Subject: CORPORATE STRATEGIC MANAGEMENT AND ETHICS (CSME)

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CSME – Nov 2023 – L2 – Q7 – Risk Management and Corporate Strategy

This question discusses the application of risk management frameworks in an IT start-up, focusing on Enterprise Risk Management (ERM), ISO31000, and the ALARP strategy.

An Information Technology start-up located in Lagos is planning to establish a robust risk management system that covers all its activities. You have been engaged as a consultant to advise it on how an effective risk management framework can be incorporated into the company’s processes to ensure that all risks that could impair the achievement of organisational goals are effectively managed.

Required:
a. Suggest to your client a risk management framework that the management can adopt using the following:
i. Enterprise Risk Management (ERM) (6 Marks)
ii. ISO31000 frameworks (3 Marks)

b. Draft an enterprise risk management strategy for the firm, using ALARP. (5 Marks)

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CSME – Nov 2023 – L2 – Q6 – Risk Management and Corporate Strategy

This question identifies types of risk in a volatile business environment, using the Turnbull Report.

Today’s business environment is often described by many experts as Volatile, Uncertain, Complex, and Ambiguous (VUCA). Some of the driving forces of the VUCA environment include COVID-19 pandemic, the war in Europe, global warming, and a rapidly changing technological environment.

The impact of the VUCA environment on the global economy includes inflation, dwindling consumers’ purchasing power, rising energy costs, among others, leading to an increase in a sense of turbulence, danger, and unpredictability. With the volatility in the business environment also comes frequent changes in laws and regulations affecting businesses, a factor that adds instability to an already unstable business environment.

You have been asked by a start-up company in the consumer goods retailing business to provide advice on risk management as it concerns the global economy. The company is planning to launch an online retail store with a focus on the global consumer goods market.

Required:
Using the Turnbull Report and drawing from the given scenario, identify and explain to your client the types of risk that are inherent in the VUCA business environment. (15 Marks)

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CSME – Nov 2023 – L2 – Q5 – Ethics in Business

This question covers the definition and importance of social thinking, key social thinking concepts, and intervention methods to improve social skills.

Prepare a presentation on social skills, detailing the following:

a. Definition and importance of social thinking (3 Marks)
b. Key concepts in social thinking (8 Marks)
c. Social thinking interventions (4 Marks)

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CSME – Nov 2023 – L2 – Q4 – Ethics in Business

Discuss the relationship models between accountants and clients, recommending the most suitable and least suitable models.

There are different models of relationship between a professional accountant and his/her clients. In the context of the above:

a. Explain the different models of relationship between a professional accountant and his/her clients. (16 Marks)

b. Which of the models in (a) above would you recommend, and which do you consider to be the least recommended? (Provide justification for your choices) (4 Marks)

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CSME – Nov 2023 – L2 – Q3 – Risk Management and Corporate Strategy

Clarify key concepts in risk management for an investor considering a new business venture.

Professor Akinlabi has been teaching physics at a frontline public university in Nigeria for 30 years. He made quite some money from research grants and has over the years saved about 75 million naira, which he has been keeping in a fixed deposit facility. He complained to his friend, Dr. Albert, who is a professional accountant and expert in risk management, about the low interest rate on fixed deposits and how the high inflation rate in the country is fast eroding the real value of his savings. He is thinking of investing his savings in a poultry farm, but he is quite averse to risks.

Having tried to get some information on the diverse dimensions and dynamics of risks involved in business, he asked Dr. Albert to offer some clarifications. As Dr. Albert, you are required to offer clarifications on the following:

a. Exposure to risk and the nature of qualitative risks. (5 Marks)

b. Residual risk. (3 Marks)

c. The dynamic nature of risk assessment. (7 Marks)

d. Risk-based approach to business. (5 Marks)

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CSME – Nov 2023 – L2 – Q2 – Sustainability and Strategic Management

Develop a sustainable development blueprint using specific environmental and social reporting frameworks.

