2011 all information mbl2 (1)

Unisa Graduate School of Business Leadership2011/0/0605-X/MBL 2

LETTER OF WELCOMELETTER OF WELCOME

Dear Student

Welcome to the University of South Africa’s Graduate School of Business Leadership (SBL).

The SBL sees its objective as the provision of highly professional management education at graduate and certificate level. In management education, we emphasise both the theory and the practice of management. We seek to provide you with a practical learning experience and to develop your leadership qualities.

In order to present the science of management in a manner that will foster its application in practical situations, the SBL has devised a unique educational structure founded on four pillars --- distance education, study schools and study groups --- for the following reasons:

Study schools and study groups facilitate dialogue between you and your fellow students and lecturers.

Study schools and study groups guide you in the process of independent study. During the study schools lecturers are able to identify and respond to your individual needs. In the study groups, you are afforded the opportunity to learn from the experiences of others

and to explore the application of theory to business problems. You will also become more analytical in the way you interpret the actions of others in your

working environment and will see how differently organisations and individuals respond to various challenges in different situations.

Our electronic delivery system (eds online) creates opportunities for rapid interaction between you and your lecturers.

We have created a structure you can utilise to your own advantage. However, the learning experience requires maximum effort for maximum return. Stated simply, you will get as much from this programme as you are prepared to put into it!

We would advise you to study this manual thoroughly because it is essential that you know what we expect of you and what you are entitled to expect from us.

Finally, I would like to take this opportunity to wish you a pleasant and rewarding period of study.

Best wishes

PROF DN ABDULAICHIEF EXECUTIVE OFFICER

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CONTENTCONTENT

1. PROGRAMME OVERVIEW

2. PROGRAMME DETAILS

3. MODULES

3.1 Leadership and Organisational Dynamics (MBL921M) 3.2 Strategic Financial Management (MBL922N) 3.3 Strategy Dynamics and International Business (MBL923P) 3.4 International Resources Management (MBL924Q) 3.5 Business Research (MBL925R) 3.6 Business Ethics (MBL926S)

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PROGRAMME OVERVIEW

The Master’s degree in Business Leadership (MBL) is a highly professional, three-year postgraduate management development programme offered predominantly by means of distance learning. This distributed learning programme affords graduates wishing to pursue a management career in business and the public sector a special learning opportunity and a unique self-development programme.

This manual has been compiled to familiarise you with the rules and administrative procedures of the Graduate School of Business Leadership (SBL). Please note that it does not replace the Unisa rules for postgraduate qualifications. It should thus be read in conjunction with the overall University rules and procedures. Please comply with these rules and procedures during your studies.

The three-year programme is based on a combination of theoretical and applied concepts. The first two years comprise compulsory core modules, while the final year affords you the opportunity to integrate all your learning experiences through a research project, an executive project management module and one elective. Students will have a maximum of six years to complete the whole MBL curriculum.

The distance learning element comprises self-tuition and group work. You are required to do both prescribed and recommended reading, complete assignments, and participate in group activities and assignments. Attendance of study schools and group meetings is compulsory, and affords you the opportunity to network with other students and interact with your lecturers.

For further information please refer to the student guide.

PROGRAMME DETAILS

2.2. Study schoolsStudy schools

The dates of the study schools and who should attend them are as follows:

First study school

Date Groups

28 March-01 April 2011 Will be informed

21-25 March 2011 All Ethiopian Groups

Second study school: August 2011

Date Groups

29 August -02 Sept 2011 Will be informed

08-12 August 2011 All groups in Ethiopia

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2.3. 2.3. AssessmentAssessment

The year mark is made up of 30% for each group assignment (of which there are two) and 40% for the test. The year mark contributes 40% towards the final mark. The year mark will not be taken into consideration when students fail to obtain the subminimum of 40% in the final examination.

MODULE CODEMODULE CODEGROUP ASSIGNMENT 1GROUP ASSIGNMENT 1FINAL SUBMISSION DATEFINAL SUBMISSION DATE

GROUP ASSIGNMENT 2GROUP ASSIGNMENT 2FINAL SUBMISSION DATE FINAL SUBMISSION DATE

MBL921M 05/05/2011 04/08/2011

MBL922N 05/05/2011 04/08/2011

MBL923P 05/05/2011 04/08/2011

MBL924Q 05/05/2011 04/08/2011

MBL925R 05/05/2011 04/08/2011

MBL926S 05/05/2011 04/08/2011

2.4 Tests2.4 Tests

Tests are set to afford individual students the opportunity to test their understanding, insight and ability. These tests are written at Unisa’s examination centres and contribute 40% towards the year mark. The duration of these tests will be one hour per module. For logistical reasons, students are required to write two tests per sitting (i.e. students will be required to write tests on the first two modules at the first sitting, the second two modules at the second sitting and the last two modules at the third sitting). These tests consist primarily of multiple-choice questions, and students will not be allowed to bring any study material into the venue. Since these tests are written under examination conditions, please familiarise yourself with Unisa’s examination rules.

MODULE CODESMODULE CODES PROVISIONAL TEST DATESPROVISIONAL TEST DATES TIMETIMEMBL921M Start date 06 May -06 June 2011 08:00

MBL922N Start date 06 May -06 June 2011 08:00

MBL923P Start date 06 May -06 June 2011 08:00

MBL924Q Start date 06 May -06 June 2011 08:00

MBL925R Start date 06 May -06 June 2011 08:00

MBL926S Start date 06 May -06 June 2011 08:00

Students who do not have a year mark of 40% will not be permitted to write the examination.

MODULE CODESMODULE CODES PROVISIONAL EXAMINATIONPROVISIONAL EXAMINATION DATEDATE

PROVISIONAL SUPPLEMENTARYPROVISIONAL SUPPLEMENTARY EXAMINATION DATEEXAMINATION DATE

MBL921M Start date 21 Oct -21 Nov 2011 Will be informed

MBL922N Start date 21 Oct -21 Nov 2011 Will be informed

MBL923P Start date 21 Oct -21 Nov 2011 Will be informed

MBL924Q Start date 21 Oct -21 Nov 2011 Will be informed

MBL925R Start date 21 Oct -21 Nov 2011 Will be informed

MBL926S Start date 21 Oct -21 Nov 2011 Will be informed

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ASSESSMENT CONTRIBUTION

An examination mark of at least 40% for the module and a final, weighted average mark of at least 50% for the module, where the weights for the final mark are as follows:Examination mark: 60%Year mark: 40%

APPLICATION ON REGISTRATION

All second and third year students need to re-register for each year that they intend to study. Application forms for second and third year including repeaters can be obtained from registration office.

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MBL921M

Leadership and organisational dynamics

Page

1 MODULE OVERVIEW

2 STUDY SCHOOLS

3 PRESCRIBED BOOKS

4 CASE STUDIES

5 ARTICLES

6 WEB LINKS

7 ASSESSMENT

8 TOPICS

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MBL921M

Leadership and organisational dynamics

Page

1. MODULE OVERVIEW

The purpose of this module is to enable students to understand the dynamics of individual, group and organisational behaviour and to examine leadership in terms of transformation and culture in both African and international contexts.

This overview aims to assist you on your journey through the prescribed materials for this course. We believe that your learning will be enhanced if you understand the logic underlying the course design, the content of the assigned reading materials, the purpose of the group assignments, and the structure of the examination. You should know at the outset that non-quantitative courses present an enormous learning challenge, since there are no straightforward rules or formulas for answering complex questions. You should not approach the material seeking easy answers, and you must be willing to grapple with knowledge that is frequently contradictory. There are no easy answers to the question: “What is effective leadership?”, and in exploring this issue you must be willing to reflect continually on your own leadership potential.

You have to work through the two prescribed books as well as the prescribed articles. The additional readings are NOT mandatory, but they do make good reading, offer useful information, and can be used for the assignments or if you have an interest in pursuing research on leadership during MBL III.

Rationale and purpose of the course

South Africa owns eight doomsday scenarios that must be shared and addressed by all who aims to be leaders.The facilitator of this course encourages candidates to practice ‘integrative leadership transference’ meaning that the MBL must become much more than a paper for promotion, but a document that says you are ready to help your country grow – J. A. FeldmanPeople have since ancient times sought to understand the phenomenon of leadership. Leadership is one of those topics that we all have common-sense ideas about. Each of us has an opinion about who has been a good leader or who has been a bad leader, and we all have mental lists of favourite leaders and heroic leaders.

Scholars have been studying leadership systematically since the 1920s. Although the body of knowledge is voluminous, it is not always definitive. There are numerous theories of leadership, and thousands of articles have been written on leadership effectiveness. Leadership theory evolved from early trait approaches to behavioural and contingency paradigms in the 1970s to the current focus on leadership through theories that encompass spiritual leadership, servant leadership and authentic leadership. Yet, the search to understand leadership continues.

Today global trends of informationalism, diversity and a networked society place even greater demands on leaders. Rapid change and constant demands for innovation and excellence have led some to say that organisations are permanently operating in white water or in an unexpected sandstorm. Flexibility and teamwork are the only ways to survive and navigate in such conditions.

PricewaterhouseCoopers has identified the development of a flexible leadership style as one of the top ten business trends for top executives as they move to globalise their operations. Our observations of the business situation in many African countries and during conversations with managers in South Africa clearly indicate that African business leaders face an even more difficult

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leadership challenge than their counterparts in the West. This challenge is exacerbated by the unsettling track record of political leadership in many African nations. Despite gains in the second half of the 1990s, many countries in Sub-Saharan Africa entered the 21st century with an average income per capita lower than at the end of the 1960s and limited access to essential services for its citizens. One African in five lives in countries severely disrupted by conflict. However, in many countries important reforms have occurred that include improving macroeconomic management, liberalization of markets and trade as well as attention to human development, Where such reforms have been underpinned and sustained by civil peace, economic growth has increased and poverty has been reduced. The new century offers a window of opportunity to reverse the marginalization of Africa’s people. Socio-economic sustainability on the continent is essential to Africa claiming the promise of the 21st century.

South African organisations (and organisations in many other African countries, especially those undergoing political transformation) with global aspirations are certainly affected by the broad global trends facing all organisations around the world, but the situation is compounded by the unprecedented challenge to recreate a society at all levels.

In South Africa this recreation of society ranges from individuals changing identities and roles to the transformation of major social institutions – education, legal, health care, housing, and government – in addition to dealing with the urgency of HIV/Aids, the falling rand, security, the brain drain and many other factors. In sum, the leadership challenge for African leaders is to retire old thinking systems in parallel with creating new ones against the reality of high-speed globalisation and informationalism.

What do we mean by the “retiring of old thinking systems”? One thing that leaders (as opposed to managers) do is help employees with sense making and paradigm shifts. In other words, they help employees to embrace and even envision a different set of assumptions. In South Africa with the dramatic ending of apartheid, everyone continues to face the challenge of letting go of the old ways and forming new identities, new relationships, and new ways of thinking and working together. The old “command and control" styles of managing organisations must be retired, as today’s employees do not respond well to top-down leadership. For other African countries, it may be the challenge eliminating the lagging effects of dependency, colonisation, and marginalization. However, no handy blueprints exist for this leadership challenge, especially for African business leaders.

Jack Welch's unprecedented successful leadership of GE through a painful period in its history is certainly remarkable, but he did not have to operate against a backdrop of a fundamental change in a system of government and a radical shift in people's fundamental relationships with one another. The vision for a democratic, non-racial South Africa will not be realised unless South African businesses become successful competitors in a world where high performance increasingly depends on innovation, speed to market, and a highly motivated and committed workforce.

African nations realise they should no longer rely on the West for sustainable development. The New Partnership for Africa’s Development (Nepad) initiative has been created to help African nations identify and solve their own problems in a way that is consistent with the economic, political and social realities of the continent.

It is increasingly realised that in today's knowledge-based economy, a sustained competitive advantage and development belong to those organisations able to rouse the commitment and energy of their workforces. In his book entitled Powershift: knowledge, wealth, and power at the edge of the 21st century, Alvin Toffler, the great futurist, stated this as early as 1991:

It is one of the grand ironies of history that a new kind of autonomous employee is emerging who, in fact, does own the means of production. The new means of production, however, are not to be found in the toolbox, or in the massive machinery of the smokestack age. They are, instead, crackling inside the employee’s cranium – where society will find the single most important source of future wealth and power.

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Hence, effective leadership is not a choice. It is an imperative! The purpose of this course is to help you understand the dynamics of individual, group and organisational behaviour and to examine leadership in the broader context of transformation and culture both in South Africa, Africa, and internationally.

2. STUDY SCHOOLS

2.1 Study school 1

TOPIC NUMBER TOPIC DESCRIPTION1 Organisational behaviour and leadership challenges in Africa (1 period)2 Leadership and key behavioural constructs (2 periods) 3 The social scientific study of leadership (2 periods)4 Introduction to leadership and culture (1 period)

2.2 Study school 2

TOPIC NUMBER TOPIC DESCRIPTION1 Leadership and organisational culture – discussion of Grant Thornton case

study (1 period)2 Leadership and national culture (3 periods)3 Leading workforce diversity and transformation discussion of the “tea

incident” (1 period)4 Review for examination (1 period)

3. PRESCRIBED BOOKS

Yukl GA. 2006. Leadership in organizations (7th edition). Upper Saddle River, NJ: Pearson/Prentice Hall.

4. CASE STUDIES

Grant Thornton Kessel Feinstein Pretoria: Winning culture CASE STUDY – CHAPTER 11 (p. 530-532 Yukl)

5. ARTICLES

5.1 Prescribed articles

Bartlett CA & Ghoshal S. 1995. Rebuilding behaviour context: turn process reengineering into people revitalization. Sloan Management Review 37(1), Fall:11–23. Booysen L. 2001. The duality in South African leadership: Afrocentric or Eurocentric. SA Journal of Labour Relations 25(3/4):36–64. Booysen L. 2007. Societal power shifts and changing social identities in South Africa: workplace implications. Southern African Journal of Economic and Management Sciences 10(1):1–20. George B, Sims P, McLean A & Mayer D. 2007. Discovering your authentic leadership. Harvard Business Review 85(2):129–138. Javidan M, Dorfman PW, De Luque M & House RJ. 2006. In the eye of the beholder: cross-cultural lessons in leadership from Project Globe. The Academy of Management Perspectives 20(1), February:67–90.

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Joseph EE & Winston BE. 2005. A correlation of servant leadership, leader trust, and organizational trust. Leadership & Organization Development Journal 26(1):6–22. Lester S, Turnley WH, Bloodgood J & Bolino M. 2002. Not seeing eye to eye: differences in supervisor and subordinate perceptions of and attributes for psychological contract breach. Journal of Organizational Behavior 23(1):39–56. Littrell R & Nkomo SM. 2005. Gender and race differences in leader behaviour. Preferences in South Africa. Women in Management Review 20(8):562–580. Popper M. 2005. Main principles and practices in leader development. Leadership & Organization Development Journal 26(1):62–75.Schein E. 1990. Organizational culture. American Psychologists 45:109–119. Ulrich, D & Smallwood, N. 2007. Building a leadership brand. Harvard Business Review 85(7/8):92–100.

5.2 Additional articles (optional reading)

Alvesson M & Sveningsson S. 2003. The great disappearing act: the difficulties in doing "leadership". Leadership Quarterly 14(3):359–381. Avolio BJ & Gardner WL. 2005. Authentic leadership development: getting to the root of positive forms of leadership. The Leadership Quarterly 16(3):315–338. Blunt P & Jones M. 1997. Exploring the limits of Western leadership theory in East Asia and Africa. Personnel Review 26(1/2):6–23. Collins J. 2005. Level 5 leadership: the triumph of humility and fierce resolve. Harvard Business Review 83(7/8):136–146. Dommisse, E. 2005. Anton Rupert: A biography. Cape Town: Tafelberg. Eagly AH & Carli LL. 2003. The female leadership advantage: an evaluation of the evidence. Leadership Quarterly 14(6):807–834. Earley PC & Peterson RS. 2004. The elusive cultural chameleon: cultural intelligence as a new approach to intercultural training for the global manager. Academy of Management Learning and Education 3(1):100–115. Fry L. 2003. Toward a theory of spiritual leadership. Leadership Quarterly 14(6):693–728. Khoza, R. 2005. Let Africa lead: African transformational leadership for 21st century business. Johannesburg: Vezubuntu Luthans F, Van Wyk R & Walumbwa R. 2004. Recognition and development: hope for South African organizational leaders. Leadership and Organization Development Journal 25(6):512–527. Nyambegera SM. 2002. Ethnicity and human resource management practices in sub-Saharan Africa: the relevance of the managing diversity discourse. International Journal of Human Resource Management 13(7):1077–1091. Pernick R. 2001. Creating a leadership development program: nine essential tasks. Public Personnel Management 30(4):429–444. Taylor, A. A. 2006. Sam Jonah and the remaking of Ashanti. Johannesburg: MacMillan. Thomas D & Ely R. 1996. Making differences matter: a new paradigm for managing diversity. Harvard Business Review 74(5):79–90 Trompenaars F & Woolliams P. 2003. A new framework for managing change across cultures. Journal of Change Management 3(4):361–375. Yu, HC & Miller P. 2005. Leadership style: the X-generation and baby boomers compared in different cultural contexts. Leadership & Organization Development Journal 26(1):35–50.

6. WEB LINKS

www.ccl.org www.leaderx.com

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7. ASSESSMENT

7.1 GROUP ASSIGNMENTS

7.1.1 GROUP ASSIGNMENT 1 Due date: 05/05/2011

Learning outcomes

Learners will be able to discriminate among the different leadership theories and gain insight into their own leadership style.

Learners will be able to evaluate and develop a leadership development programme

Assignment

By now you should realise that what makes a person an effective leader is quite complex. At the same time, a lot of leadership theory seems to have come a full circle with greater attention to understanding the leader on a personal level, and emphasis on authentic leadership, including how life experiences, cultural identity and gender influence the leadership style, behaviour and leadership situation. Keep these developments in mind while your group develops leadership profiles of a group of leaders. You have to understand the influence of multiple factors on the leadership style and behaviour of a group of actual leaders. You will use your analysis to offer a summary of how each of these factors influence leadership style and to prepare a reflective summary of the group’s learning as well as what each member learned from studying other leaders. You have to do at least the following:

Review the relevant literature (leadership theory, how people become leaders). Every group must interview four leaders(one must be female) for this study. Prepare an interview protocol (all the leaders must be asked the same questions). Collect

information that provides specific examples of situations and behaviours in support of the leader's ability to influence and lead others.

Analyse the data obtained during the interviews. Prepare an in-depth report that summarizes what you learned about how these factors

shape/influence leadership style and philosophy. (Each group member therefore has to identify a leader to interview. These leaders do not have to be "famous" people, but they must be in a position where they manage subordinates. You may keep the identities of these leaders confidential.) Your unit of analysis is the individual leader not the organisation.

Share your profiles and insights with one another and reflections upon your own life history, experiences, and work experiences. As we interview others about their lives, it is very difficult not to think about ourselves and who we are. What did the group members learn about their own leadership from studying others? Be as specific as possible.

Your analyses have to address the following issues:

1. Did the leader have role models or other significant influencers? 2. What seems to motivate this leader? What are they passionate about? Why?3. Why do they want to lead?4. How do they lead? What is their style? Their leadership philosophy? Discuss in the context of

five theories explained at first studyschool:Ohio State UniversityVroom YettonHersey and BlanchardFiedler’s LPCPath-goal

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5. Specifically, who is this leader able to influence? How? What is his/her style of leadership? What has been his/her most difficult leadership challenge to date? How did he/she deal with this challenge? What did they learn from the challenge? challenges? (Obtain specific examples from the leaders.)

6. Every leader has strengths. What weaknesses does this leader have? What have been key developmental experiences for him/her?

7. Describe the leader's educational background, career history, and current position. 8. Which leadership styles are evident from your sample? 9. Are there gender differences in leadership styles? How important is the individual’s cultural

identity in how they lead or think about leadership? Are there cultural differences in leadership styles?

10. Is there a set of common leadership lessons across the sample of leaders who were interviewed? What are they?

Your final product should include:

A leadership profile for each leader, written in a narrative form that captures the questions listed above.

A discussion of general themes across the profiles. Recommendations on how to develop people into leaders by means of your proposed theory/model

Be certain to include a list of the references that were used to complete the assignment.

Maximum length of assignment: 18 typed A4 pages (including all appendices)

ASSESSMENT FORM: ASSIGNMENT 1

CRITERIA AND WEIGHT MARK MARK ALLOCATED

Leadership profilesAppropriateness, currency, analysis and integration. Thoroughness of description, reflects review questions

30marks

Discussion of general themesCritical analysis and synthesis of themes

20 marks

Discussion of the group’s reflections on their learning 20 marksRecommendations and conclusion on how to develop people into leaders by means of a proposed theory/model 30

marks

TOTAL 100%

REPEATER ASSIGNMENT 1 (Individual) Due date 05/05/2011

Identify 3 scientific/academic journal articles on leadership style. These 3 articles may include no more than two of your prescribed articles. At least 1 of the articles need to be articles that focus on African leaders. All the articles should be current with dates between 2006 and this year. You have to hand in, with your assignment, those articles you used that are not included as prescribed articles.

Use the following suggested format to analyse each reading for this assignment:

1. What leadership theory (or theories) underpins (or underpin) each article’s approach to leadership style? What are the assumptions made about leadership behaviour? (These assumptions may be implicit or explicit.)

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2. Discuss the applicability of each reading to organisations in your country.

3. Can the findings/conclusions/methodology contained in each reading be generalised across industries? Discuss.

4. What are the shortcomings of each reading?

5. What possible follow-up research could flow from each reading?

6. Compare the readings in terms of similarities/differences and implications of findings foreffective leadership. Give an integrated model for effective leadership in your country.

7. List of references

Maximum length for the analysis of each reading: 20 pages for a

ASSESSMENT FORM: REPEATER ASSIGNMENT 1 MBL921-M

CRITERIA AND WEIGHT MARK MARK ALLOCATED

Theory/Literature review/Description and analysis of leadership approachesAppropriateness, currency, analysis and integration. Thoroughness of description, reflects review questions

20 marks

Applicability to the African contextSA context and literature and discussion of applicability.

10 marks

Generalisability of the findings/ methodologies/ conclusions across industries

10 marks

Shortcomings and possible follow up research in each reading

20 marks

Comparison of articles and integrated leadership model for organisations in your country:Comparison, similarities and difference in articlesintegrated leadership model

20marks

Conclusions and recommendations:General conclusions Recommendations on how to improve approaches

10 marks

Technical structure of assignment:Writing style, executive summary, index, grammar and spelling, organisation of report, correct reference style

10 marks

TOTAL 100%

7.1.2 GROUP ASSIGNMENT 2 Due date 04/08/2011

Learning outcomes

Learners can explain what cross-cultural studies have found about leadership styles and understand how to adapt leadership style to different contexts.

Learners can apply organisational practices to manage diversity effectively in South African organisations.

Learners must be able to assess the above two outcomes in the contest of current leadership crises in South Africa.

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Your assignment

In the last few years, the research on leadership in a cross-cultural context has increased dramatically. Research has shown that a country’s national culture influences organisational leadership and organisational culture and practises. One of the challenges facing leaders with a multicultural (diverse) workforce is forging a collective organisational identity at the same time accepting difference – that is negotiating between universalism and particularlism.

Answer the assignment questions of Chapter 15 (p. 539, Yukl)Question 1 10 marksQuestion 2 20 marksQuestion3 20 marksTOTAL: 50 MARKS

REPEATER ASSIGNMENT 2 (Individual) Due date 04/08/2011

You have been approached to write an article on “Africanizing” Leadership Theory.” What would youYou have been approached to write an article on “Africanizing” Leadership Theory.” What would you include in your article? Prepare the actual article. Your audience is largely academic and they willinclude in your article? Prepare the actual article. Your audience is largely academic and they will expect that your ideas and prescriptions are well supported with the appropriate current referencesexpect that your ideas and prescriptions are well supported with the appropriate current references and examples.and examples.

Maximum length: no more than 20 pages double spaced typed.

ASSESSMENT FORM: REPEATER ASSIGNMENT 2 MBL921-M

CRITERIA AND WEIGHT MARK MARK ALLOCATEDStructure and planning of article 10 marksDescription, discussion and applicability of relevant Theory/Literature review/ Appropriateness, currency, analysis and integration. Thoroughness of description.

30 marks

Critical analysis and synthesis towards “Africanizing” Leadership Theory”

30 marks

Conclusions and recommendations:General conclusions and recommendations on how to “Africanize” Leadership Theory”

20 marks

Technical structure of assignment:Writing style, executive summary, index, grammar and spelling and correct reference style

10 marks

TOTAL 100%

7.2 EXAMINATION STRUCTURE

The end-of-year examination is a four-hour, open-book examination. By “open-book examination” we mean that you the student may take your prescribed books into the examination room to help you formulate answers.

The end-of-year examination will comprise case studies and essay questions. The content of the course lends itself to critical examination and reflection. Although this is an open-book examination, do not expect to see questions that require you simply to define or list components/elements of theories. The emphasis is on your understanding of and insight into the organisational leadership phenomenon. You are expected to demonstrate the ability to apply the concepts to real-life situations.

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The mid-year test is narrow in scope and, for practical reasons, contains multiple-choice questions. We have given you a set of multiple-choice questions for review purposes as a self-assessment assignment.

8. TOPICS

8.1 Relationship between leadership, individual, group and organisational behaviour

8.1.1 Tuition period

Time allocation: Before study school 1

8.1.2 Specific outcomes

Students are able to identify the importance of individual, group and organisational behaviours in improving organisational effectiveness and apply organisational behaviour concepts to practical situations.

