2011 All Information MBL2

Unisa Graduate School of Business Leadership
2011/0/0605-X/MBL 2
LETTER 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 ABDULAI
CHIEF EXECUTIVE OFFICER
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CONTENT
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 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. Assessment
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.
GROUP ASSIGNMENT 1 GROUP ASSIGNMENT 2

MODULE CODE
FINAL 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 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 CODES PROVISIONAL TEST DATES TIME

MBL921M 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 CODES PROVISIONAL EXAMINATION PROVISIONAL SUPPLEMENTARY

DATE EXAMINATION 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. Feldman
People 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 DESCRIPTION

1 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

1 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.
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• 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.
• 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.
• 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.
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6. WEB LINKS
• www.ccl.org
• www.leaderx.com
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?
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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 University
Vroom Yetton
Hersey and Blanchard
Fiedler’s LPC
Path-goal
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 profiles
Appropriateness, currency, analysis and integration. 30marks
Thoroughness of description, reflects review questions
Discussion of general themes 20 marks
Critical analysis and synthesis of themes
Discussion of the group’s reflections on their learning 20 marks

Recommendations 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
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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.)
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 for

effective 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 approaches 20
Appropriateness, currency, analysis and integration. marks
Thoroughness of description, reflects review questions
Applicability to the African context 10
SA context and literature and discussion of applicability. marks
Generalisability of the findings/ methodologies/ 10
conclusions across industries marks
Shortcomings and possible follow up research in each 20
reading marks
Comparison of articles and integrated leadership model for
organisations in your country: 20
Comparison, similarities and difference in articles marks
integrated leadership model
Conclusions and recommendations:
General conclusions 10
Recommendations on how to improve approaches marks
Technical structure of assignment:
Writing style, executive summary, index, grammar and spelling, 10
organisation of report, correct reference style marks
TOTAL 100%
7.1.2 GROUP ASSIGNMENT 2 Due date 04/08/2011
Learning outcomes
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• 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 marks
Question 2 20 marks
Question3 20 marks
TOTAL: 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 you
include 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 references
and examples.
Maximum length: no more than 20 pages double spaced typed.
ASSESSMENT FORM: REPEATER ASSIGNMENT 2 MBL921-M
CRITERIA AND WEIGHT MARK MARK ALLOCATED

Structure and planning of article 10 marks
Description, discussion and applicability of relevant 30 marks
Theory/Literature review/
Appropriateness, currency, analysis and integration.
Thoroughness of description.
Critical analysis and synthesis towards “Africanizing” 30 marks
Leadership Theory”
Conclusions and recommendations:
General conclusions and recommendations on how to 20 marks
“Africanize” Leadership Theory”
Technical structure of assignment:
Writing style, executive summary, index, grammar and 10 marks
spelling and correct reference style
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.
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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.
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).
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Behavioural Context Created by a “Leadership”

Approach to Organisations
Stretch
Support Trust
Discipline
Bartlett & Ghoshal, 1995
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.
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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.
• 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
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roughly 90 years. Formal leadership theory began with a trait paradigm and moved on to emphasise
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.

• 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.
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• Ulrich, D & Smallwood N. 2007. Building a leadership brand. Harvard Business

Review
85(7/8):92–100.
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.
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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.
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.

• 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.
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• 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
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
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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
• 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.
• 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?
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• How did the followers react to the changes? Why?
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
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• What did I learn about leadership and organisational culture in topic 6?

• Describe the dominant culture in your organisation.
• 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
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5. Control: The degree to which rules, regulations, and direct supervision are used to
oversee and control employee behaviour.
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.
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(i) List some artefacts of the culture.

(ii) Describe the key values of the organisation.
(iii) What basic assumptions prevail in the organisation?
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
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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.
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.
• 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?
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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.
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.
(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
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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
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

1 Shareholder wealth creation
2 Investment decision making
3 Financial structuring
2.2 Study school 2

1 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 LINKS
A 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.
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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.
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 Funded with
100% equity 100% debt
ROE
Debt-equity ratio
Expected Tax rate
Number of shares in issue
Expected Market
Capitalisation
Expected EPS
Expected dividend per
share
Book value per share
Free cash flow per share
Value per share
WACC
EVA
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 measures
3. 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 techniques
2. 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
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available information. Do not mention company secrets or company specific risks.

3. Some methods for the calculation of valuation
a. Forecast the Income statements and balance sheet for the next seven years and then
base your valuation on this.
b. Use the Gordon formula – (The DDM, The Free cash flow, two stage models)
c. Book value
d. Use P/E ratios
e. Discounted cash flow methods
f. Methods suggested by the risk committee
4. Some risk measures:
a. Probability distributions
b. Sensitivity analysis
c. Likelihood functions - Probability is the likelihood of an unfavourable outcome (Oxford
Dictionary)
d. Monte Carlo simulation
e. Measures suggested by the risk committee
5. You can estimate (calculate) risk factors influencing the company by:
a. Regression analysis
b. Decision trees
c. Monte Carlo simulations
d. 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.
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Use more than one technique and compare the respective techniques
Note 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.
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
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• 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.
• 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.

• 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
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company’s value. A valuation must be seen in relation to the risk. A standalone valuation is
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.

• 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.

• 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
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• discounted payback
• 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.

• 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.

