Question Tag: Internal Factors

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MP – JUL 2020 – L2 – Q1 – Challenges and Strategies for Agya Savings and Loans Company

Case study on addressing performance challenges in a Ghanaian savings and loans company, including internal factors, strategies, managerial functions, and lessons for SMEs.

The Board of Directors has appointed you as a Chief Operating Officer of the Agya Savings and Loans Company Limited in April 2020. The Agya Savings and Loans Company Limited has seven (7) branches in the Greater Accra Region and employs sixty-five (65) staff serving over Two Million customers. Evidence shows that the Agya Savings and Loans Company Limited has experienced underlisted challenges between 2011 and 2019: • Net Profit after Tax per employee has reduced by 18%; • Market share has fallen by 12%; • Customer complaints rate has increased by 25%; • Employee absenteeism and lateness are rampant and alarming; and • Employee team spirit, motivation and morale are low.

As Chief Operating Officer of the company, strategies to address the challenges of Agya Savings and Loans Company Limited within three (3) years are welcome.

REQUIRED:

A. List and explain five (5) internal factors that have contributed to Agya Savings and Loans Company Limited level of performance in the banking industry?

B. Explain five (5) strategies that can be employed to improve performance level of Agya Savings and Loans Company Limited?

C. Explain five (5) managerial functions and roles required to enhance competitiveness of Agya Savings and Loans Company Limited?

D. Explain five (5) lessons that can be shared with promoters of Small and Medium-Scale Enterprises (SMEs) in Ghana?

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  • 20 Marks

MP – OCT 2022 – L2 – Q1 – Productivity Decline in Ghana Microfinance Company

Explain key productivity terms, identify internal factors for decline, suggest improvement strategies, and outline managerial functions for a microfinance company facing productivity issues.

At an Annual General Meeting of the Ghana Microfinance Company Limited held on 20th August, 2022, it emerged that her productivity growth rate, labour productivity and capital productivity have deteriorated over the last three years by 12%, 17% and 10% respectively. The shareholders resolved to motivate the Ghana Microfinance Company Limited to reverse the downward trend of the key productivity indicators in the next three years, 2022 to 2024. As Chief Operating Officer of the Ghana Microfinance Company Limited, it is incumbent to lead a discussion on productivity improvement strategies to address the challenges of Ghana Microfinance Company Limited within the three-year period.

REQUIRED:

a) In your own words, explain these terminologies: Productivity, Efficiency, Effectiveness, Added Value and Kaizen of Ghana Microfinance Company Limited? [10 Marks]

b) List and explain five (5) internal factors that might have contributed towards the reduction of productivity growth rate, labour productivity and capital productivity of Ghana Microfinance Company Limited over the period? [10 Marks]

c) Explain five (5) strategies that can be employed to improve productivity growth rate, labour productivity and capital productivity of Ghana Microfinance Company Limited? [10 Marks]

d) Explain five (5) managerial functions and roles required to enhance productivity growth rate, labour productivity and capital productivity of Ghana Microfinance Company Limited? [10 Marks]

[Total: 40 Marks]

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  • 20 Marks

MP – APR 2023 – L2 – Q1 – Performance Challenges at Agyapa Finance PLC

Analyze internal factors contributing to performance decline, propose strategies for improvement, explain managerial functions/roles, and strategies to reduce customer attrition in a Ghanaian finance company.

The Board of Directors has hired you as a Human Capital Manager of the Agyapa Finance PLC. Takoradi on $5^{\text}$ January 2022. Seven months after assumption of duty, you were informed by the Managing Director of the underlisted challenges faced by the Agyapa Finance PLC between 2019 and 2021:

  • Interest income has reduced by $12 %$;
  • Net Profit after Tax per employee has reduced by $25 %$;
  • Market share has fallen by $20 %$;
  • Customer attrition rate has increased by $5 %$;
  • Employee turnover rate among supervisors is rampant and alarming; and
  • Employee indiscipline is highly characterized by lateness, absenteeism and pretend sickness syndrome.

