- 20 Marks
CSEG – Nov 2018 – L2 – Q6 – Strategic alternatives, analysis and selection
Discuss the challenges and strategies involved in Franko Ltd’s acquisition of a Nigerian accounting software company.
Question
Franko Ltd is a producer of accounting software for SMEs. The software is very easy to use, even for a layperson, and has significant functionality for the price level of GH¢4,959 per annum. The package includes all functionality to comply with tax payments, including income tax, (PAYE) and VAT, as well as creditor and debtor accounting and some customer relationship management functions. The firm also has an enhanced package that includes telephone support and free updates for GH¢499 per annum.
Franko Ltd has been very successful, and this has led the firm to expand internationally, after starting and developing a business over the past five years, mostly in Accra, Ghana. Franko Ltd has decided to expand into the African market and has chosen to enter the Nigerian market by acquiring a Nigerian accounting software business as an entry route into that market, as it is perceived to be different from the Ghanaian market.
Required:
a) Explain FOUR (4) challenges Franko Ltd may face in the acquisition. (8 marks)
b) Advise Franko Ltd on how to effectively address the challenges they may face in planning and completing such an acquisition. (12 marks)
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