• 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)

1 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)

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)
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• Eastman Kodak: Meeting the Digital Challenge (Grant casebook p. 93)

• Richard Branson and the Virgin Group of Companies in 2004 (Grant casebook p. 308)
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:
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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:
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; and
b. 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.
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• 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

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 analyse, describe and develop sources of a competitive advantage.
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.
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Think about the following:
• 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 develop business plans for cross-border management.
• Students understand and are able to apply the principles of dynamic strategy.
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

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strategic planning.
• Why would a company want to invest outside its home country?

• 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?
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• 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).
(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

1 It’s a changing world
2.1 Information management: Information management and information
management systems and e-business
2.2 Study school 2

2.2 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.com
6.2. http://news.bbc.co.uk/2/hi/technology/
6.3. http://www.iamot.org
6.4. http://www.ieee.org
6.5. http://www.wired.com
6.6. 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?
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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 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%
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* 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.
information – strategic and operational – and of management issues.
• 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?
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(5) Distinguish between e-commerce and e-business.

(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
information – strategic and operational – and of management issues.
• 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
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managers?
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.
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• Chapter 8 (not for examination purposes) provides useful guidelines on how to write a
research article on a qualitative study.
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 DESCRIPTION

1 Key elements of the research process
2 Quantitative research methods
3 Qualitative research methods
4 Mixed methods
5 Sampling and sample size determination
6 Instrumentation: Questionnaire design and question formulation
2.2 Study school 2: Analysis of quantitative research data (topic 2)
KEY ELEMENTS DESCRIPTION

1 Levels of measurement
2 Describing data (one variable)
3 Describing data (two variables)
4 Hypothesis testing
5 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.
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5 ARTICLES
Prescribed articles
• 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/sdesign.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: Gender
Gender Number Percent
Male 21 37.5
Female 29 51.8
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Missing 6 10.7
Total 56 100
males
females
missing
Figure 1. Gender
2. Age
Table 2: Age
Age (in yrs) Number Percent
20 – 30 10 17.9
31 – 40 13 23.2
41 – 50 14 25.0
51 – 60 9 16.1
Missing 10 17.9
Total 56 100
15
10
Number
5
0
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 Experience

Work Experience Number Percent%
(in yrs)
0-5 17 30.35
6 – 15 10 17.9
16 – 25 15 26.8
> 25 10 17.9
Missing 4 7.1
Total 56 100 0
20
15
Number 10
5
0
0-5 6 – 15 16 - 25 > 25
Work Experience (yrs)
Figure 3: Work Experience
Table 4: Age and Job satisfaction

Statement Age (in years)
20-30 31-40 41-50 51-60
within the department, I feel encouraged to provide
comments and feed back 6 10 9 5
“16 respondents disagreed”

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
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My supervisor offers constructive feedback and
comments in my performance review 4 9 7 4

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 2 7 5 4
I do

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 satisfaction

Statement Gender
Male Female
within the department, I feel encouraged to provide comments and
feed back 11 23

I feel my comments and feedback are taken into consideration 9 26

I am informed of developments and activities in my own 13 17
department
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I feel my supervisor takes my performance review seriously 12 19

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

I feel policies and procedures are clear and consistently enforced
within my department 14 16

I feel that skills / education requirements for my job are reasonable
in relation to my job requirements 20 22
I feel that I am being paid a fair amount for the work I do 8 14

My work environment is satisfactory 6 8

I am satisfied with all benefits package I receive 10 9

The benefit package that we receive is as good as other 8 11
organizations

I do not feel that the work I do is appreciated 9 13

I have a good relationship with my co-workers 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 satisfaction

Statement Work Experience (in years)
0 -5 6-15 16-25 > 35
within the department, I feel encouraged to provide
comments and feed back 13 8 8 7

I feel my comments and feedback are taken into
consideration 12 9 7 8

I am informed of developments and activities in my
own department 10 7 6 9
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I feel my supervisor takes my performance review

seriously 11 9 8 5

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

I feel policies and procedures are clear and
consistently enforced within my department 13 10 4 5

I feel that skills / education requirements for my job
are reasonable in relation to my job requirements 16 10 14 4
I feel that I am being paid a fair amount for the work I 8 8 7 1
do

My work environment is satisfactory 5 4 6 1

I am satisfied with all benefits package I receive 4 6 3 8

The benefit package that we receive is as good as
other organizations 3 4 6 8

I do not feel that the work I do is appreciated 7 5 7 5

I have a good relationship with my co-workers 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 encouraged

Strongly Disagree Agree Strongly agree Total
disagree
No. Percent No. Percent No. Percent No. Percent Percent
I feel encouraged to provide3 5.4 13 23.2 30 53.6 10 17.9 100.0

comments and feed back
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I feel my comments and7 12.5 9 16.1 36 65 4 7.1 100.0

feedback are taken into
consideration
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4. FEEDBACK
Table 8: Knowledge about development and activities

No. Percent
Strongly disagree 4 7.1
Disagree 16 28.6
Agree 27 48.2
Strongly agree 8 14.3
Total 56 100.0
5. TRAINING
Table 9: Job training