8.1.3 Critical questions

In this course we subscribe to the definition of leadership proposed by Yukl (2006):

Leadership is the process of influencing others to understand and agree about what needs to be done effectively and the process of facilitating individual and collective efforts to accomplish shared objectives.

According to this definition, leadership is a process and a system of relationships (see the diagram in section 8.1.5However, Yukl’s definition misses a specific dimension of leadership, namely the affective dimension, which is captured in the following quote by Gardener (1990): “A prime function of leadership is to keep hope alive.” So, although leadership may be considered a process and a system, we should never forget its affective/emotional dimension: “A good head and a good heart are always a formidable combination” (Mandela, 2000). This sentiment echoes Goleman’s (1998) emphasis on a leader's emotional intelligence as a key dimension of his or her effectiveness.

The key components of the leadership process and system are leaders, followers, and the particular situation. Each of these in turn consists of several elements. We should examine personal life histories, traits, motivation, identity and expertise in acknowledgement of the fact that the way in which a person practises leadership often has to do with his or her character. All over the world, whether in corporations or government organisations, millions of executives imagine that their position on the organisational chart has given them a body of followers. This is not true. Their position has given them subordinates. Whether the subordinates become followers depends on whether the executives act like leaders (Gardener (1990)).

It is our followers who decide whether we are truly leaders. Hence, we need to understand our followers: What motivates them? What do they value? What are their personality traits? How does their cultural identity affect their behaviour and perceptions?

Every situation is important to understanding leadership and effective leadership in particular. We need to know something about the effects of the task to be accomplished, the internal and external environments of the organisation, and the role of the organisational culture. Different situations call for different approaches to leadership. It is important to recognise that leadership is a dynamic process centred on interaction between followers and leaders in a particular situation.

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On completion of topic 1, you should be able to: distinguish between the four levels of the conceptualisation of leadership in organisations (individual,

dyadic, group and organisation) examine and evaluate the behavioural context of an actual organisation and explain the role of

leadership in establishing this context evaluate the organisational behaviour constructs of trust, psychological contract and commitment in

the organisational context

8.1.4 Learning through activities

A Applied theoretical learning

Review Yukl (2006), chapters 1 and 2. Answer the questions based on the case study and at the end of chapter 2, Acme Manufacturing Company (pp. 48–49). This section will provide better insight into the nature of working with individuals and groups in organisations.

Review Meyer and Boninelli (2004), part 1. Meyer and Boninelli explore the landscape of leadership. Meyer shows that effective leadership is a process that enables ordinary people to do extraordinary things. Through a compelling vision, giving direction and engaging followers, effective leadership empowers followers to understand the future and to build their own future as well.

De Vries and Engellau discuss how interpersonal and intrapersonal psychodynamic processes and structures influence individual, group and organisational behaviour. They propose an extension of the learning organisation, namely the "authentizotic" organisation, in which people can be authentic or congruent. In this type of organisation leaders clearly communicate what to do and how to work, as well as why, and in this way the meta-values of "feeling of community", "sense of enjoyment" and "sense of meaning" are integrated into the organisational fabric.

Makwana shares some personal reflections on key leadership lessons from the ten-year period following the abolition of apartheid in South Africa. Most of these are based on leadership lessons from Nelson Mandela and on South African leaders of the future – our children. A reading of Booysen (2007) (prescribed) is a valuable adjunct to Makwana's analysis.

Ilbury takes the reader on a journey through the present state of the new economy to the future state of the new economy. The leadership characteristics needed to navigate the future new economy are discussed through the use of both real and fictional characters and scenarios. This discussion is based on the book, The mind of a fox: scenario planning in action, co-authored by Clem Sumter.

Geldenhuys concludes this section by exploring the reality beyond cyberspace and the impact of that reality on future organisations and leaderships.

Prescribed articles

Bartlett CA & Ghoshal S. 1995. Rebuilding behavior context: turn process re-engineering into people revitalization. Sloan Management Review 37:11–23.

Joseph EE & Winston BE. 2005. A correlation of servant leadership, leader trust, and organizational trust. Leadership & Organization Development Journal 26(1):6–22.

Lester S, Turnley WH, Bloodgood J & Bolino M. 2002. Not seeing eye to eye: differences in supervisor and subordinate perceptions of and attributes for psychological contract breach. Journal of Organizational Behavior 23(1):39–56.

As a group, the prescribed articles are intended to explain some important organisational behaviour concepts that are influenced by leadership. The article by Bartlett and Ghoshal (1995) discusses the concept of behavioural context and its impact on people.

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The article by Joseph and Winston (2005) examines leader and organisational trust and leadership perceptions. We all think we know what the word “trust” means, but this article highlights the importance of trust in relation to the psychological contract between an organisation and its employees.

The article by Lester, Turnley, Bloodgood and Bolino (2002) investigates the difference between supervisors and subordinates in perceptions of and attributions for psychological contract breach.

B Personal learning

Start a journal/diary of your learning for this module. Answer personal questions such as the following:

What did I learn about the relationship between leadership and individual, group and organisational behaviour in topic 1?

Do I really understand and know myself? How open am I to new life experiences? Do I conform to a dynamic or rigid mental model? Do I trust my organisation? How committed am I to my organisation? What can I do to be more reflexive in my thinking, doing and being?

Complete the two questionnaires attached to assess your own cognitive style and personality type.

8.1.5 Self-assessment

(1) Explain the relationship between leadership and each of the following: Individual performance Group performance Organisational effectiveness

(2) Review and discuss the questions at the end of chapter 1 (p. 21) of Yukl (2006).

Behavioural Context Created by a “Leadership”Approach to Organisations

Stretch

Support Trust

Discipline

Bartlett & Ghoshal, 1995

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8.1.6 Reflection

Because leadership is defined as a system and a process (see the definition presented earlier), it is important for you to begin the course with a basic understanding of the relationship between leadership and the study of organisational behaviour and how it fits into our general understanding of organisations. Yukl’s (2006) text does not cover this broader context (to be discussed in the first study school lecture). In this section of the course, the emphasis is on understanding organisations as social systems for the achievement of collective goals.

This social system consists of both formal and informal elements. The iceberg model of organisations is particularly useful in understanding the relationship between the two element types. The formal organisation comprises the rational, overt aspects that are manifested in goals and objectives, technology, policies and procedures, systems and structures, and job descriptions. The informal organisation is covert and nonrational. It is this element of an organisation that was revealed in the historic Hawthorne experiments conducted in the 1920s in the USA. At the time, Elton Mayo and his colleagues recognised the critical importance of the informal element of organisations. This informal element consists of beliefs and assumptions about people, work and organisation, perceptions, attitudes and values, feelings and group norms, all of which may be summarised as the "organisational culture".

The formal organisation is what we see, but it is often what is below the surface (the informal organisation) that determines how the organisation works and copes with its external environment. It is important to see organisations as living systems in a chaotic world. Chaos theory and its spin-off, complexity theory, argue that relationships in complex systems (such as organisations) are nonlinear, made up of interconnections and present choices that often produce unintended consequences. Continuous change must be accepted as the natural state of affairs in today's complex environment.

Organisational behaviour is defined as the study of individual and group behaviours in organisational settings. Leadership cannot be studied as an isolated construct; it is manifested within an organisational context. Hence, leadership becomes a key organisational variable in understanding organisations as social systems.

The dominant model for understanding individual behaviour is referred to as an interactional psychology approach, or a social psychology approach. Kurt Lewin stated that an individual's behaviour is a function of the person (P) and the environment (E). In other words, individual behaviour = f (P, E).

Leadership is a key element in the work environment that affects how individuals behave. Leadership affects an individual’s commitment to the organisation, his or her performance, and job satisfaction, for example. The same point can be made for understanding group behaviour. Group behaviour is a function of the organisational context, the composition of the group, group structure, group dynamics, and how the leader directs and interacts with the group. Leadership also affects group behaviour. For instance, ineffective team leadership can have a negative effect on team performance and team cohesion.

An organisation’s fundamental approach to leadership can affect the entire organisation and the degree to which the organisation achieves results. Leaders are responsible for results. These results include financial results (building shareholder value), customer results, employee results, and social responsibility results. A leader (and leadership) can have a great impact on what we refer to as the "behavioural context" of an organisation. How a leader leads and how the organisation practises leadership create a particular behavioural context that influences the behaviour of the people in the organisation. Some scholars argue that leadership is the key force in creating the behavioural context of an organisation (see Bartlett & Ghoshal (1995)).

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8.1.7 Conclusion

The traditional behavioural context created by leaders rooted in a Newtonian view of organisations consisted of control, contract, compliance and constraint, resulting in a psychological contract between the organisation and its employees based on an economic exchange. The emphasis was on management, not leadership. Employees were expected to be compliant and submissive; as the sign on an executive manager’s desk read: “The beatings will continue until morale improves!”

Today’s leaders understand that the world is better explained by the chaos and complexity theories. The behavioural context that is created should emphasise trust, support, stretch, and discipline (see the diagram in section 8.1.5 above). The emphasis has moved from management to leadership. Many writers argue that management produces order and consistency, whereas leadership produces change and movement by mobilising and energising followers. The psychological contract between an employee and his or her organisation (in terms of the behavioural context rooted in "leadership" as opposed to "management") is based on mutual trust, and is much more than an economic transaction (payment for work done). Leaders need to reflect on how well they understand their followers and their expectations. How much do leaders in Africa really know about their followers?

8.2 AN OVERVIEW OF LEADERSHIP THEORIES




Students are able to identify various schools of thought on leadership and the contributions of these schools of thought to understanding the leadership concept.

Students gain insight into their own leadership style, its effects on others, and its effectiveness.


Nothing is as practical as a good theory! In this section of the course you should focus on understanding important leadership theory paradigms. Do not think in terms of individual theories – rather make the effort to view the theories in terms of different paradigms. These paradigms range from trait theory to the current neo-charismatic paradigms.

With regard to the current neo-charismatic school of leadership, comprising theories on transformational leadership, ethical leadership and servant leadership, you have to understand that all the paradigms are trying to answer the same question, namely: What is effective leadership? As you study these paradigms, focus on understanding similarities and differences between them, the validity of the empirical evidence, and the implications of these paradigms for leadership practice.

On completion of topic 2, you should be able to:

critique the different theories of leadership distinguish between management and leadership judge and evaluate the contribution of current leadership research and theory to understanding

leadership in complex organisations



Review Yukl (2006), chapters 3, 4, 5, 7, 8 and 9.

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Analyse the case studies and answer the questions at the end of chapters: 3 (pp. 78–80): Consolidated Products and Air Force Supply Squadron 4 (pp. 113–115): Echo Electronics and Alvis Corporation 5 (pp. 143–144): American Financial Corporation 7 (pp. 210–213): The Intolerable Boss and National Products 8 (pp. 245–247): Foreign Auto Shop, parts 1 and 2

These case studies provide an opportunity to test your understanding of the different leadership theories. Each case study requires analysis in terms of a specific leadership theory.

Review Meyer and Boninelli (2004), part 1 (refer to the description under topic 1).

Prescribed articles

Booysen L. 2001. The duality in South African leadership: Afrocentric or Eurocentric. SA Journal of Labour Relations 25(3/4):36–64.

George B, Sims P, McLean A & Mayer D. 2007. Discovering your authentic leadership. Harvard Business Review 85(2):129–138.

Web links

The Center for Creative Leadership has been recognised as offering one of the top leadership development programmes in the USA: www.ccl.org.

See www. leaderx.com, which offers a self-assessment leadership skills test.

Additional reading (optional)

Alvesson M & Sveningsson S. 2003. The great disappearing act: the difficulties in doing “leadership”. Leadership Quarterly 14(3):359–381.

Fry L. 2003. Toward a theory of spiritual leadership. Leadership Quarterly 14(6):693–728. Mutabazi E. 2002. Preparing African leaders. In: Derr CB, Roussillon S & Bournois F (eds).

Cross-cultural approaches to leadership development. Westport, CT: Quorum Books. Luthans F, Van Wyk R & Walumbwa R. 2004. Recognition and development: hope for South

African organizational leaders. Leadership and Organization Development Journal 25(6):512–527.

Collins J. 2005. Level 5 leadership: the triumph of humility and fierce resolve. Harvard Business Review 83(7/8):136–146.

Avolio BJ & Gardner WL. 2005. Authentic leadership development: getting to the root of positive forms of leadership. The Leadership Quarterly 16(3):315–338.

The articles you are required to read for this learning outcome offer overviews of the servant leadership theory (Joseph & Winston (2005), already prescribed for topic 1) and how this theory is linked to trust in the organisation. The article by Booysen (2001) discusses the duality in South African leadership. The article by George, Sims, McLean & Mayer (2007) points out the importance of personal growth and development and authenticity in leadership.

A useful web link in this regard is the website of the Center for Creative Leadership, a USA-based leadership development organisation. In 2003, this centre was ranked the top leadership development programme provider in the world. A visit to the website (www.ccl.org) provides information on the leadership development programmes on offer, assessment tools for measuring leadership, and available publications on leadership. The other web link mentioned above offers a self-assessment questionnaire you should complete. (Note: Be aware that URLs may change.)

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B Personal learning

In your journal, answer the questions and carry out the instructions below:

What did I learn about the various leadership theories in topic 2? What are my strengths and weaknesses? How might these strengths and weaknesses affect my effectiveness as a leader? What have been important learning points in my development as a leader? How would I describe my approach to leading others? (Share your answers with others in the group

and hold a group discussion.) Draw up your own personal leadership encounter line and discuss this with your syndicate group.

When did your first encounter with “leadership” take place? When did you first encounter “authority”? List the differences and similarities between “leadership” and “authority”. What made you decide that the first encounter was with either leadership or authority or both?


(1) Develop a chart that summarises and compares the key features of the various leadership theories, including servant leadership, spiritual leadership, and emotional intelligence. Be certain to refer to the relevant chapters in Yukl (2006). How much research evidence exists in support of each theory? (2) Answer the review and discussion questions at the end of chapters:

3 (p. 77) 4 (p. 113) 5 (p. 141) 7 (p. 210) 8 (p. 244)

(3) Review chapters 1, 2, 3, 4, 5, 7, 8 and 9 and complete the self-assessment practice test (follow the link below).

http://www.sbleds.ac.za/eds/2009/mbl921M-library.nsf/bytitle?openform

8.2.6 Reflection

The early researchers on leadership focused on the personal characteristics of leaders to explain who emerged as a leader and who became an effective leader. As time passed, however, researchers emphasised leaders' behaviour as an aspect key to leadership effectiveness. Certain situational or follower characteristics may increase or decrease the effectiveness of a leader's behaviour. Other characteristics may cause followers to perform effectively or to maintain a positive attitude with little or no need for a leader's influence. Still, leaders have important roles to play in organisations, and effective leaders should be aware of the three tasks in the effective leadership process: diagnosing situations to determine the need for specific leader behaviour, providing the required leader behaviour(s), and modifying situations and followers to increase their ability to work effectively and/or independently of the leader.

8.2.7 Conclusion

In view of the overwhelming number of leadership theories, compiling a chart is a useful way to clarify similarities and differences between theories. This chart is also a useful tool in preparing for the examination. What is more important, however, is that it offers a way to trace the evolution of leadership theory and ponder how much we really know about what makes a person an effective leader. You may come to the conclusion that leadership theory has come a full circle in a period of roughly 90 years. Formal leadership theory began with a trait paradigm and moved on to emphasise

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the "situation". Now it appears as if we are once again focusing on exploring leadership within the individual. What conclusion do you reach?

8.3 LEADERSHIP DEVELOPMENT


Time allocation: After group assignment 1


Students are able to identify and understand the different leadership development models and techniques. Students have gained insight into their own leadership competencies and development needs.


Leadership and leader development have become increasingly important for business and government organisations alike. Leadership competencies can be developed in a number of ways, both formally and informally.

However, the question remains: Can leadership be developed, or is it innate? And, if leadership can be developed, how is it to be developed? The Center for Creative Leadership has defined a threefold plan for leadership development consisting of the following: challenging assignments, receiving feedback, and reflecting on learning. In other words, much of leadership is learnt through experience – not just any experience, but experience that stretches the individual.

Further critical questions pertaining to this topic

What type of leadership development is needed in my organisation? What type of leadership development do I need? Does my organisation have a mentorship programme?

This learning topic explores these questions. On completion of topic 3, you should be able to: understand and apply leadership development models and techniques generate a list of competencies of effective leaders in the new economy analyse your own leadership strengths and weaknesses



Review Yukl (2006), chapter 13. Analyse the case study and answer the questions at the end of the chapter (pp. 415–416) on Federated Industries. This case study requires you to analyse leadership development strategies.

Review Meyer and Boninelli (2004), part 3.

Prescribed articles

Popper M. 2005. Main principles and practices in leader development. Leadership & Organisation Development Journal 26(1)1:62–75. Ulrich, D & Smallwood N. 2007. Building a leadership brand. Harvard Business Review 85(7/8):92–100.

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Additional articles (Optional)

Pernick R. 2001. Creating a leadership development program: nine essential tasks. Public Personnel Management 30(4):429–444.

Recent research has drawn a distinction between leadership development (developing social capital) and leader development (developing human capital). According to the article by Popper (2005), developing human capital emphasises individual capabilities such as self-awareness as the foundation of interpersonal competence.

Ulrich and Smallwood (2007) introduce a new term pertinent to leadership development, namely “brand leadership”. They argue that leaders need to be the kind of people who embody the promises companies make to their customers

Developing social capital emphasises the development of reciprocal obligations between followers and leaders, and commitments built on a foundation of mutual trust and respect.

B Personal learning

In your journal, discuss the following questions:

What did I learn about leadership development in topic 3? What are my leadership competencies? Which competencies do I still need to develop? How am I going to develop these competencies? Do I need a mentor? Is there anyone in my organisation whom I would like as a mentor?


(1) Complete the review and discussion questions at the end of chapter 13 (p. 414) in Yukl (2006).(2) What does your organisation need most – leader development or leadership development? Write an essay on your organisation’s leadership needs and discuss the content with your immediate supervisor.(3) What is the relationship between leadership skills and leadership gifts?(4) How have you attempted to develop your leadership ability?

8.3.6 Reflection

Reflect on the statement below: Since there is leadership development potential in almost every situation, leadership development should be an integral part of the collective mental model (or organisational culture) of every organisation.

8.3.7 Conclusion

Leadership is everyone’s business. It involves interaction between a leader, followers and a situation. Leadership development involves learning about others and the context, and reflecting on one’s own experiences.

Another dimension is to engage in action learning. Participating in this programme by completing the assignments and attending study schools will provide opportunities for you to reflect on your own and your group’s experiences.

Taking your experiences and learning back to your organisation and sharing them with others will contribute to the leadership development dialogue in your organisation.

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8.4 LEADERSHIP AND MANAGEMENT INFLUENCE TACTICS


Time allocation: Before the centre visit


Students are able to identify at least three soft and two hard influence tactics. Students are able to summarise the practical lessons from research into power and influence. Students are able to manage organisational politics.


Remember the difference between a boss and a leader: “A boss says, ‘Go!’ A leader says, ‘Let’s go!’” (EM Kelly).

For every person who is a manager and who wants to know how to manage people, there are ten others who are being managed and would like to know how to make it stop! (Scott Adams, the creator of the cartoon strip “Dilbert”).

This section focuses on understanding the relationship between power, influence and leadership. What can a leader do to influence the behaviour of his or her followers? Leaders must understand the concept of power and the major bases of power. What is more important, however, is that they need to understand how to use that power effectively in different situations.

On completion of topic 4, you should be able to: explain the six bases of interpersonal power and their relative effects on individuals and groups diagnose and apply appropriate influence tactics in different leadership situations identify and describe specific challenges regarding leadership influence tactics



Review Yukl (2006), chapters 4 and 6. Answer the questions based on the case studies and at the end of chapter 6 (pp. 177–179) on Restview Hospital and Sporting Goods Store. These case studies provide insight into the use and abuse of power and influence tactics in leadership.

Review Meyer and Boninelli (2004), part 2. This article explores contemporary leadership issues, both locally and globally.

Nkomo and Kriek (2004) provide an insightful analysis of the transformation challenges facing South African leaders in a post-apartheid democracy. They discuss workforce changes and dilemmas and conclude that corporate South Africa has to embrace globalisation. They illustrate new ways of thinking in dealing with these challenges. The authors discuss current trends in leadership theory and identify five change leader roles: the hope dealer, the excellence promoter, the field facilitator, the change embracer and the diversity architect.

Ngambi (2004) gives an overview of African leadership approaches and analyses three African leadership examples, namely the Zulu, Akan and Fungwe chieftaincies. She draws some lessons from African leadership for South African organisations, and proposes a community style of leading as the competitive leadership paradigm for 21st century organisations.

Feldner-Busztin (2004) discusses the interdependent nature of affirmative action and valuing diversity, stating that the one lays the foundation for the other. She emphasises that valuing diversity

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is much more than mere compliance, and should be more inclusive and institutionalised through good practice diversity management.

Postma (2004) discusses the first South African census of women in corporate leadership, based on the long-standing catalyst (USA and Canada) methodology. It becomes evident that senior management in corporate South Africa is still dominated by white male managers.

Taylor’s (2004) intention in Leading in uncertain times is not to answer questions, but to open dialogue about current structures and potential leadership in organisations. The approach is one that combines science and art. Evolving organisational thinking channels systems, subsystems and suprasystems into a learning cycle for leaders – from concrete experiences, observations, reflections and testing of new situations into a new state. This new state inherits elements from science – the framework for organisational order – and from the practice of art – the willingness to enable and empower creative potential in organisations.

Schoeman (2004) shares an interesting and fundamental enquiry into the vast study of business ethics. Her insight dwells on the ethical landscape from a practical business perspective. Her graphic description starts with the individual, and leads to beliefs, values and principles, thoughts and feelings, and ultimately to words and actions. She focuses on the constituents of business ethics in terms of the investment of time, energy and funds into building a value-based system to guide and shape behaviour within corporate governance. In essence, she draws attention to the absence of a quantifiable number on the balance sheet reflecting the real business value of ethics.

Wolmarans (2004) analyses two distinctive aspects, namely emotion and competence, in relation to executive needs. She explains that how we “feel” in a particular environment or at a particular moment has significance for problem solving and decision making. This author is responsible for coining the term “executive intelligence”, which shares all the characteristics of emotional intelligence. She also explores the determinants of performance as an integration of knowledge and skills that can be understood, applied and transferred to different contexts. Her current focus is an examination of the elusive metacompetencies, such as emotional and spiritual intelligence, honesty and integrity, within the domain of management.

Hardman’s (2004) insight into the challenges associated with leadership sustainability offers a fresh approach to redressing the consequences of the past and reshaping future practices to ensure sustainability. He questions the dimensions of generic and global sustainability. His kind of leadership requires genuine commitment to engaging in dialogue to give expression to multiple perspectives, and to developing and defending a principled approach to decision making.

Msomi’s (2004) comments on the background to and the actions taken and the role of leadership in the crisis experienced by Pick ’n Pay in 2003. He draws on the differing philosophies of Pick ’n Pay founder, Raymond Ackerman, and the current chief executive, Sean Summers. He discusses processes and communication technologies to ensure the removal of boundaries between management and employees, the leadership and customers.

There are no prescribed articles.

You could argue that if leadership were an influence process, the easiest way to get someone to do what you want them to is to “force” them. Well, it’s not that simple! A leader has to understand the power of communication in influencing today’s employees. A key question to ask is: What does it take to build a context in which exciting conversations can take place so that people can learn something new about themselves or others, discover new insights, hear and make counter-intuitive arguments, and come to creative and novel solutions to problems? Effective communication is an important tool in influencing the behaviour of followers.

B Personal learning

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What did I learn about leadership and management influence tactics in topic 4? Are there any influence strategies that I am fairly good at? Which influence strategies do I still have to develop? What can I do to develop the power bases I

use least? How am I going to develop those influence strategies? Am I a good communicator?

Analyse your personal power base by drawing up a personal power-base wheel. Use size to indicate which power bases are larger than others.

Which power base(s) do you use most? Which power base(s) do you use least? What can you do to broaden your personal power base? Share your analysis with your syndicate group.


(1) Answer the review and discussion questions at the end of chapter 6 (p. 176).(2) Give examples of both effective and ineffective uses of power and their outcomes by referring to your own organisational experience. Explain why each outcome occurred.

This assignment asks you to think about your observations of the effective and ineffective use of power in organisations. There are two case studies on the use of power by leaders. These case studies should make you think about your own power sources and whether or not you are utilising your power effectively to influence others.

8.4.6 Reflection

Leadership is a process an individual uses to influence group members to achieve group goals. The group members would consider the influence legitimate. The processes of leadership and management are complex and interconnected, and both focus on influencing groups of people to achieve goals. Leaders use both position-based and person-based sources of power to influence their followers.

8.4.7 Conclusion

The purpose of the leadership process is to influence a group of people to achieve certain goals. Understanding leadership and the leader, especially the characteristics of the leader (e.g. power and influence, values, leadership traits and behaviour) paves the way to understanding others and to analysing leadership in the context of a particular situation.

8.5 CHANGE AND TRANSFORMATION MANAGEMENT


Time allocation: Before the 2nd study school

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Students are able to identify and apply the foremost models for leading and implementing organisational change and transformation.


Some would argue that the primary role of a leader is to make change happen. Scholars specialising in organisational studies argue that it is the way in which change is dealt with that distinguishes leadership from management. In times of organisational change, a sound understanding of the role of leaders and leadership is vital. Nowhere is this more important than in South Africa and many other African countries: Africa is facing enormous social, economic and political challenges that require change at all social levels.

