Technological Factors
The technological factors raised include the following issues:

• Use of biodegradable plastic – the passage of law requiring the use of environmentally friendly biodegradable plastic reflects improvement in the technology as far as plastic is concerned. The industry rely heavily on plastic as one of its core inputs in the production process.
• Efficient and state of the art – since the industry compete on the price basis it implies that the participants operate on low-cost leadership strategy which calls for efficient production process. This means that the industry needs cutting edge technology as far as its production process is concerned in order to lower cost and achieve competitive advantage.
  Political factors
  The political factors relate to the actions and policies of the government and other political actors such as opposition political party activism. The case before us raises a number of political issues worthy of consideration.
• Removal of subsidies – this will result in higher cost of living in the economy. It will raise cost of doing business in the Alpha Mineral Water Ltd and will also affect households and individuals. This will make the countries businesses less competitive compared to other foreign business that may be enjoying subsidies from their governments.
• Political instability – removal of subsidies is likely to result in agitations and demonstrations from the citizens who are likely to feel the negative impact in terms of increase cost of living. Any such political upheaval will have negative consequences for the economy as a whole.
• Taxation policy – The government appears to have appetite for taxes. It has introduced a bill in parliament, if passed into law, require companies to use biodegradable plastic as well as considering introduction of special tax to deal with plastic pollution. This will further worsen cost of doing business in the economy and will make businesses less competitive.
• Establishment of Industry regulator – setting up of the industry regulator to deal with hitherto unregulated industry will have implication for the cost of doing business in the economy.
  Legal factors
  These factors deal with various laws government passes to deal with the conduct of business in an economy. In this particular case the following legal issues arise:
• Special Tax – The government is considering the introduction of special tax to raise necessary funds to deal with the plastic waste challenge facing the urban centres. This is a major threat to the industry operators as this will result in higher cost of production with limited chance to pass on the effect to the consumers due to price sensitivity.
• Labour laws amendments – since the new law reduces the hiring period of casual labourers from 18 to 6 months and also make it easier for the workers to join trade unions imposes further cost of doing business in the economy. Unionised workers can demand for high salaries and also hiring more workers on permanent basis withal its related costs.
• Law setting up regulator for the industry – this is perceived to limit rate of new businesses entering the industry and existing ones may face high demands on them.
  Environmental Factors
  These factors relates to how the natural or physical environment is affected by the actions and activities of businesses.
• Pollution of environment – the case clearly state how the used sachet and bottles are becoming a nuisance to the environment. The plastic are not biodegradable.
• Floods – choked drains have resulted in serious floods that affect lives and property in the urban centres.
• Pollution of water bodies – serious pollution of environment can affect waters bodies dotted around the country and can even affect their long term sustainability.
• City Authorities budget – high cost of running the cities.

There are a number of approaches which can be used in answering this question. Candidates might focus on aspects such as market and environmental analysis or on segmentation, targeting and positioning. Marks will be awarded as to how appropriate their approach is to improving the situation for Gaspo. However it is expected that most candidates will apply the marketing mix model, the most commonly used to this scenario.

It would appear that Obed needs to develop an appropriate marketing mix to facilitate the entry into this new Ghanaian market segment. This mix usually comprises four elements – product, place, price and promotion. These need to be integrated together, to mutually reinforce the impact of a marketing offensive and not in isolation where one aspect may counteract the influence of another. For example the development of a luxury brand image (promotion) will be harmed if a price strategy concentrates on a low or a ‘penetration’ price.

The product needs to be focused on a domestic/household market. A utilitarian office approach may not fit in well with the prevailing household image. Quality may have a higher priority here. The style of the furniture will also need to match the furniture in the rest of a household – there may need to be a choice between classical and modern styles. Furthermore size may be more critical. Houses are frequently smaller than offices so the furniture may need to be more compact.

It may be advantageous not only to supply the finished products but the company could add value by providing both design and installation services. This, of course, will require a stronger Ghanaian presence. This could be achieved by having a good distribution network (place). Although the products are manufactured in India because of the lower costs, the customer will be looking for a presence locally. Stock must be available locally so as to avoid delays in order processing. This will provide reassurance. Furthermore potential customers will wish to see examples of the products, layout and workmanship before they commit themselves to purchase. Gaspo will need to have a number of showrooms in major centres where business is expected. Not only will these be depots for supply but they will also act as centres for marketing. This will be an expensive facility, offsetting the cheaper labour costs. The company will have to ensure that these new markets can generate sufficient revenue to compensate for these increased costs.

