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jobs for them to do. We therefore risk developing and losing them to our competitors as they
go in search for more enriching and non-routine and non-transaction work.

 Drag on operations: Delays in waiting for a Shared Services Center all the way in Sadimba
to process and provide key decision-making information now removed from the 'business
units' could impact negatively on productivity and offset the anticipated net savings.

 Business rules, cultural and language problems: Whereas Sadimba is an English-speaking
country, some of our markets are French-speaking and we could encounter language

barriers. Also some activities such as Human Resources may need to conform with local
rules and social protection laws which may be applied incorrectly from Sadimba negating
some of the promised cost savings and quality benefits.

 Hidden costs: Have we catered for the retrenchment costs? How about costs relating to
employee morale? The direct costs when systems don't integrate properly and migration of
diverse systems from across Africa to Sadimba? The once-off costs such as new premises,

machinery and payment of consultants to help us implement this and perhaps their ongoing
costs? How about the reputation damage we suffer due to the bad press from this decision

in terms of lost customers, suppliers, ability to attract top caliber employees, governments
tightening future regulations against our businesses in those markets?

Stakeholder conflicts and public outcry on the SSC decision:

The fall out is typical of the challenge every board faces dealing with stakeholder conflicts. The
shareholders are delighted to see the savings but it costs job security in our Africa markets.

Cyert and March’s stakeholder conflict resolution model suggests sequential attention,
satisfising, exercise of power, side payments as options to respond. Sequential attention may

involve assuring all the other stakeholders that they are next in line for attention which may not
work as this is a burning concern already! Satisficing could be to educate and negotiate (Kotter
and Schlesinger) with these key stakeholder groups and find consensus before continuing
which could encounter delays and threaten future savings. Side payments could imply higher

than expected retrenchment benefits to employees likely to loose their jobs or exercise of power
by imposing our authority over the subsidiary boards which is likely to escalate the problem.

Recommendation
Proceed with the SSC Plan but do more to manage the unintended consequences.

Justification:

Appendix 6 shows a significant cost saving of S$6599m and it is likely the future savings have
been priced into our share price so reversing this now could undermine confidence.
Developed by The CharterQuest Institute for 'The CFO Business Case Study Competition 2016'
www.charterquest.co.za | Email: thecfo@charterquest.co.za