Demo Gold is a Ghanaian mining company that has been operating on-land deep pit gold mining in Africa since its incorporation. Aiming at increasing the value of shareholders, the directors have signed an agreement with the governments of Tonga and Tuvalu to begin excavating an area of seabed in the Pacific Ocean for ores of copper, gold and other valuable metals.
The idea of mining mineral deposit in the seabed has for many decades been considered as unrealistic because of engineering challenges. However, the recent boom in offshore oil and gas operations has come with it the development of a few advanced deep sea technologies which can be used in mining mineral deposits in the seabed.
Required:
i) It appears that the sole objective of the seabed mining operation is to maximise the value of shareholders. Advice the directors on FOUR (4) non-financial objectives that Demo Gold should pursue to achieve a sustainable increase in shareholder value. (4 marks)
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Nonfinancial objectives
The following nonfinancial objective can help Demo Gold to achieve a sustainable increase in shareholder value:
- Customer satisfaction
The company should seek to provide minerals of the quality that customers expect for a fair price. - Employee satisfaction
The company should seek to maintain a safe working environment and provide job security to employees. Again, the company should seek to provide opportunities to employees to develop their professional knowledge and skills, grow in the company. - Supplier satisfaction
The company should seek to remain loyal to its suppliers and continue to give them business. It should seek to pay it’s a reasonable price and them promptly. - Market leadership in research and development
The company to show a dominant position and leadership in research and development - Diversification strategy
Seeking to expand and diversify business and product offerings to the market - Market Share growth
The company should seek to expand to increase its market share - Reduction in negative environmental footprint
The company should seek to reduce environmental degradation and pollution. It should seek to protect marine life in the area it seeks to operate.
[Marks allocation: 4 nonfinancial objectives @ 1 mark each = 4 marks]