South Africa is experiencing difficult times on the economic front after the political transition in
1994. The country's average annual economic growth rate (GOP) declined from more than 5o/o
in the 1960's to less than 3%> per year during seven years ending. The population growth
increased at a relatively high rate with the result that per capita income decreased with
unemployment increasing sharply. South Africa requires a GOP growth rate of at least 6 °/o to
close the gap. It is pleasing to hear that the Reserve Bank is now starting to predict growth rates
of up to 6 °/o in the year to come.
The country cannot afford low economic growth given the implications for unemployment,
poverty and political and social stability. A fundamental restructuring of the South African
economy with the view to increase the growth capacity and actual growth performance of the
economy is necessary. Considerable emphasis will have to be placed on the promotion of
employment creation. The country's economic problems cannot be alleviated without sustained
economic growth. Employment- creating growth to the advantage of all South Africans.
Productive investment, higher exports and increased productivity hold the key to the resolution
of the country's economic problems. Coherent and viable strategies are necessary, capable of
ensuring sustainable growth and an improvement in the quality of life of all South Africans. The
crafting and implementation of these strategies is mainly the responsibility of government and
business. The focus of this study is mainly on the role of business.
Management experts and corporate executives world-wide talk with greater insight about
business concepts and goals achieving world-class status and best-in-class performance.
The changes that overtook South Africa in 1994 with political transition, allowed a flood of new
competition into the South African market whilst the opening of international opportunities took
place at the same time. Competition is more intense with less protective barriers, import duties
for instance, were dramatically reduced. At the core of the challenges facing South African
businesses is the need for exceptional leadership, leaders that can meet the challenges of this
new highly competitive environment, leaders to steer a company towards world-class
Events in the global business environment have lately turned the spotlight of management
attention onto business optimisation. These events have been superimposed onto broad global change drivers to create a far more challenging business environment than we have seen in the
history of the world. These change drivers include globalisation of competition, disintermediation
and fragmentation along the value chain, commoditisation of products and
services, digitisation of products and services, the rapid emergence of the knowledge economy
and concentration of capacity in the search for economies of scale. With business optimisation
occupying centre stage in many companies, it became appropriate to research the concepts and
definitions of a High Performance Value Chain Organisation (HPVCO).
The following elements were investigated in order to get further insight into the concepts and
definitions of High Performance Value Chain Organisations (HPVCO):
• Strategy formulation and implementation as the backbone of High Performance Value
Chain organisations (HPVCO), discussed as part of the literature study.
• Organisational renewal and what it takes to become a successful organisation. The
General Electric (GE) model serves as an example with the focus on boundaryless
behaviour which became one of Jack Welch's core strategies during his time at GE.
• How companies explore growth opportunities and their funding capabilities with the focus
on shareholder value and assessment of company performance.
• Shareholder value was defined, calculated and analysed.
• Economic Value Added (EVA) was explored as a more progressive measure to assess
performance of a listed company and link EVA to the financial perspective of the
Balanced Scorecard (BSC).
• Value chain concepts and definitions were explored before focussing on the individual
value chain elements itself. The research focuses on vertical integration strategies, but
more specifically backward and forward integration.
• The important value chain elements were identified with the focus mainly on the human
element and Information Technology (IT) with a limited focus on processes.
• Human talent and how to energise and mobilise this resourceful capacity to the best.
• Process re-engineering and supply chain management.
• Information Technology and Communication (lTC) with emphasis on Enterprise
Resource Planning (ERP) systems and the ERP building blocks.
• Value chain performance measures
• The Balanced Scorecard as a management control system, an enabler to communicate
and implement strategy throughout all the levels of the organisation.
The essence of the research was to obtain clarity on above issues, which was accomplished by
revealing the concepts of strategy and value chain, defining strategy and value chain and determining what is needed to create High Performance Value Chain Organisations (HPVCO) in
order to improve shareholder value.
As part of the literature study a theoretical context was used to explain the concepts of the
strategy and value chains, which comprise the definitions, and complexity of the various
elements involved in creating High Performance Value Chain Organisations (HPVCO).
Dissertation (M(BAdmin))--University of Pretoria, 2005.