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 new4 7.1 26 46.4 16 28.6 10 17.9 100.0
technology is introduced
related to my job duties
It is easy to get supplies
and equipment I need to9 16.1 30 53.6 13 23.2 4 7.1 100.0
do my job
I feel comfortable to use

online resources for my3 5.4 14 25.0 33 58.9 6 10.7 100.0
job
My immediate supervisor
conducts regularly9 16.1 9 16.1 28 50.0 9 16.1 100.0
scheduled evaluation of
my work
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

disagree
No. Percen No. Percent No. PercentNo. Percent Percent
t
My job duties are clearly
defined in my work plan 3 5.3 8 14.3 32 57.1 13 23.2 100.0
My work plan accurately
reflects my day-to-day2 3.6 14 25.0 28 50.0 11 19.6 100.0
activities
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I feel my supervisor spends

adequate time and5 8.9 14 25.0 29 51.8 8 14.3 100.0
consideration with my work
plan
I have the opportunity to set
goals above the normal job5 8.9 16 28.6 2 3.6 28 50.0 100.0
duties prescribed by my job
supervisor in my work plan
7. RELATIONSHIP WITH SUPERVISOR
Table 11: Relationship with the supervisor

disagree
No. Percent No. Percen No. Percent No. Percent Percent
t
I feel my supervisor takes

my performance review6 10.7 13 23.2 29 52 7 12.5 100.0
seriously
My supervisor offers
constructive feedback and6 10.7 16 28.6 29 52 1 1.8 100.0
comments in my
performance review
My immediate supervisor
has a clear set of policies4 7.1 18 32.1 31 55.4 1 1.8 100.0
and enforces them
consistently
8. SATISFACTION ABOUT BENEFITS
Table 12: Satisfaction about the benefits

disagree
My work environment is
satisfactory 15 26.8 21 37.5 17 30.4 3 5.4 100.0
I feel that skills / education
requirements for my job are2 3.6 6 10.7 39 70 8 14.3 100.0
reasonable in relation to my
job requirements
I am aware of all the
benefits to which I am4 7.1 7 12.5 34 61 11 19.6 100.0
entitled
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 5.4 100.0
I am satisfied with all
benefits package I receive 11 19.6 23 41.0 20 35.7 1 1.8 100.0
The benefit package that we
receive is as good as other10 17.9 26 47.0 18 32.1 2 4.0 100.0
organisations
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9. PROMOTION
Table 13: Job Promotion

disagree
My job is enjoyable
4 7.1 7 12.5 35 63.0 10 17.9 100.0
Those who do well on the
job has a fair chance of15 26.8 21 37.5 18 32.1 2 3.6 100.0
being promoted
When I do a good job, I
receive recognition for it. 11 19.6 18 32.1 23 41.1 4 7.1 100.0
I 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-workers

disagree
I know the management of

my department 6 10.7 13 23.2 27 49.0 10 17.9 100.0
I have a good relationship
with my co-workers 7 12.5 32 58 17 30.4 100.0
Communication seems
good within this9 16.1 30 54.0 12 21.4 4 7.1 100.0
organisation
11. AWARDS
Table 14: Awards programme

Number Percent
Outstanding performance 8 14.3
Creative idea to improve the job 11 19.6
Every work accomplishments 8 14.3

Combination of all the above 23 41.1
Others 5 8.9
Missing 1 1.8
Total 56 100.0
Table 6.15: Period of reward

Number Percent
Every month 6 10.7
Every three months 9 16.1
Every six months 7 12.5
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Once a year 24 42.9

Should be based on an award10 17.9
programme
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 Percent
Gift certificate from my16 28.6
manager
Lunch with my supervisor 7 12.5
Money 11 19.6
Tickets to events 15 26.8
Other 7 12.5
Total 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 opinion
o Differences (if any) between background groups in terms of the measured
constructs
o 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
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• You may either analyse the data yourself and/or use the analyses provided
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
Background
Job 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, and
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c. To recommend to management how to improve on productivity and customer service through

motivating the employees.
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)
Tahoma
• Your answers, excluding the title page, table of contents (compulsory) should be a minimum
of 10 and a maximum of 12 pages
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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 of
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:
• Do the managers / owners of small businesses in Longolo have the necessary

entrepreneurial and management skills?
• What are the educational and training levels of the members of the top management of these
enterprises?
• What is the level of cultural diversity of the enterprises’ managers based on dimensions such
as 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
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)
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
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
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)
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 12
skilled 2 12
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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Chi-Square 1 10.2273 0.0014
Cramer's V 0.5330
WARNING: 50% of the cells have expected counts less

than 5. Chi-Square may not be a valid test.
The FREQ Procedure
Statistic Value ASE

Gamma 0.9091 0.1002
Stuart's Tau-c 0.4321 0.1378
Somers' D C|R 0.6250 0.1427

Somers' D R|C 0.4545 0.1408



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

Chi-Square 1 0.2864 0.5926
Cramer's V 0.0892
Statistics for Table of gender by success
Statistic Value ASE

Gamma 0.1818 0.3328
Stuart's Tau-c 0.0864 0.1616
Somers' D C|R 0.0875 0.1636

Somers' D R|C 0.0909 0.1698



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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 enterprise
b. 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.
Tahoma
Useful hint / starting point

Before 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 test

You 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 examination

You 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
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• 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
• 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
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).
9.1.4
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?
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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 research

2. Why is the research process depicted as a helical cycle and not simply as a circle?
3. Describe the differences between inductive and deductive reasoning
4. Describe the essential differences between a quantitative and a qualitative research
methodological approach to research
5. 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 answer
10. 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 answer
12. 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?
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?
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• What are the most appropriate graphical displays suitable for each of nominal, ordinal,
interval and ratio data?
• 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 methods

Mbl925R
Business 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 statistics

