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Transformation in the Petroleum Retail Sector – Making Black Entrants Linger Longer
A Dissertation submitted in partial fulfilment of the requirement for the Degree of Executive Masters of
Business Administration
At Graduate School of Business
University of Cape Town
By: Bubele Dyantyi
DYNBUB001
2012
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UNIVERSITY OF CAPE TOWN
GRADUATE SCHOOL OF BUSINESS
DECLARATION
1. I know that plagiarism is wrong. Plagiarism is to use another’s work and pretend that it is your own.
2. I have used a recognised convention for citation
and referencing. Each significant contribution and quotation from the works of other people has been attributed, cited and referenced.
3. I certify that this submission is all my own work.
4. I have not allowed and will not allow anyone to copy this essay with the intention of passing it off as his or her own work.
Signature: Date: 19 March 2012
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TABLE OF CONTENTS
LIST OF FIGURES ...................................................................................... 5
LIST OF TABLES ........................................................................................ 6
GLOSSARY OF TERMS .............................................................................. 7
EXECUTIVE SUMMARY ............................................................................. 8
ACKNOWLEDGEMENTS .......................................................................... 11
1. INTRODUCTION AND OVERVIEW ................................................... 12
1.1 BACKGROUND TO THE RESEARCH ............................................... 12
1.2 RESEARCH ISSUES AND CONTRIBUTION ...................................... 20
1.3 JUSTIFICATION OF THE RESEARCH .............................................. 22
1.4 OUTLINE OF THIS REPORT ............................................................ 23
1.5 DELIMITATIONS AND KEY ASSUMPTIONS ..................................... 24
1.6 CONCLUSION ................................................................................. 26
2. LITERATURE .................................................................................. 27
3. RESEARCH METHODOLOGY ......................................................... 34
3.1 INTRODUCTION AND OVERVIEW ................................................... 34
3.1.1 RESEARCH GOALS ........................................................................ 35
3.1.2 CONCEPTUAL FRAMEWORK ......................................................... 35
3.1.3 RESEARCH QUESTIONS ................................................................ 36
3.1.4 METHODS ...................................................................................... 37
3.1.5 VALIDITY ........................................................................................ 38
3.2 OVERACHING PHILOSOPHY .......................................................... 39
3.2.1 CRITICAL REALISM ........................................................................ 39
3.2.2 GROUNDED THEORY ..................................................................... 41
3.2.3 RELATIONSHIP BETWEEN CR AND GT .......................................... 44
3.2.4 SOFT SYSTEMS METHODOLOGY .................................................. 46
3.2.5 CRITICAL SYSTEMS HEURITICS .................................................... 48
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4. RESEARCH RESULTS .................................................................... 46
4.1 PHENOMENON OF INTEREST ........................................................ 46
4.2 PURPOSE OF THE STUDY ............................................................. 47
4.3 METHOD ........................................................................................ 49
4.4 SAMPLING ..................................................................................... 49
4.5 DATA ANALYSIS .......................................................................... 51
4.6 EMERGENCE OF THE CORE VARIABLE.................................... 51
4.7 BOUNDING THE SYSTEM OF FOCUS ........................................ 51
4.8 STAKEHOLDER ASSUMPTIONS ................................................. 51
4.9 IDENTIFYING THE ANSWER ....................................................... 51
4.10 IMPLEMENTATION ....................................................................... 51
5. EVALUATION AND AND CONCLUSION ...................................... 63
5.1 RELEVANCE ................................................................................. 63
5.2 UTILITY ......................................................................................... 63
5.3 VALIDITY ...................................................................................... 64
5.4 ETHICAL CONSIDERATIONS ...................................................... 66
5.5 CONCLUSIONS ............................................................................ 68
REFERENCES ....................................................................................... 69
APPENDICES ......................................................................................... 73
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TABLE OF FIGURES
1.1a Petrol and diesel consumption in South Africa from 1988 to 2009 ......... 12
1.1b Summary of the Liquid Fuels Charter ................................................... 13
1.1c BEE profile of company ABC ............................................................... 16
1.1d Economically Active Population ........................................................... 16
1.1e Concern Causal Loop Diagram ............................................................ 17
1.1f Rich Picture ......................................................................................... 19
1.2 The leaking bucket syndrome .............................................................. 21
2. Parent Theory, Research Problem Area, and the Research Problem ... 27
3.1 Interactive Model of Research Design .................................................. 31
3.2.3a Inductive Research Process ............................................................... 41
3.2.3b Process of Grounded Theory Research .............................................. 43
3.2.4 The Learning cycle of Soft Systems Methodology ............................... 47
4.3 Assumptions Rating Chart ................................................................... 46
4.4 80/20% of Causal Loop Diagram of the Answer .................................... 46
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LIST OF TABLES
1.1 Service Station Network in South Africa................................................. 15
1.5 Characteristics of Wicked Problems ..................................................... 24
4.6 Categories and Definition ...................................................................... 55
3.2.5a CSH Boundary Statements Without Answers ..................................... 49
3.2.5b Model of Utilitarianism, Rights & Duties, Justice, Caring ..................... 50
4.7 Boundary Statements With Answers ...................................................... 56
5.3 Quantitative vs Qualitative Research Validation ..................................... 63
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GLOSSARY OF TERMS
ACLD Answer Causal Loop Diagram
BBBEE Broad Based Black Economic Empowerment
BEE Black Economic Empowerment
CATWOE Customers, Actors, Transformation Process, World
View, Owners, Environment Constraints
CBOT Concern Behaviour Over Time
CCLD Concern Causal Loop Diagram
CLD Causal Loop Diagram
CSH Critical Systems Heuristics
DOE Department of Energy
HDSA Historically Disadvantaged South Africans
LFC The Petroleum Liquid Fuels Charter
RP Rich Picture
SAPIA South African Petroleum Industry Association
SSM Soft Systems Methodology
DTI Department of Trade and Industry
SAST Strategic Assumption Surfacing and Testing
SMME‘s Small, Micro, and Medium Enterprises
SYNFUEL Synthetic Fuels
RUVE Relevance, Utility, Validity, and Evaluation
CBT Calculus-Based Trust
KBT Knowledge-Based Trust
IBT Identification-Based Trust
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EXECUTIVE SUMMARY
Black Economic Empowerment has been identified as one of the tools to address
past economic imbalances post the dawn of a democratic dispensation in South
Africa. BEE, as it is commonly known, is a national reality, manifesting itself in
various ways in a host of communities. It is a complex problem, also referred to as a
wicked problem, where the key problem is indefinable and the answer unsolvable.
This research paper focuses on a specific sub system of BEE resulting in non-
traditional methods of accessing finance, which in turn improves BEE in the service
station business. The answer is derived using a soft systems methodology approach
to assist in managing the wicked problem.
The concern identified for the purpose of this paper is increasing BEE representation
in the petroleum retail sector. The key question that this paper seeks to answer is:
What mechanisms can facilitate the entry of Black operators into the Petroleum
Retail sector be increased, while at the same time ensuring those Black
entrepreneurs already in the system survive? This question is referred to as the
research problem.
The answer to this question is two pronged. Assisted buy-outs will bring about
access to finance, and lower the financial hurdles to entry for Black entrepreneurs;
and formalising informal training will ensure longevity of entrants. The two variables
have been identified in this paper as the determinants of success for Black entrants
into this industry. Failure to address both variables at the same time will result in a
leaking bucket syndrome in which the rate of entry is not higher than the rate of exit,
making long term progress elusive. The answer to this research problem is referred
to as the BIG IDEA.
Assisted buy-outs will provide relative ease of access to financial resources as
lending institutions are more likely to fund a business in which one of the partners
has a history with the financial institution and has a proven managerial track-record
of running a successful business. The experience and history engenders trust in the
venture. This is called knowledge-based trust (KBT). The financial institutions
develop trust for the company as a result of the knowledge and skills embedded in
one of the partners.
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Formalising of the informal learning interventions should provide entrants with
practical experiential training, as opposed to a classroom based or even traditional
seminar experience. What is needed is the infrastructure to support the learning after
the formal generic programmes have been completed.
The research methodology that was used to address this concern was Grounded
Theory Methodology. Through this process core variables emerged from a process
involving levels I and II coding, and saturation was reached via constant comparison
and theoretical sampling.
The concern variable was treated as a wicked problem, and the wicked problem
archetype was used to model both the concern and the answer causal loop
diagrams. The wicked problem archetype used the following variants: the wickedness
of problem (slow level of achieving BEE targets) difficulty in formulating the problem
(empowerment over time), probability of unforeseen circumstances (mechanisms for
partnerships), accountability of planners (reflective of demographics), knowing when
the problem is solved (survival of new entrants), sources of causal influence
(availability of finance), solutions not true or false (passing of skills), and
opportunities for experimental learning (benefiting more people).
Why should we care about the findings in this report? This report is relevant on five
fronts:
a) It is an attempt to make a contribution in the wicket problem that is BEE.
Admittedly, there is a no panacea for this problem, but this paper makes
plausible arguments on one of the angles in which it could be attacked.
b) It addresses a topical issue that has far reaching implications for the country
and the petroleum industry in particular. The petroleum industry was the first
sector to adopt a transformation charter, but it lost ground to other sectors that
have developed far more robust charters.
c) The report does not take a broad swipe at the elephant that is BEE, but
approaches the subject from a specific angle and focuses on one aspect of
BEE in the petroleum industry. The paper does not attempt to present the
issues from a scholastic polemic angle, but as a social phenomenon for which
practical approximations are possible.
d) The petroleum industry is a heavily regulated sector of the economy and can ill
afford more regulation. As the government, through statements issued by
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successive ministers, is not happy about the progress made in this industry,
the last thing that the industry needs is an intervention through legislating how
BEE should be implemented. To this end, taken to heart, the ideas in this
paper will move the industry closer to the desired state and alleviate the need
for government intervention.
This research can form a strong foundation for future research wherein ideas in
this paper can be explored further, and delve deeper into the nuts and bolts of the
subject. To that extent, and without being magniloquent, this paper can be seen
as a trail blazer that can serve as a catalyst for future research on a sector that
so little is written about.
In the same way that the paper was conducted using a rigorous methodology, a
similarly thorough approach was deployed in the evaluation process. In section
5, the paper presents expansive arguments for relevance, utility, and validity.
The latter involved arguments on credibility, validity, conformability, and
transferability of the solutions presented. Finally, using Velasquez‘s typology of
evaluating ethical considerations, the answers can be shown to be of good
ethical standing.
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ACKNOWLEDGEMENTS
I would like to convey my appreciation to my colleagues and business partners for
their willingness to listen and answer what must have seemed odd questions at
times. My working environment became the laboratory, and my colleagues the
guinea pigs in my application of theories and concepts learnt. Their bewildered eyes
when I spouted EMBA gobble-de-gook were constant reminders that theory always
had to be brought back to practice in a language that everyone understood.
Sherry was an important part of the whole EMBA experience, as the constant
reminders kept me going one step at a time. Tom was always there to give support
and encouragement. He made what seemed to be too difficult seem achievable.
I must also thank Engen Petroleum Ltd for allowing me the time to complete the
programme. My thanks go specifically to the General Manager for Sales and
Marketing, Mr Vukile Zondani for approving the study in the first place.
Lastly, but very importantly, I would like to thank my family for their understanding
over the last three years. My dear wife Boniswa supported me through the difficult
period of doing the EMBA and of writing this research report. Knowing that she was
there for the children for the six by two-week study periods ensured constant stability
in my family. Your constant nagging for me to finish the report kept the wheels
turning until the very last stage. This was proof that much can be achieved if the
environment is supportive. It is difficult to imagine how I could have finished this
report without my sons Ntsika, Khaka, and Nqaba, who kept me feeling guilty that I
was taking too much time away from them whenever I had to disappear into the
study room or campus library to find a quiet place to work on my studies.
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1. INTRODUCTION AND OVERVIEW
1.1 Background to the Research
The liquid petroleum industry is the lifeblood of the private, public and commercial
transport sectors of the economy. According the South African Petroleum
Industry Association (SAPIA), South Africa consumed approximately 11.3-billion
litres of petrol and 9.1-billion litres of diesel during 2009, as illustrated in Figure
1.1a below.
Figure 1.1a: Consumption of petrol and diesel in South Africa from 1988 – 2009
Source: SAPIA website, http://www.sapia.co.za
One of the distinctive features of this industry is that government regulates
wholesale margins and controls the retail price of petrol. One of its main
challenges has been achievement of Broad Based Black Economic
Empowerment (BBBEE) or transformation.
The whole debate on BBBEE was started with the introduction of affirmative
action legislation in 1998, four years after the first democratic elections.
Affirmative action (also known as employment equity), had the limitation that it
approached the subject of BEE only from the employment perspective. It aimed
to eliminate unfair discrimination in the workplace. It aimed to benefit previously
disadvantaged people or the ‗designated groups‘ (EE Act, 1998, p 3). The
designated group were defined as ‗black people, women, and people with
disabilities‘. This legislation didn‘t address other kinds of economic
empowerment, but the government and industry at large awoke to the need for
broader forms of empowerment. In the absence of any legislative framework on
which to base their empowerment models, each industry started to develop its
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own charter to guide its implementation of BEE and provide a mechanism for
measurement against achievement of specific targets.
