Question QUESTION_ONE Afcom Computer Limited Afcom Computer Limited is one of the fastest growing companies in Zambia. Its stock price is increasing at a rate of 25 per cent a year, to the delight of Mikatazo Wakumelo, its founder and chief executive officer. Wakumelo was only thirty-nine years old in 1995 when he lost his job with an international computer company that had decided to relocate from Zambia to South Africa. Wakumelo was paid \( \$ 50000 \) in terminal benefits. He used the terminal benefits to set up his own computer company, Afcon Computer Limited. His line of business was to buy computer parts, assemble them into computers and sell the computers. The computer industry in Zambia was dominated by international companies from the United States of America, West Germany, the United Kingdom and Japan. Afcom Computer Limited faced fierce competition from these foreign companies that had a competitive advantage of experience and backup from their home countries. Wakumelo observed that international companies dominated the upscale market that consisted of the government, multinationals in the manufacturing and service sectors, embassies, and nongovernment organizations. Undeterred, Wakumelo was convinced that there still some viable pocket of demand in the Zambian market such as students in schools, colleges and universities, professional in various walks of life, churches, and other members of the public who could be interested in the full potential of a computer. The general perception of a computer was that it was a status product which could be afforded by high income groups. Wakumelo decided to change this perception by assembling affordable computers. Since cost was a major component of the price of a computer, he decided to approach his former employers to supply him inputs at a discount His former employer was only too happy to supply him computer parts at a discount for old times' sake. He took advantage of the lower cost for his inputs, assembled the parts himself into PCs and then sold the PCs over the phone. Increasing demand for his PCs meant that within a few years he found it necessary to employ people to help him, and soon he found himself supervising three employees who worked together around a six-foot table to assemble computers while two more employees took orders over the phone. By 2000, Wakumelo employed 500 workers and was hiring over 10 new workers every month just to keep pace with the demand for the computers. When he found himself working eighteen-hour days managing the company, he realized he could not lead the company single-handedly. The company's growth had to be managed, and he knew that he had to recruit and hire strategic managers who had experience in managing different functional areas, such as marketing, finance, and manufacturing. He recruited executives from other locally based computer companies and with their help created a functional structure, one in which employees are grouped by the common skills they have or tasks they perform, such as sales or manufacturing, to organize the value-chain activities necessary to deliver his PCs to customers. As a part of this organizing process, Afcom's structure also became taller, with more levels in the management hierarchy, to ensure that Wakumelo and his managers had sufficient control over the different activities of his growing business. Wakumelo delegated authority to his managers, which gave him the time he needed to perform his entrepreneurial task of finding new opportunities for the company. Afcom's functional structure worked well, and under its new management team, the company's growth continued to soar. By 2003, the company had sales of over K2 billion, twice as much as in 2002. Moreover, Afcom's new structure had given functional managers the control they needed to squeeze out costs, and Afcom had become the lowest-cost PC maker. Analysts also reported that Afcon had developed a lean organizational culture, meaning that employees had developed norms and values that emphasized the importance of working hard to help each other find innovative new ways of making products to keep costs low and increase their reliability. Indeed, with the fewest customer complaints, Afcom rose to the top of the customer satisfaction rankings for PC makers; its employees became known for the excellent customer service they gave to PC buyers who were experiencing problems with setting up their computers. However, Wakumelo realized that new and different kinds of problems were arising. Afcon was now selling huge numbers of computers to different kinds of customers, for example, home, business, and educational customers, and the different branches of government. Because customers now demanded computers with very different features or different amounts of computing power, the company's product line broadened rapidly. It started to become more difficult for employees to meet the needs of these different kinds of customers efficiently because each employee needed information about all product features of Afcom's thousands of different product range. In 2005, Wakumelo moved to change his company to a market structure and created separate divisions, each geared to the needs of a different group of customers: a consumer division, a business division, and so on. In each division, teams of employees specialized in servicing the needs of one of these customer groups. This move to a more complex structure also allowed each division to develop a unique subculture that suited its tasks, and employees were able to obtain in-depth knowledge about the needs of their market that helped them to respond better to their customers' needs. So successful was this change in structure and culture that by 2010 Afcom's revenues were over K3 billion and its profits were in excess of K2.5 billion, a staggering increase from 2004. Wakumelo has continued to alter his company's structure to respond to changing customer needs and to the company's increase in distinctive competencies. For example, Wakumelo realized he could leverage his company's strengths in materials management, manufacturing, and Internet sales over a wider range of computer hardware products. So he decided to begin assembling servers, workstations, and storage devices to compete with the other computer companies. The increasing importance of the internet led him to split the market divisions into thirty-five smaller subunits that focus on more specialized groups of customers, and they all conduct most of their business over the internet. Today, for example, Afcon can offer large and small companies and private buyers a complete range of computers, workstations, and storage devices that can be customized to their needs. To help coordinate its growing activities, Afcom is increasingly laking use of its corporate intranet and using information technolog.(IT) to standardize activities across divisions to integrate acros nctions. Afcom's hierarchy is shrinking as managers reasingly delegating everyday decision making to employees who have access, through IT, to the information they need to provide excellent customer service. To help reduce costs, Afcom has also outsourced some of its customer service activities. As a result of these moves, Afcom's work force has become even more committed to sustaining its low-cost advantage, and its cost-conscious culture has become an important source of competitive advantage that is the envy of its competitors. Source: Adapted from Charles W.L. Hill and Gareth R. Jones, Strategic Management (New York: Houghton Mifflin Company, 2007) p.450 Required: \( -\operatorname{loc}-\cos t \) - economias of I. Required Identify and describe the strategies that were pursued at Afcom Computer Limited. (20 marks) II. Organizational structures are deployed to enable the implementation of strategy. Explain how the functional and customer organizational structures cited in the case facilitated the implementation of strategy. ( 20 marks) SECTION B QUESTION Two Discuss the significance of the following in the formulation of strategy: 1. Cash flow [5 marks] 2. Inventory turnover 3. Market share 4. Profit QUESTION THREE Explain how the following enhance the implementation of strategy a) an organizational structure b) The attitude of a leader [5 marks] c) Management Development [5 marks] d) Whistle blowing QUESTION FOUR Following poor performance over the last three years, Lukas Engineering Company has engaged Kamuti Sepiso, a civil engineer, as a Chief Executive Officer to turn things around. Six months into the job, the company is still experiencing poor performance. Sepiso now believes that if the turnaround strategy is going to lead to better performance, the company's culture will have to change. Required: a) Explain what is meant by an 'organizational culture'. (5 marks) b) Discuss how an organizational culture can be deployed to facilitate the effective implementation of the turnaround strategy and thereby improve performance. (15 marks) QUESTION FIVE W.D. Guth and R. Tagiuri, in their article on "Personal values and Corporate Strategy", published in the Harvard Business Review, Sept-Oct 1965, pp 123-32, argued that the strategic direction of a firm can be influenced by the personal values and aspirations of stakeholders. Required: Discuss and contrast the strategic direction of Zambia Nationa Broadcasting Corporation, a government owned station, with th strategic direction of Radio Ichengelo which is owned by the Cathol Church in the context of the proposition by Guth and Tagiuri. (20 marks