Subject: STRATEGIC CASE STUDY

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SCS – Mar2025 – L3 – Q4 – Financial Management

AML evaluates money market and forward contract hedges to mitigate USD/GHS exchange rate risk on USD 10M gold export revenue, with calculations and internal hedging strategies.

Akosa Minerals Limited (AML) exports a significant portion of its gold production, making its revenue highly sensitive to global gold prices and exchange rate fluctuations. Recently, gold prices have surged to a six-month high of USD 2,904.4 per troy ounce, creating an opportunity for AML to maximize export earnings. However, the company also faces foreign exchange risk, as the Ghanaian cedi (GHS) may depreciate before AML receives its USD payments.
To mitigate this risk, AML’s finance team is considering two hedging strategies: money market hedge and forward contracts. The company must determine which approach provides the best protection against exchange rate fluctuations while optimising its financial position.
AML expects to receive USD 10 million from gold exports in three months. The company is concerned that the USD/GHS exchange rate may depreciate and is evaluating both a money market hedge and a forward contract. The following information is available:

  • Current spot exchange rate: 1 USD = 12.50 GHS
  • Three-month forward rate: 1 USD = 12.20 GHS
    Three-month interest rates:
  • USD borrowing rate: 4% per annum
  • USD deposit rate: 3% per annum
  • GHS borrowing rate: 23% per annum
  • GHS deposit rate: 18% per annum

Required:
a) Explain the concept of both the money market hedge and forward contract hedge, and how AML can use each to mitigate its exchange rate risk.
(6 marks)
b) Calculate the amount AML needs to borrow or invest today in both USD and GHS under the money market hedge to fully hedge the future receipt of USD 10 million.
(4 marks)
c) Calculate the GHS amount AML would receive if it chooses the forward contract hedge instead.
(2 marks)
d) Compare the GHS amounts received under the money market hedge and forward contract hedge. Recommend the better option for AML based on the calculations.
(2 marks)
e) Discuss THREE internal hedging techniques AML can employ to mitigate the depreciation of the Ghana Cedi against the US Dollar.
(6 marks)

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SCS – Mar 2025 – L3 – Q3 – Competitive advantage, International financial

Analyze AML's employee management using IR Framework and evaluate the appropriateness of its diversification strategy into lithium mining.

a) Akosa Minerals Limited (AML) operates in both local and international mining markets, with operations spread across different regions, including Ghana, Mali and Burkina Faso. AML faces pressures for local adaptiveness, such as meeting the specific needs of employees in diverse communities, and global integration, which requires maintaining consistent HR policies and performance standards across all operations. The IntegrationResponsiveness (IR) Framework helps organisations determine how to balance these competing pressures to achieve strategic objectives.

Required:

i) Explain the Integration-Responsiveness (IR) Framework, and show how AML can manage its employees across various locations by balancing the pressures for local adaptiveness and global integration. (6 marks)

ii) Suggest TWO situations where AML should emphasise local adaptiveness and TWO where it should prioritise global integration. Provide examples to support your response. (4 marks)

b) AML diversified its operations by integrating lithium extraction into its core business. Diversification is appropriate in some situations but not in others.

Required: Explain FIVE reasons why the diversification strategy of AML is appropriate and THREE factors that could make the diversification strategy inappropriate. (10 marks)

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SCS – Mar 2025 – L3 – Q2 – Change Management

Explain leadership's role in change management and three of Kanter's skills for AML's diversification strategy.

a) Akosa Minerals Limited (AML) has undergone significant transformations in its operations, particularly with the integration of lithium extraction into its core business. This shift has presented both opportunities and challenges, including regulatory compliance, technological advancements and stakeholder management. Successfully navigating these changes requires effective leadership and change management.

Rosabeth Moss Kanter suggests that managers in change-adept organisations must possess key skills to drive transformation effectively. As AML continues its diversification efforts, the company’s leadership must demonstrate these skills to sustain growth and maintain a competitive edge.

