SCS – July 2023 – L3 – SavvyTech Expansion and Strategic Challenges

Level: Level 3
Series: JULY 2023
Case Study Tags: Acquisition Strategy, Corporate Governance, Financial Control, Full-Cost Accounting, Product Innovation, Risk Management, Stakeholder Mapping

Summarized Case Study

The case study focuses on SavvyTech Plc, a Ghana-based technology company specializing in the manufacture of wrist-top computers. Established in 1990, SavvyTech has seen significant growth but now faces critical strategic decisions. The company has developed a breakthrough product, the “High Virtual Speed Console” (HVSC), intended for global markets. However, due to local government restrictions, SavvyTech cannot expand its production in Ghana and is considering acquiring a subsidiary in Utopia to meet projected demand.

One of the central challenges is the need for financing this acquisition, which involves withholding the 2022 dividend payout to shareholders, a move likely to spark resistance from the company’s staff union, which owns 60% of the company’s shares. The management team must engage in stakeholder mapping using tools like the “stakeholder position/importance matrix” to navigate this decision.

The case also explores financial analysis, particularly Full-Cost Accounting (FCA), to assess the environmental, social, and economic impacts of the HVSC product life cycle. Another aspect involves determining a suitable corporate parenting strategy for managing the Utopian subsidiary while ensuring efficiency in operations.

Additionally, internal tensions have surfaced within SavvyTech, particularly between the production and product development teams. The need for innovation, as well as managing internal triggers for organizational change, is critical to SavvyTech’s survival and growth in an increasingly competitive market. The case includes several complex financial and strategic decisions that involve managing stakeholder expectations, optimizing risk management, and maintaining corporate governance standards.

Full Case Study

Past Questions for SCS – July 2023 – L3 – SavvyTech Expansion and Strategic Challenges

SCS – July 2023 – L3 – Q6b – Conflicts of Interest and Ethical Conflict Resolution

Explain the ICSA guidance on decisions that the board should reserve for itself and not delegate to individual or executive managers.

Question

The Director of Human Resources and Organisational Development is concerned that her recent presentation about matrix management structure and performance management should be sent to the board for approval. Prof. Ernest Kofi Mensah vehemently disagrees. He referred her to the Institute of Chartered Secretaries and Administrators (ICSA) guidance.

Required:
Identify and explain FOUR (4) of the Institute of Chartered Secretaries and Administrators (ICSA) guidance on decision-making responsibilities that the board should reserve to itself and should not be delegated to individual or executive managers to confirm and comment on the view that the Director of Human Resources and Organisational Development’s matrix structure presented is not one of the issues which require board approval before implementation.

Answer

Tags: Board Responsibilities, Corporate Governance, Decision Making, ICSA Guidance
Level: Level 3

Topic: Conflicts of Interest and Ethical Conflict Resolution
Series: JULY 2023

SCS – July 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Explain five reasons why the Director of Finance and Operations might project finance over other functions.

Question

Some of the SavvyTech plc management team is concerned that the Director of Finance and Operations is domineering during the acquisition engagement processes at meetings. The Director of Finance and Operations mentioned in anger that ‘arguably, accountancy has an influence on business and government and that is both:
i) continuous and
ii) more extensive than any other profession’.

Required:
As a newly qualified Chartered Accountant responsible for code of ethics in SavvyTech plc, identify and explain FIVE (5) reasons in support of why the Director of Finance and Operations seems to be projecting finance over other functions.

Answer

Tags: Decision Making, Ethics, Finance Leadership, Influence
Level: Level 3

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

SCS – July 2023 – L3 – Q5b – Sources of Finance

Explain two benefits of increasing long-term capital using retained profits.

Question

When companies retain profits in the business, the increase in the retained profits adds to equity reserves. This view was suggested by SavvyTech plc management team to the board. The Board is not convinced and seek further explanation.

Required:
Explain TWO (2) benefits to the board of directors on what it means to increase long-term capital using retained profits in SavvyTech plc.