1. Data preparation for analysis
2. Frequency tables and graphs
3. Summation notation
4. Measures of central tendency and variation
5. Graphing categorical data
6. Measure of association
7. Estimation (point and interval estimation)
8. Elementary regression analysis
9. Testing of hypotheses (t and chi-square)
- Data interpretation
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10. Chi-square test

11. Computer applications (excel and SPSS)
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 Structure
1. Two assignments, i.e. 1. Group assignment and 2. Individual assignment
2. A test
1. Data preparation for analysis
- Editing or cleaning the data

Eliminating errors
- Coding
Responses are coded
(e.g. 1 = ‘yes’ and 2 = ‘no’)
The answers or responses may e precoded (in the questionnaire already)
- Transcribing
Transferring 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:
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3. Residence:
B. Research data
Likert scale
Commodity prices are reasonable
The numbers within the brackets are the numbers of respondents per item
The following table shows the coded responses of 25 customers for the four itesm:
Customer/ respondent
Commodity 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 employees
R72 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
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51 47 53 46 44
(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 notation
Let the symbol X denote a variable. Let x1 denote a particular variate, i.e. the value of a
particular member of X , in this case the first member of X .
The symbol xi denotes the value of X , when i the subscript, assumes a particular value.
The only values which the subscript can assume are the integers, 1; 2; 3; …… Another word
for subscript is the word, index.
Subscripts are usually denoted by the letters i and j but other letters, e.g. K; p; q; s etc.
Can also be used. Consider the table below.
Table
Column 1 Column 2 Column 3
Row 1 X11 X12 X13
Row 2 X21 X22 X23
Row 3 X31 X32 X33
Row 4 X41 X42 X43
In this table the first subscript represents the row and the second subscript the column. xij
represents the number or value at the intersection of the i th row and the j th column. i and j
can be any whole number from 1 on words.
3. Summation notation: Sigma ∑ notation

The symbol ∑ is shorthand for ‘the sum of’. Hence, the greek capital letter ∑ is used to
denote sum, which is the answer to an addition sum.
3
∑ xi = x1 + x2 + x3
i=1
In words ‘the sum of xi for i going from one to three is’ x1 + x2 + x3 .
This may be written more simply as
3
∑ xi = x1 + x2 + x3 or more generally as
i =1
n
∑ xi = x1 + x 2 + x3 + . + xn
..........
i =1
The notation may be simplified even further, e.g. ∑x denoting the sum of all x values. In
the case where c is a constant,
n
∑c
i =1
i = c1 + c 2 + ......... + c n = c + c + c + . . . . + c = nc
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For this reason the subscript associated with the constant is generally omitted.
In the following where c is a constant
n
∑ cxi = cx1 + cx2 + ........... + cxn
i =1
n
= c( x1 + x2 + ........... + x n ) = c ∑ xi
i =1
n n
Thus ∑ cxi = c ∑ xi
i =1 i =1
4. Measures of central tendency and variation
i. Arithmetic mean ( x)
Example 4
Find the mean of the following prices
R8; 3; 5; 11; 8
Solution
x = ∑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
Solution
Array: 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 prices

R7; 4; 7; 7; 7; 3; 5; 7; 6; 1
Solution
Mo = r7
Measures of variation
i. Variance ( S 2 )
= ∑(X - X ) 2 / (n – 1)
ii. Standard deviation (s)
variance
Example 7
Find the variance and standard deviation of the following numbers.
5; 7; 3; 9
Solution
X = (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 charts
2. Multiple bar charts
3. Stacked (component) bar charts
4. Pie charts
5. Line charts
6. 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 1998

Product a
Product 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 diagram

Suppose that two attributes are measured on each member of a random sample of size n , giving
n pairs of observations.
Denote the measurement of the first attribute by x and the measurement of the second by y. The
first pair of observations is thus ( x1 ; y1 ) , the second pair is ( x 2 ; y 2 ) and so on.
The resulting plot showing n points is called a scatter diagram.
Example 12
Table 1 shows the ages in years ( x ) and systolic blood pressures ( y ) in mm of mercury, of 12
women selected at random.
Table 1
data age blood data age blood
pair pressure ( y) pair pressure ( y)
(x) (x)
1 56 147 7 55 150
2 42 125 8 49 145
3 72 160 9 38 115
4 36 118 10 42 140
5 63 149 11 68 152
6 47 128 12 60 155
These data are displayed in Figure 1.
Figure 1: Scatter diagram
170
160
Systolic blood pressure (mmHg)
150
140
130
120
110
30 40 50 60 70 80
Age of women (years)
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 X and Y 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.
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• Correlation coefficient
A measure of association between x and y in the population is the correlation coefficient,
Values of rxy are between –1 and +1 indicating varying degrees of association.
∑( x − x)( y − y )
n
rxy (or simply r ) =
∑( x − x) . ∑( y − y )
2 2
n n
1
n
∑( x − x )( y − y )
r=
1
( ∑( x − x ) 2 .∑( y − y ) 2 )
n
r=
∑( x − x )( y − y )
∑( x − x ) .∑( y − y )
2 2
To calculate r use the following:

