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 2023 – L1 – SB – Q7 – Risk Management and Corporate Strategy

Analysis of enterprise and operational risks for Gbam Telecoms in launching 5G services.

Gbam Telecoms Plc, a leading mobile phone and internet communications company, is planning to roll out its 5th Generation (5G) spectrum. As a new product, the 5G spectrum promises customers high-speed internet with immense possibilities in computing, big data management, robotics, and other numerous benefits. While a section of the populace believes that the roll-out is a welcome development, others express reservations about the 5G technology. Within Gbam Telecoms Plc, some employees believe that the erratic nature of the country’s power supply could damage the 5G transponders. Also, the high cost of diesel would increase the company’s operating costs, thus making the product largely unaffordable to prospective consumers. There are also security threats to the company’s facilities due to heightened insecurity in the country. The umbrella trade union for the company’s employees is also agitating for a pay rise and hazard allowance should the company go ahead with the 5G roll-out. Some experts believe that the market for 5G spectrum in the country today is negligible because most telecommunication and internet devices used by consumers in the market are not 5G-compliant. There are also reports that the competitors of Gbam Telecoms Plc are studying how the market will respond to Gbam Telecoms’ 5G spectrum before deciding to enter the market. In addition, a study carried out in Europe concluded that 5G spectrum may be hazardous to the health of people living close to 5G transponders. There is also news about the development of new and better technologies called 6G and 7G, which may make 5G obsolete within a short period of time.

Required:

  1. (a) Advise the management of Gbam Telecoms Plc on the enterprise and operational risks that could be associated with the roll-out of 5G spectrum using information contained in the given scenario. (11 Marks)
  2. (b) Suggest to Gbam Telecoms Plc the key elements that should be contained in the company’s Risk Management System. (4 Marks)

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CSME – May 2023 – L1 – SB – Q6 – Ethics in Business

Application of Kohlberg's moral development stages in ethical decisions and critiques of the theory.

Using Kohlberg’s stages of moral development, identify and explain the reasons why individuals make their decisions when faced with moral dilemmas.

(a) Identify and explain the reasons why individuals make their decisions when faced with a moral dilemma using Kohlberg’s stages of moral development. (12 Marks)

(b) Explain the criticisms of Kohlberg’s stages of moral development. (3 Marks)

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CSME – May 2023 – L1 – SB – Q5 – Ethics in Business

Differences between creative and critical thinking and their impact on employer benefits.

Creative and critical thinking are essential skills that chartered accountants should possess for optimal performance.

(a) Differentiate between creative and critical thinking. (4 Marks)

(b) Explain the modes through which creative thinking is expressed. (8 Marks)

(c) Explain how the creative thinking of employees benefits their employers. (3 Marks)

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CSME – May 2023 – L1 – SA – Q4 – Ethics in Business

Exploration of ethical stances and CSR implications for business startups with social goals.

Richard and his wife, Rachael, have just retired as top-level managers from one of the biggest oil companies in the country. They have earned substantial personal wealth and have ample investments in several blue-chip companies. Rachael, a food technologist passionate about healthy living, convinced Richard to start a company to produce organic drinks and foods from only natural ingredients. She also suggested that the company adopt environmentally friendly manufacturing processes and consider the wellbeing of all employees and other stakeholders.

The primary reason for establishing the company is to fulfill a passion, build a sustainable, socially impactful business, and not aggressively pursue profit. Hence, both Richard and Rachael are happy to just break even initially and later record minimal profits.

As an expert in business ethics, you are required to:

(a) Identify the alternative ethical stances available to Richard and Rachael and the ones implied in the scenario. (4 Marks)

(b) Discuss Gray, Owen, and Adams’s classification of groups of people and their views of the relationship between business organizations and society. (14 Marks)

(c) Which of the classifications in (b) above is relevant to Richard and Rachael? (2 Marks)

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CSME – May 2023 – L1 – SA – Q3 – Corporate Governance

Explanation of corporate governance statement contents and voluntary disclosure.

The code of corporate governance prescribes corporate governance disclosures for listed companies.

(a) Explain the contents of a corporate governance statement. (12 Marks)

(b) Not all information that corporate entities can provide is mandatory. Explain the justifications and drawbacks of voluntary disclosure in corporate governance reports. (8 Marks)

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CSME – May 2023 – L1 – SA – Q2 – Risk Management and Corporate Strategy

Exploring risk management through identification, ranking, and stakeholder impacts.

Every business venture has some measure of risk exposure that must be identified, measured, and adequately prepared for. Indeed, each business entity should have in place a good risk management strategy.

