MNG3701 EXAM QUESTIONS AND ANSWERS

• THE RELATIONSHIP BETWEEN GENERAL MANAGEMENT PRINCIPLES AND
STRATEGIC MANAGEMENT
Before we start our study on strategic planning, it is important to understand where exactly strategic management fits into the organisation.
It is also important to understand the value that strategic management adds to the business organisation.

Those of you who have studied management before are aware of the different management tasks or functions and the various roles that they
play in the business organisation. However, some of you have not studied management before and for you it is important to understand what
management is and how it relates to strategy. The purpose of this lesson is therefore to introduce you to the general management principles
and also to explain where strategic management fits into the management activities of the organisation.

Note: There are instances where the words “business”/“business organisation” and “organisation” are used interchangeably throughout the
lessons. However, it is important to note that we make use of the word “organisation” when referring to a range of entities including both profit
and non-profit entities. While “business/business organisation” is used when specifically referring to entities that are profit driven, strategic
management principles in general are applicable to a broader range of entities.
•


After you have studied this lesson, please make sure that you can do the following:


1. Explain the purpose and desired outcomes of a business organisation.
2. Discuss the different stakeholders who have an impact on the business organisation with specific reference to their
expectations of the organisation.
3. Distinguish between the different levels at which managers in business organisations operate.
4. Differentiate between the concepts of competitive advantage, sustainable competitive advantage and transient
competitive advantage.

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1. THE PURPOSE OF A BUSINESS ORGANISATION

, Read through the chapter orientation of chapter 1 in your prescribed textbook.



The purpose of a business organisation is to create value. Value means different things to different individuals or groups.
For instance:

o The entrepreneur who starts the business would like to make a profit. This profit is used to satisfy his/her own
needs and part of the profit is reinvested in the business organisation in order to
grow and develop the business and to ensure its long-term survival.
o In order to generate a profit, the business organisation produces products and services that provide value
to the consumers that buy these products and services.
o The employees of the business organisation receive value in the form of the salary/ wage that they earn
and also in the security that the job provides to them (knowing that they can provide in their own needs and
those of their families).
o As the organisation grows, it might start selling
shares and the shareholders of the business will receive value in the form of dividends that they earn
from the business.

These individuals and groups are known as the stakeholders of the business. It is important that
you understand what stakeholders are and also what they expect from the business organisation.
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ACTIVITY 1

Find the word “stakeholders” in the key terms at the beginning of chapter 1 in your textbook. In
your own words, explain what a stakeholder is. Once you have done that, explain what the
following stakeholders expect from the organisation:

o Customers
o Suppliers
o The community
o Organised labour