MNG3701
EXAM PACK
, lOMoARcPSD|21997160
May/June 2017 Exam Paper
READ THE CASE STUDY BELOW AND ANSWER ALL THE QUESTIONS THAT FOLLOW.
Sappi (Ltd) is a global company that focuses on providing wood pulp (paste), paper pulp and paper-
based products to a broad range of customers. This company employs approximately 12 000 people and
operates in more than 100 countries. Water and wood are the two main resources in their value chain.
At the end of 2015, the Sappi Group generated an operating profit of US$136 million (R2.2 billion), which
was higher compared to the same quarter the previous year. This happened despite the weakening of
the Euro relative to the US$. This performance is built on a strong focus on combined sustainability and
financial factors. Since the company’s birth in 1936, the welfare of the environment has played a
significant role, partly due to the fundamental importance of the environment in the value chain of the
Sappi Group.
Ranking amongst the best sustainable companies – both locally and abroad – Sappi (Ltd) has obtained
multiple awards during the last couple of years, including the prestigious William D Schaeffer
Sustainability award in North America in 2013. The Institute for Corporate Social Development ranks
Sappi (Ltd) as the fourth best local company in South Africa in terms of Corporate Social Responsibility.
But it seems as if the strong financial achievements have provided Sappi (Ltd) with the means to
increase their sustainability and corporate social responsibility (CSR) efforts. Steve Binnie, the CEO of
Sappi (Ltd) pointed out the following: “Having the right people executing a clear strategy is key to our
ongoing sustainability. We achieved significant growth over the last year, and this is reflected in our
financial results. This has also shown real benefits in our non-financial performance.”
With a firm hand on the present, Sappi (Ltd) also focuses on the future. In December 2014 Sappi (Ltd)
and Edinburgh Napier University announced the discovery of a new low-cost process to make
nanocellulose – a “wonder material” that could be used to build greener cars, thicken foods and even
treat wounds. Sappi (Ltd) followed this announcement by commencing construction of a pilot-scale plant
for low-cost cellulose nanofibrils production.
When asked which sustainability efforts Sappi (Ltd) is most proud of, CEO Steve Binnie replied: “Over the
years, Sappi has made significant strides in decreasing the impact our operations have on the
environment. The primary focus for improvement is employee and contractor safety. Mechanisation of
the more dangerous activities is also a solution. However, this would have a negative impact on
employment, which is an important consideration in a South African context. Secondly, reducing our
water usage is not only important in areas where water supply is constrained, but is an important step in
further reducing our energy consumption. By investing in newer technologies and more efficient use of
water, we can reduce the water extracted from the environment and lower our energy and water costs
at the same time.”
Adapted from:
http://www.sappi.com/regions/sa/group/Pages/Company-history.aspx
http://www.sappi.com/group/Sustainability/FAQs/Sappi-FAQs-The-JSE-SRI-Index.pdf
http://www.sappi.com/regions/sa/group/GroupProfile/Pages/default.aspx
http://www.sappi.com/group/Sustainability/2014-Sappi-Group-Sustainability-Report.pdf
http://icsd.org.za/csr/csr-hub/
http://www.sappi.com/Investors/FinancialInformation/2015AIR/2015-Sappi-Annual-Integrated-Report.pdf
http://www.bdlive.co.za/business/industrials/2015/11/13/sappis-profit-rises-across-the-board
Pg.4
© 2018 Together We Pass. All rights reserved.
, lOMoARcPSD|21997160
Question 1
1.1 Describe the term “sustainable competitive advantage”. (2)
1.2 Identify and explain the four pillars of corporate sustainability. (8)
1.3 Critically evaluate the activities of Sappi to determine whether they meet the requirements of
corporate sustainability. (5)
Question 2
Distinguish between the following business level strategies:
2.1 Cost leadership strategy (2)
2.2 Differentiation strategy (2)
2.3 Focused low-cost leadership / focused differentiation strategy (4)
2.4 Best-cost provider strategy (2)
Illustrate each business level strategy with a practical example.
Question 3
Distinguish between the three levels of strategy in business organisations with specific reference to the
decision-making roles of managers.
Question 4
Use full sentences to answer the questions below:
4.1 Distinguish between resources, capabilities and core competencies. (6)
4.2 Resources and capabilities have the potential to become core competencies that can result in a
competitive advantage. However, for this to happen, the resources and capabilities have to meet certain
characteristics. Explain these characteristics. (8)
4.3 Use the resource-based view to identify three strengths of Sappi. (3)
Question 5
Discuss the role of governments in enhancing business strategies in Africa.
Your discussion has to be presented in full sentences.
Question 6
Identify and describe any four forces that could be used to analyse the macro-environment in which
Sappi conducts its business. (8)
For each force identify one opportunity or threat that this force presents for Sappi. You can also refer
to opportunities and/or threats they might face in future. (4)
Pg.5
© 2018 Together We Pass. All rights reserved.
, lOMoARcPSD|21997160
May/June 2017 Suggested Solutions
Question 1
1.1 Definition: Sustainable Competitive Advantages.
Sustainable competitive advantages are company assets, attributes, or abilities that are difficult to
duplicate or exceed; and provide a superior or favorable long term position over competitors.
1.2 Corporate sustainability is an approach that creates long-term stakeholder value by implementing
a business strategy that considers every dimension of how a business operates in the ethical, social,
environmental, cultural, and economic spheres.
What is corporate sustainability?
Corporate sustainability can be viewed as a new and evolving corporate management paradigm. The
term ‘paradigm’ is used deliberately, in that corporate sustainability is an alternative to the traditional
growth and profit-maximization model. While corporate sustainability recognizes that corporate growth
and profitability are important, it also requires the corporation to pursue societal goals, specifically those
relating to sustainable development — environmental protection, social justice and equity, and
economic development.
1) Sustainable Development
Sustainable development is a broad, dialectical concept that balances the need for economic growth
with environmental protection and social equity.
The contribution of sustainable development to corporate sustainability is twofold. First, it helps set out
the areas that companies should focus on: environmental, social, and economic performance. Second, it
provides a common societal goal for corporations, governments, and civil society to work toward:
ecological, social, and economic sustainability. However, sustainable development by itself does not
provide the necessary arguments for why companies should care about these issues. Those arguments
come from corporate social responsibility and stakeholder theory.
Pg.6
© 2018 Together We Pass. All rights reserved.
