Question Tag: Strategic Management

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  • 30 Marks

FM – Nov 2022 – L3 – Q1 – Mergers and Acquisitions

Evaluating the acquisition of Company K3 in Togo for business expansion purposes.

The following case relates to a business expansion decision for Abayomi Plc (AP):

Abayomi Plc (AP) is a major electrical company in Nigeria. The directors have recently identified Togo as a priority location for business expansion. Togo uses currency T$. Assume today is 30 August 2021.

Company K3, located in Togo, has been identified as a potential acquisition target. AP already manages two business units in Togo, named K1 and K2, and these have shown strong performance under AP’s ownership.

K3 is particularly attractive to AP because it has its own warehouse, distribution, and logistics network, all of which could be used by K1 and K2, if the acquisition goes ahead. Currently, K1 and K2 send goods to customers from AP warehouses located in Ghana. This involves considerable cost and delay in delivery.

K3 is a private company, and 100% of its shares are owned by the family that founded it. Many shareholders are keen to realize their investment by selling the company to AP.

Both companies are working towards an effective date for the sale of K3 to AP on 1 January 2022.

Financial Data for K3 for 2020:

The statement of financial position of K3 as at 31 December 2020 showed the following balances:

T$ Million
Long term borrowings 375
Share capital (T$1 ordinary shares) 90
Total liabilities 465
Net assets 180

Additional Data:

AP aims to maintain the same capital structure as AP. That is, gearing (debt/debt+equity) would be 25% based on market values. AP would guarantee K3’s new debt, which can be assumed to have the same risk profile as AP’s debt.

A proxy company has been identified which is also located in Togo and has a similar business model to K3.

Proxy company data:

  • P/E ratio of 12.
  • Equity beta of 1.7 and debt beta of 0.4.
  • Gearing (debt/debt+equity) based on market values of 35%.

Togo has a risk-free rate of 5% and a market risk premium of 4%.

Financial Data for AP:

Latest data available for AP shows:

  • P/E ratio of 14.
  • Equity beta of 1.5 and debt beta of 0.3.
  • Gearing (debt/debt+equity) based on market values of 25%.
  • AP pays 6.2% interest on its long-term borrowings.
  • Tax rate in Nigeria is 30%.

The spot rate for T$ against Naira today is T$7/₦ (i.e., ₦1 = T$7.00) and is not expected to change in the foreseeable future.

Assume that Nigeria has the same risk-free rate and market risk premium as Togo.

Required:
Assume you are the Finance Director of AP.

a. Advise on:
i. The types of synergistic benefit that might arise from the acquisition of K3. (8 Marks)
ii. Possible reasons why both one-off and ongoing synergistic benefits might not be achieved to the extent expected. (4 Marks)

b. Calculate:
i. A Weighted Average Cost of Capital (WACC) for use in valuing K3 based on the proxy company’s business and country risk and AP’s capital structure. (6 Marks)
ii. A range of values for the equity of K3 in T$ as at 1 January 2022 using the following methods:

  • Asset basis. (2 Marks)
  • P/E (including bootstrapping). (5 Marks)
  • DCF (with and without synergistic benefits). (5 Marks)

(Total 30 Marks)

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  • 20 Marks

CSME – May 2017 – L2 – SB – Q4 – Strategic Management in the Public Sector

Explain organizational growth through Greiner's model and discuss board diversity benefits and limitations.

a. With the aid of an appropriate diagram, explain how organisations and management structures might change as a business grows using Greiner’s growth model. (10 Marks)

b. Explain briefly the concept of board diversity giving THREE examples of categories of diversity. (5 Marks)

c. Explain THREE benefits of the diversity of the board of a large company. (3 Marks)

d. Discuss TWO limitations of board diversity. (2 Marks)

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  • 20 Marks

CSME – Nov 2015 – L2 – Q4 – Risk Management and Corporate Strategy

Analyzes strengths and weaknesses of Toyin Trust Insurance Plc pre- and post-2000 ownership changes, and suggests strategies for sustaining the company.

Toyin Trust Insurance Company is one of the duly registered insurance companies in Nigeria. Ten years after it started operations in 1990, the company had become a household name in the market. Its strengths included timely payment of claims and introduction of quality products that captured changing customers’ needs.

At inception, the company was 100% foreign-owned, with five of the seven directors being experienced expatriate insurance practitioners. However, by 2000, over 90% of the equity had been transferred to Nigerian investors. In 2009, following reorganization, many experienced senior managers resigned, and inexperienced staff took over key positions, leading to a decline in service quality and a 40% drop in premium collection.

