QUESTION 1 (54 marks)

Wilson Bayly Holmes-Ovcon Ltd (“WHBO”) is a construction engineering company. The following extracts are provided from WHBO’s 2022 Integrated Reports:
WHBO conducts its operations in South Africa, the rest of Africa and the United Kingdom (“UK”).

Building and civil engineering projects were conducted during the year in the following areas: Retail, residential, commercial, healthcare, hotels and entertainment, civil works and mining infrastructure, industrial, energy infrastructure, road works, rail infrastructure, water infrastructure, oil and gas.

There are strategic partnerships with clients, subcontractors and suppliers.
The number of projects completed in the year is 110. The value of projects in the year is R16 billion. Order book of R22,2 billion at the end of the year.

WBHO bids for projects through formal tender processes and direct negotiations with clients. Construction contracts generally take the form of re-measurable construction- only contracts, fixed-price construction-only contracts or fixed-price design and construct contracts, each with different risk profiles and contractual terms. Bidding for these projects requires extensive experience as it involves a high degree of estimation, supported by in-depth contractual and engineering know-how. The proficient assessment and pricing of project risk are fundamental to submitting competitive bids and procuring new work upon which the sustainability of the WHBO group is dependent. Estimation errors, non-identification of specific project risks, misinterpretation of key specifications and/or the misunderstanding of contractual terms at the time of bid submission, have the potential to negatively affect productivity, create delays and ultimately result in penalties and losses during the execution phase.

Plant and equipment have a carrying value of R1.6 billion at year end.

The construction materials are reinforced steel products. The entity’s total carbon emissions amounted to 91 946 Carbon Dioxide Equivalent (CO2e)… and 27 756 tonnes of waste was recycled.

(The company has) An engaged and productive workforce of 6 765 people with relevant skills, knowledge and experience. R80,7 million was invested in employee learning and R7 million in bursary schemes for employees.

The construction industry is a fluctuating sector, regularly faced with a shortage or oversupply of skills depending on the amount of work available. Managing the gap between the volume of work-on-hand and the people required to execute that work, while at the same time retaining core teams and skills is essential.

Experienced management and competent artisans are crucial to project execution. Without an adequate base of experienced engineers and quantity surveyors, project delivery risk and commercial risk increase significantly. Developing and retaining skilled personnel is critical in managing these risks and underpins our ability to grow.

Construction is a demanding yet rewarding industry that often requires long hours to meet contractual programmes. In South Africa, perceived political and financial instability alongside rising social unrest and the “Construction Mafia” present several challenges for talent retention. The quality of high school education and the number of engineers graduating from universities are also a concern.

WBHO has developed the necessary strategies and protocols to proactively deal with these events (labour and social unrest) in a manner that causes the least interruption to business activities. These include early engagement with communities and business forums where possible, the appointment of a liaison officer, transparent tender processes for available work packages, and insistence on compliant business and tax registrations.

In South Africa, the Company is fully compliant with the Labour Relations Act that promotes and supports all levels of collective bargaining. We have recognition agreements in place with the National Union of Mineworkers (NUM) and the Building Construction and Allied Workers Union (BCAWU). Employees in the United Kingdom do not form part of a central bargaining council; however, employees may join a union.

The labour environment in the UK has seen shortages across a range of sectors, including construction following the emigration of Eastern European citizens to their homes or other European countries in the wake of Brexit. More than a quarter of a million additional construction workers are estimated to be needed in the UK by 2026 to deliver upon the anticipated project pipeline.

In the reporting period under review, the UK Government’s Building Safety Bill received Royal Assent on Thursday, 28 April 2022. Following months of debate and tabled amendments, the Building Safety Act 2022 is intended to “create lasting generational change” to the way in which high-risk and high-rise residential buildings are both constructed and maintained.

WBHO spent R5 million on socio-economic development.

Taxes (direct and indirect) paid to the South African government (equalled) R1.6 billion in 2022. In the past financial year…the effects of loadshedding on business activity, the social unrest experienced in July 2021, coupled with the devastating floods in KwaZulu-Natal and the Eastern Cape, have weakened an already fragile economy.
Gross domestic fixed investment in South Africa had declined to approximately 14% of gross domestic product (GDP) by the end of the second quarter of 2022, with private firms accounting for 71% of all capital expenditure and government and state-owned company expenditure making up 18% and 11% respectively since 2018. This is clearly evident by the roll-out of the R800 billion infrastructure development plan announced by the government in its 2021 budget which has gained little traction, particularly following the cancellation of major projects by SANRAL during the year.

Kindly note that it is not necessary or required of students to pursue the source. The information in the scenario above, an understanding of the textbook material and general logic are sufficient.

REQUIRED:

Describe the term “stakeholders” to WHBO. Supplement your answer by providing and explaining six (6) examples of stakeholders of WHBO. (9 marks)

Entities have a micro-environment and a macro-environment. The macro environment consists of the market-environment and the remote environment.
Explain to WHBO the difference between the micro-environment, the market-environment and the remote environment.
Provide four (4) examples in each of the micro-environment and the market-environment in the context of WHBO. (13 marks)

Perform a PESTLE/G analysis on WHBO. Structure your answer by explaining each element of the PESTLE/G analysis and then provide brief examples of each factor, specifically in the context of WHBO’s business. (14 marks)

Explain to WHBO the most common industry drivers of change. Supplement your answer by contextualising each driver specific to WHBO as an entity. (12 marks)

Provide the board of directors of WHBO’s with strategic responses to changes in the external environment that entities utilise.
Keeping in mind your answers in questions 1.1. to 1.3., Supplement your answer by advising WHBO which of one or combination of these strategic responses will suit WHBO best. Motivate your answer. (6 marks)

QUESTION 2 (46 marks)

Refer to the entity and its scenario presented in question 1 and answer the following questions.

REQUIRED:

Explain the difference between an entity’s “vision” (vision statement) and “mission” (mission statement).
Propose your own example of what WHBO’s “mission” and “vision” respectively could be. (6 marks)

An entity’s “strategy” can be described as the long-term direction of the organisation, a pattern in a stream of decisions, the means by which organisations achieve their objectives and the deliberate choice of a set of activities to achieve competitive advantage.
Explain to WHBO the universal principles of strategic management. Supplement your answer by applying each universal principle to WHBO. (21 marks)

A model that was developed to assist entities to build a competitive advantage, superior performance and customer value, is the Resource-Based View model. Describe the Resource-Based View model to WHBO. (15 marks)

According to the contemporary strategic management framework, once an entity has formulated a strategic plan, the next stage is to implement the strategy. List the three (3) important elements of this stage as well the stage which will follow once the strategy has been implemented. (4 marks)

Answers to Above Questions on Business Management

Answer 1: Stakeholders are defined as those entities that are directly or indirectly related to the performance of an organisation. These are defined as individuals, groups or entities that have certain forms of interest in an organisation. The role of stakeholders is significant on the performance of a business, and in the given case scenario of Wilson Bayly Holmes Ltd (WBHO), there are different stakeholders identified in the case scenario. The 6 important stakeholders are shareholders of WBHO, customers, employees, suppliers, local community in which WBHO operates, and government and regulatory bodies.

Get completed answers on the above questions on Business Management as provided by the Student Life Saviour South Africa experts.