(a)

Ways in which GPL’s concern for environmental and safety policy can impact on its performance.

• Understanding and managing environmental costs. Environmental costs are often hidden in overheads and environmental and energy costs are often not allocated to the relevant budgets.
• Minimize accidents and long-term environmental effects. Accidents and long-term environmental effects can result in large financial liabilities.
• Companies with poor environmental performance may face increased cost of capital because investors and lenders demand a higher risk premium.
• Environmental protection and ethical labor practices is now a key aspect of corporate social responsibility. Any steps they can take to protect the environment and its employee’s safety are considered both good for the company’s reputation and society as a whole.                                                                                                                                                                                                                                                                                                                                                                                                                                  (b)

  The relevance of mission statements to strategic management

  Aron Yebson’s recent exposure to mission statements as part of the strategic management process provides a useful opportunity to evaluate their relevance and value to a small company such as Gusco Perry. In some ways, Aron is a “walking mission statement”. He epitomizes the values, behavior, strategy and purpose of why Gusco Perry exists. Mission statements in defining the reasons why the firm exists, what it aims to achieve, how it aims to achieve its purpose and who it is in business for, can act as a powerful motivating force for the company. In strategic terms it may clarify the markets that the firm intends to serve, the products and services provided for those markets and the way they will be reached. In so doing it may define the boundaries of the organization chosen by the top management.

  It may also specify the technologies to be used (perhaps important for Gusco Perry and the competencies it will use to compete in its chosen markets. It is therefore a combination of “hard” tangible drivers of the business and the “softer” values and behaviors, which will enable the mission of the business to be achieved.

  Ideally, it should have relevance and resonance with all types and levels of employees. It expresses values and beliefs and in so doing will shape and influence the policies and standards adopted by the firm. They can profoundly influence the attitudes and behavior of key stakeholder groups both inside and outside the firm and achieve a consistency of purpose for the stakeholders.

  By their very nature mission statements typically come at the beginning of the rational planning process and thereby facilitate consistent strategic decisions. However, some commentators have argued that you discover rather than invent your mission.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             (ci)

  Computation of ROI and RI for the current year of all Divisions
  Return on Investment
  The return on investment of a specific department within a company can be calculated by dividing the departmental operating profits by the capital employed by that department.

  Cruise	Ferry	Container	Bulk Shipping
  780/2,800 × 100	650/2,500 × 100	252/3,200 × 100	(30)/3,800 × 100
  27.86%	26%	7.88%	-0.79%

  Residual Income
  Residual income can be calculated by taking the difference between the company’s net income and its equity charge, where equity charge is the product of equity capital and the cost of capital.

  Cruise	Ferry	Container	Bulk Shipping
  GH¢000	GH¢000	GH¢000	GH¢000
  780 – 0.25(2,800)	650 – 0.25(2,500)	252 – 0.25(3,200)	(30) – 0.25(3,800)
  80	25	(548)	(980)

  (cii)

  Assessment of the Various Divisions
  Appendix: Summary of key ratios for the assessment of the divisions of Gusco Perry Limited

  Division	ROI (%)	RI (GH¢)	Turnover Growth* (%)	Growth in asset turnover+ (%)	Growth in profit^ (%)
  Cruise	27.86	80,000	16.46	15.80	47.73
  Ferries	26.00	25,000	06.55	06.67	35.42
  Container	07.88	-548,000	20.10	20.30	05.00
  Bulk Shipping	-0.79	-980,000	11.60	11.11	-66.70