The Oil Industry, under the umbrella of South African Petroleum Industry
Association (SAPIA) duly adopted a Liquid Fuels Charter (LFC) in 2000. The LFC
was made up of 13 components as shown in Figure1.1b below. The focus of this
paper is on component no 9, which deals retailing and the provision of fair
opportunities for entry into the retail network (service stations).
Figure 1.1b: Summary of the LFC
Liquid Fuels Charter
No. Element Sub-Element
1. Ownership
(From preamble / interpretation) 25% ownership and control of entity that
holds the SA operating assets of the Oil
company.
HDSA ownership to apply to all segments of
the Value Chain
Sustainable presence/Sustainability through
medium to long term viability.
2. Management Control Control of the entity through majority
shareholding, effective controlling
shareholding or majority of board of directors.
3. Supportive Culture
Appointment of managers to create a
supportive culture and enabling environment
for business success
Appointing appropriate managers who will
understand the spirit and background of the
charter policies
Fostering of a supportive culture w.r.t all
aspects of this Charter when dealing with
HDSA’s
Incorporating culture change policies in
business principles.
4. Capacity Building Training of HDSA employees on core, priority
and scarce skills
Overseas training programs for HDSA’s
Identifying a talent pool & fast tracking it
Implementing mentorship programs
Annual progress reports in agreed format
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5. Employment Equity Publishing of equity stretch targets and
achievements
Ensuring inclusiveness of gender
6. Private Sector
Procurement
Supportive procurement policies
- Towards growth of HDSA companies
- With criteria that favour HDSA companies
Scope of preferential procurement to include
all supplies (including crude)
List of HDSA suppliers
Vessels used in the transportation of
supplies/products to meet all prescribed
health, safety and environmental standards
7. Access to joint facilities Fair ownership opportunities
Non-discriminatory access to uncommitted
capacity for the movement and storage of
crude oil and petroleum products
8. Refining Capacity Selling shares in the refinery to HDSAs
Making refining capacity available to HDSA
companies, thru , e.g. toll refining
agreements
Providing JV opportunities by including
HDSA’s in expansion/upgrade programmes
9. Retailing Fair opportunities for entry to the retail
network
10. Wholesaling Fair opportunity for entry into wholesale /
commercial sectors
11. Financing Investigation and implementation of internal
and external financing mechanisms for giving
HDSA’s access to equity ownership and entry
into viable strategic partnerships.
12. Terms of Credit Providing terms of credit to HDSA customers
(e.g. retailers and client wholesalers)
13. Synfuels Supply Parties to accommodate HDSA’s, which lack
the facilities to comply fully, in the fairest way
possible
Source: SAPIA website, http://www.sapia.co.za
The retail part of this industry is made up of service stations that sell petrol and
diesel to customers. The majority of these service stations also offer other
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convenience products to the customers. Some of these C-stores also offer fast
food products. According to a research report by Matsho (2010), the country has
over five thousand service stations spread across the nine provinces as
illustrated in Table 1.1 below
Table 1.1 Service Station Network in South Africa Province No. of Service Stations %
Gauteng 1582 30.95
KwaZulu Natal 989 19.35
Western Cape 810 15.85
Eastern Cape 451 8.82
Free State 332 6.49
Mpumalanga 305 5.97
North West 302 5.91
Limpopo 206 4.03
Northern Cape 135 2.63
South Africa 5112 100
Source, Jim Motsho: Retail Petrol Industry in South Africa
This paper will use data and research findings made within one of the oil
companies to make conclusions about the industry as a whole. Company ABC (its
real identity protected) has 1199 service stations nationwide. Company ABC
accounts for 23% of all service stations in the country.
Figure 1.1c below shows that 831 (62%) service stations are operated by White
people, 277 (21%) operated by Indians, 206 (15%) operated by Africans, while 29
(2%) are operated by Coloured people. Put differently, White South Africans
operate 62% of this company‘s service stations, while only 38% are in Black
control.
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Figure 1.1c BEE profile of company ABC
Source, created for this study
To gain a better understanding of why this profile represents a challenge, once
juxtapose it against the profile of economically active population in the country.
Figure 1.1d below shows that, according to the latest official census statistics,
Africans make up 75% of the economically active population (Statistics South
Africa, 2001). In figure 1.1c, we saw that Africans make up 15% of all the
entrepreneurs in the service station industry. Blacks make up 90% of the active
population of the country.
Figure 1.1d Economically active population in South Africa
Source: Stats SA, 2001
African75%
Coloured10%
Indian or Asian
3% White12%
African
Coloured
Indian or Asian
White
ECONOMICALLY ACTIVE POPULATION
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The under-representation of Black people in the service station industry is the
underlying concern that this paper seeks to address.
Adopting a critical realist approach, economic empowering must be seen as
something exists independently our description of it. To that extent BEE as a social
phenomenon is viewed as less determined and predictable. This paper will take
given the social reality of BEE is stratified into three domains, i.e., the empirical,
the actual, and the real. To this end, the paper will start in the domain of the actual
and review connected variables and their causal connections for the concern.
The section on research methodology will elaborate critical realism and the
Grounded Theory processes. Figure 1.1e below, represents the Concern Causal
Loop Diagram (CCLD) of variable interaction affecting the level of BEE progress in
the industry.
Figure 1.1e Causal Loop Diagram showing which variables impact negatively on
BEE
Source, created for this study
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From the above diagram it is clear that certain variables have a direct effect on the
progress of BEE.
The narrative behind the causal mechanisms of the poor Black representation in
the service station industry is compounded by the lack of definitive formulation of
the problem. The government feels that the current legislative framework is
inadequate and requires more fine-tuning. There are those that believe BEE is
nothing more than reverse discrimination. The White entrepreneurs believe that
BEE takes away opportunities from them. Others complain that BEE only works for
the connected few and that its implementation has only fuelled corruption. The
many published cases of politically connected who win tenders and clinch big
deals result in some people thinking BEE is just for the connected elite. Similarly,
any interventions are not true or false, but better of worse. The validity of solutions
to problems is stakeholder dependant. It is the participants of a particular
transaction that can truly judge whether there was empowerment or not. Even
though there‘s an idea of a solution, it is difficult to arrive at final solution. Any
solution that results in the improvement in the situation will not present the ‗final‘
solution. It will merely be a contribution to a process that will take generations to
overcome. The social system in question can be considered to be symptom of
other internal aspects of the same problem. In the context of this paper, BEE is
presented as a symptom of the dual problems of lack of experience and access to
capital. The availability of finance prevents new entrants from coming into the
industry. This in turn slows down the level of empowerment, which negatively
impacts the achievement of BEE targets. On the other hand, those Black
entrepreneurs already in system find it difficult to stay as they struggle to survive
due to lack of experience, expertise, and access to finance, especially for working
capital requirements.
BEE is a subject that brings varied responses depending on which interest group
is involved. This subject is emotive because different people expect different things
from it. Many stakeholder groups prevail, representing a multitude of divergent
agendas. Some of the interested parties include legislators, beneficiaries, lobby
groups, financial institutions, and current owners of the economic activity being
contested.
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Each interest group has its own views about what solutions ought to be
implemented. Such divergent views can be seen in the Rich Picture in Figure 1.1f
below.
Figure 1.1f Rich Picture
Source, created for this study
The Rich Picture reveals the wickedness of the problem. It shows different
stakeholder groups and their disparate world views reflecting their concerns,
expectations and frustrations. Black people are impatient at the slow pace of
transfer of ownership of service stations into Black people. Their major frustration
is securing funding to acquire service station when they become available for
purchase and to have cash to operate the businesses successfully.
Entrepreneurs need capital to pay for goodwill, stock, and working capital. Unlike
their White counterparts, they do not have the experience to run these
businesses. The major funding institutions want surety for their loans. They are
risk-averse, and would rather fund those with proven track record in running
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businesses. They want to see that Black entrepreneurs have unencumbered
cash to contribute to the capital requirements of the business. For those that
appear to present more risk, more interest is required. The financial institutions
are only concerned about bringing good returns to their shareholders. They have
no trust in unproven entrepreneur. The government on the other hand is
frustrated at the lack of rapid transformation. It wants petroleum companies to
give more service stations to Black entrants. Its hands are tied, but legislation
remains an option. The current view BEE is a means to replace White operators
with Black operators. They see the system as preventing young White
entrepreneurs from having entering the industry. The petroleum companies on
the other hand want transformation to occur, but they have no control over the
financial constraints of aspirant entrants. They have selection policies that
prioritise Black applicants, but each applicant must have secure funding to meet
the financial requirements.
1.2 Research Issues and Contribution
The under-representation of Black people in the service station industry is the
underlying concern that this paper seeks to address. Turning the concern into a
research question, this paper asks: how can Black entrants into the petroleum
retail industry be increased, while at the same time ensuring that Blacks already
in the industry survive? This paper argues that the rate of entry of Black
entrepreneurs must be higher than the rate of their exit, if the concern of their
under-representation it to be addressed. The opposite scenario is a leaking
bucket. In this condition, minimal progress is achieved as the inflow is
undermined by the outflow. In the leaking bucket syndrome the same or more
quantity seeps out of the bucket at same or more rate as the inflow. The zero
sum effect of the leaking bucket imagery is that much time and effort is spent
without much progress towards the end goal as the energy extended into the
inflow is cancelled out by the drainage through the holes in the bucket. The entry
into the petroleum retail industry by Black entrepreneurs is presented as the
inflow. The exit of Black entrepreneurs is presented as the seepage. This paper
seeks will suggest ways of increasing the inflow pressure, while at the same time
identifying ways in which seepage could be minimised.
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Figure 1.2 below represents this paper‘s concern behaviour over time (CBOT). In
order to deal with the CBOT, this paper proposes that the flow can be increased
while at the same time ensuring that seepage is controlled or minimised.
Figure 1.2 The leaking bucket syndrome
Source, created for this study
Answering the research question will be answered in more detail in section 4.2
below.
In summary, this research paper makes three contributions. Firstly, literature on
the transformation of the petroleum retail industry is conspicuous by its absence.
Black Economic Empowerment literature in the sector is mainly in the form of the
LFC and commentary on it. The LFC and other literature on transformation in this
industry focus on employment equity, equity in the oil majors, and procurement.
Secondly, because this sub sector of the petroleum industry has received so little
attention in the past, challenges facing its transformation have remained largely
under the radar for too long. Consequently, ways to address such challenges
have hardly been explored beyond intra-company mechanisations.
Entry of Black Entrepreneurs
Exit of Black Entrepreneurs
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Thirdly, and perhaps more importantly, some innovative ideas are presented,
that, if implemented, could change the face of this sector in ways that represent
win-win solutions for the entrants and those with skills and capital.
A number of questions were considered for purposes of dealing with the concern
observed.
These questions are summarised below of which an answer to one question was
then chosen for the purpose of this paper.
The questions identified were as follows:
What do stakeholders have to offer as possible solutions?
What long-term solution that can be regarded as a win-win for most, if not
all stakeholders?
What can each key stakeholder contribute to the solution?
What financing models can prevent the pitfall of the past failed models?
How can current White service station owners be encouraged to support
BEE without the losing their own businesses?
How can Black entrants into the market be equipped to survive and be
successful as their White compatriots?
What mechanisms can facilitate the entry of Black operators into the
Petroleum Retail sector be increased, while at the same time
ensuring those Black entrepreneurs already in the system survive?
By answering the latter question, we would be dealing with the concern identified.
Answering this question is critical as it will assist in dealing with the overall
problem of BEE and the concomitant dissatisfaction with progress over the past
number of years since the signing of the LFC.
1.3 Justification for the Research
Too many Black entrepreneurs battle to access finding as they find doors shut in
their face when they look for finance from financial institutions. As if that was not
enough, they do not have enough savings of their as unencumbered cash.
Secondly, those that go past the first hurdle often find themselves faced with
another challenge round the corner. They don‘t have any experience to handle
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the complexity of running a business that runs for 24 hours, and consists of
multiple businesses at the same time.
Why should we care about the findings in this report? This report is relevant on
five fronts:
a) It is an attempt to make a contribution in the wicket problem that is BEE.
Admittedly, there is a no panacea for this problem, but this paper makes a
plausible argument on one of the angles in which it could be tacked.
b) It addresses a topical issue that has far reaching implications for the country
and the petroleum industry in particular. The petroleum industry was the first
sector to adopt a transformation charter, but it lost ground to other sectors that
have developed far more robust charters.
c) The report does not take a broad swipe at the elephant that is BEE, but
approaches the subject from a specific angle and focuses on one aspect of the
petroleum industry. The paper does not attempt to present the issues from a
scholastic polemic angle, but as a social phenomenon for which practical
approximations are possible.
d) The petroleum industry is heavily regulated that can ill afford more regulation.
As the government is not happy about the progress made in this industry, the
last thing the industry needs is for the minister to intervene by legislating how
BEE should be implemented. To this end, taken to heart, the ideas in this
paper will move the industry closer to the desired state and alleviate the need
for government intervention.
e) This research can form a strong foundation for future research wherein ideas
in this paper can be explored further, and more focus can be given to the nuts
and bolts of the subject. To that extent, and without being magniloquent, this
paper can be seen as a trail blazer that can serve as a catalyst for future
research on a sector that so little is written about.