Required:

Identify and explain the critical role of leadership in managing change and THREE out of five key change management skills suggested by Kanter that AML’s leadership should exhibit to effectively manage its diversification and growth strategies.

b) Akosa Minerals Limited (AML) recently engaged a risk consultant from Isodek Consultants to conduct a comprehensive risk assessment and provide recommendations on managing the transformational changes the company is undergoing. The consultant’s report highlights key risks and challenges related to AML’s diversification strategy, operational restructuring, stakeholder engagement and compliance with global sustainability standards.

To navigate these challenges effectively, AML’s leadership needs to apply the Gemini Consultants’ 4Rs model which provides a structured framework for managing large-scale organisational change.

Required:

Using the Gemini Consultants’ 4Rs model, discuss how each component can be applied to address the operational and environmental risks identified in the consultant’s report.

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SCS – Mar 2025 – L3 – Q1 – Employee Satisfaction

Identify two key concerns from AML's employee satisfaction survey and their impact on competitive advantage.

a) Akosa Minerals Limited (AML) recently conducted an employee satisfaction survey to address ongoing challenges in attracting and retaining skilled labour. The survey evaluated staff experiences across five critical areas: conditions of service, career development, performance support, work environment and work satisfaction. The survey revealed key issues related to job security, career progression and employee welfare. AML’s leadership is now focused on implementing strategic measures to enhance employee satisfaction and engagement to reduce turnover risks and improve productivity. Required: Identify and explain TWO key areas of concern from the employee satisfaction survey. How might these concerns impact AML’s ability to maintain a sustainable competitive advantage?

b) AML has expanded its operations beyond Ghana, securing mining concessions in Mali and Burkina Faso. The company’s international growth has been driven by rising global demand for gold and lithium, particularly for use in battery production and renewable energy technologies. However, AML must navigate various external factors such as economic fluctuations, trade policies, global commodity pricing, and regulatory frameworks in different countries. To maintain its competitive advantage, AML’s leadership must evaluate external business conditions using tools such as Porter’s Diamond Model, which assesses factors influencing national competitiveness, and broader international economic analysis to identify key opportunities and threats. Required: Using Porter’s Diamond Model, analyse THREE factors that contribute to Ghana’s competitiveness in the global mining industry. How can AML leverage these factors for long-term success?

c) AML has evolved through various strategic phases over the last decades, including modernization, diversification and international expansion. The company is evolving and strengthening its governance, financial structure and operational processes. As AML continues to grow in a competitive mining industry, selecting an appropriate strategic approach is crucial for sustaining long-term success. The board of AML must consider different organisational strategy approaches to align with its corporate objectives, resource capabilities and industry trends. These approaches include the systems-based approach, resource-based approach, core competencies approach, rational strategy and adaptive/emergent strategy. Required: Using AML’s strategic journey as a reference, explain each of the FIVE strategic approaches and how they are relevant to AML’s organisational strategy.

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SCS – Nov 2024 – L3 – Q1a – Charles Handy’s Cultural Types

Discuss the application of Charles Handy's cultural types to BOGML's growth phases and analyze their impact.

Charles Handy identified four distinct categories of corporate culture (cultural stereotypes) that can exist within an organization. Since its formation, BOGML has exhibited all four categories of corporate culture during different phases of its growth.

Required:
Identify and explain the specific and appropriate category of corporate culture applicable, and discuss its impact on the company for each of the following phases of growth when Dr. Ayimadu Baffour:

i) Created the functional departments.
ii) Stated that BOGML is built around him and without him the company will not exist.
iii) Insisted on retaining all authority for decision-making.
iv) Emphasized getting work done through teamwork.

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AAA – Nov 2011 – L3 – SB – Q1 – Application of Audit and Assurance Principles

Evaluate the steps for identifying and responding to fraud risk during audit planning.

Fela Idaewor is the auditor for Matty Co. Ltd, a rapidly expanding retail business based in Lekki. This is her first year as the audit manager. During her engagement planning, she observed multiple risk factors, such as the company’s strong interest in maintaining earnings and share prices, unrealistic financial forecasts, and high reliance on debt financing for expansion. Additionally, there were strong indications that fraud might have been committed by top management.

