Critical success factors for the successful mobile money service operations

• Network reach – there is currently only 65% coverage of Ghana by the network operators. For effective remittances across the whole country, there must be expansion of network to unreached areas.
• Network stability – stable network and zero-down time is a prerequisite for the confidence in mobile money solution. Customers may feel frustrated if the network is not stable. Network instability is one major challenge identified.
• Product offering – continuous expansion of services offered on mobile money will guarantee its long-term profitability and success.
• Mobile Technology Infrastructure – the mobile money runs on the mobile telephony technology provided by network operators without which mobile money solution would be impossible. Mobile money solution survival will depend on the survival of network operators.
• Regulation – to protect customer’s money and build confidence stringent regulations have been called for and that has been put in place effective 1 December 2017. This will ensure long-term survival of mobile money operations in Ghana.

Threat of New Entrant

• Capital requirement – the minimum capital required by an agent is GH¢4,000 which appears to be reasonably within the reach of average Ghanaian. This may be deduced from the number of people joining as agent rising from 17,467 in 2013 to 93,376 in 2016 and projected annual rapid growth in the next 3 years.
• New Legislation and KYC requirements – with introduction of new legislation and KYC requirements, some people who may have questionable record may not be allowed to operate mobile money. But this may not constitute serious entry barrier since once a person does not have any criminal record he/she can pass the KYC test.
• Switching cost– since the mobile money appears to be standardised service and not differentiated it will not cost customers anything to switch from one agent to another hence new agents can always attract customers and will not constitute any significant entry barrier.
  From the above analyses entry barriers are generally low and this will make competition much keener as more new agents join the fray.
  Rivalry among existing agents
• Number of agents – there are large number of agents and the number is increasing and therefore competition for customers is going to be very intense all things being equal.
• Sector/industry growth rate – the mobile money service looks to be in growth stage. Given the number of agents joining the business one can assert that the segment is yet not at maturity or declining stage. With the potential for growth competition is likely not to be intense as compared to maturity or declining stage.
• Pending implementation of mobile interoperability – successful implementation of intended mobile interoperability which will allow transactions across all the four networks, this is likely to intensify the competition among the agents.
• Standard nature of service – the mobile money service is not differentiated in any way among the various networks. The fees charge is the same across the four networks hence this is likely to intensify competition since a customer can walk to any nearest point and get the service.
• Low switching cost – due to low switching cost there will be intense rivalry among mobile money providers.
  Bargaining Power of Customers/Buyers
• Self-service – the customers are able to do a number of mobile transactions by themselves including airtime purchase, transfer from one mobile wallet to another, pay utility bills etc. The only point that mobile money agents are most needed is where a customer wants to either put money on his or her wallet or physically withdraw from the wallet. This makes customers somehow power and effectively deny agents some fees.
• Low switching costs – the customers really are not facing any switching costs hence mobile agents are at their mercy and can chose to transact business with any agent at any place of convenience. Perhaps to have repeated business the agents would have to do extra work to encourage customers to always return to them for business. This makes customers very powerful.
• Access to many agents – the number of agents are increasing and it is projected to further increase. The gives the customer many alternatives and that makes the customer bargaining power very strong.
  Bargaining power of suppliers
• Concentrated or Dominant or Few Suppliers – the main suppliers to the agents are the four network providers. These operators are large and can dictate the terms of the relationship. The agents are very small relative to the network operators. Again, most of the fees end up with the operators. Hence the operators are very powerful.
• There are no alternatives/substitutes – the mobile money service was launched and is being operated by mobile network operators and are leveraging on their existing nation-wide infrastructure. There are no other companies that have nation-wide capability to deliver mobile money solution apart from the four network operators. This even makes the bargaining power of network operators very potent and veritable.
• The agent group is not an important customer of the network operators group – the network operators core business is voice and data which make up the substantial source of revenue. Mobile money service is just ancillary to their main lines of business. This makes the bargaining power of suppliers still very strong.
  Threat of substitute products
• Less attractive substitute services from banks – given less stringent KYC requirements of mobile money compared to higher KYC requirements, convenience of mobile money compared to the banks, increasingly mobile money services are more attractive. This make bank services as substitute less of a threat to mobile money.
• Low/zero switching cost for customers – it does not cost customer to switch to mobile money for remittances and other transactions executable on the mobile money solution. This again makes banking services as substitute no threat to mobile money.