REQUIRED:

A. State and explain five (5) internal factors that might have contributed towards the current level of performance of Agyapa Finance PLC? [10 Marks]

B. Explain five (5) strategies aimed to improve performance level of Agyapa Finance PLC? [10 Marks]

C. Explain five (5) managerial functions and roles required to enhance the bottom line and productivity of Agyapa Finance PLC? [10 Marks] D. Explain five (5) strategies that management of Agyapa Finance PLC can deploy to reduce the customer attrition rate in Takoradi? [10 Marks]

[Total Marks: 40]

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  • 10 Marks

SCS – July 2023 – L3 – Q3a – Strategy Implementation

Identify and explain five internal triggers of change at SavvyTech plc with examples from the case study.

Change happens continually within organisations, and the markets within which SavvyTech plc operate are not an exception. Strategic development inevitably results in some changes, which need careful management. Some of SavvyTech plc’s internal triggers of change are motivated or caused by developments within the organisation.

Required:
Review SavvyTech plc case study, identify, and explain FIVE (5) internal triggers of change with specific examples from the case.

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  • 10 Marks

AFM – May 2017 – L3 – Q5b – Treasury and Advanced Risk Management Techniques

Explanation of internal and external factors influencing transfer pricing decisions for multinational companies like Kofas Ltd.

One of the key considerations for multinational companies is to decide on the price at which goods and services are transferred from one member of a group to another.

Kofas Ltd has been operating in four countries: Ghana, Nigeria, UK, and USA. The parent company and the subsidiaries have decided to use a transfer pricing policy.

Required:
You have been approached as a consultant to advise on the internal and external factors that will facilitate the transfer of goods and services from one member of the group to another. (10 marks)

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  • 20 Marks

AFM – Nov 2015 – L3 – Q4 – The use of financial derivatives to hedge against interest rate risk

Assess the advantages and disadvantages of interest rate swaps and recommend a hedging strategy. Also, explain internal factors for transfer pricing.

JB Investments Holding Ltd (JB) is a multinational company that is committed to a policy of expansion into African countries. JB finances foreign projects with loans obtained in the currency in which project cash flows are received. JB financed an operation in Liberia with a syndicated loan of $20 million. Currently, the loan has three years to maturity. The loan requires semiannual interest payments at a fixed rate of 6.5% per annum, but JB prefers a floating interest rate as the pattern of cash flows from the Liberian project has changed.

The Finance Director talked to the creditors about JB’s preference for a floating interest rate. The creditors have agreed to accept a floating rate of LIBOR plus 200 basis points over the remaining three years of the loan term. However, the Finance Director feels that this rate is rather too high considering JB’s credit rating. She is therefore considering two alternatives for managing the interest rate risk exposure.

Alternative 1: Coupon swap with a bank
Engage in a coupon swap with UT Bank through which JB trades-in its fixed rate interest payments obligation for floating rate interest payments. The table below presents UT Bank’s bid and ask quotes for fixed dollar coupon rates:

Loan term to maturity Bid Ask Treasury note (TN) rate
2 years 2-year TN rate + 30 basis points 2-year TN rate + 40 basis points 5.3%
3 years 3-year TN rate + 35 basis points 3-year TN rate + 50 basis points 5.9%
4 years 4-year TN rate + 40 basis points 4-year TN rate + 60 basis points 6.7%
5 years 5-year TN rate + 45 basis points 5-year TN rate + 70 basis points 7.8%

Floating rate quotation: Floating rates are pegged at 6-month dollar LIBOR plus 100 basis points.

Alternative 2: Coupon swap with another multinational company
Engage in a coupon swap with McEwen Ltd, a multinational company that has a floating rate dollar debt but prefers fixed coupon payments. The interest rate on McEwen’s dollar debt is LIBOR plus 150 basis points but it can borrow fixed rate dollars at 8%. Assume JB can borrow floating rate dollars at LIBOR plus 200 basis points.

Required:
(a)
i) Discuss TWO (2) advantages and TWO (2) disadvantages of hedging interest rate risk with an interest rate swap. (4 marks)
ii) Based on the restructuring deal with the creditors and the two interest rate swap alternatives, recommend a hedging strategy for interest payments on the $20 million debt. Support your recommendation with relevant computations. (10 marks)

(b) The Board of Directors of JB Investments Holdings Ltd is considering a transfer pricing policy for the transfer of goods and services among the company and its foreign subsidiaries.
Required:
Explain THREE (3) internal factors (motivations) for transfer pricing, which the board should consider in formulating a transfer pricing policy for the company. (6 marks)
(Total = 20 marks)

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  • 20 Marks

MP – JUL 2020 – L2 – Q1 – Challenges and Strategies for Agya Savings and Loans Company

Case study on addressing performance challenges in a Ghanaian savings and loans company, including internal factors, strategies, managerial functions, and lessons for SMEs.