Required
(a) What should Idaewor do about the possibility of fraud at the planning stage? (7 Marks)
(b) What documentation is required for identifying risk factors? (5 Marks)
(c) If Idaewor has evidence suggesting fraud, what are her communication responsibilities to management? (3 Marks)

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SCS – Nov 2019 – L3 – Q2d – Ethics and social responsibility

Discuss the ethical operations of Ghanalux and recommend internal controls to enhance customer safety and service.

i) Discuss whether the company is operating in an ethical manner.
(5 marks)

ii) Recommend internal controls that might be implemented by the company to improve customer safety and security, and to deal with the problems of poor service to customers.
(7 marks)

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SCS – Nov 2019 – L3 – Q2c – Controlling risk

Recommend governance and organizational changes for Ghanalux to improve its performance.

i) In response to the views of the company directors, and giving your reasons, recommend any changes to the governance and organization of Ghanalux that would benefit the performance of the company.
(8 marks)

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SCS – Nov 2019 – L3 – Q2b – Capital structure

Discuss the potential benefits and problems of converting short-term borrowing into long-term loans.

i) Discuss the potential benefits and problems with proposals to convert the company’s short-term borrowings into a longer-term loan.

ii) Pay bigger cash salaries, or add a share option element to the remuneration packages.

iii) Maintain the dividend for 2019 at the 2018 level, or even reduce it further.

iv) Convert any surplus dollar cash into cedis.

(10 marks)

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SCS – Nov 2021 – L3 – Q2 – Environment Analysis

Analyze and present factors negatively impacting the strategic position of COM from both external and internal perspectives.

The board members discussed the future of the BRIGHT strategy of the company in the context that the strategic position of the company continues to evolve at a rather unpredictable rate. The board is interested in gaining a thorough insight into the factors that will pose material downside and upside risk to the strategic position of the company. The chairman of the board would like to discuss the draft memorandum of the company’s strategic position with the CEO prior to the next plenary board meeting.

Required:
Prepare a draft presentation explaining to the Board Chairman the current factors that are negatively impacting the strategic position of the company from the general external environment and internal perspectives.

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SCS – Nov 2021 – L3 – Q1 – Strategy Implementation

Classify and assess services provided by COM using the Boston Consulting Group (BCG) Matrix and recommend a strategy for each service.

At the First Quarter 2021 Board meeting, the performance of the company was reviewed following a comprehensive presentation of the financial performance for the year ended 2020 by the Chief Executive Officer (CEO), Elikem Cubbagee. Although the directors were generally satisfied with the performance of the company and the presentation, they expressed concern that the performance of the various services provided by the company was missing in the presentation.

Required:
You are an Advisor to the Board Chairman, and he has directed you to write a report assessing and classifying the various services provided by the company using the Boston Consulting Group (BCG) Matrix. The report should include recommendations of an appropriate strategy or action the board should pursue with respect to each of the services classified in the report. Your report should contain an appendix showing the detail computations supporting your classification of the services.

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SCS – Dec 2022 – L3 – Q8b – Controlling risk

Explanation of ways to embed risk awareness within an organisation.

The risks that TCWL automated systems could be exposed to can be controlled and managed through embedding risk awareness in the culture of the organisation. Creating a culture of risk awareness is the responsibility of the board of directors and senior management of TCWL.

Required:
Explain FOUR (4) ways by which the Board can create and embed risk awareness in the culture of TCWL to ensure that systems risks are controlled effectively. (5 marks)

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SCS – Dec 2022 – L3 – Q8a – Controlling risk

Explanation of risks faced by automated systems and ways to embed risk awareness within an organisation.

TCWL production processes and operations are highly automated, and this may expose the company to major risks with high potential of negative consequences for the business.

Required:
Explain FOUR (4) major risks that TCWL automated systems could suffer. (5 marks)

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SCS – Dec 2022 – L3 – Q7 – Strategy, stakeholders, and mission

Explanation of required corporate disclosures and measures to maximise shareholder engagement in a listed company.

