Tag (SQ): Agency Problem

(a) BrightFuture Institute is a research organization with branches in five African countries. The majority shareholder, Mr. James, though not officially part of the management structure, is actively involved in management decisions. He gives directives and makes decisions that sometimes influence the management policies. Customers, employees, and management are often affected by these decisions of Mr. James.

Preparations are underway to get the company listed on the Accra Capital Market and a consultant is needed to advise on the improvement of its weak corporate governance structure.

Required:

(i) Identify FOUR stakeholders of the company and explain the nature of their interests in the company.

(ii) Explain to Mr. James what is meant by good corporate governance, including the problems it is intended to address.

(b) Mr. Kweku Amoako is the founder and managing director of StarBloom Foods Ltd. StarBloom is a private limited liability company, which was established six years ago. Its line of business include growing different kinds of fruits, processing, and distributing them to supermarkets across the country. Mr. Amoako, together with the company’s board, has intimated on the need for the company to expand beyond its current operations in Ghana. You have been consulted by a consultant by the company’s management to advise on its quest to participate in the global market.

Required:
Discuss FOUR factors that must be considered by the board of Star Bloom Foods and Processing Ltd. before choosing a suitable mode of entry into international markets.