Subject: STRATEGIC CASE STUDY

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SCS – Nov 2024 – L3 – Q5c – Board Independence and Accountability in Corporate Governance

Evaluation of how the governance structure at BOGML affects board independence and accountability.

Question

There are a number of concepts of good corporate governance that every entity, including BOGML, must strive to adhere to.

Required:
Provide an evaluation of how the existing corporate governance structure at BOGML may undermine or compromise the following key concepts of good corporate governance, with particular reference to the current composition and organisation of the board.

i) Independence
ii) Responsibility and accountability

Answer

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Tags: Accountability, Board Independence, Corporate Governance, Ethics, Governance Framework, Leadership, Responsibility
Level: Level 3

Topic: Corporate Governance
Series: Nov 2024

SCS – Nov 2024 – L3 – Q5b – Board Responsibilities in Corporate Governance

Evaluate the role of the board in corporate governance, focusing on responsibilities for strategy, oversight, and ethical leadership.

Question

The role of the board of directors is critical in corporate governance. The National Corporate Governance Code for Ghana (the National Code) issued in November 2022 outlines the board’s core responsibilities.

Required:

Advise the board of BOGML on the FIVE key responsibilities of the board of directors as outlined in the National Code.

Answer

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Tags: Board Responsibilities, Corporate Governance, Ethics, Internal Controls, Risk Management, Strategic leadership
Level: Level 3

Topic: Professional practice and codes of ethics
Series: Nov 2024

SCS – Nov 2024 – L3 – Q5b – Board Responsibilities in Corporate Governance

Identify and explain the five governance pillars in the National Corporate Governance Code for Ghana 2022.

Question

It is evident that all is not well with the current corporate governance at BOGML. However, for the company to achieve sustainable growth and remain competitive, it must adhere to sound corporate governance principles.

Required:

Using the FIVE governance pillars identified in the National Corporate Governance Code for Ghana 2022 (the National Code), issued in November 2022 by the Institute of Directors-Ghana, advise the company on how to improve upon its current governance structure.

Answer

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Tags: Corporate Governance, Ethics, Internal Controls, Leadership, Risk Management, Social responsibility, Stakeholders, Transparency
Level: Level 3

Topic: Ethics and social responsibility
Series: Nov 2024

SCS – Nov 2024 – L3 – Q4c – Forward Rate Agreement for Interest Rate Risk Management

Calculation of settlement amount for FRA under different Ghana Reference Rate (GRR) scenarios.

Question

The company has decided to use a Forward Rate Agreement (FRA) to manage its interest rate risk likely to arise from the short-term loan of GH¢15 million it intends to borrow in three months for a period of six months.

Required:

i) What is the purpose for a company to enter into an FRA arrangement? (2 marks)

ii) Calculate the amount of money that will be paid to settle the FRA at the beginning of the FRA period if, at the end of month 3, when the FRA becomes effective, the six-month Ghana Reference Rate (GRR) is as follows:

a) 37.50%
b) 28.50%

In each case, clearly state the party (i.e. FRA buyer or FRA seller) responsible for making the payment.

Answer

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Tags: Financial management, Forward Rate Agreement, Hedging, Interest Rate Risk, Risk Mitigation, Short-Term Borrowing
Level: Level 3

Topic: International financial management
Series: Nov 2024

SCS – Nov 2024 – L3 – Q4b – International Tax Considerations

Key tax issues for BOGML’s planned international expansion to minimize total group tax payable.

Question

The company is planning to expand its operations to Tanzania and South Africa in 2026. As a result, transactions between the head office in Ghana and the prospective foreign subsidiaries will likely take place, leading to potential international tax implications.

Required:

Briefly identify and explain TWO key issues to consider for the company to minimise total tax payable on the group profits.

Answer

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Tags: Foreign subsidiary, Global Expansion, International Taxation, Tax Planning, Tax Risk, Transfer Pricing
Level: Level 3

Topic: International financial management
Series: Nov 2024

SCS – Nov 2024 – L3 – Q4a – Capital Budgeting Framework

Explanation of the five key elements in the capital budgeting framework for investment appraisal.