( ∑ x )( ∑ y )
∑ ( x − x )( y − y ) = ∑ xy −
n
2
2 ( ∑ x) 2
∑( x − x) = ∑ x −
n
2
2 2 ( ∑ y)
∑( y − y) = ∑ y −
n
For the blood pressure data relating the age of women ( x ) to systolic blood pressure ( y ) the
required values are:
∑ x = 628 ∑ y = 1 684
2 2
∑ x = 34 416 ∑ y = 238 822
∑ xy = 89 894 n( number of pairs of observatio ns ) =12
1764 ,6667
r= = 0.8961
( 1550 ,6667 )( 2500 ,6667 )
Interpreting a correlation coefficient
A statistic can be significant without, in the everyday sense, being either strong or important.
A small value for r
can be significant if the sample size is large. Thus for a sample of 1000 pairs an
r of +0.081 or –0.081 would be significant at the 1% level of significance, and yet it would only be a
weak correlation.
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Table 2 gives a guide of the interpretation of correlation coefficients.
Table 2
correlation coefficient descriptive label
( r)
0 no correlation, zero correlation
0.0 to 0.2 very weak or negligible
0.0 to – 0.2
0.2 to 0.4 weak or low
- 0.2 to – 0.4
0.4 to 0.7 moderate
- 0.4 to – 0.7
0.7 to 0.9 strong, high or marked
- 0.7 to – 0.9
0.9 to 1.0 very strong or very high
- 0.9 to – 1.0
perfect correlation (positive)
+1
perfect negative correlative
-1
7. Estimation (Point and Interval estimation)
Basic definitions
• Population and parameters

The 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 π , and it is called a parameter
of the population.
Now suppose that a random sample of size n from the population contains X vaccinated
individuals. Then the sample proportion of vaccinated persons is p = X / n .
This is an estimate of π . But p in general does not equal π , and be aware also that another
sample may produce a different value of p .
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 statistic

A 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.
α , β , μ , Σ ) are used to denote population parameters.
Population mean, µ, proportion, π and variance, σ 2 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 µ X
Standard sX σX
Deviation
Size n N
Proportion p π
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.
Estimation
Estimation 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 μ̂ = X or σ̂ 2 = S 2 .
Once numbers are substituted into the formula a numerical value is obtained which is called an
estimate for example, μ̂ = 55 .6 .
Notation
An estimator for a parameter is commonly indicated by means of a “hat” (^ ) on top of the symbol for
the parameter. If μ is the symbol for the population mean, then μ̂ (pronounced “mu hat”) is the
estimator for the population mean μ .
σ̂ 2 (sigma squared hat) is the estimator for the population variance σ 2 .
π̂ ( π hat) is the estimator for the population proportion π 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.
These are called point estimates because we calculate one figure for the estimate.
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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 X is normal, with mean μ and standard deviation σ it follows that
n
P( −z α < Z < z α ) =1 − α
where
2 2
X −μ
Z = .
σ/ n
From a table of the normal distribution,

zα
2
can be found for a specified α such that
 X −μ 
P− z α < < zα  =1 − α
 σ/ n 
 2 2 
 
P−z α σ / n < X − μ <z α σ / n  =1 −α
and 
 2 2


 
P−X −z α σ / n <− μ <−X +z α σ / n  =1 −α so that
 
 2 2 
 
PX +z α σ / n >−μ >X −z α σ / n  =1 −α
 
 2 2 
 
And PX −z α σ / n < μ <X +z α σ / n  =1 −α .
 
 2 2 
Thus a ( 1 − α ) 100% confidence interval (c.i.) for µ (σ known) is

 σ σ 
x − z α . ; x +z α . 

 2
n 2
n 

The ( 1 − α ) confidence coefficient indicates the degree of confidence. End points of interval are
called lower and upper confidence limits. For example, if α = 0.05 and z 0.025 =1.96 the
confidence interval is [ x −1.96 σ / n ; x +1.96 σ / n].
B) when σ is unknown and the population distribution is normal, it is replaced by the sample
standard deviation s and z is replaced by t. The ( 1 − α ) 100% c.i. for µ is
[ x − tα s / n; [ x + tα s / n ]
.
2 2
Example 13 The mean and standard deviation of the quality grade-points of a random sample of 36
students from a large population are
x = 2 .6 s = 0 .3
find a 95% and a 99% c.i. for the mean of the entire population.
Solution
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α
A 95% confidence interval, which is ( 1 − α )100 % = 95% has α = 0.05 and = 0.025 and
2
z α =1.96 .
the 95% c.i. is given by
2
 0 .3 0 .3 
 2 .6 − 1 .96 36 ; 2 .6 − 1 .96 36 
 
= [ 2 .6 − 0 .098 ; 2 .6 + 0 .098 ]
= [ 2 .502 ; 2 .698 ]
The length of this confidence interval is

2 .698 − 2 .502 = 0 .196
The 99% confidence interval has

α = 0.01 ⇒ α2 = 0.005
Z 0.005 = 2.575
 0.3 0.3 
⇒  2.6 − 2.575 ; 2.6 + 2.575 
 6 6 
 
=  2.471 ; 2.729 
 
The length of this confidence interval is 0.258.
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Example 14 Suppose
n = 50 , s x = 20 and x = 500
20 20
s = = = 2 .2828
x 50
n
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
X −µ
T = s has a t distribution with ν = n − 1 = 6
n
t0.025 = 2.447 for ν = n − 1 = 6 (see table 2 of appendix iii)
⇒ 95% confidence interval is:
10.0 − (2.447)(0. 283/ 7) ;
10.00 + (2.447)(0. 283/ 7 )]
10.0 − 0.26; 10.0 + 0.26]
[9.74; 10.26]
8. Elementary regression analysis