1.4 Outline of this Report
Companies in the petroleum industry want to achieve transformation but their
strategies are compromised by the inability of Black entrepreneurs in particular to
find capital. Moreover, those that are already inside the system are finding it
difficult to stay. This situation likened to a leaking bucket.
This paper addresses the subject of BEE from a point of view that it is a wicked
problem. The reasons for this approach will be made clear as this paper unfolds.
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Secondly, the paper focuses on the subject as it plays itself out in the petroleum
industry in general, but uses company ABC for experiences and examples to
extrapolate generalisations about the research problem.
Thirdly, the paper reviews some of the literature on the subject. The literature
review is structured in such a way that it presents the parent theory, the research
problem area, and the research problem. The broader BEE represents the parent
theory, transformation talks to the research problem area, and entry and survival
of new entrants addresses the research problem.
Fourthly, the paper explores the research methodology that was used to conduct
the research. The paper used triangulation of methods, but largely informed by
Grounded Theory as the preferred methodology. This research report is
premised on a critical realism world view.
Fourthly, the paper proceeds to the research results. This section of the paper
details how the core variables emerged from the data. It presents the proposed
answer to the research problem. This presents two related answers to the
research problem.
Finally, the paper justifies the answer in terms of its relevance to the research
problem, how useful it is as an answer to the problem, and the extent to which
the results are generalisable (validity). This section also adopts the Velazquez
model on moral reasoning as the basis for assessing whether the answer offered
is ethical in the situation concerned. In this case the answer does maximize
social benefits (people across the country will benefit from the solution of assisted
by-outs while ensuring those inside the system survive ), the actions proposed
will not infringe the moral rights of the stakeholders involved, benefits will be fairly
distributed and due care applied.
1.5 Delimitations and Key Assumptions
The paper presents BEE as a wicked problem. Table 1.5 below enumerates the
characteristics of wicket problems.
Table 1.5 Characteristics of wicked problems
1. There is no definitive formulation of a wicked problem
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2. Wicked problems have no stopping rules
3. Solutions to wicked problems are not true of false, but good or bad
4. There is no immediate and ultimate test of a solution to a wicked problem
5. Every solution to a wicked problem is a ‘one-shot’ operation because there is
no opportunity to learn by trial and error, every attempt counts significantly
6. Wicked problems do not have an enumerable set of potential solutions nor is
there a well described set of permissible operations that may be incorporated
into the plan
7. Every wicket problem is essentially unique
8. Every wicket problem can be considered to be a symptom of another problem
9. The existence of a discrepancy representing a wicked problem can be
explained in numerous ways. The choice of explanation determines the nature
of the problem’s resolution
10. The planner has no right to be wrong. Planners are liable for the consequences
of the actions they generate
Source: Swedish Morphological Society, http://www.swemorph.com
This paper focuses only in the petroleum industry and takes even a narrower
angle of the petroleum retail sector, also referred to as the marketing of
petroleum retail products. In assisted buy outs, the premise of this paper is that
the assistance will come from White South Africans who are more likely to be
experienced and have better access to financial resources. The assisted will be
Black entrants with little or no prior entrepreneurial experience, and would
otherwise struggle to obtain financial assistance on his/her own steam.
This paper does not assume that the ideas presented represent the only
available ideas on how to fast track BEE in the sector. The paper also does not
assume that all Black entrepreneurs need to be assisted in the ways suggested
in this paper. The paper merely points out that such interventions have a place,
and are likely to work in certain circumstances, particularly where the partners
trust each other.
All the research and interviews were conducted with participants based in Cape
Town and Port Elizabeth. This was due to the cost and time constraints involved
if a wider audience was to be included.
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1.6 Conclusion
This chapter was concerned with presenting the foundations for the report. The
research is placed within the context of Black Economic Empowerment with
particular reference to the petroleum industry. The research problem is the under-
representation of Black entrepreneurs in the service station industry. The
research problem is presented as a wicked problem, which by itself is an
admission that we are dealing with a complex social challenge for which there is
no panacea. Among the different stakeholders, there is little consensus about
what the problem is, let alone how to solve it.
The research question that this paper tries to answer is: What mechanisms can
facilitate the entry of Black operators into the Petroleum Retail sector be
increased, while at the same time ensuring those Black entrepreneurs
already in the system survive? Answering the research question is justified
because it makes a contribution in the wicket problem that is BEE, the subject
has far-reaching implications for the country, the proposed solutions are practical,
which can take the industry forward, and hopefully serve as fertile ground for
future research.
The next chapters proceed with a detailed description of the research project.
The very next section deals with the with literature review. This is the body of text
that reviews the critical points of current knowledge on the subject. It is a review
of secondary sources of information. The section on research methodology
details how the paper will carefully investigate and search for new insights on the
research topic. It will be a voyage of discovery using qualitative research
methods combining critical realism, grounded theory and soft systems
methodologies. The second last section reveals the new body of knowledge, also
known as research results in common parlance. Lastly, we will evaluate the
recommendations in terms of the relevance, utility, validity and whether they are
in line with Velasquez‘s typology of ethical considerations.
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2. LITERATURE REVIEW This part of the paper reviews the existent literature in the field of BEE in general,
transformation within the petroleum industry with specific reference to ownership
of service stations, and mechanisms to ensure long tenure and survival of the
most Black new entrants into the industry. The broader BEE represents the
parent theory, transformation talks to the research problem area, and entrance
and survival Black entrepreneur addresses the research problem, as depicted in
Figure 2 below.
Figure 2: Relationship between Parent Theory, Research Problem
Area, and Research Problem
Source, created for this study
The origins of Black Economic Empowerment in South African probably have
their routes in the introduction of the affirmative action by the United States of
America via the Sullivan Code of Principles, which were applied to American
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multinationals operating in South Africa. The strategy of affirmative action was
accelerated via this programme during the latter half of the 1980‘s to restore
historic imbalances in the economic growth of South Africa (Verhoef, 2001).
Internally, one can trace the roots of BEE from the ANC‘s Reconstruction and
Development Program (RDP) Base Document (1990), in which it was stated
that ‗the South African economy is in deep-seated structural crisis as such
requires fundamental reconstruction‘. In a journal by Verhoef (2001), the
South African Institute of Race Relations referred to BEE as process of both
natural self-empowerment and organised initiatives to promote black
empowerment.
In legal terms, Black is a generic term that includes Africans, Coloureds, and
Indians. BEE targets Blacks as beneficiaries of this policy direction and is a
tacit acknowledgement that racial groups were disempowered as a result of
apartheid policies. Earlier definitions of ‗empowerment‘ targeted Blacks,
women, and people with disability under the umbrella name of ‗previously
disadvantaged people‘. The current discourse seems to have shifted to focus
mainly on Blacks; hence the latest legislation refers only to Broad Based
Black Economic Empowerment (BBBEE).
‗Economic‘ refers to the notion that the country is not endowed with unlimited
resources, and therefore choices must be made among the available
alternatives. The choices depend on the incentives available for each choice.
Woolley (2005) suggests that the incentives for BEE are anchored on two
premises. One, there‘s a moral obligation to atone for the economic
repression and exploitation of Black people in the pre 1994 era. To this
extent, one of the stated purposes of the BBEEE legislation is to promote the
effective participation of black people in the economy (Jordan, 2010). Two,
there is a social imperative to reduce the high Gini-coefficient to create a
more stable society. The Gini-coefficient index of a country is a measure of
the levels of inequality in society. A larger coefficient is indicative of larger
disparities between the rich and poor.
‗Empowerment‘ can be understood as a concept at the core of which is power
(Page and Czuba, 1999). The argument goes along the lines that
empowerment requires that power can change, and that if power cannot
change, then empowerment cannot happen. Power does not exist in isolation,
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or without a context. It exists within the context of people or things. By
implication, since it is created in relationships, power and power relations can
change. Page and Czuba (1999) define power as empowerment in a multi
dimensional social process that that helps people gain control over their own
lives. This paper will adopt the same definition of empowerment.
The implementation of BEE has seen a fair share of problems, and has been
challenged from various quarters. The first variant of black economic
legislative framework was criticised by many because of ‗its failure to provide
access to the economy to the poorest of the poor and to uplift those that need
it most‘ and BEE was experienced by a handful of black celebrity
entrepreneurs (Petersen, 2007). In that process, NAIL became the first black
owned listed company on the JSE (Verhoef, 2003). Eleven of the sixteen
board members, whose executive chairman was Dr. Motlana and the deputy
executive chairman, was Dikgang Moseneke, were Black (2001). In a
memorial lecture, Maseti (2005) lambasted the approach in which narrow
BEE focussed on the advancement of a black minority through equity
acquisitions.
The introduction of Broad Based Economic Empowerment by the Department
of Trade and Industry (DTI) was aimed at deflecting the criticisms levelled at
narrow based BEE. The BBBEEE Codes of Good Practice that were
published by the government in 2005 introduced a 7-point scorecard in which
ownership only accounted for 20%.
In spite of all the efforts of government, Non Governmental Organisations and
private companies, the transformation of economic landscape in favour of
previously disadvantaged South Africans in general and Blacks in particular,
remains a challenge, and there are many questions than answers. Maseti
(2005) argues that ‗South African needs a black economic empowerment
programme that will seriously contribute to the real development of the poor
and the starving people in squatter camps. Although some progress has been
made, no one can claim to have all the answers.
On the subject of transformation within the petroleum retail sector, and
judging by the Minister of Energy‘s 2011 budget speech, the government is
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unhappy about progress on the BEE front in the petroleum industry. In her
speech, Minister Dipuo Peters said the state of affairs of empowerment in the
industry was not acceptable. She said that ‗for our democracy to be
sustained, inequality needs to be addressed‘ She believes that disincentives
for non-compliance will have to be tighter and tougher.
According to the Business Day (01/2011), the National Empowerment Fund, a
government agency developed to promote and facilitate broad-based black
economic empowerment, has earmarked franchising, especially within the
petroleum industry, as one of the key tools to accelerate the participation of
Black entrepreneurs in the mainstream economy. To this end, the National
Empowerment Fund last year entered into a two-year R50m agreement with
petroleum giant Engen to increase the number of Black entrepreneurs within
this lucrative industry.
We now turn our attention to the intertwined concepts of the research problem
and the BIG IDEA. Firstly, assisted buy-outs have been suggested in this
paper as part of the answer to the problem of the transformation in the
petroleum sector. Section 4 of this paper deals with this answer in more
detail. Assisted buy-outs assume partnerships between individuals, wherein
the one partner does not have either the money required to pay for the
business or the experience, or both in most cases. The other will have the
money, and sometimes, the experience in the petroleum retail industry. The
partner with money cannot unlock the opportunities because of transformation
requirements. The key ingredient in a partnership is not the convenience of
one party empowering the other. Trust between the parties plays a big role in
whether the relationship will last or not. Positive expectations and a
willingness to be vulnerable are the two essential elements of trust (Saparito
& Colwell, 2010). Positive expectations are confident, if nebulous beliefs that
are premised on the idea that your business partner will act in a fashion that
is consistent with your welfare. Fink and Kebler, 2010 propose that such
positive expectations may be based upon rational judgement or grounded in
affective or social biases. Willingness to be vulnerable, on the other hand
points to the possibility of a loss, and suggests some risk taking in placing
one‘s welfare in the hands of another. Thus, the definition of trust from
Rousseau at al (1998) is more in line with the concepts developed in this
paper: ‗Trust is a psychological state comprising the intention of one party to
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accept vulnerability based upon positive expectations of the intentions or
behaviour of another party‘.
The credit crisis of 2008 and 2009 has made it more difficult for entrepreneurs
to raise debt and financial institutions‘ appetite for risk has been significantly
curtailed (Black et al, 2010). The concept of trust is important because it also
emerges when the entrepreneur needs to approach a financial institution for
funding. The firm-bank relationship is complex and multidimensional
functioning along a typology consisting of three dimensions of trust. Saparito
& Colwell, (p152, 2010) adopt Lewicki and Bunker‘s (1996) view that trust is
calculus-based (CBT), knowledge based, (KBT), and identification based
(IBT). CBT is about the rationale consideration of self interest whose
compliance is ensured by a system of rewards and punishment. KBT
emphasises information that accumulates over time through repeated
interactions, making the parties‘ behaviour more predictable. The history of
interactions allows predicting of future behaviour and gives comfort that risk is
minimised. Entrepreneurs often have the wrong idea when applying for
finance. Entrepreneurs and financial institutions have significantly different
ideas on entrepreneurial success traits (Black at al, p 194, 2010). KBT is
largely influenced by experience. Aspiring entrepreneurs view characteristics
inherent in their nature as more important that financial institutions, as banks
place more weight on experience than do entrepreneurs. In a study
conducted by Black et al (2010), it was found that inexperienced
entrepreneurs differ significantly from financial institutions in identifying what
financial institutions look for when making funding decisions. Highlighting the
value of partnerships between new entrants and experienced entrepreneurs
and the benefit of the experience that can be gained through partnerships, it
was found in the same study that experienced entrepreneurs do not differ
significantly from funding institutions in identifying what funding institutions
look for when making funding decisions. For example, it was found that
inexperienced entrepreneurs differ most in their view of the importance of
management (the other criteria were, future returns, product/service, and
other) to the funding decision. They cite management as an important factor
only 21% of the time compared to financial institutions that cite management
36% of the time. On the other hand, experienced entrepreneurs cited
management as 33% of the time, and do not differ significantly from the
financial institutions who cited management 36% of the time. According to
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Black et al (p196, 2010), these results indicate that entrepreneurs are more
able to identify with what financial institutions are looking for only after
experience with a funding decision. The role of trust, especially KBT, in
assisted buy-outs will be expanded upon in chapter 4.
