Question

a) Kasapreko Company Limited is a wholly Ghanaian-owned company with branches in Nigeria, South Africa and Germany. With relevant examples, explain the eclectic paradigm that Kasapreko might have fulfilled, before venturing international. [15 Marks]

b) Knowing that accounting and reporting laws differ widely around the world thereby posing risks for the international business, briefly explain for each how physical asset valuation (PAV) and research and development (R&D) costs are likely to pose risks?

Answer 1

SOLUTION:-

(a) The electric paradigm that kasapreko might have fulfilled before venturing International are as follows-

1. The company is in Ghana based but has its branches in Nigeria South Africa and Germany the company must have should be understood the market and the needs of the customer and adjust its product according to their needs.

2. The company must have undertaken proper internationalization strategy which best suits the demand of the market.

3. T he product or services it is selling in Germany and South Africa must abide the local laws of the country.
4. The company must consider the appropriate pricing strategy so that it can beat the competition from the local market in terms of the product and price compatibility.

(b)

1. The physical asset valuation and research and Development cost are likely to pose risk in the following way.

2. The physical asset has different ways values in different countries so the company has to consider the actual price as per the countries rules in order to prepare the details of the accounting information.

3. Because if the correct valuation is not entered into the accounting books the company may be charged of legal action against them considering the fact that they must be aware of the actual physical valuation of assets.

4. Every company has to enter the actual value of the physical assets it possesses in order to carry on the smooth operation, otherwise the company could land in legal troubles.

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