One of the key competences of a leader is the ability to transform organisations in response to challenges such as these. The African Union (AU) and other initiatives on the continent, including Nepad, represent a concerted effort to address issues such as poverty, unemployment, HIV/Aids, conflict and global competition. This is not just a government agenda; it is an agenda for all organisations operating in Africa.

This topic and the prescribed reading material focus on what leaders should do to move their organisations forward. You therefore need to understand the different types of organisational change and the role that leaders play in effecting successful change.

On completion of topic 5, you should be able to: discuss effective leadership behaviours in times of organisational change identify and discuss key triggers of change in your country diagnose the sources of individual, group and organisational resistance to change apply appropriate strategies for managing resistance to change at the individual and organisational

levels



Review Yukl (2006), chapters 10 and 12. Answer the questions based on the case studies and at the end of chapter 10 (pp. 315–317) on the Falcon Computer Company and Ultimate Office Products. Also answer the questions based on the case studies and at the end of chapter 12 (pp. 382–385) on the Columbia Corporation and Turnaround at Nissan. These case studies will help you to analyse and evaluate the approaches to change of other leaders.

Review Meyer and Boninelli (2004), part 2. (Refer to the description under topic 4.)

There are no prescribed articles.

B Personal learning


What did I learn about organisational change management in topic 5? List the major drivers of change in South African organisations. Are these similar to the drivers in

other countries? List the characteristics required of an effective change agent in any South African organisation. What key changes have occurred in my organisation? How has leadership led the changes? What

role did each leadership level play in the changes? How did the followers react to the changes? Why?

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Complete the review and discussion questions at the end of chapter 10 (p. 314) and chapter 12 (p. 381).

8.5.6 Reflection

When you deal with change in organisations, it is important to identify the drivers of this change. Some aspects that drive change in South African organisations are discussed below.

The workforce is becoming multicultural, as a result of which change in human resources practices and increased training have become necessary. Technology is reshaping jobs and organisational structures, and competition has spread to the global arena. Many African organisations are expanding into other parts of the continent, as well as to other continents. Organisations that want to succeed have to be responsive to radical changes in the market, and they have to be fast and flexible in developing new products and delivering these to the market. World politics are changing all the time, and countries far and wide are of necessity becoming involved. South Africa is part of the Southern African Development Community (SADC), and as a result, political upheavals in SADC member states affect us directly (examples are the uprisings in Lesotho and recent events in Zimbabwe).

Another important aspect in leading change is the need to deal with resistance to change. Resistance to change may provide a degree of stability and predictable behaviour. However, the downside of resistance to change is that it hinders adaptation and progress. Resistance may be overt, immediate, implicit (subtle) or deferred. Implicit resistance is difficult to recognise, and deferred resistance cannot easily be linked to the source of the resistance.

8.5.7 Conclusion

Although much of the change in organisations is accidental, planned change is intentional and goal-oriented. The goals of planned change are to improve the ability of the organisation to adapt to changes in its environment, and to change employee behaviour. The order of magnitude of planned change may differ. First-order change is linear and continuous, whereas second-order change is radical, multidimensional, multilevel and discontinuous. Change agents are responsible for planned change in organisations and may be either internal managers or external consultants.

It has become increasingly clear that if change cannot be managed, it needs to be led. Scholars and practitioners alike agree that today's context is characterised by complex, disruptive changes. Employees are increasingly unwilling to accept management changes without understanding the "why" of such changes. Followers want a vision that is compelling and motivating. Leadership guru John Kotter believes that one of the key reasons for the failure of most change efforts is that leaders forget to pay attention to change-related emotion and to involve their followers (those who have to implement the changes).

8.6 LEADERSHIP AND THE ORGANISATIONAL CULTURE




Students are able to discuss the manifestations of organisational culture, the four functions of organisational culture, and the way in which leadership can create and change organisational culture.


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This section attempts to explain the relationship between leadership and the organisational culture. “Organisational culture” is a concept of fairly recent origin. Although not all scholars agree on its conceptual meaning, they do agree that it is a powerful phenomenon. Culture is ubiquitous and covers all areas of group life. Although the organisational culture comprises shared norms, values and behaviour patterns, we should not underestimate the influence of leadership on it. Schein (1990), a leading scholar on this subject, puts it this way: Leaders continue to try to embed their own views of how things should be, and if they are powerful enough, they will continue to have a dominant effect on the emerging culture. Ultimately, organisations change only when the culture changes. Hence, understanding the organisational culture is essential to leading change.

On completion of topic 6 you should be able to: illustrate three levels of organisational culture map and evaluate the culture of an organisation relate the development of an organisational culture to the organisation’s leadership plan an organisational culture change intervention



Review Yukl (2006), chapter 9. Answer the questions based on the case studies and at the end of chapter 9 on the Metro Bank,

and Astro Airlines, parts 1 and 2.

Review the Grant Thornton case study for discussion during the centre visit.

Prescribed articles

Schein E. 1990. Organizational culture. American Psychologists 45:109–119. Booysen L. 2007. Societal power shifts and changing social identities in South Africa:

workplace implications. Southern African Journal of Economic and Management Sciences 10(1):1–20.

Additional reading

Trompenaars F & Woolliams P. 2003. A new framework for managing change across cultures. Journal of Change Management 3(4):361–375.

Yu Hui-Chun & Miller P. Leadership style: the X-generation and baby boomers compared in different cultural contexts. Leadership & Organization Development Journal 26(1)1:35–50.

Schein (1990) discusses the concept of organisational culture and its manifestations in organisations. This author emphasises the impact a leader and his or her strategies can have on the culture of an organisation.

Booysen (2007) discusses the workplace implications of the power shifts and changing social identities in South Africa. Naturally, these shifts have huge implications for organisational culture and change.

B Personal learning


What did I learn about leadership and organisational culture in topic 6? Describe the dominant culture in your organisation.

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Describe the different subcultures in your organisation. Will everyone in an organisation have the same perception of its culture? How would you go about changing your own organisation’s culture? Why is it so difficult to change an organisation’s culture?


(1) Answer the review and discussion questions at the end of chapter 9 (p. 278).

(2) This is a two-step self-assessment:

(a) Complete the following questionnaire to identify the culture characteristics in your organisation.

The questionnaire has been designed to help you operationalise the concept of organisational culture. One of the difficulties associated with organisational culture is how to measure it, as it is a rather abstract concept. The only way to measure organisational culture is to examine artefacts or manifestations of the culture of an organisation.

The questionnaire asks you to think about your organisation in terms of ten characteristics. As you complete the questionnaire, you will develop a picture of the culture of your organisation. The culture of an organisation (i.e. shared norms, values) is often reflected in its practices and policies, so measuring those policies and practices make it possible to formulate a description of the organisational culture. For instance, a well-defined organisational structure, rigid job descriptions, very formal communication behaviour, rewards based on seniority and merit, and a large number of rules and regulations may reflect a mechanistic organisational culture.

Instructions:

The scales below relate to characteristics of organisational culture. In each case, place a cross on the scale to indicate how you rate your own organisation (or one with which you are familiar). If possible, ask colleagues in other parts of the organisation also to carry out this rating process.

1. Member identity: The degree to which employees identify with the organisation as a whole rather than with their type of job or field.

Job ............................................................. Organisation

2. Group emphasis: The degree to which work activities are organised around groups/teams rather than individuals.

Individual .................................................... Group

3. People focus: The degree to which management considers the effect of decision outcomes on people within the organisation.

Task ............................................................ People

4. Unit integration: The degree to which units within the organisation are encouraged to operate in a co-ordinated or interdependent manner.

Independent ................................................ Interdependent

5. Control: The degree to which rules, regulations, and direct supervision are used to oversee and control employee behaviour.

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Tight ............................................................. Loose

6. Risk tolerance: The degree to which employees are encouraged to be innovative and risk-seeking.

Low .............................................................. High

7. Reward criteria: The degree to which rewards (e.g. salary increases and promotion) are allocated according to performance rather than seniority, favouritism, or other factors not related to performance.

Other ............................................................ Performance

8. Conflict tolerance: The degree to which employees are encouraged to air conflicting issues and criticism openly.

Low .............................................................. High

9. Means/End orientation: The degree to which management focuses on results/outcomes rather than the techniques/processes used to achieve the outcomes.

Means .......................................................... End

10. Open-systems focus: The degree to which the organisation monitors and responds to changes in the external environment.

Internal ......................................................... External

Now use the chart below to provide a narrative description of each characteristic of the culture. Be specific. For example, when it comes to member identity, you might want to write something like "There is little identification with the organisation; everyone works in silos".

The culture of my organisation

Characteristic: Description:

1. Member identity 2. Group emphasis 3. People focus 4. Unit integration 5. Control 6. Risk tolerance 7. Reward criteria 8. Conflict tolerance 9. Means/End orientation 10. Open-systems focus

(b) Use the prescribed article by Schein (1990) to apply the three levels of organisational culture your organisation.

(i) List some artefacts of the culture. (ii) Describe the key values of the organisation. (iii) What basic assumptions prevail in the organisation?

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8.6.6 Reflection

In a strong culture the organisation's core values are actively maintained and widely shared, leading to extensive behavioural control. The resultant cohesiveness and organisational commitment ensure a low employee turnover. There is some debate about whether or not it is possible to prescribe organisational culture "archetypes". Is it possible to speak about an "ideal" organisational culture?

8.6.7 Conclusion

Culture is a contested construct. However, it is gaining increasing attention in terms of how people behave in organisations and the role of leadership in shaping culture. Some organisations even argue that culture forms a critical part of their competitive advantage. Companies such as South West Airlines, Disney and Investec consider their organisational culture to be a distinctive factor in their success.

A more recent question focused on the relationship between organisational culture and national culture (culture of the nation). Does the national culture override an organisation's culture? This is a compelling question for multinational companies operating in many countries. It is also an important question in the African context. A distinctive feature of the African continent is its rich cultural diversity. Many South African organisations are expanding to other parts of the continent, and, while they may be able to export their products or services, can and should they try to export their organisational culture? Some researchers have found that national culture has a significant effect on organisational culture.

The influence of national culture is also important in understanding the behaviour of employees. The next learning topic focuses on this issue.

8.7 MANAGING DIVERSITY AND LEADERSHIP ACROSS CULTURES




Students are able to explain what cross-cultural studies have revealed about leadership styles and understand how to adapt leadership style to different contexts.

Students are able to apply organisational practices to manage diversity effectively in South African organisations.


The first part of this topic focuses on understanding the difference between employment equity and managing diversity. Managing and leading diversity is widely considered to be a critical leadership issue around the globe. The emphasis here is on understanding the effects of cultural diversity in organisations and using best practices in managing the challenges diversity poses. Valuing diversity, and not merely managing it, is a critical leadership skill.

The second part of this topic is an extension of the work covered in the first part. Your attention is drawn to the broad question of a universalistic versus a particularistic approach to leadership. In other words, are leadership theories universal? This question becomes highly relevant in the context of globalisation and the continued expansion of organisations beyond local borders. Some South African business leaders are calling for a truly “African” approach to leadership and management. They argue that leadership practices should be grounded in a country’s national culture. In this section of the course we therefore discuss the issue of universalism versus particularism.

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On completion of topic 7 you should be able to: define diversity and discuss the difference between employment equity and valuing diversity create leadership strategies for valuing diversity in the workforce assess the barriers and challenges to managing diversity in a multicultural organisation apply the necessary leadership skills to manage and lead diversity initiatives in organisations contrast different models of national cultures compare the national cultures of different countries explain how national culture influences leadership practices generate a list of effective leadership behaviours in a multicultural context explain the relationship between national culture and organisational culture draw up a list of the leadership skills a global manager needs



Review Yukl (2006), chapters 14 and 15. Analyse the case study and answer the questions at the end of chapter 14 (pp. 438–439) on Madison, Jones & Conklin.

Review Meyer and Boninelli (2004), parts 1, 2 and 3.

Prescribed articles

Javidan M, Dorfman PW, de Luque M & House RJ. 2006. In the eye of the beholder: cross cultural lessons in leadership from Project GLOBE. Academy of Management Perspectives 20(1), February:67–90.

Littrell R & Nkomo SM. 2005. Gender and race differences in leader behaviour. Preferences in South Africa. Women in Management Review 20(8):562–580.

Additional reading

Blunt P & Jones M. 1997. Exploring the limits of Western leadership theory in East Asia and Africa. Personnel Review 26:6–23.

Nyambegera SM. 2002. Ethnicity and human resource management practice in sub-Saharan Africa: the relevance of the managing diversity discourse. International Journal of Human Resource Management 13(7):1077–1091.

Eagly AH & Carli LL. 2003. The female leadership advantage: an evaluation of the evidence. Leadership Quarterly 14(6):807–834.

Early PC & Peterson RS. 2004. The elusive cultural chameleon: cultural intelligence as a new approach to intercultural training for the global manager. Academy of Management Learning and Education 3(1):100–115.

You are required to revise two articles for the first section of the topic. The articles by Booysen (2001; 2007) raise provocative issues pointing to the complexity of the national culture in South Africa. These articles give rise to a number of difficult questions: Are there distinct national cultures? What is the national culture of my country of origin? Is there a "South African" national culture? If so, what is it? What does it mean for leading and motivating followers? How can I as a leader create an organisation that values diversity and appreciates the unique talents of all employees? How do I build a multicultural organisation?

The assigned articles for the second section of this topic offer a range of insights into the universality of leadership concepts.

Javidan and his associates argue for generalised leadership approaches based on empirical evidence. The article by these authors reports on the GLOBE research programme that tested the attributes of leadership in 62 different countries, including South Africa. The article by Litrell and Nkomo (2006) investigates gender and race differences in South Africa.

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Cultural intelligence has become a key competency for 21st century leaders, and the additional article by Early and Peterson (2004) considers the definition of the construct.

B Personal learning

In your journal, answer the question and carry out the instruction below:

What did I learn about managing diversity and leadership across cultures in topic 7? Do the exercise entitled “Who am I: My diversity pie chart” (see below) and share the outcome with

your group members. (Adapted from: Cox T & Beale RL. 1997. Developing competency to manage diversity. San Francisco: Berret-Koelher.)

Instructions:

Work individually on the blank flipchart sheet that has been provided to create a pie chart that identifies the diversity dimensions you consider most important in your self-concept (i.e. your answer to the question: Who am I?) Indicate the approximate importance of the dimensions that reflect the way you see yourself. Share and discuss your pie chart with the other members of your group.

Questions for discussion:

Which diversity dimension appears most frequently in the pie charts? On the group’s charts, which dimensions are represented by means of the largest slices? How did you react to and/or what surprised you about the group’s diversity? What surprised you

about your own identity? Do our diverse identities present challenges to how we work together in organisations?

Follow the links below and complete the questionnaires, which are based on Hofstede’s cultural dimensions, to measure the extent of your own masculinity versus your femininity, and individualism versus collectivism. http://www.sbleds.ac.za/eds/2009/mbl921M-library.nsf/bytitle?openform


(1) Answer the review and discussion questions at the end of chapter 14 (p. 437) and chapter 15 (p. 458).(2) Analyse the case study on the "tea incident" at SA Insurance. (This case study will be supplied after the first study school and a model answer will be supplied after the due date.) (3) Follow the link below and answer the examination preparation questions.


8.7.6 Reflection

It is becoming increasing clear that truly valuing diversity requires cultural change in addition to an increase in the number of members of previously disadvantaged groups in organisations. However, it is also evident that in many organisations employment equity and transformation issues have not been fully linked to the business strategies so as to allow efforts to be led from the top and accountability to become a key feature of reaching goals.

The long-term goal of having diversity centre on local differences or global diversity in multinational organisations is the building of truly multicultural organisations.

8.7.7 Conclusion

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Leopold Senghor, former president of Senegal and the most distinguished proponent of being African, asserted that the great genius of Africa lay not in European concepts of rationality, but in indigenous capacities for intuition; not in the principles of scientific method and objectivity, but in the wisdom of custom and instinct; not in cold analytical reason, but in warm, responsive emotion. While Descartes asserted, “I think, therefore I am”, the African genius is, “I feel, therefore I am”. More recently, Reuel Khoza, former Chairman of Eskom described Africa’s leadership challenge in his book, “Let Africa Lead: African Transformational Leadership for 21s Century Business (2004):

If not us, then who?If not from Africa, then whence?

If not now, then when?If not for Africa and humanity, why not?

Let Africa rise to its quintessential challenge.It is our date with destiny.

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MBL922N

Strategic Financial Management

Page

1. MODULE OVERVIEW

2. STUDY SCHOOLS

3. PRESCRIBED BOOKS

4. CASE STUDIES

5. ARTICLES

6. WEB LINKS

7. ASSESSMENT

8. TOPICS

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MBL922N

Strategic Financial Management

Page

1 MODULE OVERVIEW

This module aims to equip students with a sound theoretical and practical knowledge of important aspects of business finance, strategic financial management. It also provides a practical guide to the appropriate use of financial strategy in order to add value to the overall corporate strategy of an organisation.

This module assumes that students have some basic knowledge of Statistics. Students must understand at least the concepts: Regression and the normal distribution.

This is a Masters level course: On a masters level students must show that they can add value. It is not enough to merely repeat what is in the prescribed study material. The relevant chapters, in Ehrhard and Brigham, that you are expected to know are: 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 12 and 13.

1.1 Numerical literacy

A basic statistical / numerical literacy is assumed for this course. If you are under prepared on the following topics, please go to the closest UNISA study centre to get help.

The topics are:

Descriptive Statistics - Calculate mean, standard deviation, correlation and regression with a calculator.

Draw histograms Use the normal distribution tables to read off probabilities. Monte Carlo simulation (“Monte Carlo simulation” on the Microsoft online help) Logarithms to linearise data (Grade 11 Mathematics). The equation of a straight line: y - y1 = m (x - x1) (Grade 8/9 Mathematics). Changing the subject of a formula (Grade 10 Mathematics).

2 STUDY SCHOOLS

2.1 Study school 1

TOPIC NUMBER TOPIC DESCRIPTION1 Shareholder wealth creation2 Investment decision making3 Financial structuring

2.2 Study school 2

TOPIC NUMBER TOPIC DESCRIPTION1 Group assignment 2 Presentations

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3. PRESCRIBED BOOK

The prescribed book is the book that is used by most business schools around the world. Ehrhardt MC & Brigham EF 2011 Corporate Finance a focussed approach (4th edition). South-

Western, Cengage.

Recommended books: Arnold G 2005 Corporate Financial Management 3rd ed. Prentice Hall Firer C, Ross SA, Westerfield RW and Jordan BD 2008 Fundamentals of corporate finance

4th ed McGraw Hill

4. CASE STUDIES

None, actual company examples will be used.

5. ARTICLES

There are a number of Financial Journals linked as additional resources on the EDS. These articles can be used to find the most current research in Corporate Finance.

6. WEB LINKSA number of Web links are mentioned in the text book.

7. ASSESSMENT

Please note: The assignments are printed and the marker gets a hardcopy to mark. No marks will be allocated for Appendices in MBL922N. You can use an appendix to include proof if you think the marker might dispute a claim that you make in the assignment itself.

Last year a group actually submitted an assignment that did not make much sense without the functionality in an Excel spreadsheet with multiple tabs that they included as an appendix. How must the printers even know how to print such a spreadsheet? They were then upset when they received a low mark.

If you write a simulation program, then you have to show how you used the simulation in the assignment, merely attaching the program as an appendix and leaving the marker to figure out how to use the program will earn you NO MARKS.


The group assignments are designed to be done as group assignments. If you delegate an individual to do the assignment, you must expect a mark reflecting an individual contribution (about 12%). The correct way to do these assignments is for group members to debate the issues from the perspective of different stakeholders so that you understand the issues involved. The assignments are also designed as a learning experience that will help you in the exam and in your later career.


If we look at Grand Parade Investments (GPL) and Gooderson Leisure Corporation (GDN), would it make sense for GPL to offer to buy out GDN? Both companies are listed on the JSE.1.You have to look at the possibility strategically.

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a. Quantify the synergies between the companies (5)b. How will it affect the board members? What will the new board look like? (5)c. How will it affect the major shareholders? (5)

2.Calculate the sensible price that GPL should offer for GDN. (both per share and the total) (5)3.Complete the following table: (give the calculations in Appendix A

(12*4)Pre merger Post merger (GPL)

GPL GDN Funded by 100% equity

Funded with 100% debt

ROEDebt-equity ratioExpected Tax rateNumber of shares in issueExpected Market CapitalisationExpected EPSExpected dividend per shareBook value per shareFree cash flow per shareValue per shareWACCEVA

4.How would GPL fund the acquisition? (5)

5.Write a recommendation to the management of both companies on whether the merger will make sense. (20)

10 marks will be allocated for a clear and precise report.The maximum length for the assignment, without appendices, is 6 pages. (Times new Roman, 12, double spacing). Note only the first 6 pages will be marked, the appendices are merely to provide proof to support your assignment.


Choose a listed company that you understand (perhaps a company at which one of the group members works). You have to determine whether the share price of the company correctly reflects the risk of the company. Make an assessment of the historic company risk based on the financial information for the past seven years. (Note: This is a quantitative subject – merely listing risk factors will not be accepted)

1. You have to determine a value and some risk measures for this valuation.2. Compare the actual price to your valuation and risk measures3. The assignment must be less than 10 pages (excluding appendices. The appendices will not

be marked). (Times new Roman, 12, double spacing)

Hints:

1. Use more than one valuation technique and compare the respective techniques2. Note that it is advisable to speak to members of the company’s risk committee to find novel

ways of calculating value and risk. Please note that you are only allowed to use publically available information. Do not mention company secrets or company specific risks.

3. Some methods for the calculation of valuationa. Forecast the Income statements and balance sheet for the next seven years and then

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base your valuation on this.b. Use the Gordon formula – (The DDM, The Free cash flow, two stage models)c. Book valued. Use P/E ratiose. Discounted cash flow methodsf. Methods suggested by the risk committee

4. Some risk measures:a. Probability distributionsb. Sensitivity analysisc. Likelihood functions - Probability is the likelihood of an unfavourable outcome (Oxford

Dictionary)d. Monte Carlo simulatione. Measures suggested by the risk committee

5. You can estimate (calculate) risk factors influencing the company by:a. Regression analysisb. Decision treesc. Monte Carlo simulationsd. Methods recommended by the risk committee

- Note that if you do not quantify how these risk factors actually affect your valuations and/or risk measures, they will not be accepted.

Prepare and submit some slides (no more than 12) so that you can present your assignment at the second study school. (See the marking guideline – Annexure A)Note: Websites of financial institutions can be used to determine economic trends.

7.1.3 REPEATER ASSIGNMENTS

REPEATER ASSIGNMENT 1 Due date: 05/05/2011

As a diligent student you made a list last year of the tools (formulae) available and made sure that you knew how to use all these formulae. This repeater assignment will help you to use these formulae.

Analyse the financial statements of a quoted company and determine if financial engineering has been used in the reporting of their results. You may choose a company that has recently had bad publicity or has recently been liquidated.

The assignment must be not more than 10 typed pages (Times new Roman, 12, double spacing)

Structure your report using appropriate headings and subheadings. Attach the financial statements of the company you have analysed.

REPEATER ASSIGNMENT 2 Due date: 04/08/2011

Choose a listed company that you understand (perhaps the company that you work for).

Calculate the internal rate of return (IRR) and appropriate risk measures. (Note: This is a quantitative subject – merely listing risk factors will not be accepted)

Find the probability that the IRR exceeds the inflation rate. State clearly which official inflation rate you used.

Use more than one technique and compare the respective techniquesNote that it is advisable to speak to members of the company’s risk committee to find novel ways of calculating the IRR and the risk.

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The exam can consist of multiple choice questions, short questions and case studies.

7.3 EXAM PREPARATION

You have to study the relevant chapters in the textbook. Prepare for questions similar to assignments (both the group and repeater assignments) in the exam. During the second study school listen carefully at the innovative ways that other groups did their assignments.

7.4 FURTHER STUDIES IN FINANCE

The MBL93EV module: Advanced Financial Management is an elective that you can take in the third year of your MBL. This module will help you to understand the current research in Finance. The first assignment for MBL93EV is a presentation on a published article of your choice and the second assignment is a literature review on a topic in Finance. The articles selected by students make up the course material for MBL93EV.

7.5 RESEARCH IN FINANCE

If you want to do your research report in Finance, you can look at the journals on the EDS to get ideas for your title. The supervisors usually have titles ready for students that do not have their own title, but it is better to choose a title that you are passionate about.

When you choose the title for your research report, remember that the research is the competitive edge of your MBL. You are the only person in the world that makes the specific contribution. Make sure you choose a title that will further your career.

You can later do research on a doctoral level for a DBL in Finance.

7.6 CAREER OPPORTUNITIES IN FINANCE

Finance is one of the scarce skills. People with skills in Finance are in demand at the investment banks, stock brokers, risk committees at companies etc. Dealmakers basically use a more sophisticated version of Assignment 1 to earn commission by putting major deals together (like the Barclays bank – ABSA deal that Dr Cronjé put together).

Business leaders need a general knowledge on Finance in order to manage shareholder wealth. Remember: Business leaders are appointed by shareholders, so if you do not have a basic understanding of Finance, you will not get an appointment as a business leader.

8 TOPICS

8.1 Fundamental concepts in financial management and corporate valuation




are able to apply appropriate techniques to calculate value. must understand the Risk return relationship. understand the importance of the cost of capital in business decision making.

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must be able to calculate and understand risk.

8.1.3 Prescribed material

Corporate Finance E&B Chapters 1, 2, 3, 4, 6, 7, 8, 9 10, 11

Chapter 1 ,2 and 3 are merely revision of your MBL914 syllabus.

Most financial decisions involve situations in which someone pays money at some point and receives money at a later stage.

A crucial question in finance is: What is the value today of cash flow to be received later? The answer depends on the time value of money, the subject of Chapter 4.

