ASSIGNMENT

SEMESTER 2023 02
MODULE MANAGEMENT III
MODULE CODE MAN301
DUE DATE 22 SEPTEMBER 2023

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0B ELECTRONIC SUBMISSION INSTRUCTIONS

1B Introduction
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Completing Your Assignment

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Question 1 [12]
Read the case study below and answer the question that follows:

CASE STUDY
FISCHER-CHEM – TEAMS
Fischer-Chem embarked on a growth strategy to exploit the growing demand for hard and
liquid wax in Europe. In achieving this, a change in organisational culture was necessary.
The executive team is very aware of the fact that a change in leadership style is to drive such
a large-scale transformation.
To meet the increasing demand for product in Europe, a point of departure was to
substantially increase production volumes, without further capital investments in new plants,
technologies, and equipment. The first priority was to optimise what they already had in
operating assets. It was generally accepted that the existing three plants were not fully
utilised and that loads of waste was generated, such as product spillage and consequent
contamination, equipment down-time, and product re-work.
It was obvious that people across the organisation had to be involved. Past attempts where
only production people were involved did not succeed. The following is a high-level structure
of the organisational functions:

Production Engineering Maintenance Marketing

Packing Logistics Quality HR

Finance Safety Buying Contracts

A small cross-functional team was assembled to analyse causes of weak production. These
were their findings:
• Marketing does not take production schedules into account when making delivery
promises to customers. Production schedules change on short notice leading to
stoppages.
• Maintenance is very re-active in plant maintenance. A preventative approach to
equipment failures was non-existent.
• Engineering has the tendency to over-complicate operating processes, without
involving production, causing setting changes in the plant and consequent down-time.
• Production does not follow standard operating procedures resulting in poor
equipment reliability, and conflict with maintenance.
• Changes in product grade are not communicated to packaging. The impact is delay in
processes because of erratic packaging switch-over.
• Incorrect logistical practices are followed by distribution which contaminates product,
creating re-work.
• Quality control is only conducted at the end of the process. Off-spec product is
identified too late.
• HR is to be more actively involved in training supervisors, technicians and specialist
artisans.
• Operating people working shifts tend to be careless concerning safety. Several
unacceptable injuries cause immediate stoppage of work.

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• Procurement cycles are very long in providing critical spares for equipment
maintenance leading to production cutbacks.
• Commercial is slow in contracting external service providers to perform specialist jobs
on the production line. In two cases, production waited a week for pipelines to be
fixed.
• The response time of external service providers is generally problematic as they are
not paid by finance as per contractual terms.
This analysis sealed the fact that plant capacity involved the total organisation. The
leadership team decided to form improvement teams to tackle the problems.
Source: Erasmus, B. Strydom, J. & Rudansky-Kloppers, S. 2020. Introduction to Business Management. 9th
Edition. Oxford University Press. Cape Town: Juta.

Question:
Identify and explain the types of teams that could be established and why.

Question 2 [13]
Read the case study below and answer the question that follows:

CASE STUDY
THE DISCOVERY HEALTH MEDICAL SCHEME
The core purpose of the Discovery Health Medical Scheme (DHMS) is to achieve, in a
sustainable manner, the best possible value for its members, which comprises the benefits,
quality of care and service levels to members relative to their contributions to the Scheme.
DHMS is an open medical scheme, meaning that any member of the public can join the
Scheme, subject to its Rules.
DHMS covers more than 2,7 million members making them the largest open medical scheme
in South Africa with a market share of 53%. The integrated report for 2016 indicates six
issues which the organisation believes represent some of the most material challenges for
business today and which have driven their selection of the content of the 2016 integrated
report. The issues were identified following extensive management discussions and
workshops, as well as a review of the key risks identified by the organisation and issues
highlighted in commentary from external stakeholders. These issues are the following:
1. “Achieving new business growth by continuing to innovate products and services and
increasing our ability to capture value across the chain in our chosen business
segments.
2. Consolidating recent acquisitions, particularly the transition of the UK business to full
ownership under the Vitality brand and obtaining our UK life insurance license in our
UK primary market.
3. Continue to explore adjacent industries in the South African market that leverage our
behavioural-based business model; and explore opportunities to export successful
local adjacencies to international markets.
4. Continue to grow internationally, finding models that leverage our South African
intellectual property for Discovery Partner Markets.
5. Ensuring the best skills, depth of leadership and diversity in our business that will
enable continued innovation to benefit our clients and help us to become the best
insurance organisation in the world.
6. Navigating an increasingly complex regulatory environment.”