You have been appointed as a consultant to a company manufacturing microchips in Nigeria. The company’s management and board of directors want to implement a sustainable development agenda. You have been asked to develop a blueprint of financial and environmental reporting that captures the influence of the company’s activities on the physical and social environment.

Required:

a. Define the term ‘Sustainable Development’. (1 Mark)

b. Suggest frameworks for environmental and social reporting using the following:

  • i. Triple Bottom Line (4 Marks)
  • ii. Balanced Scorecard (BSC) (4 Marks)
  • iii. Sustainability Assessment Model (SAM) (4 Marks)

c. What are the steps involved in implementing the SAM approach to measure a product’s performance over its entire life-cycle? (7 Marks)

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CSME – Nov 2023 – L2 – Q1 – Business-Level Strategies

Analyze DITA’s strategy consistency with Porter’s six principles of strategic positioning and classify its strategic position.

Adeoye Oladejo was an exceptionally brilliant student. He graduated from the Department of Wildlife and Ecotourism in the Second-Class Upper Division. He was fortunate to undertake his youth service in Lagos with Dovic International Travel Agency (DITA), which apart from sales of tickets and hotel reservations, is reputed for organizing tours for individuals and groups to different parts of the world. By dint of hard work and impressive results in attracting clients to the travel agency, Adeoye was made a sales manager immediately after completing his service year. He held this position for two years, after which he was made a senior operations manager, a position he held before becoming the CEO.

The motto of the company is “service optimized,” and the company is very clear about its primary strategic goal, which is to optimize profit in the short, medium, and long terms. Hence, Adeoye, as the company CEO, undertook a specialized MBA course in International Business Management. He also wrote a book titled Optimizing Profit in International Tourism. In addition, he employed a business manager and an operations manager with very strong backgrounds in financial planning and strategic thinking, apart from the vast experience they acquired in the field of international tourism.

To ensure that DITA remains highly competitive in the global tourism arena, the company has different tourism packages for its clients from all parts of the world. These include cheap airfares, highly-rated hotels at unbelievably low prices, amazing tourist attractions, and the inclusion of rated artists (musicians, comedians, etc.) for the pleasure of their clients. What is quite significant is the fact that DITA has been able to establish excellent working relationships with airlines, hotels, and various service providers in the tourism industry, enabling it to provide world-class services at unbelievably cheap rates that its competitors find difficult to match.

Of course, the services that DITA offers are similar to those of its competitors in the tourism industry, but DITA has been able to introduce special flavors into its packages that render them more attractive than those of its competitors. These include free massages, horse riding, scuba diving, exquisite dinners, welcome parties, limousine airport shuttles, and much more.

However, DITA’s business strategies have trade-offs, which in the short, medium, and long terms offer it some competitive advantage. For instance, it does not offer services to large groups of people exceeding 50 at a time. Thus, it does not offer pilgrimage services. Nonetheless, DITA has become very popular among rated organizations, family groups, groups of friends, and other relatively small teams interested in organized tours to special places worldwide. Another trade-off of DITA’s strategies is that it does not sell travel tickets to individuals, only to groups.

Over two years, the CEO of DITA, in conjunction with the business and operations managers, has successfully established a synergy of all the elements of their business, making them intricately and seamlessly linked together, resulting in great success and a high return on investment for DITA.

To ensure continuity of its strategic direction, DITA organizes periodic training retreats for its staff and sends them on specialized training to enhance their productivity and commitment to the vision, strategic goals, and core values of the company. By doing so, it is systematically creating an impressive organizational culture that is key to its success. Overall, DITA has become a huge success story and a remarkable leader in the international tourism industry.

Required:

a. Discuss how the operations of DITA are consistent with Porter’s six principles of strategic positioning and how individual firms can achieve sustainable competitive advantage. (24 Marks)

b. A business entity can be classified as any one of the FOUR types in terms of strategic position.

i. Identify and briefly explain each of these types. (3 Marks)

ii. To which of these does DITA belong? (3 Marks)

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MGE – Nov 2014 – L2 – Q7 – Risk Management and Corporate Strategy

Assessing risk in importing machinery and comparing finance vs. operating lease strategies for construction equipment.