9.
The regression equation
Consider the model
Y = α + β x +e
Where x is the independent variable and e is a random error (distributed with mean zero and
variance σ 2 ).
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, e . The model specified above can be applied to
the data.
For example Table 4 shows the ages in years ( x) and systolic blood pressures ( y ) in mm of
mercury, of 12 women selected at random.
Table 4
Data Age Blood Data Age Blood
Pair Pressure ( y) Pair Pressure ( y)
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(x) (x)
1 56 147 7 55 150
2 42 125 8 49 145
3 72 160 9 38 115
4 36 118 10 42 140
5 63 149 11 68 152
6 47 128 12 60 155
These data are displayed in the figure 2.
Figure 2: scatter diagram for women age versus blood pressure data
170
160
Systolic blood pressure (mmHg)
150
140
130
120
110
30 40 50 60 70 80
Age of women (years)
• 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 X
and Y 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 y = a + bx , where a is an
estimate of α in the model and b is an estimate of β , and y 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.
( Corrected SS xy ) 2
Corrected SS x
CorrectedSS y
which becomes
( Corrected SS xy ) 2
= r2
(Corrected SS x )( Corrected SS y )
Which is thus clearly equal to the correlation coefficient ( r ) squared.
To obtain estimates of a and b the following is needed:
SS
2
=∑xi −
(∑xi )2
x
n
SS =∑xi yi −
(∑xi )(∑yi )
xy
n
SS xy
Then b = : estimate of slope
SS x
a = y −bx : estimate of intercept
Table 5 shows the calculations necessary for the regression analysis.
Table 5: Calculations
yi xi xi2 xi y i y i2
101 1.2 1.44 121.2 10 201
92 0.8 0.64 73.6 8 464
110 1.0 1.00 110.0 12 100
120 1.3 1.69 156.0 14 400
90 0.7 0.49 63.0 8 100
82 0.8 0.64 65.6 6 724
93 1.0 1.00 93.0 8 649
75 0.6 0.36 45.0 5 625
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91 0.9 0.81 81.9 8 281

105 1.1 1.21 115.5 11 025
959 9.4 9.28 924.8 93 569
(9.4) 2
SS x = 9.28 − = 9.28 − 8.836
10
= .444
(9.4)( 959 )
SS xy = 924 .8 − = 924 .8 − 901 .46
10
= 23 .34
SS xy 23 .34 
Therefore, b = = = 52 .57 and a = y − bx = 95 .9 − 52 .57 X 0.94 = 46 .48
SS x .444
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

y = a +bx
= 46 .48 +(52 .57 )(1.0)
=99 .05
⇒R990 500
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Testing the regression coefficient b- the slope of the regression line for significance – using
the t-test
The null hypothesis ( H 0 ) is that b is not significantly different from zero.

The alternative hypothesis ( H 1 ) is that b is significantly different from zero.
To perform this test t is calculated as follows:

b−0
t=
EMBED Equation.3 standard error of b
A value for the standard error of b is required. The estimate of the variance of b is given by
2
s
.
corrected SS x
Substituting the numerical values for the blood pressure data gives:
49 .2467
Estimate of variance of b = = 0.031758 .
1550 .667
The standard error of b = 0.031758 =0.1782

b −0 1.138
t= = = 6.386
se( b ) 0.1782
The degrees of freedom for the error mean square is n-2 = 10, the denominator in the definition of
s2 .
• From the t table, t 0.025 = 2.228 (remember to enter the one tail table at t α ) and
t 0.005 = 3.169 .
• The calculated t value of 6.386 > 2.764 hence b is significantly different from zero, even
at the 1% probability level.
• This is equivalent to rejecting the hypothesis that there is no dependence of y on x .
• The 95% confidence interval for b is given by
[ b −t 0.025 . SE b ; b +t 0.025 . SE b ; ν d . f .] .
Substituting the values obtained above, gives the 95% confidence interval for b as
[ 0.741 ;1.535 ] . Notice that b = 0 is not included in the 95% confidence interval. Calculate the
99% confidence interval for b and confirm that b = 0 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 H 0 . Any hypothesis that
differs from the null hypothesis is called an alternative hypothesis; denoted by H 1 .
• The decision to ‘accept’ or ‘reject’ a hypothesis is based on information contained in a sample
taken from the target population.
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• Refer to Figure 4. A set, C T , of possible values of the test statistic, T , defines the critical
region.
Figure 4
• Tests of the mean

Suppose a random sample of size n is drawn from a normal population with mean µ and standard
deviation σ .
Let H 0 : μ = μ 0 , H 1 : μ ≠ μ 0 . Then, if H 0 is true, the sample mean X is expected to be
reasonably close to µ; in fact it is expected to lie between µ0 − 1.96 σ / n and
µ0 + 1.96 σ / n with probability 0.95.
• H0 will be rejected if the observed X is “too large” or “too small”, i.e. smaller than
μ 0 −1.96 σ / n ( n large) or greater than μ 0 + 1.96 σ / n .
• H0 will be accepted if
μ 0 −1.96 σ / n < X < μ 0 + 1.96 σ / n
X − μ0
i.e. if −1.96 < <1.96
σ/ n
In the preceding discussion the significance level of the test is 0.05 . More generally 1.96 can be
replaced by zα / 2 with the rule
X − μ0
Accept H 0 if − z α / 2 < < zα / 2
σ/ n
For which the significance level is α. If σ is unknown, it is replaced by s and zα / 2 is replaced by
tα / 2 .
The form of the test can be summarized thus: calculate

estimate − specified parameter value
Actual or estimated standard error ( estimate )
estimate − specified parameter value
=
Actual or estimated SE ( estimate )
And refer this ratio to suitably chosen zα / 2 or tα / 2 critical values determined by the size of α and
by H 1 . It will be seen that all tests of the null hypothesis that specify particular parameter values
have this form.
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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
H0 : μ =70 000
H1 : μ <70 000
And note that H 1 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:
x = 69 914 s = 2 131
To test the hypotheses, the ‘test statistic’ below is used:

