EXAM QUESTION CANDIDATES

SHORT QUESTIONS

Explain the PESTLE/G method for macro-environmental analysisWhile changes in the broad (macro) environment may affect a cross-section of industries, some factors (PESTLE/G) are more important than others as drivers of change in different industries. When analysing the broad environment, managers are required to go beyond a mere description of change in the environment to an assessment of the forces driving it in order to prioritise it so that the organisation can focus its resources on the most strategically important issues. The PESTLE/G factors mentioned, are as follows: Political-legal factors - From a business perspective, the extent of political stability and a government's ability to

ensure a stable business environment are possibly the two main political considerations for business. Economic factors - Economic factors that are important from a business perspective are the growth rate of the

economy, the level of interest rates, the currency exchange rates and inflation. Sociocultural factors - Sociocultural factors and forces refer to existing and changing social values, beliefs,

attitudes, traditions and lifestyles in a society that could affect the preference and demand for certain products and services over time.

Technological factors - Technological change has become a main driving force in the global economy over the past few decades and continues unabated.

Legal, linked to political - The most important legal considerations from a business perspective are the appropriateness of a country's legal system, the effectiveness of law enforcement and whether the country adheres to the rule of law.

Ecological - Concerns about the natural environment have increased dramatically in recent years. Preservation of the ecology worldwide is threatened by continuous pollution.

Global - Global (G) factors can be included to the PESTLE framework to yield PESTLE/G. 12 Global trends have been identified which have the potential to significantly affect and challenge leaders in the next 30 years:

1) Increasing population2) Increasing urbanisation3) The spread of infectious disease4) Natural resource crises5) Environmental degradation6) Economic integration7) Knowledge dissemination8) Information technology9) Biotechnology10) Nanotechnology11) Increasing conflict12) Governance

Critically distinguish between the levels of strategy in organisations.Strategic management and decision making occur at different hierarchical levels in an organisation. The organisational structure of a multi-business organisation or corporation differs from that of a single business organisation. Corporate entities have four levels of strategy, with corporate strategy at the corporate level, business level strategies at the business unit level and tactical or functional strategies at lower levels. Single business organisations have no corporate level strategies. The levels of strategy in both corporations and single businesses must be aligned, and organisational members at all levels in the organisation should understand the overall strategy of their organisation as well as its implications at their respective levels. Levels of strategy and decision-making roles in multi-business and single business organisations:

Level of strategy Corporate entity Single business entity

Corporate level strategy CEO, board of directors and corporate staff No corporate strategy exists

Business level strategy Divisional managers and staff of separate business units

Executive manager and senior staff of single business

Functional level strategy Functional level managers and staff in each Functional managers and staff for each

functional area in a business unit functional area in the single business

Operational strategy Frontline managers in operations departments

Frontline managers in operations departments

Differentiate between the different types of business level strategiesBusiness-level, or competitive, strategies consider how to compete successfully in the various markets. These strategies focus on how to position a company within an industry in such a way that it has competitive advantage.There are many variations in business-level strategies, but if one strips away the detail to get to the real substance, the biggest and most significant differences among competitive strategies are reduced to the following: Whether an organisation’s target market is broad or narrow Whether an organisation is pursuing a competitive advantage linked to low cost or product differentiation A combination of the aboveFour distinct generic competitive strategy approaches stand out:1) Cost leadership strategy. This strategy involves becoming the lowest cost organisation in a domain of activity by

a significant margin. The strategy will normally target a broad spectrum of buyers. It is important to note that cost leadership does not necessarily imply low price – in fact, having low production cost and low price will result in average returns, and no real competitive advantage.

2) A differentiation strategy. This strategy involves uniqueness along some dimension that is sufficiently valued by consumers to allow a price premium. This strategy may focus on either a broad section of buyers or a narrow buyer segment.

3) A focus strategy. This strategy involves targeting a narrow segment or domain of activity and tailors its products or services to the needs of that specific segment to the exclusion of others.

4) A best cost provider strategy. This hybrid strategy involves giving customers more value for their money by offering upscale product attributes at a lower production cost than rivals.

These strategies relate to the organisation’s deliberate decisions on how to meet its customers’ needs, how to counter the competitive efforts of its rivals, how to cope with the existing market conditions, and how to sustain or build its competitive advantage.

Advantages and disadvantages of each business level strategy(THEY MAY ASK FOR EXAMPLE, NAME THE ADVANTAGES AND DISADVANTAGES OF COST LEADERSHIP STRATEGY) Cost leadership strategyThe advantages of cost leadership strategies include the following: an increase in competitiveness and market share through sustainable cost advantages protection for the organisation against competition as a result of its durable cost advantage protection against powerful suppliers because of large-scale purchases and resultant discounts protection against the power of buyers because of the low-cost advantage and competitive pricing possibilities durable cost advantages serving as barriers to imitation, barriers to the threat of substitute products and barriers

to the threat of new entrants to the market, which should be evident from analysis of the organisation's competitors

The potential disadvantages of cost leadership strategies include the following: not keeping up with changes in the external environment, for example, where core competencies relate to and

are sensitive to changes in technology which are not recognised not being aware of changing consumer needs and preferences with regard to products and services in the low-

cost market sector that could seriously affect competitive market position not being aware of industry dynamics, changing industry competitive forces, and the actions of competitors as

far as imitating, or even worse, improving on an organisation's low-cost core competencies, is concerned − the so-called "curse of complacency".

Differentiation strategyThe advantages of differentiation strategies include the following: They could safeguard an organisation against competition as a result of brand loyalty. They could enhance profit margins by slightly higher pricing than their competitors. Powerful suppliers are rarely a problem. Differentiators are unlikely to experience problems with powerful buyers. Threats of substitute products really depend on competitors' products to meet or exceed customer needs before

customers would be willing to switch products.

Effective differentiation and brand loyalty could act as barriers to entry.The disadvantages of differentiation strategies relate to the organisation's inability to maintain uniqueness from a customer perspective − not fully responding to the durability challenge of competitive advantage. Another danger stems from the design or physical features of a product, which are much easier to imitate than uniqueness, which stems from intangible sources like innovation, quality of service, reliability, brand and prestige.

