers’ needs are met through their product and service offerings. ARC vision to
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cover the full spectrum of fiscal needs, shows that they have carried out research as to
what their clients require and be able to offer the full spectrum in the future.

Responsible leaders would contribute to the social environment through donations to

charities as well as being involved in community initiatives to improve the lives and
wellbeing of those in need. Their staff also should be trained in their responsibilities of
their organisations in society. ARC positively contributes to the lives of south Africans
and the organisation supports deserving communities through a vast range of social
and corporate investment initiatives.

A responsible strategic leader will ensure that shareholders investments are protected
and they receive an adequate return on their investment. the rights of the shareholders
are respected and information such as the financial position of the company are
provided timeously. Responsible strategic leaders prevent any moral wrong-doings. The
board at ARC also “engage their stakeholders with transparency, honesty, respect and
conduct their business ethically. In the ARC case study, the company builds strategic
partnerships both in South Africa and further afield. They ensure astute capital
management is used to create the best possible return on equity.”

3.3 The three key elements of resource allocation for strategy implementation are as
follows:

Firstly, successful implementation of strategic resources whereby the strategic objective

is communicated effectively to all involved in the process and inputs as well as
answering questions employees have, learning and adapting and resources are
allocated through to different units adequately.

Secondly successful alignment of organisational units with strategic direction is whereby

all the dimensions in the hierarchy of organisational strategy should be aligned and

13 | P a g e
support one another. Each department within that organisation should contribute to the
strategic direction of the organisation and thus enable the organisation to achieve its
goals, missions and objectives.

Finally, successful alignment of individual behaviour with strategic direction should

occur to ensure that every employee is aligned with the strategy from the time they are
employed, through ongoing training and development, keeping up and being informed
of company policies and procedures as well as assessing their performance and
providing feedback and rewards.

References

Schein . E.H with Schein.P.2016 . Organisational Culture and Leadership ,5th ed . San
Franciso ,John Wiley & Sons.

[Online] Available from:

https://www.unilever.co.za/about/who-we-are/about-unilever-south-africa/. (Accessed on
02 March 2020).

[Online] Available from:

https://www.knowledgeforceconsulting.com/top-learning-organizations-4-businesses-
that-do-it-right/. (Accessed on 9 September 2020).

[Online] Available from:

https://www.africanrainbowcapital.co.za. (Accessed on 9 September 2020).

University of South Africa. Department of Business Management. 2020. Strategy

Implementation and Control III B. Only learning guide for MNG 3702. Pretoria: Unisa.

Venter, P & Botha, T (eds). 2019. Practising strategy – A Southern African context. 2nd
ed. Cape Town: Juta.

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15 | P a g e
 UNIVERSITY EXAMINATIONS

May/June 2020

MNG3702

STRATEGY IMPLEMENTATION AND CONTROL

70 Marks

Examiners:

First: Prof T Botha

Second: Mr R Shibiti

Moderator: Prof S Hughes

This paper consists of 13 pages.

Instructions:

1. This is a formal online Unisa examination and all the Unisa examination regulations are applicable. You
may not use any unauthorised material or consultations when taking the examination.

2. This examination is in a portfolio format with an assessment tool on the myUnisa platform.

3. Please complete the Honesty Declaration, which you will find on page 2 of this examination question
paper, and submit it together with your answers. Please note that your answers will not be
assessed without the submission of a completed and signed Honesty Declaration, together with
your answers. We will not accept Honesty Declarations submitted after the examination via email,
personally or in any other format.

4. After completion of the paper, scan and upload your answers in PDF FORMAT, together with the Honesty
Declaration in one document, for submission. You may submit only one document.

5. Upload your portfolio to the assessment site on myUnisa.

6. In the unlikely event of not being able to upload to the myUnisa portal, you may upload your portfolio to:
https://tinyurl.com/yb3pdwqz.

7. Your portfolio must be uploaded at 12:00 noon on 27 June 2020. Since the scanning and
uploading of your answers takes time, we strongly encourage you to start uploading your answers
well before the deadline. You will be blocked at 12:00 noon on 27 June 2020 and we will not accept
answers neither an honesty declaration via email nor any other form of submission after the due
date for no reasons whatsoever.

Open Rubric
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May/June 2020

Honesty
declaration

I, the undersigned, hereby declare that the work contained in this examination is my
own work and that I did not consult any unauthorised material or any other person.

_______________ ________________

Name Student number

_______________ _________________

Signature Date

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Section A

Answer all the following questions based on the SAB case study provided below.

IMPORTANT:

The questions in Section A are based on the information provided on South African
Breweries. In your answers to the questions in this section, you need to write FULL AND
MEANINGFUL SENTENCES (not merely a list of concepts). You will also be required to show
insight in the application of the theory pertaining to strategy implementation and control
to the given information in the case study. Write only the answers to the questions – there
is no need to write an introduction and conclusion. You do need to cite the sources that
you made use of.

How a South African company turned constraints into global strengths

On 28 September 2016, the shareholders of South African born international brewer,

SABMiller, approved the company’s acquisition by Anheuser-Busch InBev for $104 billion (R1.5
trillion). The deal paved the way for the creation of what is now by far the world’s largest
brewing company.

For a company that started out selling beer to miners in Johannesburg during the gold rush of
the late 1800s (SAB was founded in 1895 as Castle Brewery and became the first industrial
company to list on the Johannesburg Stock Exchange in 1897), it has been quite a journey. How
did a brewing company from a developing country rise to compete with the multinational
brewing behemoths from the developed world? A series of interviews with senior executives
and managers who presided over the growth of what was then South African Breweries’ (SAB)
rapid expansion during and after the 1990s are revealing.

After building up a monopoly-like position in the beer market in South Africa, the company
went in search of new markets. With a vision to be the most admired company in South Africa;
a partner of choice, an investment of choice and an employer of choice, it used its experience in
South Africa in its entry strategies abroad.

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SAB’s path reflects the differences between multinationals from developed and emerging
markets in terms of location choices, sequencing, time horizons and motivation.

A two-phased expansion path emerges to explain the remarkable success story. The first pillar
to SAB’s international expansion was a focus on developing markets. Coming from a developing
country itself, the company would cope better with emerging market conditions than brewers
from the developed world. These ventures became a powerful base for SAB to take on
developed markets. The second was to expand into developed countries. This became
necessary as it became clear the company was over exposed to emerging markets.

After a few early forays into South Africa’s neighboring countries prior to 1993, SAB executives
realised that the company could exploit its knowledge of institutional shortcomings in its home
country. It would use this experience to adapt more easily than its competitors to conditions in
developing countries would. And so began the first part of its internationalisation strategy: a
rapid expansion into emerging markets worldwide. Through a series of acquisitions and joint
ventures throughout the 1990s, SAB gained a foothold in various countries in Africa, Eastern
Europe and Asia. Although many were geographically distant (like Hungary, Czech Republic,
China and India), they echoed South Africa in terms of their socioeconomic development.
Eastern Europe, for example, was still emerging from political reform in the wake of
communism, and infrastructural, institutional and economic weaknesses persisted.

By expanding into countries that shared socioeconomic characteristics with South Africa, SAB
was able to make use of its experience to turn a perceived drawback – institutional weakness –
into a strength. As one respondent explained:

‘To be quite frank, we actually accepted that we would live with the political risk and poor
institutions. We did not really shy away from high-risk countries unless, of course, there was a
raging civil war that we would have to wait to subside.’

Once it had established this expansion plan, SAB diversified into developed markets such as
Italy and the US. As one interviewee put it:

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‘Investors became sceptical of companies whose only business was in emerging markets.’

In 2002, it took a step closer to consolidating its position as a multinational brewing giant when
it acquired US-based Miller Brewing Company. It became SABMiller.

The advantages that SAB gained from its experience in its home country are many. One was
employee aptitude. SAB employees had built up an extraordinary resilience, flexibility and
entrepreneurial spirit through their exposure to the unsteady South African environment of the
1980s. The company survived labour trouble, survived interest rates at 25%, inflation at 16% to
17%, survived political disorder and political violence. At the time, the company used COBIT
(Control Objectives for Information and Related Technology) as a resource to develop an
Information Technology and enterprise architecture strategy document. For each of the 34-
COBIT processes in the company, the development team documented the target environment,
business objectives, IT portfolio services or deliverables from information technology processes,
current situation analysis, strategy and action items required to move from the current
situation to the desired situation. This knowledge was shared in the company across different
departments, sections and teams, which toughened the company and its employees
tremendously.

This robustness, combined with an ability to connect with many different cultures, gave the
company a valuable flexibility in its risk, location and investment choices.

Another strength was its ability to use its knowledge to turn around neglected breweries and
businesses. The experience it gained in South Africa, with its large rural population and pockets
of poor infrastructure, meant that finding innovative ways to overcome challenges was
embedded in the company’s DNA.

SAB also had a philosophical edge over many competitors. Its risk appetite was much bigger. By
comparison, a company like Anheuser-Busch had a conservative approach to risk and
international expansion. For example, Anheuser-Busch did not react to the rapidly changing
global brewer consolidation until it was too late. When it did, it realised that it had little

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emerging market experience. This weakness meant that in 2008, Anheuser-Busch was unable to
avoid a hostile takeover by InBev. This gave rise to AB Inbev, then the world’s largest brewer.
AB Inbev, in turn, was compelled to make an offer for SABMiller to acquire complementary
emerging market presence.

SABMiller’s long journey from the mine heaps of Johannesburg to global brewing colossus may
appear to have come to an abrupt end after its acquisition by AB Inbev in 2016. Nevertheless,
what is clear is that its extraordinarily successful approach continues to hold many lessons for
aspiring global companies from the developing world.

Sources:

Luiz, John; Stringfellow, Dustin and Jefthas, Anthea. 2019. Global Strategy Journal, Volume 7,
Issue 1 (83-103).

Online: http://www.isaca.org/knowledge-center/cobit/pages/south-african-breweries-
limited.aspx [Accessed 26 November 2019].

Questions:

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May/June 2020

Question A1

Strategic change involves change in the strategic direction of an organisation and the
implementation of new strategies, involving major changes to its normal or previous
routines.

A1.1 Differentiate between the various types of strategic change (8 marks, of which 1 mark
will be awarded to the identification of each type of strategic change and 1 mark to the
correct explanation)

A1.2 Identify the type of strategic change in Anheuser-Busch when the company was unable
to avoid a hostile takeover by InBev in 2008, which gave rise to AB InBev, then the
world’s largest brewer. Substantiate your answer. (2 marks)

(10)

Question A2

Knowledge and organisational learning are important concepts for the success and survival of
organisations.

A2.1 Define the term knowledge management. (3 marks)

A2.2 Apply the phases of the knowledge management process to SAB during its expansion
years during and after the 1990s to other developing countries. In your answer, you
need to list each step in the knowledge management process and indicate the
application thereof to SAB. (4 marks)

(7)

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Question A3

The Strategy Execution Framework is a resource allocation framework that helps to align an
organisation’s projects and programmes with its strategies.

A3.1 Apply the six domains of the Strategy Execution Framework to the case study. In your
answer, you need apply each domain of the Strategy Execution Framework to SAB’s
period of rapid expansion during and after the 1990’s. List the six domains and then
apply each domain to SAB. Two marks will be awarded for the correct application of
SAB to each domain. (12 marks)

(12)

Section B

Answer all the following questions based on the Anheuser-Busch InBev case study provided
below.

IMPORTANT:

The questions in Section B are based on the information provided on Anheuser-Busch

InBev. In your answers to the questions in this section, you need to write FULL AND
MEANINGFUL SENTENCES (not merely a list of concepts). You will also be required to show
insight in the application of the theory pertaining to strategy implementation and control
to the given information in the case study. Write only the answers to the questions – there
is no need to write an introduction and conclusion. You do need to cite the sources that
you made use of.

ABInBev’s response to COVID-19: Making an impact where it matters

AB InBev, believes in bringing people together for a better world and their purpose has never
been more relevant than today. COVID-19 has caused them to re-evaluate what it means to be
together. For them, it means joining efforts to support their community, their partners, and
each other during these challenging times.

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The company is are deeply connected to the communities where they live and work and strive
to be part of the solution. Since the beginning of the outbreak, they have been delivering
impact where it is needed. They are coming together to prioritize each other’s health and
safety, to support their operations through new ways of working, and to help their
communities where they can.

Today, they are focused on supporting their people, helping their communities, working with
their partners, and connecting with their consumers in meaningful ways.

THEIR PEOPLE

The health and safety of their people is, and always will be, their priority. They have
implemented precautionary measures that go above and beyond guidelines from the World
Health Organization and local governments, and they are regularly updating and sharing
resources for the physical and mental well-being of their colleagues.

Their teams in China and South Korea were the first to be impacted by this crisis. Supported by
colleagues across their markets, the efforts of their teams in China and South Korea were
remarkable. Their experience and insight have provided best practice sharing that continues to
benefit their operations around the world.

THEIR COMMUNITIES

The strength of their global business comes from their local presence. Because the majority of
their ingredients and products are sourced and brewed locally, they are deeply connected to
their communities. Together with local governments and partners they are using their existing
operations and infrastructure to address immediate needs by developing, donating and
distributing essential resources needed to fight the pandemic. This includes:

 Producing and donating nearly three million bottles of hand sanitizer and disinfectant to
hospitals and front-line health workers in 20+ countries.

 Providing water and medical supplies to front-line emergency workers around the
world, including the donation of 3 million face shields in Brazil by Cervejaria Ambev.

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 Contributing to the enhancement of health infrastructure in several cities, including a

project in Brazil where Cervejaria Ambev, alongside Gerdau, Hospital Albert Einstein,
and the City of São Paulo are partnering to build a public hospital with 100 beds.

 Identifying available arenas and stadiums to be used by the American Red Cross for
temporary blood drive centers across the United States.

 Mobilizing their fleets of trucks in Colombia, Peru and Ecuador to deliver essential food
and medical supplies to areas where they are needed.

THEIR PARTNERS

The company is privileged to be able to call many hard-working people in the hospitality
industry their customers and partners. As local pubs, bars and restaurants have been forced to
close their doors to contain the spread of COVID-19, they have launched a series of initiatives to
provide support, including:

 In Belgium, AB InBev launched Café Courage, an online platform where consumers can
pre-order and pay for their favorite beer at a participating bar, which they can enjoy
when it reopens.

 In Brazil, Stella Artois launched the #ApoieUmRestaurante , where consumers can

purchase discounted vouchers, supplemented by Stella Artois and other partners, to
help sustain local restaurants during the crisis.

 In the Netherlands, AB InBev is supporting the #Helpdehoreca movement organised by

the national hospitality industry association, which is offering consumers the
opportunity to buy beer vouchers for the future.

 In the UK, the “Save Pub Life” campaign offers consumers the chance to buy a gift card
to spend at a local pub at a future date. Budweiser Brewing Group will match the value
of the gift card up to £1 million.

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 In the United States, Bud Light is powering the “Open For Takeout” initiative, which
allows users to enter their zip code to see what local bars and restaurants are open for
takeout or delivery.

 In Canada, Stella Artois launched "Rally for Restaurants," allowing users to buy gift
cards, and the brand will add an additional $10 to the value of every card purchased to
go directly to the restaurants, bars and pubs.

 In Mexico, Grupo Modelo is expanding their Academia de Meseros Modelo to support

4,000 waiters with on-line training and rewards.

 In Colombia, Tienda Cerca is a digital platform that allows users to access a directory
with more than 25,000 neighbourhood stores nationwide.

THEIR CONSUMERS

The company is continuing to leverage the power of their brands to engage, inspire, and bring
hope to their consumers by:

 Redirecting sport sponsorship funds to emergency efforts, including Anheuser-Busch’s

$5 million donation to the American Red Cross and South African Breweries’
contribution to the nation’s Solidarity Response Fund

 Developing unique in-home activities, including Michelob Ultra’s fitness programs in the
United States, Budweiser’s e-clubbing partnerships in China, and Brahma’s virtual
country music concert series, Circuito Brahma the first of which had over 3 million
viewers during its first live show, in Brazil

 Supporting preventative measures like social distancing in creative advertisements,

including Budweiser’s “Buds, from a distance” series in the U.S., and Quilmes’
“#SomosResponsables” campaign in Argentina

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The company is proud of the resilience, commitment and agility of their teams that are making
these initiatives happen and they will continue to explore opportunities in which they can
support the fight against COVID-19.

In these unprecedented times, they remain committed to playing their part in building a better
world, now and for the next 100+ years.

Source: ABInBev. Our response to COVID-19: Making an impact where it matters. Available
online https://www.ab-inbev.com/news-media/news-stories/our-response-to-covid19-.html
[Accessed 16 June 2020]

Questions:

Question B1

Strategic risks dominate the list of concerns for many organisations, especially during the
current COVID-19 pandemic.

B1.1 Define the term ‘strategic risk’ and identify the sources of strategic risk for the ABInBev
company since the outbreak of the COVID-19 pandemic. In your answer, you need to
identify and explain strategic risks arising from both the internal and external
environment. (2 marks will be awarded for the definition of the term ‘strategic risk’ and
15 marks will be awarded for the correct identification of the sources of strategic risk)

(17)

B1.2 Apply the strategic risk management process to ABInBev with the aid of the information
provided. (4 marks will be awarded to step 1, 2 marks will be awarded to step 2, and 8
marks will be awarded to step 3 of the process)

(14)

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 13 MNG3702
May/June 2020

Question B2

‘Structure follows strategy’.

B2.1 The hospitality industry, as partner and customer of ABInBev, has been severely
affected by the COVID-19 pandemic and many role players in this industry had to
retrench employees during the pandemic. Discuss the effect thereof on the ‘structure
follows strategy’ adage. (5 marks)

B2.2 Discuss the key considerations in organisational culture and strategy for organisations in
the hospitality industry during the COVID-19 pandemic. In your answer, you need to pay
special attention to examples from the industry during the pandemic. (5 marks)

(10)

TOTAL: SECTION A [29 marks]

TOTAL: SECTION B [41 marks]

TOTAL MARKS OF THE PAPER [70 marks]

Unisa 2020

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MNG3701 – Strategy implementation and control May/June 2020 Portfolio Examination

SECTION A

Question A1

A1.1 [8]

Adaptation – Is change that can be implemented/adapted within the existing business

model and business culture with the main aim of realigning strategy.

Reconstruction – This change does not necessarily change the culture, but it may cause
some disruption in the organisation.

Revolution – this change requires swift and major strategic and cultural transformation.

Evolution – This change happens gradually over time and requires cultural change.

A1.2 [2]

Anheuser-Busch went through a type of strategic change we refer to as a revolution.

They were forced into reactive transformation to manage the crisis they were facing due
to being complacent to the rapidly changing brewer consolidation.

Question A2 [7]

A2.1 [3]

Knowledge management is a function performed by management and is aimed at the

creation and locating of knowledge, managing the flow within the organisation and
ensuring that the knowledge is utilised efficiently and effectively for prolonged benefit to
the organisation.

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MNG3701 – Strategy implementation and control May/June 2020 Portfolio Examination

A2.2 [4]

1. Discovering knowledge within the organisation

SAB realised they had great knowledge of operating in the emerging market
conditions.

2. Capturing knowledge in a way that enables it to be shared across departments

SAB created and used what they referred to as COBIT (Control Objectives for
Information and Related Technology) a resource they used to develop a strategy
document.

3. Sharing the knowledge throughout the organisation

The knowledge form COBIT was then shared in the company across different
departments, sections, and teams.

4. Appling knowledge to solve problems and make decisions

With the experience gained in operating challenging emerging markets, SAB
used this knowledge to turnaround neglected breweries and businesses. This
knowledge also assisted them in operating developed markets.

Question A3 [12]

A3.1

1. Ideation
SAB’s vision was to be the most admired company in South Africa, a partner of
choice, an investment of choice and an employer of choice.

2. Nature (Culture, structure, and strategy)

Nature consists of culture and core values of an organisation. SAB had a huge
risk appetite and their employees had a culture of resilience, flexibility, and
entrepreneurial spirit. Their strategy was aimed at emerging economies.

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MNG3701 – Strategy implementation and control May/June 2020 Portfolio Examination

3. Vision (Goals, strategy, and metrics)

SAB’s key goals and metrics was rapid expansion in emerging markets
worldwide then shift focus to developing countries leading to expansion into
developed countries. COBIT was used as a resource to develop an Information
Technology and enterprise architecture strategy document.

4. Engagement (Strategy to portfolio)

The target environment, business objectives, IT portfolio services, current
situation analysis, and the action items required to move from current situation to
desired situation were all documented by the development team and shared with
different departments, sections and teams across the company.

5. Synthesis

The target environment, business objectives, IT portfolio services, current

situation analysis, and the action items required to move from current situation to
desired situation were all documented by the development team and shared with
different departments, sections and teams across the company.

6. Transition
The acquisition of Miller by SAB brought them a step closer in consolidating its
position as a multinational brewing giant. The resilience they had built in
emerging markets made it easy for them to overcome challenges in developed
markets. They robustness and ability to connect with different cultures, gave Sab
valuable flexibility in its risk, location, and investment choices.

QUESTION A TOTAL: [29]

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MNG3701 – Strategy implementation and control May/June 2020 Portfolio Examination

SECTION B

Question B1 [17]

B1.1

Strategic risk is an uncertain event or set of events which, should it occur, will influence
the achievement of strategic objectives.

Risk rises from mainly two categories; internal environment which is risk from within the
business and the external environment which is risk from the outside factors in which
the business operates. The business has no control over external processes, unlike the
internal environment in which they have control over. Below are the risks that may arise
from both the internal & external risks.

Political risk - Political instability due to pressure on government to provide food, water,
sanitizers, and medical supplies. If the government is seen as not being able to provide
these necessities it may result in civil unrest.

Government policies, including foreign trade policies and imports and exports have
been amended by restricting imports and exports. The new restrictions of alcohol at
restaurants and bars has a major impact on ABInBev.

New labour laws as companies need to ensure the protection of their staff members or
they could find themselves shut down. Disruptions caused by labour may have a
negative impact on the company’s production.

Human-factor risk – employees who become ill or are infected with covd-19 will be
unable to work which may result in disrupted operations. Also, if employees feel that not
enough is being done to ensure their safety at work it could result in union strikes.

Insufficient training of employees about the preventative measures of covid-19 could

lead to an employee being infected with covid-19 and spreading it in the company.

Economical risk - with covid-19 being a global pandemic, many countries are affected
economically especially countries that are dependent on foreign trade. Many countries

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MNG3701 – Strategy implementation and control May/June 2020 Portfolio Examination

will suffer from recession especially emerging markets. An economic downturn will
result in consumers not having means to purchase the ABInBev’s products, consumer
confidence becomes low and affects profit margins.

Cash flow risk – Covid-19 is affecting the universe as whole therefore ABInBev’s
debtors may be experiencing financial problems and it may lead them being unable to
pay their invoices on time, this will have a negative impact on ABInBev’s cash flow.

Supply chain disruptions resulting from trade restrictions.

Interruption of operations – Restaurants and bars have been closed due to social
distancing being implemented as a mechanism to reduce the spread of covid-19. The
interruptions of such as establishment affects ABInBev as they the supply to these
establishments.

ABInBev has control over their resources which they decided to use their property,
plant, and equipment to produce hand sanitizers and use their fleet to deliver food to
areas in need. They have also implemented innovation by helping bars to sell vouchers
that can be used in the future.

B1.2 [14]

Step 1 Risk identification

In this stage risks are identified in terms of potential losses or gains (opportunities or
threats). The risk identified are firstly people, how will covid-19 impact on clients,
employees, and shareholders of ABInBev. Secondly how will supply and operations be
impacted? We have seen alcohol production and sales being restricted in many
countries as governments temporarily amend laws. Thirdly demand for beverages will
drop as customer interactions changed. Lastly Financial aspects will we be affected as
customers are not buying or ordering the products this also leads to liquidity risks.

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MNG3701 – Strategy implementation and control May/June 2020 Portfolio Examination

Step 2 Risk analysis

In this step we take the risks we have identified and prioritise them according to which
are most likely to happen and the impact of each risk on the company. This is efforts to
mitigate the risks are channelled correctly.

Step 3 Risk evaluation and response

In this stage we evaluate the risks according to their likelihood of occurring and the
impact they will have on ABInBev.

Having employees infected by covid-19 will lead to the closure of production sites, in
turn the employees may infect the rest of the community. ABInBev being deeply
connected to its community and sourcing their ingredients with the communities they
operate in, having many infections in the community will lead to disruption in their
supply and operations. Financial losses are inevitable as bars and restaurants are not
operating and demand for alcoholic beverages has dropped leading to low sales or
limited income. If the restrictions continue ABInBev will see themselves having to
retrench employees especially if they do not find new ways of trading. We also identify
appropriate responses to risks. ABInBev has used their operations to fight the pandemic
with their community by producing and donating hand sanitiser as a way of protecting
the communities they operate with the hopes of reducing the spread. In assisting
restaurants and bars in buying beer vouchers for the future not only are they assisting
their customers but mitigating financial losses.

Question B2

B2.1 [5]

The hospitality industry has been forced to re-evaluate and restructure their strategy
due to market changes brought on by covid-19. They have had to opt on selling online

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MNG3701 – Strategy implementation and control May/June 2020 Portfolio Examination

vouchers that can be redeemed at a future date and take out delivery in response to the
closure of bars and restaurants in a bid to maintain social distancing. As a result, the
organisational structure needs to be changed to facilitate the new strategy. For
example, instead of just having waiters and bar tenders, they would know need IT
specialist to facilitate the online orders and drivers to deliver the takeout food. Therefore
“structure follows strategy”.

B2.2 [5]

QUESTION B TOTAL: [41]

OVERALL TOTAL: [70]

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MNG3701 – Strategy implementation and control May/June 2020 Portfolio Examination

References

Angelopulo, G. and Barker, R. 2013. Integrated organizational communication. Cape

Town: Juta.

Chapman, R. 2013. Simple tools and techniques for enterprise risk management.
United Kingdom: Wiley.

Venter, P. 2017. Practising strategy, A South African context. Cape Town: Juta.

University of South Africa. Department. 2019. Strategy implementation and control IIIB:
study guide for MNG3702. Pretoria.

Student number: 44787049 Page 10 of 10

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[email protected] OR [email protected]

Question Answer
1. 3. Functional strategies or tactics are defined as follows: “Detailed statements of
the ‘means’ or activities that will be used by an organisation to achieve short-term
objectives and establish competitive advantage”. Page 7 Study guide.
2. 4. Matrix organisational structures. These are characterised by dual channels of
authority, performance responsibility, evaluation and control, and are largely
adopted by large, project-oriented organisations. Functional and staff personnel are
assigned to both a functional area and a project manager. While easy to design,
matrix organisational structures are difficult to implement and manage owing to the
potential for conflict. Page 13 Study guide.
3. 1. Policies are characterised by setting boundaries, constraints and limits on all
kinds of administrative actions. They clarify what can and cannot be done in pursuit
of an organisation’s objectives, simplify decision-making, and promote delegation of
decision making to appropriate managerial levels. An organisation’s policies can
either assist or block good strategy implementation. Page 13 Study guide.
4. 2. Successful strategy implementation can be defined as implementation that:
(1) achieves the desired outcomes (strategic objectives)
(2) completes all strategic initiatives successfully
(3) is acceptable to all stakeholders (e.g. does not entail dubious means such as
bribery or coercion). Page 18 Study guide.
5. 4. The so-called Icarus paradox, according to which organisations dwell on past
successes, losing sight of and not adapting to changing market realities and
changed requirements for competitive advantage to cope with new realities, which
invariably leads to failure. Page 18 Study guide
6. 4. The paradigm forms the core of the cultural web as it represents all the
assumptions taken for granted in the organisation. At the most basic level, the
paradigm represents the way of doing business. Page 204 in the textbook.
7. 2. Revolution is classified as a type of change that requires rapid and major
strategic and cultural transformation. Page 210 in the textbook.
8. 1. The “soft issues” relates to the drivers of strategy implementation that contains
elements that are people-centred (staff, shared values, style and skills (as opposed
to the “hard issues” which refers to those elements that are not people-related,
such as structure, strategy and systems). Study guide Page 26.
9. 2. The business architecture comprises of the internal and external stakeholders of
the organisation, organisational capabilities, that are underpinned by structure and
systems; knowledge, skills and abilities; and technology, organisational processes,
governance and organisational culture. Page 223-4 in the textbook.
10. 4. Step 8: Incorporating changes into the culture: The most difficult aspect of
change is changing the culture or mind-set of the organisation, and this will take up
most of the time. For this reason it is seen as the last step and not the first step. In
order to inculcate the change in the culture of the organisation, it must become part
of the shared values and beliefs of the organisation. Study guide Page 32.
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11.
3. Structural mechanisms that leaders can use are rituals and statements, which
are explained in the study guide on page 565.
12. 3. Components of strategy deployment include the following: successful
implementation of strategic initiatives, successful alignment of organisational units
with strategic direction and successful alignment of individual behaviour with
strategic direction. Page 239 in the textbook.
13. 4. Engagement bridges the gap between the thinking process (of which strategy is
the outcome) and the deployment process (where the portfolio of investments is the
outcome). Page 247 in the textbook.
14. 2. Figure 12.4. Page 252 in the textbook.
15. 2. Bounded rationality can be regarded as a barrier to successful strategy
deployment. In practice, managers can deal with only a limited number of options,
which means that managers will tend to reduce the overall task to a number of
small steps or tasks that are easier to manage, but may not be optimal. Page 260
in the textbook.
16. 1. The strategy execution framework (SEF) advocates a project-driven approach to
strategy implementation. Once strategy has been formulated, a portfolio of strategic
initiatives is identified. These initiatives do not form part of the day-to-day
operations of the organisation, and as a result they have to be managed as
programmes and projects. Once the projects have been successfully completed,
they become part of the day-to-day operations of the organisation. Study guide
Page 83.
17. 2. The attributes of a project include the following:
 It has a specific purpose or desired outcome.
 It is temporary – in other words it has a specific start date and end
date.
 It is multidisciplinary and will require resources from various
organisational areas (especially with regard to strategy
implementation).
 It requires leadership and a “champion” at a high level. (Considering
the importance of strategy implementation, the champion should be
at the top of the organisation.)
 It requires a certain methodology, process and plan – in other words
it is managed. Study guide Page 84.

