Contents
Chapter 5: General Management and Corporate Governance .............................................................. 2
Research and Presenting of Data ............................................................................................................ 7
Forms of Ownership................................................................................................................................ 9
Professionalism and Ethics.................................................................................................................... 13
Team and Conflict Management .......................................................................................................... 16
Public Relations ..................................................................................................................................... 18
Finance .................................................................................................................................................. 21
Risk Management ................................................................................................................................. 23
Page 1 of 25
Chapter 5: General Management and Corporate Governance
Definition of management:
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Directing the business
Using resources achieve goals of business
Ensuring business is sustainable
Making decisions on how to survive
Def: Management is the process of accepting accountability for the innovative
application of resources in order to achieve business goals
Manager:
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He/she works in business that already exists, works ensure success of business
Employee of business
Not bear any financial risk apart from job security
Manager awarded with salary when job done
Manager involved with execution of plans
Levels of Management:
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Top Management (Admin Manager): responsible for strategic decisions (long-term
goals) of business (products, markets, business organizing), Jobs: CFO, CEO, COO,
CTO, VP
Middle level of management (Marketing Manager): responsible for tactical decisions
(interoperates plans and sets actions) in business, Jobs: Regional/plant managers
Lower-Level Management (Production Manager): Day-to-day decisions (implements
plans), Jobs: team leader, assistant manager, foreman, shift manager
Management all levels perform same basic tasks: planning, organizing, leading,
controlling, coordination, communication, delegation, decision-making, discipline,
motivation
Management Tasks:
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Planning: Creative and logical thinking used improve future perf of business (What,
How, When, Who)
o Principles of effective planning: rational process aimed at future (Management
plans where and how to obtain the resources needed to achieve the objectives),
funnel approach (Constant involvement of management in the process of
environmental scanning), flexible, planning takes place all levels management
o Importance: attention focused on business objectives, well-thought-out plans
minimize risks and uncertainty, helps management prepare for changes in both
environments, planning entails integration diff business functions ensure
coordination to achieve overall vison/mission, facilitates control
Organizing:
o Advantages: Patterns of communication, Authority and responsibility, create
proper balance, stimulate creativity, encourage growth
Page 2 of 25
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o Organizing: manager = arranges activities such way that all resources contribute
towards systematic and successful business
Leading: manager has to ensure guidance and support is given to employees
o Principles: Harmony of objectives, effective communication, unity of direction,
direct supervision, follow up (Provide a support structure to assist where
necessary)
o Leadership and management: a sound leader is a good planner, able to make
decisions, guide people, encourage others, take initiative and is a mediator and
arbitrator
Control:
o Establish standards
o Measuring actual performance
o Corrective action
o Control will provide manager with feedback on how problems can be addressed
in order improve performance of employees and overall business
Communication: exchanges info, opinion, views and ideas between staff mem and
management
o Helps employees understand the job they are doing to help business
Coordination:
o Principles : Clear objectives, comprehensive policies, induction, chain of
command, liaison between departments
o Ensures there is cooperation between diff departments
o Ultimate goal = creating synergy between individual efforts, teams and
departments
Delegation:
o Reduce workload of senior employees and achieve more meaningful
distribution of tasks and responsibilities
o Delegate duties, authority, and responsibilities to subordinates
Decision-Making:
o Order make responsible decision all relevant facts should be considered
o No personal prejudice
Discipline:
o Improve future behavior in business
o To achieve this = important everybody knows what is considered as
misconduct
o Verbal warnings, final written warnings, suspension
o Code of conduct
Motivation:
o Improves employee’s productivity
Page 3 of 25
Management Styles:
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Democratic:
o Encourages joint decision making, decision making might take a while, grows
confidence of employees and collective performance
o Advantages: Allows input from employees, employees become motivated
o Disadvantages: Input = slower decision making, increase chance of conflict
Autocratic:
o Commands employees, formulates all objectives, policies and procedures,
demotivated employees due to lack of involvement
o Advantages: use to ensure authority and discipline, quicker decision making
o Disadvantages: decrease employee moral, lack of knowledge because one
person deciding
Laissez-faire:
o Doesn’t exercise control, independent thinkers, may create uncertainty and
confusion
o Advantages: extra responsibilities create better employees, employees feel