Focus low-cost leadership and differentiation strategiesThe advantages of focus strategies include the following: protection from competitive rivals owing to the uniqueness of product(s) or service(s) power over buyers because of significant uniqueness and exclusivity passing supplier price increases on to customers customer loyalty as a protection against substitute products as well as new entrantsThe disadvantages of focus strategies include the following: high production costs, basically because of the inability to realise economies of scale not being aware of changing technology and consumer preferences not being able to effectively ward off an attack by rival differentiators

Best-cost provider strategy: The advantages of a best-cost provider strategy are seen to essentially stem from the implications of Porter's five

forces model for industry analysis. To recap, the five forces are threats from competitors, powerful suppliers, powerful buyers, and the threat of substitute products and new entrants. An organisation that is a cost leader is protected from industry competitors by its cost advantage, and is relatively safe as long as it can maintain this advantage because low prices are important for consumers. Differentiation strategies will be successful when the variety of products offered meets customer needs better than those of competitors in a sustainable way. As stated above, the distinguishing feature of a best-cost provider strategy is that it uniquely combines low cost and differentiation, while maintaining quality and providing good value at a reasonable price compared to competitors.

The disadvantages of a hybrid best-cost provider could result from not being aware of a changing competitive industry environment, and the risk that the cost leadership and/or differentiation features that underlie this strategy do not measure up to market expectations, leaving this strategy "stuck in the middle", and therefore uncompetitive.

Critically discuss the importance, benefits and risks of strategy. Importance and benefits of strategy:Strategy is a coherent narrative about the future direction of an organisation. It combines the views and thinking of many members of the organisation and communicates the outcome back to the organisation so that everyone follows the same strategy. It provides members of the organisation with a framework to guide their decision-making. It provides an actionable blueprint for achieving its aspirations. More specifically, the importance of strategy and, hence, strategic management is confirmed in the following broad terms: It provides for cohesive strategic thinking and an innovative and future-oriented decision framework for the

organisation. It pools the contributions by organisational members, thereby facilitating the communication of strategy to all. It is the verbalisation of the organisation's aspirations and serves as a source of motivation for everyone in the

organisation. Risks of strategyDespite its acclaimed benefits, strategic management also deals with risks of a strategic nature. Even though there are different perspectives on risk, strategic risk can be defined as “an array of external events and trends that can devastate a company's growth trajectory and shareholder value”. Strategic risk fall into seven major categories:1) Industry risk2) Technology risk3) Brand risk4) Competitor risk5) Customer risk6) Project risk7) Stagnation risk

Rowe cautions that there is a common view that strategic risk is about managing risk strategically instead of examining it as a category similar to operational, financial and other risk areas. This is a common view that mainly stems from the complexity and difficulty of identifying strategic risk.

Analysing industry attractivenessPorter argues that the greater the collective strength of the five forces, the less profitable and attractive the industry is likely to be. The way an industry is defined will therefore hold implications for the way substitutes and competing products are treated. Also, the way an industry group is defined has implications for the analysis of customers, suppliers and entry barriers. It is important to define an industry’s barriers carefully before analysing the five forces:1) Customers (power of buyers). Some customers exert greater economic power than others and have a greater

ability to dictate prices and contract terms as they negotiate with sellers. 2) Power of suppliers. Since suppliers provide all the required inputs to the organisation, including materials, capital

and labour, they have the power to influence pricing and profitability as well as create uncertainty.3) Existing competitors (rivalry among firms). Competitive rivalry is characterised by strategic manoeuvring and

retaliatory countermoves on the part of industry incumbents. This leads to increased competitive pressure resulting in profitability being affected.

4) Potential competitors (threat of entry). Existing industry players want to retain their market share and positions and are weary of new entrants since these can increase the level of competition leading to reduced profits. Organisations therefore create entry barriers which are forces intent on keeping potential competitors out while offering protection to existing industry incumbents. There are six barriers to entry:

Capital required; Access to distribution; Cost disadvantages not related to size; Economies of scale; Government legislation and regulation; and High switching costs.

5) Substitute providers (substitute products and services). Organisations providing products that serve as replacements, alternatives or substitutes to the products of an organisation.

Explain the role of value chain and resource based view in internal analysisThe activities of an organisation are effectively combined to create customer value. Activities are divided into five primary and four support categories.Primary activities and related capabilities include the following: Inbound logistics: receiving, storing and distributing inputs for the manufacturing of products by the

organisation. Capabilities: purchasing; material and inventory control systems Operations: activities that transform inputs into final products, i.e. facility operations, machines and assembly.

Capabilities: design and product development, quality control, component manufacture and assembly Outbound logistics: collecting, storing and distributing of products and services to customers. Capabilities:

distribution coordination, processes related to warehousing of products and dealer relationships Marketing and sales: marketing, sales and purchasing of products and services of an organisation. Capabilities:

innovative promotion and advertising, and a motivate sales force Customer service: everything involved in improving and maintaining the value of a product for the customer.

Capabilities: parts, warranty and servicing arrangements, and the quality and training of employeesSupport activities include the following: Administration and infrastructure support the entire value chain and include general management, planning,

financial management, information systems, legal issues and quality management. Capabilities: risk management and integration of the value chain

Human resource management involves the appointment, development and retention of employees at all levels, their compensation and all matters relating to their employment. Capabilities: training, skills development, staff recruitment and retention

Procurement is the purchasing function. Capabilities: inventory and database management Technology development involves all technology related to the operations and management of the organisation.

Capabilities: integrated management information systems and technology-management design and manufacturing

The objective of capabilities based competition is to build difficult-to-imitate organisational capabilities that distinguish a company from its competitors.

Critically discuss the obstacles and drawbacks in doing business in Africa. There are some key strategic issues facing Africa as a whole, and Sub-Saharan Africa in particular, which present challenges to investors and business in Africa: Lack of infrastructureThis is a significant damper on investment and business in Africa. For businesses, the lack of infrastructure may translate into a supply chain and distribution system that is inadequate and disorganised. Lack of industrial developmentMost of the member countries apply primary resource development and then export the raw product for secondary and tertiary economic processing. This results in extensive imports as the final products then need to be brought back into these countries for local consumption. Political instabilityFrom a business perspective, political instability in Africa takes the form of unpredictable government decision making that leads to volatility or armed conflict, making foreign investment extremely risky at best. High levels of povertyIn most African countries, a significant portion of the population fall in the ‘the bottom of the pyramid’ economic bracket. The bottom of the pyramid is those families surviving on less than the international poverty line of $2 per day. Those living at the bottom of the pyramid often endure poor living conditions. CorruptionThe cumulative effect of endemic corruption on business and the African economy is massive. According to Transparency International’s 2012 Corruption Perception Index (CPI), 90% of African countries scored below the ‘pass mark’. Corruption destroys lives and communities, and undermines countries and institutions. An inefficient public sectorIn 2013, economic growth for the African economy was negative. This dismal failure to alleviate poverty in sub-Saharan Africa can be attributed to an inefficient public sector. Lack of key skillsDue to limited access to education at various levels, African markets often present investors with lack of people with key business skills and an oversupply of semi-skilled and unskilled workers.