18. 2. Large-scale changes may be required, that may involve extensive changes, for
example:
 structural changes, such as restructuring of the whole organisation
 people changes, such as appointing a new top management team
 cultural changes, where an effort is made to realign the cultural values and
beliefs with the change. Study guide Page 23.

19. 4. There are four elements to measuring organisational performance measures:

 A goal or objective specifies where the organisation wants to be at some
point in the future. In our Comrades Marathon example, successfully
completing the Comrades may be the goal, and running a qualifying
marathon under 5 hours before the end of October may be an objective.
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 A measure is (typically) a quantifiable measurement of how the

achievement of a goal will be measured. In the Comrades Marathon
example, the key measure is time.
 The baseline measure is an indication of where we are now – our starting
point in terms of the metric. With regard to the Comrades Marathon, the first
baseline measure may be how fast you can run (or walk!) an 8 km time trial
at your club meeting on Thursday. From there, you can then track how your
time (as a measure of your fitness and running speed) improves week on
week.
 The target specifies what you want to achieve in terms of the metric. Let us
say that, for the Comrades Marathon, you set yourself the target of
completing the race in 10 hours. Study guide Page 101.

20. 2. The organisational maturity model has been developed in order to assess an
organisation’s progress towards performance excellence. From the list below, the
key business areas that organisations need to assess include the following:
 Organisational strategy, structure and support
 Workflow processes
 Management skills and competence
 Functional skills and competence
 Resource and information management systems. Textbook, Page 293-4.
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Section B
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Absorptive capacity refers to the ability of an organisation to recognise the value of new,
external information, to assimilate it and to use it to address business problems. Absorptive
capacity is a strategic capability and differs from organisation to organisation.
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The following four dimensions should first be explained:

 Acquisition of external information: This term refers to the ability of the organisation
to acquire relevant information from its external environment. This may be limited by
their dominant management logic, as the search for information will generally be limited
by what managers think are relevant (a conceptual filter that determines what gets
incorporated or left out of strategy planning and implementation components). Speed is
an important element of acquiring information - the better the quality of the information
and the sooner it is obtained, the better the organisation’s chances of developing some
sort of advantage from it.
 Assimilation of acquired information: Assimilation of information refers to the ability of
the organisation to analyse and make sense of the acquired information. The ability of
the organisation to interpret and understand what the implications are of the new
information to their business is crucial in this process, as is its ability to share the
information and knowledge across the organisation.
 Transformation of knowledge: This term refers to the abilities of the organisation to
combine new knowledge with existing knowledge and to develop new insights.
 Applying new knowledge: The real benefit of absorptive capacity occurs when
organisations use the transformed knowledge and new insights to improve their
business operations and to develop new innovations and business ventures.

Comparing Kodak and Fujifilm:

 Acquisition of external information: Kodak and Fujifilm both seen their traditional
business being rendered obsolete. Both companies have been aware of the advent
of digital photography.
 Assimilation of acquired information. Kodak did not have the ability to assimilate new
information, to analyse and make sense of it. Also, Kodak did not realise the
implications of the new information. Fujifilm on the other hand, understood the
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implications of the new information and developed a three-pronged strategy in

response to the new information.
 Transformation of new knowledge. Kodak did not have the ability to combine new
knowledge with existing knowledge and to develop new insights. Instead, Kodak had
a culture of complacency. Although Kodak eventually decided to diversify, they took
years to make its first acquisition. Fuji on the other hand, squeezed as much money
out of the film business for as long as they could, prepared for the switch to digital
photography and diversified into new lines of business.
 Applying new knowledge. Kodak did not succeed in transforming knowledge and
new insights to improve their business operations, whereas Fuji developed new
ideas, diversified their product lines, develop innovative new ideas such as the
launch of its line of cosmetics, branching into other pharmaceuticals, liquid-crystal
display panels for television sets of other electronic devices.

Strategic change occurs when an organisation decides to change its strategic direction in light
of internal and/or external factors. This then leads to large-scale changes in the organisation.

Step 1: Unfreezing

Unfreezing the status quo and readying the organisation for change. It involves the examination
of current behaviours and employees have to be shown how necessary change is, and how the
status quo is hindering organisational growth. Employees have to be informed about the
imminent change, why it is necessary, what it entails and how it would benefit them. Kodak:
strategic leaders realised that their current business being rendered became obsolete.
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However, current behaviours were not examined and the company did not see the need to
change its status quo. Kodak became a complacent monopolist. Also, the company experienced
inconsistency in leadership, it had no clear vision for the future. Fuji: recognised the need for
strategic change, strategic leaders was readying the company for strategic change by
implementing a three-staged strategy whereby the company squeezed as much money out of
the film business for as long as possible (thus, not changing process and structures); prepared
for the switch to digital photography (which also lead to new process, structures and skills to be
acquired).

Step 2: Changing

Actual change takes place, employees need to start learning new behaviours required of them.
Employees need to acquire new knowledge, skills and attitudes, organisational structures and
systems need to change and communication is crucial. Kodak: no new behaviours were
learned, strategic leadership changed frequently. Fuji: Shigetaka Komori took control of the
company overhauled the company, slashed costs and jobs, shed superfluous distributors,
development labs, managers and researchers in order to survive.

Step 3: Freezing

Once change is implemented, it needs to be permanent. IT has to be solidified and entrenched

in the organisation. Kodak: the company sticks to its culture of commitment to making perfect
products than to getting products to the market as quickly as possible and fixing the
shortcomings in later models. Fuji: mastered new tactics and survived.

Strategic leadership is the process of providing the direction, motivation and inspiration
necessary to create and implement an organisation’s vision, mission and strategies to achieve
organisational objectives.
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Leadership principles/skills:

1. Strategic leaders are future-oriented. Mr Komori was future—oriented, with a vision of what
is needed to survive over the long term.

2. Strategic leaders get things done. He overhauled the entire company.

3. Strategic leaders open new horizons. Under his leadership, new product lines were
introduced successfully.

4. Strategic leaders are fit to lead. The success of the company is testimony of his ability to
lead.

5. Strategic leaders work effectively with all stakeholders. The case provides evidence of
his ability to work with employees, he read the emerging markets correctly.

6. Strategic leaders “do the right thing”. At Fuji, technological change sparked an internal
power struggle. At first, participants in the consumer film business, who refused to see the
looming crises, prevailed. But the eventual winner was Shigetaka Komori, who chided them as
“lazy” and “irresponsible” for not preparing better for the digital onslaught. Named boss
incrementally between 2000 and 2003, he set about overhauling the company. He spend
around US$9 billion on 40 companies since 2000. He slashed costs and jobs. In one 19-month
period, he booked more than ¥250 billion in restructuring costs for depreciation and to shed
superfluous distributors, development labs, managers and researchers. “It was a painful
experience”, says Mr Komori. “But to see the situation as it was, nobody could survive. So we
had to reconstruct the business model”. All these action lead to the success of the company.

7. Strategic leaders are evidence based and research-led. Under Mr Komiri’s leadership,
Fujifilm tapped its chemical expertise for other uses such as cosmetics, liquid-crystal panels for
television sets and other electronic devices.
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A project-driven approach means that once a strategy has been formulated, a portfolio of
strategic initiatives is identified. These initiatives do not form part of the day-to-day operations of
the organisation, and as a result they have to be managed as programmes and projects. Once
the projects have been successfully completed, they become part of the day-to-day operations
of the organisation.

One project from the Fujifilm Company could be to investigate chemicals for other uses. The
typical stages of the project would be the following:

 Initiating: Investigate chemicals for other uses

 Planning: Use expertise in chemicals to develop cosmetics containing anti-oxidants
 Executing: Develop line of cosmetics sold in Asia and Europe
 Monitoring and control: Monitor the production and quality processes
 Closing: Hand –over of new product line
FINAL %
MNG3702
RMG3702

May/June 2016

BUSINESS MANAGEMENT (STRATEGIC MANAGEMENT 3B)

STUDENT NUMBER

IDENTITY NUMBER

Marks
Question
FOR USE BY EXAMINATION Examiners
No.
INVIGILATOR 1 2
A1.1
A1.2
 A1.3
Subject B1.1
B1.2
 B2
Number of paper B3


Date of examination


Examination centre
Total

WARNING

1. A candidate who, without authorisation, takes into the examination venue any book, document or object,
which could assist him or her in the examination, and does not hand over such material to the invigilator
before the official commencement of the examination, will be guilty of infringing the University’s
examination regulations and will be liable to punishment as determined by the University council.

2. Rough work may only be done on the examination question paper and must be labelled as such.

3. No notes may be made on any part of the body, such as the hands, or on any garment.

4. This examination paper is the property of the University and under no circumstances may the candidate
retain it or remove it from the examination venue.

NOTE: COMPLETE THE ATTENDANCE REGISTER ON THE BACK PAGE, TEAR IT OFF AND HAND IT TO
THE INVIGILATOR.
This paper consists of 28 pages (including the cover pages) plus 2 blank pages for rough work (pp 27
and 28).

THIS IS A FILL-IN EXAMINATION PAPER AND THE WHOLE PAPER MUST BE SUBMITTED AT
THE END OF THE EXAMINATION SESSION. THIS PAPER REMAINS THE PROPERTY OF THE
UNIVERSITY.

INSTRUCTIONS
This paper comprises two sections, namely section A and section B.

Section A
• Section A comprises of a case study and three (3) compulsory paragraph-type
questions.
• You must answer all three questions in this section on this fill-in examination.
• The total for this section is 40 marks.

Section B
• Section B comprises three (3) essay-type questions
• You must answer any two (2) of the three questions on this fill–in examination.
• Each question counts 15 marks.
• The total for this section is 30 marks.

• The total of the paper is 70 marks.

• This is a closed-book examination. You may not consult notes of any kind or any
person (except the invigilator) during the examination session.

[TURN OVER]
 2 MNG3702/RMG3702
MAY/JUNE 2016

KELLOGG CASE STUDY: CHANGING BREAKFAST TASTES AND TRENDS

Wealthy people throughout the 19th century often went to sanatoriums for exotic cures for all kinds of
ailments. Will Keith Kellogg worked at just such a health spa in Battle Creek run by his older brother, Dr.
John Harvey Kellogg, an eccentric wellness guru. The Kelloggs were Seventh-Day Adventists and
therefore strict vegetarians. They couldn’t serve their patients eggs and bacon. They needed to serve
something lighter. They developed a flaking process, which is the origin of the modern breakfast flake.

For almost a century, Kellogg dominated the cereal market and breakfast was personified by Kellogg’s
cartoon mascots like Tony the Tiger; Toucan Sam; and Rice Krispies’ Snap, Crackle and Pop. Kellogg still
spends more than $1 billion a year on advertising, but it no longer has the same hold on the breakfast
market. The sales of 19 of Kellogg’s top 25 cereals had eroded by 2015, according to Consumer Edge
Research that tracks the food industry. Kellogg executives don’t expect cereal sales to return to growth,
though they hope to slow the rate of decline and do better in 2016. Some food industry analysts anticipate
that cereal sales may never fully recover.

Kellogg’s financial woes in part can be attributes to changing tastes of fickle breakfast eaters and a more
ominous health-conscious trend. There is a growing suspicion of packaged-food companies that fill their
products with genetically modified organisms (GMOs). Consumers are shying away from processed food,
which is a problem for a company selling cereal derived from corn, oats and rice. “They basically have a
carb-heavy portfolio,” says Robert Dickerson, senior packaged-food analyst at Consumer Edge.

In response to changing consumer tastes, John Bryant, the current CEO of Kellogg says Kellogg is
labouring to develop new cereals. However some of Kellogg’s problems are self-inflicted and indicative of
the company’s larger problems. Kellogg’s problems began in 2008, when it embarked on a $1 billion,
three-year cost-cutting initiative called K-Lean, which targeted wasteful spending in the company’s
factories. It was soon clear this strategic initiative had gone overboard. A flood at an Eggo factory in
Atlanta led to a debilitating frozen waffle shortage that battered the company’s financial results in 2009.
The following year, Kellogg recalled 28 million boxes of Froot Loops, Honey Smacks, and others
manufactured at its Omaha plant because of an odd stench and taste the company traced to the plastic
lining in the boxes. Trevor Bidelman, president of the Bakery, Confectionary, Tobacco Workers and Grain
Millers International Union, which represents workers at the Battle Creek cereal factory commented that
Kellogg K-lean initiative had “cut way too deep. Probably the biggest thing that hurt them was the
thousands of years of experience that they ran out the door. Our plants could not run very effectively for

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two to three years after that.”

By the end of 2010, John Bryant, a 13-year Kellogg veteran was appointed to clean up the K-Lean mess.
Bryant admitted that Kellogg had cut too many people in their facilities. Kellogg responded by hiring 300
factory workers and added additional waffle capacity.

In 2012, Bryant made what he considered a transformative purchase. He orchestrated Kellogg’s $2.7
billion acquisition of Pringles, the 44-year-old canned potato chip brand, from Procter & Gamble. However
Pringles is representative of the processed food that consumers are shirking from. However the deal
boosted Kellogg’s net sales by more than $1 billion that year to $14 billion, and enabled Bryant to claim
that Kellogg was no longer so dependent on cereal.

In November 2013, Bryant made the puzzling decision to make another four-year cost-cutting plan. While
Bryant was cutting costs, competitors added new cereals in response to consumers’ shifting breakfast
habits. In February 2015, Bryant acknowledged that Kellogg snacks division was ailing. Sales had
declined 2 percent. This put even more pressure to resuscitate the cereal division. Hence Bryant pushed
what he describes as a long-term rescue plan. He wants to rebrand Special K from a diet brand to a cereal
for the health-conscious with new variants such as Special K Protein Cinnamon Brown Sugar Crunch. The
company is also promoting Raisin Bran with Cranberries. Bob Goldin, executive vice president of
Technomic, a food industry consultant, doubts that these new cereals will have a big impact on the
company’s sales. “The category is pretty mature,” Goldin says. “It’s not so easy anymore to introduce a
new line or do a new TV ad and life is good again.”

However Bryant isn’t worried. “The company has been around for 109 years, we have the time. We have a
plan to turn it around.”

Adapted from: http://www.bloomberg.com/news/features/2015-02-26/for-kellogg-cereal-sales-recovery-

may-be-lost-hope (accessed January 2015)

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SECTION A

• Read the Kellogg case study and answer all THREE (3) paragraph-type questions in this section.
Use the space provided below for your answers.
• The total for this section is 40 marks.

Critically evaluate the choices made in implementing Kellogg’s strategy and make recommendations on
the process of strategy implementation. More specifically in your answer do the following:

1.1 Critically evaluate the strategic change efforts of Kellogg’s. In your evaluation make specific
reference to the preconditions for effective strategic change (organisational change capacity). (15)

1.2 Critically explain the role of organisational learning in implementing Kellogg’s strategy and make
five recommendations on how Kellogg’s can become a learning organisation. (10)

1.3 Critically discuss how strategy deployment can contribute to the management of Kellogg’s strategy
implementation. In your discussion make specific reference to the components and enablers of
strategy deployment. (15)

[40]

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SECTION B

• Answer ANY TWO (2) of the following three questions in this section in the space
provided.
• Each question counts 15 marks.
• The total for this section is 30 marks.

QUESTION B1
Strategic leaders play an invaluable role in shaping culture in an organisation, and leadership is seen as
the source of the organisations beliefs and values.

In view of the above statement, do the following:

B1.1 Critically discuss how strategic leaders can shape organisational culture to enhance and support
strategy implementation. Make use of examples to support your discussion. (10)

B1.2 Discuss any five principles of strategic leadership. (5)

[15]

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QUESTION B2

2.1 In a world were change is prevalent and organisations have to be agile and quick to adapt, what
role does organisational structure play? In your discussion make specific reference to
ambidextrous organisations. (10)

2.2 Explain what organisational architecture is.

(5)

[15]

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QUESTION B3

Discuss how the Balanced Scorecard can be used to manage an organisations performance. Make use of
a strategy map example to support your discussion.
. [15]

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TOTAL: 70

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ROUGH WORK PAGE 1

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ROUGH WORK PAGE 2

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SECTION A

Question 1.1
Critically evaluate the strategic change efforts of Kellogg’s. Use the preconditions for effective strategic change (organisational change
capacity) as a framework for critically evaluating the strategic change efforts at Kellogg’s. (15)

Organizational capacity for change (OCC) is the overall capability of an organization to either effectively prepare for or respond to an Allocate 1 mark per
increasingly unpredictable and volatile environmental context. This overall capability is multidimensional, and it comprises three ingredients: relevant and meaningful
(a) human skill sets and resources, (b) formal systems and procedures, and (c) organizational culture, values, and norms. As such, OCC is argument made.
a dynamic, multidimensional capability that enables an organization to upgrade or revise existing organizational competencies, while
Allocate maximum 2 marks
cultivating new competencies that enable the organization to survive and prosper. More specifically organizational capacity for change for explanation of OCC.
comprises of eight dimensions:

Dimension 1: Trustworthy Leadership. The first essential dimension for OCC is the extent to which an organization is perceived to be led Allocate maximum 2 marks
by trustworthy leaders. A trustworthy leader is someone who is not only perceived to be competent in leading the organization but also per dimension.
perceived as someone who has the best interests of the organization as their priority. As such, a proven record of trustworthiness on the
part of the leaders is essential to bring about experimentation with a new order of things No marks allocated for
merely naming a
However, a strategic leader or leaders behaving in a trustworthy fashion are not enough; the followers within the organization must be dimension.
favorably disposed to trusting their organization. In essence, you also need trusting followers to be change capable.
Maximum mark
Dimension 2: Trusting Followers. The second key dimension of organizational capacity for change is the overall level of trust held by the allocation:15
employees of the organization. Trusted leaders are only half of the equation when it comes to organizational change; the other half is the
followers. When an organization is filled with a critical mass of individuals who are hopeful, optimistic, and trusting, it will be well positioned .
to experiment with new ways of operating. When an organization is dominated with a critical mass of individuals who are cynical,
pessimistic, and not trusting, it will not be well positioned to engage with organizational change initiatives.

Dimension 3: Capable Champions. Change champions are those individuals within the senior executive group, the middle management
ranks, or both who drive the change initiatives within an organization. These individuals are often mavericks and they don’t normally fit in
well in bureaucratic structures. However, their misfit nature is exactly what is needed in order to drive change successfully. Within small
organizations, these champions are often the same as the head of the organization. Within medium and larger organizations, these
champions are often drawn from the ranks of middle management These change champions are often “sponsored” by top management to
spearhead change initiatives.

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Dimension 4: Involved middle management. In many organizations, middle management has been hollowed out, downsized, and
replaced by computers. The remaining middle management group is often uninvolved with the strategy formation design initiatives. This is a
mistake. Middle managers are pivotal figures in shaping the organization’s response to potential change initiatives, so their involvement is
crucial to organisational capacity for change. When an organization comprises of capable champions and involved middle management,
then you have an opportunity for lateral leadership and effective influence without authority—a key ingredient for making your organization
more agile.

Dimension 5: Systems Thinking. Organizations are complex living systems that are not properly understood by linear thinking and
analysis focuses on systems thinking within the organization. Systems thinking, according to Senge, focuses on how the individual being
studied interacts with the other constituents of the system. Rather than focusing on the individual’s or organizational units within an
organization, it prefers to look at a larger number of interactions within the organization and in between organizations as a whole. In sum,
an organizational infrastructure that promotes systems thinking is another key dimension of organizational change capacity.

Dimension 6: Communication Systems. When an organization combines systems thinking with high-functioning communication systems,
systemic knowledge is created and dispersed throughout the organization. Communication systems, is a second infrastructure dimension
and one that complements the systems thinking dimension. This dimension involves such things as e-mail networks, face-to-face meetings,
telephone calls, and corporate announcements all being focused on the conveyance of the value for and the means for implementing a
proposed organisational change. Organisational change requires reflection and action. Too often, there is a gap between thinking and
doing. Consequently, many observers of failed and successful organisational change initiatives emphasize the importance of
communication in order to convert knowledge into action.

Dimension 7: Accountable Culture. Another term for an “accountable” culture is a “results-based” culture. Accountable cultures do not
focus on how the work is done, but they do help to carefully monitor the outcomes of results produced. As a result, accountable cultures
track whether a deadline was reached or whether the activities were executed under budget or not, and seek to discern what teams and
individuals hindered or facilitated successful change. Of course, change is inherently unpredictable so there must be some executive
judgment involved with the evaluation of results. However, fostering innovation and change does not mean that innovators and change
agents are given a blank check with no deadlines. In sum, organizational capacity for change is also dependent on effective reward and
control systems.

Dimension 8: Innovative Culture.

The culture of an organization defines appropriate behaviour, and motivates individuals and offers solutions where there is ambiguity. It
governs the way a company processes information, its internal relations, and its values. Some organizational cultures value innovation and
change, while many others value stability and equilibrium. In sum, an organizational culture that emphasizes the importance of
organizational change and innovation is a third infrastructure dimension that is critical to organizational change capacity. I sum, the culture

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dimensions of accountability and innovativeness, help to ensure that the organization efficiently marshals scarce resources while creatively
looking to the future.

See LU 2, section 2.6, p and open source book

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Question 1.2
Critically examine the role of organisational learning in implementing Kellogg’s strategy and make five recommendations on how Kellogg’s can
become a learning organisation. (10)

A learning organization is an organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behaviour to reflect Allocate maximum 1 mark
new knowledge and insights. for defining the concept
organisational learning
Central to this idea are three key elements of learning organisations:
(1) the creation and acquisition of knowledge, referring to new knowledge being attained Allocate 1 mark for each
by individuals in the organisation relevant and meaningful
(2) the transfer of knowledge (from one individual to others ) argument made.
(3) the modification of behaviour (and making strategic decisions) to reflect new insights
Allocate maximum two
In terms of Kellogg case study, the key elements of organisational learning is not evident. It needs to become better at modifying marks for each
organisational behaviour to reflect the insight made in terms of changing tastes and trends in breakfast market. To make deep seated recommendation made. No
mechanisms are needed, in combination, to become a learning organisation. These mechanism are: marks allocated for merely
naming or listing the
Leadership commitment to learning mechanisms needed to
Problems within an organisation generally begin with top management and filter down, as do successes. Thus, in order to generate a become a learning
culture of organisational learning, leaders should demonstrate their own commitment by being models of learning, championing learning organisation.
and using learning strategically for business results. (No evidence in the case study that organisational learning starts at top management
level)
Maximum mark allocation:
Building shared visions 10
Leaders need to develop genuine visions (not just pieces of paper) that can inspire employees. Visions cannot be dictated to employees;
employees have to believe and buy into them. Genuine shared visions will inspire employees in good times and bad, and have the power to
bind an organisation together for the long term. It is also important to empower people towards a collective vision, not only by involving
them in setting the vision, but also by distributing responsibility in such a way that people are motivated to learn toward what they are being
accountable to achieve. In the case of Kellogg is embarking on a turnaround strategy and needs to buy-in in terms of difficult decisions such
as retrenchment of staff or closing of plants. Currently no evidence of buy-in

Encouraging diversity
People from similar backgrounds, for example similar cultural groups and similar education, tend to see things in a similar way. Quite often,
if the top management team is too similar in their backgrounds, it is easier for them to get caught up in a dominant management logic, and
much more difficult to change. For this reason, diversity in the organisation and specifically in the top management team should be
encouraged. The more people have divergent views, the more they are likely to influence each other’s mental models and effect change
because employees took part in the process of developing the vision, they also bought into it. No evidence in the case study that a diversity
of viewpoints are encouraged.

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Encouraging double-loop learning

Single-loop learning occurs when individuals or organisations strive to achieve a goal and when they do not succeed, evaluate what went
wrong. They may then try a different strategy, fail again, evaluate again, and so on until they run out of ideas. This persisting failure may
push the individual or the organisation into a situation where the fundamental elements or rules governing the situation are questioned,
leading them to re-evaluate their own mental models – the goals, values and beliefs they hold. This questioning of the fundamental
underlying assumptions is known as double-loop learning. Challenging existing mental models is critical to being a learning organisation,
since our mental models can prevent new powerful insights and organisational practices from becoming a reality. The process of unlearning
mental models begins with self-reflection to develop an understanding of our deeply held beliefs and generalisations, and how they
influence the way we do things. Until we are prepared to challenge our own mental models, real change cannot take place. In the case of
the CEO has not challenged the long standing existing mental model of how Kellogg should compete, incremental changes and cost cutting
is mostly done, and not a great deal of innovation.

Developing systems thinking abilities

Systems thinking refers to the ability to see the ‘big picture’, and to see patterns rather than isolated events. Systems thinking means that
as an organisation, we understand how we are connected to the world, how we fit into our environment, how we are influenced by it and
how we can influence it in turn. Another element of systems thinking requires people to be assisted to see the effect of theirwork on the
entire enterprise. In terms of the case new patterns in taste and consumer behaviour is noticed by Kellogg, but the strategic response is
almost too late, to take advantage of changing trends.

Encouraging individual and team learning

Being committed to lifelong learning is an important element of a learning organisation. Learning should be designed into work so that
people can be trained on the job, while ample opportunities should be provided for ongoing education and growth. Peter Senge promotes
the idea of personal mastery as focusing on becoming the best person possible and striving for a sense of commitment and excitement in
our careers to facilitate the realisation of our potential. Encouraging top managers to enrich their experience bases through sabbaticals and
educational experiences, and rehearsing as a management team for a broad range of future industry scenarios are examples of such
individual learning opportunities. Peter Senge also emphasises the importance of team learning. Modern organisations operate on the basis
of teamwork, which means that organisations cannot learn if team members do not come together and learn. This process requires teams
to develop the ability to create desired results, to have a goal in mind and to work together to attain it. There is no evidence in the case
study that individual learning or team learnings being encouraged

Legitimising dissent
Thinking is not the exclusive domain of top managers. In learning organisations, everybody should think and contribute ideas, and to this
end, employees should be encouraged to question key business practices and assumptions. A culture of dialogue and debate is very
important in a learning organisation. It is also important to double-loop learning, since it allows employees to challenge the mental models
that organisations use in their decision making. No evidence in the case study of legitimising dissent.

Encouraging experimentation
Few people learn how to ride a bicycle without falling off a number of times. In fact, falling and getting back up is an important part of the
process, and in organisations, it is no different. Without failure, there is no learning. For this reason, it is important to encourage
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experimentation and to see the failures for what they are – learning opportunities. Prahalad and Bettis suggest that the economic evaluation
of the organisation should be separated from managerial evaluation, so that managers can be rewarded for experimenting even when
projects are unsuccessful. There is no evidence in the case study that experimentation is actively encouraged.

Establishing communities of practice

Communities of practice (CoPs) are the building blocks of learning systems. The idea of CoPs closely fits Peter Senge’s notion of ‘team
learning’.CoPs can also exist across organisational boundaries. For example, a CoP on procurement practices may include suppliers and
academics from outside the organisation. One of the key roles of a CoP is to define what competence entails in its context, and there are
three elements: There must be a sense of joint enterprise, meaning that members of the CoP need to have a shared understanding of what
their community is about and how they can contribute to it. Members must be accepted and trusted, and able to interact with other members
of the community, in other words there should be relationships of mutuality. The community will, over time, develop a shared repertoire of
stories, language, routines, rituals and processes, and the knowledge of how to use these appropriately. The value of CoP for organisations
occurs when sharing of information takes place across the boundaries of the CoPs, either between individuals or with other CoPs as a
whole. No evidence in the case study that a CoP exists.

Collaboration
Collaboration with suppliers, customers and even competitors is becoming a more and more common means of fostering learning in
organisations. However it does require a specific mindset organisations than cannot or will not trust their collaboration partners or share
openly will not be able to learn. In the case there is no evidence of collaboration with suppliers, customers or competitiors.

Knowledge management
Knowledge management is ‘[t]he management function that creates or locates knowledge, manages the flow of knowledge within the
organisation and ensures that the knowledge is used effectively and efficiently for the long-term benefit of the organisation’ In other words, it
is a management system to share organisational knowledge and to support organisational learning. The creation of an efficient knowledge
management system can contribute towards the creation of a learning organisation. In the case study there is no evidence of a knowledge
management systems being existing or being created.

See TB, Chapter 6, section 6.5, pp 105-105

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Question 1.3
Critically discuss how strategy deployment can contribute to the management of Kellogg’s strategy implementation, and refer to appropriate
examples to support your discussion. In your discussion make specific reference to the components and enablers of strategy deployment. (15)

Strategy deployment refers to the process for managing the implementation efforts of the organisation. In other words, it provides the Allocate maximum 1 marks
“logical model” that managers need to manage implementation efforts. In identifying the components and enablers in the case study, it is for defining strategy
likely that there will be an overlap between components. Components are likely to influence each other as well. In terms of critical deployment.
discussion it needs to be clearly stated if there is alignment between components of strategy deployment and if the enablers of strategy
deployment are considered in deployment efforts. Student may also refer to the use of a project management approach that is followed
(allocate one mark for each of aspects mentioned, but there needs to be evidence of critically thinking)

The three components of strategy deployment are:

Allocate maximum 3 marks
 Aligning organisational units with the strategic direction - the organisational units that must be aligned with the strategy so that the for the discussion each
entire organisation and all its parts move in the same direction (in the case study the overall objective is to turnaround the financial enabler. Allocate one mark
decline of cereal division – which is aligned closely with the cost cutting initiatives) for each appropriate example
 Aligning individual behaviour with strategic direction – individual behaviour can be aligned with strategy by communicating the given. Allocate maximum 9
strategy, and the use of tools such as; recruitment process, policies and procedures, cascading objectives and reward systems (in marks for the components of
the case study a new CEO was appointed to deal with the K-Lean initiative problems. The new CEO had a great deal more strategy deployment.
experience, in terms of knowledge specific to Kelogg, which placed him a better position to execute the turnaround strategy)
 Strategic initiatives – initiative refers to key projects or programmes to achieve specific objectives or improving performance. The
organisation must have adequate processes for identifying and managing strategic initiatives (several initiatives are mentioned in
the case study: developing new cereals, rebranding, and hiring 300 factory workers and added additional waffle capacity). Student
may mention process of managing initiatives for which marks may be allocated.