IBT is about decisions that are made in line with the intrinsic commitment to
the relationship. The relationship between these three forms of trust is that
IBT largely relies on the presence of CBT and KBT (Saparito & Colwell, p153,
2010).
Others, however, are suspicious of assisted buy-outs. Fakude (2008) argues
against the expectation that entrepreneurs should be supervised or mentored
before they can be fully accepted. She contents that such notions amount to
limitation on market entry. Furthermore she sees that reliance on assisted
buyouts perpetuate the stereotype concerning competence and quality of
Black businesses. She argues that that Black businesses have struggled to
access finance because of what she calls ‗the albatross‘ of blacklisting.
However, hhe agrees that accessing finance remains a challenge for Black
people. According to her, the government must take step in and remove what
she calls ‗structural prejudices‘.
The second part of the BIG IDEA is that entrepreneurs in the petroleum
industry need a support system in which informal training is formalised. The
majority of entrants into the industry are those that take over existing
businesses. Start-ups are few and far between because construction of new
service station is not a common occurrence now; as opposed to 15-20 years
go. However, Perry et al (2010) argues that approximately two out of every
five businesses were sold back on to the market within two years. This
suggests that only 40% of those that buy business give up within two years.
How can the success rate be increased, one may ask?
This is where learning intervention play a part. They should provide entrants
with practical experiential training, as opposed to a classroom based or even
traditional seminar experience. Moreover, franchisors provide formal and
generic programmes that are geared to suit everyone therefore rarely
addressing specific needs of participants. The degree of actual learning in the
formal training environments is arguable (Perry et al, p 58, 2010). What is
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often lacking is the infrastructure required to support the learning after training
has been completed. Moreover, informal training frequently plays a role in the
development of management skills. As tacit skills relate to the precise way in
which tasks are performed within a specific environment, they can only be
learned through experience within that particular environment, and may be
particularly important to skills development of entrepreneurs who are likely to
be inheriting existing processes and procedures rather them building them
from the ground up.
In a research report by Perry et al (2010), it was found that the richest source
of learning amongst new franchisees was the time spent working alongside
the present owner, when they learnt not only about the business but also
about the skills required to manage it.
The practical informal experiential learning needs to happen within a
framework, otherwise it becomes too lose and uncoordinated. To overcome
this problem, Kelleher and Reinl (2010) suggest a facilitated micro-firm
cooperative learning network environment. Such a framework will provide
entrepreneurs with an environment in which they experience, reflect,
conceptualise, and act. In this framework, cooperative learning forms an
important part of the individual‘s learning process wherein interaction with
like-minded individuals can result in improved effectiveness, efficiency, and
innovation.
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3. RESEARCH METHODOLOGY
The methodology section deals with the process to be followed in the collection
and analysis of data. The process in this paper is within a framework of certain
philosophies. These philosophies used are qualitative in nature and involve
critical realism, grounded theory, and soft systems.
3.1 INTRODUCTION AND OVERVIEW
The objective of this paper is to study the mechanisms that hinder transformation
in the petroleum industry, with specific reference to the ownership of service
stations. The aim is to identify key variables that can be viewed as hurdles that
need to be removed to achieve accelerated progress in transformation of the
industry. The premise of the study is that there is an isomorphic relationship
between transformation and the challenges that contributed to fewer Blacks
entrepreneurs. The paper looks at a situation where, 17 years since the first
democratic elections, more than half of the service station network is owned by
White operators, the reasons behind such dissonance, and how the situation
could be turned around in a sustainable way. This paper uses examples from
company ABC to make generalizations about the industry as a whole. The
rationale for such deductions is that company ABC represents 23% of the service
stations in South Africa.
The research question identifies the phenomenon to be studied. It‘s intended to
lend focus and clarity about the phenomenon of interest. But it must be borne in
mind that a truly accurate question is impossible to ask before the grounded
theory study begins. The question in this paper was refined during the process.
This paper uses a design process know as Interactive Model Research Design
(Maxwell 2005). Figure 3.1 below is an illustration of how the five components of
the model are interconnected to form an integrated and interacting whole, with
each component closely tied to several others, rather than being linked in a linear
or cyclic sequence.
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Figure 3.1 Interactive Model of Research Design
Source: Joseph Maxwell, Model for Qualitative Research Design
3.1.1 Research Goals
This study is worth doing because unless ways are found that can accelerate
the acquisition of service stations by Black operators, then it is very likely that
the government would step in and regulate by legislation. The Minister of
Energy has already indicated unless progress is made soon, it may leave the
government little choice but to pass legislation whose aim will be to fast track
Black Economic Empowerment. Up to now, it has been very difficult for Black
entrepreneurs to enter the fuel retail business. Those that have come in have
found it tough to stay. The paper will identify what prevents the entry of Black
entrepreneurs into the petroleum retail industry and why those Black
entrepreneurs already in the system do not survive.
3.1.2 Conceptual Framework
BEE is widely seen is something that only benefits only those who are
politically connected. On the other hand, it is often stated by the beneficiaries
that the White people are opposed to BEE and will put obstacles in place to
the achievement of these objectives. White operators on the hand do not
understand why they have to give up what they have worked for all their lives.
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There is a willing seller willing buyer principle that is protected by the
constitution.
This paper will explore the research problem from the point of view that it is a
wicked problem. This paper will also adopt a Critical Realist approach and
apply retroductive strategies to uncover underlying causal mechanisms that
are responsible for the empirical effects. In addition, this paper will develop
some theories about BEE. Such theories will be developed inductively from
the data. The theory developed in this way is called Grounded Theory. Critical
Systems Heuristics will be used to uncover personal interests, views, and
assumptions of different stakeholders on the subject of BEE. The Soft
Systems Methodology will be used to Identifying the problematic situation,
researching the situation and building a 'rich picture' of it, select perspectives
and build 'root definitions', develop a conceptual model of the change system,
comparing the model with the real-world situation, defining the changes to be
implemented, and taking action. The Strategic Assumptions Surfacing and
Testing technique will be used to surface and challenge the assumptions of
the different stakeholders.
3.1.3 Research Questions
This study aims to understand what can be done to achieve transformation
and enhance entry of Black entrepreneurs into the service station ownership
business.
This paper will seek to answer questions like:
What do stakeholders have to offer as possible solutions?
What can each key stakeholder contribute to the solution?
What financing models can prevent the pitfall of the past failed models?
How can Black entrants into the market be equipped to survive and be
successful as their White compatriots?
How can current White service station owners be encouraged to support
BEE without the losing their own businesses?
What long-term solution that can be regarded as a win-win for most, if not
all stakeholders.
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What mechanisms can facilitate the entry of Black operators into the
Petroleum Retail sector be increased, while at the same time
ensuring those Black entrepreneurs already in the system survive?
3.1.4 Methods
This paper will also use triangulation of methods. According to Pogson et al
(2002), triangulation can be broadly defined as the combination of
methodologies in the study of the same phenomenon. Triangulation can
happen in different ways. It can happen when two different data types are
used, qualitative and quantitative. It can also happen through the use of
multiple qualitative methods. Lastly, triangulation can happen through the use
of specific data collection methods.
The advantage of triangulation is that it can result in greater confidence in
results, and a more comprehensive integration of theories. Triangulation with
qualitative methods allows the researcher to measure the construct in a more
approximate manner, and thereby allowing a clearer understanding of the
complexity of the situation under investigation (Pogson et al, 2002, p.3). In
triangulation, it is important to empirically validate the measurement of
constructs and the convergence with the individuals‘ perception of these
constructs. It is important to distinguish between first and second order
constructs in triangulation. A first order construct refers to how the focal
individuals conceptualise the phenomenon of interest, while a second order
construct typically refers to how the researcher makes sense of the
phenomenon (Pogson et al, 2002, p.4). The inductive paradigm allows the
researcher‘s personal experience with the construct to drive subsequent
research. In this case, the researcher is interested in identifying first order
constructs, which can inductively be used to develop categories to explain the
experiences of the sample, thus describing the second order constructs. In
stark contrast to the deductive strategy where researchers are often detached
from the phenomenon of interest, the inductive paradigm involves the
researcher‘s immersion in the experiences of the participants.
Primarily, this paper uses data collection methods embodied within Grounded
Theory. The data will be collected from some of the stakeholders identified in
the Rich Picture. Any quantitative data will be collected via a desktop exercise
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exploring existing documents, company policies, current company reports,
and any other relevant written documentation, and such data will form part of
the describing the situation.
Black and White entrepreneurs will be interviewed. The conversational
interviewing technique will be used to focus on those operators with whom I
already have rapport. The reason is to be able to get to some of the deeper
issues that unfamiliar operators might not be willing to volunteer. These
participants were chosen across the broader Company ABC‘s network of
entrepreneurs, but mostly those based in Cape Town and Port Elizabeth
because it was more convenient as the researcher travelled more often
between the two cities. A selected number of employees of Company ABC
were interviewed as well.
Data was collected through interviews, field notes, documents, and literature.
More details of the method are laid out in the next sections. The detail will
include:
The relationship with the participants
The selection of settings, times, and places of data collection
Data collection methods
Data analysis
3.1.5 Validity
The results and conclusions will be heavily influenced by what comes out of
the data. This in turn will be the result of the choice of participants and data
analysis. It is plausible that the study conducted with a different set of
participants could lead to different results. The same could be said of the
impact of the researcher as the biases and analytical ability pay a critical part
in shaping the research results. The level of abstraction necessary in
developing substantive codes depends largely on the researcher‘s ability to
develop abstract concepts from the data.
This research will not use participant validation, a process where the
researcher returns to the participants and check the accuracy of individual
interview transcripts with participants or check that the researcher‘s
interpretations of the data represents what was said in the interviews. Instead,
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checking will be built-in and become part of the process rather than it
becoming a distinct exercise. A dynamic relationship between sampling and
analysis will be maintained to ensure that the emerging findings remain
constant as further data is collected.
To counter the possibility of researcher‘s bias, memoing will be used to
control distortions that may arise. All the memos that do not fit into the data
will eventually be set aside. To this effect, memoing will be used both as part
of data analysis and also in countering subjectivity.
3.2 OVERARCHING PHILOSOPHY
3.2.1 Critical Realism
This paper is premised on a critical realist world view. According to this world
view, research participants are valid scientific data than can lead to
consequential social transformation (Burnet, 2007). The participants act upon
social reality, but are also impacted by it. The real world and social reality
exist independently of our perception of it, but can only be understood under
particular descriptions, hence the ontological and epistemological premises to
critical realism. Critical realism rejects positivism‘s preoccupation with
prediction, and quantification and measurement because social reality can be
understood, but not often measured; hence it makes sense to employ
qualitative methods. Qualitative research involves detailed, verbal
descriptions of characteristics, cases, settings, people or systems obtained by
interacting with, interviewing and observing the subjects (Thompson, 2007).
Ontology can be defined as the ‗world as it is‘ and epistemology as the ‗world
as we know it‘. Critical realism prioritises the former over the latter. As a
consequence, the three ontological premises of critical realism are:
intransitivity, stratification of reality, and causal relations in social reality.
Intransitivity refers to the real things and structures, mechanisms and
processes and events in the world that are independent of human beings
(Burnet, 2007, p.2). Stratification refers to the idea that the reality is stratified
into three domains, namely; empirical, actual and real. The empirical domain
can be viewed as things we experience through our senses or perception.
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The actual domain is the events that happen in the world outside our
perception. It refers to events and outcomes that occur in the world. The real
domain refers to underlying relations, structures, and tendencies that have
the power to cause changes in the actual realm. Most often these causal
influences remain latent; however, under the right circumstances, factors in
the real domain can act together to generate causal changes in the actual
domain. These causal changes are neither uniform nor chaotic but are
somewhat patterned.
The real domain refers to causal mechanisms that generate events. The
causal mechanisms are the unobservable entities, processes and structures
that generate outcomes. In the realm of the real, critical realism views
behaviour as being influenced by both agency and structural factors. Although
humans have a degree of agency, this is always constrained by wider
structural factors that are viewed as surrounding the individual. Although
culture can be conceived as being dependent on and created only through
the existence of humans, critical realism argues that culture exists
independent of individuals. Likewise, social phenomena are made possible by
the presence of humans but are deemed to be external to individuals and
have existence and the power to constrain whether this is recognized by
individuals or not.
Critical realism adopts a retroductive approach to research. Retroduction
implies that researchers look for the conditions or qualities that make the
phenomenon beyond what they can immediately see. It compels us to ask,
not only what happened, but what could happen or what hasn’t happened. It
enables an understanding of the mechanisms underlying the dynamics in the
observed events.
Critical realists use retroduction as a strategy to conduct research. The
strategy unfolds in three steps:
a) The research begins in the domain of the action
b) The research postulates the existence of real structures and mechanisms
c) The research demonstrates the existence and operation of these
structures
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This paper will employ retroductive strategies to uncover underlying causal
mechanisms that could be responsible for changes in transformation of the
face of the service station industry.