valued
o Disadvantages: manger and employees both responsible if a job is not done,
inexperienced employees can become stressed
Transactional:
o Manager motivating employees to perform tasks in return receives benefits
o Advantages: people work harder to make extra money, increase in
productivity
o Disadvantages: if reward seem efficient it might demotivate, labour unrest
can occur
Transformational:
o Leader = charismatic by nature
o Motivate employees helping them understand meaning of work
o Advantages: people are motivated, easier to get employees to follow
o Disadvantages: not everyone can use leadership style, employees can
become too comfortable and may lead to disrespect
Situational:
o Combination of all styles depending on situation
o Advantages: can adopt to diff situations, diff employees need diff styles
o Disadvantages: creates confusion amongst employees, confusion can lead to
conflict
Motivational Factors:
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Advantages:
o Motivated employees more likely to provide better customer service
o Usually productive employees
o Lower levels of absenteeism
o Less likely embark on industrial action
o Workers will say positive things abt business
o May have positive impact on other departments
Page 4 of 25
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Monetary Factors:
o Salary increase
o Bonuses at year end
o Paid holidays
Non-monetary Factors:
o Job enlargement (additional tasks added to original job)
o Job enrichment (emps get more responsibility and authority)
o Empowerment and advancement of employee
o Flexible hours
o Recognition of good work
Management Competencies:
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Global Awareness:
o Political, language, cultural differences, exchange rates appreciate or
depreciate
o Business world interrelated and interconnected
Organisational Awareness:
o Internal:
 Manager understands strengths and weaknesses of business
o External:
 Should demonstrate understanding of opportunities and threats
Analysis:
o Manager able identify important sources of information, gather relevant
information and interpret
Strategic thinking leading to strategic action:
o Strategic thinking entails managers ability look at businesses current position
in relation rest of market and to then decide where business should be in a
few months or years
Teamwork:
o Good manager aware people’s feelings
o Manager encourages team members work together
Empowerment & Talent Development:
o Can be done by giving employee new skills through training
o By giving employee new responsibilities and authority to perform a new
challenging task
o Giving employee freedom to choose how to do a task
o By monitoring performance and giving constructive feedback
Initiative:
o Manager not waiting for other people
o Means being proactive
Judgement/Decision Making:
o Manager continuously make judgment calls in diff situations
o Manager employ integrity
Negotiation:
o Successful negotiator able convey opinions clear and accurate manner
Page 5 of 25
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Customer service orientated:
o Customers needs primary focus area
o Manager listens and responds to customers questions
Entrepreneurship:
Qualities, Characteristics & Skills:
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Initiative
Planner
Persistence
Concern for quality
Risk taker
Assertiveness
Self-confidence
Experience
Information gatherer
Problem solver
Credibility
Build own business and ensure success
Owner of business
Assumes all risks involved with business
Receives profits of business
Is innovative through creative thinking and creative problem solving
Activities of an entrepreneur:
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Idea generation
Market research
Raising of funds
Recruitment
Procurement
Project implementation
Intrapreneur:
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Often found in a large business working as an employee who creates new ideas and
then converts them into products and services within the framework of the business
Ultrapreneur:
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Identify a viable business opportunity and then establishes it into a business, hire a
team of workers to run the business
Types of entrepreneurs:
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Socio-entrepreneur
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Techno-entrepreneur
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Eco-entrepreneur
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Tender-entrepreneur
Page 6 of 25
Research and Presenting of Data
What is business communication:
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2 way process where information is sent, received and interpreted
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Filters to miss communication: language barriers, cultural diff, physical noise,
physiological factors
Importance of business of communication:
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A persons ability to express themselves will have a direct impact on their
performance
What makes communication such an asset to the business:
 Get ideas across
 Feedback
 Delegating
 Applying for finance
 Vision
 Communication with target market
Different forms of communication:
Verbal:
 Telephone
 Business letters/statements
 Electronic media
 Business magazines
 Oral presentation
 Business reports
 Business plan
Non-verbal:
 Body language
 Graphs, table, diagrams, illustrations
From a business plan to a project plan:
Business plan:
 Cover page
 Index
 Executive summary
 SWOT
 General management plan
 Marketing plan
 Financial plan
 Human resources plan
 Operational plan
 Social responsibility plan
 Contingency plan
 Appendices
From a business plan to a project plan (used to implement the business plan) and to
what, when, whom, resources and implementation
Responding to business communication:
 Telephonic calls - answered without delay
Page 7 of 25
Business letters – Letterhead
Instant media – correct language and never respond when upset
Providing feedback – listen carefully, stand straight and make eye contact.