Assessment of the macro-environment
The case study under consideration has a number of environmental influences or variables to be considered, including the following: Economic, Legal, and social-cultural factors.
Economic Factors
There are a number of economic factors in Ghana that pose serious threats to business operations and these include:

• High interest rates – the interest rate regime in the country is high, second highest in the World. This means that businesses looking to raise debt capital would have to pay high cost and this can negatively affect businesses relying on debt.
• Growing budget deficit – the increasing budget deficit coupled with the government heavily relying on domestic money and capital markets to make up for shortfall, the government is essentially competing with the private sector for limited credit. This will crowd out the private sector and push up cost of credit and this will deprive businesses of needed capital for investment.
• Concerns raised by international financial organisations about the need for financial discipline. The government need to contain expenditure so as to reduce worsening budget deficit.
  Legal
  There are some issues that have legal underpinnings and these include the following factors:
• Introduction of taxation – the introduction of taxes on the mobile money services will obviously increase the cost of doing business. For the agents to remain profitable as before the introduction of taxes they may be forced to increase the charges on remittances.
• Law to regulate operations of mobile money– With the passage of new law the KYC requirements have been made stringent and this places higher burden on both the agents and operators. This to some extent is likely to limit the number of people who can do agency since if you have prior criminal record you may not be allowed to be an agent.
  Socio-cultural Factors
  A number of factors can be considered here:
• Low Savings culture – there is generally low savings culture among the citizens of the Ghana. This has implication of capital formation and deposit mobilization by the financial sector. This limits amount of credit that will be available to deficit/spending units in the country.
• Financial Inclusion – a sizeable number of the citizens of Ghana remained outside financial services sector. This could be one of the factors accounting for low savings culture in the country.
  Technological factors
• Inadequate technological infrastructure – the mobile network operators have failed to match the growing subscribers and the attendant demands on the mobile infrastructure resulting in network instability as well as down time. This is impacting mobile money service negatively.
• Innovation – Mobile money started in the country largely with two products – airtime purchases and domestic remittances for small amounts. With the passage of time, mobile money service offerings have expanded to include bill payments, Point of Sales (POS) payments, fund transfers in increasingly larger amounts, and deposit collection by banks and non-bank financial institutions.

• One of the measures that can be taken to overcome this problem is the way of financial rewarding of the managers. The best way is to calculate their bonuses as a percentage of the realized profit of the company.
• To resolve any agency problem and the development of the company, the external and internal audit is of the great importance to be made. It helps to evaluate the efficiency of the company, to detect and stop the eventually inefficient operations as well as to protect the assets and the capital. The most effective way in this situation is to engage external audits who would periodically value the reality and objectivity of the company’s financial reports. Precise financial reporting is critical to ascertaining that the results are stated fairly and the management has not manipulated results for personal gain.
• Share options. This gives directors and possibly other managers and staff the right to purchase shares at a specified exercise price after a specified time period in the future. The options will normally have an exercise price that is equal to, or slightly higher than, the market price on the date that the options are granted. Options can be used to encourage cautious directors to take positive action to increase the value of the company – for the benefit of shareholders.
• Performance-related bonuses. The performance-related elements of executive directors’ remuneration need to be carefully designed in order to ensure that the behaviours and actions that are promoted as a result of the targets are aligned with the long term success of the company and the interests of shareholders and at the same time are stretching. Remuneration incentives should be compatible with risk policies and systems and criteria for paying bonuses should be risk-adjusted. However, non-executive directors should not be remunerated by shares or other performance-related elements, since this will compromise their independence.
• The threat of take over. Another market force is the threat of takeover by another firm that believes it can enhance the target firm’s value to restructuring its controlling, processes, and funding. The constant threat of takeover tends to motivate management to act in the best interest of the firm’s owner.
• Annual General Meetings. AGMs are a means to engage shareholders and allow them to participate actively in the running of their companies. This way, agency problems would be reduced since shareholders are involved in the decision making regarding their companies.