EXPEE CONSTRUCTION PLC.

Expee Construction Plc. has been awarded a contract to construct a 50-kilometer feeder road from Abekoko to Idi Magoro by Adatan State. Unfortunately, the company’s earth-moving machine (bulldozer) suffered a major mechanical fault, making it impossible to mobilize to the site for execution of the contract.

Similar machines are not available for sale in the open market. Management is therefore considering the option of either importing a new machine from Japan or leasing one from Odogunyan Machines Limited located in Eko-Akete. The lease may be a finance or operating lease; either option would release the machine to the lessee for immediate use. Management’s decision on this choice is dependent on its willingness to either retain or transfer the risks involved in the usage of the machine.

Required:

a. Evaluate the risk exposure of the company in adopting the import option.
(5 Marks)

b. Identify and formulate strategies that might be used by the company in managing:

i. The finance lease option
(5 Marks)

ii. The operating lease option
(5 Marks)

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MGE – Nov 2014 – L2 – Q6 – Corporate Governance

Evaluating stakeholder impact and ethical principles in response to financial reporting manipulation.

Gloria Okeke is the Chairman and Chief Executive Officer of Magi and Magi Pharmaceuticals, which produces drugs for the Lagoona region of the country. Gloria is convinced that the company is doing quite well and the management is following due process in terms of structure and governance. She believes that this is the reason for the company’s steady growth in terms of revenue, profit, and earnings.

In 2013, Magi and Magi Pharmaceuticals made a profit of 70% over and above the 2012 results. Mr. Joeb, the Chief Accountant, is quite impressed and is of the opinion that the company should make full disclosure of its profits in the Financial Statements, thinking this would engender greater confidence and attract additional investment in the company.

However, Gloria, claiming to be the boss, instructed Joeb to increase her compensation and inflate the cost of production of pharmaceutical drugs to reduce the disclosed profit of the company.

Joeb outrightly disagreed with Gloria’s instruction, giving her a long talk about his duty to comply with his Institute’s professional rules of conduct. However, Gloria cut short the meeting, saying that she did not wish to entertain any further discussion about her decision. She advised Joeb, in his own interest, to implement her instructions.

Required:

a. As a chartered accountant, specify any THREE categories of stakeholders that Joeb should consider in taking any professional decision or action with regard to the instruction stated above and give reasons for your choice.
(7½ Marks)

b. Discuss the basic principles of ethics that Joeb, as a chartered accountant, should comply with in the course of carrying out his professional responsibilities.
(7½ Marks)

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MGE – Nov 2014 – L2 – Q5 – Innovation and Strategic Renewal

Developing strategies for recruiting and retaining innovative staff to sustain competitive advantage.

Hi-Tech Industries Limited is a leading manufacturer of computers and mobile phones in the country. The company is considering the implementation of low-cost, differentiation, and innovation strategies aimed at sustaining and improving its competitive position. Hi-Tech plans to make its flagship product, Zeta Phone, the mobile phone of choice, offering innovative and cutting-edge technology to its consumers.

For the company to transform into an innovative organization as the business strategy requires, it must employ staff workgroups with highly skilled, innovative, and energetic people who can bring life to new ideas quickly and inject the same into the organization.

A skills audit recently conducted by the company showed that the company does not have enough staff that possess those qualities. To address this deficit, the management decided to train existing staff, employ, and retain the best candidates that the labor market can offer.

Required:

Formulate strategies that Hi-Tech Industries may adopt in its policy for employment and retention of human resources.

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CSME – May 2021 – L2 – Q3a – Corporate Governance

Advising on voting rights to protect a shareholder's investment in a struggling company.