Critical questions: What is the time value of money? How important is this concept in the business world (including the

use of computation tools and the basic patterns of cash flow)? How is present value related to future value? If interest is compounded more frequently than annually, what effect does this have on future value

and on the effective annual rate of interest?

Chapters 6 - 8

Companies face risk in nearly everything they do, and for this reason, risk assessment is vital. What determines the required return on an investment? In one sense the answer is simple: the required return depends on the risk of the investment. The greater the risk, the greater the required return.

Note read web extensions 6A and 6B carefully.

Critical questions/learning goals: Define risk, return, and risk preferences. State the fundamental principles of risk, return, and risk preferences. What types of risk do companies encounter? Describe the procedure for assessing and measuring the risk of a single asset. Measure the return on and standard deviation in a portfolio and the various types of correlation

between series of numbers. Discuss the risk and return characteristics of a portfolio in terms of correlation and diversification. Describe the two types of risk and the derivation and role of beta in measuring the relevant risk of

an individual security and a portfolio. Describe the capital asset pricing model (CAPM), its relationship to the security market line (SML),

and shifts caused in inflationary expectations and risk aversion.

Chapters 9-11

It is often necessary that we get a valuation for a company. Note: the same methods used to value projects are also valid when valuing companies and vice versa.

Critical questions/learning goals: How do we find the value of common stock with non-constant growth rates? How does the Gordon formula work? What is the relationship between discount rate and IRR?

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Chapter 9: Cost of capital

The cost of capital is an extremely important rate of return in the long-term decision-making process, particularly when making capital-budgeting decisions. Because the cost of capital is the pivotal rate of return used in the investment decision process, its accurate calculation can significantly affect the quality of such decisions.Even with good estimates of project cash flows, the application of net present value (NPV) and internal rate of return (IRR) decision techniques, and adequate consideration of the project risk, a poor estimation of cost of capital can destroy shareholder value. Underestimating the cost of capital can result in the acceptance of poor projects, whereas overestimating can result in the rejection of good projects. Either underestimation or overestimation could be detrimental to the value of the company. Applying the techniques presented in this chapter in order to estimate cost of capital could improve the likelihood of long-term decisions being consistent with a company’s overall goal of maximising owner wealth.

Critical questions: What key assumptions underlie the cost of capital, the basic concept of cost of capital, and the

specific sources of capital? What is the cost of each financing source? What is the weighted average cost of capital (WACC) of a specific project, and what are the

alternative weighting schemes? Which procedures are used to determine break points and the weighted marginal cost of capital

(WMCC)?

Chapter 10: Evaluating cash flows

First, consider the importance of a business valuation. A business valuation can be carried out using an applicable model.

Critical questions/learning goals when selecting a business evaluation model: How important is a business valuation? What is the concept of a business valuation? Compute the market value and yield to maturity of a bond. Compute the market value and expected yield of preferred stock. Compute the market value per share of common stock. Compute the market value of total common equity. Compute the yield on common stock. Compute the value of a complete business.


First group assignment:

The first group assignment requires that you calculate a value for a merger and get the accounting ratios of the pre and post merger entities. This involves that you apply the knowledge of valuations and the time value of money and assists in revising the accounting ratios that you learnt in the Accounting course (MBL914).

Time-value techniques make it possible to evaluate cash flows at different moments in order to combine, compare and evaluate them and link them to the overall goal of share price maximisation. Time-value techniques are a key aspect of the value-determining process.

Second group assignment:

Financial managers are often called upon to assess the risk of potential projects. A company’s risk and expected return affect its share price. Risk and return are the two key determinants of a company’s value. A valuation must be seen in relation to the risk. A standalone valuation is

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worthless, The risk of the valuation must be calculated – this means either with a standard deviation or other measure of the probability distribution – to have any real value to a decision maker.The risk quality of an asset may be considered in two ways: on a stand-alone basis, where the asset’s cash flows are analysed by themselves. in a portfolio context, where the cash flows from a number of assets are combined before the

consolidated cash flows are analysed.

In a portfolio context, the risk of an asset may be divided into a diversifiable risk component and a market risk component. An attempt has been made to quantify market risk by means of a measure called “beta”.

The capital asset pricing model (CAPM) uses the investor’s aversion to risk in conjunction with the beta concept to specify the relationship between market risk and the required rate of return. This relationship is visualised by means of the security market line (SML).

Methods for reducing risk and compensating for risk must also be examined.

The individual assignments were designed to emphasise other aspects of this course - The first individual assignment highlights the unreliability of financial statements and/or the use of real options by companies. Again this is a revision of the Accounting you learnt in MBL914.

The second individual assignment emphasise the relationship between valuations (with risk) and the IRR (with risk). This is the same assignment seen from two perspectives.

Chapter 9

Capital is a necessary factor for production, and, like any other factor, it has a cost. This cost is equal to the marginal investor’s required return on the particular security. The key to understanding the capital-budgeting process is to recognise that: investors provide managers with the necessary funds, or capital, to undertake projects. managers, if they are good stewards of the money entrusted to them, will invest only in projects

that can produce a rate of return at least as high as the return investors could get elsewhere.

The return investors could get elsewhere is called their “opportunity cost of capital”.The most important concept is the weighted average cost of capital (WACC), which is the required rate of return on an overall firm is also the appropriate discount rate for cash flows with a similar risk to that of the entire company.

Often companies/ investors use the WACC as discount rate to calculate discounted cash flows and cash flow valuations. This is not correct as the discount rate is a function of the investors risk tolerance. It must be at least the WACC of the investor plus a risk premium.

This chapter explains: how to estimate the costs of different kinds of capital how to use this information to determine an overall cost of capital for a company how to use this overall cost to determine the optimal capital budget

Chapter 10

This chapter introduces the techniques and concepts used in determining a company’s actual worth. Capital budgeting is sometimes referred to as ALM (Asset Liability management) or Liquidity risk management.

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8.1.6 Reflection

Chapter 4

Time value is a crucial element in financial decisions. It helps to answer questions about the amount of money an investment would make over time and how much a company should invest now to earn an expected payoff later.

You should have learnt the following from this chapter: How to determine the future value of an investment made today How to determine the present value of cash to be received at a future date How to calculate the present and future value of single amounts and annuities How to solve time-value-of-money problems with uneven cash flows How to calculate the return on investment

Chapter 6-8

Since risk and return are significant determinants of a company’s value, you must be able to assess the risk and return resulting from important decisions to make sure that the expected return justifies the extent of the risk that is introduced. This chapter explores the history of the capital market. Familiarity with the history of the capital market is useful because this information tells us what to expect in the way of returns from risky assets.

Two key lessons were learnt: Risky assets, on average, earn a risk premium. There is a reward for bearing risk. The greater the potential reward from a risky investment, the greater the risk.

You should have learnt the following from this chapter: How to calculate the return on an investment Different methods of reducing risk

Chapter 9

The decision regarding the cost of capital is a key input in the capital-budgeting process. The cost of capital is the return the providers of capital require before they would be willing to provide long-term financing.

Most companies employ different types of capital, and, due to risk differences, these different securities have different required rates of return. The required rate of return on each capital component is called its “component cost”, and the cost of capital used to analyse capital-budgeting decisions should be a weighted average of the costs of the various components.

You should have learnt the following from this chapter: How to determine a company’s cost of equity How to determine a company’s cost of debt How to determine a company’s overall cost of capital How the cost of capital may be used to establish whether a company is creating value

Chapter 10: Evaluating cash flow

This chapter introduces the techniques and concepts that apply when determining a company’s actual worth. ALM (liquidity risk) was introduced. Liquidity risk can effectively be simulated so that the reserves that must be available can be determined. This links on to the reserve requirements in models like Basel 3.

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8.1.7 Some additional information

A way used at some investment houses to value a company is to find the growth rate, and the standard deviation of this growth rate. They then assume that this growth rate has a normal distribution. Using the Gordon formula the growth rate probabilities can be transferred to probabilities on valuations and the probability that a share is overpriced or underpriced can be calculated. This method can be criticised because the standard deviation might have to be replaced by the standard error (divided by the square root of n) and what happens to the probabilities when the growth rate exceeds the discount rate?

8.1.8 Conclusion

By now you have examined and should understand time-value-of-money calculations so that you can plan cash collections and disbursements in a way that enables companies to earn maximum value from their money. The time-value techniques measure a company’s value and evaluate the potential impact of various events and decisions on the company. You should understand the time-value-of-money techniques and be able to apply them in order to make intelligent, value-creating decisions.

You have also examined the relationship between risk and return and how to measure that relationship in order to evaluate data and translate those data into decisions that will increase the value of the company.

The cost of capital encompasses the time value of money and the fundamental principles of risk and return in order to assess the acceptability and relative ranking of proposed long-term investments. You learnt how to calculate the NPV by discounting estimated cash flows at a given discount rate. That discount rate is also called the cost of capital.

In a sense, the corporate valuation model is the culmination of all the material we have covered thus far, because it draws together financial statements, cash flows, financial projections, time value of money, risk, and the cost of capital.

8.2 STRATEGIC INVESTMENT DECISIONS




Students are able to compute the economic viability of proposed capital investments.


Chapter 7: Stock valuation

In order to enhance shareholder value it is essential that you must be able to calculate the shareholder value. Some valuation techniques are given in this chapter. The dividend discount model is explained in this chapter.

Chapters 10 and 11: Capital budgeting

In the course of capital budgeting, future cash flows are estimated, risks are reflected in a cost-of-capital discount rate, and all cash flows are evaluated on a present-value basis. Different methods are used to determine which projects are to be included in the company’s capital budget: payback discounted payback

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net present value (NPV) internal rate of return (IRR) modified IRR (MIRR) profitability index (PI)

The NPV, IRR, PI and MIRR methods all lead to the same decisions regarding whether to accept or reject independent projects. However, the methods may conflict when mutually exclusive projects that differ in terms of timing scales are being ranked.

Critical questions/learning goals: List the key motives for capital expenditure. Describe the capital-budgeting process. Discuss the major components of relevant cash flows, expansion versus replacement cash flows,

sunk costs and opportunity costs. What does “capital rationing” mean? How do companies decide which projects to select? Describe risk-adjusted discount rates.

Companies use different methods to evaluate proposed capital-budgeting projects. This chapter explains each method and how the methods may be adjusted for differential project risk. When companies have developed relevant cash flows, these are analysed to assess whether a project is acceptable or how projects are to be ranked.

After working through this chapter, students should be able to evaluate and rank proposed projects with reference to various techniques.

Chapter 11: Cash flows

Discounted cash-flow techniques were originally developed to value securities such as shares and bonds. These securities are passive investments – once they have been purchased, most investors have no influence over the cash flows the assets produce. However, real assets are not passive instruments – managerial actions can influence their results.

Investing in a new project often brings with it the potential to increase a company’s future opportunities. Opportunities are, in effect, options – the right but not the obligation to take some future action. The impact of a project on a company’s opportunities, or its option value, may not be discernible by conventional NPV analysis, so this option value should be considered separately.

8.2.6 Reflection

Chapters 10 and 11: Capital budgeting

The capital budget is an outline of planned investments in fixed assets, and capital budgeting is the process of planning expenditures on assets whose cash flows are expected to extend beyond one year.

After studying this chapter, you should understand

how to determine the relevant cash flows for a proposed investment how to analyse the cash flows of a project how to evaluate an asset replacement proposal how to deal with projects with unequal lives

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Chapter 12: Real options

Real options allow managers to intervene and make changes after a project has been implemented, perhaps in response to changing market conditions. Real options increase a project’s expected cash flows and change the project’s risk. Real options therefore add value to a project.

Real options provide the means to manage risk – whether the risk is Credit risk, Market risk, Liquidity risk or Operational risk. Once a risk is identified and quantified, the hedging strategy can be implemented.

A risk that is merely identified without quantification, cannot be hedged. This is valid for SWAT tables where threats are identified - The risk committee must then quantify these risks - The probability that they will occur and the cost if they do occur. This is called decision trees that you

8.2.7 Conclusion

Students should understand capital-budgeting cash flows in order to understand which cash flows are relevant to decisions concerning proposals for acquiring additional production facilities or new products, or expanding existing product lines.

Students need to understand capital-budgeting techniques in order to understand the decision criteria that apply to accepting or rejecting proposed projects.

Students should remember that traditional capital-budgeting theory says nothing about possible actions after a project has been accepted and when cash flows might change.

Real options can add value to a project. Students should be able to identify real options embedded in projects (e.g. investment timing options, growth options, abandonment options, and flexibility options).

8.3 STRATEGIC FINANCING DECISIONS


Time allocation: Before group assignment 1


Students have a sound grasp of the impact of financial engineering in financing. Students are able to identify important sources of enterprise funds and are equipped to examine the

relationship between various types of enterprise funds.

8.4 DETERMINING FINANCIAL RISK




Students are able to determine an enterprise's financial risk.


Chapter 8 Derivatives

Risk management is a topic that is becoming increasingly important to financial managers. The term “risk management” can mean many things, but in business it involves identifying events that may

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have adverse financial consequences, and then taking action to prevent and/or minimise these consequences.

Critical questions/learning goals: What types of volatility can companies manage? What is the difference between forward contracts and futures contracts? How are these contracts

used for hedging purposes? How can swaps and options be used for hedging purposes?


Chapter 8 Derivatives

It is almost impossible to operate a successful business without taking some chances, and companies face a variety of risks every day. If some action can lower the risk without reducing the company’s returns too much, management action can enhance value. This chapter describes various types of risk and the basic principles of corporate risk management.

One important management tool is the derivatives market. The activities discussed in this chapter are at the frontier of modern, real-world risk management. In describing a rapidly developing area in corporate finance, we hope to leave you with a sense of the art and practice of financial management.

ANNEXURE A: MARKING GUIDELINES FOR Assignment 2

Executive summary (10)Strategic fundamental analysis of the company (10)Assumptions on variables for the models (10)Correct valuations (10)Evidence of communication with the risk committee (10)Comparison between methods (10)Correct calculation of the risk (10)Correct interpretation of the risk (10)Correct calculation of probabilities (10)Understandable and concise report and slides (10)

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MBL923P

Strategy Dynamics and International Business

Page

1. MODULE OVERVIEW

2. STUDY SCHOOLS

3. PRESCRIBED BOOKS

4. CASE STUDIES

5. ARTICLES

6. WEB LINKS

7. ASSESSMENT

8. TOPICS

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MBL923P

Strategy Dynamics and International Business

Page

1. MODULE OVERVIEW

Whereas in MBL I the focus was on understanding the process of strategy, in this module the emphasis is more on the content of strategy. More specifically, we focus on understanding how competitive advantage is achieved and sustained in the local, regional and global business environments. This integrative course introduces future executives and strategic decision-makers to the demands of a diverse and complex global business environment and applies dynamic theories of strategy to building and protecting competitive advantage.

2. STUDY SCHOOLS

2.1 Study school 1 (Strategy dynamics)

TOPIC NUMBER TOPIC DESCRIPTION1 Competitive advantage (Grant, chapters 8 to 10)2 Introduction to corporate strategy (Grant, chapters 14, 16 and 17) 3 Introduction to international strategy (Grant, chapter 15)

2.2 Study school 2 (International business)TOPIC NUMBER TOPIC DESCRIPTION

1 Leveraging differences between countries (Hill: chapters 2, 3 and 4)2 Strategy in a global context (Hill: chapters 12 – 14)3 Cross-border management (Hill: chapters 15-20)

3. PRESCRIBED BOOKS

Strategy dynamics: Grant RM. 2010. Contemporary strategy analysis. 7th edition. United Kingdom: John Wiley & Sons Grant RM. 2007. Cases to accompany contemporary strategy analysis (7th edition). Malden,

MA: Blackwell.

International business: Hill CWL. 2009. International business, competing in the marketplace. 7th edition. New York::

McGraw Hill. (This book was issued for MBL 1, Module MBL916Q, in 2010)

4. CASE STUDIES

Strategy dynamics: Wal*Mart Stores Inc. (Grant casebook p. 67) Eastman Kodak: Meeting the Digital Challenge (Grant casebook p. 93) Richard Branson and the Virgin Group of Companies in 2004 (Grant casebook p. 308)

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Global business: End of chapter cases in Hill (2009) (chapters 12 to 14)

5. ARTICLES

Prescribed articles

Strategy dynamics: Ghemawat P & Del Sol P. 1998. Commitment versus flexibility. California Management Review

40(4):26–42. Hamel G & Prahalad CK. 1994. Competing for the future. Harvard Business Review 72(4):122–128. Feurer R, Chaharbaghi K & Distel M. 1995. Dynamic strategy ownership. Management Decision

33(4):12–21. Liebeskind JP. 1996. Knowledge, strategy and the theory of the firm. Strategic Management

Journal 17 (Special Winter Issue). Ryan C. 1995. The King Report: an outline. People Dynamic, July: 15–17.

International business: Bartlett CA. 2000. Going global: lessons from late movers. Harvard Business Review 78(2):132–

142. Ghemawat P. 2001. Distance still matters: the hard reality of global expansion. Harvard Business

Review, 79(8):137 et seq. Gupta AK & Govindarajan V. 2000. Managing global expansion: a conceptual framework. Business

Horizons 43:45–54. Rosenzweig P. 1998. Managing the new global workforce: fostering diversity and forging

consistency. European Management Journal 16(6):644–652.

Additional articles

No additional articles

6. WEB LINKS

www.economist.com www.eiu.com www.ft.com www.globalreporting.org

7. ASSESSMENT


7.1.1. GROUPS ASSIGNMENT 1 Due date: 05/05/2011(Strategy dynamics and International business)

You have been asked by the Chairman of Shell to provide an independent critique on Shell’s March 2011 Strategy Update as given on their official website:http://www.shell.com/home/content/aboutshell/our_strategy/update_2011/update_2011/

Your critique need to be based on seven relevant strategy dynamics and international business models, as per your prescribed textbooks and IB lectures at the first study school.NOTE:

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http://www.shell.com/home/content/aboutshell/our_strategy/update_2011/update_2011/


1) The SWOT, PPESTLEG and Porter’s 5 forces models may be used in the strategic analysis, but do not count towards the seven required strategy models.

2) The key characteristics of a strategic critique:a. It is balanced between all dimensions of doing cross-border business, and is aimed

at building and sustaining competitive advantage; andb. It is creative, and leverages on cutting-edge knowledge and thought.

Guidelines for this assignment will be placed on the eds upon your completion of group assignment 1.

7.1.2 REPEATERS ASSIGNMENT 1 Due Date: 05/05/2011

Repeaters must also do the above assignment. (This must be an individual attempt).

7.1.3 GROUP ASSIGNMENT 2 Due Date: 04/08/2011

“It’s often a mistake to set out to create a worldwide strategy. Better results come from strong regional strategies, brought together into a global whole.”

Discuss this statement extensively and give examples. (100)

Guidelines for group assignment 1: This will be discussed at the first study school.

7.1.4 REPEATER ASSIGNMENT 2 Due date: 04/08/2011

Repeaters must also do the above assignment. (This must be an individual attempt.)


Half of the examination will be devoted to questions on strategy dynamics and corporate strategy, and one half to questions on global business.

8. TOPICS

8.1 Analysis of competitive advantage




Students are able to develop global growth strategies. Students are able to anticipate and react appropriately to changes in the competitive environment. Students are able to analyse, describe and develop sources of competitive advantage. Students are able to incorporate the changing nature of the business environment into their

strategic planning.

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The term “competitive advantage” is often used (and misused!) in the corporate environment, and various meanings have been ascribed to it. Take a moment to reflect on the following questions:

What does “competitive advantage” mean to your business? Can one talk about a competitive advantage in a not-for-profit setting? How is a competitive advantage established? How can competitive advantage be sustained?

If one considers Grant’s (2010) suggestion that a competitive advantage is not necessarily limited to greater profitability, understanding competitive advantage becomes quite complex.

This topic explores the following questions:

How does competitive advantage emerge? How is competitive advantage sustained, and is sustainability even possible? What are the key drivers of a cost and differentiation advantage? What are the implications of a dynamic view of strategy for competitive advantage?


Study chapters 1 to 7 of the prescribed book by Grant (2010).However, The focal point of your learning for this topic is chapters 8 to 10 of the prescribed book by Grant (2010). The prescribed article by Ghemawat and Del Sol (1998) provides some insight into the notion of commitment as the basis for dynamic strategy. In chapter 8, Grant (2010) examines the emergence of competitive advantage from three sources: external sources (e.g. Telkom SA's position until recently as a fixed-line monopoly) responsiveness to change (e.g. Spar's ability to establish and manage a network of franchisees) innovation or "new game" strategies (e.g. Discovery Health's innovative health insurance business

model) Most strategists agree that competitive advantage is generally temporary. However, Grant (2010) suggests certain means for sustaining competitive advantage (chapter 8).

Chapters 9 and 10 of Grant (2010) focus on the supply-side and demand-side economics of competitive advantage, namely cost and differentiation advantage. Note the importance of the value chain in cost and differentiation analysis and the identification of opportunities to attain a competitive advantage.

The so-called dynamic views of strategy propose that organisations constantly develop new competencies as their environments and the requirements for success change. Over time, resources are typically committed and new capabilities developed to provide a future basis for competitive advantage. The prescribed articles by Ghemawat and Del Sol (1998), Hamel and Prahalad (1994) and Feurer, Chaharbaghi and Distel (1995) provide background on the dynamic views of strategy.


Consider the organisation for which you work.(1) Would you consider your organisation to have a competitive advantage? Why, or why not? (2) List the sources or potential sources of competitive advantage.

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8.1.6 Reflection

The following questions may help you to reflect on your learning so far: How relevant is the idea of gaining a competitive advantage in your industry? How relevant is the notion of a dynamic strategy in your industry (or, for that matter, in the African

context)?

8.1.7 Conclusion

So far we have established the following: Competitive advantage is temporary. Internal and external factors combine to provide the basis for a competitive advantage. The basis for competitive advantage has to change as time passes and the business environment

changes.

The next topic takes this idea further, as we consider the effects of industry evolution and industry type on competitive advantage.

8.2 BUSINESS STRATEGIES IN DIFFERENT INDUSTRY CONTEXT




Students are able to develop global growth strategies. Students are able to anticipate and react appropriately to changes in the competitive environment. Students are able to analyse, describe and develop sources of competitive advantage. Students are able to incorporate the changing nature of the business environment into their

strategic planning.


Several questions in the previous topic hinted that the particular industry has an important bearing on competitive advantage and dynamic strategy. Those of you in service industries may, for example, believe that your industry conditions are totally different from those prevailing in the manufacturing industries. This may be a good time for you to think about the following:

What are the key success factors in your industry? How do these factors affect your strategic options?

This topic examines the requirements for success (i.e. a competitive advantage) in different industry settings and stages of maturity.


The idea of industry evolution is addressed in chapter 11 of Grant (2010). Many of you may be familiar with the concept of the industry life cycle (ILC). This concept implies that industries generally move through stages of demand growth, and that key success factors and strategic options change as organisations move through the ILC. Consider the telecommunications industry in South Africa. There are signs that fixed-line telecommunications are at a mature stage (brought about largely by growth in cellular and wireless technologies). This means that the options available to the second network operator (Neotel) may be very limited.

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In chapters 12 and 13, Grant (2010) explores competitive advantage in two specific industry contexts: high-technology industries and mature industries. We believe that two important ideas emerge from this section: Innovation in itself does not necessarily translate into competitive advantage. Industry maturity actually offers more strategic options than may be obvious at first glance.


(1) Where does your industry fit into the ILC? (2) Considering your answer to (1) above, has your organisation been making the right strategic choices?

8.2.6 Reflection

Take a few minutes to reflect on your learning so far:

Does the ILC play an important role in strategy, or does it simply constrain strategic thinking? Do you feel that key success factors (KSFs) are a useful concept, or are they something sought

after by all companies in an industry, but never quite achieved?

8.2.7 Conclusion

In this topic we explored the idea that industry development and different industry contexts represent different opportunities and constraints. You should have a good conceptual understanding of the following:

The ILC and its implications for strategy The role of innovation in technology-intensive industries The strategic options available to organisations in mature industries

We now move on to the comprehensive topic of corporate strategic management.

8.3 CORPORATE STRATEGY




Students are able to apply the principles of corporate strategy decisions. Students are able to develop global growth strategies. Students are able to anticipate and react appropriately to changes in the competitive environment. Students are able to analyse, describe and develop sources of a competitive advantage. Students are able to incorporate the changing nature of the business environment into their

strategic planning.


Owing to the size of transactions and the risk normally involved for shareholders, corporate strategic decisions typically enjoy high visibility. Just recently in South Africa the Barclays bid for Absa dominated headlines in the financial press, and even more recently the “divorce” between Daimler-Benz and Chrysler attracted global attention. Mergers, acquisitions and takeovers are all forms of corporate strategy, and we hear and read about them almost every day.

Think about the following:

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Why do corporate-level strategic decisions take place? Which factors influence the success of corporate strategic decisions? Michael Porter’s research (2003) suggests that despite the high stakes involved, a disappointingly large number of corporate decisions fail to add value to the corporate portfolio, mainly because few holding companies have a clear idea of how to add value to subsidiaries.

Corporate strategy normally involves decisions about vertical scope, horizontal scope and geographical scope. In this topic we focus on vertical and horizontal scope, and on the management of multi-business corporations. Geographical scope is addressed in the topics on international strategy.


Chapters 14, 16 and 17 in your prescribed book by Grant (2010) are important. The website of the Institute of Directors of SA (www.iodsa.co.za) and the articles on the King Report also form part of the prescribed material for this topic. Access the above website for a summary of the King III Report.

In chapter 14 Grant refers to the vertical scope, or vertical integration decision. This decision requires corporations to think about positive and negative aspects of vertical integration (in other words, whether it makes economic sense to integrate vertically), and how vertical relationships could be structured.