As a risk manager, clarify the following in ways that will be comprehensible to a greenhorn in business:

(a) Risk identification. (5 Marks)

(b) Importance of ranking risks. (3 Marks)

(c) Examine the impact of risks on categories of stakeholders. (12 Marks)

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CSME – May 2023 – L1 – SA – Q1 – Strategic Implementation

Strategies for market expansion, sustainable advantage, and industry environment for a medium-scale food processing firm.

Oyinbo Industries Limited is a medium-scale enterprise involved in the processing and packaging of local (traditional) food items for the Nigerian market. Its product portfolio includes Instant Elubo Powder, Instant Pounded Yam Powder, and Instant Beans Powder, all of which have been successful in the Nigerian market. The company hopes to expand its market coverage to the United States, United Kingdom, France, Canada, and the United Arab Emirates, which are believed to be viable new markets for the products.

To achieve these goals, the company plans to strengthen its position in the Nigerian market, focusing on increasing market share, sales growth, and profitability. Recently, it expanded its product range by introducing Instant Plantain Powder, Instant Soya Beans Powder, and Garri Ijebu. The table below shows current market and sales growth for each product:

*Products introduced into the market in 2021

The company’s current market growth rate for each product is over 10%, largely due to population growth and concerns about food hygiene in open markets. Oyinbo Industries seeks to leverage this opportunity to become a leader in processed and packaged foods in Nigeria.

However, competitors are mainly cottage industries and small-scale producers who, despite limited resources, control substantial market share. These firms primarily depend on small rural farmers for raw materials, which are abundant but lack regulation.

As part of its growth plan, Oyinbo Industries intends to secure a raw material supply by acquiring farmland in Kwara State. It also aims to collaborate with a local fabricator for its processing equipment. In the next phase, the firm plans to leverage its distribution network and internal capabilities to expand market share in Nigeria and increase sales of new products. However, challenges such as frequent power outages and equipment breakdowns remain.

Required:

  1. (a) Advise on strategies for each product that align with the company’s strategic direction using Ansoff Growth Vector Analysis. (13 Marks)
  2. (b) Explain how to achieve sustainable competitive advantage using Michael Porter’s Six Principles. (6 Marks)
  3. (c) Describe key business environment elements using the PESTEL framework. (6 Marks)
  4. (d) Identify the type of integration strategy being pursued and discuss potential drawbacks. (5 Marks)

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CSME – Nov 2015 – L2 – Q7 – Corporate Strategy Formulation

Analyzes reasons for slow growth in DAB phone sales, uses the S-shaped growth curve to evaluate market stages, and suggests sales improvement strategies.

Ade John is a graduate of XYZ University. For his final project work in the Department of
Electronics and Electrical Engineering, he designed a cell-phone that is rugged, cheap,
handy and not sophisticated.
During his national service year, he kept toying with the idea of manufacturing the cellphone. To ascertain that there is a market for the phone, he carried out a series of market surveys among rural farmers, artisans, market women, etc. Each time, he was convinced that a market actually exists for his design. He also made contact with some manufacturers of cell-phone components. He entered
into an agreement with CKT Japan to import cell-phone accessories to enable him
assemble them in Nigeria. DAB phone is the first of its kind in the Nigerian market and
production and assembly commenced in a small room in his uncle‟s house at Ikare.
The first batch of phones manufactured by DAB Company was supplied to cell-phone
vendors in cities on „sale or return‟ basis. To encourage distributors to accept the
phones, a 15% margin was allowed. In addition, independent sales persons (hawkers)
were given between 10 -12% margin to sell the product. In spite of the low price of DAB
phones, demand was disappointing at the end of the first year. Nevertheless, Ade John is
still optimistic about the commercial viability of the phone if only he could develop an
effective strategy to market the DAB phones

Required:
a. Identify and explain TWO reasons for the slow growth of sales of DAB phones. (4 Marks)
b. With the aid of an S-shaped growth curve, evaluate market development of DAB phones. (6 Marks)
c. Recommend the strategies that Ade John can use to improve sales. (5 Marks)

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CSME – Nov 2015 – L2 – Q6 – Corporate Governance

Evaluates how specific corporate governance issues impact the effectiveness of a company's governance.

Explain briefly how the following key issues in corporate governance establish how well or badly a company is governed:

a. The role and responsibilities of the board of directors
b. The composition and balance of the board of directors
c. Financial reporting, narrative reporting, and auditing
d. Directors’ remuneration
e. Risk management and internal control

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CSME – Nov 2015 – L2 – Q5 – Corporate Governance

Outlines key responsibilities and duties of the board in corporate governance, relevant for improving corporate structure and performance.

The owner of ABC Company learned from a conference and a professional magazine that weak corporate governance accounted for recent corporate failures in Nigeria. Many board members were found lacking a clear understanding of board responsibilities and duties.

Required:
The Managing Director will soon address the board and has requested a paper detailing the board’s responsibilities and duties.

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