Question Tag: Business Expansion

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  • 10 Marks

CSEG – Nov 2015 – L2 – Q3a – Internal control and audit

Explain the composition and functions of an Audit Committee in corporate governance.

The role of Audit Committee in corporate governance cannot be overemphasized.

i) What should be the composition of an Audit Committee? [4marks]

ii) Explain FOUR (4) functions of an Audit Committee. [6marks]

i) The composition of the Audit Committee

  1. The audit committee should comprise at least three directors, the majority of whom should be non-executive.
  2. The membership of the audit committees should ideally comprise directors with adequate knowledge of finance, accounts and the basic element of the laws under which the corporate body operates or is subject to.
  3. The chairman of the committee should be a non-executive director.
  4. The managing director/chief executive officer , the finance director, the head of internal audit and a representative of the external auditors should ordinarily be invited to attend meetings

(4 marks)

ii) Functions of the Audit Committee

The primary functions of the audit committee will be to:

  1. Recommend the appointment of the external auditors of the corporate body;
  2. Liaise with the external auditors for the purposes of maintaining and ensuring audit quality, effectiveness, risk assessment, interaction with internal auditors and dealing with situations governing the resignation of the external auditors and dealing with situations governing the resignation of the external auditors;
  3. Review with the auditors their report on the financial statements of the corporate body;
  4. Review the adequacy of systems and internal controls and of the degree of compliance with material policies, laws and the code of ethics and business practices of the corporate body;
  5. Provide a direct channel of communication between the board and the external and internal auditors of the corporate body, accountants and compliance officers (if any) of the corporate body;
  6. To report to the board on all issues of significant extraordinary financial transactions;
  7. To assist the board in developing policies that would enhance the controls and operating systems of the corporate body.
  • 10 Marks

CSEG – Nov 2017 – L2 – Q6b – Strategic management in the globalized workplace

Advise on the most suitable foreign market entry strategies for Wuudin’s new business lines.

Asamoah Wuudin is a Ghanaian private company owned mainly by the Wuudin family. Most of its clothing and accessories are produced and marketed by the company (some are manufactured by outside contractors). For other products, notably fragrances, cosmetics, and eyewear, Wuudin licenses its brand names to other companies. The Board of Directors of Wuudin is considering expanding into new foreign markets with athletic clothing, hotels, and bridal shops.

Required:

Advise Wuudin on the most suitable foreign market entry strategy for each of the new lines of business. (10 marks)

In advising Wuudin on the most suitable foreign market entry strategy for each of the new lines of business, the key criterion is likely to be the opportunities for sharing or transferring Wuudin’s other resources and capabilities with or to the new businesses.

1. Athletic Clothing:

Recommended Strategy: Joint Venture

  • Rationale: Entering into a joint venture with an established foreign partner in the athletic clothing market is advisable. Wuudin may need to access technical capabilities for designing products for different sports. A joint venture allows Wuudin to combine its branding and production strengths with the local market knowledge and expertise of a partner. This collaboration can help Wuudin quickly establish a foothold in the new market while sharing risks and benefits with the partner.

2. Hotels:

Recommended Strategy: Licensing

  • Rationale: Licensing is the most suitable entry strategy for Wuudin in the hotel industry. Since Wuudin’s core capabilities do not directly relate to the design and operation of luxury hotels, licensing the Wuudin brand to an experienced hotel operator can allow the company to enter the market without having to develop the expertise needed to manage hotels. This strategy leverages the brand’s reputation while outsourcing the operational complexities to a partner with industry knowledge.

3. Bridal Shops:

Recommended Strategy: In-House Expansion

  • Rationale: Wuudin can utilize its existing design, manufacturing, marketing, and distribution capabilities to develop and expand the bridal shop business in-house. Since Wuudin already has expertise in clothing and accessories, this line of business aligns closely with its current operations. Expanding this business in-house allows Wuudin to maintain control over product quality, brand identity, and customer experience, while capitalizing on existing synergies.

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