The balanced score card approach is an approach to the provision of information to management to assist strategic policy formulation and achievement. The information provided may include both financial and non-financial elements, and cover areas such as profitability, customer satisfaction, internal efficiency and innovation.
The scorecard offers four perspectives on performance

• Financial
• Customer
• Innovation and learning
• Internal business processes
• Using Financial Perspective to Monitor and Measure Performance
  How do should Adama Group look to shareholders. Financial performance measures indicate whether the company’s strategy, implementation, and execution are contributing to bottom-line improvement. Typical financial goals have to do with profitability, growth, and shareholder value. Adama group’s financial goals could simply be: to survive, to succeed, and to prosper. Survival can be measured and monitored by cash flow, success by quarterly sales growth and operating income by division, and prosperity by increased market share by segment and return on equity.
• Customer Perspective: How Do Customers See Adama Group
  Customers’ concerns tend to fall into four categories: time, quality, performance and service, and cost. To put the balanced scorecard to work, Adama Group should articulate goals for time, quality, and performance and service and then translate these goals into specific measures. Senior managers at Adama Group should therefore be assessed and monitored by percentage of sales from new products, on time delivery to customer (defined by customers), improvement on the company’s Total Quality Management, become customers’ supplier of choice through partnerships with them, and development innovative products tailored to customer needs.
• Internal Business Perspective: What Must Adama Group Excel at?
  Customer-based measures are important, but they must be translated into measures of what the company must do internally to meet its customers’ expectations. The internal measures for the balanced scorecard should stem from the business processes that have the greatest impact on customer satisfaction—factors that affect cycle time, quality, employee skills, and productivity.
  Managers of Adama Group should attempt to identify and measure their company’s core competencies, the critical technologies needed to ensure continued market leadership, decide what processes and competencies they must excel at and specify measures for each.
• Innovation and Learning Perspective: Can Adama Group Continue to Improve and Create Value?
  The customer-based and internal business process measures on the balanced scorecard identify the parameters that the company considers most important for competitive success.
  Adama Group innovation measures should focus on the group’s ability to develop and introduce standard products rapidly, products that the company expects will form the bulk of its future sales. Its manufacturing improvement measure should focus on new products; the goal is to achieve stability in the manufacturing of new products rather than to improve manufacturing of existing products. Adama Group should use the percent of sales from new products as one of its innovation and improvement measures. If sales from new products are trending downward, managers can explore whether problems have arisen in new product design or new product introduction.
  In addition to measures on product and process innovation, Adama Group should overlay specific improvement goals for their existing processes.

The strategy elements can be analysed into three broad categories

• Strategic management-How the entity intends to generate and preserve Value in terms of the following : strategy and objectives; business model
• Business Environment-The internal and external environments in which the entity operates – i.e. Trends and factors; Principals risks and uncertainties; Environmental, employees, social, community and human right matters.
• Business performance and position-How the entity has developed and performed and its position at the year end – Analysis of performance and position; Key performance indicators (KPIs); Employee gender diversity

Good corporate governance is important for any organisation. The benefits that derive for private sector structures easily transpose to those in the NGO sector.

• In as much as good governance leads to increased returns of profits for private organisations, the existence of controls, risk management and appropriate supervision ensure financial stability within the NGO. This finance related goal can be considered through the ability to continue to provide value for money, achieving entity goals and ensuring economic and efficient operations so as to meet needs both today and into the future.
• Risk reduction through governance regulation has a particular resonance when considering the risks inherent in operating in poorer regions around the world. These risks may be political or physical and may manifest themselves in negative publicity or unexpected costs.
• Good governance assists private organisations in attracting investment. This is equally true for NGOs. Those that wish to support such worthy causes such as governments or private individuals will feel more assured that their money is being put to good use if the organisation is well governed through appropriate structures for board operations and internal control.
• The scenario identifies the increased commercialisation of the venture. This would include the use of professional management teams who understand and support governance apparatus used in the private sector. This alignment to their management style provides a positive working environment for management, a known structure within which to operate effectively. It is also true that the use of such management will make the implementation or imposition of such a regime easier to deal with for an NGO going through such a transition.
• The existence of governance regimes includes the inherent need to adhere to the underlying governance concepts of integrity, justice, even handedness and probity amongst others. Since these will be fundamental ethical belief with the NGO, the implementation of additional levels of governance regulation is smoothed or made easier.
• Overall, the benefits of good governance are within the word itself. To govern is to command and implicit in this is the ability to command in a beneficial way. The requirement is to attempt to balance the level to which commercial governance regulation is necessary or sought. It is of benefit to the extent to which it does not compromise the ability to offer the service in the most effective way. Clearly to embrace the concept without regard to this qualification would be inappropriate.
  Alternative solution
• To ensure adherence to and satisfaction of the strategic objectives of the organization, thus aiding effective management.
• To minimize risk, especially financial, legal and reputational risks, by ensuring appropriate systems of financial control are in place, systems for monitoring risk, financial control and compliance with the law.
• To promote integrity, that is straightforward dealing and completeness.
• To fulfill responsibilities to all stakeholders and to minimize potential conflicts of interest between the owners, managers and wider stakeholder community.
• To establish clear accountability at senior levels within an organisation. However, one danger may be that boards become too closely involved with day-to-day issues and do not delegate responsibility to management.
• To maintain the independence of those who scrutinize the behaviour of the organisation and its senior executive managers. Independence is particularly important for non-executive directors, and internal and external auditors.
• To provide accurate and timely reporting of trustworthy/independent financial and operational data to both the management and owners/members of the organisation to see them a true and balanced picture of what is happening in the organisation.
• To encourage more proactive involvement of owners/members in the effective management of the organisation through recognising their responsibilities of oversight and input to decision making processes via voting or other mechanisms.

