ICAN NOVEMBER 2023 MOCK EXAMINATIONS

FIRST CHOICE ACCURATE SUCCESS LINK LTD

FIRST CHOICE ACCURATE (FCA) SUCCESS LINK INC.
 SKILLS LEVEL MOCK EXAMINATION – NOVEMBER 2023
CORPORATE STRATEGIC MANAGEMENT & ETHICS
Time Allowed: 31/4 hours (including 15 minutes reading time)

INSTRUCTION: YOU ARE REQUIRED TO ANSWER FIVE OUT OF SEVEN QUESTIONS IN

THIS PAPER

SECTION A: COMPULSORY QUESTION (30 MARKS)

Question 1

Dumbura Republic is reputed for its high population density and the consequent
availability of cheap labour. Surprisingly, due to the high premium placed on
qualitative education in science and technology-based disciplines, the country has an
abundance of highly skilled workforce suited for manufacturing industries. Other
features of Dumbura Republic include adequate, accessible and reliable social
infrastructure such as electricity, potable water, road and rail network, and an
effective security network. Besides, the country also has a variety of tax incentives
designed to attract foreign investments. These positive features of the
socioeconomic environment in Dumbura have attracted a lot of foreign investors,
including several computer and mobile phones hardware production companies.
Indeed, the socio-economic environment in Dumbura is very business friendly.
Hence, it is not surprising that a lot of foreign companies have located their industrial
plants in the country. Effects of this development include increased employment
opportunities, influx of people in search of employment from the neighbouring
countries, spiralling rent rates for all categories of accommodation, worsening
environmental pollution and a spiking population growth rate, which is beginning to
take its toll on available social infrastructure. Besides, the hitherto peaceful country is
beginning to experience an increased rate of crimes such as burglary, robbery, cyber
theft and kidnap that target expatriates particularly. The local population is becoming
increasingly hostile to the expatriates and workers from neighbouring countries,
accusing them of denying the local population access to good job opportunities.
You have been employed as a consultant to a computer and mobile phone hardware
company, Cells Incorporated, which is considering relocating its major manufacturing
plant from an Asian country to Dumbura Republic.
This is hoped to bring down cost of production and provide a ready market for about
20% of its products.
You are required to:

ICAN NOVEMBER 2023 PREPARATORY MOCK EXAMS 1

a. With the aid of Johnson, Scholes and Whittington‟s position on strategic
management, advise Cells Incorporated on the elements of strategic management
that must be taken into consideration in reaching a decision on whether to relocate
its manufacturing plants to Dumbura Republic. Ensure that you make adequate
references to the scenario above as
might be relevant. (25 Marks)
b. Clarify the nature and objectives of a mission statement. (5 Marks) (Total 40
Marks)
SECTION B: YOU ARE REQUIRED TO ANSWER ANY TWO OUT OF THREE QUESTIONS IN
THIS SECTION (40 MARKS)

Question 2

Mallam Danladi is a civil servant who has won a sum of one hundred million Naira
in a lottery. Being a very conservative person who is averse to risks, Mallam
Danladi is contemplating putting the money in a fixed deposit account at an
interest rate of 14% per annum or into treasury bills at an interest rate of 18.5%per
annum. These two options are considered to be virtually risk free. Mr. Madoff, a
risk consultant, advised him to invest in the production of shea butter, coconut oil
and black soap, with a promise of 52% profit per annum. In an attempt to convince
Mallam Danladi to invest in the production of these items, Mr Madoff, tried to
educate Mallam Danlandi on the nature of risks and how to effectively monitor and
control them in ways that will ensure that business remains highly profitable.

Required:
a. Explain briefly the nature of risk in business to Mallam Danladi.(2½ arks)

b. Discuss FOUR distinct means of controlling business risk. (10 Marks)

c. Explain briefly the purpose of monitoring risks in business. (3 Marks)

d. Discuss THREE ways of monitoring risks in business. (4½ Marks)

Question 3 company, has sought your advice as a senior accountant in the
company. GG’s stated objective has always been to adopt the highest standards
of internal control because it believes that by doing so it will not only provide
shareholders with confidence in its governance but also enhance its overall
reputation with all stakeholders. In recent years, however, GG’s reputation for
internal control has been damaged somewhat by a qualified audit statement last
year (over issues of compliance with financial standards) and an unfortunate
internal incident the year prior to that.

