Research Paper: Capetown, South Africa Assessment Item Management

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¶ … Capetown, South Africa

Assessment Item

Management

The company is facing significant challenges in expanding globally, with this report concentrating on the problems encountered expanding to Capetown, South Africa from the headquarters location in Australia. With a global operating base including offices in China, Egypt, India, Sweden and the UAE, the company has consistently shown expertise in global expansion. The purpose of this report is to evaluate why the expansion plans and strategies in Capetown, South Africa are encountering significant challenges and potentially costly errors for failing to meet employment quotas for national employees.

Problem Defined

Market entrance strategies into Capetown, South Africa are struggling internally and externally. Symptoms include the continual decline of morale and commitment of otherwise highly motivated and capable employees and associates, and the threat of the South African government to impose significant fines for failing to meet employment quotas for national employees. In addition to these factors, there is also evidence that the overall communications practices between the Australian headquarters and the South African subsidiary are ineffective in ensuring a solid platform of management and leadership. The two areas of planning and organizing are not being implemented and managed, as evidenced by attrition and lack of commitment by employees. Delving deeper into these two areas, there is also a lack of transformational leadership as exemplified by the South African employees not having the approval to solve the issue of meeting employment quotas. Clearly the Australian leadership is being more transactionally-based in how they are planning and organizing the expansion into the Capetown, South Africa market. When the symptoms are also taken in aggregate, it is evident that ethnocentrism also exists in the organization as can be seen from the high levels of employee dissatisfaction and attrition. All of these factors taken together illustrate that the management and leadership strategies, combined with planning and control systems and procedures, are not attaining the desired results.

As our mission statement indicates "It is Tootie Fruity mission to satisfy employees and customers by meeting high ethical standards and to produce the highest quality product." As of today, given the many challenges faced in expanding into Capetown, South Africa, we are failing at this mission statement. Our ethical decision making, while not intentional in its lack of compliance South African labor laws, shows that our management structure and strategies are not aligning optimally to the unique needs and requirements of global expansion. Planning and organizing functions of management are the foundational elements that need to support any global expansion, and it is the inclusion of ethics and transformational leadership that ensures consistency of purpose (Bass, 1999). As is evident from the morale-related problems and lowered productivity, combined with the lack of cultural and situational awareness that indicates a high level of ethnocentrism in decision making (Hofstede, McCrae, 2004), a re-alignment of planning and organizing strategies need to be accomplished. Delving below these two areas of management, transformational leadership and the cultural mis-alignment between the Australian and Capetown, South Africa offices needs to be addressed

Problem Analysis

Expanding operations into a new international market is daunting and requires organizations to be closely aligned with the cultural factors of the regions and nations they are attempting to launch into. The company is struggling to keep Capetown, South Africa employees motivated and engaged as part of the global organization. The lack of consistency from a planning and organizing standpoint can also be seen in not delegating the right team of employees in the Capetown, South Africa offices to work with government authorities to ensure employment quotas were met. Organizing as a discipline needs to include delegation to ensure the mission of an organization is achieved on a consistent and thorough basis (Sengul, Gimeno, Dial, 2012). Based on an analysis of the internal and external environment, planning and organizing are the two dominant management theories that are most applicable to the lack of progress and dysfunctional aspects of the expansion into Capetown, South Africa.

The first aspect of management theory that is applicable to the many managerial and leadership challenges the company is facing in its effort to expand into Capetown, South Africa is the lack of planning. The lack of planning is evident in the feedback from global subsidiaries that communication has ceased to be effective and they are increasingly being left out of decisions. Lack of planning is also seen in the lack of coordination and management of stock levels, which have seen a 25% increase in missing stock levels. The lack of planning is also evident in how ineffective the current management strategies are in nurturing and driving higher levels of trust. Authenticity and transparency are the foundational elements of effective leadership planning and execution, leading to trust accelerating each aspect of the managerial and leadership process (Bass, 1999). Also evident in the lack of planning coordination is the confusion over roles within the nascent subsidiary in Capetown, South Africa. Many of the most talented subordinates are showing signs of searching for new positions, as evidenced by the high absentee levels and the lack of commitment. When there is a lack of planning consistency between organizational goals and direction, employees often disengage from their commitment to a company and begin looking for opportunities elsewhere. Further, the lack of consistency between planning factors and leadership activities including communication on a daily basis can lead to rapid losses in leader credibility, effectiveness and over time, employee churn (Guay, 2013). The lack of planning and leadership consistency is the cause of the many employee-related symptoms mentioned . The lack of planning is also a contributing factor to the ethnocentrism that is leading the company to not seen the need for staying in compliance with employment quotas as well. Planning as a managerial discipline must be aligned with and supported consistency and transparency of leadership (Fitzgerald, Schutte, 2010). The lack of this congruence is the main cause of problems between Australian headquarters and the efforts to expand into Capetown, South Africa.

Organizing is the second management theory evident in the challenges faced in launching a new office in Capetown, South Africa. The lack of organizing can be seen across a myriad of factors in the failure of the company to keep its otherwise committed and active employee base involved and contributing. While planning's failure showed how the leadership style did not align with the needs of employees (Guay, 2013) the lack of focus on organizing is attributable for the threatened fines for not meeting employment quotas. It is also evident in the lack of transformational leadership across the entire organization (Fitzgerald, Schutte, 2010). When leadership has become myopic, more transactional in scope and lacking in perception, ethnocentrism often becomes pervasive and focused on only the short-term and familiar (Bass, 1999). This is exactly that is happening with regard to the lack of focus on meeting employment quotas for national employees. Ethnocentrism, if left unchecked, will breed on itself and eventually close off a company from the outside world.

Environmental Factors

While ethnocentrism is a significant threat to the company's survival over the long-term, the more immediate short-term threat is a lack of alignment to cultural factors. The social, legal and economic systems of Australia and South Africa are comparable, as are the cultural dimensions. On this last attribute, an analysis of the cultural dimensions shows where the Australian headquarters and South African office may not be aligning. Using the Hofstede Model of Cultural Dimensions Model and the online configuration tool for this framework, Figure 1, Hofstede Model of Cultural Dimensions Applied to Australia and South Africa has been created. This analysis indicates significant differences between the two countries on the individuality (IDV) dimension, in addition to a major difference on Power Distance Index (PDI).

Figure 1: Hofstede Model of Cultural Dimensions Applied to Australia and South Africa

Source: http://geert-hofstede.com/australia.html

Based on the Hofstede Model of Cultural Dimensions:

(Hofstede, 1998) (Hofstede, McCrae, 2004)

The PDI and IDV values have significant implications on the overall performance of the South African subsidiary. The PDI metric indicates the extent to which a given culture accepts the unequal distribution of power. Clearly Australians are not as concerned about this as South Africans, which could be in part from their history of apartheid. More severe is the differences in how Australians view themselves as highly independent, as indicated by a 90 score in the IDV metric of the Hofstede Model of Cultural Dimensions. The 65 for South Africa also shows that this nation is more collectivist and tends to look first for collaboration and shared ownership of decisions over time (Hofstede, 1998). The significant differences in expectations to results achieved in launching a new subsidiary in South Africa is explained in part by the wide difference in IDV scores between the countries. Australians managers often expect a high degree of individual initiative and effort, yet the South African culture rewards collectivism and focus on shared collaboration and consensus building (Hofstede, McCrae, 2004).

Conclusion

This analysis has shown there is a… [END OF PREVIEW]

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