Question

One of the Board members, Dr. Halimatu Sadia, has expressed concerns regarding Dr. Ayimadu Baffour’s consistent failure to conduct investment appraisals and capital budgeting when making long-term investment decisions.

Required:

Advise Dr. Ayimadu Baffour on the capital budgeting and strategic planning framework used for conducting investment appraisals by briefly outlining the FIVE key elements of the framework.

Answer

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Tags: Capital Budgeting, Decision Making, Financial management, Investment Appraisal, Strategic Planning
Level: Level 3

Topic: Investment Decisions
Series: Nov 2024

SCS – Nov 2024 – L3 – Q3a-b – SBUs and Growth Phases

Evaluate BOGML’s SBUs using Ashridge Matrix and analyse growth phases with Greiner’s Model.

Question

a) The company has presented information on the various products and services (i.e. the strategic business units (SBUs)) within the company’s portfolio.

Required:
Using Ashridge Portfolio Display Matrix and based on the performance of each SBU, clearly classify and explain the products and services under appropriate categories identified by the matrix. Support your answer with Ashridge Portfolio Display Matrix.

b) Since its inception, BOGML has grown organically and has gone through different stages of development in response to the challenges of growth and changes in both its internal and external environments. The company is currently under pressure to continue evolving.

Required:

i) Identify and describe the first two phases of growth applicable to BOGML based on Greiner’s Growth Model. In your explanation, include the type of crisis the company faced at each phase.

ii) The board has proposed appointing Regional Managers who will be responsible for the sales performance of the company’s filling and gas stations in their regions. If this proposal is implemented, it will move the company to the next phase in Greiner’s Growth Model. Identify and explain what this next phase is, and describe the potential crisis that may arise at this stage.

Answer

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Tags: Ashridge Portfolio, Business Portfolio, Delegation Phase, Greiner’s Growth Model, Growth Crisis, Leadership Crisis, Organizational Structure, Strategic Business Units
Level: Level 3

Topic: Methods of Development, Strategy implementation
Series: Nov 2024

SCS – Nov 2024 – L3 – Q2b – Integration/Responsiveness Matrix and Cost Reduction

Advising BOGML’s MD on the best international strategies under the IR Matrix to achieve cost reduction in expansion.

Question

The Board of BOGML has approved the Managing Director’s proposal to expand operations into Tanzania and South Africa by 2026. A key strategic focus of the company has been cost reduction, due to the narrow profit margins prevalent in the industry.

Required:
Using the Integration/Responsiveness (IR) Matrix, advise Dr. Ayimadu Baffour on the two most suitable international strategies/choices that have a low requirement for local responsiveness but can effectively support his cost reduction objectives. Clearly identify and explain the two strategies within the IR Matrix that prioritize cost reduction.

Answer

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Tags: Cost reduction, Global Strategy, Integration/Responsiveness Matrix, International Strategy, Multinational Strategy
Level: Level 3

Topic: International financial management, Strategy implementation
Series: Nov 2024

SCS – Nov 2024 – L3 – Q2a – Approaches to Risk Management

Discusses risk management approaches to address identified risks in BOGML.

Question

Approaches to risk management in BOGML – Advice to the board of directors

The following are the risk management approaches that the board of BOGML can adopt to manage the following risks identified in the company:

Risk A

Description: Low probability but high impact, e.g., pandemics, natural disasters.
Approach: Risk Transfer or Risk Sharing
Since this risk has a low likelihood of occurring but can result in severe financial losses, the company should consider transferring this risk or sharing risk. This can be done through the company taking full or partial (i.e. sharing of risk) insurance policies specifically designed for catastrophic events, such as business interruption insurance, pandemic insurance, or property insurance that covers natural disasters. Since the impact will be high when the risk occurs, the company can take insurance to pass on the high impact on the company to the insurance company which has to compensate BOGML in the event that the risk does occur.
The risk could also be shared through BOGML forming partnerships and collaborating with other OMCs to undertake investment in their oil stations.
The company should also develop a disaster recovery and business continuity plan to manage potential impacts effectively.