In chapter 16 Grant addresses the decision of diversification, or product scope. The motives for diversification and the potential competitive advantage to emerge from diversification are discussed. Grant makes a particularly important point about "relatedness" (in other words, when is diversification related and when is it unrelated?). This section of the prescribed book also examines the research and issues relating to diversification in practice.


(1) List the corporate strategic options open to the organisation for which you work. (2) Describe your corporate management style. Do you believe that this management style is

effective?

8.6.6 Reflection

Now that you have assessed your position on some aspects of this topic, think about the following: How important do you think it is to "stick to your knitting" (i.e. not deviate from your core business)? Do you think that holding companies in South Africa create value? Why, or why not?

8.3.7 Conclusion

This topic addressed two types of corporate strategic decision and the management of multi-business corporations. The following topics address geographical scope, and especially the context of internationalisation

8.4 LEVERAGING COUNTRY AND CULTURAL DIFFERNCES




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Students are able to apply the principles of corporate strategy decisions. Students are able to develop business plans for cross-border management. Students are able to develop global growth strategies. Students understand and are able to apply the principles of dynamic strategy. Students are able to anticipate and react appropriately to changes in the competitive environment. Students are able to analyse, describe and develop sources of competitive advantage. Students are able to incorporate the changing nature of the business environment into their

strategic planning.


List the key determinants of political economy and culture. How would you describe your own culture to someone from a different culture? How would you describe the political economy of your country?


Study chapters 2, 3 and 4 of the prescribed book by Hill (2009).


Read the opening and closing case studies in chapters 2, 3 and 4 of the prescribed book by Hill (2009). Answer the case discussion questions, and compare your answers with those of other members of your study group.

8.4.6 Reflection

Would you be able to act as a bicultural interpreter between your home country and the host countries where you conduct business?

If not, how would you improve your mastery of cross-cultural issues?

8.4.7 Conclusion

At least 50% of all cross-border business failures or substandard performance can be attributed to failure to master the political, economic and cultural contexts/dynamics of the host country. This is a strategy-critical core competence of all employees and stakeholders in international organisations.

8.5 GLOBAL STRATEGY DEVELOPMENT AND IMPLEMENTATION





strategic planning.


Why would a company want to invest outside its home country?

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Discuss the main global growth models. What key issues should be considered when identifying and evaluating a global business

opportunity? Describe the various modes of entry into a foreign country.


Study chapters 12, 13 and 14 in the prescribed book by Hill (2009).


(1) Read the opening and closing case studies in the above chapters.(2) Answer the case discussion questions, and compare your answers with those of other members of your study group.

8.5.6 Reflection

Which part(s) of what you learnt from the above chapters apply to your company?

8.5.7 Conclusion

International business managers must understand the dynamics of global strategy development and global venture creation.

8.6 BUILDING AND MANAGING THE GLOBAL INTERPRISE





strategic planning.


How would you describe the mindset of a global manager? Describe the key roles and responsibilities of a global manager. List the key determinants in building a global organisational structure. List the key determinants in building a company's global architecture. Which key cross-border risks are associated with each phase of the global value chain? How would you manage the functional departments that service global operations? How would you manage information flow and decision making across borders? How would you assure quality, environmental and governance standards across borders? How would you build and manage an expatriate management workforce?


Study chapters 15 to 20 in the prescribed book by Hill (2009).

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(1) Read the opening and closing case studies in the above chapters.

(2) Answer the case discussion questions, and compare your answers with those of other members of your study group.

8.6.6 Reflection

What does “global best practice” mean? How does your company compare in terms of global best practices?

8.6.7 Conclusion

Analysis, judgement and implementation have to be solidly grounded in theory, global learning and experience in order to build and manage an MNC.

.

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MBL924-Q

Information Resources Management

Page

1. MODULE OVERVIEW

2. STUDY SCHOOLS

3. PRESCRIBED BOOKS

4. CASE STUDIES

5. ARTICLES

6. WEB LINKS

7. ASSESSMENTS

8. TOPICS

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MBL924-Q

Information Resources Management

1. MODULE OVERVIEW

Purpose and approach

This module is designed to provide insight into key managerial issues in organisations that use information, information systems and information technology to obtain and sustain a competitive advantage. The module focuses on the strategic use of information and the transformation of that information into knowledge by evaluating and exploiting opportunities in the new economy. Learning objectives

Introduce students to the basic concepts of business information systems and the way in which they are used in organisations to gain a strategic advantage.

Introduce students to e-business and the management of e-business strategies. Help students gain insight into the development of business information systems and the way these

systems are managed. Introduce students to knowledge management and ways of discovering, generating, evaluating,

sharing and leveraging knowledge to obtain a competitive advantage.

Knowledge management represents the human factor in the successful use of information technology. How do people react to new technology? How do information technology and related aspects affect the organisation and the organisational structure? You will learn about the competencies leaders need to survive in times of change that may be turbulent.

2. STUDY SCHOOLS

2.1 Study school 1

TOPIC NUMBER TOPIC DESCRIPTION1 It’s a changing world

2.1 Information management: Information management and information management systems and e-business

2.2 Study school 2

TOPIC NUMBER TOPIC DESCRIPTION2.2 Information management: Acquiring an information management

system. 3 Knowledge management

3. PRESCRIBED BOOKS

Brown CV, DeHayes DW, Hoffer JA, Martin EW & Perkins WC. 2009. Managing information technology. 6th Edition, Upper Saddle River, NJ: Prentice Hall.

Tiwana A. 2002. The knowledge management toolkit. Upper Saddle River, NJ: Prentice Hall.

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4. CASE STUDIES

The case studies in the prescribed books represent the theory in practice. Theory and practice are synchronised in the management sciences. Read and analyse these cases by using the managerial background information you have obtained in other subjects in the MBL programme.

Process thinking and solutions to/recommendations for the case problems are considered very important. Remember: there is no right or wrong answer, but there is a good or a poor answer!

5. ARTICLES

Suggested reading See the suggested readings in the prescribed text.

Additional articles

There are no additional articles.

6. WEB LINKS

6.1. http://www.zdnet.com6.2. http://news.bbc.co.uk/2/hi/technology/6.3. http://www.iamot.org6.4. http://www.ieee.org6.5. http://www.wired.com6.6. http://www.economist.com

7. ASSESSMENT

7.1 Group and Repeater Assignments

7.1.1 GROUP ASSIGNMENT 1 Due date: 05\05\2011 Cloud computing is a relatively new phenomena in software provision. Briefly describe cloud computing, giving its benefits and challenges. Using your organisation as a case study, analyse the appropriateness of cloud computing (give pros and cons of adopting cloud computing in the chosen organisation’s context). How appropriate is cloud computing in the developing world? The group assignments must be submitted on or before the due date. These assignments will test your mastery of the subject Information Management Systems and Information Resource Management.

7.1.2 REPEATER ASSIGNMENT 1 Due date: 05\05\2011

With reference to a described information system in a company of your choice, explain why it is important to achieve organisational strategy and information systems goals alignment. How do you think this can be achieved in the organisation you have chosen for the purpose of this assignment? What are some of the barriers to achieving this harmony in the organisation you have chosen to discuss?

N.B. This assignment is ONLY for students who are REPEATING this module. This is NOT A GROUP assignment

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Maximum length: 15 typed A4 pages (1,5 spacing)

Marking Matrix for Group and Repeater Assignments

You get good assignments and bad assignments. Good assignments are creative, well-structured documents in which the thinking processes behind the assignment may be traced. An integration of practice and theory is of the utmost importance. Referencing is important and we expect you to include a proper bibliography.

* Quality of presentation -10% Presentation is important (marks will be deducted for poor presentation).

* Quality of analysis 40%

* Recommendations 40%

* Overall impression 10%

* Referencing 10%

7.1.3 GROUP ASSIGNMENT 2 Due date: 04\08\2011

Using a local e-tailer (e.g. Kalihari.net, PicknPay) as an example, explain the business model that is employed by such organisations. What risks/threats are encountered by such organisations? How are these risks mitigated? Do you believe this is the future of retailing (with special emphasis on Africa)? Justify your answer.

The group assignments must be submitted on or before the due date. These assignments will test your mastery of the subject Information Management Systems and Information Resource Management.

7.1.4 REPEATER ASSIGNMENT 2 Due date: 04\08\2011

How do online auctions function?. Giving examples of an online auction explain the business model behind online auctions. What risks and challenges are faced by such organisations? And how do they mitigate these risks? Do you believe this is the future of auctioning (with special emphasis on Africa)? Justify your answer.

N.B. This assignment is ONLY for students who are REPEATING this module. This is NOT A GROUP assignment

Maximum length: 15 typed A4 pages (1,5 spacing)

Marking Matrix for Group and Repeater Assignments

You get good assignments and bad assignments. Good assignments are creative, well-structured documents where the thinking processes behind the assignment may be traced. An integration of practice and theory is of the utmost importance. Referencing is important and we expect you to include a proper bibliography.

* Quality of presentation -10%* Quality of analysis 40%* Recommendations 40%* Overall impression 10%* Referencing 10%

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7.2 Examination structure

Preparation

You will be examined on all the work in your study programme. The examination papers will focus on your ability to apply your theoretical knowledge of the study material in practice.

The duration of the examination is 4 hours. The examination mark contributes 60% towards the final mark for this module. The examination may comprise short questions, case studies, calculations and scenarios.

Tests

Tests are written in May at Unisa-approved examination centres, and they contribute 16% towards the final mark. Each test comprises a 1-hour paper consisting of multiple-choice questions.

8. TOPICS

8.1 IT’S A CHANGING WORLD




Students are able to demonstrate their understanding of information technology. Students understand the convergence of information technology and business strategising. Students are able to demonstrate their understanding of the separation and convergence of

information, information technology and radical change.


What constitutes a computer system? What are the trends in information technology (IT)? What are the stages in the technology lifecycle? How might these trends affect organisations?


Read chapters 1 to 3 and 5 in the prescribed book by Martin et al. (2009). Page through lifestyle magazines and identify trends that may affect an organisation’s competitive

advantage. Also critically read the following cases:

Case Study I-2: Brown et al. (2009) p. 170: VOIP2.Biz, Inc.: Deciding on the next steps for a VOIP for a VOIP supplier

Case Studies I–3: Brown et al. (2009) p. 176:The VOIP adoption at Butler University


Information Management has matured and become integral in organisational strategy. Students are to critically evaluate their own organisational gathering, processing, and use of information for competitive advantage.

Attempt the review and discussion questions at the end of the chapter as self assessment.

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8.1.6 Reflection

It is important to note that technology makes a significant contribution to any organisation’s ability to create, collect, disseminate and use information. It is also pertinent to note that technological advancements take place at breakneck speed, which makes it imperative to be in constant touch with changes. It is, however, equally important to be aware that technology needs to complement organisational goals, and should not replace or be out of synch with these goals.

8.1.7 Conclusion

Life is chaotic!

8.2 INFORMATION MANAGEMENT

8.2.1 Information management and information management systems

8.2.1.1 Tuition period


8.2.1.2 Specific outcomes

Students understand that information is a resource. Students are able to evaluate decision making from an information perspective and distinguish

between information deliveries. Students are able to demonstrate their understanding of the separation and convergence of

information – strategic and operational – and of management issues. Students understand the convergence of information technology and business strategising. Students are able to demonstrate that they understand the separation and convergence of


8.2.1.3 Critical questions

How do managers manage information, knowledge and the relevant processes as key organisational assets?

How do managers use IT to maintain the organisation’s competitive advantage? What is e-business? How relevant is e-business to an organisation? What specific applications apply to e-business? Describe the relevant benefits.

8.2.1.4 Learning through activities

Read chapters 7, 8, 14 and 15 of the prescribed book by Martin et al. (2009).

Also critically read the following case: Case Study II-3: Brown et al. (2009) p. 295: Vendor-Managed Inventory at NIBCO Case Study II-4: Brown et al. (2009) p. 323: The Cliptomania Web Store: An E-Tailing start-up

survival story.

8.2.1.5 Self-assessment

(1) Describe the three dimensions of information quality.(2) How can the value of information be measured?(3) What are the functions of management?(4) Which stages are involved in making a decision?(5) Distinguish between e-commerce and e-business.

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(6) Write a report on how organisations can evaluate the impact of the Internet on their business.

8.2.1.6 Reflection

The term “data” refers to a collection of facts. Information is data that have been processed. Information has a tangible or intangible value. Management functions encompass forecasting, planning, organising, co-ordinating and

controlling information technology and knowledge. Design, choice and implementation may be considered a simple decision-making model. Decisions are made at the strategic, tactical and operational levels. The main drivers for the introduction of e-commerce and e-business are opportunities for

increased revenue and reduced costs. Other benefits are improved customer relations management and an improved corporate image.

The Internet serves as the cornerstone for a network-centric business. The enduring advantage is the information, not the technology. Time-based competition has become critical. Companies have to develop strategies in “Internet time”. Because an integrated information and marketing platform has been developed, an

understanding of technological capabilities and business possibilities that can be converted into revenue streams should result.

8.2.1.7 Conclusion

Sound information technology and knowledge management could promote business intelligence that is relevant, accurate and usable.

8.2.2 ACQUIRING INFORMATION MANAGEMENT SYSTEMS

8.2.2.1 Tuition period


8.2.2.2 Specific outcomes

Students understand that there are various methods of acquiring Information Systems. Students to understand the SDLC and its management. Students to understand the steps involved in purchasing a software package. Students to appreciate IT project management concepts.

8.2.2.3 Critical questions

What are the various methods of information systems (IS) acquisition? What are the pros and cons of each method? How do we ensure that the IS strategy supports the business strategy? Why do IS projects fail?

8.2.2.4 Learning through activities

Read chapters 9, 10 and 11 of Martin et al. (2009).

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Recommended reading: Case Study III-2: Martin et al. (2009) p. 468: Development of an interorganisational System at

Zeus. Inc. Case Study III-3: Martin et al. (2009) p. 476: Make or Buy Decision at Baxter Manufacturing

Company.

8.2.2.5 Self-assessment

(1) How might Porter’s (2003) five forces model be helpful in determining information systems requirements?

(2) There are top-down and bottom-up approaches to formulating information systems strategy. Is a more eclectic or selective approach required for formulating strategy?

8.2.2.6 Reflection

Information systems have to be acquired after requirements and options have been evaluated. Different circumstances dictate best fit solutions. Horses for courses! Proper management of the acquisition project is critical. IT Project management is essential for successful Information Systems acquisition.

8.2.2.7 Conclusion

Effective organisations make their strategy an integral part of the business strategy. The development of e-business and e-commerce supports the integration of business information systems and the business strategy.

8.3 KNOWLEDGE MANAGEMENT




Students are able to demonstrate their understanding of the separation and convergence of information – strategic and operational – and of management issues.

Students understand the convergence of information technology and business strategising. Students are able to demonstrate that they understand the separation and convergence of



What is knowledge management? How can knowledge improve the actions of an organisation? What is the difference between information management and knowledge management?


Read chapters 1 to 4 of the prescribed book by Tiwana (2002).


(1) What is the difference between information management and knowledge management?(2) What does knowledge management mean to an organisation?(3) How does one overcome the “theory-laden” nature of observations by organisational managers?

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8.3.6 Reflection

The drivers of knowledge management are technology and processes; they are personnel-specific, knowledge-related and financial.

Knowledge management is not a fad. It is not based on information only, and it involves change and future business.

People are the key drivers of successful knowledge management. The absence of knowledge management may be ascribed to insufficient focus, poor leadership and

excessive duplication.

8.3.7 Conclusion

Knowing ignorance is strength.Ignoring knowledge is sickness. (Lao Tsu)

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MBL925R

Business Research

Page

1. MODULE OVERVIEW

2. STUDY SCHOOLS

3. PRESCRIBED BOOKS

4. CASE STUDIES

5. ARTICLES

6. WEB LINKS

7. ASSESSMENT

8. TOPICS

9. RESEARCH

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Page

MBL925R

Business Research

1 MODULE OVERVIEW

The module MBL925R prepares you for the high point of your MBL studies, i.e. the research project that you have to complete during your final year. The importance of this individual research project is highlighted by the fact that it contributes 60% towards your final year’s marks. More importantly though, this module (MBL925-R) prepares you to both conduct and critically evaluate business or market research in your working environment.

Three books are prescribed for this module.

PLEASE NOTE:

Chapters in each of the prescribed books that are of critical importance to this module appear in bold.

The book on research methodology (Leedy & Ormrod, 2010) introduces you to scientific research and provides guidelines for the planning and designing of a research project. This book furthermore provides an introduction to both quantitative and qualitative research methodologies. It is divided into five parts:

Chapters 1 and 2 (part I) present the fundamentals of scientific research and expose you to the tools of research.

Chapters 3 to 6 (part II) provide guidelines on the formulation of a research problem and sub-problems. You will acquire knowledge on how to do a literature review, how to plan a project and how to write a research proposal. These chapters are important since an essential part of your research project will be to access accredited academic articles in the Unisa library.

Chapters 7 and 8 (part III) provide general background on qualitative research methods. Chapters 9 to 11 (part IV) provide background to quantitative research methods and the

analysis of quantitative research data. Chapter 12 (part V) (not for examination purposes) contains guidelines for writing the

research report.

The book on qualitative research methods (Lee, 1999) will provide you with further insight and background into qualitative research methodologies. The book was written when the Academy of Management identified a need for material that would provide researchers with the necessary background for conducting qualitative research:

Chapter 1 provides a very general overview of the academic quantitative versus qualitative research methodology debate. Table 1.1 summarises how these approaches should be used.

Chapters 2 and 3 provide an overview of qualitative research methods and when these methods should be used.

Chapters 4 and 5 address the issue of how to collect and analyse qualitative data. Chapter 6 deals with the issue of representing qualitative data quantitatively. Chapter 7 deals with the difficult concepts of reliability and validity. Chapter 8 (not for examination purposes) provides useful guidelines on how to write a

research article on a qualitative study.

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The book on the analysis of quantitative data (Diamantopoulos & Schlegelmilch, 2000) prepares you for the penultimate phase of the research process, i.e. the analysis of quantitative research data. The book is divided into three parts:

In chapters 1 to 3 (part I) the issue of sampling, levels of measurement and the concepts of validity and reliability are addressed.

Chapters 4 to 6 (part II) (which are not for examination purposes) are valuable for preparing research data files for analysis.

Chapters 7 to 13 (part III) represent the core of the topic, i.e. the analysis of quantitative research data.

Chapter 14 deals with multivariate statistical techniques (not for examination purposes) while Chapter 15 addresses the issue of how to present a written or oral research report (not for examination purposes).

2 STUDY SCHOOLS

2.1 Study school 1: Research methodology (topic 1)

KEY ELEMENTS DESCRIPTION1 Key elements of the research process2 Quantitative research methods 3 Qualitative research methods4 Mixed methods5 Sampling and sample size determination6 Instrumentation: Questionnaire design and question formulation

2.2 Study school 2: Analysis of quantitative research data (topic 2)

KEY ELEMENTS DESCRIPTION1 Levels of measurement2 Describing data (one variable)3 Describing data (two variables)4 Hypothesis testing5 Measures of association

3 PRESCRIBED BOOKS

Diamantopoulos A & Schlegelmilch BB. 2004. Taking the fear out of data analysis. London: Thomson.

Lee TW 1999. Using qualitative methods in organisational research. London: Sage. Leedy PD & Ormrod JE. 2010. Practical research: planning and design (9th edition). Upper

Saddle River, NJ: Pearson.

4 CASE STUDIES

There are no case studies for this course.

5 ARTICLES

Prescribed articles

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Baptiste, I. 2001. Qualitative Data Analysis: Common Phases, Strategic Differences. Forum Qualitative Sozialforschung / Forum: Qualitative Social Research: 2(3). Available at: http://www.qualitative-research.net/fqs-texte/3-01/3-01baptiste-e.htm

Hurmerinta-Peltomäki, L. & Nummela, N. 2006. Mixed methods in international business research: a value-added perspective. Management International Review, 46(4): 439-459.

Srnka, K.J. & Koeszegi, S. T. 2007. From words to numbers: how to transform qualitative data into meaningful quantitative results. Bidding Strategies Content Analysis (SBR), 59:29-57.

Additional articles

Lacity, M.C. & Janson, M.A. 1994. Understanding qualitative data: a framework of text analysis methods. Journal of Management Information Systems, 11(2):137-155.

Yi-Jen Chen. 2007. Relationships among Service Orientation, Job Satisfaction, and Organizational commitment in the International Hotel Industry. Journal of American Academy of Business, Cambridge, 11(2): 71-82.

6 WEB LINKS

Survey design and questionnaire design: www.surveysystem.com/s design .htm Sample design: http://www.htm.uoguelph.ca/pagefiles/MJResearch/ResearchProcess/ Elements of a research proposal: http://www.des.emory.edu/mfp/proposal.html

7 ASSESSMENTS

PLEASE NOTE:

Students assigned to groups i.e. students who are registered for this module for the first time) should hand in the group assignments. Students who are repeating the module (individual students) should hand in the individual assignments.

7.1.1 GROUPS ASSIGNMENT 1 Due date: 05/05/2011

To be advised


To be advised

The resulting data analysis follows.

1. Gender

Table 1: GenderGender Number PercentMale 21 37.5Female 29 51.8Missing 6 10.7Total 56 100

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http://www.des.emory.edu/mfp/proposal.html

http://www.htm.uoguelph.ca/pagefiles/MJResearch/ResearchProcess/

http://www.surveysystem.com/sdesign.htm

http://www.qualitative-research.net/fqs-texte/3-01/3-01baptiste-e.htm


males

females

missing

Figure 1. Gender

2. Age

Table 2: AgeAge (in yrs) Number Percent20 – 30 10 17.931 – 40 13 23.241 – 50 14 25.051 – 60 9 16.1Missing 10 17.9Total 56 100

0

5

10

15

Number

20 – 30 31 – 40 41 – 50 51 - 60

Age group (yrs)

Figure 2: Age

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3. Years of work experience

Table 3: Work ExperienceWork Experience (in yrs)

Number Percent%

0 - 5 17 30.35

6 – 15 10 17.916 – 25 15 26.8 > 25 10 17.9Missing 4 7.1Total 56 100 0

0

5

10

15

20

Number

0 - 5 6 – 15 16 - 25 > 25

Work Experience (yrs)

Figure 3: Work Experience

Table 4: Age and Job satisfactionStatement Age (in years)

20-30 31-40 41-50 51-60within the department, I feel encouraged to provide comments and feed back

“16 respondents disagreed”

6 10 9 5

I feel my comments and feedback are taken into consideration


4 12 11 3

I am informed of developments and activities in my own department


3 13 8 2

I feel my supervisor takes my performance review seriously


5 13 7 2

My supervisor offers constructive feedback and comments in my performance review


4 9 7 4

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I feel policies and procedures are clear and consistently enforced within my department


5 10 8 3

I feel that skills / education requirements for my job are reasonable in relation to my job requirements


9 12 14 3

I feel that I am being paid a fair amount for the work I do


2 7 5 4

My work environment is satisfactory


1 3 4 2

I am satisfied with all benefits package I receive


4 5 4 2

The benefit package that we receive is as good as other organizations


3 6 4 2

I do not feel that the work I do is appreciated


4 8 3 3

I have a good relationship with my co-workers


8 11 12 8

My job is enjoyable


9 13 9 4

Note: 17.9% of the respondents did not disclose their age

Table 5: Gender and Job satisfactionStatement Gender

Male Female

within the department, I feel encouraged to provide comments and feed back


11 23



9 26



13 17



12 19

My supervisor offers constructive feedback and comments in my performance review 9 19

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“22 respondents disagreed”I feel policies and procedures are clear and consistently enforced within my department


14 16



20 22



8 14



6 8



10 9



8 11



9 13



17 26

My job is enjoyable


16 23

Note: 11% of the respondents did not disclose their gender status

Table 6: Work Experience and Job satisfactionStatement Work Experience (in years)

0 -5 6-15 16-25 > 35within the department, I feel encouraged to provide comments and feed back


13 8 8 7



12 9 7 8



10 7 6 9



11 9 8 5

My supervisor offers constructive feedback and comments in my performance review 9 8 7 6

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“22 respondents disagreed”I feel policies and procedures are clear and consistently enforced within my department


13 10 4 5



16 10 14 4



8 8 7 1



5 4 6 1



4 6 3 8



3 4 6 8



7 5 7 5



17 9 14 5

My job is enjoyable


13 8 11 9

Note: 7.1% of the respondents did not disclose their work experience

3. ENCOURAGEMENT

The respondents were asked about encouragement in the job.