These showrooms will be part of the promotion element of the mix but they will have to be complemented by other media activities. Advertisements in furnishing or household style magazines could attract new customer groups. It may also be possible to buy mailing lists of people who work from home. Directors of small companies and self-employed individuals frequently receive direct mail from financial institutions about banking services and also offers from IT suppliers. Why not information about office furniture and other services? The company should also be aware of the benefits of promotion by using the world-wide web.

Price also needs to be considered as a competitive tool in this new venture. The price must not be so low that prospective purchasers question the quality of the product. However it must also be remembered that in certain circumstances this furniture cannot be offset against tax as a cost as it can in a bona fide company transaction. Therefore the company needs to be careful not to price itself out of the market. They have to be aware of what competitors are offering. It may be sensible to have competitive prices for the furniture but charge a premium for the design and installation work.

[There are no precise solutions as to how the marketing mix is to be determined. Candidates may propose different approaches. These will be accepted, assuming that there is an inherent logic in their application and that they are not inconsistent with a candidate’s premises and the objectives of the company]

A company, which has acquired a competitive advantage, should not relax its vigilance. In business nothing is permanent and competitors will soon retaliate. There are a number of methods by which a company can attempt to maintain its position.

• If the company’s strength is built on being a low-cost producer it must attempt to continue to get low cost supplies by buying in bulk, ensuring regular deliveries to avoid heavy stock-holding costs. It must control its labour costs and continue to innovate so as to maintain production advantages by simplifying the production process. It must keep overheads low and ensure low distribution costs. However if a company’s competitive position is derived from its ability to differentiate its products or services it must ensure that it maintains its lead in marketing by emphasizing a strong brand identity, a strong corporate image and by having technological superiority. This can be done by enhancing its research capability and in designing unique products.
• It is also critical to be aware of customer needs and so marketing research is an important input. Companies can also maintain their advantage if they can develop and build prohibitive switching costs into their products/services. These costs which tie a customer to a supplier can include financial links, the supply of materials and the supply of specialist services (in the case of Gaspo it could be the provision of design and installation services).
• As mentioned earlier the development of a strong brand name can tie consumers more closely to the supplier. Patents and trademark legislation can also protect the competitive advantage of certain companies although there are sometimes difficulties in certain markets where intellectual property rights are not always fully protected.
• However companies who rely mainly on the law to protect a competitive advantage run the risk that they may become reactive, hanging on to what they have. These firms would be well advised to continue to seek ‘new’ strengths either in marketing or manufacturing rather than rely on the protection of ‘old’ strengths.

It is important for the management of Starline Fruits to consider many factors before deciding on which mode of entry into the international market would be suitable. The factors are discussed as follow:
i. The firm’s marketing objectives: It is important for management of Starline Fruits to consider its international marketing objectives relating to how much it wants and can sell in overseas markets – i.e. volume – the timescale and coverage of market segments. If Starline Fruits management expects overseas sales to be low in volume, or if the products are only to be on sale for a limited time period, then setting up an overseas production and distribution facility would be inappropriate. In this case, exporting might be an appropriate strategy. On the contrary, if management intends to cover a large segment of overseas markets as well as operate for a long time then establishing an overseas production and distributing outlet would be an appropriate mode of entry.
ii. The firm’s size: A small firm is less likely than a large one to possess sufficient resources to set up and run a production facility overseas. It is important for management of Starline Fruits to consider whether the resources of the company could provide the investment capital and organisational ability to set up an overseas production facility. It would also need to consider whether it can support the costs of continuing operations. If not, then overseas production facility would be precluded as an appropriate entry mode. Management would have to consider a mode of entry that requires a relatively lower investment in terms of cost and human resource ability.
iii. Mode availability: A firm might have to use different methods of entry to enter different markets. Some countries only allow a restricted level of imports, but will welcome a firm if it builds manufacturing facilities which provide jobs and limit the outflow of foreign exchange. It is important for management to consider the policies of different overseas governments through research. This will inform it of what kinds of entry modes are available for it in each oversea market it seeks to enter.
iv. Mode quality: In some cases, all modes may be possible in theory, but some are of questionable quality or practicality. The lack of suitably qualified distributors or agents, for instance, would preclude the export, direct or indirect, of high technology goods needing installation, maintenance and servicing by personnel with specialist technical skills. Whatever mode management are considering, it is important for them to put it to the practicality test.
v. Human resources requirements: Starline management would have to consider the human resource requirements for whichever mode it wants to use. HR requirements vary according to which method of entry is used. For instance, if it would be difficult for Starline Fruits Ltd. to recruit suitable international marketing staff at home or overseas, they may have to resort to indirect exporting or the use of agents based overseas, which in this case would be the only realistic option.
vi. Market feedback information: It is important for management to consider the effectiveness of receiving feedback information on its marketing efforts in overseas markets. In some cases a firm can receive feedback information about the market and its marketing effort from its sales staff or distribution channels. In these circumstances direct export or joint ventures may be preferred to indirect export.
vii. Learning curve requirements: Management of Starline needs to be clear about its future involvement in international business. If it intends a heavy future involvement in overseas markets, then it would be necessary for it to gain the experience that close involvement in an overseas market brings. They would, therefore, have to select mode(s) of entry that would offer them the opportunity to experience international business management for themselves. This argues against the use of indirect exporting as the mode of entry.
viii. Risks: There are risks involved in operating in overseas market such as the risk of expropriation, risk of political instability, etc. Management would have to assess the nature of the risks in particular overseas markets in order to inform them which mode offers the lowest risks. For instance, some firms might prefer the indirect export mode as assets are safer from expropriation.
ix. Control needs: Starline management should assess the level of control it seeks to retain over its overseas operations. For instance, production overseas by a wholly owned subsidiary gives a firm absolute control while indirect exporting offers only limited control over the marketing mix to the exporter.
                                                                                                                                                                                   (Any 4 points)