Risk B

Description: High likelihood but low financial impact, e.g., labor turnover and software downtime due to internet instability.

Answer

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Tags: Business Continuity, Business Planning, Disaster Recovery, Financial risk, Insurance, Risk Management, Strategic Risk
Level: Level 3

Topic: International financial management
Series: Nov 2024

SCS – Nov 2024 – L3 – Q1b – Digital Challenges in Accounting

Discuss the challenges of digital transformation in accounting, covering cybersecurity, compliance, and ethical concerns.

Question

In the contemporary business landscape, the integration of digital technologies presents multifaceted challenges for accounting professionals, particularly in the areas of digital transition, cybersecurity, regulatory compliance, and ethical decision-making. Explain each of these challenges.

Answer

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Tags: Cybersecurity, Digital Transition, Ethical Dilemmas, Financial Reporting, Regulatory Compliance
Level: Level 3

Topic: Cybersecurity, Ethics, Regulatory Compliance

SCS – July 2023 – L3 – Q1b – Controlling Risk

Explain why FCA might be difficult to use for the HVSC discussion at SavvyTech.

Question

After the presentation of the SAM four-step approach to the management team, the Director of Finance and Operations made the following statement: ‘The data required for FCA is usually only available in organisations that are at the forefront in responding to the environmental agenda’ (Bebbington, Gray, Hibbitt, and Kirt, 2001).

Required:
Explain to the management team why it might be difficult to use FCA to support the ongoing discussion about the new product HVSC.

Answer

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Tags: Environmental Data, Full-Cost Accounting, Product lifecycle, Risk Management
Level: Level 3

Topic: Controlling Risk
Series: JULY 2023

SCS – July 2023 – L3 – Q1a – Controlling Risk

Explain the SAM four-step approach to measuring product sustainability over its entire life cycle.

Question

Sustainability assessment and test for Full-Cost Accounting (FCA) of HVSC is to measure the impact over the full product life cycle. The Management team is concerned about the great deal of judgment that would be exercised. Conceptually, FCA appears straightforward, but it is also not an easy technique to develop and use in practice if adopted by SavvyTech plc.

The Sustainability Assessment Model (SAM) measures the impacts on sustainability of a product such as HVSC over its full life cycle from raw material extraction through the production process to final usage and disposal.

Required:
Explain the SAM four-step approach to measuring product HVSC over its entire life cycle.

Answer

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Tags: Full-Cost Accounting, Product lifecycle, Risk Management, Sustainability
Level: Level 3

Topic: Controlling Risk
Series: JULY 2023

SCS – Nov 2023 – L3 – Q4c – Controlling Risk

Identifying and explaining four production resource planning needs to manage production capacity challenges.

Question

It is evident that NSL has capacity challenges, and this has impacted the decision to expand to other markets. To succeed, NSL must plan to obtain the resources that it will need each year to meet the required capacity levels.

Required:
Identify and explain FOUR (4) production resource planning needs that NSL should focus on to effectively manage its production capacity challenges.
(6 marks)

Answer

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Tags: Labor, Materials, Production Capacity, Resource Planning, Technology
Level: Level 3

Topic: Controlling Risk
Series: NOV 2023

SCS – Nov 2023 – L3 – Q4b – Strategy Implementation

Outlining and explaining the four main stages of human resource planning for NSL's growth.

Question

With the company’s audacious expansion plans, it must also plan for its human resource needs to effectively respond to the expected growth. David Martinson, the Finance and Administration Manager, needs advice on how to plan for the company’s human resource needs.

Required:
Outline and explain FOUR (4) main stages in the human resource planning process.
(8 marks)

Answer

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Tags: Growth Strategy, HR Planning, Human Resource, Workforce Management
Level: Level 3

Topic: Strategy implementation
Series: NOV 2023

SCS – March 2023 – L3 – Q8 – International financial management

Discusses governance structure in terms of the separation of roles between the chairman and the CEO in line with the UK and Ghana Codes of Best Practices.