The enablers of strategy deployment are:

Allocate maximum two marks
 Communicating the strategy: The CEO announced a four year cost cutting program (a rescue or turnaround strategy). In terms of for the discussion of each of
buy-in there is a need to convince the union of the benefits of such as cost cutting program that may lead to job losses. the enablers of strategy. Give
 Organisational learning and adaption: It is not clear if real organisational learning is occurring, as the acquisition of Pringles is the one mark for each
kind of processed food that consumers are moving away from. Previous cost cutting also resulted in the loss of key organisational appropriate example given
know-how and capabilities to run quality production processes. Cost cutting has been excessive in the past (the organisation may that supports the discussion.
be making the same mistake, or “stuck” using a type of dominant management logic). No evidence also of double loop learning Allocate maximum 6 marks
taking place (the focus is more on closing gaps – single loop learning) for the discussion of enablers

 Resource allocation: Resources will be needed for each of the initiatives. It is not explicitly stated the kinds of resources that are
committed to initiatives, such as the development of new cereals, rebranding and so forth. The focus is more on cutting cost as

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opposed to developing new and innovative products that is suited to changing tastes and breakfast trends.

See TB, Chapter 12, section 12.1, p 239 -245 and LU 6, section 6.4 Maximum mark allocation:15

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SECTION B

Strategic leaders play an invaluable role in shaping culture in an organisation, and leadership is seen as the source of the organisations beliefs
and values.

In view of the above statement, do the following:

B1.1 Critically discuss how strategic leaders can shape organisational culture to enhance and support strategy implementation. Make use of
examples to support your discussion. (10)

Leaders play an invaluable role in shaping and instilling culture in an organisation. Drawing on the work of Edgar Schein (1992), we see Allocate 1 mark per
leadership as the source of the organisation’s beliefs and values. The most central issue for leaders is to understand the deeper levels of meaningful and relevant
organisational culture and to deal with the anxiety that sprouts from assumptions being challenged, for example during change argument made. The
programmes.
maximum marks allocated
1
Organisational cultures spring from three sources: without giving any
 the values, beliefs and assumptions of the founders of the organisation (this is the most important source of culture) appropriate examples is 5
 the learning and experience of group members marks.
 new beliefs introduced by new leaders or other members of the organisation
Allocate 1 mark for each
Leaders transmit and shape organisational culture by way of certain embedding mechanisms, which may include appropriate practical
 what leaders measure example given that supports
 how they react to critical incidents the explanation of how to
 how they allocate resources instil an organisational
 how they reward and allocate status culture that supports a
 how they recruit, promote and “excommunicate” members of the organisation
chosen strategy.
In addition to these embedding mechanisms, leaders can also use structural mechanisms (which exhibit some commonalities with
organisational architecture and the cultural web), such as Maximum mark allocation: 10
 organisational structures and systems
 procedures
 rituals
 physical spaces and other physical artefacts
 stories
 statements

Planned change programmes are also undertaken to deal with cultural change. See LU 4, section 4.5, the table on p 57, for symbolic

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and substantive actions that leaders may take, and LU 4, section 4.5.1, pp 56–57.

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B1.2 Discuss any five principles of strategic leadership. (5)

Various studies have been undertaken to gain a better understanding of the skills required to be a strategic leader and how these skills can Allocate 1 mark per
be mastered in a way that allows strategic leaders to think strategically and navigate the unknown effectively. The six principles of strategic meaningful and relevant
leadership are: principle mentioned.

Principle 1: Strategic leaders are future oriented and anticipate change No marks are allocated for
merely naming or listing a
A strategic leader needs to look ‘beyond the present’ and anticipate change to help them see opportunities before competitors do or employ principle of strategic
strategies to protect their business interests. Effective leaders are constantly scanning the environment and are vigilant to uncover leadership
opportunities inside and outside the organisation. In doing so, they consider the complex and unpredictable nature of the future and develop
broader networks to gain insights into the perspectives of customers, competitors and partners. These leaders furthermore encourage Allocate a maximum of 1
‘future thinking’ through ‘future dialogue’ and scenario planning to prepare for the unexpected. In this process, a set of learning skills can be marks for each strategic
developed to identify and take advantage of opportunities rather than be the victim of unforeseen changes and events. Although gut feel leadership principle.
plays an important role, strategic leaders understand the importance of formalising the collection, analysis, interpretation and dissemination
of market and business intelligence. These leaders allocate sufficient budget to resource research projects and reward employees to come Maximum mark allocation: 5
up with new ideas or innovative ways to improve practice. Active participation and leadership is furthermore required to find out ‘what works’
and to recognise achievements of performers. Best practice is communicated to all staff members and used to bring about improved
outcomes.

Principle 2: Strategic leaders get things done

Strategic leaders do not just question the status quo; instead they implement the best solutions to make a difference. They do not just talk
about what they might do, they actually do it. However, actions are based on careful reflection and examination of a problem through many
lenses and although they are known for their decisive actions, their ‘feet are firmly on the ground’ as they can distinguish between practical
solutions and ambitious dreams.

Principle 3: Strategic leaders open new horizons

Leaders who challenge existing work practice and strategy invariable elicit complex and conflicting information. So, in order to uncover
possibilities beyond the mundane and open new horizons and directions for their organisations, they are expected to look beyond the
obvious to recognise patterns, interpret different events and synthesise various outputs to gain new insight.

Strategic leaders also work effectively with all stakeholders and understand how their work interweaves with that of their colleagues and
relevant stakeholders to create opportunities for innovative practice. It is therefore important to find common ground among stakeholders

© UNISA 2015 [TURN OVER]

 Francois Crafford 012- 4294545 or 072 1770847 and Elsabe Scholtz 012 429 2695 or 074 6029979

who have disparate views and agendas. Opening new horizons does not mean thoughtlessly discarding what the organisation currently
values or neglecting the routines needed for the organisation to run smoothly. Rather, it means helping others see beyond established
orthodoxy to experiment with new, exciting and more effective ways of meeting the needs of their clients.

Principle 4: Strategic leaders reach out to stakeholders

As strategic leaders value the input of stakeholders and understand the importance of these parties when it comes to implementing new
strategies, they use proactive communication and frequent engagements to build trust and get their support. They are sensitive to different
cultures and cross-cultural issues, and they respectfully confront issues and articulate perspectives that may differ from prevailing or
dominant thinking. Strategic leaders therefore need to be skilled at managing conflict positively and at framing dynamic relationships in
ways that are productive. Together with stakeholders, they create a compatible view of the future.

Principle 5: Strategic leaders are fit to lead

It is easy to overlook the importance of health, but strategic leaders need to manage their physical and mental wellbeing. Consider the
Indian proverb: ‘A healthy person has many wishes, but a sick person has only one’. Strategic leaders are confronted by various obstacles
and unexpected environmental changes that pose threats and risks for the organisation. Such change creates increased levels of anxiety
and stress and to deal with this, leaders need to be resilient, flexible, reliable and resourceful. ‘Fit leaders’ are those who can be relied upon
in times of high pressure and when problems need to be solved. Being ‘fit to lead’ is also about being mentally prepared to exploit
opportunities which arise unexpectedly, to cope with uncertainty and ‘make things happen’ with limited resources.

Principle 6: Strategic leaders do the ‘next’ right thing and learn from past experiences

Strategic leadership is about ‘doing the next right thing’, which is about ethical leadership. Although it is not always possible, strategic
thinkers need to insist on multiple options and should not get prematurely locked into simplistic go/no-go choices. They do not ‘shoot from
the hip’ and recognise the importance of balancing rigour with speed, consider the trade-off involved and take both short- and long-term
goals into account. Fortunately, people who are egotistic, openly ambitious, autocratic, manipulative or plain dishonest and who put self-
interest first usually do not keep their positions for long. In comparison, successful leaders are described as those who consistently apply
the ethics of justice and caring. Strategic leaders also recognise the value of organisational learning. They consider lessons learned from
both successful and unsuccessful goals to be important inputs into future strategic considerations.

TB, Chapter 10, sect 10.4.1, p 207-209

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Question B2

B2.1 In a world were change is prevalent and organisations have to be agile and quick to adapt, what role does organisational structure play?
In your discussion make specific reference to ambidextrous organisations. [10]

In a complex and highly competitive environment, organisations need to be more agile and quick to respond to business environment Allocate 1 mark per
changes. Organisational structure plays an important role in organisations becoming more agile and responsive. Therefore, organisational meaningful and relevant
structures often evolve from simple forms to complex forms as environments are becoming more complex and competitive. More statement made.
specifically, ambidextrous structures assist organisations in remaining agile and adaptive, which is crucial to quickly exploiting opportunities.
Organisational ambidexterity refers to the ability to be equally good at exploiting existing opportunities using existing capabilities while
Allocate 2 marks if an
exploring and searching for new opportunities and new capabilities.
appropriate example is given
of organisational
In most organisations, the existing way of doing things tends to dominate management thinking, which makes it very difficult for them to be
ambidexterity derived from
truly innovative and to develop new capabilities. O’Reilly and Tushman (2004) found that companies, which are successful at both separating exploiting and
exploiting existing opportunities and exploring new opportunities (i.e. companies that are ambidextrous), separate their new, exploratory exploring units.
units from their traditional, exploitative ones, allowing for different processes, structures, and cultures. At the same time, they maintain tight
links across units at the senior executive level. In other words, they manage organisational separation through a tightly integrated senior Maximum mark allocation: 10
team. This supports Clayton Christensen’s (1997:7–11) idea that organisations will find it very hard to harbour activities that are disruptive
to their existing business in the existing organisation – the dominant management logic will simply suppress those innovations and new
ways of doing business.

Christensen argues that it would be better to harbour such ideas and activities in a spinoff business that is not fully under the control of the
old business and that is permitted to explore and be innovative. This is a prime example of an instance in which structure can directly
support strategy.

(See LU5, section 5.5.1, pp 73–74.)

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B2.2 Explain what organisational architecture is. (5)

Organisational architecture is an integrated strategic response (blueprint) that draws together the key dimensions and strategic planning Allocate 1 mark for each
and implementation components of the organisation (such as organisational structure, leadership, organisational culture, policies and relevant and meaningful
strategies) to guide strategic planning and implementation. Simply stated, it is a blueprint of the internal and largely invisible workings of the statement made.
organisation. Note that there is also a view that organisational architecture is not just internal workings, but also the totality of internal and
external relationships (includes external stakeholders). The argument for using an organisational architecture framework (a strategy tool in No marks are allocated for
the strategist toolkit) is that strategy implementation components and organisational subsystems should align with each other, creating a an illustration of
cohesive whole. Failing to do so, will lead to strategy implementation components (and parts of the organisational system) pulling in organisational
different directions, which will reduce the chances of successful strategy implementation.
architecture.
There are different organisational architecture frameworks that follow different approaches to developing a cohesive strategy (note that Maximum mark
there is no one “right” organisational architecture). allocation:5

(See

© UNISA 2015 [TURN OVER]

 Francois Crafford 012- 4294545 or 072 1770847 and Elsabe Scholtz 012 429 2695 or 074 6029979

Question B3
Discuss how the Balanced Scorecard can be used to manage an organisations performance. Make use of a strategy map example to support
your discussion. [15]

The balanced scorecard (BSC) is a widely accepted tool for managing organisational performance. The BSC focuses on four Allocate maximum 1 mark for
dimensions, and its purpose is to define the small number of strategic goals and key measures that measures performance defining the Balanced
across the organisation. For each goal, the organisation has to identify how it will be measured, what target it wants to achieve in the Scorecard.
given time frame, and the strategic initiatives that it will implement to achieve these targets.

The balanced scorecard plays a crucial role in the management of performance across the organisation, as each goal and target
can be broken down into functional objectives, measures (often also referred to as key performance indicators or KPIs), targets Allocate 1 mark per
and initiatives, which are ultimately reflected in the performance targets of individual employees. At the top, the executive team will meaningful and relevant
focus on the few key measures identified by the BSC, often designed in the form of an executive "dashboard". argument made how the
BSC can be used to improve
For example, an organisation might have the long-term objective of "increasing customer lifetime value". As a measure, average organisational performance.
customer lifetime value can be used, which is the net present value of all future cash flows generated by a customer. The customer lifetime
value (CLV) depends on customer retention (the longer you have a customer, the more they will spend), the profitability of a customer and
the amount of money a customer spends. Therefore, typical strategic initiatives may include a customer loyalty programme, a programme to
increase sales to customers (for example by bundling products) and ways to increase customer profitability, for example by increasing
online sales. You can see how these initiatives then become functional objectives: Allocate a maximum of 7
marks for the BSC
 Marketing may now have the objective of increasing customer retention, for example by launching a loyalty programme. discussion of how is can be
 Operations may introduce a programme to increase customer satisfaction by shortening delivery times. used to improve
 The sales function may be given the goal of increasing the sales value per sale (for example by cross-selling insurance products). organisational performance.
 The IT function may introduce an initiative to improve the e-commerce capability of the organisation and to increase online sales.
Allocate 1 mark for each
These initiatives will also have an effect on the individual performance management of individuals. For example, salespeople may perspective mentioned and 1
now be measured and rewarded on the net profit they generate per transaction and the size of the transaction, whereas previously they mark for an example of an
may have been rewarded purely on the basis of transaction volumes. initiative or measure.

In addition to cascading performance measurements down to lower levels, the BSC also offers the opportunity of developing strategy maps.
Strategy maps show how the objectives of the organisation are connected and how value is created for the organisation. This, in
turn, helps the organisation to understand how improving performance in one area will lead to improved performance in another area.

© UNISA 2015 [TURN OVER]

 Francois Crafford 012- 4294545 or 072 1770847 and Elsabe Scholtz 012 429 2695 or 074 6029979

Allocate maximum of 8
marks for either drawing or
explaining how a strategy
map assists in understanding
how improving performance
in one area will lead to
improvement in another area.
Allocation a marks. Allocate
1 mark for each perspective
mentioned and 1 mark for an
example of an initiative (the
Figure 1 A strategy map example interrelatedness between
initiatives must be clearly
Figure 1 is an example of a strategy map using the four perspectives of the BSC. From this map it follows that improved organisational shown or mentioned in the
capacity (better knowledge and skills and better tools and technology) can lead to increased process efficiency. Increased process discussion. No marks are
efficiency leads to lower cost (and higher profitability) but also to lower cycle time, which, in turn, leads to improved customer retention and allocated if interrelatedness
increased revenue (again increasing profitability). This example illustrates that the elements of the BSC should not be seen in is not clearly illustrated or
isolation, but rather as parts of a comprehensive system. discussed.

See TB, sect 13.5, p 290-291 and LU 7, section, 7.5

Maximum mark allocation: 15

TOTAL MARKS: 70

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o' south 4.,._�

MNG3702

RMG3702

Oct/Nov 2015

BUSINESS MANAGEMENT (STRATEGIC MANAGEMENT 38)

STUDENT NUMBER

IDENTITY NUMBER

I I I I

3
Subject 4

6
Number of paper 7

Date of exarnmation

Exam1nat1on centre

WARNING

A candidate who, without autnortsauon, takes into the exarnmation venue any book, document or object,

which could assist him or her m the exarnmanon, and does not hand over such material to the 1nv1g1lator

before the oftrcral commencement of the exarmnanon, will be gu1Uy of 1nfnng1ng the Urnversity's

exarrunanon requlations and w11l be hable to punishment as determined by the Uruversrty council

2 Rough work may only be done on the sxammanon question paper and must be labelled as such

3 No notes may be made on any part of the body, such as the hands, or on any garment

4 This examination paper rs the property of the University and under no circumstances may the candidate

retain 11 or remove u from the exarmnauon venue

NOTE. COMPLETE THE ATTENDANCE REGISTER ON THE BACK PAGE, TEAR IT OFF AND HAND IT TO

THE INVIGILATOR
 --- �- - ----
UNIVERSITEITSEKSAMENS

....-.-·
UNIVERSITY EXAMINATIONS

Ea lDl ll!lll czt - 1 '

----� U N l S A I :;:-
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MNG3702 October/November 2015

STRATEGIC IMPLEMENTATION AND CONTROL 1118

Duration 2 Hours 70 Marks

EXAMINERS

FIRST MR F CRAFFORD

SECOND MRS E SCHOLTZ

EXTERNAL MS S HUGHES (MAREE)

Use of a non-programmable pocket calculator rs permtsstble

Closed book exammanon

This exammanon question paper remains the property of the University of South Africa and may not be

removed from the exammatron venue

This paper consists of 26 pages (including the cover pages) plus 2 blank pages for rough work (pp 25

and 26)

THIS IS A FILL-IN EXAMINATION PAPER AND THE WHOLE PAPER MUST BE SUBMITTED AT

THE END OF THE EXAMINATION SESSION. THIS PAPER REMAINS THE PROPERTY OF THE

UNIVERSITY.

INSTRUCTIONS

• This paper comprises of seven compulsory, paragraph-type questions Answer all seven

questions

• Note that the case study rs applicable to questions 1 , 2, 3 and 4 only

• The total of the paper rs 70 marks

• This is a closed-book exammanon You may not consult notes of any kind or any person (except

the 1nv1g1lator) during the exarnmation session

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OCT/NOV 2015

NOKIA TRANSFORMING ITSELF AGAIN

Introduction

Nokia was founded as a wood-pulp mill m 1865, and 1t underwent transformations from

manufacturing rubber boots and toilet paper to manufacturing cables, computers and mobile

phones The strategic decrsion m 1 992 to focus solely on telecommunications and investments m

GSM technologies turned the company into the world's largest mobile phone manufacturer by

2000 However, by 2 0 1 2 , Nokia's run as the world's largest mobile manufacturer ended, due to a

loss of market share to Apple's 1Phone that made use of touchscreen technology At that time,

Nokia's engineers developed a mobile phone prototype with a touchscreen set above a single

button But the product, crafted years before Apple rolled out its 1Phone, did not hit the shelves

Nokia doubted touchscreen phones would be adopted or had any market potential This

assumption proved to be wrong, and had serious consequences m terms of market share losses

The company also had to make serious changes m operations due to losses m market share by

2011 In 2 0 1 1 , 11 announced a major business partnership with Microsoft, which would see Nokia

use Windows Phone as its platform However, by 2013, Nokia fell to number ten m global mobile

phone sales In 2014, Nokia divested rts mobile device business

New strategic direction for Nokia

In 2014, Nokia started talks with the French telecornmurucanons company Alcatel-Lucent

regarding a potential merger The merger would create a E U R 1 5 , 6 b i l l i on company and r

t may

potentially become one of the leaders m bu1ld1ng networks for today's sma rt phones and the next

generation technologies and services, such as the "in ternet of things" The strategic move rs m

anticipatron of gaining an advantage m connecting in telligent machines that have not yet been

i nvented These machines would i nclude everything from dnverless cars to robotic surgeons

using h i gh - s p eed connections T o create these high-speed connections will require transforming

exrstmq wireless frastructure to run at speeds 1 0 0 times faster than the current best technology
in

It would potentially cost trillions of euros to make the transformation

Strategy implementation challenges

T he transformation of Nokia and A lcatel-Lucent hinges on successfully executing the merger

Alcatel-Lucent was targeted by Nokia as a result of a previous merger failure between a French

and US company ( Alcatel and Lucent), wh i ch, since the merger, have struggled to compete m a

market dominated by Huawer of C h i na a nd Ericsson of Sweden

B oth companies are aware that mergers come at a cost, as drawn-out mergers require extensive

restructuring Moreover, these compa n i e s may never integrate successfully due to a clash of

cultures, which can be value destroying Both Nokia and Alcatel-Lucent had struggles with

clashes of organisational culture For example, Nok i a had an un comfortable 101nt venture with

Si emens, which resulted m the buy-out of the G erman st ake to create the current Nokia Alcatel­

Lucent had s1grnf1cant losses since its merger and was almost bankrupt at one stage

Alcatel rs considered a strategic national asset by the French government, which may oppose the

merger T he government rs concerned about what will happen to the 7 000 workers employed by

the company Therefore, one of the hurdles to the merger could be the reaction of the Fr ench

g overnment In view thereof, there rs scepticism about the merger A former N okia director

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commented, "My concern rs that you would be trying to meld together four companies, not two,

and four cultures, not two That sounds hke a recipe for disaster to m e "

However, the merger of Nokia and Alcatel-Lucent rs pnmanly motivated by cost savings and the

synergies that they will gain Moreover, Nokia, as a stand-alone business, would not be able to

compete against companies such as Ericsson and Huawei that are controlling the larger share of

the core wireless business With the merger, Nokia would gain a wireless business worth billions

of euros as well as cost synergies The merger will also give Nokia the capabihty to access the

US and Chinese markets and improve long-term growth opportunities

Conclusion

The proposed merger of Nokia and Alcatel-Lucent rs a key strategic move to stay ahead of

developments m a wide range of emerging next generation networked technologies In addrtion,

the investments m high-speed networks today should place Nokia in a better posmon to compete

against companies such as Ericsson and Huawer m the future

Adapted from

http://www.wsj.com/art1 cles/nok1 a-looks-to-reinvent-itself-yet-aqai n-142902357 4 (accessed

on 1 1 May 2015)

http .//www.bloomberg.com/news/art1cles/2015-04-15/nokia-ag rees-to-buy-networks-r1val­

alcatel-for-16-6-bi I hon (accessed on 1 1 May 2 0 1 5 )

http //www .ft.com/mtl/cms/s/O/bccd2ce0-e290-11 e4-ba33·

00144feab7de.html#axzz3ZovHb04U (accessed on 1 1 May 2 0 1 5 )

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Question 1

Identify the key reasons why strategic change programmes fail. Give examples from the

Nokia case study to support your answer. [10]

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Question 2

Explain why absorptive capacity rs a dynamic capability Give examples from the Nokia case study

to support your explanation. (1 OJ

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Question 3

Make recommendations on how an organisational culture can be instilled that supports Nokia's

chosen strategy. (1 OJ

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Question 4

Explain why organisational ambidexterity rs important in a more complex and compentrve

business environment Give examples from the Nokia case study to support your explanation [1 OJ

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Question 5

Cnt1cally discuss how the Strategy Executing Framework (SEF) contributes to strategy

deployment. [10]

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Question 6

Critically discuss strategy implementation failure. [10]

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Question 7

Explain Simons'(1994) control levers and the role they play in strategic control. [10]

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TOTAAL: 70

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ROUGH WORK PAGE 1

e
UNISA 2015

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ROUGH WORK PAGE 2

UNISA2015
 Francois Crafford at 012 429 4545 or 072 177 0847 and Elsabe Scholtz at 012 429 2695 or 074 602 9979

Question 1
Identify the key reasons why strategic change programmes fail. Give examples from the Nokia case study to support your answer.
[10]

The key reasons for strategic change programmes failing may be categorised as leadership reasons, structural reasons, cultural reasons, Allocate 1 mark per relevant
systems reasons and process reasons. and meaningful statement
made. Give a maximum of 2
Leadership reasons. In change programmes, it could happen that the leadership of the organisation has a different idea of the changes marks per reason. The
required than the board of directors (representing the owners of the company), the rest of the management team or the employees. Top
maximum marks allocated
leadership will work towards the change they think is required, but the rest of the organisation or the owners of the company, who do not
have the same view of the strategic direction, will then undermine the leaders. For this reason, widespread communication and participation without showing any
are critical in any change process. Trust is another key issue – if there is a lack of trust between leaders and other factions in the application is 5 marks.
organisation (e.g. unions or other stakeholders), it may have a negative effect on any change programme.
No mark allocated for merely
Structural reasons. Where the structure does not support the change required, the change programme could fail, for example, the naming or listing reasons for
managers in the organisation may not have the skills and mindset required to operate in a digital environment. If this is the case, large-scale why change programmes fail.
restructuring and the appointment of new managers with the right mindset will be required. In terms of the case study, the merger would
require extensive restructuring.
Allocate one mark for an
Cultural reasons. Where the change requires a paradigm shift that is far removed from the current paradigm, changing the culture of the appropriate example given
organisation may be too difficult or too time consuming. This may lead to the failure of the change programme. It may also have other that supports the reason
consequences that will affect the outcome of the change programme: identified.
• The existing paradigm of the organisation may be so strong that change initiatives are simply reinterpreted to fit the old paradigm.
• Various members of the organisation may feel disconnected from the change and not see it as relevant to them.
• Some people may comply with the changes even if they do not believe in the change. Maximum mark allocation:10
• The above behavioural compliance is merely superficial and not sustainable.

In terms of the case study, the differences in organisational cultures between the two organisations may derail the merger process.

Systems reasons. Where the systems are set up to support a specific paradigm, a change in paradigm might mean that the current
systems simply become inadequate to deal with the changes. Remember that systems in this instance refer to technical systems (such as
ICT) and to business processes such as performance management and reward systems.

© UNISA 2015 [TURN OVER]

 Francois Crafford at 012 429 4545 or 072 177 0847 and Elsabe Scholtz at 012 429 2695 or 074 602 9979

Process reasons. Some reasons inherent in the way the change process is managed, may lead to its failure, for example:
154

• Too much focus on planning. Too much focus on planning the change and not enough on implementing it may lead to over-
complicating and stalling change.
• Lack of communication. John Kotter suggests that the vast majority of change programmes are “under-communicated”.
• The slow nature of change. Given the slow and arduous nature of strategic change, it is easy to lose momentum and interest;
therefore, quick wins and considerable management attention are required to keep the change going.
• Not dealing with resistance. Not dealing with resistance to change or brushing it off may lead to an escalation in resistance; for this
reason, it is essential to encourage dialogue and debate and to deal with resistance as soon as possible. In terms of the case
study, resistance may come from the government that has an interest in preventing any job losses due to the merger.

(See LU2, section 2.6, pp 34–36 and TB, chapter 10, section 10.6, p 212.)

© UNISA 2015 [TURN OVER]

 Francois Crafford at 012 429 4545 or 072 177 0847 and Elsabe Scholtz at 012 429 2695 or 074 602 9979

Question 2
Explain why absorptive capacity is a dynamic capability. Give examples from the Nokia case study to support your explanation.
[10]

Dynamic capabilities are geared towards effecting and driving organisational change; they are essentially strategic in nature and Allocate 1 mark per
accordingly, define the organisation's path of evolution and development. Described in a different way, dynamic capabilities are those meaningful and relevant
capabilities that help organisations learn the new capabilities they require to adapt to environmental changes. statement made. The
maximum marks allocated
Absorptive capacity, the ability to acquire, assimilate and use external information, is an example of a dynamic capability that drives without showing any
application is 5 marks.
organisational learning and change. Absorptive capacity refers to the ability of an organisation to recognise the value of new, external
information, to assimilate it and to use it to address business problems. Absorptive capacity differs from organisation to organisation, and
therefore, some have a higher absorptive capacity than others do. They are thus able to learn much faster and to adapt more quickly to Allocate 1 mark for an
their environments, or to innovate (some organisations may lack the ability to absorb new information). example from the case
study that supports the
In the Nokia case study, we see that Nokia has transformed itself several times. The case study also includes an example of how Nokia explanation.
failed to unlearn the dominant logic it used – showing a lack of absorptive capacity.

There are four dimensions that determine the absorptive capacity of an organisation:
Maximum mark allocation:
Acquisition of external information. This refers to the ability of the organisation to acquire relevant information from its external 10
environment. This may be limited by its dominant management logic, as the search for information will generally be restricted to what
managers think is relevant. Speed is an important element of acquiring information – the better the quality of the information and the sooner
it is obtained, the better the organisation’s chances of gaining some sort of advantage from it.

In the case study, Nokia's new strategic direction shows it is anticipating changes in connectivity (speed of connectivity) and new network
technologies – such as the internet of things.

Assimilation of acquired information. Assimilation of information refers to the ability of the organisation to analyse and make sense of the
acquired information. Interpreting and understanding the implications of new information are crucial, as is the ability to share the information
and knowledge across the organisation.

Transformation of knowledge. This refers to the ability of the organisation to combine new knowledge with existing knowledge and to
develop new insights.

Applying new knowledge. The real benefit of absorptive capacity occurs when organisations use the transformed knowledge and new
insights to improve its business operations and to develop innovations and new business ventures.

© UNISA 2015 [TURN OVER]

 Francois Crafford at 012 429 4545 or 072 177 0847 and Elsabe Scholtz at 012 429 2695 or 074 602 9979

In the case study, the application of knowledge is shown as the merger that will transform Nokia’s core business and that it divested its
mobile handset business.

Ultimately, organisations with a high level of absorptive capacity will be able to gain a competitive advantage, as they will be able to be
more dynamic within their context. In terms of the case study, Nokia will gain synergies, cost advantages and capabilities to compete
against larger competitors in large attractive markets (US and Asia).

(See TB, chapter 7, section 7.2.2, p 120 and chapter 6, section 6.2.3, pp 101–102.)

