Case 1: SA’s big new jobs opportunity: Working remotely for offshore companies

The Covid‐induced global shift to remote work has vastly expanded the employment opportunities available to South Africans.

Previously, Saffas who lived here had to work for local companies or the satellite offices of foreign groups.

This was extremely limiting, considering that our government has done so much to crush the domestic economy. Rolling blackouts, a growing logistics crisis, and confused policymaking have led to a catastrophic employment situation.

As many as 24.1 million South Africans of working age are either searching for jobs that don’t exist here, have given up trying, or are not economically active for other reasons, according to the latest employment report.

At the risk of making the understatement of the year, there aren’t nearly enough jobs to go around.

But in stark contrast to the untenable position, we find ourselves in, many wealthy nations have a problematic shortage of workers. Corporates often can’t find suitable or even willing people to fill vacant roles, and as a result, pay demands are rising too.

That’s further fuelling the remote work revolution and breaking down national barriers. Many American and European firms, in particular, are now fishing for staff in the large and ever‐growing South African employment pond.

This is a genuine win‐win. By snapping up South Africans, those companies get cheap and hard‐ working staff (we’re cheap for them, but the dollar‐ or euro‐based pay is great for us) and the chances of us finding employment in our specific fields of expertise go way up.

Every time a South African switches from a local employer to a foreign one, they open a gap for a fellow countryman – perhaps an unemployed graduate – to fill. And they start bringing euros and dollars into the country.

It’s near impossible to quantify how many South Africans are working remotely for offshore groups, but there’s no doubt this is a fast‐growing trend.

In 2022, I worked for a New York‐based news company. The pay far exceeded anything I could’ve got locally in my line of work – even though I was probably cheap as chips for them.

The company hired me via a global human resources management organisation called Remote, which acts as your local employer and takes charge of your salary payments, leave applications, and tax. It’s a smart operating model.

Anyway, I asked Remote recently how many South Africans are now on their books, and they said over 100. They’re not the only ones in this game.

And far more South Africans are contracted directly by foreign firms, with no local intermediary involved. Every week I meet another professional who’s signed a contract with an overseas company.

A word of caution here, though: My team at the American company was shut down due to budget constraints, and we were all retrenched a year ago. Because I was employed via Remote’s South African office, I was protected by local labour laws and was therefore entitled to severance pay.

My American colleagues weren’t so lucky, and South Africans hired directly by foreign firms could well find themselves suddenly stranded as well. So being employed through an intermediary means there’s a safety net involved, although it’s not always an option.

And of course, remote work is only possible for those who’re fortunate enough to own a laptop and an education or skill that companies in foreign lands need. This option is only really available to the middle class.

That said, remote work is providing at least a small boost for the local economy and jobs market, and it’s something that more South Africans should keep in mind. Don’t limit your job searches to local employers – there’s a big world out there and the South African work ethic is coveted in many markets.

There’s no need to move to London in search of greener pastures, and there’s a reason so many

Europeans decide to work remotely from South Africa for months on end.

Stay here, enjoy the African sun, earn more, learn new skills and ways of doing things, and free up space for people in need of work experience.

And remember, other countries are doing what our government can’t: Creating jobs for South

Africans. Let’s take our wins where we can.

South Africa’s working age population is growing by nearly 600 000 people a year, which means we need to be creating a lot of jobs just to maintain the status quo. Our current government is not willing to provide the conditions needed to do so, but thankfully, others are.

Source: Hedley, N. 2023. SA’s big new jobs opportunity: Working remotely for offshore companies. [Online]. Available at: https://www.news24.com/fin24/opinion/nick‐hedley‐sas‐big‐new‐jobs‐
opportunity‐working‐remotely‐for‐offshore‐companies‐20231211 [Accessed 17 January 2024].

Q.1.1 One of the most interesting characteristics of managerial work is the rapidly changing workplace. One of the most significant changes since COVID‐19 was the introduction of ‘remote work’, or, as some of you might know it, ‘work from home’. Also, COVID‐19 had a significant impact on business, with many not surviving, impacting countless livelihoods. Some organisations used COVID‐19 as a positive Black Swan event, one that is an unpredictable, highly impactful event where the benefits of the event are unlimited while the disadvantages are limited.

You are required to write a report of between 1800 – 2500 words in which you address the following aspects within the context of the case:(50)

• Henry Mintzberg offered a number of interesting insights into the nature of managerial roles. These roles take on greater significance in the world post‐
2023. Discuss Mintzberg’s managerial roles within the context of the new workplace, specifically as it applies to remote work.
• Discuss the challenges faced by management within the context of the new workplace, specifically as it applies to remote work.
• Using the rational decision‐making model, analyse how successful organisations possibly applied the process to thrive during COVID‐19. Ensure that you use the adoption of remote work to frame your discussion.

Read Case 2 below and answer Question 1.2 and 1.3.

Case 2: ‘We will be ready.’ Takealot owner Naspers prepares for battle against Amazon

Global consumer internet and tech group Naspers says it’s been investing to ensure SA’s largest ecommerce retailer Takealot can defend its turf against US giant Amazon.

On Wednesday, Naspers and its subsidiary Prosus released results for the six months to end‐ September and confirmed that its consumer internet businesses will break even six months earlier than previously expected.

It now expects to do so by the end of its current financial year, with its consolidated ecommerce trading loss narrowing 85% to $38 million (R711 million) in its six months to end‐September. Both Brazil’s iFood and its classifieds business, which is a market leader in many Eastern European countries, doubled their trading profit.