Research:
Primary:
 Initial/first
 Original data
 Questionnaires, interviews, etc
 Protocol: Clearly define research topic, Consider secondary research,
Research methodology, Consider ethical issues, Research sample, Timeline
of research (explanations in book)
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Secondary:
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Desk research – what other people have said
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Plagiarism
 Citations: reference to show a reader where u received your info from
Errors in research:
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Don’t use one source
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Don’t generalise
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Not everything you read is true
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Self-fulfilling prophesies
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The Hawthorne effects
Page 8 of 25
Forms of Ownership
Characteristics:
Legal Persona:
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It is the legal right of a business or person to enter into contract, own property, sue
and be sued
Liability for debt of business:
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Unlimited liability means that the owner could lose personal belongings if the debts
of the business can’t be settled
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Limited liability means that the owners personal belongings can’t be taken to settle
debts of the business
Tax Implications:
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For individuals we pay according to how much we earn ( the more you earn, the
more you pay) and for companies they pay a flat rate of 28% on all profits and 20%
on dividends
Continuity of existence
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Businesses will have continuity if they are registered and have no continuity if they
are not registered, which means that if an owner retires or dies the business will not
continue
Management and control:
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The owner of a business can run the business or appoint a manager at any time
Capital size of business:
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Capital refers to the amount of money needed to start a business
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The bigger the business the more capital will be needed
Formation procedures:
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What the business has to go through to be established
Sole Trader:
Characteristics:
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Owned by one person
Contribute all the capital
A special skill
Not a separate legal personality
Not a separate legal entity
No continuity
Owner pays tax on profits
Advantages:
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Very quick to establish (formation procedure)
Page 9 of 25
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Takes all the profits
Quick decision making, gains exp, close relationships with customers (management
and control)
If the profit is relatively low, the rate at which the owner will be taxed on the profit,
could be lower than 28% (tax implications)
Competition in the market → keeps prices low and quality high
Disadvantages:
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The business cannot be registered → no separation between the owner and the
business → Unlimited liability for the debt of the business (Formation procedure)
 Growth is limited → capital is limited, the owner has to carry all responsibilities
 Does not have somebody to discuss decisions with. He may not have someone to
take over from him (management and control)
 If profit high = tax higher than 28% (tax implications)
 There is no continuity of existence, because there is no separation between the
owner and the business
Partnerships:
Characteristics:
 Verbal, written, tacit agreement
 2 – 20 partners
 Not a legal entity
 Profits and losses shared between partners
 Partnership agreement
 Based upmost on good faith
 Unlimited liability for debts
 Jointly and severally liable for debts
 Raise capital by bringing in more partners
 No continuity
 Partner pay tax with personal capacity
 Share responsibilities of running business
Advantages:
 Easy to establish agreement (formation procedure)
 Skills and knowledge combined
 Better decision-making, responsibility shared, division of labour (management and
control)
 Partners taxed on profits, could be lower than 28% (tax implications)
 Offered to valuable employee, eliminates comp
Disadvantages:
 No separation between owner and business
 Growth limited
 All partners have to be consulted
 If profit is high, tax higher than 28%
 No continuity of existence
 Unlimited liability, jointly and severally liable
Companies:
Page 10 of 25
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A company is defined as a legal entity incorporated in terms of Act 71 of 2008. This
includes any company that was registered under the previous Companies Act (61 of
1973) and a Close Corporation (regardless of whether it has in the meanwhile been
converted into a company). A Company will be registered with the Companies and
Intellectual Property Commission (“CIPC”)
Purpose of act:
 Encourage entrepreneurship
 Promote SA economy
 Simplify process of registering company
Different types of companies:
Non-profit companies
Profit companies:
 State owned cop
 Private cop
 Personal liability cop
 Public cop
Prescriptions of companies act number 71 2008:
Name of a company:
 Private company – (Pty) Ltd
 Public company – Ltd
 Personal liability company – Inc
 State-Owned company – SOC Ltd
 Non-profit company – NPC
Formation procedure:
 MOI – memorandum of incorporation is the founding document to start a company
 Minimum shareholders for company (private or public) is 1
 Public company must have at least 3 directors and a private must have at least 1
Prospectus:
 This is defined as a written invitation to the public to come and buy shares
 All directors must sign prospectus with dates
 The prospectus contains information about the business
 If the prospectus is issued to raise capital it must contain details of the transaction
Meetings:
 PROXY?