© UNISA 2015 [TURN OVER]

 Francois Crafford at 012 429 4545 or 072 177 0847 and Elsabe Scholtz at 012 429 2695 or 074 602 9979

Question 3

Make recommendations on how an organisational culture can be instilled that supports Nokia’s chosen strategy. [10]

Leaders play an invaluable role in shaping and instilling culture in an organisation. Drawing on the work of Edgar Schein (1992), we see Allocate 1 mark per
leadership as the source of the organisation’s beliefs and values. The most central issue for leaders is to understand the deeper levels of meaningful and relevant
organisational culture and to deal with the anxiety that sprouts from assumptions being challenged, for example during change statement made. The
programmes.
maximum marks allocated
1
Organisational cultures spring from three sources: without giving any
• the values, beliefs and assumptions of the founders of the organisation (this is the most important source of culture) appropriate examples is 5
• the learning and experience of group members marks.
• new beliefs introduced by new leaders or other members of the organisation
Allocate 1 mark for each
Leaders transmit and shape organisational culture by way of certain embedding mechanisms, which may include appropriate practical
• what leaders measure example given that supports
• how they react to critical incidents the explanation of how to
• how they allocate resources instil an organisational
• how they reward and allocate status culture that supports a
• how they recruit, promote and “excommunicate” members of the organisation
chosen strategy.
In addition to these embedding mechanisms, leaders can also use structural mechanisms (which exhibit some commonalities with
organisational architecture and the cultural web), such as Maximum mark allocation: 10
• organisational structures and systems
• procedures
• rituals
• physical spaces and other physical artefacts
• stories
• statements

Planned change programmes are also undertaken to deal with cultural change.

See LU 4, section 4.5, the table on p 57, for symbolic and substantive actions that leaders may take.

(See LU 4, section 4.5.1, pp 56–57.)

© UNISA 2015 [TURN OVER]

 Francois Crafford at 012 429 4545 or 072 177 0847 and Elsabe Scholtz at 012 429 2695 or 074 602 9979

Question 4

Explain why organisational ambidexterity is important in a more complex and competitive business environment. Give examples from the Nokia
case study to support your explanation. [10]

In a complex and highly competitive environment, organisations need to be more agile and quick to respond to business environment Allocate 1 mark per
changes. (In the case study, the next generation technologies and services will create an even more connected world that will run at speed meaningful and relevant
100 times faster than current network technologies.) Organisational structure plays an important role in organisations becoming more agile statement made. The
and responsive. (In the case study, it is clear that Nokia made the strategic decision to merge with Alcatel-Lucent, and with the merger, a maximum marks allocated
restructuring process will be undertaken.) Therefore, organisational structures often evolve from simple forms to complex forms as without showing any
environments are becoming more complex and competitive. More specifically, ambidextrous structures assist organisations in remaining application is 5 marks.
agile and adaptive, which is crucial to quickly exploiting opportunities. (In terms of the case study, Nokia will gain scale advantages and
other synergies and will be able to access much larger markets, once the two organisations have merged.) Allocate 1 mark for an
example that supports
Organisational ambidexterity refers to the ability to be equally good at exploiting existing opportunities using existing capabilities while explanation of
exploring and searching for new opportunities and new capabilities. (In the case study, Nokia divested and invested at the same time.) organisational
ambidexterity.
In most organisations, the existing way of doing things tends to dominate management thinking, which makes it very difficult for them to be
truly innovative and to develop new capabilities.

O’Reilly and Tushman (2004) found that companies, which are successful at both exploiting existing opportunities and exploring new Maximum mark allocation:
opportunities (i.e. companies that are ambidextrous), separate their new, exploratory units from their traditional, exploitative ones, allowing 10
for different processes, structures, and cultures. At the same time, they maintain tight links across units at the senior executive level. In .
other words, they manage organisational separation through a tightly integrated senior team. This supports Clayton Christensen’s (1997:7–
11) idea that organisations will find it very hard to harbour activities that are disruptive to their existing business in the existing organisation
– the dominant management logic will simply suppress those innovations and new ways of doing business.

Christensen argues that it would be better to harbour such ideas and activities in a spinoff business that is not fully under the control of the
old business and that is permitted to explore and be innovative. This is a prime example of an instance in which structure can directly
support strategy (see the merger and restructuring example in the case study).

(See LU5, section 5.5.1, pp 73–74.)

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 Francois Crafford at 012 429 4545 or 072 177 0847 and Elsabe Scholtz at 012 429 2695 or 074 602 9979

Question 5

Critically discuss how the Strategy Executing Framework (SEF) contributes to strategy deployment. [10]

The SEF is discussed in chapter 12, section 12.2, of the prescribed book. It advocates a project-driven approach to strategy Allocate 1 mark per
implementation. Once strategy has been formulated, a portfolio of strategic initiatives is identified. These initiatives do not form part of the meaningful and relevant
day-to-day operations of the organisation, and as a result, they have to be managed as programmes and projects. Once the projects have statement made.
been completed successfully, they become part of the day-to-day operations of the organisation. For example, a merger between two
companies may entail many different projects – integrating financial systems, cultural change programmes, cost reduction programmes,
and so forth. However, once all of the projects have been completed, they should all be part of one functioning organisation. Allocate 1 mark for each
example of an initiative or
Any formulated strategy may lead to the identification of a host of possible strategic initiatives. Strategic initiatives are those initiatives that how the SEF contributes to
are not part of the operations of the organisation, but are intended to permeate the strategy through the organisation. deployment (argument made
Typical strategic initiatives include the following: for alignment between the
• specific initiatives to align culture, structure and systems with strategy three components of
• specific initiatives to ensure that a strategy is enabled (For example, if an organisation decides on a turnaround strategy, a strategy deployment).
to reduce costs on a sustainable basis may be a specific initiative.)
• specific initiatives to align organisational units and individual behaviour with strategy, for example, a campaign to implement a
performance management system Maximum mark allocation: 10

Although all the initiatives may have potential, the organisation has limited resources, and a key decision at this point would be which
strategic initiatives to fund, and which initiatives to discard. From this perspective, resource allocation will thus only occur to fund selected
strategic initiatives. It is in this regard that programme and project management can play a key role in strategy implementation. First, the
project portfolio has to be selected. Then, programme management has to be established to ensure that all strategic projects are properly
tracked and managed. Lastly, individual projects have to be managed to ensure that project milestones are achieved and that the project
ultimately becomes part of the operation of the organisation.

(See LU6, sections 6.5.1 and 6.5.2, pp 82–84 and TB, section 12.2.)

© UNISA 2015 [TURN OVER]

 Francois Crafford at 012 429 4545 or 072 177 0847 and Elsabe Scholtz at 012 429 2695 or 074 602 9979

Question 6
Critically discuss strategy implementation failure. [10]

Successful strategy implementation can be defined as implementation that (Miller 1997:577–602) Allocate 1 mark per
(1) achieves the desired outcomes (strategic objectives) meaningful and relevant
(2) completes all strategic initiatives successfully statement made.
(3) is acceptable to all stakeholders (e.g. does not involve dubious means such as bribery or coercion)
Marks should not be
Implementation failure accordingly means that a new strategy was formulated but was not implemented, or was implemented in such a way allocated for merely listing
that the implementation was incomplete, strategic objectives were not attained, or the implementation was unacceptable to key
the reasons for
stakeholders.
implementation failure.
Strategy implementation often fails, and failure is normally due to a set of complex factors or conditions rather than to just one specific Critical discussion is
reason. Therefore, a list of possible reasons for failure cannot simply be provided. It is far more important that students to demonstrate an required.
understanding of the complexity of strategy implementation failure and of how the various factors are interconnected than simply generating
a list of reasons why strategies fail. Maximum mark allocation: 10

Strategy implementation failure may start with the strategy formulation process. If strategic objectives are too complex or poorly understood,
lack consistency and do not provide clear future direction to members of the organisation that have to implement them, it is unlikely that
implementation will be successful.

Leadership excellence, sound organisational structures, effective functional strategies, appropriate policies and procedures, and adequate
resources and capabilities are also requirements for effective strategy implementation. Meticulous alignment of all these implementation
components for any degree of success is also important. Apart from deficiencies in any one of the above components, poor or ineffective
alignment is regarded as a major reason for implementation failure. Implementation failure can thus result from poor change management
and the resulting misalignment of the various elements of the organisation. The dire consequences of misalignment could include the
following (Fonvielle & Carr 2001:5):
• new programmes running the risk of failure
• deteriorating commitment of employees to quality
• individual objectives taking precedence over organisational objectives
• morale and productivity that diminish over time

To ensure effective alignment, excellence in leadership is critical. It is generally acknowledged that poor implementation rather than poor
formulation is the main cause of strategies failing.

The so-called Icarus paradox, according to which organisations dwell on past successes, losing sight of and not adapting to changing
market realities and changed requirements for competitive advantage to cope with new realities, invariably leads to failure (Grant & Jordan
2012:10–12; Hough et al 2008:11–13); Jones & Hill 2013:107–109). If organisations are unable to learn and adapt (for example, when they
© UNISA 2015 [TURN OVER]
 Francois Crafford at 012 429 4545 or 072 177 0847 and Elsabe Scholtz at 012 429 2695 or 074 602 9979

are constrained by their own arrogance or mental models), it may affect their ability to implement strategy negatively.

Effective leadership and management are required for strategy implementation, and if management is ineffective in this regard, it may lead
to implementation failure.

Strategy implementation may be hampered by ineffective implementation management processes (or the lack of such processes). These
management processes are referred to as strategy deployment.

External factors may also affect strategy implementation. Unexpected occurrences or misreading and misinterpreting the external
environment may have a negative impact on strategy implementation. Therefore, the management of strategy implementation risk needs to
part of the strategy implementation toolkit that strategists use.

(See LU1, section 1.11, p.18–19.)

[10]

© UNISA 2015 [TURN OVER]

 Francois Crafford at 012 429 4545 or 072 177 0847 and Elsabe Scholtz at 012 429 2695 or 074 602 9979

Question 7
Explain Simons’ (1994) control levers and the role they play in strategic control. (LU7)
[10]

Robert Simons (1994:169–189) identifies four types of control systems that managers use to control business strategy. These four systems Allocate 1 mark per
are the following: meaningful and relevant
statement made.
(1) Belief systems. Belief systems encourage and guide the necessary search for new opportunities and innovations. They are the set of
organisational definitions that senior managers communicate formally and reinforce systematically to provide a set of basic values and Marks should not be
beliefs, purpose and direction for the organisation. Belief systems tend to be broad and inspirational in order to appeal to all allocated for merely naming
organisational levels. The vision statement and mission statement are examples of instruments that reinforce the belief system, as they
or listing control levers.
communicate key ideas about the organisation’s purpose and beliefs.

(2) Boundary systems. Whereas belief systems are a positive and proactive type of control system, boundary systems are more negative Allocate a maximum of 3
in the sense that they set boundaries on the search for new opportunities by defining and limiting the acceptable domain for opportunity- marks for each control lever.
seeking behaviour. Two kinds of boundaries form part of boundary systems:
• Business conduct boundaries rely on formal codes of conduct, such as procurement guidelines or codes of business conduct. Maximum mark allocation: 10
• Strategic boundaries are used to specify the range of opportunity-seeking behaviour to support explicit strategy.

(3) Diagnostic control systems. Diagnostic control systems are more traditional and backward looking in nature, and they tend to focus on
the management of exceptions (e.g. where performance falls outside a specified, acceptable performance range or where key
milestones are not achieved), when corrective action is taken to get performance back on track. Budgets, project plans and balanced
scorecards are examples of diagnostic control systems. Diagnostic controls thus save management time, as they require management
attention only when there is a substantial deviation between performance standards and actual performance.

(4) Interactive control systems. Whereas diagnostic control systems are designed to take up as little management time as possible,
interactive control systems demand a great deal of management time. A diagnostic control system measures the intended strategy (i.e. it
is aligned with the strategic management process), while interactive control systems are aligned more with emergent strategy and
accordingly, these systems contribute to the formulation of strategy.

Interactive controls are largely externally focused and are used to monitor changes in strategic uncertainties, such as changes in the
competitive landscape that could present risks to the current strategy and that may prevent the achievement of strategic objectives. In
contrast to diagnostic control systems, interactive control systems are characterised by the personal and regular involvement of
management in the decisions and decision support activities of their subordinates. Due to the time and expense associated with interactive
controls, their number tends to be limited.

Interactive control systems focus on the search for new opportunities and the need for innovation and creativity. They also contribute to
organisational learning and the exchange of information and knowledge.

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In terms of control levers, we can distinguish between those controls that are positive and proactive and that contribute to innovation, and
those, on the right, that constrain the activities of the organisation, are backward looking and require compliance rather than innovation and
renewal. As you may be able to guess by now, organisations need a balance in their use of control systems. Those that use mostly
compliance systems will have difficulty innovating, while those using mostly innovation-oriented control systems will have operational
problems and may end up wasting time and money pursuing opportunities they should not be pursuing.

(See LU7, section 7.3, pp 98–99.)

TOTAL MARKS: 70

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 UNIVERSITY EXAMINATIONS UNIVERSITEITSEKSAMENS

=====1 UNlSAI��-
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MNG3702 May/June 2015

RMG3702

STRATEGIC IMPLEMENTATION AND CONTROL 1118

Durall on 2 Hours 70 Marks

EXAMINERS

FIRST MR F CRAFFORD
SECOND MRS E SCHOLTZ
EXTERNAL MS S HUGHES (MAREE)

Use of a non-programmable pocket calculator rs permrssrble

Closed book exarnmanon

This examination question paper remains the property of the University of South Africa and may not be

removed from the examination venue

This paper consists of 7 pages (1nclud1ng the cover page)

THIS EXAMINATION PAPER REMAINS THE PROPERTY OF THE UNIVERSITY OF SOUTH

AFRICA AND MAY NOT BE REMOVED FROM THE EXAMINATION VENUE.

INSTRUCTIONS

• This paper comprises of parts 1 and 2

• Part 1 must be answered only by students registered m 2015, semester 1 for the MNG3702

module (includes RMG3702 code) The 2015 syllabus rs assessed m part 1 . Students

answering part 1 of the paper must not answer part 2 of the paper

• Part 2 must be answered only by students that have been granted a supplementary

examination in the MNG3702 module The 2014 syllabus rs assessed m part 2 Students

answering part 2 of the paper must not answer part 1 of the paper

• This rs a closed-book examination You may not consult notes of any kind or any person

(except the mv1g1lator) during the exarrnnanon session

• Indicate the numbers of the questions you have answered on the cover of the exarnmanon

answer book

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PART 1 : 2015 SYLLABUS

THE FOLLOWING INSTRUCTIONS APPLY ONLY TO PART 1 OF THE PAPER

• Part 1 comprises of seven compulsory paragraph-type questions Answer all seven

questions.

• Note that the case study rs applicable to question 1 and 2 only

• The total for part 1 of the paper ts 70 marks.

CASE STUDY: THE UNILEVER SUSTAINABLE LIVING PLAN

In 2009 Paul Polman, the CEO of Unilever, announced a bold strategic plan, the Unilever Sustainability

Living Plan (USLP), to double the size of Unilever and half the company's environmental impact The

monvanon for launching such an aggressive long-term plan was that many parts of the world were

becoming more volatile, uncertain, complex and ambiguous (VUCA). The VUCA trend was also fuelled by

the strain (or stress) placed on large sections of many socieues and the world's resources While a more

volatile, uncertain and complex world made 11 more d1ff1cult for Unilever to navigate, 1t also presented

opporturunes, but these opportunities needed to be well managed Paul Polman's thinking was that the

USLP would a step in the right direcnon to address these strain issues He said "There are clear signs of

stress around the world, coming from the 'other 99%' A bilhon people still go to bed hungry A child dies

of starvation e very six seconds O ur form of capitalism has brought us far, but 11 hasn't solved everything

W e think that businesses that are responsible and actually contributing to society as part of their business

model will be succe ss ful "

To achie ve the goals of the Unilever Sustainable ving

Li Plan, several mrtranvss were undertaken These

in cluded reducing waste and material use, which created etnciencies and reduced costs, and irnprovinq

margins By looking at product development, sourcing and manufacturing through a sustamabihty lens,

opportunities for innovation opened up B y collaborating with partners, in cluding not-for-profit

organisations, valuable new market sights were gamed,

in which extended the channels to engage with

the consumer

Unilever knew that such an arnbmous plan would be q uestioned by sceptics, therefore there was a sense

at Unilever that results had to be shown To show results an environment had to be created that focused

on th e long term Thi s was achieved by abolishing q uarterly reporting and changing the compensation

system to focus on the long term

F urthermore a disproportionate amount of time was pent on explaining to shareholders what was being
s

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May/June 2015

done m terms of the long-term strategy Strategic success did not mean that shareholder wealth would be

created at the expense of everything else This would have been a myopic view that would not assist the

company m survivmq m the long term Therefore the focus was on attracting shareholders that aligned

themselves with the long-term strategy, rather than the other way around Hedge fund managers and

short-term speculators were told that they did not belong m the company The sheer fact that they bought

a few shares did not give them the nght to rum the company's strategy "

In 2013 Paul Polman reported that steady progress had been made m 1mplementmg the USLP "[T]he

USLP becomes more firmly embedded m all aspects of the business As this annual report highlights, the

USLP rs driving waste and metncrencies out of the system and helping us transform the supply chain

Suppliers and customers are mcreasmqly keen to work with us under the USLP By helping grow our

business m a responsible and equitable way, the USLP rs benefittmq all our stakeholders, including our

shareholders "

Three years after launching the USLP, there was evidence that making sustainable hvmg commonplace

was helping to dnve business growth at Unilever In addmon, new msiqhts were gained into the

rmplernentanon of the USLP These msiqhts were used to update the USLP m 2014 and to develop new

focus areas

Adapted from

http //www urnlever com/1nvestorrelat1ons/annual reports/AnnualReportandAccounts2013/urnlever­

sustamable-l,ving-plan aspx, accessed 2015/01/05

https //hbr orq/2012/06/captain-planet, accessed 2015/01/05

https //hbr org/2012/06/captam-planet, 2015/01/05

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NOTE THE CASE STUDY IS APPLICABLE TO QUESTIONS 1 AND 2 ONLY.

Question 1

Explain the six pnnciplas of strategic leadership and assess the extent to which they are present at

Um/ever Use examples from the case study to support your explanation [15]

Question 2

Cnt1cal/y discuss the strategy deployment efforts of Urn/ever In your discussron make specmc reference

to the components and enablers of strategy deployment [10]

Question 3

Cnttcally discuss factors that contribute to strategy implementanon failure m organisations. [10]

Question 4

Explam the value of organisational architecture m building a cohesive strategy Use any ONE example of

an organisational architecture framework to support your explanation [1 OJ

Question 5

Exp/am the role of knowledge management systems m organisational learning with the help of practical

examples [1 OJ

Question 6

Explam how ambidextrous organisations facilitate mnovation Give ONE practical example to support your

explanation [5]

Question 7

Exp/am the role of the Balanced Scorecard m managing organisational performance Use ONE Balanced

Scorecard example to support your explanation [10]

TOTAL: 70

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PART 2: 2014 SYLLABUS {THIS PART OF THE PAPER MUST BE ANSWERED

BY SUPPLEMENTARY STUDENTS ONLY)

THE FOLLOWING INSTRUCTIONS APPLY ONLY TO PART 2 OF THE PAPER

• Part 2 of the paper comprises of two sections, namely section A and section B.

• The total for part 2 of the paper ts 70 marks.

SECTION A

• Section A comprises four (4) compulsory paragraph-type questions

• Each question counts five (5) marks.

• The total of this section rs 20 marks.

SECTION B

• Section B comprises three (3) essay-type questions

• You must answer any two (2) of the three questions on the fill-out examination paper

• Each question counts 25 marks.

• The total of this section is 50 marks

SECTION A

• Answer all four paragraph-type questions m this section

• The total for this section rs 20 marks

Question A1

Explain any five of the issues involved m strategic change (5)

Question A2

Discuss the concept of a learning organisation

(5)

Question A3

Discuss corporate governance and leadership m the hght of the King II Report (5)

Question A4

Explain what strategic control entails within an organisation

(5)

TOTAL SECTION A: [20)

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SECTION B

• Answer any two of the following three questions m this section

• Wnte the number of the questions you have answered on the front of the answer book

QUESTION 81

'We tend to think we can separate strategy from culture, but we fail to notice that in most organisations

strategic thinking rs deeply coloured (sic) by tacit assumptions about who they are and what their rrussion

ts " (Schein 1999)

In view of the above statement, do the following

81 1 Explain why culture rs an important driver of strategy implementanon (7)

81 2 Explain Hofstede's five cultural value dirnensrons (10)

81 3 D1fferent1ate between adaptive, weak, strong and unhealthy cultures (8)

[25]

QUESTION 82

The contemporary business environment rs dynamic and charactensed by change that rs not Just

punctuated, but also revolutionary at limes A change m the business environment can trigger strategic

change which, in turn, would require a change m some strategy drivers and instruments or all of them

In view of the above statement, answer the following questions

82 1 Comment on the statement that "structure follows strategy'' (3)

82.2 D11>cuss the five basic parts of an organisation (10)

82 3 Discuss the six basic coordinating mechanisms of orqarusanonal design (12)

[25]

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QUESTION 83

Planned strategy rs often not realised strategy One of the reasons why there ts a gap between planned

and realised strategy rs that long-term goals do not always easily translate into operational terms that

provide useful guides to action at a local level

In view of the above statement, do the following

B 3 1 Explain how long-term goals are translated into short-term goals (5)

83 2 Explain how functional tactics differ from corporate and business strategies (6)

83 3 Explain the role of policies in strategy tmplernentauon (5)

83 4 Discuss the use of the Balanced Scorecard as a strategy irnplementatron and control system (9)

(25]

TOTAL: 70

UNISA2015
 Francois Crafford 012- 4294545 or 072 1770847 and Elsabe Scholtz 012 429 2695 or 074 6029979

PART 1: 2015 SYLLABUS

Question 1
Explain the six principles of strategic leadership and assess the extent to which they are present at Unilever. Use examples from the case study
to support your explanation. [15]

Various studies have been undertaken to gain a better understanding of the skills required to be a strategic leader and how these skills can Allocate 1 mark per
be mastered in a way that allows strategic leaders to think strategically and navigate the unknown effectively. The six principles of strategic meaningful and relevant
leadership are: statement made.

Principle 1: Strategic leaders are future oriented and anticipate change

A strategic leader needs to look ‘beyond the present’ and anticipate change to help them see opportunities before competitors do or employ No marks are allocated for
strategies to protect their business interests. Effective leaders are constantly scanning the environment and are vigilant to uncover merely naming or listing
opportunities inside and outside the organisation. In doing so, they consider the complex and unpredictable nature of the future and develop principles
broader networks to gain insights into the perspectives of customers, competitors and partners. These leaders furthermore encourage
‘future thinking’ through ‘future dialogue’ and scenario planning to prepare for the unexpected. In this process, a set of learning skills can be
developed to identify and take advantage of opportunities rather than be the victim of unforeseen changes and events. Although gut feel
Allocate a maximum of 2
plays an important role, strategic leaders understand the importance of formalising the collection, analysis, interpretation and dissemination
marks for each strategic
of market and business intelligence. These leaders allocate sufficient budget to resource research projects and reward employees to come
leadership principle.
up with new ideas or innovative ways to improve practice. Active participation and leadership is furthermore required to find out ‘what works’
and to recognise achievements of performers. Best practice is communicated to all staff members and used to bring about improved
outcomes.
Allocate 1 mark for an
Examples: example that supports
explanation of a strategic
This VUCA trend is also being fuelled by “stress” on large portions of many societies and the world’s resources. While a more volatile, leadership principle.
uncertain and complex world makes it more difficult for Unilever to navigate, it does present opportunities. Allocate a maximum of 6
marks for supportive
“There are clear signs of stress around the world, coming from the “other 99%”. A billion people still go to bed hungry. A child dies of examples.
starvation every six seconds. Our form of capitalism has brought us far, but it hasn’t solved everything. We think that businesses that are
responsible and actually contributing to society a part of their business model will be successful”.
Maximum mark allocation:
15

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 Francois Crafford 012- 4294545 or 072 1770847 and Elsabe Scholtz 012 429 2695 or 074 6029979

Principle 2: Strategic leaders get things done

Strategic leaders do not just question the status quo; instead they implement the best solutions to make a difference. They do not just talk
about what they might do, they actually do it. However, actions are based on careful reflection and examination of a problem through many
lenses and although they are known for their decisive actions, their ‘feet are firmly on the ground’ as they can distinguish between practical
solutions and ambitious dreams.

Example: In launching such an ambitious plan sceptics were inevitable, therefore there was a sense at Unilever that results must be shown.
To show results an environment had to be created that focused on the long term. This was achieved by abolishing quarterly reporting, and
changing the compensation system to be focused on the long term.

Principle 3: Strategic leaders open new horizons

Leaders who challenge existing work practice and strategy invariable elicit complex and conflicting information. So, in order to uncover
possibilities beyond the mundane and open new horizons and directions for their organisations, they are expected to look beyond the
obvious to recognise patterns, interpret different events and synthesise various outputs to gain new insight.

Strategic leaders also work effectively with all stakeholders and understand how their work interweaves with that of their colleagues and
relevant stakeholders to create opportunities for innovative practice. It is therefore important to find common ground among stakeholders
who have disparate views and agendas. Opening new horizons does not mean thoughtlessly discarding what the organisation currently
values or neglecting the routines needed for the organisation to run smoothly. Rather, it means helping others see beyond established
orthodoxy to experiment with new, exciting and more effective ways of meeting the needs of their clients.

Example: Paul Polman’s thinking was that the USLP is a step in the right direction to address these “stress” issues, rather than take from
societies and the environment.

Principle 4: Strategic leaders reach out to stakeholders

As strategic leaders value the input of stakeholders and understand the importance of these parties when it comes to implementing new
strategies, they use proactive communication and frequent engagements to build trust and get their support. They are sensitive to different
cultures and cross-cultural issues, and they respectfully confront issues and articulate perspectives that may differ from prevailing or
dominant thinking. Strategic leaders therefore need to be skilled at managing conflict positively and at framing dynamic relationships in
ways that are productive. Together with stakeholders, they create a compatible view of the future.

© UNISA 2015 [TURN OVER]

 Francois Crafford 012- 4294545 or 072 1770847 and Elsabe Scholtz 012 429 2695 or 074 6029979

Examples:

Furthermore a disproportionate amount of time was spent on explaining to shareholders what is being done in terms of the long term
strategy. Strategic success was not viewed as creating shareholder wealth, at the expense of everything else.

By collaborating with partners including not-for-profit organisations, valuable new market insights were gained, which extended the
channels to engage with the consumer.

Principle 5: Strategic leaders are fit to lead

It is easy to overlook the importance of health, but strategic leaders need to manage their physical and mental wellbeing. Consider the
Indian proverb: ‘A healthy person has many wishes, but a sick person has only one’. Strategic leaders are confronted by various obstacles
and unexpected environmental changes that pose threats and risks for the organisation. Such change creates increased levels of anxiety
and stress and to deal with this, leaders need to be resilient, flexible, reliable and resourceful. ‘Fit leaders’ are those who can be relied upon
in times of high pressure and when problems need to be solved. Being ‘fit to lead’ is also about being mentally prepared to exploit
opportunities which arise unexpectedly, to cope with uncertainty and ‘make things happen’ with limited resources.

Principle 6: Strategic leaders do the ‘next’ right thing and learn from past experiences

Strategic leadership is about ‘doing the next right thing’, which is about ethical leadership. Although it is not always possible, strategic
thinkers need to insist on multiple options and should not get prematurely locked into simplistic go/no-go choices. They do not ‘shoot from
the hip’ and recognise the importance of balancing rigour with speed, consider the trade-off involved and take both short- and long-term
goals into account. Fortunately, people who are egotistic, openly ambitious, autocratic, manipulative or plain dishonest and who put self-
interest first usually do not keep their positions for long. In comparison, successful leaders are described as those who consistently apply
the ethics of justice and caring. Strategic leaders also recognise the value of organisational learning. They consider lessons learned from
both successful and unsuccessful goals to be important inputs into future strategic considerations.

Examples:

Three years on from launching the USLP, there is evidence that making sustainable living commonplace is helping to drive business growth
at Unilever, as well new insights were made in implementing the USLP. These insights were used to update the USLP in 2014 and develop
new areas to focus on.

TB, Chapter 10, sect 10.4.1, p 207-209

© UNISA 2015 [TURN OVER]

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© UNISA 2015 [TURN OVER]

 Francois Crafford 012- 4294545 or 072 1770847 and Elsabe Scholtz 012 429 2695 or 074 6029979

Question 2
Critically discuss the strategy deployment efforts of Unilever. In your discussion make specific reference to the components and enablers of
strategy deployment. [10]

Strategy deployment refers to the process for managing the implementation efforts of the organisation. In other words, it provides the Allocate 1 mark per
“logical model” that managers need to manage implementation efforts. In identifying the components and enablers in the case study, it is meaningful and relevant
likely that there will be an overlap between components. Components are likely to influence each other as well. statement made.

The three components of strategy deployment are:

Maximum 5 marks
• Aligning organisational units with the strategic direction - the organisational units that must be aligned with the strategy so that the allocated for critical
entire organisation and all its parts move in the same direction. discussion of strategy
• Aligning individual behaviour with strategic direction – individual behaviour can be aligned with strategy by communicating the deployment.
strategy, and the use of tools such as; recruitment process, policies and procedures, cascading objectives and reward systems.
• Strategic initiatives – initiative refers to key projects or programmes to achieve specific objectives or improving performance. The
organisation must have adequate processes for identifying and managing strategic initiatives.

