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- 10 Marks
BMIS – L1 – QE9 – Operations strategy
SkyStar Clothing evaluates forward integration by establishing its own retail outlets while maintaining sales through existing retailers.
Question
SkyStar Clothing Limited (SSCL) is engaged in the business of manufacturing a wide range of children’s clothing for the past six years. The Company has built a reputation for good quality products of the latest designs, and its brand name is very popular in the middle-class segment of the market. The Company strongly believes in a policy of giving “value for the customer’s money.” At present, SSCL markets its products through a widely dispersed network of independent retailers who sell the company’s brands along with the products of other manufacturers.
SSCL is considering a proposal of forward integration and establishing its own chain of retail outlets for the sale of its products. SSCL would, however, continue to sell its products through the network of existing retailers also.
Required
Identify and explain briefly the different factors which SSCL should examine while evaluating the proposal for establishing its own network of retail outlets.
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- 20 Marks
SCS – L3 – Q5- Functional strategies
Explain how the production function integrates with other functions in a company.
Question
(a) Strategic management is a cross-functional activity. The production function for example, has relationship with other functions of a company. Explain how the production function can be integrated with other functions in company.
(b) Explain the FOUR (4) different orientations Organizations may adopt a number of different orientations towards their customers: they include a production or product approach, a sales approach, a marketing approach and a societal approach. Explain the meaning of each of these different approaches.
(c) What is meant by sustainability? Using relevant examples, explain the concept of the triple bottom line.
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- 15 Marks
MA – L2 – Q16 – Budgetary control
Prepare a budgeted profit or loss statement for Kofi Limited for Q1, focusing on sales, inventory, and expenses.
Question
Kofi Limited retails fertilizer to farmers in Ghana. The company has approached its Bankers to provide funding for next year’s operations and a three-month master budget has been requested for review by the bankers.
You have been approached by the management as a consultant to prepare the 1st quarter budget for the banker’s consideration for its next year’s operations.
End of Accounting year December 20X9
| GH¢ | |
|---|---|
| Debtors | 23,000 |
| Bank balance | 55,000 |
| Non-current asset at cost | 698,000 |
| Provision for depreciation balance | 98,000 |
| Creditors Balance | 48,000 |
| Operating expenses for the month December | 60,000 |
| Sales for the month of December 20X9 | 400,000 |
| December Ending inventory | 20,000 |
| Retained earnings | 120,000 |
The following additional information was also provided to assist your work:
(i) Depreciation is provided at the rate of 5% on cost of non-current assets.
(ii) Closing inventory is expected to increase by GH¢2,000 in January from December levels. This is expected to increase by the same figure in February from the projected figure in January. It is expected that in March closing inventory is desired to be GH¢26,000.
(iii) The company makes a profit of 25% on its sales.
(iv) Operating expenses are expected to increase by 10% from that of December, and this is projected to increase at the same growth rate to March.
(v) Sales are projected to grow by 15% from December until March.
(vi) The Debtors figure is desired to be proportional to the sales values.
(vii) Creditors value for the three months are expected to be as follows: January – GH¢50,000; February – GH¢46,000; and in March – GH¢52,000.
You are required as a consultant for Kofi Company Limited to prepare for their Bankers:
(a) The budgeted statement of profit or loss for the three months.
(b) The budgeted statement of financial position for the three months.
(c) The cash budget for the three months.
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