 Public companies have to give 15 days notice for an upcoming meeting and for
private it is 10 days
 The requirement for a quorum is 25% of shares with voting rights that must be in
attendance
Duties of directors:
 Act in the best interest of the company and may not act in a manner that benefits
themselves and disadvantages the business
 Act in good faith and diligently
 Obliged to disclose personal or financial interest that may cause a conflict of interest
Financial obligations:
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All companies must prepare annual financial statements that IFRS.
Page 11 of 25
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Public companies must appoint a secretary, external auditor and internal audit
committee.
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Meet the solvency and liquidity test. Solvency test will ensure assets exceed liabilities
and the liquidity test will determines a companies financial position to settle debts
that become due within 12 months
Characteristic
Formation
procedures
Legal persona
Continuity of
existence
Owner’s liability
for debts
Advantage
Disadvantage
Complicated and
Costly
Legal entity
Continuity of
existing
Limited liability
Tax implications
It depends on the profit generated by
the business, it is an advantage of the
business to pay a flat rate of 28% tax.
Capital
A suitable form of ownership,
requirements
regardless of size
Management and The business is managed by
control aspects
Directors.
Page 12 of 25
Professionalism and Ethics
Effective Business practice:
 It is necessary to identify the core values that are important to the business
and then to ensure these values are ingrained in everyday business practice.
Ethical Theories:
Professionalism, Ethics and responsible behaviour:
A ethical person will:
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Be honest and act with integrity
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Do what is right
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Act in a way that is acceptable for society
A professional person will:
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Share knowledge
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Reliable
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Accept accountability
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Dressed correctly
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Personal issues left at home
Batho Pele: a framework to ensure professional and ethical service delivery in the
public service in South Africa
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Batho Pele (Sotho: "People First") is a South African political initiative. The
initiative was first introduced by the Mandela Administration on October 1,
1997 to stand for the better delivery of goods and services to
8 Principles:
Page 13 of 25
Consultation
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Hear what the people of the country have to say e.g. surveys
Service standards
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Must be monitored and benchmarked against international ones
Access
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Access to public services
Courtesy
 Respect for others lead to better communication
Information
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Information about the government departments should be shared with public
Openness and transparency
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Government employees should be accountable and responsible
Redress
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Correct government services that do not meet the standard
Value for money
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should try to be more efficient and reduce costs
Code of ethics and code of conduct:
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A Code of ethics is often defined as a set of rules that helps people when they
have to make decisions
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A Code of conduct will guide people’s actions (conduct)
Types of unethical behaviour that will be addressed in the Code of Ethics / Code of
Conduct:
 Bribery, corruption and fraud
 Confidentiality of Company records
 How to handle conflict of interest
 Insider trading
 Receiving gifts or offers of entertainment: value and how to declare
 Respect for the business’ intellectual property
 Use of company resources and the issue of privacy
 Are employees allowed to have another job / run a business in their own time?