The enablers of strategy deployment are:

• Communicating the strategy
• Organisational learning and adaption
• Resource allocation

Strategy deployment Examples

Allocate 1 mark allocated
component or enabler for an example of a
component and enabler of
Strategic initiatives To achieve the goals of Unilever Sustainable Living Plan, several initiatives were undertaken. These strategy deployment.
included reducing waste and material use, which created efficiencies and reduced costs, improving
(component) Maximum 5 marks
margins. By looking at product development, sourcing and manufacturing through a sustainability allocated for examples.
lens, opportunities for innovation opened up. By collaborating with partners including not-for-profit
organisations, valuable new market insights were gained, which extended the channels to engage Maximum mark allocation:
with the consumer. 10

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Aligning organisational In 2013 Paul Polman reported that steady progress had been made in implementing the USLP “3,

units (component) the USLP becomes more firmly embedded in all aspects of the business. As this Annual report
highlights, the USLP is driving waste and inefficiencies out of the system and helping us transform the
supply chain. Suppliers and customers are increasingly keen to work with us under the USLP, by
helping grow our business in a responsible and equitable way, the USLP is benefitting all our
stakeholders, including our shareholders”.

Aligning individual In launching such an ambitious plan sceptics were inevitable, therefore there was a sense at Unilever

behaviour (component) that results must be shown. To show results an environment had to be created that focused on the
long term. This was achieved by abolishing quarterly reporting, and changing the compensation
system to be focused on the long term.

Communication Furthermore a disproportionate amount of time was spent on explaining to shareholders what is being

(enabler) done in terms of the long term strategy

Being an adaptive Three years on from launching the USLP, there is evidence that making sustainable living

organisation commonplace is helping to drive business growth at Unilever, as well new insights were made in
implementing the USLP. These insights were used to update the USLP in 2014 and develop new
(enabler)
areas to focus on.

Resource allocation All of the initiatives identified in this case study required resources and especially a conscious

(enabler) decision to allocate sufficient resources to product development and sourcing and manufacturing in a
sustainable manner.

By looking at product development, sourcing and manufacturing through a sustainability lens,

opportunities for innovation opened up

See TB, Chapter 12, section 12.1, p 239 -245 and LU 6, section 6.4

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Question 3
Critically discuss strategy implementation failure. [10]

Implementation failure accordingly means that a new strategy was formulated but was not implemented, or was implemented in such a Allocate 1 mark per relevant
way that the implementation was incomplete, strategic objectives were not attained, or the implementation was unacceptable to key and meaningful statement
stakeholders. made.

Strategy implementation often fails, and failure is normally due to a set of complex factors or conditions rather than to just one
specific reason. Therefore, we do not simply want to provide you with a list of possible reasons for failure. It is far more important that you
No mark allocated for merely
develop an understanding of the complexity of strategy implementation failure and how the various factors are interconnected than simply
naming or listing factors for
generating a list of reasons why strategies fail.
strategy implementation
failure. Critical discussion is
Strategy implementation failure may start with the strategy formulation process. If strategic objectives are too complex or poorly
required.
understood, lack consistency and do not provide clear future direction to members of the organisation that have to implement them, it
is unlikely that implementation will be successful.

Other factors that are often mentioned as being of the importance is leadership excellence, sound organisational structures, effective Maximum mark allocation:10
functional strategies, appropriate policies and procedures, and adequate resources and capabilities as requirements for effective strategy
implementation. However, we also emphasised meticulous alignment of all these attributes for any degree of success. Apart from
deficiencies in any one of the above attributes, poor or ineffective alignment is regarded as a major reason for implementation failure.
Implementation failure can thus result from poor change management and the resulting misalignment of the various elements of
the organisation. These aspects are discussed in learning unit 2.

The so-called Icarus paradox, according to which organisations dwell on past successes, losing sight of and not adapting to
changing market realities and changed requirements for competitive advantage to cope with new realities, which invariably leads to failure
(Grant & Jordan 2012:10–12; Hough et al (2008:11–13); Jones & Hill 2013:107–109). In learning unit 3 we examine organisational learning
and adaptation, where we will see that, if organisations are unable to learn and adapt (for example where they are constrained by
their own arrogance or mental models), it may negatively impact on their ability to implement strategy.

Effective leadership and management are required for strategy implementation, and if management is ineffective in this regard, it may
lead to implementation failure. This aspect is discussed in more detail in learning unit 4.

Strategy implementation may be hampered by ineffective implementation management processes (or the lack of such processes).

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We refer to these management processes as strategy deployment, which is discuss in learning unit 6.

External factors may also impact on strategy implementation. Unexpected occurrences or misreading and misinterpreting the external
environment may have a negative impact on strategy implementation. In learning unit 7 the management of strategy implementation
risk is dealt with.

The dire consequences of misalignment could include the following (Fonvielle & Carr 2001:5):
• new programmes running the risk of failure
• employee commitment to quality deteriorating
• individual objectives taking precedence over organisational objectives
• morale and productivity that diminishing over time

To ensure effective alignment, excellence in leadership is critical. It is generally acknowledged that poor implementation rather than poor
formulation is the main cause of strategies failing.

Overall it difficult to draw up a list a simply list of top reasons for implementation failure, as implementation failure is normally attributable
to a long-standing problem, not to a simple, short-term failure in one area. Moreover the various aspects/factors are interrelated,
which means that it is difficult to prioritise some over others.

See LU 1, section 1.11

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Question 4
Explain the value of organisational architecture in building a cohesive strategy. Make use of any ONE organisational architecture framework
example to support your explanation. [10]

Organisational architecture can be defined as a blueprint of the organisation using architectural disciplines to improve performance. Allocate a maximum of 1
It is a definition of what the organisation must produce to satisfy its customers, compete in a market, deal with its suppliers, sustain mark for defining
operations and care for its employees. Business architecture is a disciplined approach to realise an organisation’s vision and mission, and it organisational architecture.
serves as a foundation to enhance accountability and improve decision making. The value contributed by business architecture is to
increase the effectiveness of the various functions in the organisation, by mapping and modelling the organisation to its vision
and strategic goals. Business architecture is the foundation of subsequent architectures, where it is detailed into various functions and
Allocate 1 mark per
disciplines. It gives direction to all organisational aspects, such as the organisational structure (in which all the responsibilities and tasks
meaningful and relevant
of the organisation are assigned to departments and individuals in the organisational chart) and the administrative functions of the
statement made.
organisation (for example, describing the financial reconciliation mechanisms between various functional departments). Assigning the
various business functions to their managers enhances the further development of other architectures, such as the information architecture,
technical architecture, functional architecture and so on. The various parts of the business architecture act as a compulsory starting point
for all subsequent architectures. It is a helpful pre-structuring tool for the development, acceptance and implementation of Allocate a maximum of 5
subsequent architectures. It sheds light on the relationship between organisational strategy and design. marks for the explanation of
the value of organisational
In terms of examples that can be used in the explanation. There are many different models of organisational architecture: The McKinsey architecture in implementing
7S model (figure 1), Lee, Venter and Bates (2004:13–22) depict organisational architecture as a flow diagram or process (figure 2) and strategy.
figure 11.2.1 in the textbook that depicts the common elements of organisational architecture. These elements are: sensing and sense
making, culture, leadership, governance, structure, technology and capabilities.

Allocate a maximum of 5
marks for a complete and
accurate example of an
organisational architecture. 5
marks can also be allocated
if the model is correctly
depicted.

If the common elements of

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an organisational
architecture are mentioned
then 1 mark is allocated for
each element, to a maximum
of 5 marks.

Maximum mark allocation: 10

Figure 1 McKinsey 7S model

Lee, Venter and Bates (2004:13–22)

See TB, section 11.1, p 219-220, figure 11.2.1 (example of business architecture) and LU 2, section 2.4

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Question 5
Explain the role of knowledge management systems in organisational learning with the help of practical examples. [10]

Knowledge management is ‘[t]he management function that creates or locates knowledge, manages the flow of knowledge within the Allocate 1 mark per
organisation and ensures that the knowledge is used effectively and efficiently for the long-term benefit of the organisation’. In other words, meaningful and relevant
it is a management system to share organisational knowledge and to support organisational learning. The creation of an efficient knowledge statement made.
management system can contribute towards the creation of a learning organisation.

The process of knowledge management consists of the following four different phases:
1. The discovery of knowledge in the organisation Allocate maximum of 4
2. Capturing the knowledge in a way that enables it to be shared across departments marks for the phases in the
3. Sharing knowledge throughout the organisation process of knowledge
4. Applying knowledge to solve business problems and make decisions. management.
In learning unit 3, section 3.6 an example of McKinsey & Company’s knowledge management practices is dealt with. The following are
examples (marks can be awarded for any other applicable example):
Allocate 1 mark for each
• Knowledge acquisition. McKinsey very clearly sees its role as knowledge creation rather than the simple application of existing appropriate example that
knowledge. Every project accordingly provides an opportunity to use existing knowledge in conjunction with new insights to solve a supports explanation of
client’s problem. This leads to the generation of new knowledge. phases. Allocate a maximum
• An emphasis on knowledge (new and existing McKinsey is a knowledge intensive firm; therefore it continuously strives to increase of 5 marks for examples
its knowledge base by increasing its knowledge and ensuring that its employees share their knowledge with each other. For given.
example, McKinsey's recruitment practices focus on attracting people who are comfortable in working with others and sharing their
knowledge. Maximum mark allocation: 10
• Capturing knowledge. McKinsey’s philosophy is that knowledge is best shared in person rather than through IT systems. It prefers
the personalisation philosophy of knowledge sharing over the codification approach. For this reason, the individual knowledge and
learning of each consultant is plays a key role in the company's success. For example, it recruits only the top performers who have
shown an ability to learn.
• Organising knowledge. Since McKinsey is less reliant on an IT system for knowledge organisation, knowledge is organised
according to the field of expertise and seated in individual consultants.
• Sharing knowledge. Knowledge is shared in person by the teams working on a project. Although an IT system is used, it is not
applied very successfully as it clashes with McKinsey’s basic knowledge philosophy of personalisation.
• Using knowledge. McKinsey essentially deals in knowledge, using existing knowledge and thorough inquiry to generate new
insights, which not only helps clients to solve their problems but also increases McKinsey's knowledge base.
• Applying knowledge management systems. McKinsey relies heavily on personal interaction to share and apply its knowledge. IT

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systems are used, but are of lesser importance.

See TB, chapter 6, section 6.5.11, p109-112 and LU 6, section 3.6

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Question 6
Explain how ambidextrous organisations facilitate innovation. Use ONE practical example to support your explanation. [5]

In the context of organisational structure, ambidexterity refers to the ability to be equally good at exploiting existing opportunities using Allocate 1 mark per
existing capabilities while exploring and searching for new opportunities and new capabilities. meaningful and relevant
statement made.
In most organisations, the existing way of doing things tends to dominate management thinking, which makes it very difficult for them to be
truly innovative and to develop new capabilities. In this regard we can think of Kodak (activity 3.1 in the LU 5). Kodak excelled at film
photography but has not been able to make the leap to digital cameras. Allocate 1 mark for an
appropriate example of an
In their research on this topic, O’Reilly and Tushman (2004) found that companies that are successful at both exploiting existing ambidextrous organisation or
opportunities and exploring new opportunities (i.e. ambidextrous) separate their new, exploratory units from their traditional, exploitative capability.
ones, allowing for different processes, structures, and cultures. At the same time, they maintain tight links across units at the senior
executive level. In other words, they manage organisational separation through a tightly integrated senior team. This supports Clayton Maximum mark allocation: 5
Christensen's (1997: 7-11) idea that organisations will find it very hard to harbour activities that are disruptive to their existing business in
the existing organisation – the dominant management logic will simply suppress those innovations and new ways of doing business.
Christensen argues that it would be better to harbour such ideas and activities in a spin-off business that is not fully under the control of the
old business and that is permitted to explore and be innovative. This is a prime example of an instance in which structure can directly
support strategy.

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Question 7
Explain the role of the Balanced Scorecard in managing organisational performance. Make use of ONE Balanced Scorecard example to support
your explanation. [10]

The balanced scorecard (BSC) is a widely accepted tool for managing organisational performance. The BSC focuses on four dimensions, Allocate 1 mark for defining
and its purpose is to define the small number of strategic goals and key measures that measures performance across the organisation. For the Balanced Scorecard.
each goal, the organisation has to identify how it will be measured, what target it wants to achieve in the given time frame, and the strategic
initiatives that it will implement to achieve these targets.

The balanced scorecard plays a crucial role in the management of performance across the organisation, as each goal and target
can be broken down into functional objectives, measures (often also referred to as key performance indicators or KPIs), targets
and initiatives, which are ultimately reflected in the performance targets of individual employees. At the top, the executive team will Allocate 1 mark per
focus on the few key measures identified by the BSC, often designed in the form of an executive "dashboard". meaningful and relevant
statement made.
Example:

For example, an organisation might have the long-term objective of "increasing customer lifetime value". As a measure, average customer
lifetime value can be used, which is the net present value of all future cash flows generated by a customer. The customer lifetime value
(CLV) depends on customer retention (the longer you have a customer, the more they will spend), the profitability of a customer and the
amount of money a customer spends. Therefore, typical strategic initiatives may include a customer loyalty programme, a programme to
increase sales to customers (for example by bundling products) and ways to increase customer profitability, for example by increasing
online sales. You can see how these initiatives then become functional objectives:

• Marketing may now have the objective of increasing customer retention, for example by launching a loyalty programme.
• Operations may introduce a programme to increase customer satisfaction by shortening delivery times.
• The sales function may be given the goal of increasing the sales value per sale (for example by cross-selling insurance products). Allocate a maximum of 8
• The IT function may introduce an initiative to improve the e-commerce capability of the organisation and to increase online sales. marks for the BSC example.
Allocate 1 mark for each
These initiatives will also have an effect on the individual performance management of individuals. For example, salespeople may now be
perspective mentioned and 1
measured and rewarded on the net profit they generate per transaction and the size of the transaction, whereas previously they may have
mark for an example of an
been rewarded purely on the basis of transaction volumes.
initiative.

In addition to cascading performance measurements down to lower levels, the BSC also offers the opportunity of developing strategy maps.
Strategy maps show how the objectives of the organisation are connected and how value is created for the organisation. This, in turn, helps
the organisation to understand how improving performance in one area will lead to improved performance in another area.

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A strategy map can also be

used as an example.
Allocate a maximum of 8
marks. Allocate 1 mark for
each perspective mentioned
and 1 mark for an example of
an initiative.

Figure 1 A strategy map example

Figure 1 is an example of a strategy map using the four perspectives of the BSC. From this map it follows that improved organisational Maximum mark allocation: 10
capacity (better knowledge and skills and better tools and technology) can lead to increased process efficiency. Increased process
efficiency leads to lower cost (and higher profitability) but also to lower cycle time, which, in turn, leads to improved customer retention and
increased revenue (again increasing profitability). This example illustrates that the elements of the BSC should not be seen in isolation, but
rather as parts of a comprehensive system.

See TB, sect 13.5, p 290-291 and LU 7, section, 7.5

TOTAL MARKS: 70

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PART2: 2014 SYLLABUS

Section A

A1.Explain any five of the issues involved in strategic change. (5)

Some of the issues associated with strategic change are: Allocate 1 mark for each
Time – how quickly is the change needed? meaningful statement; if a
Scope – is it a dramatic revolutionary change or a moderate change? student merely listed the
Diversity – what is the level of homogeneity in the organisation? issues without any
Capacity – does the organisation have the capacity to change in terms of the resources needed? explanation, allocate half a
Readiness – are the employees ready for the change? Refer to the level of resistance to change. mark for each issue.
Capability – do the employees and managers of the organisation have the capability to implement the change?
Maximum mark allocation: 5
(See E & L, chapter 10 section 10.3.1.2 pg 268 and SG section1.8 in study unit 1.1)

A2. Discuss the concept of a learning organisation. (5)

The concept of a learning organisation entails the ability to think continually about strategy and create synergy by sharing ideas, and by Allocate 1 mark for each
generating actions that will contribute positively to the whole organisation. The idea behind a learning organisation is that it is easier to meaningful statement.
adapt to change if the organisation has the ability to learn. This actually means that the employees in the organisation accept the
importance of continuous learning. Becoming a learning organisation may also help with the process of managing strategic change. This Maximum mark allocation: 5
approach to managing change does not only mean that a learning organisation will suddenly adopt strategic change, but also that it will be
amenable to gradually seeking it.

(See E&L, chapter 10, section 10.3.3 pg 274)

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A3. Discuss corporate governance and leadership in the light of the King II Report. (5)

The King II Report emphasises the role of leadership in corporate governance. Corporate governance is essentially about leadership which Allocate 1 mark for each
comprises four dimensions: efficiency, probity (honesty and decency), responsibility, and transparency and accountability. Efficiency is meaningful statement.
regarded as necessary to compete effectively in a global economy. Probity assures investors that the organisation will behave honestly and
with integrity towards its shareholders and others; taking care of the legitimate social concerns provides proof of responsible leadership. Maximum mark allocation: 5
Most importantly, leaders must be transparent and accountable for their activities.

(See E&L, chapter 11, section 11.2.7 pg 291 and SG section 1.6 in study unit 2.1).

A4.Explain what strategic control entails. (5)

Strategic control is the phase in the strategic management process that concentrates on evaluating the chosen strategy in order to verify
whether or not the results produced by the strategy are those intended. Strategies focus on the long-term future and time elapses between Allocate 1 mark for each
the formulation and implementation of a strategy and the achievement of the intended results. Strategic control is the phase where meaningful and relevant
managers ensure that the implementation activities are performed effectively and efficiently and identify deviations from the strategic plan in statement.
order to take corrective action. It has two focal points: to review the content of the strategy and to evaluate and control the implementation
process. Strategic control identifies and interprets triggers of critical events or changes in the external environment that require a response Maximum mark allocation: 5
from the organisation. Strategic control should initiate managerial questioning of performance, assumptions and expectations in order to
determine to what extent the organisation is achieving its short-term objectives.

(See E&L chapter 13 section 13.2.1 pg 358-359–277 and SG section 1.1 in study unit 5.1).

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SECTION B

“We tend to think we can separate strategy from culture, but we fail to notice that in most organisations(sic) strategic thinking is

deeply coloured(sic) by tacit assumptions about who they are and what their mission is” (Schein 1999).

In view of the above statement, answer the following questions:

B1.1 Explain why culture is an important driver for strategy implementation. (7)

The culture of an organisation relates to the people, their behaviour and the operation of the structure. Organisational culture shapes how Allocate 1 mark for each
things are being done in an organisation. It is encapsulated in beliefs, customs and values, and manifested in a number of symbolic ways meaningful statement. If
(Thompson & Martin 2005:333). Organisational culture is so fundamental that it affects behaviour unconsciously (practices that are being students defined
taken for granted). It affects the way people in an organisation make decisions, think, feel and act in response to opportunities and threats. organisational culture,
Managers also do things in particular ways, because this is implicitly expected behaviour. Organisational culture can either be an ally allocate 2 marks only.
(driver) or stumbling block to strategy implementation. Thompson and Strickland (2003) emphasise that strong cultures, if they are aligned
with the chosen strategy or strategies, are an important strategic asset. The underlying assumptions, values and internalised beliefs that Maximum mark allocation: 7
make up an organisation’s culture can motivate people to exceptional levels of performance (culture is thus a valuable driver and simplifies
strategy implementation efforts if well aligned). However, reshaping culture is a complex and time-consuming task, yet to implement
strategy successfully, management must create a tight fit between strategy and culture. An effective strategic leader will understand this
and mould the culture of an organisation.

(See E & L, chapter 11 section 11.3 pg 292–294 and SG section1.1 in study unit 2.2).

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B1.2 Explain Hofstede’s five cultural value dimensions. (10)

Cultural dimensions of Hofstede (1990):
• power distance: the extent to which people accept that power is distributed unequally Allocate 1 mark for naming
• uncertainty avoidance: the extent to which people feel uncomfortable with uncertainty and ambiguity each dimension and 1 mark
• individualism/collectivism: the extent to which there is a preference for belonging to a tightly knit collective rather than a more loosely for a meaningful discussion.
knit society Maximum mark allocation: 10
• masculinity/femininity: the extent to which gender roles are clearly distinct
• confusion dynamism: the extent to which long-termism or short-termism tends to predominate

(See SG section 1.4, unit 2.2).

B1.3 Differentiate between adaptive, weak, strong and unhealthy cultures. (8)
There are various ways of classifying or drawing typologies of organisational cultures. Adaptive, weak, strong and unhealthy
culture typology is used by several authors (Ehlers and Lazenby 2010:295). Allocate 1 mark for each
meaningful and relevant
In a strong organisational culture, value, norms and beliefs are deeply ingrained and difficult to eliminate. If there is a tight fit between the statement. Allocate
chosen strategy and a strong culture, it is a valuable asset. A strong culture that does not match the chosen strategy or strategies is a maximum of 2 marks for
liability to the organisation and the strategy implementation process. each type of culture.

A weak organisational culture is a fragmented one. There are few traditions and few values that are shared; subcultures exist, there is very Maximum mark allocation: 8
little cohesion, and organisational members do not have a sense of corporate identity. Weak cultures seldom serve as a driver of strategy
implementation.

An organisation is classified as unhealthy if it has a politicised internal environment where influential managers operate in autonomous
kingdoms. Unhealthy organisational cultures are also characterised by hostile resistance to change and to people who advocate new ways
of doing things.

In an adaptive organisational culture, members share a feeling of confidence that the organisation can neutralise the threats and exploit the
opportunities that cross its path. Adaptive culture are characterised by receptiveness to risk taking, innovation and experimentation. A
proactive approach to strategic change is evident and strategies are changed whenever possible.

(See E&L, chapter 11, section 11.3.2 pg 295).

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B2. The contemporary business environment is dynamic and characterised by change that is not just evolutionary, but punctuated
(revolutionary) at times. A change in the business environment can trigger strategic change which, in turn, would require a change
in some of the strategy drivers and instruments or all of them.

In view of the above statement, answer the following questions:

B2.1 Comment on the statement that “structure follows strategy”. (3)

The statement that structure follows strategy emphasises that a change in strategy necessitates a change in structure. When a tight fit Allocate 1 mark for each
between strategy and structure is absent, the organisation’s performance declines as a result of administration, resource allocation relevant statement.
problems and conflicting priorities in terms of implementing tasks. Note that strategy and structure have a reciprocal relationship. Structure
also influences the choice of strategy to some extent. As a rule of thumb structure is not a determinant of strategy. Strategy has a much Maximum mark allocation: 3
more important influence on structure. Organisational structures are often difficult and costly to change, but it is not a reason to be
complacent and resistant to changing a structure that is incompatible with a chosen strategy.

(See E&L, chapter 12, section 12.2.2 pg 320 and SG section 1.2 in study unit 3.1).

B2.1 Discuss the five basic parts of an organisation. (10)

Mintzberg (1979:247) contends that an organisation consists of five parts regardless of its size, complexity or motive: Allocate 1 mark for each
relevant statement. Award 1
• A strategic apex which is the home of top management and strategic leadership in an organisation mark for listing a part without
• The middle line which includes all the managers in direct line relationships between the strategic apex and the operating core. explaining it.
• The operating core where the actual operational tasks of an organisation are performed to produce the products and services of
the organisation. Maximum mark allocation: 5
• The techno-structure which includes all staff analysts who design systems by which work processes and the outputs of others in
the organisation are formally designed.
• The support staff that provide support for the organisation outside its operating workflow: corporate communications,legal and tax
specialists, catering specialists and so forth.

(See E&L, section 12.2.4 pg 321–322).

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B2.3 Discuss the six basic coordinating mechanisms of organisational design. (12)

The six basic coordinating mechanisms used by organisations to coordinate activities are: Only 1 mark may be awarded
Mutual adjustment: simple communication used to coordinate work and achieve tasks. Simple entrepreneurial organisations use a high if a student merely lists a
level of mutual adjustment. mechanism without
Direct supervision: whereby one person is responsible for coordinating the work of others and for giving orders andinstructions. Direct explaining it. Allocate 1 mark
supervision typically follows from the top, down the organisational hierarchy. for each relevant statement
Standardisation: refers to specifications or processes governing how the content of work should be carried out. These include standard or supportive example.
operating procedures and policies. A maximum of 2 marks for
Standardisation of outputs: focuses on the results achieved, for example, a manufacturer can standardise in terms of a range of products each coordinating
that are produced. mechanism.
Standardisation of skills and knowledge: also a coordinating mechanism, but it is less formal. For example, different employees gain
different skills over time, but also learn what to expect of one another, ensuring coordination. (For example, a surgeon, nurse and Maximum mark allocation: 12
anaesthetist hardly need to communicate, because each of them knows what the others are doing and what they are responsible for.)
Standardisation of norms: refers to the organisational culture and the shared beliefs and values of employees. For example, if an
organisation’s value is frugality (doing more with less) the value serves as a coordinating mechanism when employees share the value and
work towards frugality.

(See E&L, section 12.2.4.2 pg 322–323).

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B3. Planned strategy is often not realised strategy. One of the reasons why there is a gap between planned and realised strategy is
that long-term goals do not always translate easily into operational terms that provide useful guides to action at a local level.

In view of the above statement, answer the following questions:

B3.1. Explain how long-term goals are translated into short-term goals. (5)

Short-term goals are set on the basis of long-term goals to ensure that the mission and strategic intent become a reality. Aligning short-term Allocate 1 mark for each
goals with the organisation’s mission and strategy confirms that the strategic management process is interrelated and that a change in one relevant and meaningful
component will trigger changes in another. An organisation‘s mission statement provides guidelines in terms of the areas on which the long statement made.
term focuses such as product, market, technology, profitability and corporate governance. Short-term goals should incorporate these focus
areas into operational areas. The link between long-term and short-term goals cascades through the organisation from the broad vision and Maximum mark allocation: 5
basic goals to specific short-term targets and can provide a clear reference for communication.

(See E&L, section 12.4.2 pg 338 and SG section 1.2 in study unit 4.1).

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B3.2. Explain how functional tactics differ from corporate and business strategies. (6)

Functional tactics are different from grand and business strategies in terms of time horizon, specificity and participation. Allocate 1 mark for each
relevant and meaningful
Dimension Functional tactics Corporate or business strategies statement made. Allocate a
maximum of 2 marks for
Time horizon Identify the tasks that must be performed now or in Grand strategies focus on the organisation’s position in the each dimension.
the near future in the various functional areas. next few years.
Maximum mark allocation: 6
Specificity Identify specific activities that need to be performed Provides general direction (low level of specificity).
in each functional area (high level of specificity).

Participation Developed in the operational area, involving Developed by top management.

operational managers.

(See E&L, section 12.5.1 pg 342).

B3.3. Explain the role of policies in strategy implementation. (5)

Policies can be defined as the specific guidelines, methods, procedures, rules, forms and administrative practices that direct the thinking, Allocate a maximum of 2
decisions and actions of managers and employees in strategy implementation. Functional tactics provide broad guidelines on the marks for defining the
performance of key routine activities, but more detail is often needed which is provided by policies. Policies inform employees about what is concept policies.
expected of them and clarify what can and cannot be done in pursuit of the short-term goals in the strategy implementation process.
Policies provide a basis for control and promote coordination and consistency across organisational units. Allocate 1 mark for each
relevant statement.
(See E&L, section 12.6.1 pg 343).
Maximum mark allocation: 5

© UNISA 2015 [TURN OVER]

 Francois Crafford 012- 4294545 or 072 1770847 and Elsabe Scholtz 012 429 2695 or 074 6029979

B3.4 Discuss the balanced scorecard (BSC) as a strategy implementation and control system. (9)

The use of a single measure, such as financial ratios, is not the most effective means of controlling the implementation of strategy, because Allocate 1 mark for a
it might fail to take all perspectives into account. The reason for this is that control measures are often applied in isolation and do not take meaningful and relevant
measures such as customer knowledge, internal business process evaluation and criteria for organisational learning and growth into statement.
account. The balanced scorecard provides for the use of both financial and non-financial performance measures. It incorporates financial
performance measures, customer knowledge, internal business process measures and criteria for assessing learning and growth Maximum 2 marks can be
prospects. These measures combine so as to monitor the implementation of strategies in a holistic way. It ensures that the implementation allocated for mentioning the
process is linked to the long-term objectives of the organisation through a series of short-term actions. In doing so, it provides management four perspectives of the
with a complete picture of the control process; ultimately ensuring that actions are prioritised and aligned with the long-term goals and BSC.
strategies of the organisation. There are four processes that make up the overall balanced scorecard framework. These processes are:
translating the vision, communicating and linking, business planning and feedback and learning. Maximum mark allocation: 9

(See E&L, section 13.3.2 pg 365-366 and SG section 1.2 in study unit 5.2).

© UNISA 2015 [TURN OVER]

May/June 2018

1. APPENDIX A: EXAMINATION CASE STUDY-Kodak is at death’s door; Fujifilm, its old rival, is
thriving. Why?
The Eastman Kodak Company (referred to simply as Kodak) is an American technology company founded in
1888 when it was known for its pioneering technology and innovative marketing. “You press the
button, we do the rest,” was its slogan in 1988. By 1976 Kodak accounted for 90% of film and 85% of
camera sales in America. Until the 1990s it was regularly rated as one of the world’s five most
valuable brands. The company’s ubiquity was such that its “Kodak moment” tagline entered the
common lexicon to describe a personal event that was demanded to be recorded for posterity. The
company build one of the world’s first digital cameras in 1975.

Then came digital photography to replace film, and smartphones replace cameras. Kodak’s revenues peaked at
nearly US$16 billion in 1996 and its profits at US$2.5 billion in 1999. Then Kodak’s financial struggle
began as a result in the decline in sales of photographic film and its inability to adapt to a world in
which digital photography had become pervasive and available in just about every cellular telephone.

Fujifilm Holdings Corporation, better known as Fujifilm, is a Japanese company and one of Kodak’s
competitors. Fujifilm is very similar to Kodak in many aspects, but has been faring much better in the
age of pervasive digital photography. Both companies have seen their traditional business being
rendered obsolete and both companies have been aware of the advent of digital photography.
Whereas Kodak has been unable to adapt to this new environment, Fujifilm has successfully
weathered the storm and is still today a profitable and sustainable company. Observers point to a
number of key differences that led to Fujifilm adapting more successfully to its changing environment
than Kodak.

