CONTEMPORARY MANAGEMENT ISSUES

8. CONTEMPORARY MANAGEMENT ISSUES

LEARNING OUTCOMES: After you have read this topic you should be able to:

 Place the productivity problem in South Africa in perspective  Explain ways to improve productivity in South Africa  Explain the nature and importance of SME’s (small and medium enterprises)  Place in perspective the problems that confront contemporary businesses in the International

environment

8.1. THE PROBLEM OF PRODUCTIVITY IN SOUTH AFRICA

Productivity can be defined as the ratio between goods and services produced (output) and the resources (input) used to produce them, to indicate the productive efficiency with which labour, capital, material and other inputs are combined and used to produce goods and services of a specific quality for the satisfaction of customer needs.

The five basic ways in which productivity improvements can be achieved:  Increased output is accomplished with fewer inputs

 Increased output is produced with the same inputs  The same output is produced with fewer inputs  A smaller output is produced with even fewer inputs  A larger output is produced with more inputs, but the marginal increase in output is larger than

the marginal increase in inputs.

8.2 THE IMPORTANCE OF PRODUCTIVITY IMPROVEMENT AND LEVEL OF PRODUCTIVITY IN SOUTH AFRICA

In South Africa, productivity makes a very small contribution to overall economic growth. However, the converse applies to many of its trading competitors. South Africa can achieve a higher economic growth rate if productivity growth could be enhanced. A high economic growth rate is essential to improve the standard of living of all South Africans, because it entails more job opportunities, addresses unemployment and allows more people to share the economic prosperity. It is also through productivity improvement that South African manufacturing organisations can ensure that their products can compete in national and international markets.

8.3 PRODUCTIVITY IMPROVEMENT IN SOUTH AFRICA Productivity Awareness

Productivity is the state of the mind. The economy grew by using more labour, capital, raw materials and energy. Productivity awareness should therefore form an integral part of education from an early age.

Training

Illiteracy does not promote productivity, and unfortunately, schooling can be rectified only over several generations. Hence management has a huge responsibility to appropriately train employees to meet requirements of their jobs.

The implementation of new technology

Technological development and its successful implementation are significant factors that can contribute to the productivity improvement.

Government Action

The following actions to be a positive influence on productivity improvement in South Africa:  Generally lower taxes

 Create training facilities  Link wage and salary increases  Make training subsidies available

Business Management

The responsibility for productivity improvement lies with an organization’s management, which should follow a holistic approach that includes all resources and activities.

Entrepreneurship and the management of the small and medium-sized enterprise

Entrepreneurship is the establishment of a business and the risking of capital in mobilizing resources to satisfy society’s needs and make a profit. This includes the continuous ownership of the business as well as active management. Entrepreneurs are found in large and small businesses. As the

business becomes larger, entrepreneurship is less relevant. It plays an important role in the economic development, growth and wealth of a country in job creation.

8.4. MANAGEMENT IN THE INTERNATIONAL ENVIRONMENT

Internationalisation has the most influence on the business world. The sustained growth of international trade has resulted in great competition. This includes the East, where the international activities of the business have given rise to sweeping changes in the international environment.

Contemporary trends in international business

International trade has grown over the past two decades. The globalisation of the world economy and the trend towards a borderless business world affect the business in different ways. Businesses cannot operate in isolation; changes in the international environment affect the business activities International trade has grown over the past two decades. The globalisation of the world economy and the trend towards a borderless business world affect the business in different ways. Businesses cannot operate in isolation; changes in the international environment affect the business activities

Management Perspectives in the International Environment

 The international economic environment- includes the economic systems of different countries with regard to affluence, natural resources and infrastructure. Managers will have to examine

the influence of these activities.  The technological environment –to determine whether the competition can be met or the possibility of technological expertise being utilized locally.  The cultural environment- cultural variables such as customs, values and language have certain implications for international managers. Cultural sensitivity must be developed in order to

identify cultural variables and adapt their activities of the business accordingly.  The legal- political environment – this includes the country’s legislation as well as the host countries. It includes the employment of workers, foreign exchange regulations etc

ASSESSMENT QUESTIONS:

1. The definition of productivity corresponds to the definition of

a) Efficiency

b) Profitability

c) Return on investment

d) The economic principle

2. Why has South Africa’s labour productivity remained at a constant level?

3. Discuss the nature of SME’s

4. Discuss the influence of the entrepreneurial driven SME on the economy.

TOPIC 9