3.2.2 Grounded Theory
This paper will use grounded theory as the dominant methodology. Grounded
theory is a qualitative research method of field research. Qualitative methods
involve flexible investigation in natural settings using participant perspectives
(Pogson et al, 2002, p.5). It follows a largely inductive approach as a result of
which theory is derived from the study of the phenomenon it represents. In
the early stages of research, the focus is on theory development and
elaboration without any formal hypothesis presented or tested. The creation
of hypothesis can influence and distort the way in which researchers collect
and interpret data (Pogson et al, 2002, p.6). The goal becomes the creation of
a testable model. As depicted in Figure 3.2.3a below, inductive research
approach moves from specific observations to broader generalisations and
theories. Loosely, it can be termed as a bottom-up approach. Metaphorically,
this research approach can be described as hill climbing. An important
consideration about grounded theory is that research does not begin with a
theory, but is an exploration of social processes with the goal of developing
theory. The goal of grounded theory investigations is to discover theoretically
complete explanations about particular phenomena.
Figure 3.2.3a Inductive Research Process
Source, created for this study
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As Elliot and Lazenbatt (2005) point out, grounded theory emphasises the
importance of developing an understanding of human behaviour through a
process of discovery and induction rather than from the more traditional
research process of hypothesis testing and deduction. The essential
components of the grounded theory method of doing research are concurrent
data collection and constant comparative analysis; theoretical sampling;
memoing; and understanding how these methods impact on the quality of the
research.
Having said that, it is important to realise that the methods of sampling, data
collection, and data analysis should not be considered as separate procedural
steps in the research process but instead need to be considered as a
continuous cycle of data collection, analysis and sampling (Elliot and
Lazenbatt, 2005, p.50). In this continuous process, the researcher starts
analysing data as soon as it collected and then moves on to compare the
analysis of one set of data with another. In a nutshell, constant comparison
analysis and data collection offer the researcher an opportunity of generating
research findings that accurately represent the phenomenon of interest.
During the process, it is impossible to control for the presence of the
researcher. There was no deliberate attempt to eliminate the influence of
these researcher‘s personal experience, background, and preferences.
The data used in this research paper was collected from interviews, field
notes, documents and literature. A wide and representative sample was
sought to ensure relevant participant experiences were included in further
analysis. The interviews were both face to face and telephonic, especially for
those respondents that did not live in the same city as the researcher. The
interviews covered a sample of twenty one respondents who included nine
current and former colleagues, one employee of a competitive company, and
eleven service station operators. The internal staff interview contingent was
made of eight senior managers who either have had a direct or indirect
interaction with the service station owners. For employees of Company ABC,
both senior and junior levels were selected. The primary selection criterion
was position. The educational background was not regarded as a relevant for
the purpose of the research study. The initial process involves generating
data through the various data sources. The entire process is depicted in
figure 3.2.3 B below.
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Figure 3.2.3b Process of Grounded Theory Research
Source, created for this study
The next step is data analysis. Open coding is the initial phase of grounded
theory analysis. It results in substantive codes. The initial codes are often too
many and often require reworking into patterns or combinations of codes to
produce a smaller number of categories. As the research progresses and the
categories are developed, the researcher uses selective coding to check out
whether the newly developed categories remain constant when the data is
analysed specifically for these categories. The ultimate aim is to ensure that
data is not being forced into categories but rather that the categories
represent data. This dynamic relationship between data collection and
analysis enables the researcher to check if preliminary findings remain when
further data is collected (Elliot and Lazenbatt, 2005, p.50).
The most distinctive features of grounded theory are constant comparison
and theoretical sampling. Constant comparison refers to the process by which
each time an instance of an existing category is found in the data, it is
compared with previous instances of the same category and their definitions.
Theoretical sampling on the other hand, is the process by which the
researcher controls the process of developing a theory. This is achieved by
deliberately seeking to minimise or maximise selected differences and
similarities between cases, and thus between instances of data that underlie
categories and their properties (Partington, 2002).
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As the process gathers momentum, theoretical sampling guides the sources
of data, and the questions used to collect data to ensure the theory is
developed. This implies that fixed and predetermined questions and
participants identified before the research begins can only be used as a
starting point. Enough room needs to be left for data analysis to guide the
direction of further questions and participant selection.
Memoing is another important feature of grounded theory, which refers to
researcher writing down ideas that arise during data analysis. The memos are
essentially used to record the meaning of conceptual ideas and jotting down
ideas for theoretical sampling. One reason why writing memos is considered
important is that it encourages analysis that is grounded in the data because
the researcher must consider how codes and their properties relate to each
other (Elliot and Lazenbatt, 2005, p.51).
The final product is a framework of participant experiences categorised and
labelled by meaning.
3.2.3 Relationship Between Critical Realism and Grounded Theory
Critical realism and grounded theory then become highly compatible, sharing
a focus on abduction and accepts fallibility and the interconnectedness of
practice and theory. Critical realism simultaneously recognizes the existence
of knowledge independent of humans but also the socially embedded and
fallible nature of scientific inquiry. Attending to evidence and meaning,
individual agency and social structure, theory-building and the pursuit of
practical emancipatory goals, the resulting approach is ideally suited to social
work research.
The empirical domain can be viewed as things we experience through our
senses or perception. In grounded theory, but instead empirical data is used
to explain and sometimes to predict phenomena.
In a similar fashion to grounded theory, critical realism has been applied in
qualitative research in a variety of ways. It views reality as complex and
recognizes the role of both agency and structural factors in influencing human
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behaviour. The strengths of critical realism for qualitative research lie in its
desire to render complexity intelligible, its explanatory focus, its reconciliation
of agency and structural factors, and its ability to recognize the existence of
wider knowledge while respecting the importance of social meaning to
humans. Its ontology may underpin empirical work irrespective of whether this
is overtly recognized or acknowledged. Much qualitative research seeks to
understand the causes of social phenomena through recourse to both
individual and contextual factors.
In terms of method, critical realism can be used to guide empirical work as
part of recognized approaches. For example, interpretations of critical realism
can underpin variations of ethnography and grounded theory. Alternatively,
approaches that are presented as critical realist have been developed.
Although there is no single critical realist method, these various approaches
have some commonalities.
A strong focus in theorising and research informed by critical realism is
placed on understanding causality and explaining events in the actual
domain. This movement from events to their causes, known as abduction, is
contrasted with other common goals of research to describe, predict,
correlate, and intervene.
Critical realism attempts to respond to and understand reality as it exists in
the actual and real domains. Grounded theory and critical realism are
particularly well suited to exploring research questions that relate to
understanding complexity. Rather than controlling for or simplifying
complexity artificially, the approaches advocate that complexity must be
embraced and explored. Although other research methods, such as the
randomised trial, have control and artificiality as defining characteristics,
critical realism and grounded theory advocate that phenomena must be
understood in the real world. Understanding phenomena in this natural realm
means that findings do not need to endure problematic generalisations from
unnatural to natural settings. In grounded theory the generalisations trace
similar patterns. These patterns don‘t aim to be the truth, but merely capture
and capsulate what is going on. In critical realism, patterns are used to
identify or understand the underlying phenomena. As a result, there is often
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difficulty in accounting for why trends exist or why programs perform as they
do. There is nothing inherent in critical realism that directs researchers to
theoretical, qualitative, or quantitative methods.
Explanation should be rich and deep, invoking both agency and structural
factors in a complex way to account for patterns in data. In this way, results
are not descriptive but should provide an explanation of patterns identified in
data. Interactions between factors should be described, and a sense of
complexity should be to the fore. Different types of data can be relied on to
provide a case for explanation, including lay accounts from different key
groups or document analysis. These qualitative data can also be linked to
quantitative data for corroboration or further explanation. The rationale for this
multiplicity is that each method or perspective can provide evidence of what is
occurring in the world.
Critical realism is also compatible with grounded theory because it views
individuals as having the potential for emancipation. Critical realism
recognizes that humans can actively shape and change wider social
phenomena through channels such as collective action, the arts, and
research.
In both approaches, the beliefs, understandings, and meanings of humans do
matter—not because they determine what objective reality is but rather
because they are likely to influence behavior. Hence, critical realism can be
used to guide research into lay beliefs, accounts, and discourse with the
broad caveat that data produced in these inquiries relate to accounts of reality
that may or may not be accurate but do not determine reality. This is
compatible with many forms of qualitative research.
While critical realism views having a deep understanding of why patterns exist
as a prerequisite to effective action, grounded theory reveals the patterns that
explain what is going on.
3.2.4 Soft Systems Methodology
The soft systems methodology was developed by Peter Checkland in the late
1960‘s. The methodology is illustrated in figure 3.2.4 below. The first two
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stages are involved in defining the situation in some way. The process is not
constrained by any formal definitions. It often involves data collection in
whatever form seems necessary. The problem is also expressed in all its
richness, normally via a rich picture.
Figure 3.2.4 The Learning cycle of Soft Systems Methodology
Source: Systems Thinking: Creative Holism for Managers
The third stage moves out of the real world into the systems world. It draws
on the rich picture and identifies the various perspectives of the different
interest groups and participants. Each stakeholder group defines the purpose
of the system in their eyes. The views expressed may not be acceptable to
those who own the power relations, but the views must still be allowed to be
expressed. Each perspective or Holon is then expanded by means of a
CATWOE mnemonic.
The fourth stage involves developing a conceptual model using systems
conversations. This process need not be too cumbersome becomes SSM is
about cycles of discussion and debate and not about developing an ideal
situation first time. The purpose of the model is to show a logical process that
shows all the features that describe a system. The key feature of the model is
that it must be representative of the views expressed in the participants.
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Stages five to seven take the process away from the systems realm to the
real world. Now the model is compared with reality, insights drawn from that
comparison, and ideas for improvements determined. The model is compared
with what is actually happening in the real world.
Stage six begins to explore possible alternatives and assess the feasibility of
each alternative.
In stage seven the methodology comes full circle and identifies what action
might be taken to improve the problem situation. Whenever there is an
implementation, a whole new cycle begins as the underlying dynamics take
on a different shape.
3.2.5 Critical Systems Heuristics
Critical Systems Heuristics (or CSH for short) was chosen because the
constituent parts are relevant to the phenomenon of interest. Heuristics
literally means ‗the art of discovery‘ (Ulrich, 1983). As a methodology,
heuristics has been chosen because it serves to identify and explore relevant
problem aspects, assumptions, questions, or solution strategies. This paper is
about a process of discovery to better appreciate the dynamics at play to
enhance or hinder the entrance and survival of Black entrepreneurs in the
service station industry.
The problems statement is viewed from a critical perspective because it is
believed that there is no single right way to achieve transformation. Answers
depend largely on various interests and views. If there were any cookbook
answers to BEE, it would not be viewed as a wicked problem, and this study
would probably not be worth doing.
This paper is presented from a systems thinking perspective because all
problem definitions, solution proposals, evaluations of outcomes, and so on,
depend on prior judgments about the relevant ‗whole system‘ to be looked at.
The relevant aspect of CSH is the boundary judgements, which becomes a
guiding framework on which aspect of the system are viewed as more
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relevant than others. To this end, this paper will frame the boundary
statements in the ‗is‘ mode to gain a better understanding of what is
happening. The twelve boundary statements are presented in figure 3.2.5a
below.
Table 3.2.5a CSH Boundary Statements
Questions
Who is the actual client of transformation design, i.e. who belongs to the group
of those whose purposes (interests and values) are served, in distinction to those
who do not benefit but may have to bear the costs or other disadvantages?
What is the actual purpose of transformation design, as being measured not in
terms of declared intentions of the involved but in terms of the actual
consequences?
What, judged by the design's consequences, is transformation’s built in measure
of success?
Who is actually the decision taker in transformation, i.e. who can actually change
the measure of success?
What conditions of successful planning and implementation of transformation
are really controlled by the decision taker?
What conditions are not controlled by the decision taker, i.e. what represents
"environment" to the decision maker?
Who is actually involved as planner?
Who is involved as "expert", of what kind is his expertise, what role does he
actually play?
Where do the involved see the guarantee that their planning will be successful?
(E.g. In the theoretical competence of experts? In consensus among experts? In
the validity of empirical data? In the relevance of mathematical models or
computer simulations?
In political support on the part of interest-groups? In the experience and
intuition of the involved? Etc.) Can these assumed guarantors secure the design's
success, or are they false guarantors?
Who among the involved witnesses represents the concerns of the affected?
Who is or may be affected without being involved?
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Are the affected given an opportunity to emancipate themselves from the
experts and to take their fate into their own hands, or do the experts determine
what is right for them, what quality of life means to them, etc? That is to say, are
the affected used merely as means for the purposes of others, or are they also
treated as "ends in themselves" (Kant), as belonging to the client?
What world view is actually underlying the design of transformation? Is it the
world view of some of the involved or of some of the affected?
Source: Systems Thinking: Creative Holism for Managers
3.3 ETHICAL CONSIDERATIONS
Ethics is the moral compass that will be used to conduct the research and the
filter for any proposed solution. During the research process, ethical
considerations will feature prominently in the way participants‘ views are
treated and protected. Each participant‘s contribution will be treated
confidentially and will not be shared with the other people. The Velasquez
(2006) model of looking at utilitarianism, rights and duties, justice, and caring
will be employed as follows:
Table 3.2.5b Valesquez Model of Utilitarianism, Rights & Duties, Justice,
Caring
Utilitarianism (Does the action, as far as possible, maximise social benefits and minimise social injuries?)