A friend of yours, who invested heavily in the ordinary shares of a company that has been struggling in recent years, came to you for advice. He is confused as to what he can do to protect his investment.

Advise him on:
i. How he can use his voting rights as a shareholder to secure his investment. (6 Marks)
ii. Limitations to the use of his voting rights. (4 Marks)

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CSME – May 2021 – L2 – Q2 – Risk Management and Corporate Strategy

Examination of a risk manager’s role, specific risks managed, and purposes of risk monitoring.

“A risk manager is not a line manager and is not directly responsible for risk management but might help with the management of specific risks.”

Required:

a.
i. Review the statement above within the context of the role of a risk manager. (7 Marks)
ii. Evaluate THREE specific risks that can be managed. (3 Marks)

b. Discuss the purposes of risk monitoring. (10 Marks)

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CSME – May 2021 – L2 – Q1 – Strategic Implementation

Assessing Davidson Ltd's key resources, strategic choices, and restructuring to address international opportunities.

Davidson Ltd is an automobile company based in Aba, Nigeria. It has been in
existence for nearly eighty years. The company originally began by supplying
components for small vehicles and was producing equipment during the Second
World War. However, in the nineties, it underwent rapid transformation under
the founder‟s son, Tony. Tony has diversified the company into supplying tricycle
components and spare parts to the Nigerian market. The company now employs
some 500 staff around the country and is well known for the quality of its
workmanship. The company operates under three divisions. One division is
concerned with the manufacture of tricycle components, a second division with
spare parts and the third division undertakes specific one–off work in automobile
and automobile design. The tricycle component division is by far the biggest and
accounts for seventy per cent of the total turnover. The smaller specialist
automobile design division is by far the most profitable in terms of return on
capital employed and it relies a great deal on a senior engineer, Emmanuel, who
has been with the company for more than twenty years.
Recently, the company was invited to send sample components to a Japanese car
manufacturer who is keen to commence operations in Nigeria. These components
are needed within eight months. However, Mr. Tony is concerned that his
company may not be able to meet the strict standard imposed by the Japanese
manufacturer. The deal, if it is sealed, would establish Davidson Ltd as an
important auto component supplier in South East Asia, thus, opening up the
potential for exports. Tony realises that the export potential is great and that any
initiative towards exports would get full backing from the government. While,
this is happening, the spare parts division is also showing signs of growth.
Recent reforms in part of North Africa has made companies in that region to be
very keen to modernise and innovate their old manufacturing processes and
Davidson had received business enquiries from the region.
Tony faces a dilemma. He knows that the opportunities that have presented
themselves would give the company a global presence. At the same time, he
knows that the company is solely under his management as chief executive.
Tony holds eighty percent of the shares. The other two directors hold ten percent
each. Although the other divisions have managing directors, they rely on him for
decision making. The current managing directors are family members. One is a brother in-law and the other a cousin. Their knowledge of the industry and its
workings is generally poor. He made these appointments to please his father so
that he could be left to run the company as he deems fit. Tony knows that to
satisfy the Japanese auto manufacturer, he needs to reorganise the automobile
design division and consider issues of Total Quality Management (TQM). This will
take time and requires that he delegates responsibilities to other divisions.
However, he feels uncomfortable doing this.
The company is at crossroads. The three divisions are doing well, but could do
even better, if their old, bureaucratic and hierarchical systems are reviewed.
Indeed, some of the younger managers and engineers would prefer a more open,
flexible management structure. Some of them have studied both engineering and
management in Holland and the United States, and are keen to see key
innovations in place. While Tony knows that these opportunities highlighted
above should not be missed, he has to ensure that they are handled successfully
so that the future is secured for Davidson Ltd. This requires that he takes some
tough decisions in restructuring the company within a few months.

