Table of Contents
1. Introduction/motivation
2. Case study
2.1 Description
2.2 Analysis
2.3 Recommendation
2.4 Implementation
3. Conclusion
3.1 Summary
3.2 Value creation
4. Bibliography
5. Annex
1 INTRODUCTION AND MOTIVATION
Vunani Limited (Vunani) is incorporated in South Africa and was established in the late
1990s. Vunani is a diversified financial services group that listed on the Johannesburg Stock
Exchange’s AltX in November 2007. The company has a market capitalisation of R354.5
million, with just under 270 employees. Its mission is to be South Africa’s foremost boutique
financial services group.
Globalisation is inevitable, and business leaders in my organisation need to take cognisance
of global factors affecting our business and take proactive measures to eliminate the adverse
impact of a rapid changing business environment. Globalisation brings about new challenges
in the way in which leaders have to operate their business. The global economy has become,
and will continue to become more integrated, presenting a business environment
characterised by a global interdependence of resources, suppliers, product markets and
business competition. In order to successfully grow in this environment, Vunani needs to
understand, more specifically, the global challenges facing the business and as well as the
implications of these challenges in future putting globalisation on the forefront of Vunani’s
strategic direction.
1.1 The research problem
Globalisation affects our company to a degree that it may threaten its survival.
1.2 Research objectives
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To introduce your company in the light of globalisation issues.
To analyse how current global trends, affect your company you selected today and
how they will affect it in three to five years from now.
To identify issues that are of critical importance for the survival of your company
To develop recommendations that would prepare the company to survive global
competition.
To develop a plan of actions with suggestions of how to implement your
recommendations.
1.3 Data collection design
 To introduce your company in the light of globalisation issues:
Key information on Vunani Limited will be obtained from the latest published information on
the company – Vunani Limited Integrated Annual Report 2019 – pages 31 to 45.
https://www.vunanilimited.co.za/investor-relations/integrated-reports/
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To analyse how current global trends, affect your company you selected today and
how they will affect it in three to five years from now:
Economic overview on the company - Vunani Limited Integrated Annual Report 2019: page
11. https://www.vunanilimited.co.za/investor-relations/integrated-reports/
Google search engine
 To identify issues that are of critical importance for the survival of your company:
Economic overview on the company - Vunani Limited Integrated Annual Report 2019: page
11 and pages 31 to 45.
https://www.vunanilimited.co.za/investor-relations/integrated-reports/
Interviews with business heads at Vunani
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To develop recommendations that would prepare the company to survive global
competition:
Interviews with business heads at Vunani
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To develop a plan of actions with suggestions of how to implement your
recommendations:
Interviews with business heads at Vunani
2 CASE STUDY
2.1 Analysis
Company profile:
Vunani has a unique positioning in the South African financial services sector. Its robust
operational platform supports an innovative and fully integrated range of products and
services that can be customised and packaged to meet the needs of clients in both the public
and private sectors. The company’s objective is to gain a competitive advantage by
consistently providing the best services and expertise available in the local financial services
sector.
Vunani has a solid and respected footprint, not only in South Africa but in the rest of Africa
as well, countries include, Botswana, Swaziland, Malawi, Zambia and Zimbabwe. It has
operations in fund management, asset admnistration, investment banking (institutional
securities broking and advisory services) and a private equity offering (commodtities trading
and investments). et funds.
The fund management segment offers a range of investment products to both institutional
and retail clients, including retirement funds, medical schemes, corporates, parastatals and
trusts. Its product range has domestic and global reach, which is offered through both singleasset and multi-asset funds. The fund management business was rated in the top 10 of the
black asset managers in South Africa and has just over 5% market share. The operations in
Zimbabwe have a 2% market share.
The asset administration segment is a a niche trust and beneficiary fund administrator
responsible for administering funds on behalf of minor dependants of deceased retirement
fund members. It has two key client groups, ie. members and their guardians, who make use
of its services; and retirement fund trustees, who make the decision to place the funds due
to beneficiaries in the company’s care. It has a 25% market share of the country’s beneficiary
fund admnistrators.
The institutional securities broking segment manages equity, derivative and capital market
trading services for institutional clients. The company trades primarily in domestic stocks
and has wide coverage in the mid-cap section of the market. The business is ranked 29 out of
56 brokers in terms of volume traded on the Johannesburg Stock Exchange (JSE).
The advisory service business offers the full range of classic corporate finance services,
enabling clients to buy and sell companies. Its services include capital raising; advice on
mergers, acquisitions and disposals; and transaction structuring. It is a JSE and A4X sponsor,
and as a result assists with the listing of companies, as well as with the ongoing support
required to ensure compliance and to enhance growth potential and sustainability. The
operations extend across all sectors, but its core focus is in mining and financial services.