The Board of Directors has appointed you as a Chief Operating Officer of the Agya Savings and Loans Company Limited in April 2020. The Agya Savings and Loans Company Limited has seven (7) branches in the Greater Accra Region and employs sixty-five (65) staff serving over Two Million customers. Evidence shows that the Agya Savings and Loans Company Limited has experienced underlisted challenges between 2011 and 2019: • Net Profit after Tax per employee has reduced by 18%; • Market share has fallen by 12%; • Customer complaints rate has increased by 25%; • Employee absenteeism and lateness are rampant and alarming; and • Employee team spirit, motivation and morale are low.

As Chief Operating Officer of the company, strategies to address the challenges of Agya Savings and Loans Company Limited within three (3) years are welcome.

REQUIRED:

A. List and explain five (5) internal factors that have contributed to Agya Savings and Loans Company Limited level of performance in the banking industry?

B. Explain five (5) strategies that can be employed to improve performance level of Agya Savings and Loans Company Limited?

C. Explain five (5) managerial functions and roles required to enhance competitiveness of Agya Savings and Loans Company Limited?

D. Explain five (5) lessons that can be shared with promoters of Small and Medium-Scale Enterprises (SMEs) in Ghana?

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  • 20 Marks

MP – OCT 2022 – L2 – Q1 – Productivity Decline in Ghana Microfinance Company

Explain key productivity terms, identify internal factors for decline, suggest improvement strategies, and outline managerial functions for a microfinance company facing productivity issues.

At an Annual General Meeting of the Ghana Microfinance Company Limited held on 20th August, 2022, it emerged that her productivity growth rate, labour productivity and capital productivity have deteriorated over the last three years by 12%, 17% and 10% respectively. The shareholders resolved to motivate the Ghana Microfinance Company Limited to reverse the downward trend of the key productivity indicators in the next three years, 2022 to 2024. As Chief Operating Officer of the Ghana Microfinance Company Limited, it is incumbent to lead a discussion on productivity improvement strategies to address the challenges of Ghana Microfinance Company Limited within the three-year period.

REQUIRED:

a) In your own words, explain these terminologies: Productivity, Efficiency, Effectiveness, Added Value and Kaizen of Ghana Microfinance Company Limited? [10 Marks]

b) List and explain five (5) internal factors that might have contributed towards the reduction of productivity growth rate, labour productivity and capital productivity of Ghana Microfinance Company Limited over the period? [10 Marks]

c) Explain five (5) strategies that can be employed to improve productivity growth rate, labour productivity and capital productivity of Ghana Microfinance Company Limited? [10 Marks]

d) Explain five (5) managerial functions and roles required to enhance productivity growth rate, labour productivity and capital productivity of Ghana Microfinance Company Limited? [10 Marks]

[Total: 40 Marks]

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  • 20 Marks

MP – APR 2023 – L2 – Q1 – Performance Challenges at Agyapa Finance PLC

Analyze internal factors contributing to performance decline, propose strategies for improvement, explain managerial functions/roles, and strategies to reduce customer attrition in a Ghanaian finance company.

The Board of Directors has hired you as a Human Capital Manager of the Agyapa Finance PLC. Takoradi on $5^{\text}$ January 2022. Seven months after assumption of duty, you were informed by the Managing Director of the underlisted challenges faced by the Agyapa Finance PLC between 2019 and 2021:

  • Interest income has reduced by $12 %$;
  • Net Profit after Tax per employee has reduced by $25 %$;
  • Market share has fallen by $20 %$;
  • Customer attrition rate has increased by $5 %$;
  • Employee turnover rate among supervisors is rampant and alarming; and
  • Employee indiscipline is highly characterized by lateness, absenteeism and pretend sickness syndrome.

