SCS – April 2022 – L3 – HPC Ltd Expansion and Risk Management

Level: Level 3
Series: APRIL 2022
Case Study Tags: Agro-processing, Corporate Governance, Financial Analysis, Internal Controls, Market Expansion, Net Present Value, Risk Management, Stakeholders, Strategic Positioning

Summarized Case Study

HPC Ltd, a Ghanaian-owned agro-processing company, specializes in processing and packaging fruits for local and international markets. In 2022, HPC is considering expanding its operations to Nigeria and Togo. The expansion strategy involves acquiring retail outlets in Nigeria and setting up new retail outlets in Togo. Both investment options present strategic and financial challenges, requiring careful analysis of market conditions, competition, and potential returns.

Stakeholder analysis plays a key role, with the company’s major stakeholders, such as employees, farmers, regulatory authorities, and customers, influencing the expansion strategy. Using stakeholder mapping, the case study explores their power, expectations, and potential impact on HPC’s growth plans.

The company’s external environment is assessed using PESTEL analysis, which identifies favorable and unfavorable influences like political stability, economic growth post-COVID-19, and technological limitations. However, the PESTEL framework has limitations, especially in forecasting future influences and quantifying their impact.

Porter’s six principles of strategic positioning are applied to analyze how HPC can achieve a sustainable competitive advantage in these new markets. The case study also addresses the challenges of decentralizing authority within the company as it grows and diversifies across multiple countries.

In terms of risk management, the case study draws on the Turnbull Report to identify key risks faced by HPC, including market risk, liquidity risk, technological risk, and legal risk, and suggests measures to mitigate them. Finally, the importance of establishing strong internal controls to safeguard governance, operational efficiency, and financial performance is emphasized, with recommendations on implementing controls like segregation of duties, physical security, and management oversight.

This comprehensive case study provides valuable insights into HPC’s strategic decisions, financial evaluations, and governance challenges as it seeks to expand its operations into new markets.

Full Case Study

Past Questions for SCS – April 2022 – L3 – HPC Ltd Expansion and Risk Management

SCS – Apr 2022 – L3 – Q8 – Controlling risk

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

Question

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)

Answer

Tags: Corporate Governance, Governance, Internal Controls, Risk Management
Level: Level 3

Topic: Controlling Risk
Series: APR 2022

SCS – Apr 2022 – L3 – Q7 – Professional practice and codes of ethics

Discuss key governance issues based on Ghana’s Code of Best Practices considering the Board Chairman’s intentions.

Question

In reference to Ghana’s Code of Best Practices in Corporate Governance, discuss FOUR (4) key issues that could determine how well or badly HPC is governed, taking into consideration the intention and business relationship of the Board Chairman. (10 marks)

Answer

Tags: Best Practices, Board of Directors, Conflict of Interest, Corporate Governance, Ethical Governance
Level: Level 3

Topic: Professional Ethics and Code of Conduct for Auditors
Series: APR 2022

SCS – Apr 2022 – L3 – Q6 – Investment decisions

Compute NPV for two investment options and evaluate potential benefits and difficulties for HPC.

Question

a) For the two strategic development options being considered by HPC, compute:
i) the Net Present Value of Option 1.
ii) the Net Present Value of Option 2.
iii) the Net Present Value for the worst-case outcome for Option 1. (10 marks)

b) Discuss THREE (3) potential benefits and TWO (2) difficulties for HPC of undertaking each of the strategic development options. Your answer should include an evaluation of the calculations of the profitability index of each option. (10 marks)

Answer

Tags: Investment Analysis, NPV, Profitability Index, Strategic Development
Level: Level 3

Topic: Investment Decisions
Series: APR 2022

SCS – Apr 2022 – L3 – Q5 – Identifying and assessing risk

Discuss eight business risks faced by HPC and recommend mitigation strategies based on the Turnbull Report.

Question

In their Annual Business Review meeting, the Board of HPC discussed a report on Internal Controls and Risk Management, presented by the Internal Auditor. The Board Chairman in his comments mentioned that he would have been more comfortable with a Risk Management report categorized according to the Turnbull Report.

Required:
With reference to the Turnbull Report and the comments made by the Board Chairman, write a report discussing EIGHT (8) categories of business risks faced by HPC and recommendations to mitigate the identified risks. (20 marks)

Answer

Tags: Business Risks, Corporate Governance, Risk Management, Risk Mitigation, Turnbull Report
Level: Level 3

Topic: Identifying and assessing risk
Series: APR 2022

SCS – Apr 2022 – L3 – Q4 – Strategy implementation

Explain why HPC’s decentralized system is preferable to a centralized system.

Question

The Chief Executive Officer is concerned that with the expansion of the operations of HPC to other countries, she would further have to divulge authority and power to other Managers because of how the company would grow in size and complexity.

Required:
Explain to the CEO why HPC’s decentralized system of internal organizational relationship is preferable to a centralized system. (10 marks)

Answer

Tags: Centralization, Decentralization, Decision Making, Organizational Structure
Level: Level 3

Topic: Strategy implementation
Series: APR 2022

SCS – Apr 2022 – L3 – Q3 – Competitive advantage

Analyse how HPC can achieve competitive advantage using Porter’s six principles when expanding to Nigeria and Togo.