Required:

a. Analyze the strengths of Toyin Trust Insurance Plc before 2000. (5 Marks)
b. Analyze the strengths and weaknesses of Toyin Trust Insurance Plc after 2000. (5 Marks)
c. Suggest essential strategies to sustain Toyin Trust Insurance Plc. (10 Marks)

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  • 30 Marks

CSME – Nov 2020 – L2 – Q1a – Environmental Analysis

Advise Cells Incorporated on the strategic management factors to consider when relocating its manufacturing plant to Dumbura Republic.

Dumbura Republic is reputed for its high population density and the consequent availability of cheap labour. Surprisingly, due to the high premium placed on qualitative education in science and technology-based disciplines, the country has an abundance of highly skilled workforce suited for manufacturing industries. Other features of Dumbura Republic include adequate, accessible and reliable social infrastructure such as electricity, potable water, road and rail network, and an effective security network. Besides, the country also has a variety of tax incentives designed to attract foreign investments. These positive features of the socio-economic environment in Dumbura have attracted a lot of foreign investors, including several computer and mobile phones hardware production companies.

Indeed, the socio-economic environment in Dumbura is very business-friendly. Hence, it is not surprising that a lot of foreign companies have located their industrial plants in the country. Effects of this development include increased employment opportunities, influx of people in search of employment from neighbouring countries, spiralling rent rates for all categories of accommodation, worsening environmental pollution, and a spiking population growth rate, which is beginning to take its toll on available social infrastructure. Besides, the hitherto peaceful country is beginning to experience an increased rate of crimes such as burglary, robbery, cyber theft and kidnap that target expatriates particularly. The local population is becoming increasingly hostile to the expatriates and workers from neighbouring countries, accusing them of denying the local population access to good job opportunities.

You have been employed as a consultant to a computer and mobile phone hardware company, Cells Incorporated, which is considering relocating its major manufacturing plant from an Asian country to Dumbura Republic. This is hoped to bring down the cost of production and provide a ready market for about 20% of its products.

Required:
With the aid of Johnson, Scholes, and Whittington’s position on strategic management, advise Cells Incorporated on the elements of strategic management that must be taken into consideration in deciding whether to relocate its manufacturing plants to Dumbura Republic. Ensure that you make adequate references to the scenario above as might be relevant.

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  • 20 Marks

PM – Nov 2020 – L2 – Q5 – Balanced Scorecard

Analyze the performance of DAT Air using the Balanced Scorecard approach and propose relevant goals and performance measures for each of the perspectives.

QUESTION 5
Dat Air was founded in January 2010 by Dr. Daniel Taiwo and the airline has been
branded as a low-cost airline in Nigeria. Dat Air‟s strategy is to operate as a low-cost and highly efficient airline, and it does this by:
(i) Operating mostly in cities where other airlines do not fly to reduce landing
cost;
(ii) Using only one aircraft model in order to reduce maintenance and operational
costs. These planes are leased rather than bought outright;
(iii) Having only one category of seat class; there is no pre-allocated seats or in-
flight entertainment; and to
(iv) Focus on e-commerce with customers both booking tickets and checking in
for flights online. Customers who booked well in advance before the flight
date enjoy substantial discount.
The airline was given an „on time arrival‟ ranking of second best by the
Nigerian aviation authority, who rank all 20 airlines operating locally in the
country based on the number of flights which arrive on time at their
destinations. 48 Dat Air flights were cancelled in 2018 compared to 35 in
2017. This increase was due to an increase in the staff absentee rate at Dat
Air from 5 days per staff member per year to 7 days.
The average „ground turnaround time‟ for airlines in Nigeria is 2 hours,
meaning that, on average, planes are on the ground for cleaning, refuelling,
etc for 2 hours before departing again. Customer satisfaction surveys have
shown that 90% of customers are happy with the standard of cleanliness on
Dat Air‟s planes.
The number of passengers carried by the airline has grown from 200,000
passengers on a total of 2,107 flights in 2010 to 650,000 passengers on
5,320 flights in 2018. The overall growth of the airline has been helped by
the limited route licensing policy of the Nigerian government, which has
given DAT Air almost monopoly status on some of its routes. However, the
government is now set to change this policy with almost immediate effect,
and it has become more important than ever to monitor performance
effectively.
This has necessitated the management of Dat Air to examine the airline‟s
performance using the balanced scorecard model. This will enable the
management to discover areas where improvement is needed in its
operations.
Required:
a. Describe each of the FOUR perspectives of the balanced scorecard.
(6 Marks)
b. For each perspective of the balanced scorecard, identify ONE goal
together with a corresponding performance measure which could be
used by DAT Air to measure the company‟s performance. The goals
and performance measures should be specifically relevant to Dat Air.
For each pair of goals and performance measures, explain why you
have chosen them. (9 Marks)
c. Appraise the usefulness of the balanced scorecard as a performance
evaluation technique. (5 Marks)
(Total 20 Marks)

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  • 15 Marks

CSME – Nov 2018 – L2 – Q6 – Corporate Strategy Formulation

Explain the BCG Model with a diagram to analyze a firm's business portfolio, detailing the four product categories.