Answer

Tags: Equity, Financial strategy, Long-term Capital, Retained Profits
Level: Level 3

Topic: Sources of Finance
Series: JULY 2023

SCS – July 2023 – L3 – Q5a – International financial management

Calculate the group profits from the sale of HVSC based on the transfer price set at market price and 25% of Utopia's unit cost.

Question

As the Head of Finance of SavvyTech plc, the Director of Finance and Operations has assigned you to use the forecast data (Table 8) and the “additional information” provided to calculate the following to support engagement by the management team with the Board.

Required:
Calculate the group profits to be realised from the sale of HVSC, if the transfer price for the component is set at its market price, which is GH¢26 per unit (total Ghana cost) plus 25% of Utopia’s unit cost.

Answer

Tags: Financial Calculations, Group Profit, Taxation, Transfer Pricing
Level: Level 3

Topic: International financial management
Series: JULY 2023

SCS – July 2023 – L3 – Q4 – Controlling Risk

Prepare an internal memo on how SavvyTech's board can show commitment to risk management and create a risk-aware culture.

Question

Essential aspects of risk management and control are the culture within the organisation. The culture within the organisation is set by the board of directors and senior management (the tone at the top), but it should be shared by every manager and employee.

Required:
You are the ‘Risk and Assurance Manager’ of SavvyTech plc with the responsibility of creating a culture of risk awareness in the organisation. Prepare an internal memo for the management team to be discussed with the board of directors on what they must do to show their own commitment to risk management in the things that they say and do.

Answer

Tags: Organizational Culture, Risk Management, Tone at the Top
Level: Level 3

Topic: Controlling Risk
Series: JULY 2023

SCS – July 2023 – L3 – Q3b – Strategy Implementation

Identify and explain four reasons why SavvyTech needs to research, innovate, and develop existing and new products.

Question

Business entities must innovate to survive and grow. The Director of Marketing and Sales, in a meeting, presented a product market annual performance analysis report and highlighted that the sales trend of the ‘Wrist Organiser 3b’, introduced in 2018, reduced by 75% in 2022 and by 50% in 2021.

Required:
As a member of SavvyTech plc management team, identify and explain FOUR (4) reasons why it is necessary to research, innovate and develop existing and new products as an organisation.

Answer

Tags: Business Growth, Product Innovation, Research and Development
Level: Level 3

Topic: Strategy implementation
Series: JULY 2023

SCS – July 2023 – L3 – Q3a – Strategy Implementation

Identify and explain five internal triggers of change at SavvyTech plc with examples from the case study.

Question

Change happens continually within organisations, and the markets within which SavvyTech plc operate are not an exception. Strategic development inevitably results in some changes, which need careful management. Some of SavvyTech plc’s internal triggers of change are motivated or caused by developments within the organisation.

Required:
Review SavvyTech plc case study, identify, and explain FIVE (5) internal triggers of change with specific examples from the case.

Answer

Tags: Internal Factors, Organizational Change, Triggers of Change
Level: Level 3

Topic: Strategy implementation
Series: JULY 2023

SCS – July 2023 – L3 – Q2b – Strategy Implementation

Explain three broad corporate parenting styles described by Goold and Campbell that SavvyTech might adopt.

Question

SavvyTech plc’s management team is debating the corporate parenting strategy that should be adopted. Corporate parenting refers to the relationship between the Head Office and the strategic business unit staff in Utopia.

Required:
As a lead consultant, explain to SavvyTech plc management team THREE (3) broad parenting styles that might be adopted as described by Goold and Campbell (1991).

Answer

Tags: Business Units, Corporate Strategy, Parenting Styles, Strategic Control
Level: Level 3

Topic: Strategy implementation
Series: JULY 2023

SCS – July 2023 – L3 – Q2a – Strategy, Stakeholders, and Mission

Explain the stakeholder position/importance matrix and provide guidance to SavvyTech on managing key stakeholders.