The commodities trading segment’s trades minerals and resources like coal, boron and
agricultural commodities. The organisation has a joint venture agreement to distribute
boron products to all 54 African countries.
The other investment segment’s mandate is to acquire equity stakes in both listed and
unlisted companies in and outside of South Africa, within the property, mining, healthcare
and fintech (financial technology) sectors.
Analysis of the current global effects on the company:
In order to provide an analysis of the the global effects on Vunani, a PEST analysis was
conducted which takes in four essential aspects of the environment i.e Political, Economic,
Sociocultural and Technologocal environments. These are supplemented by legal, financial
and ecological environments.
Political and legal environment
 Political instability in Africa
Political instability in Africa is one of the major obstacles to the continent’s economic
development. Lack of political stability and the existence of a number of economic, sociocultural issues has a huge impact on the economy of the continent. This has an impact on
business performance and increases the risk of operating in such an economy. South Africa is
no exception to these issues.
 Regulatory changes
New regulatory regime has been triggered by multiple political and economic events with
global ramifications. Changes in the US political administration, the UK’s exit from the EU,
cybersecurity issues, the rise of fintech, and technological advancements like blockchain are
keeping organisations worldwide on their toes as they struggle to keep pace with the
ensuing regulatory changes. Of particular importance is the impact of the update to the EU’s
Markets in Financial Instruments Directive (MiFID II).
Economic environment
 Global economy and policies
The global economy is facing a confluence of risks, which has severely disrupted economic
activity and inflict significant damage on longer-term development prospects. These risks
include the on-going trade disputes (the on-going US China trade wars), an abrupt tightening
of global financial conditions, and intensifying climate risks. These global challenges coupled
with South Africa’s own domestic issues, has resulted in the local economy shrinking an
annualized 3.2 percent on quarter in the three months to March of 2019 impacting all sectors
of business.
 High level of taxation in Africa
The average corporate tax rate for Africa overall is 27.46% compared to the global average
of 23.62%. Vunani has operations in a few of the African countries where tax rates average
between 25% and 30%, which has an impact on the business‘ investment decisions. Some of
the businesses operate with slim margins, and the higher income tax rates make those
margins slimmer.
Socio-cultural
 Social impact and the role of women
Major headlines like the rise of the #MeToo Movement and advocation for an increase in the
number of women on boards have forced leading companies and their management to
evaluate their current practices and their social impact efforts in an effort to avoid drawing
negative attention and set themselves up for long-term success. South Africa has follwed suit
in making gender diverty and the role of women in business at the top of the agenda.
Analysis of anticipated global effects on the company in three to five years from now:
 Political instability in Africa
The political challenges that Africa faces have been a headline for long. The continent’s
general economic performance continues to improve, however, as long as Africa continues
to be havoked by corruption, abuse of power, civil wars, businesses will continue to be more
fragile.
 Regulatory changes
Frequent changes to regulatory regimes are here to stay given the current state of
uncertainty in the global political and economic environment, coupled with disruptive new
technology trends. The fintech revolution is disrupting traditional business models,
compelling organisations to change their business strategies, while forcing regulators to take
note.
 Global economy and policies
Global growth has been revised downward because of negative effects of tariff increases
enacted in the US and China, and softer momentum in Europe. In sub-Saharan Africa, growth
is expected to increase from 3.5 % in 2019, and 3.6 % in 2020, however there was a
downward revision. The South African government has raised concerns that the US is
considering a new wave of tariffs that could be extended to the auto industry, which is one
of the cornerstones of South African manufacturing, putting pressues on an already
depressed economy. It remains to be seen what the next three to five years will be like
economically.
 High level of taxation in Africa
Corporate tax rates around the world averaged 38.84 percent in the 1980s compared to an
average of 23.62 percent now, with most countries having corporate tax rates below 30
percent. Lower rate could help attract investments into Africa, but a reduction is unlikely
given most of these countries‘ fiscal position and government needs every drop of tax
revenue it can get. This means the companies’ margins will continue to be eroded by the hgh
taxes in the countries in which they operate.
Socio-cultural
 Social impact and the role of women
The change in behaviour and the way companies are doing business will continue to take
shape into the future. It will no longer be a choice for companies to embed social impact into
their business and brand strategies – it will be imperative. Companies will be forced to
embrace social impact and the goals and metrics of social impact will be more transparent. I
believe that social impact driven by business investment and leadership will increase
exponentially and continue well into the future.
Identification and justification of issues that are critical for survival of the company:
 Political instability in Africa
Vunani operates in more than one country. Lack of political stability in a country effects
business operations. Any changes in the political factors can affect business strategy.