 whistle blowing
How to ensure staff members use the Code of Ethics / Code of Conduct as part of
everyday business:
Obtain staff input
Aware of consequences
Page 14 of 25
Lead by example
Ensure it is proof read
Easy language
Regular training
The implications of Unethical Business Practices
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broken trust
boycotting
fined
profitability declines
court cases (sued)
reputation may be lost
may need to implement more rules and regulations
Corporate Governance:
Balancing the interest of all stakeholders:
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Shareholders
 Management
 Employees
 Customers
 Suppliers
 Government
 Broader community
Environmental awareness
Ethical behaviour
Meeting legal requirements
Page 15 of 25
Team and Conflict Management
What is a good team:
 Understands roles
 Understands one another
 Synergy within team
 Open-minded
 Respecting opinions
 Communication
 Strong leader
Stages of team development:
Team Dynamics:
Belbin Theory:
 Thinking: Monitor evaluator (monitors situations), specialist (valuable skill), plant
(Creative)
 Task: Finisher (look for mistakes), implementor (convert ideas into practical actions),
shaper (loves pressure and challenge people)
 People: Resource Investigator (extrovert, loves talking to ppl), team worker
(diplomat, listens to others), coordinator (natural leader who knows when to delegate)
Conflict Management:
Reasons:
 Lack of or poor communication
 Resource allocation
 People not respecting rules or policies
 Power struggle between staff members
 Unsure of respective roles
 Different cultures and different values
 Differences in personalities.
 Differ about the priorities
 If one staff member is not performing well
Importance of conflict management:
Functional:
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New idea due to arguments
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Talking about conflict allows better relationships amongst people
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Problems solved due to conflict
Page 16 of 25
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Improved communication
Dysfunctional:
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Decreased staff morale
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Decreased productivity
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Negative organizational culture
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May result is verbal or physical abuse
Conflict management Skills:
Stress levels
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Learn to say no
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Exercising and eating healthy
Crisis Management
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Time management skills
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Complete smaller objectives to solve the holistic problem
Change
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Find positives in the new situation
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Ask for help
Page 17 of 25
Public Relations
Role and purpose of public relations:
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PR about management of communication between nosiness and stakeholders
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PR promotes open communication channels between diff stakeholders by
being proactive
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PR used for new product or event available to create ‘marketing buzz’
(excitement amongst stakeholders
For PR to be successful:
Planned:
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Should be aware all internal and external factors
Deliberate:
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Comm with stakeholders not take place on accident, must be intentional and
carries specific message
A management function
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PR should be part of business strategic planning cause its tool assist
management with problem solving
Involve 2 way communication
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Listens to stakeholders concerns or demands
Promote performance:
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Ensures business policy properly communicated and understood by
everybody
Be in the interest of the public
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Ensures stakeholders understand that business activities are mutual benefit to
business and themselves
Public Relations Stakeholders
Internal
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Employees and trade unions
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Shareholders
External
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Media
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Customers
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Suppliers
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Image
Page 18 of 25
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Financial institutions
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Political officials
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The broader community
Internal marketing:
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Process where plans communicated to various people and group of
departments in business to achieve business goals
How to ensure successful:
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Find out what employees feel and think
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Use newsletters, bulletin boards, emails, etc
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Reward employees
Tools used by PR department
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Media relations
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Media tours
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Newsletters
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Special events
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Speaking engagements
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Sponsorships
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Employee relations
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Community relationships
Process of public Relations (RACE)
Research:
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Where PR function assess all factors contributing to problem/opportunity
Action:
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Decides what action should be taken
Communication:
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Question arises about what relevant stakeholder going to be told about
problem/situation
Evaluation:
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Success of PR drive needs be evaluated order make adjustments where
necessary
Public relations and marketing:
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Deal with businesses’ internal and external relationships
Page 19 of 25
Objectives:
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Appropriate distribution channels
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Sound relationships with stakeholders, sound reputation for business and
brand
Target market:
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Buy or use of businesses products of service
Activities:
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Ensuring all action are in line
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Shaping and promoting businesses core values, both internally and externally
Integrated perspective between marketing and PR
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To use all methods and resources available to get message across to
stakeholders
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Integrated marketing communication function ( advertising, personal sales,
sales promotion and publicity)
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Business should look at integrated tactics: launch products/services, sell
product/service to a given segment, reinforce consistent message regarding
brand and image
Page 20 of 25
Finance
Financial concepts in business environment
Income statement
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Business receives income when services are rendered or when goods are
sold
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Income earned shown in statement comp income
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Business incurs expenses has to pay for services rendered to business
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Expenses shown in statement comp income
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Owners equity = value of owners money in business
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Assets refers to possessions of business
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Liability refers debt of business
Cost
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Fixed costs = remain same irrespective of output
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Variable costs = vary according to output (units produced)
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Cost per unit = total costs / num units produced
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Total costs = var costs + fixed costs
Break-even analysis
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Point where income generated from sales exactly equal to total costs
Safety margin
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How far above break-even point business has to perform in order ensure
safety continue to exist
Feasibility Studies
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Assessing potential of new business idea
Why important
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Helps determine possibility of success
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Forces entrepreneur take all emotion out of equation and focus solely on facts
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Forces entrepreneur think critically
How to do study
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Describe business project or idea
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Describe market (market research)
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If viable idea what next?