X −µ
Z =
s
n
Which has approximately a n(0; 1) distribution if n ≥ 30 .
Calculate the z value, assuming that H 0 is true (i.e. μ =70 000 )
69 914 −70 000

z=
2 131
500
=−0.90
The obtained value of the test statistic is – 0.90.
Since for α = 0.05 the critical value is − z 0.05 = −1.645

I.e. P( Z < −1.645 ) = 0.05 under H 0 .
Reject H 0 if z < −1.645
Otherwise accept H 0 :
For this example z = −.0.90 and H 0 is accepted.
• Hypothesis testing using the t distribution

Hypothesis testing is done as for the standard normal distribution.
Step 1
Define H 0 and H 1 .
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Step 2
Define the probability ( α ) , the degrees of freedom ( ν ), the acceptance region A , and the rejection
region r.
A = {t − tα < t < tα ;ν}
R ={ t t ≤−t α ; ν or t ≥t α ; ν }
Step 3
Calculate
x −μ
t=
sx
with ν d.f.
Step 4
If t ∈ R reject H
0
If t ∈ A accept H 0
Example 18 Given eight sample observations from a normal population, N ( μ ,σ 2 )

31; 29; 26; 33; 40; 28; 30; 25 so that
sx 4.781
x = 30.25 sx = = .
n 8
Test the null hypothesis that µ =35.
Answer
Because the sample size, n = 8 , is small the t distribution should be used in this example.
Step 1
H0 ( μ ) = 35
the mean
H 1 the mean ( μ ) ≠ 35 , a two-sided alternative.
This is clearly a two tailed test.
Step 2
The test is to be carried out at the 5% level of significance, α = 0.05 .
α 0.05
, i.e. = 0.025 . Thus the P = 0.025 column in the t-table is to be used. Note that this
2 2
is confirmed by the familiar value 1.960 for ν = ∞ , the last figure in the column. As there are 8
observations,
t 0.05
ν = 8 −1 = 7 ; t α = = 2.365 for 7 d.f.
2
2
(table value)
A ={ t −2.365 <t < 2.365 }
R ={ t t ≤−2.365 or t ≥ 2.365 }
Step 3
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x − μ 30 .25 −35 − 4.75

t= = =
sx 4.781 1.690
8
t = −2.85 .
Step 4
- 2.85 < - 2.365 hence the calculated t falls in the rejection region ( t ∈ R ) . Hence, reject H 0
and accept H 1 .
11. Chi-square test

Chi-square as a measure of association
This test is based on the distribution of a statistic called χ2 , 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 19
If 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 South

Unemployment 87 73 66
Inflation 113 77 84
Totals 200 150 150
If π1 , π2 and π3 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,
H0 : π1 =π2 =π3 =π . If H 0 is true, we can combine the data to estimate π as
87 + 73 + 66
= 0.452.
200 + 150 + 150
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 6
North West South
Unemployment 87 73 66
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(90.4) (67.8) (67.8)

Inflation 113 77 84
(109.6) (82.2) (82.2)
The chi-square formula

In order to perform a test of H 0 we need a statistic which summarises the discrepancies between
the observed frequencies (Oi ) and the expected frequencies (E i ) .
( 0i − E i ) 2
One such statistic is chi-square ( χ 2 ) which is defined by the formula χ2 = ∑ which
i Ei
in words is
2
2 (Observedfrequency- Expectedfrequency)
χ = sum of over all sells or classes.
Expectedfrequency
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 χ 2 .
Table 7: Application of the χ 2 formula to data

Observed frequency Expected Oi − Ei (Oi − E i ) 2 ( Oi − Ei )
2
Frequency
Ei
Oi Ei
87 90.4 -3.4 11.56 0.12788
73 67.8 5.2 27.04 0.39882
66 67.8 -1.8 3.24 0.04779
113 109.6 3.4 11.56 0.10547
77 82.2 -5.2 27.04 0.32895
84 82.2 1.8 3.24 0.03941
500 0 77.20 1.04832
2
Therefore, χ = 1.05
2
Using χ in tests of the goodness of fit and hypotheses
• The expected frequencies are calculated according to a null hypothesis, H 0 .