The first difference can be found in corporate culture. Kodak had a culture of complacency, ironically
cultivated by its massive success and near monopoly in instant film photography in the USA. Despite
its strengths – hefty investment in research, a rigorous approach to manufacturing and good relations
with its local community –Kodak has become a complacent monopolist. Fujifilm was also aware of the
threat of digital photography surging towards it like a tsunami by the 1980s, but in response, it
developed a three-pronged strategy. First, Fujifilm squeezed as much money out of the film business
for as long as possible. Second, Fuji prepared for the switch to digital photography. Lastly, Fuji
diversified into new lines of business.

The second difference between Kodak and Fuji can be found in the inconsistency in the Kodak leadership,
which meant that Kodak’s strategies changed with every new CEO. As a result, the company was
never able to diversify successfully. For example, George Fisher, CEO from 1993 until 1999, focused
on Kodak’s expertise in digital imaging rather than in chemicals, and mass-produced digital cameras
until camera phones destroyed that business. The latest CEO, Antonio Perez, who took charge in
2005, insisted that digital printing would save Kodak. At Fuji, technological change sparked an internal
power struggle. At first, participants in the consumer film business, who refused to see the looming
crises, prevailed. But the eventual winner was Shigetaka Komori, who chided them as “lazy” and
“irresponsible” for not preparing better for the digital onslaught. Named boss incrementally between
2000 and 2003, he set about overhauling the company. He spent around US$9 billion on 40
companies since 2000. He slashed costs and jobs. In one 19-month period, he booked more than ¥250
billion in restructuring costs for depreciation and to shed superfluous distributors, development labs,
managers and researchers. “It was a painful experience”, says Mr Komori. “But to see the situation as
it was, nobody could survive. So we had to reconstruct the business model”

The third difference between the Kodak and Fujifilm companies can be found in its ability compete in a
changing market environment. Kodak executives were not used to competing in a high-technology
world in which speed-to-market is critical to success. Hence, they were more committed to making
perfect products than to getting products into the market as quickly as possible and fixing the
 shortcomings in later models. Even when Kodak decided to diversify, it took years to make its first
acquisition. It created a widely admired venture-capital arm, but never made big enough bets to
create breakthroughs. By contrast, rather than simply trying to convert its film camera business to a
digital camera business, Fujifilm tapped its chemical expertise for other uses. Film is a bit like skin –
both contain collagen. Just as photos fade because of oxidation, cosmetic firms would like you to
think that skin is preserved with anti-oxidants. In Fuji’s library of 200 000 chemical compounds, 4 000
are related to anti-oxidants. Therefore the company launched a line of cosmetics which is sold in Asia
and Europe. Fuji also successfully branched out into other pharmaceuticals, liquid-crystal display
(LCD) panels for television sets and other electronic devices. Today, Fujifilm makes only 1% of its
revenue from photographic film. The fourth difference between the companies can be found in its
ability to identify target markets for the future. While many high technology companies were
achieving great success in emerging markets, Kodak’s failure to read the emerging markets correctly
cost the company dearly. Emerging markets generally switched early on from analogue to digital,
many emerging markets leapfrogging from having no cameras straight to using digital on the back of
the rapid adoption of cellular telephone technology.

Whereas Fujifilm has mastered new tactics and survived, Kodak, like so many great companies before it, seems
to have run its course and is on the brink of simply fading away.

Source: Available online: http://www.economist.com/node/21542796 [Accessed 25 November 2017].

2. Study Unit 3 Discussion Questions-Organisational Learning

(1) Explain why dynamic capabilities are necessary in strategic change.
Dynamic capabilities are those capabilities that help organisations to learn new capabilities they
require to adapt to environmental changes.

Organisations cannot only depend on what they are good at today; they also have to change and
acquire new capabilities that will ensure their future success. Whether or not an organisation
possesses dynamic capabilities essentially determines its ability to learn and to change.
Without dynamic capabilities, organisations will not be able to adapt to drastic changes in
their environment, or be able to benefit from innovation.

Organisations differ in their ability to acquire new capabilities. Organisations that can learn and adapt
will be capable of dealing with change, and will accordingly be better able to survive and
prosper in the long term. Only sustainable competitive advantage over the long term is the
ability to learn and adapt.

In considering the case study above, how did the dynamic capabilities of Kodak and
Fujifilm differ? Try to identify at least three key differences.

In considering the dynamic capabilities of the two companies, it becomes clear that Kodak and
Fujifilm differed fundamentally in at least three key respects
• Culture. While Fujifilm was initially slow to change due to the influence of the old
school, it was eventually able to overhaul itself. By contrast, Kodak was never really
able to escape its culture of complacency.
• The mental models of the executives. While Kodak continued to see itself as
primarily a camera company, Fujifilm defined its expertise more broadly and, as a
result, was able to diversify more successfully.
• A lack of market knowledge. The lack of market knowledge, for example about
emerging markets, meant that Kodak was not able to develop appropriate strategies
for dealing with potential new markets.

(2) Explain the relationship between individual learning and organisational learning.
The learning process can be seen as a cycle with four different activities as follows:
● Concrete experience – this occurs when a person acts in a certain way. The concrete
experience is followed by a process of thinking and reflecting on the experience.
 ● Abstract conceptualisation – this occurs when certain ideas or theories are
extrapolated from the reflection.
● Active experimentation – this occurs when the new ideas or concepts are
deliberately tried in other similar settings to see what the results are.
● Individual learning is the key to organisational learning. Organisations do not learn,
individuals learn. The process of organisational learning thus starts with individual
learning.
The second phase of the process is where learning is shared with other members of the organisation
until it becomes commonly accepted practice or knowledge.

Organisational learning is continuous and experimental, because the acquisition of knowledge is not a
guarantee that mistakes will not be made. Making mistakes of figuring out what works or
what does not work in different situations is an important part of learning.
However learning takes place in an organisation, it is the transfer of knowledge to other individuals
that will ultimately lead to organisational learning.

There are mechanisms that organisations can use to encourage organisational learning.
The organisation should be a supportive learning environment for example mistakes and
experimentation are tolerated. It should have a concrete learning process and practice. It
should promote learning and reinforce learning behaviours. The organisation should pay
attention to barriers of organisational learning. The organisation should ensure that a proper
knowledge management system is in place and that all organisational members follow the
system. The organisation should reward and motivate individuals who transfer knowledge.
Staff members who have benefited from learning investments should share newly learned
knowledge at staff meetings.

(3) Identify the barriers to organisational learning.

Organisational learning can be defined as the organisational processes of learning and adapting.
There are three major barriers to organisational learning:
● Constrained thinking / dominant general management logic – this stems from the
way managers conceptualise their business. It is a set of broad assumptions that can
be thought of as structures. Managers make critical decisions about the strategy
and allocation of resources based on this and the more dominant the logic, the
more it acts as a barrier to learning and change.
● Management ignorance – managers often assume that they know all about their
business and their industry and that there is no need to learn any more. In this
instance, ignorance and arrogance present a barrier to learning.
● Absorptive capacity - it refers to the ability of an organisation to recognise the value
of new, external information, to assimilate it and to use it to address business
problems. It is a strategic capability and differs from organisations, therefore some
will be able to learn, adapt and innovate quicker than others.

Let us revisit the Kodak case study and consider the definition provided by Garvin in the
context of Kodak versus Fujifilm. Would you say that the definition is complete? What
else would you add to the definition?

The one element that Garvin did not consider explicitly in his definition is the element of
managerial sense-making. If we consider again the case of Fujifilm and Kodak, both
companies had the foreknowledge that digital photography was coming, and both
altered their behaviour in response. The key difference was the way in which the two
companies interpreted (made sense of) the threat and accordingly altered their
behaviour. While Kodak simply attempted to adapt to the new technology, Fujifilm
fundamentally (and successfully) changed their business model – something that Kodak
was never able to do.

(4) Explain the role of absorptive capacity in organisational learning with the help of practical
examples.
Absorptive capacity refers to the ability of the organisation to recognise the value of new, external
information to assimilate it and to use it to solve business problems.
Absorptive capacity is a strategic capability and it differs for different organisations, so that some
organisations have a higher absorptive capacity than others and would accordingly be able to
learn faster and adapt more quickly to their environment or to innovate.

There are four dimensions that determine the absorptive capacity of an organisation:
● Acquisition of external information – this term refers to the ability of the
organisation to acquire relevant information from its external environment. Speed
is an important element of acquiring information – the better the quality of the info
and the sooner it is obtained, the better the organisations chances are of
developing some sort of advantage.
● Assimilation of acquiring information – assimilation of information refers to the
ability of the organisation to analyse and make sense of the acquired information.
The ability of the organisation to interpret and understand the implications of the
new information to their business is crucial as is its responsibility to share this info
and knowledge across the organisation.
● Transformation of knowledge – this term refers to the abilities of the organisation
to combine new knowledge with existing knowledge and to develop new insights.
● Applying new knowledge – the real benefit of absorptive capacity occurs when
organisations the transformed knowledge and new insights to improve their
business operations and to develop new innovations and business venture.

The ultimate outcome of absorptive capacity is that organisations with a high level of absorptive
capacity will be able to develop competitive advantage as they will be able to be more
dynamic in the context they operate in.
Knowledge management ensures that knowledge is used effectively and efficiently for the long term
benefit of the organisation.

What were the barriers to learning that prevented Kodak from successfully adapting to a digital
world? Give specific examples from the case study, and specifically consider all the different
elements that determine absorptive capacity.

In the case of Kodak, we can find examples of all three major barriers to learning and their
interrelationship is evident. They are the following:
• Constrained thinking. The dominant logic of the Kodak management team was that they
were a camera and digital imaging company. This clearly constrained their thinking, and
their search for new opportunities was limited to opportunities related to the camera
business. For example, when they entered the emerging Chinese market, it was with the
intent of selling photographic fi lm rather than digital imaging.
• Ignorance and lack of foresight on the part of management. Management’s ignorance
was evident from the fact that Kodak executives were not sure how to compete in the
fast-moving technology market. Rather than getting products to the market as quickly as
possible and fixing them in due course, they wanted to launch perfect products, which
meant that they always lagged behind their more technology-oriented competitors, such
as Sony and Canon.
• A lack of absorptive capacity. Kodak was also limited by its lack of absorptive capacity.
Factors such as those mentioned above and its complacent mind set limited Kodak in identifying
relevant information from the environment. Despite their specific efforts to identify
diversification opportunities, they were not able to diversify significantly. Ironically,
regardless of their early entry into the digital camera market, they were never able to
combine this with new information to identify new opportunities.

(5) Explain the role of knowledge management systems in organisational learning by means of
practical examples.
Knowledge management is the management function that creates or locates knowledge, manages the
flow of knowledge within the organisation and ensures that the knowledge is used
 effectively and efficiently for the long term benefit of the organisation. In other words, a
management system should share organisational knowledge and support organisational
learning. A knowledge management system is not an IT system; it is rather the philosophy of
knowledge management and the organisational processes that make it possible. The creation
of an efficient knowledge management system can contribute towards the creation of a
learning organisation. More specifically, a learning organisation is an organisation that is
skilled at creating, acquiring and transferring knowledge, and at modifying its behaviour to
reflect new knowledge and insights. Modifying behaviour is the important aspect.

The idea behind a learning organisation is that is easier for an organisation to adapt to sudden change
if the organisation as whole has the capability to learn. However, many organisations, even
though they acquire new knowledge and insights, often do not make fundamental changes in
their behaviour in response to insights or new knowledge. Hence an organisation may see or
“sense” gaps in systems and focus solely on closing these gaps (Single loop learning).
Different strategies or tactics may be employed to close these gaps, but often the same
problem is encountered at a later stage. Opposite effects may even emerge to what was
intended to be a solution or the organisation may simply run out of ideas.

In order for an organisation to become a learning organisation, several mechanisms can be used, such
as leadership commitment to learning, a shared vision, systems thinking, legitimising dissent,
encouraging experimentation, establishing communities of practice, using collaboration and
knowledge management in combination, and making deep-seated behavioural changes in an
organisation. More specifically, the process of knowledge management consists of the
following four phases:
• The discovery of knowledge in the organisation
• Capturing the knowledge in a way that enables it to be shared across
departments
• Sharing knowledge throughout the organisation
• Applying knowledge to solve business problems and make decisions

(6) Make recommendations on how an organisation can improve its organisational learning
capabilities.
Guidelines for organisations that want to become learning organisations or that simply want to
improve their organisational learning abilities. Learning organisations generally have three
distinguishing characteristics:
• a supportive learning environment (e.g. mistakes and experimentation are
tolerated)
• concrete learning processes and practices (e.g. communities of practice are used)
• leadership that reinforces learning behaviours (e.g. dissent is tolerated)

Review the Kodak case study. From an organisational-learning perspective, what could
Kodak have done differently that might have resulted in adapting more successfully to its
changing environment? Use the information contained in this section to identify at least five
specific actions.

Some possible practical steps Kodak might have taken to increase its organisational ability to
learn are identified based on the concepts discussed in this section.

The fact that every CEO had a different plan for Kodak, suggests that there was no shared
vision. By contrast, Fujifilm executives collectively identified a plan of action very early on
and were committed to their revised vision.
Although we do not know the exact composition of the Kodak management team, the case
suggests that “group think” was a problem. Had Kodak been able to engender more diversity
in its management team, especially by including executives from other industries, they may
have approached their strategies differently.
Kodak seemed to be stuck in single-loop learning, simply adjusting its strategies every time
they failed until it ran out of options. Instead executives should have fundamentally re-
 evaluated their business model and the way in which they did things to reinvent the
organisation – in other words they should have encouraged double-loop learning.
Challenging the existing mental models (e.g. of being a digital imaging company) would have
been an important starting point for this process.
Collaboration with other industry players, such as Sony, might have encouraged new thinking
and opened up new ways of doing things.
Kodak appeared to be very reluctant to experiment, but by delaying acquisitions and product
launches the management team denied itself the opportunity to learn, even if it meant
learning by failing.
3. Study Unit Four-Culture
(1) Study the four layers of cultural elements and attempt to identify elements of these four
cultural layers. Do any of the four layers predominate in the profiles of the three
organisations, or do they occur evenly among the three organisations? Summarise your
findings briefly.

(2) Nedbank’s Turnaround-Page 58 SG

One of the key challenges for Nedbank was to strengthen the culture and entrench the values in the
organisation. This involved, amongst other things:
● Matching the organisational culture with the requirements of strategy execution. To
this end, the Nedbank brand was used as a change catalyst.
● Using strong group norms to create culture-induced peer pressure, which could
shape employee behaviour. The “Dagwood” provided a way of shaping the
behaviour of employees.
● Creating a culture that focused on soft issues (becoming a good place to work) and
hard issues (measuring every aspect of performance) to energise employees,
deepen their commitment and enhance their productivity.
The cultural web also provides a good framework for assessing Nedbank’s change eff ort.
From this assessment it is evident that Nedbank dealt with many soft and hard issues that are
necessary to effect a cultural change in support of their business
 (3) Page 61 SG-The principles of strategic leadership provide a good framework for the
assessment of its role in the case of Nedbank. This is outlined in the table below.

(4) Critically evaluate the cultural change effort in Nedbank

Given the external pressures Nedbank faced when it started the change process, it could be argued
that the change effort was a revolution (change that requires rapid and major strategic and
cultural change, and that normally occurs where external pressures threaten the continued
existence of an organisation).
From the data we have, it would seem that Nedbank’s leadership created the vision first and then put
in place the “power tools” such as measurement and performance management.
Overall there is a sense that there is a good balance between the soft and hard elements of change,
and a good balance between management and leadership, in line with Denning’s
recommendations.
4. Study Unit Five-Align Strategy and Culture
(1) Factors other than strategy may also influence structure, for example:
● External macro environmental factors. Macro environmental factors may dictate
some elements of structure. For example, legislation on personal privacy may
require the appointment of someone to manage the personal privacy of customers.
● Skills constraints. The existing staff complement of the organisation may limit
structural changes. For example, if a strategy requires a certain number of scarce
skills, the organisation may not be able to fill the positions as required.
● Automation. Technology may enable the automation of certain processes, which
may in turn affect the design of the organisation.

In addition to what we have learnt so far, it is important to remember the following lessons about
strategy and organisational structure:
 ● No structure is perfect, and there is never just one best structural solution for an
organisation. There are many different options, several of which may work equally
well.
● Any decision on organisational structure will always entail a choice between
different options, and for this reason trade-off s can be made. Every option has
advantages and disadvantages, and these have to be weighed as part of the
ultimate decision.
● Organisational structures are not static; they are always evolving and changing. One
of the challenges for management is to ensure that the changes remain aligned with
the strategic direction of the organisation.
● There is a lot of room for innovation in organisational structure, much of it enabled
by technology.
(2) The basic organizational types of structure you should be able to describe in this way are:
● Simple structure (also known as the entrepreneurial structure, since it is very
common in young entrepreneurial start-ups, build around one owner-manager)
o entirely centralized and there is no division of responsibility, all decisions
made by owner and employees refer everything significant back to the
owner
o advantage during start up, owner controls its growth and development
o Limitations are that the owner not having sufficient knowledge in certain
area
o Such a structure will only be appropriate up to a size and will then develop
into other more appropriate structures
● Functional structure
o Activities belonging to each management function are grouped together
into a unit, department or function. To build competitive advantage such
organizations require well defined skills and areas of specialization
o Advantages of this structure are that control resides with the strategic
leaders of the organization (decision making is centralized), has clearly
defined relationships and relatively simple lines of authority and associated
with relatively low overhead costs
o Limitations are succession problems since specialists are created and not
generalist and may also experience coordination problems between
various functions
o Often used by organization with a single product focus
● Divisional structure
o can use product or geographic regions as means of divionalising or even a
combination of product and geographic divisionalisation
o decision making is decentralized, appropriate when an organization grows
in size, and complexities and for when organization performs business
internationally
o Advantage- profit responsibility is decentralized therefore enables
organization to assess the effectiveness and efficiency of various activities
and functions. It’s also enables organizations to adapt to changes more
effectively
o Limitations-Conflicts may develop between various divisions in their
competition for limited resources, efforts and resources may be duplicated
and evaluation performance of the divisions may be difficult
o It is appropriate when an organization performs business internationally
● Holding-company structure
o The headquarter of the organization or corporate centre largely acts as an
investment company. The operations of the various individual companies
are largely independent
o This structure is appropriate for organizations pursuing a restructuring
strategy, buying, selling or taking over other organizations
 o Advantages: involves relatively low central overhead costs and the holding
company is this able to finance subsidiaries at a favourable cost of capital.
Risks are spread between the companies
o Limitations: there are no centralized skills to support the organization.
There is no synergy and a also a possible lack of organizational culture and
strategic control
● Matrix structure
o This structure requires dual reporting by managers. It shows the
permanent and dual control of operating units. Authority and
accountability are defined in terms of particular decisions
o This structure is appropriate in large, multiproduct and multinational
organizations with significant interrelations and interdependencies
o Advantages: decisions are decentralized within a large organization. Makes
optimal use of scarce skills and resources and enables control over growth
o Limitations: It is difficult to implement and the dual reporting lines may
create confusion among employees. Potential conflicts exists between
various managers, it has high overhead costs and decision making can be
slow
● Global structure- there are five possible global structures:
o A globally centralized organization, remote from its global markets but
relying on exporting
o Manufacturing plants that are located close to the organizations markets in
order to satisfy local needs and preferences
o Centralization of the manufacturing of key components
o An integrated global structure with production locations chosen on
resource or cost grounds
o A global network through strategic alliances
● Network structure
o involves an interrelationship between different organizations, the network
structure usually
o performs the core activities itself, but subcontracts some or many of its
non-core operations to other organizations
o One big challenge for this structure is to coordinate its network partners
activities to ensure that they contribute to the network organization’s
mission and goals
● New venture unit
o Consist of groups of employees who volunteer to develop new products
ventures for the organization. These groups use a form of matrix structures
o when the project is complete they can be adapted in organizational
structures like functional, divisional or create a new department
● Virtual network structure
o It builds on the features of the network structure. It doesn’t need
employees to be in one office or facility. Information technologies (virtual
organisation) enables people who are spread out in remote locations work
as though they were in one place
o Advantages: streamline model that fits the rapidly changing environment.
It provides flexibility and efficiency because partnerships with other
organizations can be formed or disbanded as needed.
o Disadvantages: levels of reciprocal and sequential interdependence are
much higher than those of the network organisation

Assignment One-Semester 1 2018 and May/June 2017 Exam

1. The business strategies of an organisation are based on _____; whereas functional strategies are
based on _____. 3) a particular vision and mission, strategic intent and long-term objectives; annual
objectives in the immediate future. Pg 8 SG
2. Successful strategy implementation requires a number of components. Study the following list of
components, select the correct components and select the correct answer below. Pg5-6 SG
a. Achieves the desired outcomes of the chosen strategy
b. Completes all the strategic initiatives successfully
c. Improves the profitability of the organisation
d. Is acceptable to shareholders in terms of their welfare
e. Provides an enabling environment for employees
f. Is acceptable to all organisational stakeholders
3. The following figure depicts the experiential learning cycle. Fill in the missing spaces. 4) (i) Reflective
observation (ii) Abstract conceptualisation (iii) Active experimentation Pg103 PB

4. A number of dimensions determine the absorptive capacity of an organisation. Study the following
list, identify the correct dimensions and select the correct answer. Pg102 PB
a. The ability of the individual to share new knowledge and information
b. The ability of the organisation to acquire relevant information from its economic, technology,
social, international, political, natural and cultural environments
c. The effectiveness of the transfer of knowledge by an individual to other members of the
organisation
d. The ability of the organisation to analyse and make sense of acquired information
e. The ability of managers to conceptualise their business and its environment
f. The ability of the organisation to combine new knowledge with existing knowledge and to
develop new insights
g. The ability of the organisation to use transformed knowledge and new insights to improve
business operations and to develop new innovations and business ventures
5. Which type of knowledge transfer occurs when explicit knowledge is mixed and shared? 4)
combination Pg104 PB
6. Which one of the following is a mechanism to become a learning organisation? 3) encourage double-
loop learning Pg106 PB
7. _____ is/are the _____ of an organisation to deploy resources for a unique end result. 2) Capabilities;
capacity Pg120 PB
8. Successful business architecture has a number of core principles. Study the list of principles below and
select the core correct principles. Pg221 PB
a. Business architecture is about the functional areas of a business.
b. Business architecture is prescriptive.
c. Business architecture is an ongoing process.
d. Multiple components make up business architecture.
e. Multiple stages make up business architecture.
9. Which of the following factors will lead to centralised authority and decision making in an
organisation? 2) A risky decision with high costs involved and a high impact. Pg225 PB
10. The following figure illustrates an example of a _____ structure. 1) Holding Company Pg230 PB
11. The Nike Company performs its core business activities itself, but subcontracts non-core operations,
such as manufacturing, to other organisations. This is an example of a _____ structure. 2) Network
Pg232 PB
12. The _____ phase of strategy deployment is where the organisation decides how it is going to spend its
money in support of its strategy and in pursuit of attaining its vision. 3) Engagement Pg249 PB
13. Fill in the missing spaces in the strategic initiative management process illustrated below. 1) (i)
translate goals into potential strategic initiatives (ii) define and approve strategic initiatives (iii) align
individual behaviour (iv) report and manage Pg252 PB

14. _____ is a barrier to effective strategy deployment, which means that managers will tend to reduce
the overall task to a number of smaller steps or tasks that are easier to manage, but may not be
optimal. 4) Bounded rationality Pg260 PB
15. Question 15 and 16. In the table below, Column A lists various areas of strategic control, whilst
Column B lists measures of control. Match the area of strategic control in Column A with a measure
thereof in Column B. Organisational effectiveness-No.5 Pg275 PB
16. Organisational efficiency- No. 3 Pg277 PB

17. Customer value analysis, customer retention, and the number of new patents registered will measure
the _____ of an organisation. 1) Marketing efficiency Pg277-278 PB
18. _____ ratios give an indication of whether an organisation will be able to pay off its debt as they come
due over the next financial period. 2) Liquidity Pg283 PB
19. The __(i)___ is a management tool which can serve as __(ii)___, by considering the __(iii)___,
_____,_____, and __(iv)___ dimensions of an organisation. 4) (i) balanced scorecard; (ii) a planning
 and control mechanism; (iii) financial, customer, internal business process; (iv) learning and growth
Pg290-291 PB
20. The risk _____ stage in the strategic risk management process involves the prioritisation of the
various. 2) Analysis Pg300 PB

Assignment One-Semester 2 2018

1. Few organisations are truly good in terms of organisational learning, since various barriers to learning
exist. Which one of the following barriers refers to the barrier of dominant general management
logic? 4) Managers in the organisation make critical decisions about the strategy, allocation of
resources and other critical decisions based on their own (often flawed) assumptions. Pg100 PB
2. Absorptive capacity of organisations has a number of dimensions. Which one of the following
dimensions refers to the analysis, interpretation, understanding and sharing of acquired information
and knowledge across the organisation? 2) Assimilation of acquired information Pg102 PB
3. A learning organisation requires learning individuals. Which one of the following statements describes
the step in the individual learning process that follows reflective observation of the individual? 1)
Certain ideas and theories are extrapolated. Pg103 PB
4. A newly appointed lecturer may learn presentation skills from an experienced and resourceful senior
lecturer by joining a discussion class facilitated by the senior lecturer. The type of knowledge transfer
described in this scenario is _____. 4) socialisation Pg104 PB
5. Which one of the following statements provides a crucial aspect in terms of double-loop learning? 1)
An evaluation of what went wrong when a specific organisational goal was not achieved.Pg106 PB
6. The ____of an organisation are the beliefs, traits and behavioural norms that its management have
determined should guide the pursuit of its vision and mission. 1) values Pg198 PB
7. (i) _____ forms the core of an organisation’s cultural web as it represents (ii) _____. 2) (i) The
paradigm; (ii) all the assumptions taken for granted in the organisation Pg204 PB
8. Questions 8, 9 and 10. In the table below, Column A lists various types of strategic change, whereas
Column B lists examples thereof. Match the type of strategic change in Column A with an appropriate
example thereof in Column B. Pg210 PB
Reconstruction: 3) A change in the organisational structure by means of delayering
9. Revolution: 1) Company A plans a take-over bid of Company B which threatens the existence of
Company B
10. Evolution: 5) A culture of inclusiveness that will be implemented over time
11. The following statements relate to the principles of successful business architecture. Identify the
correct statement. 3) The development of business architecture has three distinct stages namely
strategy architecture, business architecture and architectural execution. Pg220 PB
12. Study the following list of terms to answer the question that follow. Pg222 PB
a. Governance
b. Culture
c. Leadership
d. Strategy
e. Technology
f. code of conduct
g. policies and procedures
h. structure
13. Which one of the following factors will increase an organisation’s tendency to decentralise authority?
1) A complex and volatile management environment Pg225 PB
14. A matrix organisational structure combines the advantages of (i) _____ and (ii) _____. 4)
decentralisation; coordination Pg231 PB
15. An organisation which is entering the global environment for the first time, will probably use the
following global structure: 3) a globally centralised organisation, remote from its global markets,
relying on an export department Pg232 PB
16. A _____ structure organisation usually performs the core activities itself, but subcontracts some or
many of its non-core operations to other organisations. 4) network Pg232 PB
17. Study the following list of terms and answer the question that follow: Strategic control mainly
revolves around the following: Pg269 PB
 a. Effectiveness
b. Organisational maturity
c. Benchmarking
d. Efficiency
e. Stakeholder satisfaction
18. Complete the missing spaces in the following statement: Organisational (i) _____ has an (ii) _____
focus of control; which can be measured by means of (iii) _____. 1) (i) effectiveness; (ii) external; (iii)
stakeholder satisfaction, competitive success and excellence Pg275 PB
19. The Microsoft company provides significant support in retaining its competitive position in the
computer software market. The culture at Microsoft has evolved to continuous improvement of its
products. The company is constantly seeking new opportunities in new markets with new products.
According to the Organisational Maturity Model, Microsoft can be classified as stage (i) ____ in terms
of the stages of organisational maturity, since Microsoft (ii)_____. 3) (i) four; (ii) sustains its industry
leadership position Pg294 PB
20. Study the following statements that relate to strategic risk management in organisations and identify
the correct statement. 4) Risk evaluation involves the evaluation of risks in terms of its likelihood of
occurrence, and the impact that they might have on the organisation. Pg300 PB

October/November 2017 MCQ

1. 2 Pg4 SG
2. 2 Pg13 SG
3. 5 Pg23 SG
4. 5 PG23 SG
5. 3 Pg23 SG
6. 3 Pg27 SG
7. 1 Pg29 SG
8. 2 Pg31 SG
9. 4 Pg109 PB
10. 1 Pg198 PB, 52 SG
11. 2 Pg57 PB
12. 2 Pg72 SG
13. 1 Pg233 PB
14. 4 Pg241 PB
15. 1 Pg240 PB
16. 5 Pg247 PB
17. 3 Pg247 PB
18. 4 Pg247 PB
19. 1 Pg277 PB
20. 2 Pg281 PB

Discussion Class
Learning Unit 1
In strategy implementation we consider the entire organisation – not only divisional or functional
segments of the organisation, the impact of strategy implementation decisions for the entire
organisation, at all managerial levels and across all functional areas. The organisation’s strategic
plans therefore can succeed only if properly supported, coordinated and implemented by middle
and lower management.