Required:

Write a report to the Chief Executive of Davidson Ltd addressing the following issues:

a.
i. The key resources and implementation issues facing Davidson Ltd in the scenario above. (15 Marks)
ii. How the key resources will affect strategic choices. (7 Marks)
iii. How implementation issues will affect strategic choices. (8 Marks)

b. How should Tony restructure the company? (10 Marks)

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CSME – May 2017 – L2 – SC – Q7 – Corporate Governance

Explain the Nolan principles guiding public life and discuss standards for ethical conduct in the public sector.

Nolan Committee on standards in public life was set up to report on standards of behaviour amongst politicians, civil servants and public bodies. Provide an analysis of Nolan‟s‟ SEVEN Principles of Public Life. (15 Marks)

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CSME – May 2017 – L2 – SC – Q6 – Ethics in Business

Explain agency problems and Tucker's model to guide ethical decisions for accountants.

a. Agency problems and conflicts are common in all organisations.
Required:
Explain the concept of agency problems and discuss FIVE types of agency conflicts that might exist in an organisation. (8 Marks)

b. Tucker‟s Five Question Model can be employed in training new professional accountants in ethics.
Required:
Explain the issues covered by the Tucker‟s Five Question Model. (7 Marks)

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CSME – May 2017 – L2 – SC – Q5 – Risk Management and Corporate Strategy

Show how organizations can address risk management challenges using ISO 31000.

a. Using the ISO 31000 framework, show what an organization might do to address risk management challenges. (9 Marks)

b. Explain THREE main elements of risk management contained in the ISO 31000 framework. (6 Marks)

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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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CSME – May 2017 – L2 – SB – Q3 – Risk Management and Corporate Strategy

Explain business risk to a conservative investor and discuss strategies for risk control and monitoring.

Mallam Danladi is a civil servant who has won a sum of one hundred million Naira in a lottery. Being a very conservative person who is averse to risks, Mallam Danladi is contemplating putting the money in a fixed deposit account at an interest rate of 14% per annum or into treasury bills at an interest rate of 18.5% per annum. These two options are considered to be virtually risk-free. Mr. Madoff, a risk consultant, advised him to invest in the production of shea butter, coconut oil, and black soap, with a promise of 52% profit per annum. In an attempt to convince Mallam Danladi to invest in the production of these items, Mr. Madoff tried to educate him on the nature of risks and how to effectively monitor and control them in ways that will ensure that business remains highly profitable.

Required:

a. Explain briefly the nature of risk in business to Mallam Danladi. (2½ Marks)

b. Discuss FOUR distinct means of controlling business risk. (10 Marks)

c. Explain briefly the purpose of monitoring risks in business. (3 Marks)

d. Discuss THREE ways of monitoring risks in business. (4½ Marks)

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CSME – May 2017 – L2 – SB – Q2 – Corporate Culture and Strategy

Discuss the cultural web and the ethical principles for maintaining client confidentiality.

Johnson and Scholes suggested that there is a cultural web within an organization.

Required:

a. Discuss the idea of the cultural web and its interrelated elements in a way that would assist a new employee to understand this concept in a business organization. (15 Marks)

b. As a professional accountant, explain any TWO ethical principles or requirements you would consider in deciding whether or not to keep a promise to maintain confidentiality with regards to information acquired from a client in the ordinary course of business. (5 Marks)

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CSME – May 2017 – L2 – SA – Q1 – Strategic Planning Process

Develop a business plan for a fast-food franchise and explain the product life cycle with stakeholder analysis.

Gbenga Alimi wants to establish a fast food restaurant in Koko, a state in Naijaland. A well-known global fast-food outfit in Naijaland has agreed to give him a franchise to operate the business in the state. However, the franchisor has requested Gbenga to present a viable business plan for assessment.

Required:

a. Outline the contents of a business plan addressing the proposed franchise’s viability. (20 Marks)

b. Use a graphical representation to educate Gbenga on the four stages of the classical product life cycle. (6 Marks)

c. Within an organizational context, distinguish between:

i. Narrow and wide stakeholders
ii. Active and passive stakeholders

(4 Marks)

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