Question

Consistent with its strategic ambition to expand its business into other countries, HPC is considering expanding to Nigeria and Togo.

Required:
Using Porter’s six principles of strategic positioning, analyse how HPC can achieve sustainable competitive advantage if it decides to expand the business to Nigeria and Togo. (10 marks)

Answer

Tags: Competitive Advantage, International Expansion, Porter’s Principles, Strategic Positioning
Level: Level 3

Topic: Competitive Advantage
Series: APR 2022

SCS – Apr 2022 – L3 – Q2 – Environment analysis

Discuss HPC’s external business environment using PESTEL and evaluate limitations of PESTEL.

Question

favourable or unfavourable to its present survival and future success. The influences (current influences and possible future influences) of the business environment of HPC need to be analysed to ensure that none are over-looked.

Required:

a) Using PESTEL analysis, discuss HPC’s external business environment that appears to be either favourable or unfavourable to its present survival and future success. (8 marks)

b) Discuss TWO (2) limitations of PESTEL as a technique in analysing the environmental influences of HPC. (2 marks)

Answer

Tags: Business Environment, External factors, PESTEL Analysis, Strategy Analysis
Level: Level 3

Topic: Environment analysis
Series: APR 2022

SCS – Apr 2022 – L3 – Q1 – Strategy, stakeholders and mission

Discuss stakeholder groups' influence on business decisions using Mendelow's matrix.

Question

As part of a review of the strategic position of HPC and its move to expand the business, management identified its major stakeholder groups, their power, and their expectations that could either fast-track or delay the implementation of the decision. These major stakeholder groups are the employees, farmers, regulatory authorities, and customers.

Required:
Using two matrices of approach to stakeholder mapping, discuss and show (with diagrams) the relative significance of stakeholder groups identified and their real and potential influences over HPC and its expansion strategies. (Use the stakeholder position/importance matrix and the stakeholder power/interest matrix – Mendelow matrix.) (10 marks)

Answer

Tags: Business Strategy, Mendelow Matrix, Power-Interest Matrix, Stakeholder analysis, Stakeholder Mapping
Level: Level 3

Topic: Strategy, stakeholders, and mission
Series: APR 2022

SCS – April 2022 – L3 – HPC Ltd Expansion and Risk Management

Past Questions for SCS – April 2022 – L3 – HPC Ltd Expansion and Risk Management

SCS – Apr 2022 – L3 – Q8 – Controlling risk

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

SCS – Apr 2022 – L3 – Q7 – Professional practice and codes of ethics

Discuss key governance issues based on Ghana’s Code of Best Practices considering the Board Chairman’s intentions.

SCS – Apr 2022 – L3 – Q6 – Investment decisions

Compute NPV for two investment options and evaluate potential benefits and difficulties for HPC.

SCS – Apr 2022 – L3 – Q5 – Identifying and assessing risk

Discuss eight business risks faced by HPC and recommend mitigation strategies based on the Turnbull Report.

SCS – Apr 2022 – L3 – Q4 – Strategy implementation

Explain why HPC’s decentralized system is preferable to a centralized system.

SCS – Apr 2022 – L3 – Q3 – Competitive advantage

Analyse how HPC can achieve competitive advantage using Porter’s six principles when expanding to Nigeria and Togo.

SCS – Apr 2022 – L3 – Q2 – Environment analysis

Discuss HPC’s external business environment using PESTEL and evaluate limitations of PESTEL.

SCS – Apr 2022 – L3 – Q1 – Strategy, stakeholders and mission

Discuss stakeholder groups' influence on business decisions using Mendelow's matrix.

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SCS – April 2022 – L3 – HPC Ltd Expansion and Risk Management

Past Questions for SCS – April 2022 – L3 – HPC Ltd Expansion and Risk Management

SCS – Apr 2022 – L3 – Q8 – Controlling risk

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

SCS – Apr 2022 – L3 – Q7 – Professional practice and codes of ethics

Discuss key governance issues based on Ghana’s Code of Best Practices considering the Board Chairman’s intentions.

SCS – Apr 2022 – L3 – Q6 – Investment decisions

Compute NPV for two investment options and evaluate potential benefits and difficulties for HPC.

SCS – Apr 2022 – L3 – Q5 – Identifying and assessing risk

Discuss eight business risks faced by HPC and recommend mitigation strategies based on the Turnbull Report.

SCS – Apr 2022 – L3 – Q4 – Strategy implementation

Explain why HPC’s decentralized system is preferable to a centralized system.

SCS – Apr 2022 – L3 – Q3 – Competitive advantage

Analyse how HPC can achieve competitive advantage using Porter’s six principles when expanding to Nigeria and Togo.

SCS – Apr 2022 – L3 – Q2 – Environment analysis

Discuss HPC’s external business environment using PESTEL and evaluate limitations of PESTEL.

SCS – Apr 2022 – L3 – Q1 – Strategy, stakeholders and mission

Discuss stakeholder groups' influence on business decisions using Mendelow's matrix.

Our offerings

Contact Info

Customer

Get In Touch

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