 Regulatory changes
Vunani operates in a highly regulated environment. Only when organizations are agile and
responsive will they be able to stay ahead of the regulatory curve. Vunani needs to be
prepared to respond to these changes, and to reinforce their compliance frameworks with
strong teams and processes, as well as advanced technology platforms.
 Global economy and policies
The slow economic growth has put contraints on productivity and ultimately profitability.
The revenue generating capacity of Vunani has slowed down, as the company can not raise
prices fearing losing customers. In an effort to cut costs and improve the bottom line, the
company is in the process of restructuring some of its businesses, undergoing retrenchments
(impact on employee morale and productivity) and this has impacted new product rollouts
(a factor in the growth of revenue and market share).
 High level of taxation in Africa
The differing tax rates requires careful considerations on where the company will allocate
any additional capital generated by the business as a whole. The company must examine the
comparative returns offered by each venture in each of the countries. Comparing returns
requires calculating the after-tax cash flow, which depends on the tax treatment of each
activity. A higher tax rate will reduce the return offered by the investment.
Socio-cultural
 Social impact and the role of women
Vunani is a listed company and is required to adhere to good corporate governance practices
and the JSE Listings Requirements which require a policy on promotion of gender and race
diversity at board level. Vunani’s female representation on the board is only 9%.
2.2 Recommendation
 Political instability in Africa
As political systems in different areas vary, the political impact differs. Vunani should
track the political environment in the countries in which it operates.
 Regulatory changes
A “wait and watch” approach will no longer suffice. Compliance professionals, in particular,
need to ensure effective compliance with the new wave of regulations, while also
maintaining meaningful relationships with regulators and customers.
 Global economy and policies
Raising and lowering prices effectively involves careful attention to timing. It requires
knowing how to affect your customers' perception of the value inherent in what you are
selling. The company must study and accurately predict reactions from competitors. If this is
not done properly might result in alienating customers. The company must maintain and
improve business relationships with its customers through Customer Relationship
Management (CRM).
Due to contraints on revenue, there needs to be a significant cultural shift in the way costs
are managed within the business. The creation of a cost-conscious culture and ensure the
company is not spending unnecessarily.
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High level of taxation in Africa
The company requires an better understanding of the tax jurisdictions in all the countries it
operates in. Tax planning strategy must be undertaken to ensure that all financial plans are
carried out in the most tax efficient manner.
Socio-cultural
 Social impact and the role of women
The promotion of gender diversity at board level must become a priority for Vunani. Targets
must be set to ensure there is more female representation on the board. Vunani must
recognise and embrace the benefits of having a diverse board, and see the increase in
gender diversity at board level as an essential element in maintaining a competitive
advantage.
2.3 Implementation
 Political instability in Africa
The company in particular top management and compliance officers must always stay up-todate on political factors, any changes there-in and updated on current affairs.
 Regulatory changes
On a monthly basis, compliance officers will be required to report to the executive commitee
on compliance and regulatory related matters and any shortcomings be raised and followed
up.
On a yearly basis, the company must engage the use of external and internal auditors to
review the effectiveness of the regulatory compliance frameworks and processes and to
issue a report to managemengt of any possible areas of non-compliance with laws and
regulations.
 Global economy and policies
In order to ensure customer retention, and ultimately improve sales growth the company
must review its CRM processes on a regular.
Cost management and monitoring requires proper due diligence of the income statement by
the Chief Financial Officer. This involves proper budgeting processes and variance analysis of
costs regularily.
 High level of taxation in Africa
The involvement of tax specialists have an indepth knowledge of the tax jurisdictions in each
country before setting up businesses in countries and as and when capital projects are being
undertaken by the company.
Socio-cultural
 Social impact and the role of women
The board to required to review its gender diversity policy and set voluntary targets for
achieving diversity on the board. The targets and processes must be reported annually to its
shareholders.
3
CONCLUSION
3.1
Summary
The impact of globalisation on the South African economy is very complex. In order to
survive, Vunani must embrace and get a better understanidng of global challenges which
range from the increasing demands of the global economic crises, legislative requirements,
issues of gender diverty, unemployment, increased competition, skills and technology as the
impact of these challenges may threaten its survival.
3.2
Value creation
It can not be business as usual – innovativation and the need for greater efficiencies and
higher levels of creativity are essential in order to remain relevant and successful in the ever
changing global environment.
Vunani operates in different countries, which makes the global business environment even
more complex, as such business leaders need to increase their own competences and gain a
better understanding of the environments in which the business operates.
4
BIBLIOGRAPHY
Internet sources
 Articles by World Trade organisation/Forbes
Discussions with work colleagues
Vunani Limited Integrated report 2019