Describe the four pillars of corporate sustainability.Corporate sustainability has four pillars:1) Sustainable developmentThe notion of sustainable development had its roots in the triple bottom line of economics, environment and society. Sustainable business hinges on three main factors, namely ethical profits (economic), a healthy physical environment (environmental) and healthy communities (social). A holistic model of a sustainable business includes: environmental context social context economic context organisational context stakeholders strategic fit2) Corporate social responsibility (CSR)CSR refers to the role of business in society. It is based on the principle that managers have an ethical obligation to consider and address the needs of society, not solely the interests of the shareholders or their own self-interest.3) Stakeholder managementStakeholders are those entities that can affect or be affected by the organisation's actions. Not all stakeholders have the same effect or are entitled to the same consideration. The purpose of a stakeholder management approach is to help the organisation to prioritise and develop strategies for dealing with stakeholders4) Business ethics (corporate accountability theory)Ethical business is an essential element of corporate accountability. It is ultimately up to every organisation to define what ethical business means in its context and how it will deal with it. There are some obvious guidelines as to what would constitute unethical business practices: Behaviours that are illegal or in contravention of regulations or legal contracts. Discriminatory and unfair practices. For example, in the appointment of employees. Misleading stakeholders deliberately. Deliberately behaving in ways that are detrimental to stakeholders. Being unduly influenced in, for example, purchasing and recruitment practices.In strategic management it is important to have a code of conduct that will guide the actions of management.

Explain what sustainable strategies are and why they are important.The purpose of sustainable strategy is to generate a maximum increase in the outputs, turnover and other aspects of a company, the consumers of the company, and employee value by embracing opportunities in the macro- and market environments and managing risks derived from environmental and social developments.The following six elements are important in developing sustainable strategies:1) Environmental context – For strategies to be sustainable, they should not harm the physical environment in

which the organisation operates.2) Social context – Sustainable strategies contribute positively to the communities in which they operate.3) Economic context – This aspect relates to the economic success and contribution of the organisation, typically

measured by financial measures such as profits, return on equity and economic value added.4) Organisational context – The internal functioning of the organisation is critical to sustainable strategies. This may

relate to strategy implementation processes as well as internal role players such as the board of directors, management, employee effectiveness, corporate governance, and so on.

5) Stakeholders – Key stakeholders are creditors, directors, employees, government, owners, suppliers, unions and the community from which the business draws its resources. While it is impossible to satisfy the demands of all stakeholders, the organisation must, as far as possible, develop strategies that balance the demands of multiple stakeholders.

6) Strategic fit – Long-term strategic success is only possible if the strategies of the organisation are aligned with the internal and external environments, and if processes and capabilities exist to adapt to changes in the environment.

Define strategy, strategic planning and strategic management Strategy:Strategy can be described as the long-term direction of the organisation, a pattern in a stream of decisions, the means by which organisations achieve their objectives and the deliberate choice of a set of activities to achieve competitive advantage. Strategic planning:Strategic planning is the first phase of an integrated strategic management process, based on the concepts of strategic thinking and strategy, and comprises the following three main decision stages:

(1) Deciding on the future of the organisation(2) Analysing the organisation's external and internal environments(3) Selecting appropriate competitive strategies – strategic choice

Strategic management:Strategic management involves managers from all parts of the organisation in the formulation and implementation of strategies. It integrates strategic planning and management into a single process.

Illustrate and explain the strategic management processThe structure of the traditional process approach to strategic management is as follows:1) Strategic planning or strategy formulation

Deciding on the organisation's strategic direction and its long-term objectives Analysing the organisation's external and internal environments Selecting appropriate competitive strategies – strategic choice

2) Strategy implementation or execution requirements Leadership and culture Implementation competencies Learning organisation Systems, policies and procedures Organisational architecture and structure

3) Strategy review, feedback and control Control measures ensuring that strategies are on track

Traditionally the strategic management process is portrayed as a neat, cognitive (rational), logical and sequential process. This is evident from above structure. The traditional approach stems from microeconomics, and is widely criticised for its lack of consideration of the role of people at all levels in the organisation and changes in the environment.

Explain the nature of strategic decisions. Strategic decisions are those decisions that affect the long-term performance of an organisation and which relate directly to its vision, mission and objectives. Strategic decisions are generally ill-structured and characterised by uncertainty, risk and conflict. However, managers are expected to make effective decisions in the face of these challenges. Regarding their characteristics, strategic decisions: Are typically taken at higher organisational levels Contribute to and are directed by the organisation's vision Impact directly on an organisation's long-term direction Performance and sustainable success optimally exploit the links between the organisation's internal and external

environments Require large amounts of the organisation's resources Are usually irreversible once made Are entirely future oriented and likely to affect the whole organisation Are shaped by the values and expectations of stakeholders Usually have multifunctional or multi-business consequences

Explain the importance of strategic thinking and strategic direction setting in strategic planning and managementThe importance of strategic thinking relates to the conceptual nature of strategy and strategy formulation, which is referred to as the thinking part of strategic management. Strategic thinking may occur at the following three successive hierarchical levels in organisations: Lower level: self-awareness, critical thinking, intellectual curiosity and openness Intermediate level: exercising good judgement and understanding the business – problem solving, decision

making, business acumen and customer focus Higher level: successfully creating ”new and different” – dealing with ambiguity, innovative management and

perspective takingStrategic direction refers to the long-term goals of the organisation which can be expressed as, for example, vision and mission statements. It is the key element against which all strategic decisions should be measured. All strategies must be formulated with the strategic direction in mind. Advantages of clear strategic direction: It provides direction It guides all the organisational efforts towards achieving the same goals It binds the organisation members to work together towards achieving the overarching goal of the organisation It communicates to internal and external stakeholders what the organisation wants to achieve in the long run It guides decision making It distinguishes the organisation from other organisations It promotes a sense of shared expectations It contributes to synergy among managers and employees

Criticise the traditional process perspective on strategic management The major criticisms of the process perspective include the following: It is viewed as a rational and linear process, comprises consecutive phases and does not effectively embrace new

competitive realities. Because it is a linear process, the effects of the complex and dynamic nature of the external environment are not

fully considered. Strategy formulation and strategy implementation are seen as separate phases. It supports the notion that it is only the top management team or senior managers who develop strategy, thus

ignoring potentially valuable contributions by all levels of staff. It essentially ignores the development of strategy through dialogue, conversation and inputs from all

organisational levels, and on occasion, external expertise.Although the traditional process perspective had merit in earlier ears, when business environments were less dynamic, it has become outdated in almost every sense due to its rigidity. Strategic management has been found to have become as dynamic a discipline as the environments organisations have to operate in, as such it has become necessary to move away from the traditional approach to something more suited to the modern business. The traditional approach, however, remains a valuable basis to work from, for any person wishing to understand strategy and strategic management.

