BASED ON TH ARTICAL BELOW. EXPLAIN THE VARIOUS MARKET STRUCTURE OF SAA IN SOUTH AFRICA. 20 MARKS

Your answer should include the following: for 20 Marks

1) Introduction and Background

2) Market structure (define)

3) Based on the artical, the relevant market structure in Monopoly. (Justification/Application of case study)

4) Characteristics of a Monopoly

5) Conclusion

SAA on Human Resource Development, Transformation, Risk Management Plan & long-term procurement plans: briefing This premium content has been made freely available Meeting Summary South African Airways briefed the Committee on the methodologies deployed for enhanced performance in the three areas of Human Resource Development, Risk Management and Procurement as well as on the actions undertaken, status and progress report in those areas. Focus was on the roles and responsibilities of the governance structures.

South African Airways reported significant progress in dealing with legacy issues in all three areas but residual legacy issues which permeated the risk profile still existed. Some of the top risks currently being monitored by shareholders were: a weak balance sheet, onerous contracts some of which were entered into over a decade ago; anti-trust litigation in various jurisdictions which were difficult to manage as they emanated from transgression activities some years in the past by previous managers; and baggage pilferage.

The legacy of Public Finance Management Act-related non-compliance extended from both the 2006/07 and 2008/09 Annual Financial Statements. A three-year plan was put in place in 2009 with the objective of re-establishing the procurement function at a level that was statutorily compliant, which was in step with best practice and which was in line with the business requirements of South African Airways.

Past irregularities that were reported through the KPMG report, which specifically highlighted areas of concern relating to Delegation of Authority, pointed to failure as far as systems and controls were concerned.

The Procurement Policy, manual and practices were designed with particular attention to compliance to Section 51 (1) (iii) a systems focus and Section 55 (2) a control focus of the Public Finance Management Act.

The short-term focus of the procurement intervention Clean up Project involved reviewing the Procurement Policy and procedures as well as the Delegation of Authority framework within the total business value chain with focus on gate-keeping and accountability. There was clear resolve at Board and Management level to achieve 100% compliance and achieve no audit comments or qualifications by the end of the 2010/11 financial year with regard to procurement. This intent was very much dependant on South African Airways ability to resolve legacy issues.

The Remuneration and Human Development Committee, which had replaced the Remuneration Committee, emphasized employee value proposition and business case for remuneration and human development processes.

The junior level represented 93% of the workforce and the majority of the company was represented by personnel of ages 26-45 years, with approximately six percent of the workforce being close to retirement age. South African Airways believed that its Retention Strategy and Succession Planning would lead to young people leading the company in future.

An Employment Equity Policy was developed to improve Employment Equity status and a number of initiatives had been lodged to empower all stakeholders in terms of their roles to ensure successful implementation of the Broad-Based Black Economic Empowerment Plan. South African Airways was also working hard with service providers to improve their Broad-Based Black Economic Empowerment rating from its current level of accreditation by the end of the financial year.

Members asked for more information on the composition and frequency of meetings of the Financial Risk Management and the Audit Committees and the level of independence of these Committees, if the Committee which investigated Labour representation investigated everyone in the company including the Board Members, Chief Executive Officer and senior level management and the extent of empowerment given to that Committee.

Members asked for clarity on interpretation of the Risk Matrix, what the solutions to the top risks were, what pro-active steps were taken by the Board Committee specifically with regard to the finding against the former Chief Executive Officer, which Risk Committee was responsible for currency fluctuation and hedging, if all the Risk Committees talked to each other and how often they did so. Members also asked what the onerous contracts were, if they could be provided with a list of the risk policies and legacy issues, the effect legacy issues had on a day-to-day basis, the date they originated, plans for addressing them and the cut-off date for turnaround, how long the Clean-up Project had been in existence, what the progress was to date, and what the prevalence of invalid contracts and debt irregularities was within South African Airways.

Members also asked if servicing of aircraft was outsourced or if it was performed internally, what the frequency of commerce with the Civil Aviation Authority was, and the relationship with the Civil Aviation Authority in terms of compliance and for detail on fleet ownership, planning and leasing agreements and on grounding of 747s.

Members asked if South African Airways procured tenders from other State-Owned Enterprises, what policy was in place to ensure that South African Airways was proudly South African, and if the regulatory environment of the Public Finance Management Act had restrained procurement with regard to growing South African Airways business and its meaningful role in the economy.

Members asked if the Procurement Strategy was sustainable in terms of retaining procurement beneficiaries for an extended period, what South African Airways was doing to improve its Recruitment Strategy, if all foreign employees were classified as White, if South African Airways personnel in Africa were trained in South Africa, if the Apprenticeship Programme included training of Black foreign and if South African Airways Technical was no longer for sale. Members asked for a clearer breakdown of the headcount, why Broad-Based Black Economic Empowerment procurement spend had decreased from 43% in 2009 to 42% in 2010, if South African Airways Technical extended skills training to South African Airways personnel in the Southern African Development Community regions, and if South African Airways had a plan to accommodate and enlarge its training capability. Members also asked why it had taken over 18 years to introduce the Draft Disability Policy and if on-flight safety announcements could be improved.

South African Airways would report back to the Committee at an appropriate time on the fleet plan and profile, the Risk Mitigation Plan and broad-spectrum risks - including Aviation Safety and the Legacy Contract. On the question of the finding against the former CEO, South African Airways Management could not take a view on the matter but would report back to the Committee with KPMGs answer as KPMG had conducted the investigation independently.