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Source: Adapted from: Smit, P.J., Botha, T. & Vrba, M.J. 2020. Management principles. A contemporary edition
for Africa. 7th edition. Cape Town: Juta.

Question:
Identify the key sources of data in Discovery’s internal and external environment that may
ultimately inform decision-making.
NOTE: For each of the data sources, cite an appropriate example which resonates with the
organisation’s context.

Question 3 [22]
Read the case study below and answer the questions that follow:

CASE STUDY
SEVEN TREES HOTEL
The owner of Seven Trees Hotel, Mr Dennis Long, has returned from his trip through Africa
as a direct result of the poor performance of the hotel that he inherited from his father. He is
convinced that the hotel has a lot of potential but that poor management in his absence has
led to the current poor performance of the hotel. After analysing the financial performance of
the hotel over the last few months, he was shocked to see that the hotel was on the brink of
bankruptcy. He further discovered that bookings for the next few weeks dropped drastically,
mainly because of Airbnb’s that have opened in the town and on the farms. However, he also
discovered that the booking system as well as other systems have almost collapsed
completely. Upgrading the booking system is, to him, a definite priority. Another priority
would be to see if he can convince the employees who have left to re-join his staff. The
visitors’ book was also an eye opener to him as many guests stated that the hotel was old-
fashioned and did not keep track with the changing needs of the guests. One guest even
compared the hotel to an ‘old ox-wagon’. He felt that changing the perception of guests
regarding his hotel would be a challenging task but something that he would have to do
sooner rather than later.
If at all possible in this situation, he was excited about a new game farm that would open its
doors to the public within the next year. The farm was very close to his hotel and he was
hoping that guests in future would stay for two or more nights – and not just one night.
He realised that he would have to formulate a strategic plan for the hotel to take it into the
future. However, he struggled to decide on what type of hotel he should create for the future ,
who his real customers are and how he should offer the accommodation. In terms of the
latter, he even considered outsourcing the management of the hotel to a professional group.
In the end he decided to appoint a family member, Ms Jenny Black, as general manager of
the hotel. She accepted the job and resigned as a bookkeeper from her firm in Gauteng. He
realised that Ms Black’s goal of ‘to make as much money as possible’ was confusing and not
taken seriously by the staff. Although he felt that the hotel had a lot of potential, he knew it
would be an uphill battle to restore the hotel to its former glory. The lack of suitably skilled
workers and the high absenteeism amongst the housekeeping staff caused him nightmares.
He was furthermore very concerned about the economy in South Africa but felt that he could
do nothing about it. He was hoping that the economy would force travellers to opt for cheaper
hotels such as Seven Trees Hotel. He also realised that the hotel does not comply with the
Employment Equity law in South Africa. Furthermore, there are rumours that the government
wants to raise the minimum wage of hotel workers to almost double the wage that he is
currently paying his staff. Crime in the area has also increased as many people have lost
their jobs in the nearby town as well as on the farms.

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With the family’s pride at stake, he decided to take the bull by the horns and spend quality
time on formulating a strategic plan for the hotel. This would be his first attempt at
formulating such a plan but he felt that he had no choice but to try his hand at it.
Source: Adapted from: Smit, P. J., Botha, T. & Vrba, M. J. 2020. Management principles. A contemporary edition
for Africa. 6th edition. Cape Town: Juta.