Explain the various methods for macro-environmental analysis

There are four important techniques which can be employed when analysing the external environment:1. Scanning involves detecting and identifying early signs of potential environmental changes and trends. It entails

studying all segments in the broad environment and often reveals ambiguous, incomplete and or unconnected data. Many firms use special software to help them identify current events and trends using public sources on the internet. For instance, Amazon.com records information about individuals visiting its website. Environmental scanning will enable managers to forecast changes in the expected profitability of the industry and to adjust their strategies accordingly.

2. Monitoring concerns the detection of meaning through ongoing observations of environmental changes and trends. Analysts observe environmental changes when monitoring to see if an important trend is emerging from among those spotted through scanning. For example, a large food retailer in SA may plan to add diverse ethnic cuisine to its offering. In order to do that, it will monitor growing demand for various foods from ethnic groups settling in urban areas. The food retailer will also need to identify important stakeholders and to understand its reputation among these stakeholders as the foundation for serving their unique needs. Scanning and monitoring are particularly important in industries with high technological uncertainty.

3. Forecasting comprises developing feasible projections of what might happen, and how quickly as a result of the changes and trends identified through scanning and monitoring. For example, analysts may want to forecast the time that will be required for a new technology to reach the marketplace because this will give an organisation an idea of how much time will be available to train employees to deal with the anticipated changes. Forecasting events and outcomes accurately is nevertheless a challenging task for most organisations.

4. Assessing is about determining the time and importance as well as the implications of environmental changes and trends for organisations’ strategies and their management. Through scanning, monitoring and forecasting, analysts are able to understand the general environment and assess the implications of trend and changes. Without assessment, the firm is left with data that may be interesting but of unknown competitive relevance. In other words, although the gathering and ordering the information is important, the appropriate interpretation of that intelligence to determine if an identified trend, change or event in the external environment is an opportunity or a threat should be paramount.

Identify the impact of industry forces on profitability Customers. Note the four requirements for powerful customer buying power that would increase industry

competitiveness and reduce industry profitability. Power of suppliers. Note the five requirements for powerful suppliers that can increase industry competitiveness

and reduce industry profitability. Existing industry members and rivalry. Note the five requirements for intense rivalry and their effect of

increasing industry competitiveness and reducing profitability where they prevail. Potential competitors and threat of entry. Note the numerous underlying elements that could potentially

influence this factor, the critical question being the ease of entry, or stated otherwise, the industry's “barriers to entry”. Familiarise yourself with the six barriers to entry referred to and the fact that ease of entry will increase industry competitiveness and adversely affect profitability.

Providers of substitute products and services. Note the meaning of substitute products. It is possible that an increase of substitutes coming from outside the immediate industry but which could replace industry products would increase competitiveness and reduce industry profitability.

Government intervention. Note that government intervention could be enhancing or constraining. It could affect the structure, competitiveness and profitability of industries, especially where interventions are industry specific

Complementors as additional forces. Complementors are products that enhance an industry member's own products

To summarise, where the original five factors all have high ratings, industry competition increases and profitability decreases, and vice versa.

Explain the role of corporate governance in corporate sustainabilityWhereas sustainability examines the strategic decisions of an organisation, corporate governance refers to the frameworks provided for governing sustainability. Corporate governance is described as the system by which corporations are directed and controlled, and it performs the following functions: It specifies the distribution of rights and responsibilities among different participants in the corporation. It specifies the rules and procedures for making decisions in corporate affairs. It provides a structure through which corporations set and pursue their objectives, while reflecting the context

of the social, regulatory and market environments. It is a mechanism for monitoring actions, policies and decisions of corporations.

It is a mechanism for aligning the interests of different stakeholders.In most countries, corporate governance frameworks have been adopted to provide corporations with specific guidelines on how to implement and manage corporate governance procedures. Ultimately the role of governance frameworks is to provide mechanisms to help corporations to attain sustainability.

Corporate level strategic options: creating corporate value and synergyIn order to create value for the organisation as a whole, executives need to make decisions about the growth path of the organisation. Corporate level strategies deal with a number of products and services that the company will offer and the markets which will be pursued. We can broadly classify these strategies into the following: Internal growth strategies External growth strategies Corporate combination strategies Turnaround or exit strategiesEach of these categories can be achieved by employing different strategic options. Corporate strategic options:

Internal growth External growth Combination strategies

Turnaround / exit strategies

Corporate strategies Market penetration. Market development. Product development.

Integration Acquisitions MergersDiversification

Strategic alliances. Joint ventures.

Retrenchments. Recovery. Divesture. Liquidation.

Internal growth strategiesDepending on whether products and markets are new or not, three internal growth strategies are possible: Market penetration. This strategic option aims to increase market share by selling more of the organisation’s

existing products and/or services to its existing markets. Market development. The aim of this strategy is to grow turnover by selling the organisation’s existing products

and/or services to new markets. Product development. This strategy aims to grow turnover by selling new products or services to the

organisation’s existing market.

External growth strategiesSome organisations choose to grow by adding new businesses to their current portfolio. Strategic options to achieve external growth can be broadly classified as diversification and integration. Diversification strategiesDiversification strategies are driven by two key objectives, namely growth and risk reduction. Diversification that seeks only growth or risk reduction is likely to destroy value. Once an organisation decides to diversify, it faces the choice of whether to diversity into related or unrelated businesses. Businesses are said to be related when there is a close resemblance in how they perform value chain activities. Integration strategiesOrganisations often acquire other businesses similar to their own to grow through acquisitions of and/or mergers with competitors (horizontal integration), or suppliers or distributors (vertical integration).