ICAN NOVEMBER 2023 PREPARATORY MOCK EXAMS 2

This incident concerned an employee, Miss Jenkins, expressing concern about the
compliance of one of the company’s products with an international standard on fire
safety. She raised the issue with her immediate manager, but he said, according to
Miss Jenkins, that it wasn’t his job to report her concerns to senior management.
When she failed to obtain a response herself from senior management, she decided
to report the lack of compliance to the press. This significantly embarrassed the
company and led to a substantial deterioration in GG’s reputation.
The specifics of the above case concerned a fabric produced by GG Co, which, in
order to comply with an international fire safety standard, was required to resist fire
for ten minutes when in contact with a direct flame. According to Miss Jenkins, who
was a member of the quality control staff, GG was allowing material rated at only five
minutes fire resistance to be sold labelled as ten minute rated. In her statement to
the press, Miss Jenkins said that there was a culture of carelessness in GG and that
this was only one example of the way the company approached issues such as
international fire safety standards.
Required:
(a) Describe how the internal control systems at GG Co differ from a ‘sound’ system
of internal control, such as that set out in the Nigerian Corporate Governance
Code, for example. (5 marks)
(b) Define ‘reputation risk’ and evaluate the potential effects of GG’s poor reputation
on its financial situation. (5 marks)
(c) What is the main difference between a rules-based and a principles-based code
of
professional ethics for accountants? (5 marks)
(d) Explain, with reference to GG as appropriate, the ethical responsibilities of a
professional accountant both as an employee and as a professional. (5 marks)
(Total: 20 marks)

Question 4

Universal Food Processing Company Plc. is a company in Nigeria engaged in the

production of food products and confectioneries. Some of the products are cocoa
beverages, candy, food seasoning and biscuits. Since inception, the company
sources most of its raw materials locally and from a West African country. It currently
produces 10 different products from different production facilities.
The company is also structured along functional lines. As part of its corporate
strategy to consolidate and improve on its competitive position, the Board of
Directors has resolved to integrate backwards. This, according to Board members,

ICAN NOVEMBER 2023 PREPARATORY MOCK EXAMS 3

has become necessary due to current challenges encountered with its suppliers of
cocoa, the most important raw material that the company uses. Due to the Ebola
outbreak, supplies from other West African sources have become erratic.
This situation, coupled with activities of competitors, has drastically reduced the
volume of supplies of cocoa from local suppliers. In order to address this issue, the
company decided to set up cocoa plantations and a cocoa processing plant in
Western Nigeria. To effectively implement this strategy, the management of the
company also decided to redesign its organisational structure to support the
backward integration strategy and improve organisational effectiveness.
Required:
a. Identify and explain the types of organisational structures that Universal Food
Processing Company Plc. can adopt. (10 Marks)
b. Advise the company on which of the organisational structures identified will best
suit its new strategy, giving reasons for your advice. (10 Marks)
(Total 20 Marks)

SECTION C: YOU ARE REQUIRED TO ANSWER ANY TWO OUT OF THREE QUESTIONS IN
THIS SECTION (30 MARKS)

Question 5

Oasis Bakeries is a producer of all kinds of bread, servicing only the Lagos market.
In response to anticipated increase in the demand for bread, the company decided
to increase its installed production capacity from 1,000 loaves to 5,000 loaves per
day, having secured regulatory approval from the federal authority.
However, the market for bread in Lagos is largely dominated by bigger producers and
there is some stability in the price of bread across all brands in the market. Thus, the
risk of a price war is low. However, owing to the short shelf life of loaves of bread,
most are sold to retailers on credit and due to a combination of reasons, credit default
rate is increasing. The company by experience has also discovered that ovens, mixers
and other equipment for the production of bread rarely break- down within the first 5
years of usage. However, procurement of raw materials such as flour and butter has
become more challenging due to the activities of bigger bakeries and recent increase
in import duty on all processed food.
Required:
a. Advise Oasis Bakeries on the level of exposure to any FIVE categories of risk
inherent in its growth strategy. (8 Marks)
b. Analyse the impacts of risk on any FIVE of the stakeholder groups of Oasis
Bakeries. (7 Marks)

ICAN NOVEMBER 2023 PREPARATORY MOCK EXAMS 4

Question 6

As a professional accountant, it is important that you are ethical in carrying out your
professional responsibilities. This requires, among other qualities, a good ethical
foundation consisting of clear understanding of what ethics is all about.
You are required to:
a. Clarify the relationship between ethics and law. (3 Marks)
b. With the aid of an appropriate example, explain the nature of moral dilemma. (5
Marks)
c. Present a critique of consequentialist theories of ethics in relation to TWO of its
general criticisms and the profit-making objective in business. (7 Marks) (Total 15
Marks)

Question 7

You have been invited to train entry level graduates of your organisation on several
topics in soft skills.
Required: Using the mixed model, prepare a brief presentation on the following: a.
Meaning and characteristics of emotional intelligence. (9 Marks)
b. Uses of emotional intelligence. (6 Marks) (Total 15 Marks)

ICAN NOVEMBER 2023 PREPARATORY MOCK EXAMS 5