Questions:
3.1 Which information in the case study confirms that the owner is currently struggling to
state a clear mission for the hotel? (6)
3.2 Use the table below to apply a SWOT-analysis to the case study on hand. (16)

Strengths Opportunities

Weaknesses Threats

Question 4 [25]
Read the case study below and answer the following questions
CASE STUDY
THE DAIMLER CHRYSLER MERGER IN 1998
On 7 May 1998, Daimler-Benz Aktiengesellschaft in Germany, the manufacturers of the
iconic Mercedes Benz range, and Chrysler Corporation in the United States of America,
signed a merger contract to establish a new organisation - DaimlerChrysler AG. The newly
formed Aktiengesellschaft was organised and existed under the laws of the Federal Republic
of Germany. Daimler, who proposed the merger and dominated it, paid US$35 billion for
Chrysler. The intention of the merger between the two organisations was twofold – (i) to
safeguard its long-term competitiveness, mainly by reducing the new organisation’s
production costs; and (ii) to increase the new organisation’s footprint dramatically, especially
in North America. Sadly, the merger between the two organisations is probably the most
famous of all international mergers that ended in failure.
Figure 1 illustrates the DaimlerChrysler Management Board, responsible for managing
DaimlerChrysler AG and represents the new organisation in its dealing with third parties.
Jürgen E Schrempp from Daimler and Robert E Eaton played key roles in the merger
process.

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Figure 1: DaimlerChrysler AG Board of Management

Group A consisted of board members that represented the following interests in the
organisation:
• Research and Technology
• Services
• Aerospace
• Commercial Vehicles
• Sales and Marketing: Mercedes-Benz
Group B consisted of board members that represented the following interests in the
organisation:
• Passenger Cars: Mercedes-Benz
• Passenger Cars and Trucks: Chrysler and Integration
• Corporate Development
• Chief Financial Officer
• Global purchasing
Together with the Co-Chairmen and Co-Chief Executive officers, Group B’s board members
formed the Chairmen’s Integration Council.
Group C consisted of board members that represented the following interests in the
organisation:
• Sales and Marketing: Chrysler
• Human Resources: Daimler-Benz
• Product Strategy and Design: Chrysler
• International: Chrysler
• Procurement and Supply: Chrysler
• Manufacturing: Chrysler
In 2007, Daimler sold its Chrysler division in the US to Cerberus Capital for US$7.4 billion
(for which they paid US$35 billion in 1998). Cerberus Capital Management was taking an
80.1 percent stake in the automaker for that amount. The financial performance of Daimler
increased dramatically after the sale. Without Chrysler, Daimler reported a net profit of €4
billion for the year 2007 (compared to €3.8 billion in 2006). Sales rose to €99.4 billion from
€99.2 billion. The sheer difference in the amounts of money paid for Chrysler by Daimler and
later by Cerberus Capital, makes one really wonder how such a promising merger could fail
so dramatically. "We obviously overestimated the potential of synergies," Dieter Zetsche,
chief executive of DaimlerChrysler, said at a news conference at the organisation's
headquarters in Stuttgart, Germany, after Daimler sold its Chrysler division to Cerberus
Capital Management.

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Upon closer examination, the two organisations differed from each other in many ways, as
indicated in Table 1 below.
Table 1: Comparison between Daimler and Chrysler
Aspect of
Daimler Chrysler
comparison

Follows a strong and formal

hierarchy, clear chain of
command, bureaucratic Follows an informal, team oriented and
Hierarchy and culture with respect for flexible approach. Payment disparities
structure authority. Little payment between various levels in the organisation
disparity exists between exist.
various levels in the
organisation.

Organisation’s Values reliability and the Focus on catchy designs and offers cars at
values highest levels of quality. competitive prices.

Chrysler workers felt reluctant to work with

German employees.
Daimler workers felt reluctant
to work with American Chrysler’s employees mistrusted Daimler
workers. and raised some serious communication
Trust challenges.
Daimler was imposing and
tried to dictate the terms on Chrysler’s middle managers and engineers
which the new merged saw the merger as a sell-out to foreigners,
organisation should work. and they feared an invasion of rigid working
practices from the German organisation into
their own rather freewheeling organisation.

Decision- Daimler made use of Chrysler workers were used to creative and
making centralised decision-making. decentralised decision-making practices.

Control Daimler employed Chrysler encouraged adaptability in control

methodical control practices. processes.

Official Official language at Daimler

language Official language at Chrysler was English.
was German.

Products High quality, luxurious motor

Attractive and comfortable motor vehicles
offered vehicles, offered at high
offered at very competitive prices.
prices.