Turnaround and exit strategiesIn order to effect a turnaround, executives need to acknowledge problems and consider strategic options that could yield immediate returns. Unfortunately, sometimes there is no other option but to cut losses and exit the industry, by filing for liquidation.In the shorter term, the most successful turnaround strategies focus on reducing direct operational costs and improving productivity gains. Three strategic options that can be used to achieve these objectives are: Retrenchment strategies are typically used to reduce the size or diversity of the organisation. The strategy takes

two forms, namely cost cutting and reducing non-core assets. Recovery is used to stabilise the business. This strategy is often employed in response to externally induced

problems and a recovery strategy aims to introduce new entrepreneurial blood in the form of turnaround specialists or a new leadership team.

Revenue growth strategies aim to grow sales by dropping prices, increasing promotions, product modification, more sales staff and attentive customer service. Turnaround can also be achieved through divesture.

Critically differentiate between deliberate and emergent strategies Deliberate strategies:

Deliberate strategies are implemented and realised as intended, and tend to emphasise central direction and hierarchy. In order for a strategy to be deliberate, three conditions need to be satisfied:1) The management team must know precisely what they wish to achieve and what they intend for the

organisation before any actions are taken2) Organisation means collective action. All members of the organisation must believe in the strategy and work

towards it3) The strategy must be realised exactly as intended, with no external interference. Emergent strategies:For a strategy to be emergent, there must be order in the absence of intention about the strategy. Thus, strategy may suddenly be rationalised to mean something very different from what was originally intended. Emergent strategies are actions taken by middle managers within the organisation. Emergent strategy implies learning what works – taking one action at a time in search of that viable pattern of consistency. It is also frequently the means by which deliberate strategies change. Strategies are open, flexible and responsive to allow the organisation to learn and adapt to its environment. It enables the senior management team, to surrender control to those middle level managers who have the information current and detailed enough to shape realistic strategies. In short: Emergent strategies typically have to do with the actions of middle managers. Emergent strategies imply learning tactics that work. Emergent strategising often precedes the full understanding of situations. Emergent strategies open the way for collective action and convergent behaviour. Emergent strategies can influence intended strategies during their implementation.

LONG QUESTION (THIS WOULD THEN FIT WITH THE CASE STUDY)

Explain how organisations can evaluate business level strategiesOnce a number of feasible strategy options have been formulated, these strategy options have to be evaluated, and the most appropriate strategy or combination of strategies selected for implementation. Strategies can be evaluated in terms of their suitability, acceptability and feasibility. Suitability. Suitability considers whether the proposed strategies address the key issues related to the

opportunities and threats the organisation faces. Suitable strategies need to take advantage of external opportunities and internal strengths, whilst overcoming external threats and internal weaknesses. Suitability is the degree to which an organisation's strategy deploys its core competencies to exploit external opportunities and overcome external threats and internal weaknesses. Methods that are available to test suitability include SWOT analysis, the five forces industry analysis, and scenario analysis and planning.

Acceptability. Strategies are acceptable if the expected performance outcome of the strategy meets the expectation of stakeholders. Since the acceptability of a strategy option is determined by expected performance outcomes, this criterion requires strategists to consider risk, return and stakeholder reaction. Tools such as sensitivity analysis, financial ratios, and break-even analysis are useful to evaluate risks. The second consideration is return, i.e. financial benefits which stakeholders are expected to receive from a strategy. To assess return, strategists can use different measurements such as financial analysis, shareholder value analysis, cost-benefit evaluations and the real option approach. To assess the final consideration, which is the reaction of stakeholders, strategists can make use of stakeholder mapping. This requirement relates to the ability of the strategy to produce the expected results over the short and the long term in line with stakeholder expectations.

Feasibility. Finally, a strategy is feasible when the organisation has, or can obtain, the capabilities required to deliver a strategy. Feasibility implies that the organisation is capable of executing the strategy. The following questions need to be answered: Can the strategy achieve the set objectives? Can the strategy be implemented effectively and efficiently? Are the required resources and capabilities available for implementation of the strategy?

For the feasibility measure, the organisation’s financial and human resources as well as resource integration need to be evaluated.

Once formulated, strategies need to be evaluated according to the above-mentioned measures discussed in this section if they are to be deemed "fit for purpose".

Explain what is meant by strategy as practice? Critically defend why is it an appropriate approachCriticism of the process approach to strategic management have provided the impetus for new insights into and approaches to strategic management to cope with new environmental and competitive realities. Responses to these

challenges include dealing with the increasing trend in emergent as opposed to deliberate strategies, and adopting a strategy-as-practice approach. The key insight of strategy-as-practice studies is that strategy work (strategizing) relies on organisational and other practices that significantly affect both the process and the outcome of resulting strategies. Thus, the scope of the strategy-as-practice perspective is wider than just the strategy formulation itself. The practice perspective focuses on social practices as the basis for explaining strategy emergence. It seeks to identify the strategic activities reiterate in time by the diverse actors interacting in an organisational context. The strategy-as-practice perspective is concerned with the detailed aspects of strategizing – how strategists think, talk, reflect, act, interact, emote, embellish, politicise, which tools and technologies they use, and the implications of different forms of strategizing for strategy as an organisational activity. The practice perspective is also concerned with what people do less often during board meetings, strategy breakaways and other occurrences. Strategy-as-practice researchers recognise the complexity of the process and the potential influence of organisational members, not only through formal organisational processes, but also in everyday activities. The strategy-as-practice research field is not only focused on the micro-activities, but also on the context within which these micro-activities take place.The strategy-as-practice perspective supports and builds on the strategy process perspective and views strategy as a situated, socially accomplished activity – meaning it is done by people and influenced by their context. It refers to activities that are connected with particular practices such as strategic planning, annual reviews, strategy workshops and their associated discussions.The promise of strategy-as-practice is an enhanced capacity to design more practical strategy processes and develop more trained and skilled strategists and practitioners to effectively address the real complexities and unintended consequences of organisational life.The strategy-as-practice perspective distinguishes between strategy praxis (the work), strategy practitioners (the workers) and strategy practices (the tools). The strategy praxis, practitioners and practices are discrete, but interrelated social phenomena. It is not possible to study one without also drawing aspects of the others.