There is good corporate governance when an organization is properly directed and controlled. This involves two issues – good performance in terms of value creation, resource utilization, risk management; and conformance which means complying properly with relevant regulations and being accountable and trustworthy. The company should operate in a manner that serves the best interests of its stakeholders including its shareholders and investors by performing well economically.
Good corporate governance is intended to manage the agency problem which is that directors act as agents of the company but may find their interests conflicting with those of the company. Directors are in a privileged position and are likely to act to serve their interests at the expense of shareholders and other stakeholders.

The key stakeholders are customers, employees, directors and management, suppliers, competitors, lenders and financiers, regulators, government and the community.
Interests of stakeholders:
Shareholders – wish to see a good return on their investment and a stable future.
Employees – wish for a steady job and decent pay/conditions
Directors/management – wish to comply with their responsibilities as well as having similar interests to other employees.
Customers – look for appropriate, safe and reasonably priced products plus excellent customer service
Suppliers – are interested in sales volume and price, fair payment terms and long-term relationships.
Competitors – are keen to ensure there is vigorous but fair competition in the market.
Lenders and financiers – are keen for security and to see repayment of their investment in line with the agreed terms.
Regulators – wish to see the company complying with relevant rules and engaging with ideas for further improvement
Government wishes to see a stream of tax income plus a company which is a good corporate citizen.
The community – is interested in the company providing employment and preserving/supporting the environment

i. Organisational status – internal audit’s specific status in the organisation and the effect this has on its ability to be objective. Ideally, internal audit function should have a direct line of communication to the entity’s main board or audit committee, and be free of any other operating responsibility. External auditors should consider any constraints or restrictions placed on internal audit.
ii. Scope of function – the nature and extent of assignments which internal audit performs. External auditors should also consider whether management and the directors act on internal audit recommendations and how this is evidenced.
iii. Technical competence – whether internal audit work is performed by persons having adequate technical training and proficiency as internal auditors. External auditors may, for example, review the policies for hiring and training the internal audit staff and their experience and professional qualifications, also how work is assigned, delegated and reviewed.
iv. Due professional care – whether internal audit work is properly planned, reviewed and documented. The existence of adequate audit manuals, work programmes and working papers may be considered, also consultation
procedures.

i) Keener Ltd is pursuing shapers of society corporate social responsibility stance. Shapers of society stance regard financial considerations as of secondary importance or a constraint. These are activists, seeking to change society and social norms. Here the social role is the raison d’être of the business. Such organisations may see their strategic purpose as ‘changing the rules of the game’ through which they may benefit but by which they wish to assure that society benefits. In this role it is unlikely that they will be operating on their own: rather they are likely to be partnering with other organisations, commercial and otherwise, to achieve their purposes. The Keener Ltd has put Mercyland community at the centre of its purpose.

ii) Standard Ltd is pursuing the laissez-faire stance of corporate social responsibility. The laissez-faire view represents an extreme stance. Proponents argue that the only responsibility of business is to make a profit and provide for the interests of shareholders. It is for government to prescribe, through legislation and regulation, the constraints which society chooses to impose on businesses in their pursuit of economic efficiency. Organisations should meet these minimum obligations but no more. Expecting companies to exercise social duties beyond this can, in extreme cases, undermine the authority of government.