Rights & Duties (Is the action consistent with the moral rights of those whom it will affect?)
Justice (Will the action lead to a just distribution and burdens?)
Caring (Does the action exhibit appropriate care for the well being of those who are closely related to or dependent on oneself?)
The participant information and names will be treated confidentially.
Every participant will do so voluntarily without any undue pressure.
Permission will be sought from each participant should be necessary to disclose sources of information, if necessary.
Each participant will take place in a safe office environment during office hours. If the interviews lasts longer than the original planned time, the interview will continue only if the interviewee is still wants to continue beyond the original
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planned time.
Only those actions that will result in the greater social good for the greater majority will be considered as recommendations for implementation.
Only actions that will not infringe on moral rights and will be considered appropriate. Nothing will have religious, gender, race, cultural, ethic connotations.
The actions presented will only be those that advance the interests of BEE.
The options presented will take care not to present harm or danger to anyone in particular. The proposal will be I form of a report that presented in a humane and sensitive manner.
Source, created for this study
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4. RESEARCH RESULTS
This section deals with both the process that was followed using the methodology
explained in section 3 above, and the results of the study that was conducted to
provide answers to the research problem in general, and to the research question
in particular. Each phase of the grounded theory is presented with examples from
the research conducted.
4.1 Phenomenon of interest
The phenomenon of interest in this paper is the under-representation of Black
entrepreneurs in the petroleum retail industry with particular reference to the
operation of service stations. This is in spite all the best intentions of the major
petroleum companies and government. The researcher has been fascinated by
how difficult it has been for Black entrepreneurs to enter the petroleum retail
industry. As if that was not enough, those Black entrepreneurs in the industry
have found it difficult to survive.
4.2 Purpose of the study
The purpose of the study is to provide answers and explanations to the question:
What mechanisms can facilitate the entry of Black operators into the
Petroleum Retail sector be increased, while at the same time ensuring
those Black entrepreneurs already in the system survive?
4.3 Methods
Grounded theory was used as the overarching research methodology used to
guide data collection, analysis and development of theory.
Data collection encompassed a triangulation of methods including in-depth
interviews, field notes, documents and some research literature. My own
experiences as someone responsible for selection and appointment of service
station operators also influenced the selection of the research problem, and the
identification of interviewees.
Quantitative data was collected via a desktop exercise exploring existing
documents, company policies, current company reports, and any other relevant
written documentation, and such data formed part of the describing the situation.
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The conversational interviewing technique was used to focus on those operators
with whom the researcher already had rapport. The reason was to be able to get
to some of the deeper issues that unfamiliar operators would not be willing to
volunteer. The idea was to collect data on transformation on people so that their
responses reflected their day-to-day activities and how they perceived it. The
enquiry was conducted as an interactive process between the researcher and the
participants. The recording of the interviewees was primarily descriptive and
relied on people words, as every attempt was made to record what they said
verbatim.
4.4 Sampling
The sample was mainly influenced by the research problem and the leads
emerging from the data. This paper used purposive sampling known as
theoretical sampling where participants were selected according to criteria
specified by the researcher and based on initial findings.
The interviews covered a sample of twenty one respondents who included nine
current and former colleagues, and eleven service station operators. An
employee of another company (XYZ) was also interviewed for a perspective that
was not influenced by company ABC. The internal staff interview contingent was
made up of eight senior managers who either have had a direct or indirect
interaction with the service station owners or have had previous experiences in
the appointment of operators. Race selection was done to get a wide range of
views across the different races. Gender selection was not done it might have
complicated participant selection, and could have introduced difficulties in getting
interviewees as a males make up no less than ninety percent of entrepreneurs in
the industry. Employees were chosen at both junior and senior levels however,
the nine selected colleagues consisted of Black, White, Indian, and Coloured
employees, and there was a 60/40 male and female gender split. For employees
of Company ABC, the primary selection criteria were position and experience.
The educational background of participants was not regarded as relevant for the
purpose of the research study.
4.5 Data Analysis
Initial or open coding is the first step of data analysis. It was used as a way of
identifying important words, or groups of words, or themes in the data and then
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labelling them accordingly. Coding helped to move away from particular
statements to more abstract interpretations of the interview data. To get the
essence of what was said; conceptual labels were attached to every line. A
statement like, ―you can‘t give your baby away‘, was given a label, ‗emotional
attachment‘, and all other statements that gave away similar sentiments were
given the same label. To determine a potential of a new codes to develop into a
category, the frequency of codes was used as means to eliminate those
categories that appeared to be weak as a result of having significantly few codes.
The level 1 codes that emerged are tabulated in annexure D. The initial codes
were too many and required reworking into patterns or combinations of codes to
produce a smaller number of categories. The initial coding resulted in
substantive codes. As the research progressed and the categories were
developed, the researcher used selective coding to check out whether the newly
developed categories remained constant when the data was analysed specifically
for these categories. The ultimate aim was to ensure that data was not being
forced into categories but rather that the categories represented data. Some of
the themes or codes that appeared very infrequently were eventually dropped.
As the process gathered momentum, theoretical sampling guided the sources of
data, and the questions used to collect data to ensure the theory was developed.
This meant that fixed and predetermined questions and participants identified
before the research began could only be used as a starting point. One example
of theoretical sampling in this study was the interviewing of an expert on BEE
from Company XYZ to gather more information on how management in his
company view representation of Black entrepreneurs in the industry. The purpose
of including this interview was to obtain views outside of those people that were
exposed to Company ABC.
Memoing was used to write down ideas that arose during data analysis. One of
the memos that arose during analysis was the idea of trust. Partnerships had
been raised as something that made sense to achieve transformation. The memo
on ‗trust‘ enabled further questions whether participants felt trust was an
important factor in partnerships. Memoing was important because it became an
important source for theoretical sampling. The other important memo related to
what ‗choices‘ people made in relation to whether they were prepared to enter
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into partnerships in the first place. Were choices of partners for the sake of
partnership or was it seen as a means to an end. It came out that participants felt
that most people don‘t have business partners if they have a choice not do. The
concept of partnership emerged as vehicle of convenience. Partnerships were
possible only if the funding partner saw something in it for him or her.
Constant comparison took place as a result of data collection and analysis taking
place in alternating sequences. This can also be described as an iterative cycle
of induction and deduction, consisting of collection of data and constant
comparison between results and new findings in order to guide further data
collections. Whenever I encountered new data or literature, I compared the new
categories with existing ones. As this process happened saturation was reached
and no new categories were forthcoming.
4.6 Emergence of the core variables
The aim of the exercise described above was to eventually discover the central
category. Form the research undertaking, the following core variables emerged
from the data using grounded theory methodology:
Review of current system
Passing of skills
Empowerment over time
Mechanisms for partnerships
Access to finance
Inclusivity of the process
Survival of the new entrant
Reflective of demographics
The categories listed above emerged through the data, but were finalised
through a process of saturation using constant comparison and theoretical
sampling. Table 4.6 below shows the categories with final categories and
their definitions.
Table 4.6 Categories and definitions
Category Definition
Review of current system The system of appointing entrepreneurs priorities
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those with access to finance and doesn‘t look to
assist those that don‘t.
Passing of skills Those with many years of experience in the
industry have skills and must be encouraged to
pass the skills and experience over to new
entrants
Empowerment of time The new entrants cannot gain skills overnight or
merely rely on formal training programmes from
franchisors
Mechanisms for
partnerships
Those with skills and money must partner with
those without skills and money, but the
partnerships must unlock more business
opportunities for the funder
Access to finance New entrants need assistance to access funding
from financial institutions as they face many
hurdles if they do it alone
Inclusivity of the process Black Economic Empowerment must include
White entrepreneurs because they possess
skills, experience and finance
Survival of new entrant New entrants need help to cope with the rigours
and stresses of the petroleum retail sectors,
especially its demands regarding cashflow
management
Reflective of demographics BEE must target mostly Africans, but must not
exclude other minorities like Coloured and
Indians
Source, created for this study
4.7 Bounding the system of focus using Critical Systems Heuristics
To prevent the creation of limited boundaries to the process, Critical Systems
Heuritcs was undertaken, which resulted in the following table (in the ‗is‘ mode).
This time the CHS statement provided answers. The boundary statements helped
to confine the research problem to empowerment in the service station business.
The statements, as shown in Table 4.7 below show that
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Table 4.7 Boundary Statements
Question Answer
Who is the actual client of S's design, i.e. who belongs to the group of
those whose purposes (interests and values) are served, in
distinction to those who do not benefit but may have to bear the
costs or other disadvantages?
Black and White service
station owners;
What is the actual purpose of S's design, as being measured not in
terms of declared intentions of the involved but in terms of the
actual consequences?
More service station
owned by Black people
What, judged by the design's consequences, is it’s built in measure of
success?
Increased % of sites
given to BEE players
Who is actually the decision taker, i.e. who can actually change the
measure of success?
Banks, White Dealers,
Petroleum Companies
What conditions of successful planning and implementation of S are
really controlled by the decision taker?
Finance; Mentorship;
Partnerships; Strategic
Framework
What conditions are not controlled by the decision taker, i.e. what
represents "environment" to him?
Price; Interested Buyer;
Government
Regulations;
Who is actually involved as planner? Government, Petroleum
Companies
Who is involved as "expert", of what kind is his expertise, what role
does he actually play?
Staff of petroleum
companies, financial
institutions like banks;
current service station
owners
Where do the involved see the guarantee that their planning will be
successful? (E.g. In the theoretical competence of experts? In
consensus among experts? In the validity of empirical data? In the
relevance of mathematical models or computer simulations?
In political support on the part of interest-groups? In the experience
and intuition of the involved? Etc.) Can these assumed guarantors
secure the design's success, or are they false guarantors?
In replication of what is
currently practiced
within the White service
station owner
community
Who among the involved witnesses represents the concerns of the
affected? Who is or may be affected without being involved?
Staff of service stations
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Are the affected given an opportunity to emancipate themselves
from the experts and to take their fate into their own hands, or do
the experts determine what is right for them, what quality of life
means to them, etc? That is to say, are the affected used merely as
means for the purposes of others, or are they also treated as "ends
in themselves" (Kant), as belonging to the client?
The staff of service
stations are affected but
directly represented
What world view is actually underlying the design of S? Is it the
world view of (some of) the involved or of (some of) the affected?
It is the world views of
some of those involved
and affected
Source, created for this study
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4.8 Stakeholder’s assumptions (results of SAST process)
Assumptions of all the stakeholders were identified within the system of focus
and the assumption rating chart in Figure 4.3 was formulated. The rich picture
was the tool that was used to surface these assumptions. The assumptions
that were followed are those in the high certainty, high importance quadrant.
In this quadrant, the assumptions were:
Demand for finance – this is the view of entrants, but frustration is
encountered when dealing with financial institutions
Need for change – government wants to see transformation
Win-win solutions – White entrepreneurs are willing to assist, but can‘t
do it without some benefits to them.
The answer somehow had to address all of these assumptions expressed as
concerns by the various stakeholders.
Figure 4.3 Assumptions Rating Chart
Source, created for this study
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4.9 Identifying the answer
Having produced the core variables, it was still important to push further and
explore for the possibility of uncovering the most central variable or variables.
Having used grounded theory and came up with the core variables; it was
now time to turn to exploring for causal mechanisms among the variables.
In defining an answer, the process involved developing conceptual models for
each of the stakeholders as to what they believed was happening in the
situation they were experiencing, and from their perspective. Refer Appendix
B – for evidence of the stakeholder conceptual models. Comparing these
conceptual models against what was in fact happening in reality allowed for
the identification of areas of conflict, and offered the basis for identifying an
answer to address the situation. It is important to stress that the answer
emerged from the data. This research did not start with a hypothesised
solution with the hope of finding corroborative data.
Using deductions from the data, the following statements were developed:
The Black entrepreneur has no unencumbered cash
The Black entrepreneur cannot borrow from the bank
The Black entrepreneur has no skills and knowledge of how to run
a service station
The White entrepreneur has unencumbered finance
The White entrepreneur can borrow from the bank
The White entrepreneur has knowledge and skills to run a service
station
Black and White need to work together
Using the deductions from the data enabled the identification of underlying
causal mechanisms through a process of retroduction. The retroductive
process produced the following causal explanation:
White entrepreneurs have access to finance and skills, while their
Black counterparts don‘t. Black entrepreneurs have increased
chances of securing funding if they partner with their White
colleagues and also acquire skills and knowledge from them.
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Figure 4.9 below is a graphical illustration of the causal mechanisms that
show the interrelation between the various interconnected variables. Assisted
buy-outs are presented as shown to be the answer to the wicked problem.
Figure 4.9 80/20% of Causal Loop Diagram of the Answer
Source, created for this study
The answer lies in White entrepreneurs assisting their Black counterparts to
access finance through assisted-buy outs. This answer is extrapolated from
the data that pointed to forming partnerships. The logic of the answer comes
from the question: what good is the partnership if it doesn‘t help the Black
entrepreneur to access funding? This is achieved when current White
entrepreneurs provide financial muscle by partnering with a Black dealer in a
service station, and come up with the majority of the finance in the process or
stand surety for the company. The Black entrepreneur buys himself/herself
out from his partnership if he/she chooses to do so over a period of time,
mainly through the sacrificing of dividends to pay off his/her partner.