Question

Dr. Kingsley Tettey is the Chairman of the 4-member board of directors, and Dr. Joy Tettey is the Medical Director. Clearly, the Chairman is not the Chief Executive Officer (CEO) or Medical Director of LCH.

Required:
Discuss what the Ghana Code of Best Practices and the UK Corporate Governance Code state about this governance structure.
(8 marks)

Answer

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Tags: Best Practices, Board Governance, Ghana Code of Best Practices, UK Corporate Governance Code
Level: Level 3

Topic: International financial management
Series: MAR 2023

SCS – March 2023 – L3 – Q7 – Professional practice and codes of ethics

Analyzes LCH board composition using governance codes and discusses OECD principles of disclosure and board responsibilities.

Question

a) LCH’s Board of Directors is composed of four experienced professionals.

Required:
In reference to codes of corporate governance and the composition of LCH’s Board, analyze the view that the board has a suitable balance.
(5 marks)

b) The OECD Principles (2015) provide guidance through recommendations and annotations across six chapters. Principle 5 and 6 deal with disclosure and transparency and the responsibilities of the board respectively.

Required:
Provide the guidance and recommendations given on these principles and how relevant it is to LCH.
(7 marks)

Answer

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Tags: Board Composition, Corporate Governance, Disclosure, OECD principles, Transparency
Level: Level 3

Topic: Professional practice and codes of ethics
Series: MAR 2023

SCS – March 2023 – L3 – Q6 – International financial management

Explains the financial reporting implications of debt exchange and compares investing in bonds versus shares

Question

LCH has invested GH¢1,000,000 in a 5-year Government of Ghana Bond with a coupon rate of 20%. As a result of the Government of Ghana DDE programme, LCH has no option but to exchange the old bond with the new bond.

Required:
a) Explain FIVE (5) financial reporting implications of the debt exchange on the financial statements of LCH as at 31 December 2022.
(10 marks)

b) Discuss FOUR (4) advantages and TWO (2) main disadvantages of investing in bonds rather than shares.
(10 marks)

Answer

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Tags: Bonds, Debt Exchange, Financial Reporting, Investment, Shares
Level: Level 3

Topic: International financial management
Series: MAR 2023

SCS – Nov 2023 – L3 – Q4a – Controlling Risk

Identifying and explaining the role of three stakeholders in corporate risk management.

Question

Risk management is critical for the success of every organization, including NSL. Responsibilities for effective risk oversight and management within NSL do not depend on only one stakeholder group.

Required:
Identify and explain the role of THREE (3) stakeholders as identified by the International Corporate Governance Network (ICGN) guidelines on responsibilities for the oversight and management of corporate risk (2010).
(6 marks)

Answer

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Tags: Corporate Governance, ICGN Guidelines, Risk Management, Stakeholders
Level: Level 1

Topic: Controlling Risk
Series: NOV 2023

SCS – March 2023 – L3 – Q5 – Strategy implementation

Uses Fitzgerald and Moon’s performance measurement dimensions to link LCH’s performance assessment to corporate strategy.

Question

Fitzgerald and Moon (1996) provided a framework for analysing performance management systems in service industries like a hospital. They suggested that a performance management system in a service organisation can be analysed as a combination of three building blocks, namely:
i) Dimensions
ii) Standards
iii) Rewards.

Required:
Using Dimensions as a tool for performance measurement, discuss how LCH could link performance assessment to corporate strategy.
(10 marks)

Answer

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Tags: Corporate Strategy, Healthcare, Performance Dimensions, Performance Management, Service Industries
Level: Level 3

Topic: Strategy implementation
Series: MAR 2023

SCS – March 2023 – L3 – Q4 – Strategy, stakeholders, and mission

Compares mechanistic and organic structures and recommends which is more suitable for LCH.

Question

An appropriate organizational structure should reflect the size and complexity of an entity.