Takealot – which also includes Mr D and Superbalist – grew its revenue by 9% in rand, and also managed to cut its trading loss by 85% in dollar terms.

Naspers SA CEO Phuthi Mahanyele‐Dabengwa said both Takealot and Mr D had been performing well, with the latter growing its revenue by 11% in rand. Takealot now has almost 11 000 third‐party sellers on its platforms.

With Amazon set to launch in SA in 2024, Mahanyele‐Dabengwa stressed the importance of having local knowledge of the market and said the group had received financial support to stand its ground.

“We have received a lot of support in terms of our budget to ensure that our Takealot team is able to take on Amazon.”

Naspers declined to go into details on this support, but Naspers and Prosus interim CEO Ervin Tu said the group expects Amazon to enter SA “comprehensively”, meaning, for example, it will be looking for both a footprint in customers and suppliers.

Said Tu:

We will be ready across multiple fronts. We welcome the competition. We are untroubled by it.

He added that the group is not put off by the regulatory environment in terms of further acquisitions in South Africa.

However, Tu did concede that there are fewer “exceptional opportunities” in the country, even if there is still an entrepreneurial spirit.

Any investment in SA comes amid the potential of capital invested elsewhere, including India, a country that is expected to grow 6% in real terms this year and which Naspers has made clear is a focus area.

Profit moves

Naspers has been pushing for its underlying ecommerce portfolio to reach breakeven point, and after two consecutive six‐month periods of significant growth, its classifieds and food delivery divisions are now profitable.

“We are growing meaningfully ahead of some of the biggest internet companies in the world. We are growing our profitability and very quickly catching up to their margins,” said CFO Basil Sgourdos.

However, the group’s educational technology portfolio lagged, improving its trading loss by only

4%. Tu said the group had paid “2021 prices” for a number of businesses. Since then, the technology sector took a large hit, with US tech stocks falling more than 30% in 2022. Prosus also bought these businesses before a disruptive wave of artificial intelligence arrived.

Prosus has recognised impairment losses on goodwill of $440 million on Stack Overflow ‐ a question‐and‐answer website for software programmers. Prosus bought the platform for $1.8 billion in 2021.

Strategic focus

While the focus over the past 18 months has been to boost the profitability of its businesses, Tu said the group was also focused on “reigniting our core strategy of backing exceptional technology companies, whether through controlled or minority investment”.

“Now, of course, we focus much more on profitable growth opportunities and won’t be backing, by any measure, as many loss‐making enterprises as we did in the past,” he said.

Tu added:

We are not afraid of investing early, we are not afraid of growth, we are ultimately a growth investor, and sometimes that requires risk. That requires some loss‐making years before profitability, but I will tell you there is utter focus on making sure there is a path to profitability if we invest in that type of enterprise.

The group also remains bullish about the prospects of Tencent. While investor sentiment towards China had waned in 2023, the group believed it would ultimately return, having confidence in “long‐ term mean reversion.”

“We believe the stock is undervalued across almost all metrics, and as we look forward, we see a clear trajectory for renewed revenue growth, accelerated profit growth, and continued capital return. We like this about Tencent in the same way we like this about Prosus,” said Tu. Naspers and Prosus own 25% of the Chinese behemoth.

Market reaction

After gaining almost 18% over the past month, Naspers ended the day marginally lower. Prosus fell half a percent.

The group together is still trading at a discount of about 36%. But it stressed that its efforts ‐ through share buybacks and improved profitability ‐ have helped the discount shrink by 17 percentage points since its peak.

“There is still a lot of noise in the Prosus numbers due to restructuring transactions and impairment of some smaller assets,” said Peter Takaendesa, head of equities at Mergence Investment Managers.

“However, we think that the operational outlook for Prosus is at an inflection point where both the recovery in Tencent earnings growth and the loss reduction in the ecommerce assets should drive strong double‐digit earnings and cash flow growth for Prosus over the next three to five years.”

Director and portfolio manager at Sentio Capital, Imtiaz Suliman, said the narrowing of trading losses was welcome news, and the accelerated trajectory toward e‐commerce profitability and positive free cash flow are supportive of the group’s investment case.

Analyst at Nitrogen Fund Managers Willem Oldewage called the financial results “robust”, marked by notable advancements in cost management.

Source: Gernetzky, K. 2023. ‘We will be ready.’ Takealot owner Naspers prepares for battle against Amazon. [Online]. Available at: https://www.news24.com/fin24/companies/we‐will‐be‐ready‐ takealot‐owner‐naspers‐prepares‐for‐battle‐against‐amazon‐20231130 [Accessed 17 January 2024].

Q.1.2 A key element in the effective management of an organisation is determining the ideal alignment between the environment and the organisation and then working to achieve and maintain that alignment.

Achieving and maintaining this environment requires an organisation to perform a thorough external environmental analysis. Perform this analysis for Takealot in the
form of a report between 1000 – 1500 words.(25)

Q.1.3 Each organisation must assess its own unique situation and then adapt according to the wisdom of its senior management. Several mechanisms are available to management.

In the form of a report between 1000 – 1500 words, assess the six basic mechanisms through which organisations adapt to their environments, using Takealot to frame this discussion.

Answers to Above Case Study Questions

Answer 1: The role of managers is significant in managing the 21st century business environment. According to Henry Mintzberg, there are different perspective available to understand the nature of managerial rules in modern organisation, and these perspectives are applied in the given case scenario as provided in the case study in order to understand the ways in which different managerial roles all significant in allowing the proper management during covid-19 pandemic.

Get assistance in writing answers to the above questions on contemporary management accounting as provided by Student Life Saviour South Africa experts.