iii) Poor Ltd is pursuing enlightened self-interest stance of corporate social responsibility. Enlightened self-interest is tempered with recognition of the long-term financial benefit to the shareholder of well-managed relationships with other stakeholders. The justification for social action is that it makes good business sense. An organisation’s reputation is important to its long-term financial success. Given that employees see it as important that their employer acts in a socially responsible manner, a more proactive stance on social issues also helps in recruiting and retaining staff. So, like any other form of investment or promotion expenditure, corporate philanthropy or welfare provision might be regarded as sensible expenditure. The avoidance of ‘shady’ marketing practices is also necessary to prevent the need for yet more legislation in that area. Managers here would take the view that organisations not only have responsibility to their shareholders, but also a responsibility for relationships with other stakeholders (as against responsibilities to other stakeholders).

iv) High Ltd is pursuing a forum for stakeholder stance of corporate social responsibility. A forum for stakeholder stance explicitly incorporates multiple stakeholder interests and expectations rather than just shareholders as influences on organisational purposes and strategies. Here the argument is that the performance of an organisation should be measured in a more pluralistic way than just through the financial bottom line. Companies in this category might retain uneconomic units to preserve jobs, avoid manufacturing or selling ‘anti-social’ products and be prepared to bear reductions in profitability for the social good. Some financial service organisations have also chosen to offer socially responsible investment ‘products’ to investors. These include only holdings in organisations that meet high standards of social responsibility in their activities.

(i) Combining the role of CEO and Board Chairman increases the workload of the individual making him or her less efficient.
(ii) The individual may become too powerful and overbearing on other members of the board, thereby dictating the pace of activities.
(iii)Conflict of interest situations are likely to arise where the CEO can easily force through his executive decisions at the board level though they may not be in the best interest of the organization.
(iv) Decisions taken by the board may not be based on well-deliberated opinions and as a result, may not be the best under some circumstances.

• Provide continuity for the organization by setting up a corporation or legal existence, and to represent the organization’s point of view through interpretation of its products and services, and advocacy for them
• Select and appoint a chief executive to whom responsibility for the administration of the organization is delegated, including: to review and evaluate his/her performance regularly on the basis of a specific job description, including executive relations with the board, leadership in the organization, in product/service/program planning and implementation, and in management of the organization and its personnel and to offer administrative guidance and determine whether to retain or dismiss the executive.
• Govern the organization by broad policies and objectives, formulated and agreed upon by the chief executive and employees, including to assign priorities and ensure the organization’s capacity to carry out products/services/programs by continually reviewing its work.
• Acquire sufficient resources for the organization’s operations and to finance the products/services/programs adequately.
• Account to the shareholders (in the case of a for-profit) or public (in the case of a non-profit) for the products and services of the organization and expenditures of its funds, including: to provide for fiscal accountability, approve the budget, and formulate policies related to contracts from public or private resources and to accept responsibility for all conditions and policies attached to new, innovative, or experimental products/services/programs.

(i) In the first situation, the fundamental principle of integrity was violated. Accountants are required to act with integrity (honesty and truthfulness) while they are performing their duties. By allowing customs official to undervalue the imports, the accountant’s behavior which can be described as bribery of an official and cheating of the state pointed to his dishonesty.
(ii) The second situation was an issue of confidentiality. Any information that is withheld from the public during a bidding process is supposed to be kept as a secret. Revealing this information to anyone who is not supposed to have it violates the fundamental principle of confidentiality.
(iii) The CEO’s refusal to disclose information relating the court suit violates the principle of disclosure. Governance regulations and codes require that organisations make disclosures about the board, internal control reviews, going concern status and relations with stakeholders.

Roles of a corporate parent
A corporate parent plays three value creating roles in managing its business units.

• Envisioning corporate intent
  This is the process of creating a clear vision of corporate intent (what the organization wants to do). Creating a clear vision will help to avoid wasteful activities, provide a clear understanding of the organisation’s activities to external stakeholders and potential investors and help managers to know what is expected of them.
• Intervening to improve performance or developing business strategy
  In this role, the corporate parent has the responsibility to monitor and control the performance of its business units against respective plans, targets and intentions. It also has to develop the business units’ capabilities, provide training and coaching services as and when necessary and promote collaboration among the units in order to achieve synergy.
  In order to play these roles effectively, the corporate parent may adopt any of the following approaches:
• Portfolio management where they will create value by applying financial discipline. That is keeping their own costs low.
• Synergy management by focusing or paying attention to economies of scope through the sharing of competences and resources by the business units.
• Parental development by developing their own competences to improve their SBUs’ performance.