All the strategy-critical activities required for implementation need to be meticulously coordinated
and work together to achieve implementation success – neglecting any of these activities will result
in less than optimal implementation. Effective strategy implementation, therefore, requires
consideration of all the aspects below, as briefly explored in this learning unit and discussed in
greater detail in subsequent learning units. The following are essential components of the strategy
implementation process:

• Strategy is not about conducting business as usual, it is about managing change, and change
initiatives.
• Organisations cannot change if they are unable to learn and adapt.
• Change is often about changing the culture of an organisation.
• As part of strategy implementation, the organisational structure of the organisation has to
adapt to the selected strategy.
• Strategy deployment is the process of managing the strategy implementation process and
the strategic initiatives that form a vital part of it through programmes and projects.
• Managers need to ensure that appropriate strategy review, evaluation and control
mechanisms, for example by tracking key strategic metrics, within the organisation to
prevent strategies from failing.
The following three elements of strategy implementation:

• Translation of strategy and long-term objectives into guidelines for the daily and short-term
activities of those organisational members responsible for implementation. This also entails
the translation of strategy and long-term objectives into clear annual objectives.
• Ensuring that appropriate functional strategies and tactics for implementation are in place.
• Ensuring that the necessary resources, capabilities and especially distinctive competencies
for implementation are available and that relevant policies, procedures and systems,
including optimal reward systems for effective strategy implementation are in place.
The four broad approaches to or perspectives on strategy implementation are:

• Strategy implementation as organisational architecture. This perspective views the

organisation as an interrelated set of sub-systems, which must all be aligned, in balance and
consistent if a strategy is to be implemented successfully.
• Since strategy is about change, there is a perspective that strategy implementation is about
managing planned change.
• Strategy implementation can be viewed as a process of selecting and managing strategic
initiatives that collectively contribute towards the achievement of strategic objectives. We
refer to this process as strategy deployment.
• Strategy implementation as organisational adaptation suggests that organisations learn and
adapt organically rather than as part of a formal process.
In most organisations, strategy implementation entails a combination of perspectives rather than
focusing on one only.

Strategy implementation is about the processes and actions to ensure that all aspects of the internal
environment are aligned with the chosen strategic direction and strategy. While ideation, vision and
strategy form part of strategic planning, the aspects outlined above form part of strategy
implementation.
1. Strategic change occurs when the organisation decides to change its strategic direction in
light of internal or external factors. This then leads to large-scale changes in structure,
culture and systems to support the new strategic direction. What makes strategic change
complicated is that it often comprises a large number of large and small-scale changes
within the larger strategic change programme. In figure 2.1 the focus of strategic change
management is indicated.
Activity: One of the goals of the University of South Africa (Unisa) is to move from its current
position as a distance learning university towards becoming a leading university in open and
distance e-learning globally (a digital university). List the steps that you think Unisa will have to
take to effect this change. Would this be a strategic change in your view?

From the example given above, we can argue that this would indeed be a strategic change, since
it requires a change in strategic direction. Strategic change has a number of characteristics:

● It requires moving from a current state to a desired future state – without the need and
desire for change; there can be no effective change. In the case of Unisa, it would
require the need to change (for example recognition of the changing environment) and
the desire to change (to become a leading digital university globally).
● It affects the whole organisation. A change such as the one proposed above, would
require change across the entire organisation, not only in a few departments.
● It involves both structural and cultural elements. Structural elements are the tangible or
“hard” elements, such as organisation structure and systems. Cultural elements are the
intangible elements that have to do with values and beliefs. Often organisations focus
on the structural elements, because they are easy to change and implement, but
sustainable change also has to incorporate a change in mind-set.

2. Kurt Lewin’s change model describes planned change as a three-step process, involving
unfreezing, changing, and freezing.
Step 1: Unfreezing-Most individuals will naturally resist change and will be inclined to
maintain the status quo (the current state). For this reason, actively “unfreezing” the status
quo and readying the organisation for change is required. Unfreezing entails two critical
elements or steps:

● Current behaviours have to be carefully examined and employees have to be shown how
necessary change is, and how the status quo is hindering organisational growth.
● Employees have to be informed of the imminent change, why it is necessary, what it will
entail and how it will benefit them.
During the unfreezing phase, communication is critical. The more employees know about
the change, the better they understand why it is necessary and how it will affect them, the
more they will be motivated to accept the change.

Step 2: Changing-This phase entails the actual change taking place, and for that reason (and
due to the resistance to change that will accompany it) it is the most difficult phase of the
change process. During this phase, employees need to start learning the new behaviours
required of them, and they require a lot of support. This phase is characterised by

● employees acquiring new knowledge, skills and attitudes (for example, though training)
● organisational structures and systems changing
● communication throughout to maintain the momentum of change by reminding
employees why it is necessary and how it will benefit them
Step 3: Freezing-Once the change has been implemented; the challenge is to make it a
permanent part of employee behaviour. It has to be solidified and entrenched in the
organisation, and that is why Lewin called this phase “freezing”. This phase is essential to
ensure that employees do not simply revert back to their old ways of doing things. The
change should, therefore, be made part of the performance management and reward
systems of the organisation.
 1. Strategic change is not normal change, but proactive change to achieve strategic goals.
Strategic change involves changing strategic direction in light of internal and external
factors.
2. Types of Strategic Change:
• Adaptation (incremental) – only adapt to new situation, organisation can handle it. Change can be
accommodated within the current business model and the current culture with the aim to
realign the strategy.
• Reconstruction (sudden and disruptive) – a sudden alteration in the market conditions (which may
require a turnaround strategy); rapid change related to reconstruct processes and policies
(cost cutting) or structural changes
• Evolution (incremental) – fundamental changes over time. Change in strategy over time may
require cultural change. There is no urgency to create change. Lack of urgency may create
strategic drift
• Revolution (fast and disruptive) – fundamental changes as a result of sudden and fast-changing
conditions. Circumstance may change that puts pressure to change. A takeover that
threatens the existence of an organisation.
3. An example: If Unisa wants to become a globally recognised digital university, the first step
(unfreezing) may consist of showing Unisa staff how its present state is preventing the
institution from reaching its potential. For example, using a paper-based system in tandem
with online systems is not only costly, but may also result in poor student service as it may
cause delays in study material and assignment feedback reaching students.

During the changing phase, one of the elements of change may be to install and develop state-of-
the-art virtual learning environments and online assessment systems. Academics may
require training in the online teaching environment (e.g. in online marking).

During the freezing phase, academics will now be expected to present their courses online, and this
will be reflected in the performance management systems of the university.
1. Refer case study questions above
 1. Organisational culture is a collection of values and norms shared by people and groups in an
organisation. These values and norms are often found in the value statements of
organisations. These values and norms also reflect the appropriate kinds of behaviour and
standards that members of the organisation should use, or are expected to use, to achieve
the organisation’s strategic objectives.
2. Culture is a key factor to be considered during strategic planning and strategy
implementation. For example, in the case of Nestle, leaders insist that organisational values
and business principles are reflected in the decisions and actions taken by all employees.
This means that it is a strong-culture organisation in which values and norms are so deeply
embedded that change can be endured − the importance of which should not escape us. In
contrast, weak-culture organisations lack these same values and principles, have no or
minimal employee allegiance, and lack leverage in terms of employee motivation for
strategy implementation to succeed. Note and study the differences between these two
types of organisations and their possible implications for success.

Now consider the following three key advantages that an organisation gains when its culture is
grounded in agreed actions, behaviours and work practices:
● Organisational culture can be matched with strategy implementation requirements.
● Strong group norms are used to create peer pressure to shape positive behaviour.
● An organisational culture that is consistent with implementation requirements can
energise employees, deepen commitment and enhance productivity.

In summary, leadership excellence and a strong and supportive organisational culture promote good
performance as a result of shared values and behaviours.

3. The six principles of strategic leadership are:

• Principle 1: Strategic leaders are future oriented and anticipate change
• Principle 2: Strategic leaders get things done
• Principle 3: Strategic leaders open new horizons
• Principle 4: Strategic leaders reach out to stakeholders.
• Principle 5: Strategic leaders are fit to lead.
• Principle 6: Strategic leaders do the ‘next’ right thing and learn from past experiences

4. Activity-Nedbank’s turnaround: The role of Leadership

The leadership team of Nedbank took full responsibility for the cultural change effort.
The CEO in particular played a key role (McCoy, 2011:203): [The CEO] has championed this initiative
and is a great spokesperson for the brand and the company. He has rallied people around
him and is very vocal about the vision, values, brand and philosophy of the business. He is a
charismatic leader and has inspired confidence in the organisation, taking his leadership
team and the company as a whole with him.

[The CEO] has been a crusader on creating a compelling vision, activating the values within the
business and driving performance accordingly. He is passionate, committed and charismatic
and has ensured that we are all pulling in the same direction.
Although the above comments point to a single individual, namely the CEO, they strongly suggest
that the entire executive team had similarly aligned themselves with this vision and were
very much a part of the process (McCoy, 2011:203): Divisional and operational management
also need to be very active partners in the process, particularly in our case where business
level decisions are decentralised; as they are leading teams on the frontline and can
dramatically influence and impact service delivery and performance levels against the brand
reputation and brand promise.

Although some concern was expressed at the prominence and influence of the CEO, a plan was in
place to ensure a transition of executive leadership in 2009. (Source: McCoy, 2011, adapted)

Critically evaluate the role of strategic leadership in Nedbank’s change efforts.

The principles of strategic leadership provide a good framework for the assessment of its role in the
case of Nedbank. This is outlined in the table below.
 1. Strategic leadership can be defined as the ability to anticipate, envision and maintain
flexibility, empower others to create strategic change as necessary, articulate a strategic
vision for the organisation and motivate others into buying into it.
2. The six principles of strategic leadership are:
• Principle 1: Strategic leaders are future oriented and anticipate change
• Principle 2: Strategic leaders get things done
• Principle 3: Strategic leaders open new horizons
• Principle 4: Strategic leaders reach out to stakeholders.
• Principle 5: Strategic leaders are fit to lead.
• Principle 6: Strategic leaders do the ‘next’ right thing and learn from past experiences
 1. Organisational structures are designed to ensure that determined or intende3 strategies can
be implemented successfully. Alfred Chandler once suggested that “structure follows
strategy”. By this he meant that an organisation will adapt its structure to suit its strategy.
Rather than the other way around. This implies that an organisation’s structure should
reflect its strategy, and we should be able to see some evidence of it.

For example, the structure of an organisation with a differentiation strategy wills differ from that of
an organisation opting for a cost leadership strategy. One key difference may be that a
differentiator may have a research and development department whereas a cost leader may
not.

2. Organisational structures will evolve and change overtime. As an organisation starts out, it
may have a simple structure. However, as the organisation grows, it may make gradual
changes to the structure until it starts to experience crises of coordination and control – for
example, decisions take too long and more mistakes are made. At this point, the
organisation may decide to restructure itself, and will then move towards a new
organisation design. This process will repeat itself several times during an organisation’s
lifetime. It should be noted that it is quite difficult to find large organisations with a “pure”
organisational form. Such large and complex organisations normally have complex hybrid
structures that use a variety of organisation types in combination.3

3. Ambidexterity refers to the ability to be equally good at exploiting existing opportunities using
existing capabilities while exploring and searching for new opportunities and new capabilities
To have best of both worlds. Allows the organisation the ability to influence those parts of the
environment over which it can exercise some control , while adapting to environmental
circumstances that are beyond control or too costly to influence. In a complex and highly
competitive environment, organisations need to be more agile and quick to respond to business
environment changes. Organisational structure plays an important role in organisation becoming
more agile and responsive. Therefore, organisational structures often evolve from simple forms
to complex forms as environments.
1. Strategy deployment refers to the process of managing the implementation efforts of the
organisation. In other words, it provides the “logical model” that managers need. It is a vital
part of strategy implementation.
2. Strategy implementation is generally considered to be the “doing” part of strategic
management, and its purpose is to ensure that formulated strategies are activated. It
involves the alignment of the organisation’s culture, structure and systems (reward systems)
with the formulated strategy. It is widely acknowledged that there is no clear framework for
managing the process of alignment. Strategy deployment refers to the process of managing
the implementation efforts of the organisation. It provides the “logical model” that
 managers need. In larger organisations, strategy deployment can be a long and complex
process, and for this reason it is necessary that the organisation has clear processes for it
Strategy deployment focuses on the selection and implementation of strategic initiatives. Strategic
initiatives are all the activities that are not part of operations; they would typically be
programmes or projects that require programme and project management.
3. Components
● The organisational units (such as business units, divisions or functions) must be
aligned with the strategy so that the entire organisation and all its parts move in the
same direction.
o Mobilisation refers to the process by which the corporate, business and
functional dimensions are awakened and kept moving until they find their
place in strategic deployment
● The behaviour of individuals must be aligned with the strategy.
There are five tools to achieve this:
Recruitment of individuals that support the strategic direction
Training and development of employees
Policies and procedures to guide behaviour
the process of cascading objectives can be used as a framework for setting
objectives
● Finally, the organisation must have adequate processes for identifying and managing
strategic initiatives
Strategic initiatives refer to those key projects or programmes focus on achieving specific objectives
or improving performance in order to achieve a performance target

Enablers
● Communicating the strategy: There are four man objectives for communication of strategy
o To ensure that everyone in the organisation understands what the strategy is and
how it will affect them
o To resolve ambiguity and uncertainty about the strategy
o To explain the assumptions and judgements that were made during the analysis
process to explain the decisions that were made and backup plans
o To ensure coordination across all organisational units
● Organisational learning and adaptation
o a readiness to experiment, to learn from the results and to adjust accordingly is a
hallmark of adaptive organisations
o Learning through experimenting has three components: conduct the experiment,
study the success and failure of experiment and finally transfer the lessons learned
throughout the organisation
o To learn from experimentation requires a mistake-friendly, knowledge-sharing
culture and should be part of every strategy deployment
● Resource allocation: In considering requests for funding and in the budgeting process,
organisations should take the following into account:
o The extent to which the proposed resources contribute towards the organisation’s
mission and long-term objectives
o The extent to which they support the strategic direction and key strategic initiatives
o The level of risk associated with the proposal
4. Strategy deployment focuses on the selection and implementation of strategic initiatives.
Strategic initiatives are all the activities that are not part of operations; they would typically
be programmes or projects that require programme and project management. (TUT 202)
A project is a temporary endeavour with the purpose of creating a unique product, service or
outcome. A project does not form part of the operations of an organisation, and for that
reason it is ideally suited to function as a management framework for strategy
implementation
If we consider this definition, we can see that project management has some very specific attributes:
● It has a specific purpose or desired outcome.
● It is temporary – in other words it has a specific start date and end date.
● It is multidisciplinary and will require resources from various organisational areas
● It requires leadership and a “champion” at a high level.
● It requires a certain methodology, process and plan – in other words it is managed.
 ● A project typically has five stages. First stage is the initiation of the project (identification
and selection of strategic initiatives). The second stage is the creation of a project plan,
while stage three is the execution of the plan. Monitoring and controlling (stage 4) take
place throughout to ensure that the project progresses as planned, to take corrective
action if required, and to ensure that project milestones are achieved. In the final stage,
the project comes to a close.

1. Strategic control is the third and final phase of the strategic management process, its
defined as the management efforts to track strategy as it is being implemented detect
problems or changes in its underlying premises and make necessary adjustments

Strategic control is the phase during which mangers ensure that the implementation activities are
performed effectively and efficiently, and identity deviations from the strategic plan in order
to take corrective action

It has two focal points: to review the content of the strategy and to evaluate and control the
implementation process

Strategic control is necessary for these reasons:

● Provides a coordinating mechanisms that links the strategic planning,
implementation and control processes of an organisation
● Ensures that resources are deployed in such a way that an organisation attains its
overall objectives
● Enables management to cope with environmental change and uncertainty
● Ensures that costly mistakes are avoided
● Ensures a balance between organisational effectiveness and efficiency
2. The balanced scorecard (BSC) is a widely accepted tool for managing organisational
performance. The BSC focuses on four dimensions, and its purpose is to define the small
number of strategic goals and key measures that measures performance across the
 organisation. For each goal, the organisation has to identify how it will be measured, what
target it wants to achieve in the given time frame, and the strategic initiatives that it will
implement to achieve these targets.

It links strategy formulation and implementation

BSC also offers the opportunity of developing strategy maps. Strategy maps show how the objectives
of the organisation are connected and how value is created for the organisation. This in turn
helps the organisation to understand how improving performance in one area will lead to
improved performance in another area.

The four perspectives of the balanced scorecard:

● The financial perspective, with focus on the financial performance of the
organisation “to succeed financially, how we should appear to our shareholders?”
● The customer perspective with a focus on how the organisation’s customers
perceive it “To achieve our vision, how should we appear to our customers?”
● The learning and growth perspective with a focus on sustainable growth, value
creation and innovation “To achieve our vision, how will we sustain our ability to
change and improve
● The business process perspective with a focus on the core capabilities at which the
organisation must excel in order to be competitive “To satisfy our shareholders and
customers, what business processes must we excel in? “
The balanced scorecard plays a crucial role in the management of performance across the
organisation, as each goal and target can be broken down into functional objectives,
measures, targets and initiatives which are ultimately reflected in the performance targets
of individual employees.
 ANNEXURE C: SELF-ASSESSMENT ASSIGNMENT FOR 2018
The questions for the self-assessment assignment are based on the DaimlerChrysler case study provided
below. Please study this case study to answer the questions below.

DaimlerChrysler merger
On 7 May 1998, Daimler-Benz Aktiengesellschaft in Germany, the manufacturers of the iconic Mercedes
Benz range, and Chrysler Corporation in the United States of America, signed a merger contract to establish a
new company - DaimlerChrysler AG. The newly formed Aktiengesellschaft (AG) was organised and existed
under the laws of the Federal Republic of Germany. Daimler, who proposed the merger and dominated it, paid
US$35 billion for Chrysler. The intention of the merger between the two companies was twofold – (i) to
safeguard its long-term competitiveness, mainly by reducing the new company’s production costs; and (ii) to
increase the new company’s footprint dramatically, especially in North America. Sadly, the merger between
the two companies is probably the most famous of all international mergers that ended in failure.

Figure 1 illustrates the DaimlerChrysler Management Board, responsible for managing DaimlerChrysler
AG and represents the new company in its dealing with third parties. Jürgen E Schrempp from Daimler and
Robert E Eaton played key roles in the merger process.

Figure 1: DaimlerChrysler AG Board of Management

Group A consisted of board members representing the following interests in the company:
• Research and Technology
• Services
• Aerospace
• Commercial Vehicles
• Sales and Marketing: Mercedes-Benz

Group B consisted of board members representing the following interests in the company:
• Passenger Cars: Mercedes-Benz
• Passenger Cars and Trucks: Chrysler and Integration
• Corporate Development
• Chief Financial Officer
• Global purchasing
Together with the Co-Chairmen and Co-Chief Executive officers, Group B’s board members formed the
Chairmen’s Integration Council.

Group C consisted of board members representing the following interests in the company:
• Sales and Marketing: Chrysler
• Human Resources: Daimler-Benz
• Product Strategy and Design: Chrysler
• International: Chrysler
• Procurement and Supply: Chrysler
• Manufacturing: Chrysler

In 2007, Daimler sold its Chrysler division in the US to Cerberus Capital for US$7.4 billion (for which they paid
US$35 billion in 1998). Cerberus Capital Management was taking an 80.1 percent stake in the automaker for
that amount. The financial performance of Daimler increased dramatically after the sale. Without Chrysler,
Daimler reported a net profit of €4 billion for the year 2007 (compared to €3.8 billion in 2006). Sales rose to
€99.4 billion from €99.2 billion. The sheer difference in the amounts of money paid for Chrysler by Daimler and
later by Cerberus Capital makes one really wonder how such a promising merger could fail so dramatically.
"We obviously overestimated the potential of synergies," Dieter Zetsche, chief executive of DaimlerChrysler,
said at a news conference at the company's headquarters in Stuttgart, Germany, after Daimler sold its Chrysler
division to Cerberus Capital Management. Upon closer examination, the two companies differed from each
other in many ways, as indicated in Table 1 below.

Table 1: Comparison between Daimler and Chrysler

Differences in the first two aspects compared in the table above, resulted in conflicting orders given by
managers to their subordinates and the formulation of different goals in different departments. American and
German managers had different values which drove and directed their work. Different departments were
heading in opposing directions. The two companies were never integrated into a cohesive whole and the
potential synergies that were identified as reasons for the merger, went unrealised.
Furthermore, employees of the two companies did not like each other – they could not cooperate to an extent
necessary to make the merger a success.

Mistrust between German and American employees and between management and their subordinates were
mainly caused by the realisation that the agreed term “merger-of-equals" did not materialise and that it was,
in actual fact, a takeover of Chrysler by Daimler. During the initial stages of organisational integration, huge
bulks of Chrysler’s key executives either resigned or were replaced by German counterparts. Poor
communications lead to sharp decreases in productivity of the merged companies.
In theory, the Daimler-Chrysler merger should have yielded two potential sources of competitive advantage.
The first potential source was cohesive global brand architecture. The second source lay in the creation of a
coherent platform strategy. The cost of developing new motor vehicles is very high.
Therefore, manufacturers design “platforms” from which they create families of vehicles. They also try to
share parts between platforms to drive economies of scale in manufacturing.

Realising synergy in brand architecture and platform strategy would have required deep integration of Daimler
and Chrysler. One of the plans of the merger was for Chrysler to use Daimler parts, components and even
vehicle architecture to sharply reduce the cost to produce future vehicles. Unfortunately, problems surfaced
when Daimler’s Mercedes-Benz luxury division, whose components Chrysler were supposed to use, was
reluctant to share with its mass-market partner. In return, Daimler had hoped that Chrysler would dramatically
increase its footprint in the promised land of auto sales – North America.
Due to increased competition from Asian motor car manufacturers, Chrysler fell short. The management team
would have had to develop a global brand strategy and associated logic of competitive positioning.
None of this happened. Management of the merged company managed the two companies as separate
operations.

Only two years after the merger, the new company admitted that they needed to deal with many barriers that
prohibited them from realising their initial merger goals. Over and above the differences between the two
merged companies (indicated in Table 1 above) time differences between the US and Germany also posed a
big problem – managers from both companies criss-cross the Atlantic in a stream of meetings and workshops,
seeking ways to drive down expenditures and share future development costs.
People such as Mr Hubbert from Daimler (member of the Chairmen’s Integration Council and responsible for
Passenger cars: Mercedes-Benz), acknowledged that Daimler, seeking to solve strategic problems of its own,
had engineered a friendly takeover of the American car manufacturer. The merged company also faced
financial problems. It was admitted that renewed cost-cutting efforts had to be undertaken to improve its
operating results. The merged company also realised the importance of communication with investors when
their share price fell more than 40% in 1999, only one year after the merger. Competition in the motor vehicle
industry intensified, especially in Chrysler’s home market. At the time of the merger, share options became
hugely available, which resulted in senior Chrysler managers becoming rich. This triggered concern in
Germany. Furthermore, Americans were remunerated two, three or even four times as much as their German
equivalents. Management also needed to coordinate hundreds of integration projects, for which they formed
an automotive council of five senior managers to which all projects needed to report every four to six weeks.

Adapted from:
(i) http://www.commisceo-global.com/blog/cultural-differences-in-international-merger-andacquisitions;
(ii) http://www.casestudyinc.com/daimler-chrysler-and-the-failed-merger;
(iii) http://www.economist.com/node/341352; and
(iv) http://www.globalsepri.org/uploadphotos/2008912171836151.pdf.

1. Organisational culture influences an organisation’s actions and approaches to conduct business and the
way in which strategy is implemented.
1.1. Define the terms organisational culture (in an organisational context) and the cultural web. (2 marks)
1.2. List and explain the elements of the cultural web. Apply each element of the cultural web to the
Daimler Chrysler AG company. Present your answer in a table as indicated below: (28 marks)
 1.3. Would you describe the strategic leadership of Jürgen E Schrempp and Robert J Eaton as being
successful? Substantiate your answer. (5 marks)
2. Question 2
2.1. Discuss the various types of strategic change and identify the type of change applicable to the
DaimlerChrysler merger. Substantiate your answer. (12 marks)
2.2. The management of strategic change requires the execution of various activities. Identify these
activities (3 marks). For each activity, apply the execution of the activity to the DaimlerChrysler
merger. In your answer, you should also indicate the failures of the merger in terms of the execution
of activities (6 marks).
2.3. Strategic change often fails, as we have seen in the DaimlerChrysler merger. Explain the barriers to
strategic change (10 marks). Identify the most important reasons for the failure of the
DaimlerChrysler merger and substantiate your answer (4 marks).

Roland’s Exam Revision Guidance

1. Learning Unit 1:Factors for Implementation Failure-Pg. 18-19 SG
Before we embark on this discussion, it might be useful if we define what we meant by strategy
implementation failure. Successful strategy implementation can be defined as implementation that
(Miller, 1997:577–602)
(1) Achieves the desired outcomes (strategic objectives)
(2) Completes all strategic initiatives successfully
(3) Is acceptable to all stakeholders (e.g. does not entail dubious means such as bribery or coercion)

Implementation failure accordingly means that a new strategy was formulated but was not implemented, or
was implemented in such a way that the implementation was incomplete, strategic objectives were
not attained, or the implementation was unacceptable to key stakeholders.

Strategy implementation often fails, and failure is normally due to a set of complex factors or conditions rather
than to just one specific reason. Therefore, we do not simply want to provide you with a list of
possible reasons for failure. It is far more important that you develop an understanding of the
complexity of strategy implementation failure and how the various factors are interconnected than
simply generating a list of reasons why strategies fail.

Strategy implementation failure may start with the strategy formulation process. If strategic objectives are too
complex or poorly understood, lack consistency and do not provide clear future direction to members
of the organisation that have to implement them, it is unlikely that implementation will be successful.

In our preceding discussions we highlighted the importance of leadership excellence, sound organisational
structures, effective functional strategies, appropriate policies and procedures, and adequate
resources and capabilities as requirements for effective strategy implementation. However, we also
 emphasised meticulous alignment of all these attributes for any degree of success. Apart from
deficiencies in any one of the above attributes, poor or ineffective alignment is regarded as a major
reason for implementation failure. Implementation failure can thus result from poor change
management and the resulting misalignment of the various elements of the organisation. These
aspects are discussed in learning unit 2.

The so-called Icarus paradox, according to which organisations dwell on past successes, losing sight of and not
adapting to changing market realities and changed requirements for competitive advantage to cope
with new realities, which invariably leads to failure (Grant & Jordan, 2012:10–12; Hough et al,
(2008:11–13); Jones & Hill, 2013:107–109). In learning unit 3 we examine organisational learning and
adaptation, where we will see that, if organisations are unable to learn and adapt (for example where
they are constrained by their own arrogance or mental models), it may negatively impact on their
ability to implement strategy.

Effective leadership and management are required for strategy implementation, and if management is
ineffective in this regard, it may lead to implementation failure. This aspect is discussed in more detail
in learning unit 4.

Strategy implementation may be hampered by ineffective implementation management processes (or the lack
of such processes). We refer to these management processes as strategy deployment, which we will
discuss in learning unit 6.

External factors may also impact on strategy implementation. Unexpected occurrences or misreading and
misinterpreting the external environment may have a negative impact on strategy implementation. In
learning unit 7 we examine the management of strategy implementation risk.

The dire consequences of misalignment could include the following (Fonvielle & Carr, 2001:5):
new programmes running the risk of failure
Employee commitment to quality deteriorating
Individual objectives taking precedence over organisational objectives
Morale and productivity that diminish over time

To ensure effective alignment, excellence in leadership is critical. It is generally acknowledged that poor
implementation rather than poor formulation is the main cause of strategies failing.

Activity 1.7: Make a list of all the possible reasons for strategy implementation failure you encountered in this
section. In your view, what are the top five reasons why strategy implementation might fail?

Feedback
If you found it difficult to make a list of the top reasons for failure, it is with good reason. Bear in mind that
Implementation failure is normally attributable to a long-standing problem, not to a simple, short-term
failure in one area
The various aspects are interrelated, which means that it is difficult to prioritise some over others

2. Learning Unit 2:
● Organisational Architecture –Pg.25-28 PB
Study section 11.1 in the prescribed book.
After completing this section you should be able to
explain what organisational architecture is
identify the components of business architecture
compare and contrast three different types of organisational architecture
explain the importance of organisational architecture in building a cohesive strategy

Building a house is a complex business. It is not simply about stacking bricks and putting a roof on top.
First there is the process of designing the house, and during this process the rules of
structural design and the rules of the municipality have to be considered. Architectural skills
 and engineering skills are required to draw up the plans and to calculate the costs of the
project. Only after the plans have been approved can building begin. During this phase,
certain skills (e.g. project management, building, plumbing and electrical installation skills)
and technologies (e.g. earthmoving equipment) are required. The plans (which are an
expression of the vision and goals of the architect and the owner) provide the guidelines for
what should be built, how it should be built and what materials should be used. So we can
see that building a house (or any other building) entails a complex combination of various
sub-systems. An organisation is also a construction, albeit in more than just the physical
sense. It involves people, and for that reason we could say that organisations are social
constructions that are constructed by the people who are involved in it. This social
construction is in a sense also architecture, although it is more fluid than a physical building
and continuously evolves.

There are many confusing definitions and descriptions of business and organisational architecture and
its components. Some focus only on the organisation structure, while others focus on the
totality of the organisation (see for example the definition at
http://www.youtube.com/watch?v=F4Xz6vzxhRo). Yet others describe organisational
architecture as the totality of the internal organisation and its external relationships –this is
the view of the textbook (section 11.1). In this section of the study guide, we focus on three
different depictions of organisational architecture, namely those discussed in section 11.1 of
the prescribed book (see also fi g 11.2 and section 11.2.1), the well-known McKinsey 7–S
framework, as well as the Lee, Venter and Bates perspective on organisational architecture.