Explain the role of strategists and managers in the context of strategy as practice Role of strategists and managers in the context of strategy as practice:A strategist is the ‘doer’ of the strategy. Whereas top managers have traditionally been regarded as the custodians of strategy, the idea that other people and even artefacts can also be strategists is gaining ground. Any individual or group within the organisation that controls key actions can be regarded as a strategist. Since objects can also control or influence key actions, we can extend this definition to include presentations, written documents, information systems, and so on. Individual strategists will, cognitively speaking, fall into one of four broad types: detail-conscious, big-picture conscious, non-discerning, and cognitively versatile.

Strategists DescriptionDetail-conscious Practitioners who are detail-conscious are highly analytic and driven by the minutiae of

available data, with little or no regard for intuition. They have a tendency to approach problems in a step-by-step, systematic fashion.

Big-picture conscious

Practitioners who are big-picture conscious can become preoccupied with gaining an overview of the problem at the expense of the details. They are highly intuitive in orientation, with little or no regard for analytical approaches to problem-solving or decision-making.

Non-discerning Non-discerning practitioners deploy minimal cognitive resources in order to derive strategic insight, being disciplined to process the detail or to extract a bigger picture from such detail. They rely on opinion and wisdom received from others and thereby relieve themselves of the burdens of analytic and intuitive processing altogether.

Cognitively versatile

These practitioners possess in equal abundance the inclination to attend to analytical detail and cut through that detail, as and when required. This type of practitioner is able to switch more readily between analytic and intuitive processing strategies

Top managers as strategists:The role of the top management team is to set the overall strategic direction of the organisation by formulating the strategy, allocating the resources and reviewing the strategic success. They are responsible for gathering information, from both the internal and external environment, and choosing strategies and actions to help the organisation gain a sustainable competitive advantage. They then communicate this to middle management, explaining the rationale behind their strategic choices so that middle managers can link the strategies and strategic goals to implementation efforts. Top managers are also responsible for the review of strategies. They reflect upon their decisions and actions, and this may lead to changes or new decisions and actions. Board of directors as strategists:

Boards of directors of companies influence strategizing in organisations, being the focal point and custodians for corporate governance. Although strategic decision making is done by senior management, the board of directors influences the overall direction and monitors the relationship between management and other stakeholders to ensure the organisation is sustainable in the long term. Middle managers as strategists:Middle management is now much closer to the strategic apex and makes a variety of contributions to the formulation, implementation, review and success of strategies. Three strategic roles of middle managers:1) Implementing deliberate strategy - This role is aligned with the traditional role of strategic management, but

remains valid in the contemporary business organisation, especially in relation to deliberate strategies. It deals with managerial interventions, actions and tasks to align the organisational action with the strategic intention of top management. Middle managers’ ability to understand, anticipate and manage processes needed to secure positive and pervasive commitment to strategy is a critical general management implementation skill. Middle managers implement strategy by translating corporate strategy into action plans and individual objectives.

2) Synthesising information - This is the interpretation and evaluation of information. How middle managers understand and share information influences the success or failure of the organisational strategies. Not only do middle managers provide information concerning internal and external events to top management, but they are also responsible for passing information down to subordinates, which can reduce uncertainty and resistance to change. Middle managers are considered linking pins, equipped with the ability to combine strategic macro-information and hands-on micro-information.

3) Reshaping the strategic thinking of top management by selling to them strategic initiatives that diverge from their current conception of strategy

This role links with emergent strategizing. Middle managers frequently become organisational champions for initiatives developed at the operating level. This role is distinct from product championing as it centres on influencing corporate management to adjust their current concept of management. It is defined as the persistent and persuasive communication of strategic options to top management. By proposing and defining issues for top managers, middle managers provide important contributions to an organisation’s strategic direction and thereby influence organisational effectiveness. Consultants as strategists:The management consulting industry is considered to be one of the most powerful forces shaping organisational strategy. Management consultants are practitioners who are considered to be knowledgeable about the business environment and organisations. They have a wealth of industry contacts and a good reputation based on experience. Most importantly, management consultant firms pool their resources, knowledge and experience across industries and are authoritative forces in advising on best practices.People bring with them their own personalities and backgrounds in the form of culture, education, politics, and religion. Strategizing is therefore not only a cognitive activity, but is fuelled by the individual’s quest for personal power. Strategizing is essentially what strategists do, and can be described as devising or influencing strategies. Through their actions, strategists influence the allocation of the organisation’s resources and control or influence key actions. Strategizing and strategy making are often used interchangeably and include strategizing activities. Strategizing not only involves those within the organisation, but also consulting firms, business schools, business media, academic journals, professional societies, enterprises and management in a joint endeavour that all recognise as somehow strategic.

Critically differentiate between resources, capabilities and competencies ResourcesResources are the productive assets owned by an organisation and can be grouped into five primary categories:1) Financial capital (e.g. the organisation’s ability to generate funds, internally or through loans and investments)2) Physical capital (e.g. operational and manufacturing plant equipment, location and access to raw materials)3) Human capital (e.g. knowledge, management and employee insight, intellect, training, experience and judgment)4) Organisational capital (e.g. reporting structure and management, including planning, coordinating, controlling)5) Technological capital (e.g. ICT systems)Resources that can contribute positively to an organisation’s strategy and lead to sustained competitive advantage need to be identified. An organisation will possess some resources that are differentiating, valuable, rare and inimitable, and will accordingly pursue different strategies and achieve different levels of success. This heterogeneity in resources can be acquired and sustained over a longer period within an industry as it may not be perfectly mobile across organisations.Resources include individual, social and organisational factors. To determine the resources of an organisation, a comprehensive directory should be developed. The directory should differentiate between tangible and intangible

resources and capabilities, and human resources (tacit knowledge). Tangible resources are physical, observable and quantifiable assets of the organisation and include physical things such as equipment, money, structures, sophistication and location of plant, formal reporting structures, and technology used, and patents. Intangible resources are a subset of the strategic resources of an organisation and the broad categories include knowledge, intellectual capital, human capital, structural capital, customer capital, organisational capital, innovation capital and process capital, and have a finite life. Intangible resources include the reputation of an organisation and that of its product, employee know-how, perception of quality, ability to manage change, ability to innovate, team-working ability and participative management style. Competitors find it difficult to understand, acquire, substitute or imitate intangible resources, therefore organisations often rely on intangible resources for their core competencies and capabilities. Consequently, more intangible and unobservable resources will lead to more sustainable competitive advantage.There are three types of intangible resources:1) Human resources (including knowledge, trust and managerial capabilities)2) Innovation resources (including ideas, scientific capabilities and capacity to innovate)3) Reputational resources (including brand name, reputation with customers, perceptions of product quality and

reliability)Not all knowledge is a source of competitive advantage as some knowledge is public. Private knowledge, however, can be valuable. Knowledge can be explicit or tacit: Explicit knowledge can be taught of conveyed with ease. Tacit knowledge is gained through experience, insight and intuition, and is difficult to share or record, making it

virtually impossible to emulate or sell. Therefore tacit knowledge can be very valuable and can lead to competitive advantage.