Table 7: Ways of getting encouragedStrongly disagree

Disagree Agree Strongly agree Total

No. Percent No. Percent No. Percent No. Percent Percent

I feel encouraged to provide comments and feed back

3 5.4 13 23.2 30 53.6 10 17.9 100.0


7 12.5 9 16.1 36 65 4 7.1 100.0

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4. FEEDBACK

Table 8: Knowledge about development and activities No. Percent

Strongly disagree 4 7.1Disagree 16 28.6Agree 27 48.2Strongly agree 8 14.3Total 56 100.0

5. TRAINING

Table 9: Job trainingStrongly disagree



I was adequately trained to perform my job duties 4 7.1 14 25.0 27 48.2 11 19.6 100.0

I receive adequate training when new technology is introduced related to my job duties

4 7.1 26 46.4 16 28.6 10 17.9 100.0

It is easy to get supplies and equipment I need to do my job

9 16.1 30 53.6 13 23.2 4 7.1 100.0

I feel comfortable to use online resources for my job

3 5.4 14 25.0 33 58.9 6 10.7 100.0

My immediate supervisor conducts regularly scheduled evaluation of my work

9 16.1 9 16.1 28 50.0 9 16.1 100.0

I receive formal evaluation of my work 5 8.9 12 21.4 31 55.4 8 14.3 100.0

4. JOB DUTIES

Answers on job duties and work-plan by the respondents are shown in table 10

Table 10: Job duties and Work plans

Strongly disagree


No. Percent

No. Percent No. PercentNo. Percent Percent

My job duties are clearly defined in my work plan 3 5.3 8 14.3 32 57.1 13 23.2 100.0My work plan accurately reflects my day-to-day activities

2 3.6 14 25.0 28 50.0 11 19.6 100.0

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I feel my supervisor spends adequate time and consideration with my work plan

5 8.9 14 25.0 29 51.8 8 14.3 100.0

I have the opportunity to set goals above the normal job duties prescribed by my job supervisor in my work plan

5 8.9 16 28.6 2 3.6 28 50.0 100.0

7. RELATIONSHIP WITH SUPERVISOR

Table 11: Relationship with the supervisorStrongly disagree


No. Percent No. Percent

No. Percent No. Percent Percent


6 10.7 13 23.2 29 52 7 12.5 100.0

My supervisor offers constructive feedback and comments in my performance review

6 10.7 16 28.6 29 52 1 1.8 100.0

My immediate supervisor has a clear set of policies and enforces them consistently

4 7.1 18 32.1 31 55.4 1 1.8 100.0

8. SATISFACTION ABOUT BENEFITS

Table 12: Satisfaction about the benefitsStrongly disagree



My work environment is satisfactory 15 26.8 21 37.5 17 30.4 3 5.4 100.0I feel that skills / education requirements for my job are reasonable in relation to my job requirements

2 3.6 6 10.7 39 70 8 14.3 100.0

I am aware of all the benefits to which I am entitled

4 7.1 7 12.5 34 61 11 19.6 100.0

I feel that I am being paid a fair amount for the work I do 11 19.6 17 30.4 25 44.6 3 5.4 100.0I am satisfied with all benefits package I receive 11 19.6 23 41.0 20 35.7 1 1.8 100.0The benefit package that we receive is as good as other organisations

10 17.9 26 47.0 18 32.1 2 4.0 100.0

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9. PROMOTION

Table 13: Job PromotionStrongly disagree



My job is enjoyable4 7.1 7 12.5 35 63.0 10 17.9 100.0

Those who do well on the job has a fair chance of being promoted

15 26.8 21 37.5 18 32.1 2 3.6 100.0

When I do a good job, I receive recognition for it. 11 19.6 18 32.1 23 41.1 4 7.1 100.0I do not feel that the work I do is appreciated 6 10.7 24 43.0 23 41.1 3 6.0 100.0

10. RELATIONSHIP WITH COLLEAQUES

Table 14: Relationship with co-workersStrongly disagree



I know the management of my department 6 10.7 13 23.2 27 49.0 10 17.9 100.0I have a good relationship with my co-workers 7 12.5 32 58 17 30.4 100.0Communication seems good within this organisation

9 16.1 30 54.0 12 21.4 4 7.1 100.0

11. AWARDS

Table 14: Awards programme Number Percent Outstanding performance 8 14.3Creative idea to improve the job 11 19.6

Every work accomplishments 8 14.3Combination of all the above 23 41.1 Others 5 8.9Missing 1 1.8Total 56 100.0

Table 6.15: Period of reward Number Percent Every month 6 10.7Every three months 9 16.1Every six months 7 12.5

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Once a year 24 42.9 Should be based on an award programme

10 17.9

Total 56 100.0

12. PREFERENCE OF RECEIVING AWARDS

The different forms of getting awards is indicated below in table 16 by the respondents

Table 16: Preferred methods of receiving award Number PercentGift certificate from my manager

16 28.6

Lunch with my supervisor 7 12.5Money 11 19.6Tickets to events 15 26.8Other 7 12.5Total 56 100.0

GROUP ASSIGNMENT 2 Due date: 21/07/2010

Write a report on the results of this study addressing each of the following issues: A short introduction highlighting the aim of the study, the scope, the methodology and sample

selection utilised(5)

An exposition of the measured variables and the level of measurement of each (5)

The profile of the respondents in terms of background, opinion and the measured constructs together with suitable graphical displays

(15) Generalisation of the results , i.e. the extent to which the results obtained from the

respondents can be generalised to the target population(5)

Results o Differences (if any) between background groups in terms of their opiniono Differences (if any) between background groups in terms of the measured

constructso Relationship between the measured constructs

PLEASE NOTE: When discussing the results you should formulate the relevant null- and alternative hypotheses, specify which statistical test is appropriate to test the hypotheses (with appropriate references), indicate (with justification) whether the null-hypothesis is rejected or not.

(30) Interpretation of the results in the context of the study

(20) Recommendations to the company (based on the results obtained)

(10)

PLEASE NOTE:

An additional 10 marks will be allocated to layout, grammar and professional appearance You may either analyse the data yourself and/or use the analyses provided

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Please use the following guidelines: (marks will be deducted for failure to adhere to these)

Excluding the title page, list of references (compulsory), table of contents (compulsory) and the graphical displays, the body of your assignment should be a minimum of 10 and a maximum of 15 pages.

Format : 1.5 line spacing, paper size (A4), font size 12, font type Arial, Times New Roman or Tahoma

Insert page numbers

Useful hints / starting points

Before proceeding with this assignment, you are advised to read the documents (available on the EDS): For e.g., MBL925 R INTRODUCTION TO STATISTICS-ADDITIONAL NOTES.pdf.

7.3 REPEATER ASSIGNMENTS

Students who are repeating the module should submit the repeater assignments.

7.3.1 REPEATER ASSIGNMENT 01 Due date: 28/04/ 2010

BackgroundJob satisfaction can be defined as a pleasurable emotional state resulting from the appraisal of one’s job; an affective reaction to one’s job; and an attitude towards one’s job. Job satisfaction describes how content an individual is with his or her job. The happier people are within their job, the more satisfied they are said to be. Job design aims to enhance job satisfaction and performance using methods that include job rotation, job enlargement and job enrichment. Other influences on satisfaction include the management style and culture, employee involvement, empowerment and autonomous work groups. Job satisfaction is a very important attribute which is frequently measured by organizations.

It is argued that job satisfaction is an attitude but points out that researchers should clearly distinguish the objects of cognitive evaluation which affect emotion, beliefs and behaviours. This definition suggests that we form attitudes towards our jobs by taking into account our feelings, our beliefs, and our behaviors.

There are different models of job satisfaction, e.g., affect theory and disposition theory. The affect theory is arguably the most famous job satisfaction model. The main premise of this theory is that satisfaction is determined by a discrepancy between what one wants in a job and what one has in a job. Further, the theory states that how much one values a given facet of work (e.g. the degree of autonomy in a position) moderates how satisfied/dissatisfied one becomes when expectations are/aren’t met. When a person values a particular facet of a job, his satisfaction is more greatly impacted both positively (when expectations are met) and negatively (when expectations are not met), compared to one who doesn’t value that facet.

The dispositional theory on the other hand suggests that people have innate dispositions that cause them to have tendencies toward a certain level of satisfaction, regardless of one’s job. This approach became a notable explanation of job satisfaction in light of the evidence that job satisfaction tends to be stable over time and across careers and jobs.

You have been tasked : a. To identify the impact of job satisfaction on productivity and customer service in an

organisation, b. To find what motivates or de-motivates employees, andc. To recommend to management how to improve on productivity and customer service through

motivating the employees.

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Your investigation is limited to a population of 1000 local companies in a specific industry in South Africa consisting of 30% larger (more than 200 employees) and 70% smaller companies (50 to 200 employees).

You may assume that you have a list of all the companies as well as the size of each company. You may also assume that each company has a Human Resources (HR) Manager who will be able to provide you with the relevant information.

Assignment 1

1. Use the information and background provided above to write a short introduction to the problem of job dissatisfaction, i.e. why is it important to address the research question or research problem. Do not fail to review the relevant literature. (10)

2. Formulate the research question and sub-questions or research problem and research sub-problems (if applicable) (5)

3. Formulate the scope of the study (5)4. Describe how you will address the research question or research problem if you were limited

to mixed method (qualitative and quantitative methods) a. Which qualitative methodology would you use and why?b. How will you implement the proposed methodology?c. How will you select the sample and why? d. What information would you gather? (30)

5. Describe how you will address the research question or research problem if you were limited to qualitative methods only

a. Which qualitative methodology would you use and why?b. How will you implement the proposed methodology?c. How will you select the sample / participants / cases?d. What information would you gather? (20)

6. Which of the methods described above, i.e. quantitative or qualitative (or a combination thereof) do you believe would best address the research question or research problem? Justify your answer in the context of the study. (20)

PLEASE NOTE:

An additional 10 marks will be allocated to layout, grammar and the professional appearance You are NOT required to conduct a literature review but you may wish to read some

articles for further insight into the problem.

Assume that you have a maximum of 6 months to conduct the study.

Please adhere to the following guidelines: (marks will be deducted for failure to adhere to these)

Format : 1.5 line spacing, paper size (A4), font size 12, font type Arial, Times New Roman or Tahoma

Your answers, excluding the title page, table of contents (compulsory) should be a minimum of 10 and a maximum of 12 pages

Insert page numbers

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7.3.2 REPEATER ASSIGNMENT 02 Due date: 21/07/2010

Background

There has been a growing concern about the increasing closure of Small, Micro and Medium Enterprises (SMMEs) in Longolo area of the North West Province as of recent. It is therefore evident that these enterprises are facing quiet a number of problems and challenges, which are preventing them from becoming successful. It may be true that the lack of entrepreneurial and financial skills are the most important challenges faced by these enterprises. There is a plea for management of Small businesses in the province to equip themselves with the proper training in order to deal with these issues. This study intends to investigate the problems and challenges facing the SMMEs in Longolo.

The study by consultants indicated that 48% of closures of small businesses take place within the first three years after they commenced with business activities.

For a proposed research study, the research problem is that there is a high failure and closure rate of SMME’s in Longolo. The problems and challenges facing SMMEs in the area that are causing the closure of many of these businesses are unknown.

The study was done to investigate two major problems considered to be hindering the growth ofThe study was done to investigate two major problems considered to be hindering the growth of SMMEs in Longolo, namely the lack of entrepreneurial management skills and financial problems.SMMEs in Longolo, namely the lack of entrepreneurial management skills and financial problems. The objectives of this research study were given in terms of research questions as:The objectives of this research study were given in terms of research questions as:

Do the managers / owners of small businesses in Longolo have the necessary entrepreneurialDo the managers / owners of small businesses in Longolo have the necessary entrepreneurial and management skills? and management skills?

What are the educational and training levels of the members of the top management of theseWhat are the educational and training levels of the members of the top management of these enterprises? enterprises?

What is the level of cultural diversity of the enterprises’ managers based on dimensions such asWhat is the level of cultural diversity of the enterprises’ managers based on dimensions such as gender, race and ethnicity?gender, race and ethnicity?

Does business success depend on management skill? Is gender a factor? What are the factors of business success in terms of revenue? For e.g., does education affect

business success?

Note: Data were collected on gender (i.e. male =1, female=2), race (black=1, coloured=2, Indian=3, White=4 and other=5), education (in terms of number of years spent at school), success (business is successful=1 and business is not successful=2), whether the manager has the management skill or not (i.e. manager has management skill =1 and manager does not have management skill=2) and on the last month’s revenue of the business.

The results of the analyses conducted by the research company based on the information they obtained are presented below:

1. Gender

Cumulative Cumulative gender Frequency Percent Frequency Percent

1 16 44.44 16 44.44 2 20 55.56 36 100.00

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2. Race

Cumulative Cumulative race Frequency Percent Frequency Percent 1 25 69.44 25 69.44 2 2 5.56 27 75.00 3 8 22.22 35 97.22 5 1 2.78 36 100.00

3. Education (years of schooling)

Cumulative Cumulative education Frequency Percent Frequency Percent 1 3 8.33 3 8.33 6 2 5.56 5 13.89 8 2 5.56 7 19.44 9 3 8.33 10 27.78 10 2 5.56 12 33.33 12 7 19.44 19 52.78 14 10 27.78 29 80.56 15 7 19.44 36 100.00

4. Success Cumulative Cumulative Success Frequency Percent Frequency Percent

1 14 38.89 14 38.89 2 22 61.11 36 100.00

Note: success=1, no success=2

5. Skilled Cumulative Cumulative Skilled Frequency Percent Frequency Percent

1 8 22.22 8 22.22 2 28 77.78 36 100.00

Note: skilled=1, not skilled=2

6. Revenue (Rands per month) Cumulative Cumulative Revenue Frequency Percent Frequency Percent

8000 1 2.78 1 2.78 10000 1 2.78 2 5.56 10800 1 2.78 3 8.33

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12000 1 2.78 4 11.11 15000 1 2.78 5 13.89 21344 1 2.78 6 16.67 21800 1 2.78 7 19.44 23700 1 2.78 8 22.22 24500 1 2.78 9 25.00 25700 1 2.78 10 27.78 31088 1 2.78 11 30.56 32000 3 8.33 14 38.89 32344 1 2.78 15 41.67 32400 2 5.56 17 47.22 33000 1 2.78 18 50.00 34450 1 2.78 19 52.78 35500 1 2.78 20 55.56 36000 1 2.78 21 58.33 36500 1 2.78 22 61.11 38900 1 2.78 23 63.89 40000 1 2.78 24 66.67 40900 1 2.78 25 69.44 42309 1 2.78 26 72.22 43509 1 2.78 27 75.00 43700 1 2.78 28 77.78 43900 1 2.78 29 80.56 46000 1 2.78 30 83.33 50000 1 2.78 31 86.11 53400 1 2.78 32 88.89 56000 1 2.78 33 91.67 67009 1 2.78 34 94.44 74000 1 2.78 35 97.22 89222 1 2.78 36 100.00

The REG (RESSION) Procedure Model: MODEL1 Dependent Variable: revenue

Number of Observations Read 36 Number of Observations Used 36

Analysis of Variance

Sum of Mean Source DF Squares Square F Value Pr > F

Model 1 73802402 73802402 0.24 0.6276 Error 34 10470027923 307941998 Corrected Total 35 10543830326

Root MSE 17548 R-Square 0.0070 Dependent Mean 36149 Adj R-Sq -0.0222 Coeff Var 48.54388

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Parameter Estimates

Parameter Standard Variable DF Estimate Error t Value Pr > |t|

Intercept 1 32143 8691.00064 3.70 0.0008 education 1 354.38880 723.90103 0.49 0.6276

The ANOVA Procedure

Class Level Information

Class Levels Values

gender 2 1 2 skilled 2 1 2

Number of Observations Read 36 Number of Observations Used 36

The ANOVA Procedure

Dependent Variable: revenue

Sum of Source DF Squares Mean Square F Value Pr > F

Model 2 282386734 141193367 0.45 0.6389 Error 33 10261443592 310952836

Corrected Total 35 10543830326

R-Square Coeff Var Root MSE revenue Mean

0.026782 48.78062 17633.85 36149.31

Source DF Anova SS Mean Square F Value Pr > F

gender 1 271228400.1 271228400.1 0.87 0.3571 skilled 1 11158333.5 11158333.5 0.04 0.8509

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The ANOVA Procedure

Student-Newman-Keuls Test for revenue

NOTE: This test controls the Type I experimentwise error rate under the complete null hypothesis but not under partial null hypotheses.

Alpha 0.05 Error Degrees of Freedom 33 Error Mean Square 3.1095E8 Harmonic Mean of Cell Sizes 17.77778

NOTE: Cell sizes are not equal.

Number of Means 2 Critical Range 12033.375

Means with the same letter are not significantly different.

SNK Grouping Mean N gender

A 39218 16 1 A A 33694 20 2

The ANOVA Procedure

Student-Newman-Keuls Test for revenue

NOTE: This test controls the Type I experimentwise error rate under the complete null hypothesis but not under partial null hypotheses.

Alpha 0.05 Error Degrees of Freedom 33 Error Mean Square 3.1095E8 Harmonic Mean of Cell Sizes 12.44444

NOTE: Cell sizes are not equal.

Number of Means 2 Critical Range 14382.634

Means with the same letter are not significantly different.

SNK Grouping Mean N skilled

A 36447 28 2 A A 35108 8 1

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The FREQ (UENCY) Procedure

Table of skilled by success

skilled success

Frequency‚ Percent ‚ Row Pct ‚ Col Pct ‚ 1‚ 2‚ Total 1 ‚ 7 ‚ 1 ‚ 8 ‚ 19.44 ‚ 2.78 ‚ 22.22 ‚ 87.50 ‚ 12.50 ‚ ‚ 50.00 ‚ 4.55 ‚ 2 ‚ 7 ‚ 21 ‚ 28 ‚ 19.44 ‚ 58.33 ‚ 77.78 ‚ 25.00 ‚ 75.00 ‚ ‚ 50.00 ‚ 95.45 ‚ Total 14 22 36 38.89 61.11 100.00

Statistics for Table of skilled by success

Statistic DF Value Prob Chi-Square 1 10.2273 0.0014 Likelihood Ratio Chi-Square 1 10.5948 0.0011 Continuity Adj. Chi-Square 1 7.7665 0.0053 Mantel-Haenszel Chi-Square 1 9.9432 0.0016 Phi Coefficient 0.5330 Contingency Coefficient 0.4704 Cramer's V 0.5330

WARNING: 50% of the cells have expected counts less than 5. Chi-Square may not be a valid test.

Fisher's Exact Test Cell (1,1) Frequency (F) 7 Left-sided Pr <= F 0.9999 Right-sided Pr >= F 0.0026

Table Probability (P) 0.0025 Two-sided Pr <= P 0.0026

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The FREQ Procedure


Statistic Value ASE Gamma 0.9091 0.1002 Kendall's Tau-b 0.5330 0.1356 Stuart's Tau-c 0.4321 0.1378

Somers' D C|R 0.6250 0.1427 Somers' D R|C 0.4545 0.1408

Pearson Correlation 0.5330 0.1356 Spearman Correlation 0.5330 0.1356

Lambda Asymmetric C|R 0.4286 0.1527 Lambda Asymmetric R|C 0.0000 0.4677 Lambda Symmetric 0.2727 0.2395

Uncertainty Coefficient C|R 0.2202 0.1217 Uncertainty Coefficient R|C 0.2778 0.1418 Uncertainty Coefficient Symmetric 0.2457 0.1301

The FREQ Procedure

Summary Statistics for skilled by success

Cochran-Mantel-Haenszel Statistics (Based on Table Scores)

Statistic Alternative Hypothesis DF Value Prob 1 Nonzero Correlation 1 9.9432 0.0016 2 Row Mean Scores Differ 1 9.9432 0.0016 3 General Association 1 9.9432 0.0016

The FREQ Procedure

Table of skilled by success

skilled success

Frequency‚ Percent ‚ Row Pct ‚ Col Pct ‚ 1. 2‚ Total 1 ‚ 7 ‚ 1 ‚ 8 ‚ 19.44 ‚ 2.78 ‚ 22.22 ‚ 87.50 ‚ 12.50 ‚ ‚ 50.00 ‚ 4.55 ‚ 2 ‚ 7 ‚ 21 ‚ 28 ‚ 19.44 ‚ 58.33 ‚ 77.78 ‚ 25.00 ‚ 75.00 ‚ ‚ 50.00 ‚ 95.45 ‚ Total 14 22 36 38.89 61.11 100.00

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WARNING: 50% of the cells have expected counts less than 5. Chi-Square may not be a valid test.

The FREQ Procedure







The FREQ Procedure

Summary Statistics for skilled by success



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The FREQ Procedure

Table of gender by success

gender success

Frequency‚ Percent ‚ Row Pct ‚ Col Pct ‚ 1‚ 2‚ Total 1 ‚ 7 ‚ 9 ‚ 16 ‚ 19.44 ‚ 25.00 ‚ 44.44 ‚ 43.75 ‚ 56.25 ‚ ‚ 50.00 ‚ 40.91 ‚ 2 ‚ 7 ‚ 13 ‚ 20 ‚ 19.44 ‚ 36.11 ‚ 55.56 ‚ 35.00 ‚ 65.00 ‚ ‚ 50.00 ‚ 59.09 ‚ Total 14 22 36 38.89 61.11 100.00

Statistics for Table of gender by success


Statistics for Table of gender by success






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The FREQ Procedure

Summary Statistics for gender by success



ASSIGNMENT 2

Write a short report on the study and results presented above. Address each of the following issues:1. A short introduction to the study, its aims, scope and the methodology used. (5)

2. Classify each of the background and outcome variables as either a nominal, ordinal, interval or a ratio variable. (5)

3. Describe the sample (profile of respondents) in terms of both the background and outcome variables. Comment on the distribution of the variables (where applicable)(10)

4. Comment on the relationship (if any) between: a. Gender of the owner/manager and success of the enterpriseb. Management skill of the manager and success of the enterprise (10)

5. In both a) and b), clearly state the null- and alternative hypothesis. State which hypothesis test was used, state whether the null-hypothesis should be accepted or rejected. (20)

6. Interpret the results in 4 (above) in the context of the study. (15)

7. To what extent can the results obtained be generalised to small businesses in Longalo? Justify your answer. (10)

8. Critically evaluate the methodology used and the analysis conducted by the research company in view of the aims of the commissioned study. Suggest alternative strategies where necessary. (15)

9. In view of your answers to the previous questions, what recommendations would you make to the management of a small business in Longolo, if any?

(10)

PLEASE NOTE: An additional 10 marks will be allocated to layout, grammar and professional appearance

Please adhere to the following guidelines: (marks will be deducted for failure to do so) Excluding the title page and the table of contents (compulsory) and the body of your

assignment should be a minimum of 10 and a maximum of 12 pages. Format : 1.5 line spacing, paper size (A4), font size 12, font type Arial, Times New Roman or

Tahoma Insert page numbers

Useful hint / starting pointBefore proceeding with this assignment, you are advised to read the document (available on the EDS): MBL925 R INTRODUCTION TO STATISTICS-ADDITIONAL NOTES.pdf.

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7.3 TEST Due Date: 10 May 2010

The test (which is a closed book test) will comprise of multiple-choice questions (both theory and application related) pertaining to the research methodology: the stages of the research process, quantitative, qualitative and mixed methodologies.

Preparing for the testYou will be tested on chapters 1 to 10 of Leedy and Ormrod (2010) and chapters 1 through 4 of Lee (1999).

7.4 EXAMINATION Due date: 08 November 2010

The examination (which is an open-book examination) will comprise 20% multiple-choice questions selected from all the topics in accordance with the weighting below. The remaining 80% of the examination paper will consist of longer questions.

Preparing for the examinationYou will be examined on:

Chapters 1 to 11 of Leedy et al (2010) Chapters 1 to 7 of Lee (1999) Chapters 1 to 3 and 7 to 13 of Diamantopoulos et al (2000)

Overall weighting of the module according to topics:Topic 1: Research methodology (the research process, quantitative, qualitative and mixed

methodology): 60% of the total module weight Topic 2: Analysis of quantitative research data: 40% of the total module weight

SPECIFIC OUTCOMES OF THIS MODULE

The specific outcomes of this module are: Students understand the concept of scientific research Students appreciate the role research in the business environment Students are able to identify the basic components of the research process Students are able to formulate a problem statement Students are able to formulate a research question based on an identified problem

statement Students recognise the importance of delimiting the scope of a research study Students are able to choose an appropriate research methodology (either quantitative

and/or qualitative) to answer a specific research question Students have the ability to use appropriate sampling techniques to select participants

(qualitative research) and respondents (quantitative research) for a research study Students can identify the concepts to be measured and/or observed that will enable

them to answer a research question Students can formulate specific key (open-ended) questions for qualitative research as

well as closed-ended questions (together with suitable response categories) for utilisation in a quantitative research study

Students recognise the difference between and the utility of primary and secondary data

Students are able to conduct research using either a qualitative and/or quantitative methodologies

Students are aware of the ethical considerations involved in scientific research in general and business research in particular

Students are able to collect data (either primary or secondary) for either a quantitative or qualitative study

Students are able to analyse and interpret data collected qualitatively Students are able to analyse and interpret the results of quantitative data

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Students recognise the importance of relating the results of a research study to the research question

Students have insight into the limitations of their research studies Students are able to draw suitable and justifiable conclusions based on the results of

a research study Students are able to make recommendations based on the results of a research study.

8. TOPICS

8.1 TOPIC 1: RESEARCH METHODOLOGY

8.1.1 Tuition period: before study school 1

Learning through activities

In preparation for the first study school, you are requested to read: Chapters 1 through 10 of Leedy et al (2010) Chapters 1 through 4 of Lee(1999) Chapters 5 and 7 of Lee(1999) The articles by Hurmerinta-Peltomäkl & Nummela (2006) and Baptiste (2001).

9.1.3 Critical questions9.1.4

On completion of this topic, you should be able to answer the following questions: What is the role of research in the MBL programme? What is the role of research in the business environment? What are the key components of the research process? What are the merits of a quantitative and a qualitative approach to a research question? What are the advantages and disadvantages of using quantitative research methodologies? What are the advantages and disadvantages of using qualitative research methodologies? What are the advantages and disadvantages of using a mixed methodological design? How would you argue about the contribution to knowledge if you only used qualitative

research methods? How can qualitative methods be combined with quantitative methods? How could a quantitative study benefit from augmentation with qualitative research methods? How does delimiting the scope of a research study influence its generalisability? What role do ethics play in quantitative business research? Should ethical considerations be considered in qualitative research? Why (not)? To what extent does sampling play a role in a quantitative research study? Does sampling play a role in a qualitative research study? In what way does it play a role /

not play a role? To what extent can poor question formulation bias the results of a quantitative study? How important is question formulation in a qualitative study? Justify your answer. Why is it important to acknowledge the limitations of a research study?