Code of ethics may usefully draw upon the underlying principles of good governance or existing codes such as the IFAC code for accountants. Blending the most appropriate elements from a variety of sources is a difficult skill to apply in practice but necessary for the creation of a worthy document.
Below are the fundamental principles that should be included in code of ethics
A professional accountant is required to comply with the following fundamental principles:

• Integrity
  A professional accountant should be straightforward and honest in all professional and business relationships.
• Objectivity
  A professional accountant should not allow bias, conflict of interest or undue influence of others to override professional or business judgments.
• Professional Competence and Due Care
  A professional accountant has a continuing duty to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional service based on current developments in practice, legislation and techniques. A professional accountant should act diligently and in accordance with applicable technical and professional standards when providing professional services.
• Confidentiality
  A professional accountant should respect the confidentiality of information acquired as a result of professional and business relationships and should not disclose any such information to third parties without proper and specific authority unless there is a legal or professional right or duty to disclose. Confidential information acquired as a result of professional and business relationships should not be used for the personal advantage of the professional accountant or third parties.
• Professional Behavior
  A professional accountant should comply with relevant laws and regulations and should avoid any action that discredits the profession.

International strategy
Explanation
Multinational companies that are confronted with low cost pressures and low pressures for local responsiveness pursue “International Strategy”. An international strategy is based on diffusion and adaptation of the parent company’s knowledge and expertise to foreign markets. Country units are allowed to make some minor adaptations to products and ideas coming from the head office, but they have far less independence and autonomy compared to multidomestic companies. The primary goal of the strategy is worldwide exploitation of the parent firm’s knowledge and capabilities. All sources of core competencies are centralized. This strategy type is ethnocentric since the foreign activities only secure the home-country company. A strong dependence of the foreign subsidiary on the resources of the home country is a consequence.
Risks associated with international strategy
i. Different activities in the value chain typically have different optimal locations. The international strategy, with its tendency to concentrate most of its activities in one location, fails to take advantage of the benefits of an optimally distributed value chain.
ii. The lack of local responsiveness may result in the alienation of local customers.
iii. The firm’s inability to be receptive to new ideas and innovation from its foreign subsidiaries may lead to missed opportunities.

Explanation
The multinational companies facing low pressure for local adaptation and responsiveness but high pressure to lower cost pursue “Global Strategy”. Companies that pursue a global strategy focus on increasing profitability by reaping the cost reductions that come from economies of scale and location economies; that is, their business model is based on pursuing a low-cost strategy on a global scale. A global strategy emphasizes economies of scale due to the standardization of products and services, and the centralization of operations in a few locations. These companies try not to customize their product offerings and marketing strategy to local conditions because customization, which involves shorter production runs and the duplication of functions, can raise costs. Instead, they prefer to market a standardized product worldwide so that they can reap the maximum benefits from economies of scale.
Risks associated with Global strategy
i. A firm can enjoy scale economies only by concentrating scale-sensitive resources and activities in one or few locations. Such concentration, however, becomes a “double-edged sword.” Thus, decisions about locating facilities must weigh the potential benefits from concentrating operations in a single location against the higher transportation and tariff costs that result from such concentration.
ii. The geographic concentration of any activity may also tend to isolate that activity from the targeted markets. Such isolation may be risky since it may hamper the facility’s ability to quickly respond to changes in market conditions and needs.
iii. Concentrating an activity in a single location also makes the rest of the firm dependent on that location. Such dependency implies that, unless the location has world-class competencies, the firm’s competitive position can be eroded if problems arise.