Individual resources have limited worth and do not lead to competitive advantage, but a combination of resources, both tangible and intangible, can create valuable organisational capabilities. CapabilitiesCapabilities are the capacity of an organisation to deploy resources for a unique end result. They are organisation-specific clusters of activities developed through complex interactions between tangible and intangible resources over time and reflect what an organisation excels at compared to other organisations. They can also be information based.Key characteristics of capabilities are that they are valuable across various products and markets, embedded in routines and tacit. Capabilities are what the organisation can do exceptionally well. Whereas resources are static and will generally deplete over time, capabilities will increase with use and become more valuable. Capabilities can be within business functions, can be linked to technologies or product design, can involve the ability of the organisation to manage linkages between elements of the value chain or refer to the capacity of the organisation to deploy resources through processes.It is important to distinguish between capabilities and dynamic capabilities. Capabilities are ‘high level routines that, together with its implementing input flows, confers upon an organisation’s management a set of decision options for producing significant outputs of a particular type’. A capability is reflected in high-level activities (routines) that produce important outputs of significant value that contribute to an organisation’s competitive advantage. Dynamic capabilities, on the other hand, are geared towards effecting and driving organisational change; they are essentially strategic in nature and accordingly define the firm’s path of evolution and development. Described in a different way, dynamic capabilities are those capabilities that help organisations to learn the new capabilities they require to adapt to environmental changes. Absorptive capacity (the ability to acquire, assimilate and use external information) is an example of a dynamic capability that drives organisational learning and change.Carefully developed capabilities from the basis of competitive advantage and are therefore primary differentiators of organisations from their competitors. Building difficult-to-imitate capabilities is of great importance to an organisation as this ensure differentiation. Core competenciesCapabilities or competencies are the same thing. However, core competencies (also referred to as distinctive capabilities) are those capabilities or competencies that distinguish an organisation from others in an industry and form the basis of its competitive advantage, strategy and performance. Core competencies make a disproportionate contribution to customer value and the efficiency of its delivery, and serve as a basis for market entry. Core competencies that are internal strengths of an organisation enable it to capitalise on opportunities that are identified in the environment.Core competencies involve the combination of various resources and capabilities. The development of core competencies usually takes place over a period of time and is a process of accumulation and learning how to use a unique combination of resources and capabilities. It also often involves communication and an intense commitment

to working across organisational boundaries. It can entail the coordination of diverse production skills and integration of multiple streams of technology.Their complex coordination, integration and harmonisation across production skills, technologies and capabilities make core competencies difficult to imitate. They enable access to a variety of markets and significantly contribute to perceived customer benefits from products and services. Most successful organisations will have only one or two core competencies, while many average organisations will have no distinguishing core competencies at all.

Explain how the value of resources, capabilities and competencies is appraised Capabilities and resources have the potential to become core competencies and these core competencies can result in competitive advantage, but only if they meet certain conditions. A resource-based framework for analysis of an organisation will determine the resources and capabilities that will result in core competencies. For resources and capabilities to become the core competencies, they should be valuable (V), rare (R), inimitable and non-substitutable (I), and exploitable by the organisation (O), (VRIO). These measures can be used to test the strategic value of resources and capabilities.Value:Valuable (V) implies the ability of the organisation to transform a resource into a product or service at a lower cost or with a higher value to the customer. Capabilities are valuable when they enable an organisation to implement a strategy that improves efficiency and effectiveness. To be valuable, the capabilities must either increase efficiency with regard to outputs or inputs or increase the revenue of an organisation. For example, an information system could reduce customer service agents required or increase the number of calls that the same number of agents can answer. Alternatively, effectiveness must increase, meaning that some new sources of revenue not previously held should be enabled. For example, the opening of a new regional campus that will access the student market. Value is dependent on the type of strategy, for example a low-cost strategy such as Kulula.com or a differentiator strategy that enhances features such as African Pride hotels may require different capabilities.Rarity:A valuable resource and/or capability that an organisation owns that other organisations do not have, and that is not generally availability in the open market, is rare (R).Inimitability:Inimitable capabilities (I) and core competencies are valuable, unique and complex resources, including intangible resources (such as reputation, networks, client trust and intellectual property) and capabilities (such as knowledge, the culture of the organisation, skills and experience) that make it difficult for competitors to copy what an organisation is doing, resulting in sustained competitive advantage. It is easy copying something valuable that an organisation started doing first, its competitors will soon follow and in the process erode any competitive advantage.Imitation by competitors is prevented if: they do not understand the reason for success they do not have the same unique historical conditions the cause of the effectiveness is uncertain due to social complexity (for example, trust, teamwork)Non-substitutability is also part of inimitability of resources and capabilities and means that there are no equivalent resources, duplicates, substitutes or imitations that can be exploited to implement the same strategies. The strategic value of a capability or core competency of an organisation increases when it is difficult for competitors to substitute it and also when it is difficult for them to identify, discern or observe it. Specific knowledge of the organisation and trust relationships are not easily observable and therefore difficult to copy.Organisation:The organisation’s structure and systems (O) should be suitable for a specific competitive advantage. If an organisation cannot be geared to exploit a resource or capability, it will have little value. Managerial awareness, of both the potential competitive advantage and the action required to realise it, is essential.

Explain the external environment relating to Africa as a frame of reference for doing business in Africa Local customs and customer preferencesInvestors, as well as organisations exporting to countries in Africa, should bear in mind that countries are diverse and differ in terms of the following: their political stability; legal system; size of their economy as indicated by GDP and GNP levels; level of economic development; rate of economic growth; size of the country; population size; levels of disposable and discretionary income; sophistication of infrastructure; industry characteristics; market size and consumer needs; and culture, as well as customs and especially religious traditions. These are but a few determinants that business leaders need to contemplate as a start. Comprehensive country analysis would, for example, further involve country risk analysis and taking into account information derived from the Human Development Index and information made available by organisations such as Transparency International.