8.1.4 Topic weight

This topic carries 60% of the final module weight.

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1. Describe the essence of the scientific method of research2. Why is the research process depicted as a helical cycle and not simply as a circle?3. Describe the differences between inductive and deductive reasoning4. Describe the essential differences between a quantitative and a qualitative research

methodological approach to research5. When should a researcher choose a qualitative research approach?6. Under what circumstances would a researcher opt for a quantitative approach to a

research study?7. In what way(s) can a mixed methodological approach to a research study be

advantageous? 8. What role does sampling play in a quantitative research study?9. Does sampling play a role in qualitative research? Justify your answer10. What are the characteristics of a ‘good’ question in a cross-sectional survey?11. Does question formulation play a role in qualitative research? Justify your answer12. To what extent does delimiting a research study to a single case study impact on the

generalisability of a quantitative study?13. To what extent does delimiting a research study to a single case impact on the

generalisability of a qualitative study?

8.2 TOPIC 2: ANALYSIS OF QUANTITATIVE RESEARCH DATA

8.2.1 Tuition period: before study school 2

Learning through activities

In preparation for the second study school, you are requested to read: Chapters 11 of Leedy et al (2010) Chapter 6 of Lee (1999) Chapters 1 to 3 of Diamantopoulos et al (2000) Chapters 7 to 13 of Diamantopoulos et al (2000) The article by Srnka & Koeszegi (2007)


1. How does statistics fit into the research process? 2. What does it mean if a research finding is significant?3. What does it mean if research findings are not significant? How does it affect the quality of a

research study?4. Is it important to identify which statistical analysis techniques are appropriate prior to

collecting the data in a quantitative study? Justify your answer

8.2.3 Topic weight

This topic represents 40% of the final module weight.


Why is it important to describe the characteristics of the sample (profile of the respondents / participants) in a research study?

What is the difference between a metric and a non-metric variable? Provide suitable examples of each.

Why is it important to classify a variable as nominal, ordinal, interval or ratio? What does “descriptive statistical methods” mean? What are the most appropriate graphical displays suitable for each of nominal, ordinal,

interval and ratio data?

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What is the aim of inferential statistics? Under what circumstances would it be appropriate to do hypothesis testing? What (if any) are the differences between a research hypothesis and a statistical null-

hypothesis? Describe the differences between parametric and nonparametric hypothesis tests? Describe the difference between a practical (substantive) significance and a statistical

significance. If you are able to show that there is a correlation between two metric variables, does it mean

that the one variable causes the other variable? Justify your answer. If your research results do not support your research hypothesis, does it mean the research is

useless? Justify your answer.

9. CONCLUSION

The research project you will conduct in your third year of MBL studies provides an opportunity to contribute to knowledge on a (fairly) narrowly defined topic in the general field of management and leadership. You should start thinking about your research topic now and formulate your main research question. After the examinations, you can do an incredible amount of preparation for your research project by focusing on the literature review and the research methodology that would be most appropriate to use in order to answer the research question.

Business research methodsMbl925RBusiness research

Introduction

The module prepares the student to both conduct and critically evaluate business or market research. This involves both the quantitative and qualitative approaches of doing research. The need for knowledge of statistical data analysis with regards to quantitative approach cannot be overemphasized. Statistics involves logical reasoning. Quantitative approach definitely requires for e.g., that the student knows and thoroughly understands what the measures of central tendency, variance, association and causal relationships are and how their estimates are calculated and tested for statistical significance and inference. He/she should know how frequency tables are constructed and what frequency graphs and charts are and how they are drawn. Simply put, you cannot know how to interpret statistical estimates and critically evaluate scientific research satisfactorily if you do not have a clue as to how the estimation is done. This justifies the need for the students registered for this module to be taught basic statistics to be well prepared and have good background knowledge for the business research module.

Proposed basic statistics aspects to be taught – as a supplement

Outline for basic statistics1. Data preparation for analysis2. Frequency tables and graphs3. Summation notation 4. Measures of central tendency and variation5. Graphing categorical data6. Measure of association7. Estimation (point and interval estimation) 8. Elementary regression analysis9. Testing of hypotheses (t and chi-square)- Data interpretation10. Chi-square test11. Computer applications (excel and SPSS)

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Text books for reference 1. Cooper, DR and Schindler, PS. 1998. Business Research Methods, Sixth edition, Mcgraw-

Hill, ISBN 0 07 115677 1. (Business Research)2. Berenson, ML and Levine, DM. 1996. Business Statistics: A First Course, Amazon.Com.,

Inc.

Other Reading materials:1. Introduction to statistics by Philip AE Serumaga-Zake, Danelle Kotze and Raghunath Arnab,

North West University (Mafikeng Campus).2. An introduction to statistical survey methods, by Philip AE Serumaga-Zake, Raghunath

Arnab, Danelle Kotze and Nancy Stiegler, North West University (Mafikeng Campus).

Assessment Structure1. Two assignments, i.e. 1. Group assignment and 2. Individual assignment 2. A test

1. Data preparation for analysis

- Editing or cleaning the dataEliminating errors

- Coding

Responses are coded (e.g. 1 = ‘yes’ and 2 = ‘no’)

The answers or responses may e precoded (in the questionnaire already)

- TranscribingTransferring coded responses into the computer

Example 1

Purpose of survey research:

Evaluating the efficiency of a supermarket

A. Biographical data

1. Gender:

2. Age in years:

3. Residence:

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B. Research data

Likert scale

Commodity prices are reasonable

The numbers within the brackets are the numbers of respondents per itemThe following table shows the coded responses of 25 customers for the four itesm:

Customer/ respondentCommodity prices are reasonable

The following table shows the computer results of the SPSS (i.e. statistical package for social scientists) 11.

(……………………………..to be included)

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Raw data refer to data that have not been organised according to a certain criterion.E.g. annual salaries of 4 employeesR72 000, R27 000, R31 000, R42 000

If these salaries are arranged in either the ascending or descending order of magnitude, then such a data set is called an array.

E.g. R27 000, R31 000, R42 000, R72 000 (array)

2. Frequency tables and graphs

A frequency table shows the class intervals together with their corresponding class frequencies.

The following table shows the ages of 50 employees:

.This frequency table consists of 6 class intervals.E.g. 18 < 22 means ’18 and under 22 years’18 is thw lower class boundary and 22 is the upper class boundary of the first interval.

2 is the frequency of the first class interval (i.e. there are 2 employees whose ages are between 18 and 11 years.

The size of the first class interval is 22 – 18 = 4 years.How to construct a frequency table

Steps:

1. Determine the range of raw data (n.b. range = highest value – lowest value)2. Specify the number of classes (preferably between 5 and 20).3. Calculate the class size as follows.

Class size = range/no. Of classes

4. Use tallies to find class frequencies.

Example 2

The following raw data show the prices (r ) of a certain product in 25 supermarkets:

42 48 45 47 44

50 40 51 48 45

54 47 46 49 41

49 54 49 52 46

51 47 53 46 44

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(a)Construct a frequency table consisting of 5 class intervals.(b)Construct a stem-and-leaf display

Solution

(a)R = h –l = 54 – 40 = r14

No. Of classes = 5 (given)

Class size = r/no. Of classes = 14/5 = 2.8 3

Tallies:

Relative frequency table

Example

Age (in years) Frequency Relative frequency (%)

Cumulative frequency table

Example 3

Cumulative frequency

Graphs of frequency tables

Histogram and frequency polygon

Example: (ages of 50 employees)

…………………………………………..

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The subscript or index notationThe subscript or index notation

Let the symbol Let the symbol denote a variable. Let denote a variable. Let denote a particular variate, i.e. the value of a denote a particular variate, i.e. the value of a

particular member of particular member of , in this case the first member of , in this case the first member of ..

The symbol The symbol denotes the value of denotes the value of , when , when the subscript, assumes a particular value. The the subscript, assumes a particular value. The

only values which the subscript can assume are the integers, 1; 2; 3; …… Another word foronly values which the subscript can assume are the integers, 1; 2; 3; …… Another word for subscript is the word, index.subscript is the word, index.

Subscripts are usually denoted by the letters Subscripts are usually denoted by the letters and and but other letters, e.g. but other letters, e.g. K; p; q; sK; p; q; s etc. Can etc. Can also be used. Consider the table below.also be used. Consider the table below.

Table Table Column 1Column 1 Column 2Column 2 Column 3Column 3

Row 1Row 1 XX1111 XX1212 XX1313

Row 2Row 2 XX2121 XX2222 XX2323

Row 3Row 3 XX3131 XX3232 XX3333

Row 4Row 4 XX4141 XX4242 XX4343

In this table the first subscript represents the row and the second subscript the column. In this table the first subscript represents the row and the second subscript the column.

represents the number or value at the intersection of the represents the number or value at the intersection of the row and the row and the column. i and j can column. i and j can be any whole number from 1 on words. be any whole number from 1 on words.

3.3. Summation notation: Sigma Summation notation: Sigma notationnotation

The symbol The symbol is shorthand for ‘the sum of’. Hence, the greek capital letter is shorthand for ‘the sum of’. Hence, the greek capital letter is used tois used to

denote sum, which is the answer to an addition sum. denote sum, which is the answer to an addition sum.

In words ‘the sum of In words ‘the sum of for for going from one to three is’ going from one to three is’ ..

This may be written more simply asThis may be written more simply as

or more generally asor more generally as

The notation may be simplified even further, e.g. The notation may be simplified even further, e.g. denoting the sum of all denoting the sum of all values. In values. In

the case where the case where is a constant,is a constant,

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For this reason the subscript associated with the constant is generally omitted.For this reason the subscript associated with the constant is generally omitted.In the following where In the following where is a constant is a constant

Thus Thus

4. Measures of central tendency and variation

i. Arithmetic mean ( )

Example 4

Find the mean of the following prices

R8; 3; 5; 11; 8

Solution

= ∑x / n = (8 + 3 + 5 + 11 + 8)/ 5 = 35/5 = r7

ii. Median

Me = middle value of an array

Example 5

Find the median of the following prices

R7; 5; 15; 11; 4

SolutionArray: r4; 5; 7; 11; 15

Me = r7

iii. Mode

Mo = most common value

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Example 6

Find the mode of the following pricesR7; 4; 7; 7; 7; 3; 5; 7; 6; 1

Solution

Mo = r7

Measures of variation

i. Variance ( )

= ∑(X - ) / (n – 1)

ii. Standard deviation (s)

variance

Example 7

Find the variance and standard deviation of the following numbers.

5; 7; 3; 9

Solution

= (5 + 7 + 3 + 9)/4 = 24/4 = 6

Solution:

Variance = 20 / (4 – 1) = 20/3 = 6.67

Standard deviation = 6.67 = 2.58

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Measure of shape

Skewness (sk)

Sk > 0 means that data values are positively skewed.Sk < 0 means that data values are negatively skewed.Sk = 0 means that data values are normally distributed.

(i.e. mean = median = mode).

5. Graphing categorical data

1. Bar charts2. Multiple bar charts3. Stacked (component) bar charts4. Pie charts5. Line charts6. Percentage component bar charts

Example 10

The following table shows the annual sales (‘000) of products a and b during the years 1995 – 1998:

Year 1995 1996 1997 1998Product aProduct b

Graph the data using:

(a)Line chart for product a(b)Bar chart for product b(c) Pie chart for product b(d)Multiple bar chart(e)Stacked bar chart(f) Percentage component bar chart

Excel software package was used to display the above charts (see results in subsequent pages)

…………………………………charts………………………………………………

Example 11

Use excel program to analyse the following raw data;

9; 2; 6; 9; 9; 3; 5

Solution

See computer output in last pages

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6. Measure of association

Correlation

Data pairs and the scatter diagramSuppose that two attributes are measured on each member of a random sample of size , giving pairs of observations.

Denote the measurement of the first attribute by and the measurement of the second by y . The

first pair of observations is thus , the second pair is and so on.

The resulting plot showing points is called a scatter diagram.

Example 12Table 1 shows the ages in years ( ) and systolic blood pressures ( ) in mm of mercury, of 12 women selected at random.

Table 1datapair

age

( )

bloodpressure ( )

datapair

age

( )

bloodpressure ( )

123456

564272366347

147125160118149128

789101112

554938426860

150145115140152155

These data are displayed in Figure 1.

Figure 1: Scatter diagram

The scatter diagram gives a rough idea of how the variables x and y are related.From the scatter diagram above it would appear that there is an association between and in the form of an approximate linear (straight line) relationship between age of women and systolic blood pressure, that is, blood pressure increases more or less linearly with increasing age. A measure of the strength of the association is required.

107


Correlation coefficient

A measure of association between and in the population is the correlation coefficient,

Values of are between –1 and +1 indicating varying degrees of association.

To calculate use the following:

n

yxxyyyxx

))(())((

For the blood pressure data relating the age of women to systolic blood pressure the required values are:

Interpreting a correlation coefficient

A statistic can be significant without, in the everyday sense, being either strong or important. A small value for can be significant if the sample size is large. Thus for a sample of 1000 pairs an

of +0.081 or –0.081 would be significant at the 1% level of significance, and yet it would only be a weak correlation.

n

yyyy

n

xxxx

222

222

)()(

)()(

628x 6841y

416342x 8222382

y

89489xy

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Table 2 gives a guide of the interpretation of correlation coefficients.

Table 2correlation coefficient

)( rdescriptive label

0 no correlation, zero correlation

0.0 to 0.2

0.0 to – 0.2

very weak or negligible

0.2 to 0.4

- 0.2 to – 0.4

weak or low

0.4 to 0.7

- 0.4 to – 0.7

moderate

0.7 to 0.9

- 0.7 to – 0.9

strong, high or marked

0.9 to 1.0

- 0.9 to – 1.0

very strong or very high

+1-1

perfect correlation (positive)perfect negative correlative

7. Estimation (Point and Interval estimation)

Basic definitions

Population and parametersThe conceptual totality of objects under consideration is referred to as population. Examples of a population are: a total collection of households in Cape Town and all elephants in a game reserve.

Consider for example the case where the observations of individuals are categorical, such as having been vaccinated against measles, or not. The proportion of vaccinated persons in the population is denoted by , and it is called a parameter of the population. Now suppose that a random sample of size from the population contains vaccinated individuals. Then the sample proportion of vaccinated persons is . This is an estimate of . But in general does not equal , and be aware also that another sample may produce a different value of .

If the observations on the members of a population are numerical, such as heights and weights, there are two intuitive notions about numerical values in a population that have to be made precise. These are the notions of average or central tendency and of spread or dispersion - measured by standard deviation.

Parameter and statisticA parameter is a number, which is computed from all the members of a population. For example, if we want to obtain the average household income of Cape Town, we add up household incomes of all the households of Cape Town and then divide the total by the number of the households of Cape Town. A parameter describes some property of a population, and normally greek letters (e.g.

) are used to denote population parameters.

Population mean, proportion, and variance, are examples of population parameters.

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Parameters are unknown in general, so to get a rough idea, we take a sample and estimate them. Any number computed on the basis of a sample is called a statistic. A number, that describes some property of a sample, is referred to as a sample statistic, or briefly as a statistic. Lower case letters from our usual (roman) alphabet (e.g. a, b, m, and s) are normally used to denote sample statistics.

Population versus sample

We have distinguished between population and sample characteristics (see the Table 3).

Table 3: Population parameters versus sample statistics

Statistical measure Sample statistics Population parameters

Mean X X

StandardDeviation

Xs X

Size N

Proportion

A statistic is a function of values, calculated from sample value. A parameter is a value computed from all the values of the population, that is, a function of all the values of the population.

EstimationEstimation is done in two ways: point estimation, where one single value is calculated that serves as an estimate of the unknown population parameter. Interval estimation, where an interval (a set of consecutive values) is calculated such that it contains the unknown population parameter with a specified probability.

Definition An estimator and an estimate

An estimator is defined by a rule by which an estimate is calculated. It may be given as a formula,

like .

Once numbers are substituted into the formula a numerical value is obtained which is called an estimate for example, .

Notation

An estimator for a parameter is commonly indicated by means of a “hat” )(^ on top of the symbol for

the parameter. If is the symbol for the population mean, then (pronounced “mu hat”) is the estimator for the population mean μ . 2σ̂ (sigma squared hat) is the estimator for the population variance 2σ .

( hat) is the estimator for the population proportion of individuals with certain attributes.

We estimate the population arithmetic mean, median and mode by using a sample, then the sample mean, median, and sample proportion estimate the population mean, median, moide and population proportion.

110


These are called point estimates because we calculate one figure for the estimate.

Estimating population parameters: total values, mean values Interval estimation Confidence interval and confidence limit

A confidence interval is a set of values determined by the sample. It is devised so as to contain the parameter value with a specified probability.

Since the distribution of is normal, with mean and standard deviation it follows that

where

From a table of the normal distribution, can be found for a specified such that

so that

And .

Thus a 100% confidence interval (c.i.) for ( known) is

The confidence coefficient indicates the degree of confidence. End points of interval are

called lower and upper confidence limits. For example, if = 0.05 and the

confidence interval is

B) when is unknown and the population distribution is normal, it is replaced by the sample standard deviation s and z is replaced by t. The 100% c.i. for is

.

Example 13 The mean and standard deviation of the quality grade-points of a random sample of 36 students from a large population are

find a 95% and a 99% c.i. for the mean of the entire population.

3.06.2 sx

111

and


Solution

A 95% confidence interval, which is = 95% has and and

the 95% c.i. is given by

The length of this confidence interval is

The 99% confidence interval has

The length of this confidence interval is 0.258.

].;.[

]..;..[

...;

...

69825022

098062098062

36

3096162

36

3096162

196050226982 ...

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Example 14 Suppose

The 95% confidence interval for the mean is[500-1.96 2.828; 500 + 1.96 2.828][494.5;505.5]

Confidence interval for the mean using t distribution

Example 15 A sample of seven containers (i.e. small sample< 30) of fuel have a mean contents of 10.0 litres with standard deviation = 0.283 litres. Find a 95% c.i. for the mean content of all such containers, assuming an approximate normal distribution for container contents.

Solution

n

XT s

has a t distribution with 61 n

for 61 n (see table 2 of appendix iii)

confidence interval is:

8. Elementary regression analysis9.

The regression equationConsider the model

Where is the independent variable and is a random error (distributed with mean zero and

variance ). Consider the data given in table 3 and figure 4. Supposing the systolic blood pressure of the 12 women was measured subject to a random error, . The model specified above can be applied to the data.

For example Table 4 shows the ages in years ( ) and systolic blood pressures ( ) in mm of mercury, of 12 women selected at random.

Table 4Data Age Blood Data Age Blood

2828.250

2020

50020,50

ns

xsn

x

andx

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Pair( )

Pressure ( ) Pair( )

Pressure ( )

123456

564272366347

147125160118149128

789101112

554938426860

150145115140152155

These data are displayed in the figure 2.

Figure 2: scatter diagram for women age versus blood pressure data

The scatter diagram gives a rough idea of how the variables x and y are related. From the scatter diagram above it would appear that there is an association between and

in the form of an approximate linear (straight line) relationship between age of women and systolic blood pressure, that is, blood pressure increases more or less linearly with increasing age.

A measure of the strength of the association is required.

Fitting a straight line to the scatter diagram leads to a regression line , where is an estimate of in the model and is an estimate of , and is the estimate of y (See Figure 3). There are many ways of fitting a straight line to data. The method of least squares is the best in many circumstances.

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Figure 3: The regression line diagram

The coefficient of determination – r-square

R-square is a measure of the variability accounted for by regression. It gives an idea on how good the regression model is or how much the explanatory power of the regression model is. The value of r-square ranges from 0 to 1 or in percentage terms, from 0 to 100.

For example, if the value of r-square is 80%, it would mean that the regression model explains the variability of the dependent variable 80 percent – 20 percent of the variability is not determined by the model.Alternatively, it means that the regression model explains the dependent variable 80 percent.

It is calculated by dividing the regression sum of squares by the corrected sum of squares y .

which becomes

Which is thus clearly equal to the correlation coefficient squared.

To obtain estimates of and the following is needed:

Then : estimate of slope

: estimate of intercept

Table 5 shows the calculations necessary for the regression analysis.

Table 5: Calculations

10192110120908293

1.20.81.01.30.70.81.0

1.440.641.001.690.490.641.00

121.273.6110.0156.063.065.693.0

10 2018 46412 10014 4008 1006 7248 649

115


7591105

0.60.91.1

0.360.811.21

45.081.9115.5

5 6258 28111 025

959 9.4 9.28 924.8 93 569

Therefore, and

The regression equation is, therefore, y = 46.48 +52.57x.Example 16 If the advertising budget is r10 000, predict the sales volume.Predicted sales volume

116


Testing the regression coefficient b- the slope of the regression line for significance – using the t-test

The null hypothesis is that is not significantly different from zero.

The alternative hypothesis is that is significantly different from zero.

To perform this test t is calculated as follows:

EMBED Equation.3 b

bt

oferrorstandard

0

A value for the standard error of is required. The estimate of the variance of is given by

.

Substituting the numerical values for the blood pressure data gives:

Estimate of variance of .

The standard error of

The degrees of freedom for the error mean square is n-2 = 10, the denominator in the definition of .

From the t table, (remember to enter the one tail table at ) and

.

The calculated t value of hence is significantly different from zero, even at the 1% probability level.

This is equivalent to rejecting the hypothesis that there is no dependence of on .

The 95% confidence interval for is given by .

Substituting the values obtained above, gives the 95% confidence interval for as

. Notice that is not included in the 95% confidence interval. Calculate the 99% confidence

interval for and confirm that is not in the 99% confidence interval.

10. Testing of hypotheses

Statistical hypothesis In practice one is often required to make decisions about populations on the basis of sample

information. Such decisions are statistical decisions. A useful approach is to formulate statistical hypotheses which can be tested. A hypothesis, is usually called a null hypothesis and denoted by . Any hypothesis that

differs from the null hypothesis is called an alternative hypothesis; denoted by . The decision to ‘accept’ or ‘reject’ a hypothesis is based on information contained in a sample

taken from the target population.

117


Refer to Figure 4. A set, , of possible values of the test statistic, , defines the critical region.

Figure 4

Tests of the meanSuppose a random sample of size n is drawn from a normal population with mean and standard deviation . Let

. Then, if is true, the sample mean is expected to be reasonably

close to ; in fact it is expected to lie between and with

probability 0.95. will be rejected if the observed is “too large” or “too small”, i.e. smaller than

( large) or greater than .

will be accepted if

< <

i.e. if

In the preceding discussion the significance level of the test is 0.05 . More generally 1.96 can be replaced by with the rule

Accept if

For which the significance level is . If is unknown, it is replaced by s and is replaced by .

The form of the test can be summarized thus: calculate

And refer this ratio to suitably chosen or critical values determined by the size of and by

. It will be seen that all tests of the null hypothesis that specify particular parameter values have this form.

118


Example 17 The manufacturers of ‘road king’ tyres claim that their tyres last 70 000km or more. The consumer board suspects that this claim may be false (they have received some complaints) and decides to test the manufacturer’s claim. Appropriate null and alternative hypothesis are

And note that is one-sided.

Take a sample of size, say, 500 from the population. Run the tyres until they fail to meet requirements for tread depth. Calculate the mean and standard deviation of the sample:

To test the hypotheses, the ‘test statistic’ below is used:

n

sX

Z

Which has approximately a n(0; 1) distribution if .

Calculate the z value, assuming that is true (i.e. )

The obtained value of the test statistic is – 0.90.

Since for the critical value is

I.e. under .

Reject if

Otherwise accept :

For this example and is accepted.

Hypothesis testing using the t distributionHypothesis testing is done as for the standard normal distribution.

Step 1 Define and .

119


Step 2 Define the probability , the degrees of freedom ( ), the acceptance region A , and the rejection region r.

Step 3 Calculate

with d.f.

Step 4 If Rt reject

If At accept

Example 18 Given eight sample observations from a normal population, 31; 29; 26; 33; 40; 28; 30; 25 so that

.

Test the null hypothesis that =35.

AnswerBecause the sample size, , is small the distribution should be used in this example.

Step 1

the mean the mean , a two-sided alternative.

This is clearly a two tailed test.

Step 2The test is to be carried out at the 5% level of significance, .

. Thus the column in the t-table is to be used. Note that this is

confirmed by the familiar value 1.960 for , the last figure in the column. As there are 8 observations,

for 7 d.f.

(table value)

Step 3

120


.

Step 4

hence the calculated t falls in the rejection region )( Rt . Hence, reject

and accept .

11. Chi-square testChi-square as a measure of association This test is based on the distribution of a statistic called , chi-squared . It plays an important role in many problems where information is summarized as counts or frequencies of individuals belonging to certain categories. The categories are usually called cells (in a contingency table). Typical examples are:

The numbers of males and females who do and do not fall ill; here we have four cells: male ill, male not ill, female ill, female not ill.

Persons in three cities classified as they choose answers 1, 2, 3, and 4 in a questionnaire; this gives 12 cells.

Example 19If 25 of 200 brand a tires, 21 of 200 brand b tires, 32 of 200 brand c tires and 18 of 200 brand d tires failed to last 30 000 kilometres, we may want to know whether the differences among the sample proportions 25/200 = 0.125, 21/200 = 0.105, 32/200 = 0.160 and 18/200 = 0.090 can be attributed to chance or to actual differences in the quality of the tires.

In another example, a survey in which independent random samples of workers from three parts of the country were asked whether they feel that unemployment or inflation is more serious yielded the following results:

North West SouthUnemployment 87 73 66Inflation 113 77 84Totals 200 150 150

If , and are the true proportions of workers in the three parts of the country who feel that unemployment is the more serious economic problem, we may test the null hypothesis,

. If is true, we can combine the data to estimate as

= 0.452.

