Question Tag: Strategic Alliances

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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 – May 2017 – L2 – Q3a – Strategic alternatives, analysis and selection

Discuss the impact of strategic alliances on companies and how they contribute to competitive advantage.

Strategic alliances have become an important part of the corporate world, with companies joining forces for various strategic reasons. A well-formed alliance can provide a competitive advantage to the companies involved.

Required:

a) Explain FIVE ways in which strategic alliances can impact companies.

1. Access to New Markets: Strategic alliances allow companies to enter new markets and expand their geographical reach without having to go it alone. By partnering with local firms, companies can leverage their partner’s market knowledge, distribution networks, and customer relationships to penetrate new markets more effectively.

2. Sharing of Resources: Companies in an alliance can share resources such as technology, expertise, and capital. This can reduce costs and increase efficiency, allowing the companies involved to achieve economies of scale and improve their competitive position in the market.

3. Risk Sharing: Entering into a new market or launching a new product involves significant risks. Strategic alliances allow companies to share these risks with their partners, reducing the burden on any one company and increasing the likelihood of success.

4. Enhancing Innovation: Alliances can foster innovation by bringing together different perspectives, skills, and technologies. When companies collaborate, they can create new products or services that neither could have developed on their own, giving them a competitive edge.

5. Strengthening Competitive Position: By forming alliances, companies can strengthen their competitive position against rivals. This can be particularly important in industries where competition is fierce, and alliances can provide the scale and scope needed to compete effectively.

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