The notion of organisational architecture is not purely about organisational structure, but is actually
quite similar to that of the cultural web you encountered in the previous section. Can you
think why? Well, both concepts consider the organisation as a set of interdependent sub-
systems, and both ideas acknowledge the existence of hard and soft sub-systems. Both also
suggest that all the major subsystems should be aligned and pulling in the same direction in
order for change to succeed. It would therefore not be incorrect to suggest that the cultural
web is also a depiction of an organisational architecture. 2

The McKinsey 7–S framework

The 7-S framework was created by the famous McKinsey strategy consultancy. In order to learn more
about the 7-S framework, its history and application, visit
http://www.mckinsey.com/insights/strategy/enduring_ideas_the_7–s_framework. You can
click on the podcast on the web page to listen to a podcast and interview with Lowell Bryan,
one of the McKinsey partners who were involved in the original development of the 7–S
framework, as depicted in figure 2.3.

Figure 2.3: The McKinsey 7-S framework

 At the heart of the McKinsey framework is the idea that there are seven key sub-systems in
the organisation that all have to be in balance and consistent with each other. No one sub-
system is more important than the other. As with the cultural web, certain subsystems can
be regarded as “hard” (strategy, structure, systems), while the rest can be categorised as
“soft”.

The Lee, Venter and Bates framework of organisational architecture

Whereas the McKinsey 7-S framework depicts organisational architecture as a set of interrelated and
interdependent sub-systems, Lee, Venter and Bates (2004:13–22) depict it as a flow diagram
or process (fig 2.4).

Figure 2.4: Lee, Venter and Bates framework of organisational architecture

In terms of the framework, which should be read from right to left, the following components make
up the organisational architecture:
The architecture is shaped by the needs of internal and external stakeholders. For example,
organisations exist to serve customers, so customers play an essential role in shaping the
organisational architecture.
The organisation’s capabilities, described as the important outcomes provided by the organisation,
are distributed to the stakeholders.
The organisational processes lead to the outcomes (capabilities), and are underpinned by the
structures and systems of the organisation, the competencies of individuals (knowledge,
skills and abilities) and the technologies employed by the organisation. Organisational
culture underscores the organisational architecture.

Activity 2.2-Compare and contrast the organisational architecture model in the prescribed book, the
McKinsey 7-S framework and the Lee et al framework discussed above. Clearly identify the
key similarities and differences between the frameworks. What would you say is the key
strength of each framework?

Feedback
In the table below, the components of each of the frameworks are compared. From this comparison
we can deduce the following:
The McKinsey 7-S framework focuses mostly on the internal environment. Its strong point is its
simplicity. It also has a strong focus on strategy as a part of the architecture.
The key strength of the Lee et al framework is its strong focus on stakeholders.
 The framework in the prescribed book focuses particularly on the leadership and governance of the
organisation and on the interface between the internal and external environments (sensing
and sense making)

Table 2.1: Comparison of the components of the different frameworks

Organisational architecture plays an important role in strategy implementation as it helps the

organisation to “map out” where it currently is and where it wants to be in future.

● Planned Change Models OCC-Reasons for Failure

3. Learning Unit 3:Dynamic Capabilities Absorptive Capacity Knowledge Management System-
Frameworks to improve Organisational Learning
4. Learning Unit 4: Organisational Culture-Six principles of Strategic leadership
5. Learning Unit 5: Evolution of Structure-Organisation Ambidexterity
6. Learning Unit 6: Components and Enablers SEF Managing Initiatives
7. Learning Unit 7: Elements of Strategic Control-Simons Control Levers BSC and Strategy Map
Risk Management
Section A Questions – Compulsory

**Explain why corporate governance is important in strategy implementation (5)

 It is the responsibility of the board of directors of an organisation to define the purpose of the
organisation and identify the stakeholders relevant to the business of the organisation.
 The board has to formulate a strategy based on these factors.
 The King Report states that it is the board of director’s responsibility to ensure that managers
implement the formulated strategy and monitor the implementation.
 Top management must ensure that strategy implementation activities support the drive
towards social and environmental responsibility.
 Stakeholder engagement should be encouraged.
 Strategy implementation should take issues as social responsibility, environmental
responsibility, stakeholder engagement and sustainability into consideration at all times.

**Describe the major types of executive bonus compensation plans (5)

 Share options
o It link individual rewards to organisational performance.
o Top managers will be motivated to pursue long-term goals in line with stakeholder
expectations.
o Executives only receive a bonus if the organisations share price appreciated.
 Restricted share plan
o Uses company’s shares as an incentive for executives.
o Executives are given a certain number of shares but may not sell it for a specified
period.
o The rational is to promote longer executive tenure.
 Golden Handcuffs
o Cash bonuses are deferred in a series of annual instalments.
o Should the executive leave the company before a certain time, compensations is
forfeited.
 Golden Parachutes
 An executive retains a substantial cash bonus regardless of whether he or she quits,
resigns or is fired.
 Executive is rewarded regardless of success or failure.
 Cash bonuses
 Cash bonuses are more widespread in organisations (not only executives)
 Bonuses are calculated using accounting measures such as ROE, EPS and growth
rates.

**Discuss the ‘warm square’ in the modified McKinsey 7-S framework (5)/
Discuss the component of the McKinsey 7S framework

 This model links the organisations strategy to the various factors that need to be addressed to
ensure successful implementation and consequently strategic success. The 7 –s are:

 The framework distinguishes between a cold triangle and a warm square.

 The warm square are style, skills, staff and shared values
o It refers to the people in the organisation.
o Strategy
 The organisations chosen strategy and the way it intends to achieve its
strategic goals and vision.
o Structure
 The way in which an organisation is structured.
o Systems
 Including systems such as reward systems, strategic control systems and
operational control systems.
o Style
 the leader and management style of the organisation
o Staff
 the people in the organisation
o Skills
 the organisations core competencies and source of competitive advantage
o Shared values
 the values the organisation believes in
 The cold triangle refers to structure, strategy and systems of the organisation.
 These issues cannot be isolated from one another.
*Explain any five of the strategic change issues (5)

 Time
o how quickly is change needed
 Scope
o is dramatic revolutionary change needed or only a moderate change
 Diversity
o the level of homogeneity in the organisation
 Capacity
o does have the resources to change
 Readiness
o employees ready for change
 Capability
o does employees and managers have the capabilities to implement change

*Provide guidelines for overcoming resistance to change (5)

 Education and communication

o Help people to understand the need for change.
o Must be communicated so that it is clearly understood by all.
 Participation and Involvement
o If people are part of the strategy formulation process, they will be more supportive of
changes necessary to implement new strategy.
 Facilitation and support
o Building support networks helps to overcome resistance to change.
 Negotiation and agreement
o Linked to incentives and rewards.
 Manipulation and co-optation
o Influencing people to accept change and "buying-off" people to accept and promote
change.
 Giving clear direction
o May use authority to set direction and impose means to implement change.
 Explicit and implicit coercion
o this may work in the short-term - unlikely that this will result in long term commitment from
employees

*Discuss the five basic parts of the organisation (5)

 Strategic apex
o The home for top management and strategic leadership in an organisation.
 Middle line
o Includes all the managers in direct line relationships between strategic apex and the
operating core.
 Operating core
o Occurs where the actual operating tasks for an organisation are performed to produce the
product/service.
 Techno-structure
o Includes all staff analyses who design the systems by which work processes are formally
designed.
 Support staff
o Includes the support for the organisation outside its operating workflow, corporate
communications, legal, etc.

**Discuss the instruments in strategy implementation (5)

 Short term objectives

o Short term objectives must be suitable, achievable, acceptable, motivating, flexible and
understandable.
o Each goal must indicate clearly who is responsible and the focus area, action require,
how it will be measured and the time frame.
o It should be consistent across functional areas.
 Functional tactics
o Are the key activities that have to be performed in each functional are to provide the
organisations products and services.
o It translates the organisations grand strategy into action to ensure that the short term
goals are attained.
o It typically includes marketing, finance, operations and human resource management.
 Policies
o It entails specific guidelines, methods, procedures, rules and administrative practices that
direct thinking, decisions and actions of managers and employees in strategy
implementation.
o Policies create empowerment.
o It provides a basis for control and promotes coordination and consistency across
organisational units.
Comment on the importance of strategic implementation as a component of the strategic
management process (5)

 Strategy implementation is an essential part (the most important part) of strategic

management process.
 Is the process that turns strategic plans into a series of actions tasks and ensures that these
tasks are executed in such a way that the objectives of the strategic plan are achieved?
 It entails the communication, interpretation, adoption and enactment of strategic plans.
 It is the phase in which management aligns strategic leadership, organisational culture,
organisational structures, reward systems, policies and resource allocation with the chosen
strategy.
 It involves taking management form thinking to actually doing.
 It is also an important source of competitive advantage.

*Discuss the barriers to successful strategic implementation (5)

 Vision Barrier
 Failure to communicate the vision and strategy may confuse the work force.
 If lower levels of management and the work force do not know or understand the
organisations vision and strategy, they won’t understand their role in the
implementation process.
 Management Barrier
 Too often executives are focused on solving short term problems and not enough
time is spent on strategic management.
 Some executives that were promoted from the functional areas and tent to
remain involved in functional issues.
 Resource Barrier
 Resource allocation plans or budgets are not linked to the chosen strategies.
 Resources are not allocated in support of the strategy.
 People Barrier
 About 75% of managers do not have rewards and incentives inked to strategies.
 Key responsibilities of employees are not clearly defined.
***Discuss the different types of strategic control and indicate how strategic control can alter
an organisations chosen strategy (5)

 Premise control
 Check whether the assumptions on which the choice of a strategy was based are still
valid.
 Usually deals with the macro environment as well as the industry.
 Strategic surveillance
 The organisation identified both external and internal events that may affect the course of
it strategy. The sources could include conferences and conversations.
 Special alert control
 The rapid reconsideration of an organisations strategy in the light of a sudden event.
 Like the terrorist attack on the world trade centre on 11 September 2001.
 It support s strategic surveillance and premise control.
 Implementation control
 Assesses whether the overall strategy could be changed in the light of the results of the
incremental actions taken to implement it.
 It provides management with information regarding the success of the implementation.

Diagrammatically depict the operational control process (5)

Set standards of Measure actual Identify deviations Initiate corrective

performance performance from the standards action
set.

*Explain what strategic implementation entails (5)

  Strategic implementation can be defined as the process that turns strategic plans into a series
of action tasks, and ensures that these tasks are executed so that objectives of the strategic
plan are achieved.
 It entails:
o The communication, interpretation, adoption and enactment of strategic plans.
o Management aligning or matching strategic leadership, organizational culture,
organizational structures, reward systems, policies and resource allocation with the
chosen strategy or strategies.
o involves taking management from thinking to actually doing and;
o Involves management developing short term objectives and policies.

Indicate the difference between management and leadership (5)

LEADERSHIP MANAGEMENT
Coping with change Coping with complexity
Concerned with guiding, encouraging and
Concerned with directing others in the pursuit of
facilitating others in pursuit of ends by the use of
ends and by the use of means, both of which
means, both of which they have either selected
have been selected by the manager
or approved.
Tend to be more visionary, experimental, flexible Tend to be more analytical, structured and
and creative controlled
Value the intuitive side of their work Value the quantitative science part of their work
Focus on the bigger picture Focus on the details
Inspire and apply influence Instruct and apply authority

Briefly explain Hofstede’s five value dimensions (5)

 Power distance
o The extent to which people accept that power is distributed unequally.
 Uncertainty avoidance
o The extent to which people feel uncomfortable with uncertainty and ambiguity.
 Masculinity / femininity
o The extent to which gender roles are clearly distinct
 Individualism / collectivism
 The extent to which there is a preference for belonging to a tightly knit collective
rather than a more loosely knit society.
 Confusion dynamism
 The extent to which long-termism or short-termism tends to predominate.
*Discuss the drivers of strategic implementation (5)

 Leadership
o This is vital in strategy implementation as it is only through effective leadership that
organisations are able to use strategic management successfully.
 Organisational culture
o Is a set of important beliefs, behavioural norms and values that the members of an
organisation share. It refers to the way we do things around here.
 Reward system
o Required to motivate managers and employees to ensure commitment to the
implementation of new strategies.
 Organisational structure
o Refers to the framework within which the strategic process must operate to achieve
the organisations goals. Identify the tasks necessary for strategy implementation and
how is responsible for the tasks.
 Resource Allocation
o is essential that resources be allocated in such a way that they supports the
organisations long-term goals, chosen strategy, structure and short term goals.

Explain how functional tactics differ from corporate and business strategies (5)

Differences Functional tactics Business strategy

Time Identify tasks and activities that Grand strategies focus on the
horizon must be done in the near future organisations position in the next few
years

Specificity Identify the specific activities that Provides general direction

needs to be performed

Developers Developed within the operational Developed at top management level

areas of the organisation
Expound on the importance of having sound policies in place in strategic implementation (5)/
Defend the use of policies in the strategy implementation process

 Policies guide the thinking, decisions and actions of managers and employees in the strategy
implementation process.
 Policies inform employees about what is expected of them
 Clarify what can and cannot be done in the pursuit of the short term goals
 Standardise routine decisions, thus reducing the time to make decisions
 Provide a basis for control and promote coordination and consistency across organisational
units.

Section B – Answer any two questions

 Discuss the drivers of strategic implementation by referring to the following criteria

*B1.1 – Differentiate between visionary and managerial leaders by identifying four key
characteristics of each (HINT use table) (8)

VISIONARY LEADERS MANAGERIAL LEADERS

· Are proactive, shape ideas, change the way · Are reactive, adopt passive attitudes towards
people think about what is desirable, possible goals. Their goals arise out of necessity and not
and necessary out of desires and dreams, and are often are
based on the past
· Work to develop choice and fresh approaches· View work as an enabling process involving
to long-standing problems and work from high- some combination of ideas and people interacting
risk positions to establish strategies.
· Are concerned with ideas, relate to people in · Relate to people according to their roles in the
intuitive and empathetic ways decision-making process
· Feel separate from their environment; they · See themselves as conservators and
work in, but do not belong to, organizations; in regulators of the existing order. Their sense of
other words their sense of who they are does not who they are depends on their role in the
depend on their work organization.
· Influence the attitudes and opinions of others in
· Influence the actions and decisions of those
the organization with whom they work
· Are concerned with ensuring the future of the · Are involved in situations and contexts
organization, especially through development characteristic of day-to-day activities
and management of people

*B1.2 – Explain the different aspects and levels of organisational culture (as identified by
Thompson & Martin 2005) (12)

The aspects and levels of culture can be grouped into manifestations, people and power.

MANIFESTATION PEOPLE POWER

Artefacts and symbols Stories from the past Ownership and structure
Values Leadership and management Personal power
styles
Underlying assumptions Communication Politics
Behaviours
**B1.3 – Provide guidelines for structuring effective reward systems (5) /Name guidelines to
aligning the reward system with the chosen strategy (7) or Match an organisations
compensation plan to its chosen strategy (4)

 Start-up phase
o Organisations that pursue growth strategies should incorporate large salaries and
equity into their reward systems.
 Rapid growth phase
o Reward systems should include a salary plus large bonuses for growth targets, plus
equity for key people.
 Maturity phase
o Link reward systems to efficiency and profit-margin performance.
 Decline phase
 Reward systems should be linked to cost savings.

B2.1 – Comment on the statement that “structure follows strategy” (5)

 There should be a tight fit between strategy and structure to ensure successful strategy
implementation.
 Before implementing the chosen strategy, it is important to determine whether the
organisations current structure facilitates the implementation of its strategy.
 Structure should not be a determinant of strategy, thus structure follows strategy.

B2.2 – Explain how organisational structures evolve over time (3)

 Organisational growth tends to follow predictable patterns.

 These patterns are related to volume, geography, integration (vertical/horizontal) and
diversification (product/business).
 Change from simple to complex.
B2.3 – Discuss the five basic parts of an organisation (5)

 Strategic apex
o The home for top management and strategic leadership in an organisation.
 Middle line
o Includes all the managers in direct line relationships between strategic apex and the
operating core.
 Operating core
o Occurs where the actual operating tasks for an organisation are performed to produce the
product/service.
 Techno-structure
o Includes all staff analyses who design the systems by which work processes are formally
designed.
 Support staff
o Includes the support for the organisation outside its operating workflow, corporate
communications, legal, etc.

*B2.4 – Discuss the six basic coordination mechanisms used by organisations to coordinate
activities (12)

 Mutual adjustment
o The informal communication used to coordinate mechanisms.
 Direct supervision
o This is where one person is responsible for coordinating the work of others and
gives orders and instructions.
 Standardisation of work processes
o Refer to the specifications how the work should be carried out.
 Standardisation of skills and knowledge
o This is also a co-ordination but less formal. Employees know each other
responsibilities.
 Standardisation of outputs
o This focus on the results that must be achieved.
 Standardisation of norms
o refer to the organisations culture, shared beliefs and values of the employees
B3.1 – Explain how functional tactics differ from corporate or business strategy (6)

Differences Functional tactics Business strategy

Time horizon Identify tasks and activities that must be Grand strategies focus on the
done in the near future organisations position in the next few
years

Specificity Identify the specific activities that Provides general direction

needs to be performed

Developers Developed within the operational Developed at top management level

areas of the organisation

**B3.2 – Explain the role of policies in strategy implementation (4)

 The strategy implementation instruments are Short term objectives, functional tactics and
policies.
 Short term objectives
o Short term objectives must be suitable, achievable, acceptable, motivating, flexible and
understandable.
o Each goal must indicate clearly who is responsible and the focus area, action require,
how it will be measured and the time frame.
o It should be consistent across functional areas.
 Functional tactics
o Are the key activities that have to be performed in each functional are to provide the
organisations products and services.
o It translates the organisations grand strategy into action to ensure that the short term
goals are attained.
o It typically includes marketing, finance, operations and human resource management.
 Policies
o It entails specific guidelines, methods, procedures, rules and administrative practices that
direct thinking, decisions and actions of managers and employees in strategy
implementation.
o Policies create empowerment.
o It provides a basis for control and promote coordination and consistency across
organisational units.
B3.3 – Discuss the four “levers” that are considered when designing strategic control systems
(8)

 The 4 levers of control that should be taken into consideration in designing strategic control
systems are

 Diagnostic control systems

o These systems are used to track the performance of departments, managers and
employees, to monitor goals and to measure progress towards profitability and
revenue growth targets.
 Belief systems
o These systems relate to the organisations values and organisational culture and
provide guidelines for implementing decisions.
 Boundary systems
o These systems supplement diagnostic control systems and belief systems.
o Diagnostic and Belief systems tell the managers and employees what should be done
and what behaviour is accepted, boundary system provide information on what
should not be done and what falls outside the scope.
 Interactive control systems
o Provides the managers with a sense of what is happening in different areas of the
organisation.

**B3.4 – Discuss the balance scorecard as a strategy implementation and control system (7)

 The balanced scorecard sets objectives, measures, targets and initiatives for four
organisational areas based on the vision or strategy.
 The 4 processes of the balance scorecard that forms a framework for strategic control are:
 Translating the vision
 Ensures that the vision is translated into goals and measures linked to the strategy.
 Communicating and linking
 Ensures that the long term strategy is clearly understood by the entire organisation
through communicating and linking.
 Business Planning
 Forces organisations to link their business plans to the strategy through the setting of
targets or milestones.
 Through this process organisations integrate their strategic planning and budgeting
processes.
 Feedback an learning
 Provides organisations with the capacity of strategic learning.
 Strategic learning consists of gathering feedback, testing the assumptions on which the
strategy is based and making the necessary adjustments.
*B1.1 – Differentiate between strategic planning and strategic implementation (8)

Strategic Planning Strategy implementation

1 Is the intellectual or thinking phase The thinking phase in which these

thoughts are operationalised and turned
into action.

2 Is mostly a market driven activity with Is an internal, operational driven activity.

an external focus

3 Requires good intuitive and analytical Requires strong motivation and

skills leadership skills.

4 Well structured, rational and controlled Not so well structured, rational and
controlled.

5 Takes place at top management and The responsibility of all levels of

senior management management and the entire work force is
involved.

6 Focus on effectiveness Focus on efficiency

7 Positioning forces before the action Managing forces during the action

8 Requires co-ordination among a few Requires co-ordination among many

individuals individuals

B2.1 – Explain why different strategies require different leadership styles (5)

 Strategic implementation is essential about creating a tight fit between strategy and
leadership, strategy with culture, strategy with reward systems, strategy with organisational
structure and strategy with short-term objectives.
 A change in strategy will therefore require a change in any of these drivers and instruments of
strategy implementation to ensure that the strategy remains aligned with the tasks that need
to be performed to ensure sound implementation.
 Below are the matching leadership styles with the chosen strategy.
 Growth strategy, leaders pay attention to managing relationships, inspiring people and
communicate the goals and strategies to the people.
 Corporate Combination strategy, require leaders who can integrate different cultures and
values systems.
 Decline strategy, leaders who are tasks orientated and who can focus on reducing assets
and costs.
 Start-up phase, needs a risk taker
 Rapid growth phase, needs a caretaker
 Mature phase, needs a surgeon
 Death or decline phase, requires an undertaker
B2.2 – Differentiate between adaptive, weak, strong and unhealthy cultures (8)

 Strong culture
o Values, norms and beliefs are deeply ingrained and difficult to eliminate.
o It is a valuable asset if a tight fit exits between the chosen strategy and strong culture.
 Weak culture
o Is a fragmented and there are very few traditions, values and beliefs that are shared.
 Adaptive culture
o Members share a feeling of confidence that the organisation can neutralized the
threats and exploit opportunities that cross its path.
 Unhealthy culture
 It has a politicised internal environmental where influential managers operate in
autonomous kingdoms.

B3.3 – Comment on the criteria used to evaluate strategies during the strategic control phase

 Criteria for effective strategies include appropriateness, feasibility and desirability. Including
the questions for strategy evaluation.
 Appropriateness strategic criterion questions
 Is the strategy in line with the mission?
 Is the strategy still appropriate taking the changes in external environment is
consideration?
 Is strategy still acceptable for all stakeholders?
 Feasibility
 Can it be carried out?
 Still feasible in terms of resources?
 Desirability
 Have stakeholders preferences changed?
 Has the strategy produces adequate results in the short term?
B1.1 – Explain the different types of strategic change (4)

 Adaptation
 Change that must happen in order to achieve desired goals.
 Only adapt to new situation, organisation can handle it.
 Reconstruction
 Organisation can handle a sudden alteration in the market conditions.
 It may be that only reconstruct processes and policies are needed to implement
the new strategy.
 Evolution
 Fundamental changes over time.
 Organisation must become a learning organisation to manage this change.
 Revolution
 Fundamental changes as a result of sudden and fast-changing conditions.
 May be a treat for takeover, in which case the organisation has to implement a
new strategy very fast.

B1.2 – Briefly comment on the strategic change process

 Identify the areas of change

 Manage resistance to change
 Using Power and influence to persuade member of the organisation to support the
changes.
 How to become a learning organisation.

Strategic Change

Analysing the causes of change

Strategic Change Process

Identify areas of Identify barriers to Use organisational Become a Learning

change change persuasion organisation
*B2.1 – Expound on the role that structures play in the implementing the chosen
strategy (4)

 To provide a formal allocation of work rules

 Serves as channels for collaborative working
 Set boundaries of authority and lines of communication
 It’s a means of allocating power and responsibility
 Prescriptive levels of formality and complexity.
 Organisational design can be a source of competitive advantage if it ensures that
organisational structures are
 Aligned with the chosen strategy
 Functional
 Difficult to copy
 Make it easy for customers to do business with the organisation.

*B2.4 – Describe any five types of organisational structures (10)

 Entrepreneurial structures
 A simple structure typically consisting of the owner-manager and the employees
 Functional structures
 Consist of a CEO supported by a limited number of corporate staff such as legal advisors,
accountants and functional managers.
 Divisional structures
 Activities and responsibilities are organized into a series of divisions, each with its general
manager and functional areas.
 Strategic business units (SBU)
 It is similar to the divisional structure.
 Matrix structures
 Dual lines of authority.
 Network structure
 Are loosely grouped business teams that come together or a single project.
 Structures of the future
 Are based on networks of temporary external and internal relationships, linked primarily
by information technology in order to share skills, costs and access to markets.
*B3.1 – Explain the role of resource allocation in the strategic implementation with
specific to human resources (8)

 To achieve successful strategy implementation, the scare resources must be allocated in

such a way that they support the organisations
 Long term goals
 Chosen strategy
 Structure and
 Short term objectives.
 The role of Human resources in organisations and strategy implementation is becoming
increasingly important as the world moves from the information technology era to a
knowledge-based society and economy.
 Human resources are the heart of strategy and it is important that people are allocated to
the most important task in implementing the strategy.
 Organisations can no longer generate profits without the ideas, skills and talent of
knowledge workers.
 Technologies, natural resources and capital are no longer difficult to obtain and are less
important in developing and sustaining competitive advantage.
 The opposite may be said to talent and skills of people and that may be one of the
reasons for the rise in CEO and executive compensation.

B3.2 – Identify the different types of resources in an organisation (3)

 Tangible resources are often described as the resources that can be touch, feel or see.
 Examples include property, land, buildings, equipment and shares (balance sheet items).
 Intangible resources cannot be seen or touched.
 It forms the core of an organisations competitive advantage. It’s classified into
o human capital, (employees skills, talent and knowledge)
o information capital (technology infrastructure, databases)
o Organisation capital. (culture, leadership, teamwork)
B3.3 – Discuss the role of the master budget and strategic funds in the strategy
implementation (6)

 The master budget of an organisation includes the monitoring of activities that is

important for the survival of the organisation.
 Activities such as sales, manufacturing, administrative activities investment and cash
management.
 Projected sale are the foundation of budgeting.
 Forecasting sales is critical because all other budgeted activities depend on these
forecasts.
 Strategic funds are expense items required for implementation of strategic actions,
expected to benefit the organisation in the long term.
 The 3 main components of strategic funds are investment in tangible assets,
development expenses such as advertising increase or decrease in working capital.
B1.1 – Discuss the key responsibilities of a strategic leader (6)

 Develop appropriate strategic direction

 Communication of vision and strategic direction
 Motivate employees to achieve strategic objectives
 Design appropriate reward systems and organisation structure
 The development of strategic and operational control systems
 Develop and maintain effective organisational culture
 Ensure good corporate governance and management

B1.4 – Discuss the different types of organisational culture as identified by Charles Handy (6)

 Power culture
o It can be compared to a spider (power and influence source) and a web (functional
area).
o It depends on trust and empathy for effectiveness and personal communication
o It is strong and has the ability to move quickly.
 Role culture
o Is often stereotyped as bureaucracy where logic, rules and procedures dominate.
o The role or job description is considered more important than the person who fills it.
o It offers individual security.
 Task culture
o Is project-oriented and this type of culture is often found in organisations with matrix
structures.
o It seeks to bring together the right people, functional expertise and resources.
 Person culture
 Have the individual as the central point and the organisation only exists to serve the
individual within it.
 This type of culture is formed when a group of people band together, like sharing
space, services and equipment.
B1.5 – Explain how the strategy culture relationship can be managed (6)

B3.1 – Distinguish between the different levels of objectives (3)

 The three levels of objectives are:

o Strategic
o Operational
o Functional
 You will have to discuss each of these in terms of the parties involved, time-frame, level
of detail etc
***B1.3 - Discuss the strategy implementation challenges and problems (barriers) that
organizations face in the contemporary business environment (15)

 The challenges are as follows: (7)

 Lack of resources
 Poor leadership
 The strategy is poorly communicated
 As the strategy is cascaded down the organisation, critical issues become lost in
translation
 Actions required for implementation are not clearly defined
 Organisational culture is not aligned to the strategy
 Reward and incentive systems are not aligned to strategic goals.
 Too much emphasis is place on strategic planning and too little time is allocated for
strategic implementation.

 The problems (barriers) of successful strategic implementation are: (8)

 Vision Barrier
 Failure to communicate the vision and strategy may confuse the work force.
 If lower levels of management and the work force do not know or understand the
organisations vision and strategy, they won’t understand their role in the
implementation process.
 Management Barrier
 Too often executives are focused on solving short term problems and not enough
time is spent on strategic management.
 Some executives that were promoted from the functional areas and tent to
remain involved in functional issues.
 Resource Barrier
 Resource allocation plans or budgets are not linked to the chosen strategies.
 Resources are not allocated in support of the strategy.
 People Barrier
 About 75% of managers do not have rewards and incentives inked to strategies.
 Key responsibilities of employees are not clearly defined.
B2.5 - Describe any four monetary reward systems that can be used as drivers in the strategic
implementation process (8)

Monetary Non-monetary

1 Salary increases Status

Profit sharing Recognition awards

Share options Job security

Cash bonuses Promotion

Retirement packages Perks

B3.1 – Use a diagram to indicate the position of strategic control in the strategic management
process (12)
B3.3 – Explain how continuous improvement builds customer value and comment on the
approaches to sustain competitive advantage through continuous improvement (5)

 Benchmarking
 The comparison of selected performance measures or operational processes that serve
as challenging, yet comparable, yardsticks.
 These include the organisations own history, major competitors or best in class/world
performance.
 Total quality management
 A Culture, inherent in which is a total commitment to quality and attitude expressed by
everybody’s involvement in the process of continuous improvement of products and
services by using innovative scientific methods.
 Re-engineering
 An organisation is reorganized in a way that creates value for customers by eliminating
barriers that create distance between employees and customers.
 As such cost are lowered and service to customers improved.
 Six sigma approach
 A methodology linking improvement to profitability.
 Highly rigorous and analytic approach to quality and continuous improvement with the
objective of improving profits through defect reduction, yield improvement, improved
customer satisfaction and best in class performance.
B3.1 – Provide guidelines for matching structures with strategies (4)

 There is no one size fit all structure that all organisations can use, but below is several
guidelines for matching strategy with structure.
 Functional structure :Single-product or dominant product organisations
 Divisional structure: Organisations with several business lines
 Strategic business units: Large, diverse organisations with unrelated business divisions
 Matrix structure: Product development and innovation oriented organisations.

*** Chandler found that a particular structure sequence is often repeated as organisations
grow and change their strategy over time.