With this estimate we expect 200 x 0.452 = 90.4 of the 200 workers in the north, 150 x 0.452 = 67.8 of the 150 workers in the west and 150 x 0.452 = 67.8 of the 150 workers in the south to choose unemployment.

The results can now be summarized in the following table where expected frequencies are shown in parentheses below the observed frequencies in Table 6:

Table 6North West South

Unemployment 87 73 66

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(90.4) (67.8) (67.8)Inflation 113

(109.6)77 (82.2)

84 (82.2)

The chi-square formulaIn order to perform a test of we need a statistic which summarises the discrepancies between the

observed frequencies and the expected frequencies .

One such statistic is chi-square )( 2 which is defined by the formula which in

words is

2 sum of frequency Expected

frequency) Expected -frequency (Observed 2

over all sells or classes.

There are some rules for chi–squares tests as follows.i. The number of items appearing in the 'expected' category, obtained during the stages of

computation, must be at least five.ii. The tests must be carried out on the actual numbers of items which appear in the cells,

not on derived proportions or percentages. Even though the proportions of numbers are unaltered, the test is invalidated if the original numbers are not used.

Example 20 Refer to Table 6 and complete Table 7 below to calculate 2 .

Table 7: Application of the 2 formula to data

Observed frequency ExpectedFrequency

ii EO

i

ii

E

EO 2)(

iO iE

8773661137784

90.467.867.8109.682.282.2

-3.4 5.2-1.8 3.4-5.21.8

11.5627.043.2411.5627.043.24

0.127880.398820.047790.105470.328950.03941

500 0 77.20 1.04832

Therefore, 2 1.05

Using 2 in tests of the goodness of fit and hypotheses

The expected frequencies are calculated according to a null hypothesis, .

If the observed 2 is small, is accepted. If it is “too large” it is rejected.

What is “too large” depends on the distribution of 2 under and this distribution is

determined by the number of degrees of freedom, . The number of degrees of freedom is the number of classes, m, minus the number of

independent linear constraints, k, on the differences ii EO .

Contingency tables

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Table 8: The incidence of forest types on different soil groupsSoil group Forest type Subtotal

1F 2F 3FS1S2S3

273226

484651

626761

137145138

Subtotal 85 145 190 420

Table 8 is a 3 x 3 contingency table, and the expected frequencies can be calculated as explained above. Thus the expected frequency in cell

The other expected frequencies are given in Table 9.

Table 9: Expected frequencies of forest types on different soil groupsSoilGroup

Forest type Subtotal

1F 2F 3FS1S2S3

27.72629.34527.929

47.29850.06047.643

61.97665.59562.429

137145138

Subtotal 85 145 190 420

Note that

031.1429.62

)429.6261(.................

........345.29

)345.2932(726.27

)726.2727(

2

222

For this calculation the following rearrangement affords a far more convenient and accurate way for

the calculation of 2 .

The calculation involves the use of totals, rather than means, which means that decimal rounding errors are avoided. The possibility of calculation errors is also reduced.

123


The degrees of freedom for this 2 is (3-1)(3-1)=2*2=4. The tabulated values for df4

2 are

488.905.0

711.095.0

4

24

2

df

df

P

P

The calculated 2 of 1.031 lies between these values, so, 0H is accepted. The probability of the

calculated 2 can be obtained within the limits 0.05 and 0.95, that is,

12. Computer Applications Excel and SPSS)

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MBL926S

Business Ethics

Page

1. MODULE OVERVIEW

2. STUDY SCHOOLS

3. PRESCRIBED BOOKS

4. CASE STUDIES

5. ARTICLES

6. WEB LINKS

7. ASSESSMENT

8. TOPICS

125


MBL926S

Business Ethics

1 MODULE OVERVIEW This module will provide you with an understanding of the scope and importance of business ethics, with special emphasis on contemporary issues in the Southern African context that influence decision making.

2 STUDY SCHOOLS 2.1 Study school 1

TOPIC NUMBER TOPIC DESCRIPTION1 A business case for ethics2 Ethical decision-making approaches3 Goodpaster: The case method (CAT)

2.2 Study school 2

TOPIC NUMBER TOPIC DESCRIPTION1 Managing ethics and good corporate governance2 King III3 Whistle-blowing legislation and mechanisms

3 PRESCRIBED BOOKS Carroll AB & Buchholtz AK. 2009. Business and society: ethics and stakeholder management

(7th edition). Mason, OH: South-Western College Publishing.

4 CASE STUDIES All these cases, except for case (6) which is on eds online, appear in the prescribed book by Carroll and Buchholtz (2009). (1) Something’s rotten in Hondo (case 20)(2) Nike, Inc (case 22)(3) Nestlé, the infant formula controversy (pp 406 - 407)(4) Safety, what safety? (case 34)(5) Plant safety and the Bhopal tragedy (pp 407 – 410)(6) Marketing to inner-city blacks: PowerMaster and moral responsibility. (eds online)(7) When management crosses the line (case 45)

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5 ARTICLES

Prescribed articles Goodpaster K. 1999. Teaching and learning ethics by the case method (on eds online). Rossouw D. 2004. Ethical decision-making in business. RIMS (part 4). Business Ethics in Africa (on eds online).

Additional reading Crain WC. 1985. Kohlberg’s stages of moral development. Theories of moral development. New York: Prentice-Hall, pp. 118–136. (http://faculty.plts.edu/gpence/html/kohlberg.htm)

6 WEB LINKS

http://www.info.gov.za/documents/constitution/index.htm http://www.polity.org.za/html/govdocs/constitution/saconst.html?rebook=1 http://www.cauxroundtable.org/principles.html http://www.ceres.org http://www.cepaa.org http://www.itcilo.it http://www.ecgi.org/codes http://www.gov.za/sa_overview/index.html

7 ASSESSMENT

Students that are repeating this module must also submit these 2 assignments but as individual efforts. 7.1 GROUP ASSIGNMENTS


To be advised


To be advised

7.2 EXAMINATION STRUCTURE The examination will consist of multiple-choice questions, short questions, and long questions based on case studies. Any combination of the above may apply.

8 TOPICS 8.1 The business/society relationship and stakeholder management 8.1.1 Tuition period Time allocation: Before study school 1

127

http://www.gov.za/sa_overview/index.html

http://www.itcilo.it/_



Students understand the importance of business ethics. Students are able to apply their understanding of business ethics to the

- business/society relationship - management of the stakeholders in this relationship


How would you define business ethics? From an open systems perspective, identify the most important societal stakeholders in

business. How would you evaluate corporate social responsibility as a business imperative? How can the principles of stakeholder management be applied?


Study chapters 1, 2 and 3 in the prescribed book by Carroll and Buchholtz (2009). Read the following:

SA8000 (www.sa-intl.org ) SA8000 (www.cepaa.org/SA8000/SA8000 The Global Workplace Standard on http://www.cepaa.org (global workplace

standard) 8.1.5 Self-assessment (1) How would you define the interrelationship between business and society? (2) Describe the relationship between corporate social responsibility and (financial) business

performance. (3) Who are the stakeholders in your business? What do you consider to be appropriate strategies

for managing these stakeholders?

8.1.6 Reflection There are a number of definitions of corporate social responsibility. Carroll and Buchholtz (2006) provide a four-part definition that focuses on various types of social responsibility. Explain how corporate social responsibility evolved to encompass economic, legal, ethical and philanthropic components. 8.1.7 Conclusion A significant criticism of business is that it abuses its power. This power emanates from the entire business system, from groups of companies acting in concert, from individual companies, and from individual corporate executives. Business power also manifests itself in different spheres, for example in the economic, political, technological, environmental, social and individual spheres. This extensive business power demands responsibility and a balance between power and responsibility. 8.2 MORAL DEVELOPMENT AND ETHICAL THEORIES 8.2.1 Tuition period Time allocation: Before study school 1 8.2.2 Specific outcomes Students understand, and are able to compare and apply the most important ethical theories.

128

http://www.cepaa.org/_



What do you understand by Kohlberg’s levels of moral development? Discuss your understanding of the various ethical theories. How can these theories be

applied to practical situations? How would you apply ethical reasoning in workplace dilemmas?

8.2.4 Learning through activities Study chapters 7 and 8 in the prescribed book by Carroll and Buchholtz (2009). Read Crain WC. 1985. Kohlberg’s stages of moral development. Theories of moral

development. New York: Prentice-Hall, pp. 118–136. (http://faculty.plts.edu/gpence/html/kohlberg.htm)

8.2.5 Self-assessment (1) What does the traditional approach to business ethics entail?(2) What does the utilitarian approach to business ethics entail? (3) What does the rights approach to business ethics entail?(4) What does the justice approach to business ethics entail?(5) How does the democratic approach apply to business ethics?(6) What does the deontological approach entail?(7) How can practical ethical tests promote decision making? 8.2.6 Reflection Give two examples of ethical dilemmas that you have experienced in the workplace. Identify one or more of the guides to personal decision making or ethical tests that you think would have been helpful in resolving those dilemmas, and describe how these guides or tests could have been helpful. 8.2.7 Conclusion A number of different ethical principles serve as guides to personal decision making. These principles may be categorised as teleological (ends-based) or deontological (duty-based).

A major deontological principle is the categorical imperative: act only according to that maxim by which you can at the same time will that it should become a universal law. Other principles include the golden rule (do unto others as you would have them do unto you), utilitarianism, which focuses on the greatest good for the greatest number, and virtue ethics, where character is built through the cultivation of virtues.

8.3 THE ETHICAL DECISION-MAKING PROCESS AND THEORIES 8.3.1 Tuition period Time allocation: After study school 1 8.3.2 Specific outcomes

Students are able to demonstrate the ethical decision-making process. Students are able to apply various theories to practical situations.

8.3.3 Critical questions How would you evaluate business problems from an ethical perspective, using different ethical tests and theories?

129



Study chapter 8 in the prescribed book by Carroll and Buchholtz (2009). Read the article by Goodpaster (1999).

8.3.5 Self-assessment (1) How can Goodpaster’s (1999) case analysis template be used to analyse and resolve ethical dilemmas?(2) Describe the benefits of various ethical approaches to resolving ethical dilemmas (deontology, utilitarianism, virtue ethics, etc.).

8.3.6 Reflection A lively debate is being conducted in the USA and many other countries as to whether business ethics can or should be taught in business schools. What is your opinion? Be prepared to explain your reasons carefully. Can top managers and board members be taught business ethics? 8.3.7 Conclusion Goodpaster’s (1999) CAT scan approach is an effective tool in making ethical decisions. The various philosophical normative theories, such as deontology, utilitarianism, virtues theory and rights theories provide ethics principles that serve as guides for the analysis of case studies. Carroll and Buchholtz (2006) propose six practical tests to help the individual make ethical decisions: the test of common sense, the test of one’s best self, the test of making something public, the test of ventilation, the test of the purified idea, and the gag test. The quick test, which consists of a number of questions, has become very popular in business. 8.4 RATIONAL INTERACTION FOR MORAL SENSITIVITY (RIMS) 8.4.1 Tuition period Time allocation: After study school 1 8.4.2 Specific outcomes Students are able to demonstrate the ethical decision-making process according to the RIMS strategy and apply the process to ethical dilemmas in the workplace. 8.4.3 Critical questions Using the RIMS approach (Rossouw (2004)), how would you evaluate ethical dilemmas related to issues such as affirmative action and HIV/Aids? 8.4.4 Learning through activities Study the article by Rossouw (2004) (on eds online). 8.4.5 Self-assessment How can the RIMS strategy be applied to ethical issues such as affirmative action and dealing with HIV/Aids in the workplace? Provide a detailed description of the steps to be taken.

8.4.6 Reflection The RIMS strategy is another example of an ethical decision-making tool that is effective when dealing with moral issues such as affirmative action and discrimination on the grounds of an

130


employee’s HIV/Aids status. Use the RIMS strategy to consider the issue of affirmative action by weighing up the different arguments for and against it. 8.4.7 Conclusion The purpose of the RIMS strategy is to structure a process of rational interaction between rival points of view in a moral dispute that requires morally sensitive decisions. The strategy is based on a number of assumptions. The first assumption is that moral dissensus is a given. The RIMS strategy begins with a rational debate about the moral issues under discussion. It consists of three steps: (1) generate and evaluate all points of view, (2) identify the implications, and (3) find solutions. Although a well-established set of corporate ethical values or a directional code of ethics can ease the process of making moral decisions, new issues will always crop up. The RIMS strategy is therefore useful in guiding the process of moral decision making. 8.5 THE ETHICAL VALUES OF EQUALITY AND HUMAN DIGNITY 8.5.1 Tuition period Time allocation: Before study school 2 8.5.2 Specific outcomes Students understand and are able to apply the ethical values of equality and human dignity described in the South African Bill of Rights, the African Charter and other international human rights instruments to the employment situation (including employment equity). 8.5.3 Critical questions

What do you understand by the various liberal conceptions of equality? How do you understand the different conceptions of human dignity? How would you determine whether affirmative action measures could give rise to (un)fair

discrimination? How would you apply the principles underlying sexual harassment in the workplace at

operational level? 8.5.4 Learning through activities Study chapters 17 to 19 in the prescribed book by Carroll and Buchholtz (2009) Read the following:

The Bill of Rights in the South African Constitution (a) http://www.info.gov.za/documents/constitution/index.htm (b) http://www.polity.org.za/html/govdocs/constitution/saconst.html?rebook=1

The Caux Round Table principles for business (see http://www.cauxroundtable.org/principles.html and other websites) The Ceres principles (under “Coalition and companies”) (see http://www.ceres.org) SA8000 and the global workplace standard (see http://www.cepaa.org)

8.5.5 Self-assessment (1) How is it possible to justify affirmative action but condemn discrimination?(2) How do you personally justify human dignity as an ethical value?

8.5.6 Reflection

131

http://www.cepaa.org/_

http://www.cauxroundtable.org/principles.html

http://www.info.gov.za/documents/constitution/index.htm_


The right to due process has been one of the most frequently proclaimed employee rights issues during the past decade. How would you define the right to due process? Describe important ways in which managements are trying to ensure due process in the workplace. Recommended case study: When management crosses the line (case 45) 8.5.7 Conclusion Employee stakeholders have become more sensitive about employee rights, and society’s ideas about treating employees fairly are changing. International human rights instruments play a major role in ensuring human dignity and equality in the workplace and various countries have introduced legislation that specifically addresses these issues (e.g. the South African Bill of Rights). 8.6 CORPORATE GOVERNANCE 8.6.1 Tuition period Time allocation: Before study school 2

8.6.2 Specific outcomes Students are able to identify the most important ethical issues related to corporate governance in the modern business world and can suggest solutions for resolving these issues. 8.6.3 Critical questions

Define the “construct of corporate governance”. Describe the various approaches to corporate governance (e.g. a rules-based approach

and a principles-based approach). How would you identify corporate governance problems and resolve them?


Study chapter 4 of the prescribed book by Carroll and Buchholtz (2009) Read the following:

The King III report on corporate governance The executive summary on http://www.ecgi.org/codes

8.6.5 Self-assessment (1) What is good corporate governance? List the major problems with regard to good corporate governance.(2) How would you structure an organisation to ensure good governance and to minimise governance problems? (3) List the major obstacles in implementing this organisational structure. How would you overcome these obstacles? (4) How would you develop and implement a code of ethics? 8.6.6 Reflection What are the most important suggestions for improved corporate governance? How instrumental do you believe the King III report is in promoting good corporate governance? 8.6.7 Conclusion

132


Corporate governance refers to the way in which an organisation is governed, directed, administered or controlled, and to the goals for which this organisation is being governed. Furthermore, it is concerned with the relative roles, rights and accountability of such stakeholder groups as owners, boards of directors, managers, employees, and others considered to be stakeholders. For corporate governance to function as originally intended, the board of directors must be an effective, potent body that carries out its roles and responsibilities to ascertain that management pursues the stakeholders’ best interests. 8.7 ENBIRONMENTAL ETHICS 8.7.1 Tuition period Time allocation: Before study school 2 8.7.2 Specific outcomes

Students are able to identify major environmental ethical issues. Students are able to make suggestions for resolving these issues.


Discuss the concerns relating to environmental issues. How do these issues have a differential influence on developed and developing countries?


Study chapter 15 of the prescribed book by Carroll and Buchholtz (2006). Read the Ceres principles (see http://www.ceres.org and other websites). 8.7.5 Self-assessment (1) Do you think companies should be forced not to pollute the environment?(2) How can this be done without having undesirable consequences for economic growth?(3) Can a market in pollution credits be ethically justified? Would this work?(4) Should different norms for the environment apply to developed and developing countries? 8.7.6 Reflection What do you perceive the natural environment to be? List several of the most important issues now receiving worldwide attention in this regard. What is the future outlook for the natural environment? Specifically, how can ethics be applied in response to environmental issues? Recommended case study: Safety? What safety? (case 34) 8.7.7 Conclusion

Scientists, policymakers, public-interest groups, individuals and the business world all seem to agree that the natural environment is crucial to human survival and that a number of complex and interconnected human-induced activities may be threatening this environment. Problems such as deforestation and pollution are endangering nonhuman species and ecosystems, and are having a detrimental influence on quality of life. Individuals and the world of business have a responsibility to resolve these environmental issues, especially as the world population is projected to continue to increase – which will make even greater demands on food and fuel resources. 8.8 HEALTH, SAFETY AND PRIVACY

133


8.8.1 Tuition period Time allocation: After study school 2 8.8.2 Specific outcomes

Students are able to identify the rights and duties of employers, employees and customers, especially with regard to health, safety and privacy. 8.8.3 Critical questions

Identify the characteristics of general human rights. How do these rights compare with special workers’ rights?

How would you distinguish between fair and unfair monitoring at work? Does South African legislation protect employees against the possible invasion of

privacy? Under what circumstances would drug testing in the workplace be considered fair?


Study chapter 17 and 18 of the prescribed book by Carroll and Buchholtz (2009) Read the following:

Machan TR. 2001. Human rights, workers’ rights, and the “right” to occupational

safety: Readings and cases in corporate morality. In Hoffman WM, Frederick RE & Schwartz M. Business ethics: readings and cases in corporate morality. New York: McGraw-Hill, pp. 266 – 270. (On eds online.)

Hartman LP. 2001. The rights and wrongs of workplace snooping. In Hoffman WM, Frederick RE & Schwartz M. Business ethics: readings and cases in corporate morality. New York: McGraw-Hill, pp. 270–274. (On eds online.)

8.8.5 Self-assessment (1) Should one differentiate between general human rights and special workers’ rights? Substantiate your answer. (2) Under what circumstances would monitoring at work be considered fair or unfair?(3) Does South African legislation protect employees sufficiently against the possible invasion of privacy? Substantiate your answer by referring to the relevant acts and regulations. (4) Under what circumstances would drug testing at the workplace be considered fair? 8.8.6 Reflection Think about two major arguments for and against integrity testing by employers. Under what circumstances could management legitimately argue that integrity testing is necessary? Recommended case studies: Plant safety and the Bhopal tragedy (pp 407 – 410)

8.8.7 Conclusion Critical employee stakeholder issues include the right to privacy, safety and health. Technology development over the past few years has seriously affected workplace privacy. Safety and health are of equal importance to employee stakeholders. A number of international instruments have been developed to address these concerns, yet new and unexpected threats continue to present new challenges to managers. 8.9 WHISTLE-BLOWING

134


8.9.1 Tuition period Time allocation: After study school 2

8.9.2 Specific outcomes Students are able to identify the rights and duties of employers and employees in respect of whistle-blowing (as outlined in the Protected Disclosures Act 26 of 2000 and relevant policies). 8.9.3 Critical questions

Under what circumstances would whistle-blowing be considered morally justifiable, and under what circumstances, if any, would whistle-blowing be considered morally obligatory or morally required?

Describe different forms of whistle-blowing.


Study the following:

De George RT. 2001. Whistle blowing. In Hoffman WM, Frederick RE & Schwartz M. Business ethics: readings and cases in corporate morality. New York: McGraw-Hill, pp. 284–291. (On eds online.)

James GG. 2001. Whistle blowing: its moral justification. In Hoffman WM, Frederick RE & Schwartz M. Business ethics: readings and cases in corporate morality. New York: McGraw-Hill, pp. 291–301. (On eds online.)

Chapter 17 of the prescribed book by Carroll and Buchholtz (2009)

Read the Protected Disclosures Act 26 of 2000 (see http://www.gov.za).

8.9.5 Self-assessment (1) Under what circumstances would whistle-blowing be morally justifiable?(2) Are the statutory regulations in respect of whistle-blowing in South Africa sufficient to protect employees from occupational detriment?(3) Examine your organisation’s whistle-blowing structures and processes. Would you recommend any improvements?

8.9.6 Reflection

Discuss the recommendations you would make to the South African Law Reform Commission to ensure that the Protected Disclosures Act is amended to improve the protection offered to potential whistle-blowers.

8.9.7 Conclusion The whistle-blowing process comprises four key elements, namely the whistle-blower, the act or complaint, the party to whom the protected disclosure is made (in other words the recipient of the complaint), and the organisation against which the complaint is made. Although external disclosures

are usually referred to as “whistle-blowing”, employees who make internal disclosures receive the same protection under the Protected Disclosures Act. Although the Act has a number of remedies for those who experience retaliation in the workplace, it is very difficult to prove occupational detriment. 8.10 MARKETING AND PRODUCT SAFETY

135


8.10.1 Tuition period Time allocation: After study school 2 8.10.2 Specific outcomes

Students are able to discuss the relationship between business and consumers by analysing some of the ethical aspects related to marketing and product safety. 8.10.3 Critical questions

What are Brenkert’s views on collective responsibility? Discuss the objections to the marketing of PowerMaster. Provide examples to illustrate the deceptive use of information in marketing. Which three theories outline the ethical duties of manufacturers and consumers?


Study chapters 13 and 14 of the prescribed book by Carroll and Buchholtz (2009).

Read Brenkert GG. 2001. Marketing to inner-city blacks: PowerMaster and moral responsibility. In Hoffman WM, Frederick RE & Schwartz M. Business ethics: readings and cases in corporate morality. New York: McGraw-Hill, pp. 394–402. (On eds online.)

8.10.5 Self-assessment (1) What are Brenkert’s views on collective responsibility? Do you support this author’s arguments? (2) List the objections to the marketing of PowerMaster. Do you consider these objections to be fair? (3) How would the implications of this social approach affect PowerMaster’s marketing campaign?(4) How can information be used deceptively in marketing strategies?(5) Under what circumstances would it be unethical to use emotion as a motivator? 8.10.6 Reflection

Although the free market has traditionally been perceived as promoting a mutually beneficial relationship between business and consumers, a free market can be effective only in a society where there is no deception, where the consumer is given accurate information about a product, and where the consumer is free to choose what to buy. In your opinion, what should the manufacturer’s moral obligations to consumers entail? 8.10.7 Conclusion The PowerMaster case study shows that there are situations in which marketers are able to fulfil their individual responsibilities, but not their collective responsibilities. If products targeted at particular market segments result in consumers suffering disproportionately compared with others in comparable market segments, the role these products play should be determined and measures should be taken to reduce potential harm. Marketers have a joint or collective responsibility to the entire market segment they target. According to Brenkert, responsibility in the marketplace implies much more than the responsibility of individual agents. He believes that we should consider the responsibility of groups of persons as well as groups of corporations. Valesquez proposes a contract view of a company’s obligations to its consumers. The relationship between a company and its customers should essentially be a contractual relationship. This theory claims that companies have four main moral duties:

complying with the terms of the sales contract disclosing the nature of the product

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avoiding misrepresentation avoiding the use of duress and undue influence

8.11 MULTINATIONAL COMPANIES (MNCs) OPERATING IN DEVELOPING COUNTRIES: CORRUPTION AND BRIBERY 8.11.1 Tuition period Time allocation: After study school 2

8.11.2 Specific outcomes Students are able to identify the most important ethical issues pertaining to multinational companies (MNCs) operating in developing countries. 8.11.3 Critical questions List the most important ethical dilemmas MNCs face, especially when developing countries act as their host countries. 8.11.4 Learning through activities

Study chapter 10 of the prescribed book by Carroll and Buchholtz (2009).

Read the following:

The ILO code of conduct for multinationals (see http://www.itcilo.it and other websites)

The Caux Round Table principles for business See http://www.cauxroundtable.org/principles.html and other websites) The Ceres principles (see Ceres principles under “Coalition and companies”:

http://www.ceres.org) SA8000 and the global workplace standard (see http://www.cepaa.org) Prevention and Combating of Corrupt Activities Act - http://www.gov.za/

8.11.5 Self-assessment (1) Describe some of the ethical dilemmas facing multinational companies in their host countries.(2) How should these companies deal with these dilemmas?(3) Differentiate between a bribe and a grease payment. Give an example of each. 8.11.6 Reflection

What are your impressions of Nestlé (in the infant formula controversy) in terms of the notions of moral, amoral and immoral management (pp 406 – 407)

Other recommended case studies: Something’s rotten in Hondo (case 120), Nike, Inc (case 22).

8.11.7 Conclusion Different cultures, value systems, forms of government, socioeconomic systems, and underhanded and ill-motivated business exploits have contributed to the ethical dilemmas MNCs face in their Third World host countries. It has been argued that the greatest ethical challenges facing businesses in the future will be global.

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http://www.gov.za/

http://www.cepaa.org/

http://www.ceres.org/_


Ethicists are therefore looking into the potential benefits of theories such as the integrated social contracts theory, global codes of conduct, and adherence to international rights, instruments and moral guidelines.

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