BEE Partner, South Africa Economy Watch

Sun Tzu’s advice to make one’s position unassailable assumes critical proportions for an emerging nation like South Africa, faced with stiff global competition not only from the well-established and First World nations of the world, but also from other developing countries. The world’s more advanced and wealthy nations are deeply entrenched in the global system, and manipulate it for their own benefit. They virtually control it, and have often come under intense criticism for practising double standards, particularly in their application of such issues as, for example, international trade.’

Other emerging nations, as well as the poorer countries of the world, also want their slice of the global pie and their share of global resources. They too possess a desire to improve the standard of living of their citizens, thereby improving their position in the global (or at least their region’s) economic rankings. For any emerging nation to successfully play the globalisation game, there are a number of strategic principles, identified by Sun Tzu, that should be followed. Read the rest of this entry »

Investment No. 6: Integrate executive development with the strategy process

Given that Strategy is the process of putting an organisation into a more favourable position in the marketplace relative to its competitors by integrating customer needs, competitive realities and its own internal capabilities, proactive executive development will improve the chances of strategic success. This is because properly trained executives can design and deliver more effective strategies.

It is imperative that the talent pipeline delivers both the quantity and quality of managers who can guide the future strategic thinkin_gof the organisation. This prevents the planning process from getting too far ahead of the executive development process. It also means that the organisation does not rely on outside talent to fill key management positions. Read the rest of this entry »

Investment No. 3: Spend resources to secure your leadership pipeline

Any South African firm today is really an emerging globaliser. Therefore, it has to ensure that it can develop great leaders and, indeed, a succession of them. There is always the temptation for a senior executive or an executive team to focus on building a legacy based on their own policies and achievements, rather than _establishing a pipeline of leaders. Establishing a leadership pipeline is a strategic activity built over the long term and is the result of a _cumulative process. Read the rest of this entry »

Investment No.1: Invest in time and resources that take a global viewpoint

This does not necessarily mean having business representation in multiple geographies, but it does mean treating the world globally and not multi-domestically. South African business organisations need to take a global view of their business and understand the global dynamics of their industries, especially in relation to the development and implementation of company strategy and the search for competitive advantage. Even companies that are operating purely in the domestic business environment have to take this approach, as globalisation will impact on the way they do business. Part of this global viewpoint is being realistic. Read the rest of this entry »

One of the major problems facing strategic thinkers is the whole issue of competitive advantage. According to strategy guru Richard D’Aveni, in most industries the days of permanent competitive advantages are long gone, because of the nature of what he calls `hypercompetition’.² D’Aveni contends that the best one can hope for is an ongoing series of temporary advantages, and that that is wh_atstrategists should be aiming at. This has led many organisations to move from seeking immediate competitive advantage to the development of long-term relationships with customers in the belief that opportunities for the creation of advantage will arise within the relationship. Allied to this is the belief that customers are company assets that need nurturing, rather than income sources that are there to be exploited. Also, more organisations are beginning to place greater value on customer advocates than on powerful management teams. In terms of customer loyalty, greater emphasis is being placed on moving customers up the loyalty ladder, until they becom_e advocates of the company and its products.’ Read the rest of this entry »

South African business organisations now find themselves in a global environment that is characterised by a number of trends, which increasingly shape strategic thinking. Given that the object of business strategy is to continually place a company and its products in a more favourable position In themarket place relative to its competitors, and to do so where it matters most, namely in the mind of the customer, it follows that these trends should be considered by any South African strategist. Over the past decade, the global business environment has witnessed a major shift from mass markets, and even mass customisation, to micro-markets. This has had major ramifications for strategists, as many organisations either have had to reinvent themselves, or, at the very least, revisit the fundamentals of their business to take cognisance of this shift. McDonald’s is a good example.’ Read the rest of this entry »

11. Be prepared to adapt the supply chain

A company’s supply chain should reflect the strategic initiative it takes in its attempts to outmanoeuvre its opposition. Because the supply chain impacts heavily on costs, customer service, asset productivity and revenue, it must play a key role in company efforts at creating an ongoing, seamless transition of responsibilities. This means that customers should perceive a ‘business-as-usual’ focus. Essentially, the supply chain should be assisting the company in searching for competitive advantage, and sustaining it for as long as realistically possible. Read the rest of this entry »

The problem in most organisations seems to be that value innovation is kept at the corporate level and does not permeate the entire organisation. Employees need to see themselves as a critical resource in the job that they do, not just for the organisation, but also for themselves. Put simply, if an organisation creates an environment in which value innovation is encouraged and rewarded, the participating individual’s self-worth will improve, which in turn will have a positive spin-off on job satisfaction, job involvement, and, ultimately, customer satisfaction and loyalty. Read the rest of this entry »

