Management principles: Monash South Africa

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Table of Contents

Executive Summary
Introduction
Discussion
Conclusion
Reference List

Executive Summary

Companies use different approaches while entering new markets. They include stand alone operations or the direct approach and strategic alliances and partnerships. Depending on the scale of operation, different companies adopt different approaches.

The paper is a case study of Monash South Africa. Monash University opened a new campus in South Africa in 2001. The campus located in Johannesburg was expected to break even in 2006 but made losses of up to AU $ 30 million.

Using the above case, the paper explores the effectiveness of different strategies used in the process of internalization. Monash South Africa adopted a direct approach strategy which has proven ineffective in its operations.

The paper thereby gives recommendations on appropriate action for Monash South Africa in order to improve its bottom line.

Introduction

Good management is an essential component in any successful organization. It entails development of a unique organization culture tailor-made to meet the needs of all stakeholders in the organization.

Stakeholders in an organization include the management, employees, shareholders and suppliers. Management oversees the development of the organizational culture which mainly targets employees.

Management is both an art and a science where it concentrates on specific needs of the individual and using of empirical data to develop management strategies that can be replicated in different learning environments.

Management or leadership styles include autocratic, democratic and laissez faire. Management styles are heavily influenced by the respective culture in which the organization is based.

Firstly, the paper explores the performance of Australian managers in South Africa and vice versa. The paper focuses Monash University, an Australian university expansion strategy into South Africa.

Discussion

Management and culture

In the development of a single global market, more organizations have been on an expansion path aimed at establishing subsidiaries in different countries. Organizations such as Monash University are keen on having a global outreach that improves their bottom lines.

Organisations are forced to bring in expatriates from their mother countries. Foreign expatriates train the local and other employees on such aspects such as organizational culture in order to assimilate them fully into the organization.

However, due to divergent cultures, this may not be entirely successful. During the Apartheid era, more white South Africans immigrated to Australia. They were appointed to senior managerial positions where their managerial style was different from that of Australian managers.

Most South African managers were authoritarian as opposed to Australian managers that were more democratic. There are several things that can be done to ensure successful integration of South African and Australian managers in opposite cultures.

When managers wishes to move from their homeland to another country, they are likely to be faced with cultural shock. In order to ensure a successful integration process, there is need for multinational companies to encourage their managers to make use of social networks (Morrish & Vasilchenko, 2011).

Before sending managers for overseas assignments, they should be encouraged to learn more from their peers. They include colleagues who have worked in South Africa or Australia or managers who are natives of either country.

Such people can provide first information on how to handle different situations and also the most appropriate managerial style.

Also, before sending managers for overseas assignment, the organisation should ensure that the manager is exposed to the culture of the local people. This can be done by encouraging them to participate in community programs organised by their organization or other organization.

Managers are able to understand and internalize different aspects of the culture including the behavior of the people. This information is critical when handling different managerial problems.

Process of internationalization, Monash South Africa

Firms can use different strategies in the process of internalization. A firm can use a direct approach. In this instance, the firm establishes a subsidiary directly using its own resources.

In the second approach, the firm can use strategic alliances with locally based firms before establishing its own subsidiary. Both approaches have varied advantages and disadvantages on the operations of the firm.

Monash South Africa, an affiliate of Monash University, Australia was established in 2001. The university used the direct approach where it did not use any of the local universities for correspondence.

Therefore, it established a campus in Johannesburg which was expected to break even in 2006. Moreover, the organisation used Australian expatriates to head various schools on campus.

Also, the university outsourced staff from neighbouring countries to assist in the management of the campus. The move had several effects including the campus’s inability to meet AA quotas.

Affirmative action quotas stipulate that companies reserve employment opportunities for blacks and Indians. However, Alanford (2004) during the Apartheid era, these groups were disadvantaged where they were not able to access quality educational facilities.

This has translated into reduced number of qualified black and Asian employees. Companies are forced to offer the few available employees exorbitant pay packages in order to meet AA quotas.

Therefore, Monash South Africa resulted in employing staff from neighbouring countries. This was detrimental on the campus’s bottom line due to penalties incurred from South African authorities due to the AA guidelines.

Strategic alliances and partnerships

Monash University should have used the strategic alliances approach while establishing its activities in South Africa. Strategic alliances approach is divided into two categories including joint entities and co-operative accords. Joint entities include such aspects as consortium and co-enterprise.

It involves one dominant partner and a junior partner where consultation is done before any managerial decisions can be taken. On the other hand, co-operative accords involve integration of such aspects such exchange of personnel and development strategies. This approach has several advantages and disadvantages alike.

One advantage of the above approach is that the local partner provides a comprehensive market survey report. Among the most important aspects of the report is risk assessment. Various risks are associated with different markets.

In 2006, Monash South Africa reported A$ 30 million where it was expected to break even in the year. One of the risks that Monash University did not explore fully before establishing its campus is currency fluctuations.

For example, a country may devalue its currency making its exports cheaper and imports expensive. The devaluation affects multinational organizations which report their income in their mother countries’ local currencies.

A strategic partnership with a local university could have provided Monash South Africa with the necessary guidelines as such labour laws such as the AA regulations.

Due to increased competition for the few available local expatriates, Monash South Africa resulted to hiring experts from other countries. This was harmful to the organisation which faced stiff penalties from South African authorities.

Also, a local partner could have been a viable source of local expatriates. Therefore, Monash South Africa could have cut costs incurred of recruiting and hiring staff from neighbouring countries.

To correct the above situations, Monash South Africa can adopt an expansion plan that involves strategic partnerships with local universities and colleges. This partnership can involve upgrade of colleges to university status.

Also, Monash South Africa should encourage remittance of fees in Australian dollars. This acts as an important hedging tool from currency fluctuations experienced during different economic periods of the economic cycle.

Importance of strategic partnerships between Australian and South African firms

South African firms provide first hand market experience to Australian firms joining the South African market (Johanson & Vahlne, 1990). The International Stages Theory classifies firm’s approaches into different categories including movement from domestic market to neighbouring markets and later to the expansive international market.

Additionally, local South African firms are able to provide empirical data that is useful in predicting future market trends.

Local South African or Chinese firms provide information regarding legislation affecting firms in a particular industry. Also, information regarding pending legislation that affects operations in the industry is availed.

This information is important the firm is aware of all requirements for commencement of operations. An Australian firm in strategic partnership may not be required to acquire all the licenses where the local firm makes has the necessary licenses. This enables the Australian firm to cut costs related to registration and time wasted in the process of registration.

Another advantage of a strategic relationship is that the Australian firm might be in position to enjoy government incentives. The incentives could be either advanced to the local firm or Australian firm due to the partnership.

Conclusion

Strategic partnerships or alliances are an important strategy that firms can use while entering new markets. These partnerships are advantageous both to the local firm and international firm.

More governments have put up incentives to encourage more strategic partnerships. Among the benefits from these partnerships are increased employment opportunities for the local population and importation of technology through the international firm.

Reference List

Alanford , J. R. 2004, Apartheid, social and political racial segregation and discrimination by white minority government in South Africa from 1948 -1974. Web.

Johanson, J. & Vahlne J. E. 1990,’ The mechanism of internationalization’, International Marketing Review, vol 7 no.4, p 11-24.

Morrish S. & Vasilchenko E. 2011,’The role of entrepreneurial networks in the exploration and exploitation of internationalization opportunities by information technology firms’, Journal of International Marketing, vol 19 no. 4, pp 88-105.

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