2
• If the observed χ is small, H 0 is accepted. If it is “too large” it is rejected.
2
• What is “too large” depends on the distribution of χ under H 0 and this distribution is
determined by the number of degrees of freedom, ν .
• The number of degrees of freedom is the number of classes, m, minus the number of
independent linear constraints, k, on the differences Oi − Ei .
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Contingency tables
Table 8: The incidence of forest types on different soil groups

Soil group Forest type Subtotal
F1 F2 F3
S1 27 48 62 137
S2 32 46 67 145
S3 26 51 61 138
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
137 * 85
S1 F1 is = 27.726
420
The other expected frequencies are given in Table 9.
Table 9: Expected frequencies of forest types on different soil groups

Soil Forest type Subtotal
Group
F1 F2 F3
S1 27.726 47.298 61.976 137
S2 29.345 50.060 65.595 145
S3 27.929 47.643 62.429 138
Subtotal 85 145 190 420
Note that
2 2
( 27 − 27.726) ( 32 − 29.345)
χ2 = + + ........
27.726 29.345
2
( 61 − 62.429)
................. + = 1.031
62.429
For this calculation the following rearrangement affords a far more convenient and accurate way for
the calculation of χ2 .
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.
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2
χ is (3-1)(3-1)=2*2=4. The tabulated values for χ
2
The degrees of freedom for this are
4 df
2
P = 0.95 χ = 0.711
4 df
2
P = 0.05 χ = 9.488
4 df
2 H 0 is accepted. The probability of the
The calculated χ of 1.031 lies between these values, so,
calculated χ 2 can be obtained within the limits 0.05 and 0.95, that is,
0.05 < P (Calculated x 2 ) < 0.95
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
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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

1 A business case for ethics
2 Ethical decision-making approaches
3 Goodpaster: The case method (CAT)
2.2 Study school 2

1 Managing ethics and good corporate governance
2 King III
3 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.
To be advised
To be advised
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
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• 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)
(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
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Students understand, and are able to compare and apply the most important ethical theories.
• 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?
• 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)
(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
Time allocation: After study school 1
• Students are able to demonstrate the ethical decision-making process.

• Students are able to apply various theories to practical situations.
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How would you evaluate business problems from an ethical perspective, using different ethical tests
and theories?
• Study chapter 8 in the prescribed book by Carroll and Buchholtz (2009).

• Read the article by Goodpaster (1999).
(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)
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.
Using the RIMS approach (Rossouw (2004)), how would you evaluate ethical dilemmas related to
issues such as affirmative action and HIV/Aids?
Study the article by Rossouw (2004) (on eds online).
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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
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
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).
• 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?
• 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)
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 SA8000 and the global workplace standard (see http://www.cepaa.org)
(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
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
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.
• 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)

 The King III report on corporate governance
 The executive summary on http://www.ecgi.org/codes
(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
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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
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
• 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).
(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)
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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
Students are able to identify the rights and duties of employers, employees and customers, especially
with regard to health, safety and privacy.
• 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)
 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.)
(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
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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
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).
• 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).
(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
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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
Students are able to discuss the relationship between business and consumers by analysing some of
the ethical aspects related to marketing and product safety.
• 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.)
(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?
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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
• avoiding misrepresentation
• avoiding the use of duress and undue influence
8.11 MULTINATIONAL COMPANIES (MNCs) OPERATING IN DEVELOPING COUNTRIES:

CORRUPTION AND BRIBERY
Students are able to identify the most important ethical issues pertaining to multinational companies
(MNCs) operating in developing countries.
List the most important ethical dilemmas MNCs face, especially when developing countries act as
their host countries.
• Study chapter 10 of the prescribed book by Carroll and Buchholtz (2009).
 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/
(1) Describe some of the ethical dilemmas facing multinational companies in their host countries.
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(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.
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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Unisa Graduate School of Business Leadership

3.1 Leadership and Organisational Dynamics (MBL921M)

The Master’s degree in Business Leadership (MBL) is a highly professional, three-year

For further information please refer to the student guide.

2.2. Study schools

First study school

28 March-01 April 2011 Will be informed

21-25 March 2011 All Ethiopian Groups

Second study school: August 2011

29 August -02 Sept 2011 Will be informed

08-12 August 2011 All groups in Ethiopia

GROUP ASSIGNMENT 1 GROUP ASSIGNMENT 2

MODULE CODES PROVISIONAL TEST DATES TIME

MODULE CODES PROVISIONAL EXAMINATION PROVISIONAL SUPPLEMENTARY

Leadership and organisational dynamics

Leadership and organisational dynamics

Rationale and purpose of the course

It is increasingly realised that in today's knowledge-based economy, a sustained competitive

TOPIC NUMBER TOPIC DESCRIPTION

2.2 Study school 2

TOPIC NUMBER TOPIC DESCRIPTION

• Grant Thornton Kessel Feinstein Pretoria: Winning culture

5.2 Additional articles (optional reading)

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

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

Your analyses have to address the following issues:

1. Did the leader have role models or other significant influencers?

Your final product should include:

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

ASSESSMENT FORM: ASSIGNMENT 1

CRITERIA AND WEIGHT MARK MARK

Discussion of the group’s reflections on their learning 20 marks

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

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

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 for

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

7.1.2 GROUP ASSIGNMENT 2 Due date 04/08/2011

Answer the assignment questions of Chapter 15 (p. 539, Yukl)

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

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

ASSESSMENT FORM: REPEATER ASSIGNMENT 2 MBL921-M

CRITERIA AND WEIGHT MARK MARK ALLOCATED

7.2 EXAMINATION STRUCTURE

The end-of-year examination is a four-hour, open-book examination. By “open-book examination” we

8.1.1 Tuition period

Time allocation: Before study school 1

8.1.2 Specific outcomes

8.1.3 Critical questions

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

Every situation is important to understanding leadership and effective leadership in particular. We

On completion of topic 1, you should be able to:

8.1.4 Learning through activities

A Applied theoretical learning