5. Leverage diversity

One of the most powerful tools of innovative thinking in the South African workplace is that of diversity. In South Africa, with its apartheid past, the temptation is to focus on cultural diversity in order to try to forge a clearer understanding between the various cultures of South Africa. The Rainbow Nation is well represented in business organisations, thereby presenting our companies with a great opportunity for the generation of ideas. However, the prudent manager will appreciate that workplace diversity also covers age, ethnicity, ancestry, gender, physical abilities and qualities, race, sexual orientation, educational background, geographical location, income, marital status, military experience, religious beliefs, parental status and work experience, amongst others. Read the rest of this entry »

2. Create a high-engagement workplace

Because modern business competition is more about a battle between rival workforces than it is about technology, innovation and strategies,companies coming from emerging market economies need all the intellectual input they can get in order to have a chance of becoming a serious player in the global marketplace. For that reason, the new breed of South African manager will have to find ways of harnessing the energy and intellectual capability of all the company’s employees and focus these on innovatively growing the organisation. Read the rest of this entry »

These are but two examples of a process that was repeated throughout the entire company with stunningly positive results. However, the key to success in an exercise of this nature lies in the extent to which management rethinks the view it has of its business, as well as the extent to which it is prepared to bring its people into the process. In the above examples, subsequent organisational climate surveys indicated a greater feeling of achievement and job-fulfilment in this organisation. Job satisfaction improved, as did customer loyalty. Ceteris paribus, a contribution was being made to the maximisation of shareholder value and a win—win relationship created between these two elements of modern-day capitalism. Read the rest of this entry »

Fortunately, management realised that if things continued in the _way they had for decades, the company would be vulnerable to attack by global predators. This was of particular concern, as foreign competitors were beginning to eye South Africa’s small but potentially good pickings. In addition to this, global customers such as Johnson & Johnson were beginning to demand justification for their local _subsidiary retaining its South African supplier, instead of plugging into the global supply network.

Essentially, it took threats from major customers to bring home to this company the gravity of the situation. Persuading management to think carefully on how they saw themselves, the company and its role in the marketplace, solved the problem. After careful thought, management reached the conclusion that its company was more than simply a manufacturer and distributor of packaging. Read the rest of this entry »

In addition to all of this, the development and application of strategic thinking is dependent not only on the manner in which the manager views his or her company, industry and competition, but also on how he or she actually views business per se, and the world in general. All organisations function within the greater universe. How a manager views our universe will have an impact on how a strategy is developed. For example, if business is seen purely as a means of making money, then one’s overall thinking will reflect that view. If, on the other hand, a broader context is applied, such as a business as a means of providing employment and/or making a contribution to the development of one’s community or country, then broader-based thinking will result. Read the rest of this entry »

The global challenge currently facing every single South African business organisation will test their ability and endurance at competing in the global environment. Faced with competition from global firms whose managers are used to competing at the highest level, the new breed of South African manager, which is slowly beginning to emerge, will need to be `sharper, ^,flicker and more strategically, competent than his or her predecessors, who had very little competition to contend with. To give managers any chance of success, companies are going to have to overhaul their approach to strategic thinking. Read the rest of this entry »

In each of the customer segments mentioned above, the ‘product’ has to be right so that the customer has a great experience of the country relative to the experience that can be gained elsewhere. For example, tourists not only want to enjoy the natural beauty and amenities of our country, but want to know that they will not be mugged on Durban’s beachfront, or attacked in their hotels in Johannesburg. They will also expect to be treated properly by customs officials at the various points of entry and exit. Should they embark on a tour of the country, they should feel confident that their lives would not be at risk owing to unscrupulous tour companies who put unroadworthy vehicles driven by inexperienced drivers on the road. Read the rest of this entry »

A well-known marketing adage states that a bad product will not last very long in the marketplace. No amount of sales, advertising or promotional effort will do it any good if people simply do not want to buy it. As any first-year marketing student knows, and in the words of famed marketing guru Philip Kotler, the marketing concept states that ‘the key to achieving organisational goals consists in determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors’: In today’s bitterly contested global marketplace, countries have customers and competitors too. South Africa is no exception. Read the rest of this entry »

Proponents of functional finance are committed to the principle that government’s power to tax, spend, borrow and manage its debt can and should be used as an instrument for achieving the goals sanctioned by a democratic voting process for the macroeconomy. The premise of functional finance is quite explicitly that a dynamic capitalistic economy is inherently unstable, so that unemployment and price instabilities periodically impose economic pain on the economy as a whole, which impacts most severely on labor markets. Wages and salaries comprise two-thirds of earned income; both J.M. Keynes, and subsequently Laurence Klein and Richard Kosabud, have shown the ratio of the wage relative to the profit share to be historically constant in national income (Keynes, 1939; Klein and Kosabud, 1961). Read the rest of this entry »