Explanation
Multidomestic strategy is the reverse of global strategy since the company faces high pressure for local responsiveness and adaptation but with low pressure to lower costs. A firm whose emphasis is on differentiating its product and service offerings to adapt to local markets follows a multidomestic strategy. Decisions evolving from a multidomestic strategy tend to be decentralized to permit the firm to tailor its products and respond rapidly to changes in demand. This enables a firm to expand its market and to charge different prices in different markets.
Risks associated with Multidomestic
i. Decreased ability to realize cost savings through scale economies.
ii. Greater difficulty in transferring knowledge across countries as a result of localization of core competences.
iii. May lead to “over adaptation” as conditions change. In many industry segments, a variety of factors, such as the influence of global media, greater international travel, and declining income disparities across countries, may lead to increasing global standardization.

Explanation
Transnational strategy is adopted by company that simultaneously faces both strong cost pressures and strong pressures for local responsiveness. In essence, companies that pursue a transnational strategy are trying to develop a business model that simultaneously achieves low costs, differentiates the product offering across geographic markets, and fosters a flow of skills between different subsidiaries in the company’s global network of operations. As attractive as this may sound, the strategy is not an easy one to pursue because it places conflicting demands on the company.
Risks associated with Transnational strategy
i. The choice of a seemingly optimal location cannot guarantee that the quality and cost of factor inputs (i.e., labor, materials) will be optimal. Managers must ensure that the relative advantage of a location is actually realized, not squandered because of weaknesses in productivity and the quality of internal operations.
ii. Although knowledge transfer can be a key source of competitive advantage, it does not take place “automatically.” For knowledge transfer to take place from one subsidiary to another, it is important for the source of the knowledge, the target units, and the corporate headquarters to recognize the potential value of such unique know-how.

• Factor Conditions/Endowments – The first dimension in Porter’s model is the factors of production. This dimension refers to the inputs necessary to compete in any industry – labour, land, natural resources, capital, and infrastructure (such as transportation, postal, and communication systems). There are basic factors (for example, natural and labour resources) and advanced factors (such as digital communication systems, technological and scientific know-how and a highly educated workforce). Other production factors are generalized (highway systems and the supply of debt capital) and specialized (skilled personnel in a specific industry, such as the workers in a port that specialize in handling bulk chemicals).
  Advanced factors tend to give countries more competitive advantage than the basic factors of production. If a country has both advanced and specialized production factors, it is likely to serve an industry well by spawning strong home-country competitors that also can be successful global competitors. Since West African countries are more endowed in basic factors of productions and less endowed in advanced factors they are likely to be less competitive when compared to other advanced economies such as Japan, United States, France, etc.
• Demand conditions – refer to the demands that consumers place on an industry for goods and services. Consumers who demand highly specific, sophisticated products and services force firms to create innovative, advanced products and services to meet the demand. This consumer pressure presents challenges to a country’s industries. But in response to these challenges, improvements to existing goods and services often result, creating conditions necessary for competitive advantage over firms in other countries.
  Countries with demanding consumers drive firms in that country to meet high standards, upgrade existing products and services, and create innovative products and services. The conditions of consumer demand influence how firms view a market. This, in turn, helps a nation’s industries to better anticipate future global demand conditions and proactively respond to product and service requirements.
• Related and supporting industries – enable firms to manage inputs more effectively. For example, countries with a strong supplier base benefit by adding efficiency to downstream activities. A competitive supplier base helps a firm obtain inputs using cost-effective, timely methods, thus reducing manufacturing costs. Also, close working relationships with suppliers provide the potential to develop competitive advantages through joint research and development and the ongoing exchange of knowledge.
  Related industries offer similar opportunities through joint efforts among firms. In addition, related industries create the probability that new companies will enter the market, increasing competition and forcing existing firms to become more competitive through efforts such as cost control, product innovation, and novel approaches to distribution. Combined, these give the home country’s industries a source of competitive advantage.
• Firm Strategy, Structure, and Rivalry – Rivalry is particularly intense in nations with conditions of strong consumer demand, strong supplier bases, and high new entrant potential from related industries. This competitive rivalry in turn increases the efficiency with which firms develop, market, and distribute products and services within the home country. Domestic rivalry thus provides a strong impetus for firms to innovate and find new sources of competitive advantage.
  This intense rivalry forces firms to look outside their national boundaries for new markets, setting up the conditions necessary for global competitiveness. Among all the points on Porter’s diamond of national advantage, domestic rivalry is perhaps the strongest indicator of global competitive success. Firms that have experienced intense domestic competition are more likely to have designed strategies and structures that allow them to successfully compete in world markets.