REQUIRED:

A. State and explain five (5) internal factors that might have contributed towards the current level of performance of Agyapa Finance PLC? [10 Marks]

B. Explain five (5) strategies aimed to improve performance level of Agyapa Finance PLC? [10 Marks]

C. Explain five (5) managerial functions and roles required to enhance the bottom line and productivity of Agyapa Finance PLC? [10 Marks] D. Explain five (5) strategies that management of Agyapa Finance PLC can deploy to reduce the customer attrition rate in Takoradi? [10 Marks]

[Total Marks: 40]

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  • 10 Marks

SCS – July 2023 – L3 – Q3a – Strategy Implementation

Identify and explain five internal triggers of change at SavvyTech plc with examples from the case study.

Change happens continually within organisations, and the markets within which SavvyTech plc operate are not an exception. Strategic development inevitably results in some changes, which need careful management. Some of SavvyTech plc’s internal triggers of change are motivated or caused by developments within the organisation.

Required:
Review SavvyTech plc case study, identify, and explain FIVE (5) internal triggers of change with specific examples from the case.

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  • 10 Marks

AFM – May 2017 – L3 – Q5b – Treasury and Advanced Risk Management Techniques

Explanation of internal and external factors influencing transfer pricing decisions for multinational companies like Kofas Ltd.

One of the key considerations for multinational companies is to decide on the price at which goods and services are transferred from one member of a group to another.

Kofas Ltd has been operating in four countries: Ghana, Nigeria, UK, and USA. The parent company and the subsidiaries have decided to use a transfer pricing policy.

Required:
You have been approached as a consultant to advise on the internal and external factors that will facilitate the transfer of goods and services from one member of the group to another. (10 marks)

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  • 20 Marks

AFM – Nov 2015 – L3 – Q4 – The use of financial derivatives to hedge against interest rate risk

Assess the advantages and disadvantages of interest rate swaps and recommend a hedging strategy. Also, explain internal factors for transfer pricing.

JB Investments Holding Ltd (JB) is a multinational company that is committed to a policy of expansion into African countries. JB finances foreign projects with loans obtained in the currency in which project cash flows are received. JB financed an operation in Liberia with a syndicated loan of $20 million. Currently, the loan has three years to maturity. The loan requires semiannual interest payments at a fixed rate of 6.5% per annum, but JB prefers a floating interest rate as the pattern of cash flows from the Liberian project has changed.

The Finance Director talked to the creditors about JB’s preference for a floating interest rate. The creditors have agreed to accept a floating rate of LIBOR plus 200 basis points over the remaining three years of the loan term. However, the Finance Director feels that this rate is rather too high considering JB’s credit rating. She is therefore considering two alternatives for managing the interest rate risk exposure.

Alternative 1: Coupon swap with a bank
Engage in a coupon swap with UT Bank through which JB trades-in its fixed rate interest payments obligation for floating rate interest payments. The table below presents UT Bank’s bid and ask quotes for fixed dollar coupon rates:

Loan term to maturity Bid Ask Treasury note (TN) rate
2 years 2-year TN rate + 30 basis points 2-year TN rate + 40 basis points 5.3%
3 years 3-year TN rate + 35 basis points 3-year TN rate + 50 basis points 5.9%
4 years 4-year TN rate + 40 basis points 4-year TN rate + 60 basis points 6.7%
5 years 5-year TN rate + 45 basis points 5-year TN rate + 70 basis points 7.8%

Floating rate quotation: Floating rates are pegged at 6-month dollar LIBOR plus 100 basis points.

Alternative 2: Coupon swap with another multinational company
Engage in a coupon swap with McEwen Ltd, a multinational company that has a floating rate dollar debt but prefers fixed coupon payments. The interest rate on McEwen’s dollar debt is LIBOR plus 150 basis points but it can borrow fixed rate dollars at 8%. Assume JB can borrow floating rate dollars at LIBOR plus 200 basis points.

Required:
(a)
i) Discuss TWO (2) advantages and TWO (2) disadvantages of hedging interest rate risk with an interest rate swap. (4 marks)
ii) Based on the restructuring deal with the creditors and the two interest rate swap alternatives, recommend a hedging strategy for interest payments on the $20 million debt. Support your recommendation with relevant computations. (10 marks)

(b) The Board of Directors of JB Investments Holdings Ltd is considering a transfer pricing policy for the transfer of goods and services among the company and its foreign subsidiaries.
Required:
Explain THREE (3) internal factors (motivations) for transfer pricing, which the board should consider in formulating a transfer pricing policy for the company. (6 marks)
(Total = 20 marks)

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