The rationale for this brief overview is to reaffirm that an organisation's international or global strategy which is successful in its home country in most cases will not work in Africa. The message is clear − deciding on business involvement in Africa must be preceded by extensive research and strategic analysis, most importantly about the actual market needs and customer preferences. LegislationInvestors and business leaders should be aware of the legal dispensation of the country they are involved in or contemplating becoming involved in. An intimate knowledge of a country's legal system, laws and regulations as well as the extent to which the rule of law and effective law enforcement prevail is indispensable. Relevant issues would include those relating to ownership, labour relations, taxation, customs and excise, direct investment, securities exchange and listing requirements, repatriation of profits and dividends to parent organisations in the home country, foreign exchange controls and transfer pricing rules. Political considerationsOwing to the political complexities that organisations face when setting up business in African countries, ways that could be considered to circumvent or overcome such complexities include the following: partnering with local stakeholders for a number of reasons, including ease of entry into the country, shared

ownership (international joint ventures) or involvement by agreement (strategic alliances) as a source of local market knowledge, potentially favourable government relations, and sharing risks, especially in the early stages of a venture where uncertainty is high

responding positively to an awareness of community, cultural and social needs in terms of customised products; certain human resource management practices and an awareness of political events and national priorities could enhance organisation-government relations. See the experience of SABMiller below.

Creative supply chain managementOwing to underdeveloped infrastructure in many of the countries in Africa, organisations have to devise their own, innovative supply chain solutions, especially in terms of logistics relating to procurement and inbound transportation and the distribution of products to markets. Study the following ways in which these challenges can be addressed: investing in own infrastructure product innovation to meet specific market needs developing local suppliers to ensure consistent supply of raw materials developing distribution channel strategies that are sufficiently flexible to cope with both formal and informal

distribution via wholesalers and retailers to serve their markets effectivelyIn the case of land-locked countries, logistics could present a nightmare. Not only could customs clearance at a country's nearest port take relatively long, but cross-border customs clearance en route could cause further delays, while poor infrastructure, especially roads and ineffective rail transport, add to already existing time delays that all translate into higher costs, potential production delays and getting products to market. Investing heavily in talentThe lack of skills, and especially key managerial skills, remains a drawback in African countries. Organisations doing business in Africa need to identify, attract and retain talent, but also invest in training and development, including mentorship.

Explain the importance of stakeholders and stakeholder management for sustainable businessAny organization is the sum of its stakeholders. Stakeholders have different perspectives on the organisation, each looking to take something out of it and all have an ability to influence that success. To achieve a competitive advantage an organisation needs to meet the needs of the stakeholders which means adding value. Adding value can be defined as adding certain characteristics to the product/services that the competitor and customer cannot do for themselves. Anyone who is directly influenced by the acts of the organization is seen as a stakeholder. Stakeholders usually have divergent goals and are driven not only by profit or other financial aspects. To ensure sustainability and long term survival of the organization it is important to ensure that the claims of the stakeholders are met. In the event of their claims not being met, organisations will lose their competitive advantage and ultimately losing their sustainability over the long run. Stakeholders are those entities that can affect or be affected by the organisation’s actions. Some examples of key stakeholders are creditors, directors, employees, government, owners, suppliers, unions, the environment and the community from which the business draws its resources. Not all stakeholders are equal. For example, customers are entitled to fair trading practices, but they are not entitled to the same consideration as the company’s employees. Any strategic decision taken by an organisation is likely to have positive and negative consequences for different stakeholders. When a company needs to cut costs and plans a round of lay-offs, this negatively affects the community of workers in the area and therefore the local economy. Shareholders, however, may be positively

affected, as the company may return to profitability after this decision. The extent to which organisations should consider stakeholders in their decision making is thus a point of contention.The shareholder view argues that the claims of shareholders, the owners of the business, are paramount to any business. Without this focus on shareholders, the organisation would not attract investors and this would affect sustainability. Supporters of this view argue that in the long run, profit benefits all stakeholders.On the other hand, the stakeholder perspective argues that shareholders cannot be the sole focus – if they are, other stakeholders may withdraw their support for the organisation to its detriment. Supporters of this view accordingly argue that all stakeholders should be considered in the strategic decision-making processes of the organisation.As a middle ground, some observers have argued that there should not be a great chasm between the two views, as an enlightened shareholder perspective is really no different to an enlightened stakeholder perspective. In terms of sustainable strategy, the organisation should thus try to balance the needs and claims of its key stakeholders. In determining the relative importance of stakeholders, the organisation needs to weigh up the claims of stakeholders and the relative power and influence of stakeholders. In the case of a strike, a union may demand a substantial increase in their pay, which the employers usually claim they cannot afford. Whether the demand constitutes a legitimate claim is an issue of debate, but in the meantime the workers are exerting their power by withholding labour, to the detriment of the company. The stakeholder salience model can assist managers in determining the relative importance of stakeholders of the organisation. It should be noted that the importance of stakeholders will differ from firm to firm and from industry to industry.The determining factors are as follows: Stakeholder power is determined by the extent to which stakeholders control the resources required by the

organisation. The more resources and the higher the degree of control, the more powerful the stakeholders. Employees and unions, for example, have direct control over the human resources of the organisation, whereas the community does not always have similar control.

Stakeholder legitimacy is determined by the extent to which the stakeholders are affected by the decision of the organisation, and the more affected, the higher the legitimacy. Once again, the employees of the organisation are directly affected by the organisation’s decisions, and therefore have a high level of legitimacy.

Stakeholder urgency is determined by the time sensitivity of the stakeholder’s claim, and the level of importance to the stakeholder. The more urgent and important the claim, the higher the level of urgency.

We can use these attributes to classify stakeholders into three broad classes: Latent stakeholders have only one attribute, either power, or legitimacy or urgency. For example, for many

organisations the environment may be such a stakeholder. It has legitimacy, as it is affected by the decisions of the organisation, but may not have power or urgency.

Expectant stakeholders have two or three attributes. For example, the government may have power and urgency, but may not have a high level of legitimacy.

Salient stakeholders have the strongest claim, and will be most important to the organisation. For example, unions have high power, high legitimacy and high urgency. However, it could be said that shareholders in this case are also salient stakeholders, which may help to explain the deadlock between management and labour regarding the remuneration claims of the union.