The Ghana Code of Best Practices for Corporate Governance specifies a number of disclosures that should be included in an annual report of a listed company, in addition to those required by law or other regulations. The new CEO has presented a paper to the Board recommending that the company should go public to raise some equity capital to partially finance its expansion plans. The listing of the company would result in an increased number of shareholders.

Required:

a) Explain to the Board SIX (6) statements that must be disclosed in the annual report of TCWL after listing on the Ghana Stock Exchange. (6 marks)
b) The Code of Best Practices recommends measures that aim at maximising attendance and involvement by shareholders in the company. Briefly discuss FOUR (4) of those measures. (4 marks)

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SCS – Dec 2022 – L3 – Q6b – Ethics and social responsibility

Analysis of child labour using deontological and teleological ethical theories.

The Board chairman and the CEO have disagreed on whether the use of child labour by the distributors and continuous supply of the company’s products to the affected distributors is ethically wrong. The two have approached you as an expert in ethics to determine which of the positions is correct.

Required:

Using the two main theories of ethics, deontological theory and teleological theory, determine whether child labour is ethically wrong. (10 marks)

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SCS – Dec 2022 – L3 – Q6a – Internal analysis

Draw Shell Directional Policy Matrix and recommend strategies for TCWL products based on their performance.

The Consultant undertook analysis of the performance of TCWL products using Shell Directional Policy Matrix. The management of the company is interested in receiving a report that contains the matrix and the strategies to be adopted for each product.

Required:

i) Draw Shell Directional Policy Matrix and clearly locate each product in an appropriate quadrant/cell in the matrix based on the product’s performance. (2 marks)
ii) Recommend and explain the appropriate strategy or strategies that TCWL should adopt for each product as suggested by Shell Directional Policy Matrix. (8 marks)

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SCS – Dec 2022 – L3 – Q5 – Financial management

Calculate the required loan, interest earned, and the Cedi gain or loss from a money market hedge.

The Board has directed the CEO to take the necessary steps to arrange with its bankers, a money market hedge for the expected receipts from DMP, to protect the company against the downside risk of expected Cedi appreciation.

Required:
As the Financial Controller of the company, the CEO has asked you to calculate the following relating to money market hedge:

a) The initial dollar amount of loan that TCWL could take from the bank in Cameroon on 1 December 2022 and the cedi equivalent of the initial loan if converted on the same date. (3 marks)
b) The total Cedi amount and interest the company will earn by 31 May 2023, if the converted amount is invested in Ghana for the duration of the money market hedge. (3 marks)
c) The Cedi gain or loss that TCWL would make by hedging. (2 marks)
d) The effective forward rate of the Cedi to U.S. dollar on 31 May 2023. (2 marks)

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SCS – Apr 2022 – L3 – Q8 – Controlling risk

Explain five factors of internal control that HPC can implement to strengthen governance.

The Accountant advised the CEO that to strengthen governance, the Board should concern itself with the establishment of strong internal control systems. Failures or weaknesses in internal controls will have adverse consequences for HPC’s finances, financial reporting, operational efficiency and effectiveness, or regulatory compliance.

Required:
Write a paper, explaining FIVE (5) factors to the Board the nature of internal controls that could be instituted by HPC to strengthen governance. (10 marks)

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SCS – Dec 2022 – L3 – Q4b – Strategy implementation

Explain the levers of change and discuss the benefits of an external change agent for leading change in TCWL.

The Board Chairman wants the new CEO to keep to the original vision and mission upon which the company was founded, but the new CEO has his own idea of the direction he wants to take the company. He, therefore, desires to implement some changes, including the introduction of a new organisational structure.

Required:

i) Explain FOUR (4) levers of change that the CEO must adopt to successfully implement the changes he desires in TCWL. (6 marks)
ii) Briefly discuss FOUR (4) benefits of an external change agent if the CEO decides to engage one to lead the proposed changes. (4 marks)

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