• You have recently been appointed as a Finance Manager within a company, FlyHigh plc. To date, the business has been successful despite the company's decisions at Board level being led by an entrepreneur, Max, who is excellent with the company's business product but who has a history of being uninterested in the activity of the finance function. Max operates as the CEO after being a key reason for the historic success of FlyHigh as the business grew and ultimately acquired a listing on the UK stock exchange. Finance staffing has been subject to high turnover since employees have felt that there is no coherent leadership and direction in the way that the department is to run. Neither do the finance team feel that their concerns or recommendations are being heard – which has caused the activity in the department to be reactive to problems rather than arising from a clearly thought-out strategy to support business growth. Additionally, little consideration is given to the wishes of key suppliers and customers and there have been questionable recruitment decisions made – it appears that acquaintances of Max have been put into positions of power despite not having the background experience and expertise that would be present in other staff that may have been recruited externally or in some cases, in staff already employed around the organisation. Max has struggled to understand why performance has not lived up to his expectations – especially as many of his business meetings undertaken to win new contracts have appeared to be very promising. Many of the projects undertaken in the past couple of years have been in different areas, each involving at least some exposure to specialisms that the business doesn't possess, based on its past line of trade. This has led to sub-optimal delivery of projects through increased costs or impeded effectiveness of delivery. You have been requested to produce a report for the CEO as he now appreciates that there may be a need for clearer rules and processes in the area. This has been fuelled by unrest among shareholders who feel that the returns that they are enjoying are not as impressive as they ought to be (compared to competitors). Despite the above issues, the view among many of the Board members is that the business would flourish better if it extended its product offering into new geographical countries. FlyHigh plc has no relevant experience of the risks and benefits that such a strategy might present and Max is keen to know more. Another business, Steady plc has been identified as a target company that might complement FlyHigh plc well as it has a good reputation in many of the areas that FlyHigh's customers (current and potential) have shown interest in. 
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• You are required to: 
• 1. Critically evaluate the changes that could be made to improve the company's approach to corporate governance, specifically detailing the benefits that these changes would, be expected to bring; 
• 2. Evaluate the changes that could be introduced when evaluating projects in future. In particular consider the benefits that any new processes could have on the current approach to embarking on new projects and the outcomes of those projects; 
• 3. Explain why the company's current approach to financing through long-term borrowing and short-term use of overdraft and deferring supplier payments could impact the business. In doing so, propose a strategy towards the long-term and day to day management of finance needs. 
• 4. Illustrate with specific examples the new risks that the new geographic expansion strategy could present and explain the extent to which these could be managed, effectively. 
• 5. Ignoring any potential merger with Steady plc, respond to the shareholder's concerns about the returns being earned. Specifically, clearly show the influences on dividend policy and why an increased annual dividend may not be the optimal strategy for FlyHigh plc. 
• 6. For the company's current plans to merge or acquire Steady plc, explain the considerations that need to be made when designing terms to be offered to the target shareholders. 

Answer rating: 100% (QA)

1 The changes which the company could come up with to help the with the corporate governance are several and they should be well implemented to make it much more effective The changes include recogniz... View the full answer