The second part of the answer involves formalising skills transfer that must
take place when the entrepreneur is back at his service station. The solution
overcomes the barrier that is finance, introduces Black operators at a quicker
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rate to reflect the right demographic profile in line with the stated objections.
Fundamentally, the answer addresses the problem of a leaking bucket by
keeping the existing entrepreneurs through localised knowledge transfer.
Both interventions should go a long way towards making Black entrepreneurs
in the petroleum industry linger longer.
4.10 Implementation
The answer regarding assisted buy-outs has been tried out in practice, and is
in 6 months of operation. So far the concept is working, but it still early days
to talk about it as a resounding success, but its showing promising sings. The
partners are very happy with the arrangement, and are already talking about
expansion plans. The innovativeness of the intervention is in its ability to
take someone with little of their own capital (5%), and end up with 100%
ownership over a 5 year period.
This solution also takes away the fear that the White Dealers are expected to
‗give away their babies‘ to BEE. Rather, this solution targets site for sale
based on the willing-buyer, willing seller principle, and is therefore based on
voluntary exit.
Figure 4.10 Deming‘s PDCA Cycle
Source, created for this study
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5. EVALUTION AND CONCLUSION
Evaluation is achieved through making arguments for relevance, utility, validity,
and ethical considerations. The conclusion brings this paper to a close by
summarising the key elements that culminate in the answer.
5.1 Relevance
In summing up this overview, the issue of relevance is pertinent. It is argued that
the concerns raised are relevant in the situation. The slow progress in reaching
BEE targets is the basis for the claim that BEE is a serious problem since it
achievement has eluded many companies, and resulted in frustration all round.
The national interest in this subject and multiple stakeholder involvement
provides further backing for the claim.
A solution is relevant if it increases the likelihood of accomplishing the goal.
Assisted buy-outs will increase the likelihood of more Black entrepreneurs in the
petroleum industry as access to finance has always proven to be Achilles heel
plaguing the transformation agenda. Assisted buy-outs will provide relative ease
of access to financial resources as lending institutions are more likely to fund a
business in which one of the partners has a history with the financial institution
and has a proven managerial track-record of running a successful business. The
experience and history engenders trust in the venture. This is called knowledge-
based trust (KBT).
The second part of the solution argues that learning interventions should provide
entrants with practical experiential training, as opposed to a classroom based or
even traditional seminar experience. What is needed is the infrastructure to
support the learning after the formal generic programmes have been completed.
This is relevant because practical skills enable new entrants with coping
mechanisms as they learn the tricks of the trade. This enhances the probability of
longer tenure and durability for the entrepreneurs.
5.2 Utility
The Oxford dictionary defines utility as ‗the quality or the condition of being
useful‘. In economics, the term refers to relative satisfaction that a customer
receives from consuming a good or service. The proposed solution is useful in
the sense that buying of retail sites requires lending from financial institutions.
The banks rely on KBT to assess the riskiness of a venture. The bank is more
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likely to trust a new entrant, if he is partnered with someone that has a financial
contribution, and is willing to share his experience. Most Black entrepreneurs are
not financed because the banks are too nervous as the Black borrowers have no
prior history of success, and therefore KBT is lacking. In the economic sense, the
solution provides for a solution that meets the needs of the banks for risk
mitigation, and the needs of the entrepreneur to access capital. If both the banks
and the entrepreneur are viewed as the customers for the proposed solution, it
can be safely argues that the solution has utility to satisfy the needs of both
customer groups.
Annexure B also shows oil companies in South Africa are on the lookout for
solutions presented. The example in the annexure is one of an existing oil
company looking for BEE players, but it also asks for R55 – R65 million
investment that is required.
5.3 Validity
This section deals with validity of this paper, which refers to the extent to which
the results of a study are dependable, credible, confirmable and generalisable or
transferable. This is preferred way of validating qualitative research, as it does
not ask true or false statements. As depicted in Table 5.3 below, quantitative
research, in contract, is concerned with internal validity, external validity,
reliability and objectivity as its measures of validity. We go into each measure of
validity in more detail.
Table 5.3 Quantitative vs Qualitative Research Validation
Traditional Criteria for Judging Quantitative
Research
Alternative Criteria for Judging Qualitative Research
internal validity credibility external validity transferability
reliability dependability objectivity confirmability
Source, created for this study
5.3.1 Is the Answer Dependable?
Dependability is a measure of trustworthiness and reliability. The solution
presented in this paper was tested with a solution that has been implemented
with a partnership in Port Elizabeth. The partnership is a 55/45 percent BEE
partnership in which a Black entrepreneur is a majority shareholder. The White
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partner saw an opportunity and agreed to avail his capital and experience to this
partnership. This business model has been in operation since January 2011, and
has worked well so far. The reliability of the solution is practicability. The
conclusions of this paper might be wrong to the extent that it cannot represent the
only solution to the research problem.
Among the existing Black entrepreneurs interviewed, it was found that the
training provided should adopt a less formal style of delivery than the traditional
classroom. In the test case for the proposed answer, the Black entrepreneur did
not even attend formal classroom training yet, but has been able to hold his own
based on the practical training he has received from his partner.
Turning into internal validity with regards to dependability, this paper uses
analytical tools consistent with Grounded Theory (e.g. coding, categorisation,
constant comparison, and theoretical sampling consistent with the Grounded
Theory). All of this points to rigor in deriving the answer.
5.3.2 Is the Answer Credible?
Credibility answers questions about whether the solution is believable. The
solution can said to be believable because it features real people, real
businesses, real risks, and real rewards. The proposed solution has a physical
address in Port Elizabeth.
The Grounded Theory process is an iterative one, and through application of the
process it was possible to develop a theory that ‗emerged‘ from the data. The
quality of the data and depth of the analysis underscored the credibility of the
answer.
5.3.3 Is the Answer Confirmable?
Confirmability refers to the degree to which the results could be confirmed or
corroborated by others. Firstly, a review of relevant literature, focusing on the
parent discipline (BEE) and the core variables that emerged as part of the theory
explaining the phenomenon observed, and definition of an answer, located the
research for this paper in an established body of knowledge, confirming the
findings.
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Secondly, the annexure C is a copy of a retail licence that was issued to the
company that has implemented the solution. The solution can be confirmed
through Department of Energy, the Companies and Intellectual Property
Commission.
5.3.4 Is the Answer Transferable?
It is the author‘s contention that the rigor in the research for this paper makes it
possible to transfer the key findings to similar work contexts. Wherever there are
two or more parties interested in implementation the solution, it is possible that it
can be replicated. The big determinant of success, however, is trust. Both
partners need to have trust in each other.
5.4 Ethical Considerations
The approach by Velasquez was used for this position paper, which is a
method which can be used to systematically evaluate the ethical merits of
an answer, decision or action according to the principles of utility, rights,
justice and caring. The following table reflects the evaluation of the merits
of the proposed answer according to these principles on the different
stakeholder identified.
Table 5.4: Velasquez, Ethical Considerations
Key
Stakeholders
Utilitarianism
(Does the action,
as far as possible,
maximise social
benefits and
minimise social
injuries)
Rights & Duties
(Is the action
consistent with
the moral rights
of those whom it
will affect?)
Justice
(Will the action
lead to a just
distribution and
burdens)
Caring
Does the action
exhibit
appropriate care
for the well being
of those who are
closely related to
or dependent on
oneself)
White Dealers Assisted buy-out
would not assist
white dealers
directly, but it
would change
perceptions
positively.
The action will
not compromise
the rights of
white dealers.
Their rights will
be protected as
they are the
ones offering the
The benefits of
this solution and
the goodwill
coming out of it
will be shared by
all white dealers.
The dealers that
make the offer
The solution takes
care of the white
dealers because it
takes their views
into account.
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assistance.
Those who are
not willing to
part of this
solution will not
be forced.
will get extra
mileage for their
assistant to BEE.
Black Dealers Black dealer would
be the main
beneficiaries of the
solution without
any social harm to
any one else
The rights of
black dealers
will not be
violated anyway.
This assistance
will be offered
only those who
want it. Those
who either don‘t
approve of the
solution or don‘t
like it in any way
will have the
freedom to stay
away.
African female
dealers in
particular will
stand to benefit
more than
people. This is
because they are
currently the
most
underrepresented
. Justice will be
done in the sense
it will bring them
on par with
everyone else
The solution should
result in better
financial position
for black dealers.
Financial
Institutions
This solution would
reduce loans
applications to the
banks, thereby
reducing their risk,
but also
opportunities to
make profits
The financial
institutions will
not be affected.
The choice of
financial
institution is left
up to the
individual.
Little or no effect
yet
Engen This solution works
for Engen because
it will increase the
number of sites
under BEE control
The company
will have the
right to approve
of the plan or
disapprove of it.
Engen will benefit
as the BEE
targets will be
met.
Little or no effect
yet
Government This solution will
be liked by the
government
because it
improves Black
representation.
The government
can give
feedback
anytime it wants
The government
stands to benefit
because its BEE
legislation is
being
implemented
Little or no effect
yet
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5.5 Conclusion
The concern identified for the purpose of this paper was the poor representation
of Black entrepreneurs in the petroleum retail sector, with particular reference to
service station operations. The key question that this paper attempted to answer
was: How can access to Black entrants into the Petroleum Retail sector be
increased, while at the same time ensuring those Black entrepreneurs
already in the system survive? This question was the research problem.
Grounded theory, critical realism, SSM, SAST and CSH as methodologies were
use to attempt to establish ontological premise for explaining the problem
observed as in manifests in the empirical domain.
Assisted buy-outs and practical learning interventions were presented as the
solutions. Assisted buy-outs will provide relative ease of access to financial
resources as lending institutions are more likely to fund a business in which one
of the partners has a history with the financial institution and has a proven
managerial track-record of running a successful business. The experience and
history engenders trust in the venture. This is called knowledge-based trust
(KBT).
Learning intervention should be to provide entrants with practical experiential
training, as opposed to a classroom based or even traditional seminar
experience.
The solutions presented have been shown to have been relevant, usefulness
established, and valid for the concern. Validity was established by considering
whether the answer was dependable, credible, confirmable, and transferable.
Lastly, the using Velasquez‘s typology of evaluating ethical considerations, the
answers were shown to have been of good ethical standing.
Finally, the solutions provided in this paper represent just two of the ways BEE
could be improved. It cannot be argued that Black people, who have their own
access to finance, and possess experience, cannot succeed without these
solutions. But such people are few and far between.
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APPENDIX A: EXTRACT FROM LFC AUDIT
5.9.RETAILING
Charter Objective: Create fair opportunity for entry to the retail
network and commercial sectors by HDSA
companies.
LFC compliance status LFC Sub-Element Compliance
Element Charter Sub-Element Scoring Principles Company ABC
Retailing Fair opportunities for entry
to the retail network
Analysis of BEE Ownership
percentage
L
Fair opportunities for entry to the
retail network
Equitable retail opportunities to
HDSAs
L
Compliance status Y
Total Sites and Volumes Sites Volumes
African Dealer 65 140427570
African Company 141 357639108
African Total 206 498066678
African % 15% 18%
Coloured Dealer 13 34494200
Coloured Company 16 55751359
Coloured Total 29 90245559
Coloured % 2% 3%
Indian Dealer 127 284529249
Indian Company 150 413014521
Indian Total 277 697543770
Indian % 21% 25%
Black, coloured Indian Dealer 205 459451019
Black, Coloured, Indian
Company
307 826404988
Total Black, coloured Indian
sites
512 1285856007
Total Black, Coloured, Indian
sites %
38.12% 46.75%
White Dealer 525 921524351
White Company 306 543174743
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White Total 831 1464699094
White % 62% 53%
Total Dealer 730 1380975370
Total Company 613 1369579731
Total Sites and Volumes 1343 270555101
5.9.4. Key Retailing observations
The company has strategies and policies for recruitment and appointment of franchisees
and specific policies to increase HDSA participation. Dealers’ panels include companies’
BEE / Diversity Managers.
Company uses a point system with more points awarded for African applicants.
The following supplier development initiatives are in place:
Mostly theoretical training is offered by the company to the retailers.
No aftercare and advice on critical success factors.
Most of the training is generic. No HDSA focused retail programs.
Challenges of HDSA Retailers
Premises are dilapidated and although dealer paying an operating lease to
Company ABC as the site is owned by a third party, they are expected to
renovate and maintain the site from own pocket.
Retailer tend to be left to their own devices, company ABC’s concerns are more
about guarding their own interests.
Branding and signage was not upgraded and also the problem of the dealer.
Township site rampant with robbery, had submitted a request, as an old and
loyal retailer, to be moved to a new site once a site became available but has not
been considered. Has had to invest a lot of money into security systems thus
impacting on own revenue and cash flow as there has not been any assistance
from company ABC.
Retention of staff and the management of cash flow are everyday challenges
retailers are faced with
Management of own supply (delivery) from company ABC.
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Sampled retailers felt there were no real advantages to advance and benefit
BEE’s
No training incentives.
Company ABC is not quite transformed as BEE initiatives are not working
including recruitment of dealers and the NEF financing initiative as application
process to be offered replacement capital took too long and it takes very long to
structure the NEF deal (interviewee had an investment analyst background). This
might result in HDSA’s resorting to commercial banks.