As part of a training session in strategic management, deploy a diagram to explain how a firm would use the Boston Consulting Group (BCG) model to analyze its business portfolio. Explain each category of products identified in the BCG model.

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  • 1 Marks

BMF – May 2016 – L1 – SA – Q10 – Basic Management Functions

This question evaluates the student's knowledge of Porter's Strategic Management Model and which element is not a part of it.

Which of the following is NOT part of Porters’ Model of Strategic Management?
A. The Strategic goal for a company should be to achieve a superior long-term return on investment
B. Strategy must offer a unique value proposition for the customer
C. There should also be a distinctive value chain
D. The selected strategy will not involve some trade-offs
E. There should be continuity of strategic direction

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  • 1 Marks

MI – Nov 2015 – L1 – SA – Q16 – Information Systems and Management

Identifies which management level handles strategic issues and long-term trends.

Strategic issues and long-term trends are handled by:
A. Software system developers
B. Hardware system developers
C. Senior management
D. Middle management
E. System analysts

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Has Case Study
  • 20 Marks

SCS – May 2020 – L3 – Q1 – Strategy, Stakeholders and Mission

Perform a SWOT analysis of Customer Focused Ltd, highlighting key strengths, weaknesses, opportunities, and threats.

Customer Focused Ltd has updated its management accounts (Exhibit 1) to produce a
forecast for the year 2020 and these have indicated some significant problems. The business
owners are unsure what to do next.
Required:
You are acting as an advisor to the company and they ask you to:

Prepare a SWOT analysis of Customer Focused Ltd. You should list the strengths, weaknesses, opportunities, and threats in the SWOT analysis of Customer Focused Ltd. You should then select from your list the key strengths, weaknesses, opportunities, and threats and explain why they are important.

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  • 1 Marks

BMF – Nov 2021 – L1 – SA – Q20 – The Business Environment

Question about identifying an element not part of the Cultural Web model within an organization.

The cultural web consists of the following inter-related elements of culture within an organisation, EXCEPT:

A. Symbols
B. Interactions
C. Control systems
D. Stories and myths
E. Routine and rituals

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  • 1 Marks

BMF – Nov 2021 – L1 – SA – Q2 – Business and Organizational Structures and Choices

Question on elements of an organization according to Mintzberg’s theory.

Which of the following according to Mintzberg is NOT an element or building block in an organization?

A. Strategic apex
B. Techno-structure
C. Middle line
D. Support staff
E. Strategic planning

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  • 1 Marks

BMF – May 2023 – L1 – SA – Q12 – The Business Environment

Identify a non-basis for market segmentation in strategic management.

Market segmentation is important for strategic management. Which of the following is NOT a basis for market segmentation?

A. Customer
B. Products function
C. Geographical area
D. Demographic factors
E. Competitive activities

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  • 9 Marks

BMF – Mar July 2020 – L1 – SB – Q1b – Basic Management Functions

Identifying the three levels of management decisions and stating two decisions at each level.

Dominion Properties Limited conducted a company-wide workshop on strategic management. Employees were told that decision-making was at three levels of management according to Robert Anthony.

Required:
(i) State the THREE levels. (3 marks)
(ii) State TWO decisions that can be taken at each level. (6 marks)

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  • 1 Marks

BMF – Mar July 2020 – L1 – SA – Q7 – Basic Management Functions

Understanding decision-making levels in an organization according to Robert Anthony.

Decision-making in an organization is classified into three levels according to Robert Anthony. Which of the following is NOT one of these levels?
A. Strategic level
B. Tactical level
C. Operational level
D. Intermediate level
E. Managerial level

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  • 5 Marks

AFM – May 2016 – L3 – Q4b – International investment and financing decisions, Economic environment for multinational organizations