Importance of money management / investment in business context
Page 21 of 25
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Money management = ability of person attain optimum return of his/her
money
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Business makes profit = entrepreneur has to make decision to: withdraw profit
from business to use in personal capital, withdraw profit from business to
invest somewhere else, reinvest profit in business
Investing money to generate monthly income
Investing money to achieve capital growth
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Consider concept ROI = additional money generated on investment / original
amount invested x 100/1
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Success of business: type of industry, business’ brand strength, management
team, liquidity
Importance of insurance in business concept
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Fire, burglary, floods, customer slipping and falling, car accident into store,
employee being injured on duty
Insurance on the building
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Structural damage building usually covered in section of policy
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Fire, structural damage, explosions, impact by vehicles
Business interruption insurance
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Business experience any loss or damage = reduction in turnover
Fidelity insurance
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Cover business against theft (money or stock) by employees
Public liability
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If owner or employee causes damage to visitor or customers property or if
someone is injured or dies during course of business
Insurance on vehicles
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Either fully comprehensive or only covert third party
Theft, burglary or robberies
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Inventory or equipment bring stolen
Bad debt
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Non-insurable risk
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Possible to take out insurance but very expensive type of insurance
Page 22 of 25
Risk Management
Risk Management:
Analysing the probability of an event-taking place then planning to:
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MINIMISE the negative impact
 CAPITALISE on possibilities
Risk and strategic management
What is the objective of risk management
 To ensure balance between business opportunities and threats
Strategy:
 Vision, mission, value statement, organisational structure, goals & objectives
Risk Management:
 The alignment between business strategy & business operations
Business operations:
 Implementing policies, managing processes, monitoring & controlling daily
activities
Risk management in profile
 Not all risks are seen in same way
 The way a business views risk influenced by: risk profile of business and risk
culture
Risk profile of business:
 The degree that a business is willing to accept risks
 Directly related to strategy of business
Risk culture:
 Business culture = shared attitudes and practices in the business.


Risk culture = the collective attitude towards accepting risks.
Is the result of business practice = rewards for risk-taking or risk-avoiding
behaviour.
Types of risks:
Operational risks:
 Systems/processes
 Organisational structure
 People
 Product development
 Data storage and security
Environmental risks:
 Flooding or droughts, etc
Country risks:
 Political events
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 Economy conditions
Financial risks
 Credit risk
 Fluctuations in exchange rate
 Solvency risks
Reputational risks
 Customer complaints over social media
 Business causing environmental damage
Strategic risks
 Poorly formulated/communicated vision
 Unrealistic goals
Managing risks
 It’s IMPORTANT that risk management be seen as a holistic business
mechanism across the various levels of management & the different business
functions.
 It’s IMPORTANT that a business assesses the type of risk they’re dealing with
in order to understand the potential impact.
 Once the business has determined the potential impact of the risk – strategies
need to be developed to deal with it.
 Managing risk involves 4 steps:
Risk assessment
 Identification of risks
 Description of risks
 Estimation of impact
Risk management policy
Ensure comprehensive policy is:
 Drafted
 Communicated to relevant parties
 Implemented in business
Risk response
 Avoid risk
 Reduce the risk
 Accepted but managed
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Choosing a suitable risk response involves developing a RISK PLAN that
considers all opportunity costs & consequences.
Risk reporting

Internal

Involves reporting risk management info to people that are involved in
decision-making / performance reviews.
External

Has increasingly been under the spotlight through Corporate Governance
efforts.
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