Nature of deals is that seller gives buyer 60days offer to purchase, hence only
have that long to come up with necessary finance.
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APPENDIX B: An example of an Oilco advertising to attract Black Entrepreneurs
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ANNEXURE C: Copy of Retail Licence
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APPENDIX D: RESEARCH PROCESS
Level 1 Coding
Review
of
current
system
Passing
of skills
Empow
er more
people
Empower
ment
Partnershi
ps
Finance Inclusivi
ty
Survival
of
entrants
Reflect
demograp
hics
51% is
a deal
breaker
Develop
ment
plan
Ss staff
need to
be part
of
empowe
rment
Empower
ment
cannot
happen
overnight
Blacks must
partner with
blacks
Finance is
difficult
Cannot
empower
only the
ones that
have
money
Business
survival
Change
must
reflect the
poor
Smaller
% first
Mentorsh
ip
Identify
certain
staff
member
s for
empowe
rment
Black
empower
ment must
not mean
white
disempow
erment
Blacks must
partner with
white
dealers
Finance is
easier
when more
people are
involved
Whites
want to
be part of
the
process
All new
sites must
be given
to blacks
Blacks
must get
priority
Self
funding
Master
licence to
train
others
You can
trust
people
who
have
worked
with you
for
years
People
with
money
only will
fail
Use the
current
incumbent
There‘s
security to
get finance
What
about the
future of
white
children?
Need a
phased
approach
There are
few African
dealers
Prove
your
worth
‗I need to
pass my
16 years
of
experien
ce‘
I want
my best
people
to also
benefit
It takes
years to
learn
about the
industry
If you are
alone, your
chance of
survival is
limited
It‘s about
who you
know in
governmen
t agencies
Nobody
wants my
help
Too many
new
entrants
fail
Indians get
sites
because
they have
money
Can‘t
give
your
baby
away
The
governmen
t
institutions
are worse
than banks
Increme
ntal
growth
Finance is
big
problem
Change
must be
increme
ntal
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Very
few
success
ful BEE
Only
makes
few
guys
rich
Emergence of the core variables
Form the research undertaking, the following core variables emerged from the
grounded theory methodology:
Review of current system
Passing of skills
Empowerment over time
Mechanisms for partnerships
Access to finance
Inclusivity of the process
Survival of the new entrant
Reflective of demographics
Concern Behaviour Over Time
The concern of this paper is the poor representation of Black entrepreneurs in the
petroleum industry, with particular reference to service station operations.
CCLD
The variables that emerged out of the data were used to construct an explanatory
theory (CCLD) for the phenomenon represented by the concern related to BEE in the
petroleum industry and Engen.
The core variables above were incorporated into the Wicked Problem Archetype (see
Appendix E) to form the following CCLD.
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Question:
The questions that asked were:
What can be done to increase the no. of sites owned of BEE beneficiaries?
What models are available to increase BEE representations while at the same
time addressing white fears?
How can BEE be achieved under conditions of competing agendas?
Can banks do more what they have done up to know?
Can companies spend their own money to fund BEE?
Boundary process of the system of focus
To prevent the creation of limited boundaries to the process, CSH was undertaken,
which resulted in the following table (in the ‗is‘ mode).
Question Answer
Who is the actual client of S's design, i.e. who belongs to the group
of those whose purposes (interests and values) are served, in
Black and White
service station owners;
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distinction to those who do not benefit but may have to bear the
costs or other disadvantages?
What is the actual purpose of S's design, as being measured not in
terms of declared intentions of the involved but in terms of the
actual consequences?
More service station
owned by Black people
What, judged by the design's consequences, is it‘s built in measure
of success? Increased % of sites
given to BEE players
Who is actually the decision taker, i.e. who can actually change the
measure of success?
Banks, White Dealers,
Engen
What conditions of successful planning and implementation of S are
really controlled by the decision taker?
Finance; Mentorship;
Partnerships; Strategic
Framework
What conditions are not controlled by the decision taker, i.e. what
represents "environment" to him?
Price; Interested Buyer;
Government
Regulations;
Who is actually involved as planner? Government, Engen
Who is involved as "expert", of what kind is his expertise, what role
does he actually play?
Engen staff; banks;
current service station
owners
Where do the involved see the guarantee that their planning will be
successful? (E.g. In the theoretical competence of experts? In
consensus among experts? In the validity of empirical data? In the
relevance of mathematical models or computer simulations?
In political support on the part of interest-groups? In the experience
and intuition of the involved? Etc.) Can these assumed guarantors
secure the design's success, or are they false guarantors?
In replication of what is
currently practiced
within the White service
station owner
community
Who among the involved witnesses represents the concerns of the
affected? Who is or may be affected without being involved?
Staff of service stations
Are the affected given an opportunity to emancipate themselves
from the experts and to take their fate into their own hands, or do
the experts determine what is right for them, what quality of life
means to them, etc? That is to say, are the affected used merely as
means for the purposes of others, or are they also treated as "ends
in themselves" (Kant), as belonging to the client?
The staff of service
stations are affected
but directly represented
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What world view is actually underlying the design of S? Is it the
world view of (some of) the involved or of (some of) the affected? It is the world view of
some of those involved
and affected
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APPENDIX E: SAST of the system in focus – BEE)
Stakeholder
s
White Dealers Black Dealers Financial
Institutions
Engen Government
Goal Increase number of Black owned service stations
Strategy sell sites at
premium
retail
ownership
partnership
s
inherit sites
family
businesses
buy sites
high gearing
look for
companies to
assist
look for
government
to assist
Provide
loans to
qualifying
applicants
Make
returns for
shareholder
s
Assist to
source
finance
Empower
new dealers
Give priority
to BEE
applicants
Provide enabling
legislation
Put pressure on
oil companies
Threat to
withdraw
operating
licences
Assumptio
ns
No change
in legislation
Demand for
service
stations
Need cheap
finance
Companies
must pay
White
dealers can
be forced to
ask for
lower prices
No will
power for
change
Demand
for loans
Economic
stability
Business
as usual
Not a bank
Assisting
already
Need
experience
Companies will
be scared to
action
Companies must
pay
It is up to oil
companies to
speed it up
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APPENDIX F: Soft Systems Methodology
CATWOE of Stakeholders
White
Dealers
Black Dealers Financial
Institutions
Engen Government
C - Customer Motorists;
companies;
pedestrians,
Motorists,
companies;
pedestrians
Dealers,
shareholders
Dealers,
landlords,
Voters, site
owners, site
applicants
A - Actor Dealers,
managers;
workers
Black dealers Managers;
loan
originators
National
Sales
Manager;
Retail
Business
Manager;
General
Manager
Minister of
Energy;
Registrar in the
dept of energy;
regional
directors
T -
Transformation
Sell fuel,
food,
convenience
items
Sell fuel, food,
convenience
items
Provide bank
loans
Build service
stations;
Deliver fuel to
service
station;
Policy
development;
approval of
retail site and
licences
W – World view Livelihood,
profit
Livelihood,
profit
Return on
investment
Profits,
transformation
Transformation,
social justice
O – Owner Banks,
dealers,
Engen,
Government
Banks,
dealers,
Engen,
Government
Shareholders,
government
Shareholders,
government
Voters,
Minister,
President
E -
Environment
BEE
legislation
and,
pressure for
change
Bank lending
rates;
Franchise
Model of
Unencumbered
contribution
World sub-
prime crisis;
stability of
financial
markets
BEE
legislation,
targets;
government
relations
Legitimacy,
public support;
Constitution
and Law
Root Definition
White
Dealers
Black
Dealers
Financial
Institutions
Engen Government
Root Definition The white Black They view The BEE is too slow
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86
dealers view
BEE as
reverse
discrimination
dealers
view BEE
as a way of
redress
from past
injustices
BEE as an
opportunity to
score points
for enterprise
development
company
views BEE
as any
other
government
law that
must be
complied
with
and needs to
be speeded up
so show the
Black
electorate that
they are
serious about
transformation
and are doing
what they can
to fast tract
empowerment.
Ideal system White dealers
groom people
over a long
period to
eventually
buy the site
All new
sites, and
sites for
sale be
given to
Black
applicants
Someone
needs to
guarantee
the loans
given to
people who
are not
meeting the
stringent risk
takings
Current
dealers
charge a
fair price
when they
sell
Majority of
applicants for
sites on sale
and new sites
be Black
The real world Grooming
doesn‘t really
happen
Blacks
often don‘t
have
money to
buy sites
No one is
willing to take
the risk if the
banks aren‘t
willing to do
so
There is a
willing
buyer-
willing
seller
principle
where the
dealer can
ask
whatever
he/she
wants
Black
applicants don‘t
have finance
and sites go on
sale for a long
time, and so
the law doesn‘t
prevent sale to
white
applicants
Somewhat
acceptable
Willing to
help is
applicants
are also
willing to start
small –
Anyone
solution
that lowers
barrier is
good
Some
creative
solutions are
possible
Slow
progress
that will
accelerate
later is
worth
Industry needs
to come with
the solutions
anyway
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87
assisted buy-
out
considering
The answer:
The method of lowering the barriers is attractive to all parties. The lowering of the
barriers involves someone buying into a white dealer‘s site, but coming in as a small
partner, and buys him/her into the site over a 5 year period, at the same time buying
out his white partner. In summary this solution is regarded as assisted buy-out.
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88
Ethical considerations
Key
Stakeholders
Utilitarianism
(Does the action,
as far as possible,
maximise social
benefits and
minimise social
injuries)
Rights & Duties
(Is the action
consistent with
the moral rights
of those whom it
will affect?)
Justice
(Will the action
lead to a just
distribution and
burdens)
Caring
Does the action
exhibit appropriate
care for the well
being of those who
are closely related
to or dependent on
oneself)
White Dealers Assisted buy-out
would not assist
white dealers
directly, but it
would change
perceptions
positively.
The action will
not compromise
the rights of
white dealers.
Their rights will
be protected as
they are the
ones offering the
assistance.
Those who are
not willing to
part of this
solution will not
be forced.
The benefits of
this solution and
the goodwill
coming out of it
will be shared by
all white dealers.
The dealers that
make the offer
will get extra
mileage for their
assistant to BEE.
The solution takes
care of the white
farmers because it
takes their views
into account.
Black Dealers Black dealer would
be the main
beneficiaries of the
solution without
any social harm to
any one else
The rights of
black dealers
will not be
violated anyway.
This assistance
will be offered
only those who
want it. Those
who either don‘t
approve of the
solution or don‘t
like it in any way
will have the
freedom to stay
away.
African female
dealers in
particular will
stand to benefit
more than
people. This is
because they are
currently the
most
underrepresented
. Justice will be
done in the sense
it will bring them
on par with
everyone else
The solution should
result in better
financial position
for black dealers.
Financial This solution would The financial The choice of Little or no effect
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89
Institutions reduce loans
applications to the
banks, thereby
reducing their risk,
but also
opportunities to
make profits
institutions will
not be affected.
financial
institution is left
up to the
individual.
yet
Engen This solution works
for Engen because
it will increase the
number of sites
under BEE control
The company
will have the
right to approve
of the plan or
disapprove of it.
Engen will benefit
as the BEE
targets will be
met.
Little or no effect
yet
Government This solution will
be liked by the
government
because it
improves Black
representation.
The government
can give
feedback
anytime it wants
The government
stands to benefit
because its BEE
legislation is
being
implemented
Little or no effect
yet
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APPENDIX G – RESEARCH PROCESS
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91
APPENDIX H – Wicked Problem Archetype
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92
APPENDIX I: Interview Log
No. Interviewee Function Date Recorded Duration Location
19. Bruce Poole Service station owner
16/05/2011 Yes 30min Restaurant
1. Nobesuthu Tom
Ex employee
18/06/2011 Yes 45min Interview’s home
2. Chris Opperman
Service station owner
21/06/2011 Yes 60min Settlers Way
3. Masomelele Phantswa
Operator station owner
22/06/2011 Yes 29min East London Golf Club
4. Kendal Landman
Service station owner
22/06/2011 Yes 37min East London Golf Club
5. Malcolm Abrahams
Service station owner
26/07/2011 Yes 45min Golf Park
6. Songezo Nayo
Service station owner
27/07/2011 no 20 minutes Interview’s home
7. Sango Velleman
Ex employee
30/07/2011 no 25min Interview’s home
8. Vukile Zondani
Employee 10/08/2011 Yes 60min Thibault Square
9. Chris Cronje Employee 10/08/2011 Yes 30min Golf Park 10. Batshobonke
Sipuka Service station owner
15/08/2011 no 75min Telephonic interview
11. Lennox Hlangani
Service station owner
16/08/2011 Yes 100min KwaMagxaki
12. Gerrit Meyer Service station owner
16/08/201 Yes 90min Penford
13. Arafaat Ismail
Employee 23/08/2011 Yes 30min Golf Park
14. Pierr Roodt Employee 23/08/2011 Yes 30min Thibault Square
15. Portia Mpofu Employee 23/08/2011 Yes 30min Golf Park 16. Kenneth
Mafatle Employee 23/08/2011 Yes 20min Telephonic
interview 17. Refilwe
Mokoto Employee 25/10/2011 Yes 65min Blair Athol
18. Eben Espach Service station owner
06/02/2012 Yes 120min Golf Park
20. Graeme Rushmere
Legal consultant
06/02/2012 Yes 120min Golf Park