Describe five strategic reasons that might motivate a company to undertake foreign direct investment. —------------------------------------------------------------------ Question: b) At the last meeting of the Board of Directors of Greenwich Ghana Limited, the Board resolved to establish a manufacturing facility in Asia and Europe. Briefly describe FIVE strategic reasons that might have informed management's decision to undertake the Foreign Direct Investment (FDI). (5 marks) Answer: Strategic Reasons for Foreign Direct Investment (FDI) Access to New Markets By establishing a manufacturing facility in foreign countries, the company gains access to new markets, enabling it to expand its customer base and increase market share. This helps diversify the company’s revenue sources and reduces dependency on the domestic market. (1 mark) Cost Reduction Manufacturing in regions with lower production and labor costs can significantly reduce operational expenses. Asia and Europe might offer cost advantages such as cheaper raw materials, lower wages, or favorable tax policies, making FDI a cost-effective decision. (1 mark) Proximity to Resources Setting up operations closer to key resources (such as raw materials or skilled labor) reduces transportation costs and ensures a more efficient supply chain. This proximity can also lead to better quality control and faster production cycles. (1 mark) Government Incentives Many countries offer incentives such as tax holidays, grants, or subsidies to attract foreign investments. These incentives can lower the company’s overall costs and improve profitability, making FDI an attractive option. (1 mark) Strategic Positioning Against Competitors Establishing a presence in key international markets can be a defensive move to counter competitors who are already operating in those regions. By entering these markets, the company can strengthen its competitive position and ensure it does not lose out on potential opportunities. (1 mark) ========== Let me know if you'd like to proceed with the next part or have any further modifications! Describe five strategic reasons that might motivate a company to undertake foreign direct investment. —------------------------------------------------------------------ Question: b) At the last meeting of the Board of Directors of Greenwich Ghana Limited, the Board resolved to establish a manufacturing facility in Asia and Europe. Briefly describe FIVE strategic reasons that might have informed management's decision to undertake the Foreign Direct Investment (FDI). (5 marks) Answer: Strategic Reasons for Foreign Direct Investment (FDI) Access to New Markets By establishing a manufacturing facility in foreign countries, the company gains access to new markets, enabling it to expand its customer base and increase market share. This helps diversify the company’s revenue sources and reduces dependency on the domestic market. (1 mark) Cost Reduction Manufacturing in regions with lower production and labor costs can significantly reduce operational expenses. Asia and Europe might offer cost advantages such as cheaper raw materials, lower wages, or favorable tax policies, making FDI a cost-effective decision. (1 mark) Proximity to Resources Setting up operations closer to key resources (such as raw materials or skilled labor) reduces transportation costs and ensures a more efficient supply chain. This proximity can also lead to better quality control and faster production cycles. (1 mark) Government Incentives Many countries offer incentives such as tax holidays, grants, or subsidies to attract foreign investments. These incentives can lower the company’s overall costs and improve profitability, making FDI an attractive option. (1 mark) Strategic Positioning Against Competitors Establishing a presence in key international markets can be a defensive move to counter competitors who are already operating in those regions. By entering these markets, the company can strengthen its competitive position and ensure it does not lose out on potential opportunities. (1 mark) ========== Let me know if you'd like to proceed with the next part or have any further modifications! Describe five strategic reasons that might motivate a company to undertake foreign direct investment.

b) At the last meeting of the Board of Directors of Greenwich Ghana Limited, the Board resolved to establish a manufacturing facility in Asia and Europe. Briefly describe FIVE strategic reasons that might have informed management’s decision to undertake the Foreign Direct Investment (FDI). (5 marks)

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  • 10 Marks

MA – Nov 2017 – L2 – Q1b – Performance analysis

Identify and explain five areas of relevance for management to ensure short and long-term profitability and survival of corporate institutions.

b) The traditional methods of measuring performance of sub-units to achieve goal congruence include divisional profit, Return on Investment, Residual Income and Transfer pricing. These profit based measures do not reveal all about the long term survival of corporate institutions.

Required: Identify and explain FIVE areas of relevance that should engage the attention of management to ensure both short and long term profitability and survival.

(10 marks)

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  • 10 Marks

MA – Nov 2020 – L2 – Q3a – Performance Analysis, Other Aspects of Performance Measurement

Identify and explain the four perspectives of the Balanced Scorecard.

a) The aim of a balanced scorecard is to provide a comprehensive framework for translating a company’s strategic objectives into a coherent set of performance measures. It allows managers to look at the business from four different perspectives.

Required: Identify and explain these FOUR (4) perspectives.

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  • 10 Marks

MA – May 2020 – L2 – Q4a – Introduction to capital budgeting, Decision making techniques

Identify and explain the stages in the capital investment decision-making process.

a) Senchi Ltd is evaluating an investment proposal to manufacture River boat, which has performed well in test marketing trials conducted recently by the company’s research and development division.

Required:

Identify and explain the stages in the capital investment decision-making process. (10 marks)

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  • 4 Marks

CSEG – Nov 2015 – L2 – Q5a – Management perspective

Explain how the production function can be integrated with other functions in a company.

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. [4marks]

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  • 5 Marks

CSEG – Nov 2015 – L2 – Q4b – Strategy evaluation and control

Identify and explain five elements of the Ms Model used in resource audits for strategy evaluation and control.

Strategy evaluation is as important as strategy formulation. One of the tools used in resource audit as part of strategy evaluation and control is the Ms Model. Identify and explain any FIVE (5) elements in the Ms Model. [5marks]

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