Question

The management team of SavvyTech plc is concerned about how the staff union group with 60% shareholding might react if the 2022 dividend payout is withheld to finance the subsidiary acquisition in Utopia, particularly the production staff with 80% shareholding of the total staff union’s interest of 60%. There are a number of stakeholder mappings. Two most popular are the ‘stakeholders position/importance matrix’ and ‘stakeholders power/interest matrix’.

Required:
You have been contracted as an independent consultant by SavvyTech plc to review the stakeholder mapping using the ‘stakeholders position/importance matrix’. Draw the diagram, illustrate, and explain using a brief internal memo to guide the management team’s engagement with the stakeholders as presented in the case study.

Answer

Tags: Influence, Mapping, Matrix, Stakeholders, Strategic Engagement
Level: Level 3

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

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

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

Topic: Controlling Risk
Series: JULY 2023

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SCS – July 2023 – L3 – SavvyTech Expansion and Strategic Challenges

Past Questions for SCS – July 2023 – L3 – SavvyTech Expansion and Strategic Challenges

SCS – July 2023 – L3 – Q6b – Conflicts of Interest and Ethical Conflict Resolution

Explain the ICSA guidance on decisions that the board should reserve for itself and not delegate to individual or executive managers.

SCS – July 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Explain five reasons why the Director of Finance and Operations might project finance over other functions.

SCS – July 2023 – L3 – Q5b – Sources of Finance

Explain two benefits of increasing long-term capital using retained profits.

SCS – July 2023 – L3 – Q5a – International financial management

Calculate the group profits from the sale of HVSC based on the transfer price set at market price and 25% of Utopia's unit cost.

SCS – July 2023 – L3 – Q4 – Controlling Risk

Prepare an internal memo on how SavvyTech's board can show commitment to risk management and create a risk-aware culture.

SCS – July 2023 – L3 – Q3b – Strategy Implementation

Identify and explain four reasons why SavvyTech needs to research, innovate, and develop existing and new products.

SCS – July 2023 – L3 – Q3a – Strategy Implementation

Identify and explain five internal triggers of change at SavvyTech plc with examples from the case study.

SCS – July 2023 – L3 – Q2b – Strategy Implementation

Explain three broad corporate parenting styles described by Goold and Campbell that SavvyTech might adopt.

SCS – July 2023 – L3 – Q2a – Strategy, Stakeholders, and Mission

Explain the stakeholder position/importance matrix and provide guidance to SavvyTech on managing key stakeholders.

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 – SavvyTech Expansion and Strategic Challenges

Past Questions for SCS – July 2023 – L3 – SavvyTech Expansion and Strategic Challenges

SCS – July 2023 – L3 – Q6b – Conflicts of Interest and Ethical Conflict Resolution

Explain the ICSA guidance on decisions that the board should reserve for itself and not delegate to individual or executive managers.

SCS – July 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Explain five reasons why the Director of Finance and Operations might project finance over other functions.

SCS – July 2023 – L3 – Q5b – Sources of Finance

Explain two benefits of increasing long-term capital using retained profits.

SCS – July 2023 – L3 – Q5a – International financial management

Calculate the group profits from the sale of HVSC based on the transfer price set at market price and 25% of Utopia's unit cost.

SCS – July 2023 – L3 – Q4 – Controlling Risk

Prepare an internal memo on how SavvyTech's board can show commitment to risk management and create a risk-aware culture.

SCS – July 2023 – L3 – Q3b – Strategy Implementation

Identify and explain four reasons why SavvyTech needs to research, innovate, and develop existing and new products.

SCS – July 2023 – L3 – Q3a – Strategy Implementation

Identify and explain five internal triggers of change at SavvyTech plc with examples from the case study.

SCS – July 2023 – L3 – Q2b – Strategy Implementation

Explain three broad corporate parenting styles described by Goold and Campbell that SavvyTech might adopt.

SCS – July 2023 – L3 – Q2a – Strategy, Stakeholders, and Mission

Explain the stakeholder position/importance matrix and provide guidance to SavvyTech on managing key stakeholders.

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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Customer

Get In Touch

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