Currency Daimler traded in German

Chrysler traded in US$.
Marks.

Differences in the first two aspects compared in the table above, resulted in conflicting orders
given by managers to their subordinates and the formulation of different goals in different
departments. American and German managers had different values which drove and
directed their work. Different departments were heading in opposing directions. The two

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organisations were never integrated into a cohesive whole and the potential synergies that
were identified as reasons for the merger, went unrealised. Furthermore, employees of the
two organisations did not like each other – they could not cooperate to an extent necessary
to make the merger a success.
Mistrust between German and American employees and between management and their
subordinates were mainly caused by the realisation that the agreed term “merger-of-equals"
did not materialise and that it was, in actual fact, a takeover of Chrysler by Daimler. During
the initial stages of organisational integration, huge bulks of Chrysler’s key executives either
resigned or were replaced by Germans counterparts. Poor communications led to sharp
decreases in productivity of the merged organisations.
In theory, the Daimler-Chrysler merger should have yielded two potential sources of
competitive advantage. The first potential source was cohesive global brand architecture.
The second source lay in the creation of a coherent platform strategy. The cost of developing
new motor vehicles is very high. Therefore, manufacturers design “platforms” from which
they create families of vehicles. They also try to share parts between platforms to drive
economies of scale in manufacturing.
Realising synergy in brand architecture and platform strategy would have required deep
integration of Daimler and Chrysler. One of the plans of the merger was for Chrysler to use
Daimler parts, components and even vehicle architecture to sharply reduce the cost to
produce future vehicles. Unfortunately, problems surfaced when Daimler’s Mercedes-Benz
luxury division, whose components Chrysler were supposed to use, was reluctant to share
with its mass-market partner. In return, Daimler had hoped that Chrysler would dramatically
increase its footprint in the promised land of auto sales – North America. Due to increased
competition from Asian motor car manufacturers, Chrysler fell short. The management team
would have had to develop a global brand strategy and associated logic of competitive
positioning. None of this happened. Management of the merged organisation managed the
two organisations as separate operations.
Only two years after the merger, the new organisation admitted that they needed to deal with
many barriers that prohibit them from realising their initial merger goals. Over and above the
differences between the two merged organisations (indicated in Table 1 above) time
differences between the US and Germany also posed a big problem – managers from both
organisations criss-cross the Atlantic in a stream of meetings and workshops, seeking ways
to drive down expenditures and share future development costs. People such as Mr Hubbert
from Daimler (member of the Chairmen’s Integration Council and responsible for Passenger
cars: Mercedes-Benz), acknowledged that Daimler, seeking to solve strategic problems of its
own, had engineered a friendly takeover of the American car manufacturer. The merged
organisation also faced financial problems. It was admitted that renewed cost-cutting efforts
had to be undertaken to improve its operating results. The merged organisation also realised
the importance of communication with investors when their share price fell more than 40% in
1999, only one year after the merger. Competition in the motor vehicle industry intensified,
especially in Chrysler’s home market. At the time of the merger, share options became
hugely available, which resulted in senior Chrysler managers becoming rich. This triggered
concern in Germany. Furthermore, Americans were remunerated two, three or even four
times as much as their German equivalents. Management also needed to coordinate
hundreds of integration projects, for which they formed an automotive council of five senior
managers to which all projects needed to report every four to six weeks. Despite all
management efforts, the merger culminated in failure – one that will long be discussed in
management and strategy studies.
Source: Adapted from: Smit, P.J., Botha, T. & Vrba, M.J. 2018. Management Principles. A contemporary edition
for Africa. 6th edition. Cape Town: Juta.

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4.1 Critically discuss the most significant diversity issues which the merged organisation
needed to manage. (10)
4.2 Explain why managers, playing a key role in the merger between Daimler and
Chrysler, needed to manage cultural diversity.
Hint: The arguments for managing cultural diversity. (15)

Question 5 [28]
5.1 The traditional model of organisation (bureaucracy) is NOT a suitable arrangement to
support the needs of modern organisations. Evaluate this statement. (16)
5.2 Explain the South African perspective of the Corporate Governance concept,
considering the four pillars that support good governance. (12)

ASSIGNMENT TOTAL: 100

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