Required:
Using the management study of Burns and Stalker that identified two categories of organization structure—a mechanistic structure and an organic structure—explain the differences between the two types of structures and determine which of the two is suitable for LCH.
(10 marks)

Answer

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Tags: Burns and Stalker, LCH, Mechanistic Structure, Organic Structure, Organizational Structure
Level: Level 3

Topic: Strategy, stakeholders, and mission
Series: MAR 2023

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SCS – Nov 2024 – L3 – Q5c – Board Independence and Accountability in Corporate Governance

Evaluation of how the governance structure at BOGML affects board independence and accountability.

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SCS – Nov 2024 – L3 – Q5b – Board Responsibilities in Corporate Governance

Evaluate the role of the board in corporate governance, focusing on responsibilities for strategy, oversight, and ethical leadership.

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SCS – Nov 2024 – L3 – Q5b – Board Responsibilities in Corporate Governance

Identify and explain the five governance pillars in the National Corporate Governance Code for Ghana 2022.

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SCS – Nov 2024 – L3 – Q4c – Forward Rate Agreement for Interest Rate Risk Management

Calculation of settlement amount for FRA under different Ghana Reference Rate (GRR) scenarios.

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SCS – Nov 2024 – L3 – Q4b – International Tax Considerations

Key tax issues for BOGML’s planned international expansion to minimize total group tax payable.

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SCS – Nov 2024 – L3 – Q4a – Capital Budgeting Framework

Explanation of the five key elements in the capital budgeting framework for investment appraisal.

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SCS – Nov 2024 – L3 – Q3a-b – SBUs and Growth Phases

Evaluate BOGML’s SBUs using Ashridge Matrix and analyse growth phases with Greiner’s Model.

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SCS – Nov 2024 – L3 – Q2b – Integration/Responsiveness Matrix and Cost Reduction

Advising BOGML’s MD on the best international strategies under the IR Matrix to achieve cost reduction in expansion.

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SCS – Nov 2024 – L3 – Q2a – Approaches to Risk Management

Discusses risk management approaches to address identified risks in BOGML.

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SCS – Nov 2024 – L3 – Q1b – Digital Challenges in Accounting

Discuss the challenges of digital transformation in accounting, covering cybersecurity, compliance, and ethical concerns.

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SCS – July 2023 – L3 – Q1b – Controlling Risk

Explain why FCA might be difficult to use for the HVSC discussion at SavvyTech.

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SCS – July 2023 – L3 – Q1a – Controlling Risk

Explain the SAM four-step approach to measuring product sustainability over its entire life cycle.

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SCS – Nov 2023 – L3 – Q4c – Controlling Risk

Identifying and explaining four production resource planning needs to manage production capacity challenges.

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SCS – Nov 2023 – L3 – Q4b – Strategy Implementation

Outlining and explaining the four main stages of human resource planning for NSL's growth.

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SCS – March 2023 – L3 – Q8 – International financial management

Discusses governance structure in terms of the separation of roles between the chairman and the CEO in line with the UK and Ghana Codes of Best Practices.

You're reporting an error for "SCS – March 2023 – L3 – Q8 – International financial management"

SCS – March 2023 – L3 – Q7 – Professional practice and codes of ethics

Analyzes LCH board composition using governance codes and discusses OECD principles of disclosure and board responsibilities.

You're reporting an error for "SCS – March 2023 – L3 – Q7 – Professional practice and codes of ethics"

SCS – March 2023 – L3 – Q6 – International financial management

Explains the financial reporting implications of debt exchange and compares investing in bonds versus shares

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SCS – Nov 2023 – L3 – Q4a – Controlling Risk

Identifying and explaining the role of three stakeholders in corporate risk management.

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SCS – March 2023 – L3 – Q5 – Strategy implementation

Uses Fitzgerald and Moon’s performance measurement dimensions to link LCH’s performance assessment to corporate strategy.

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SCS – March 2023 – L3 – Q4 – Strategy, stakeholders, and mission

Compares mechanistic and organic structures and recommends which is more suitable for LCH.

You're reporting an error for "SCS – March 2023 – L3 – Q4 – Strategy, stakeholders, and mission"

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