Phoenix-Adele Global Partners

Accounting house, 1, Communication Road, Lagos, Nigeria.

Adesua Thomas,
Finance Director,
Magic Network Communications Limited (MNC).

Dear Ma,

RE: CONSULTANCY SERVICES

We acknowledge receipt of your mail dated November 16, 2015 requesting our
advice, analysis and input on your planned restructuring processes.
The purpose of this report is to come up with an analysis of the strategic
performance of Magic Network Communications Limited (MNC). As part of the analysis of
the financial performance of MNC, we’re taking into consideration the comments by the
Chairman in his statement and the relevant financial information provided in attachments
sent by coming up with suitable ratios that deem meaningful in MNC‟s industry for your
analysis.
This report also seeks to use Product mix to further analyze the operations of Magic
Network Communications Limited (MNC). The analysis includes:
i. An analysis and determination of the product mix that will maximize the margin
of MNC call center, if no staff was to switch position. Also to calculate the total margin from
our suggested product mix.
ii. An advice on how to allocate the existing staff between the two roles (operators
and consultants) in order to satisfy the market demand working with the assumption that
MNC cannot hire new call center staff. Our advice includes other business/managerial
factors that should be taken into account when considering our recommendations.

DISCLAIMER:
This report is solely for the use of Magic Network Communications Limited (MNC)
and contains confidential information. Phoenix-Adele Global Partners (PAGP) will not be
held liable or accountable for any use of the information contained in this report by any
other party.

Balanced Scorecard Model analysis (REQUIREMENT 1)

 Phoenix-Adele Global Partners
Accounting house, 1, Communication Road, Lagos, Nigeria.

In a wider context, there were visible challenges prevalent in the economy and they
shouldn’t be downplayed as they play a vital role in the situation of the things in the
business at the moment and in the country at large. The economy was facing an
unpredictable future as no one knew what could happen in the nearest future thus its safer
to prepare for the worst. However, in the midst of the uncertainties facing the future of the
economy, MNC has still gained national and international recognitions which is a plus to
the business.
The Balanced Scorecard (or balance score card) is a strategic performance
measurement model with an objective to translate an organization's mission and vision
into actual (operational) actions (strategic planning). Balanced score card model consists of
four basic perspectives and they are the financial, customer, internal business, and
innovation & learning perspectives. Relating these to the report we have them thus,
Financial perspective – This perspective is evident in its increased profits and its
opportunity for increased investments. The aim of every business is to remain in
profitability and MNC aren’t failing in that, thus their financial situation can be said to be
healthy and thus have no going concern issue.
Customer perspective – Providing their services in 5 additional languages is a major plus
and improves different ways of relating to customers. This act would also increase the
number of customers as language barrier has been highly reduced. Excitingly they can
boast of a high customer base, this further shows that the relationship maintained with
customers are very healthy. Unfortunately they seem to have had an increased number in
customer complaints and unresolved cases, this definitely would affect its healthy
customer relationship built over the years.
Internal business environment perspective – There seemed to be some issues facing the
internal management and operations of the business. This is seen in the overstretched
systems and long hours worked by the staff. Also the HR department may have shown
some deficiencies in capacity in the sole recruitment of inexperienced staff. A combination
of experienced, semi experienced and inexperienced staff hired would have eased the
pressure the business was facing.
Innovation and learning perspective – MNC has a very interesting drive for innovation and
learning, this has shown in the funds invested for research and development. Staff are
being trained on innovative ways to increase efficiency in service and service delivery, also
innovative ways to create and come up with market changing ideas. There’s apparent room
for development, innovation and learning.
From an analytic point of view, there were various crucial observations seen in the
attachments and the financial statements. There was a 473% increase in customer
complaints, which was an enormous movement from 131,456 to 753,661. This could
grossly affect the reputation of the business as it’s a weakness on the internal process of
the business. The number of resolved cases also dropped significantly and could be
attributed to the inexperienced staff hired by the company. Ratings and recommendations
 Phoenix-Adele Global Partners
Accounting house, 1, Communication Road, Lagos, Nigeria.

also dropped significantly however on the bright side, it didn’t affect the profitability ratios
of the company as all the relatable profit ratios remained positives despite the downsides
affecting businesses. Gross profit and net profit margins were computed as 17.5% and
5.5% respectively. Return on capital employed stood at 11.5%.
Issues that cause worry to the business vary accordingly however they include the
following: The going concern of the business as the CEO might resign due to the fine being
slammed on the company as a result of the breach in regulations from the regulatory
authorities. This would greatly affect the going concern of the business as there’s a
possibility of losing a lot of customers, goodwill and experience gathered over the years by
the CEO. At this point it’s safer to start abiding to the laws so as to avoid future problems.
Observation shows that there’s little or no motivation available to the staff and it could be
suggested as the cause of the increasing complaints and unresolved cases. This could be
solved by introducing interesting programs and compensations to staff so as to improve
their output. Staff are also overworked and it can tell on their output also, an option to this
is to introduce flexible work times such as shifts and time outs to balance work life. The
systems are quite over worked and can lead to a decline in productivity and efficiency. A
proper management of this systems can increase and improve output.
Considering the peculiarity of this report, there are certain skeptical issues that
shouldn’t be overlooked. These critical factors include the fact that during the meetings
some information were held back from us especially that relating to the fine being slammed
on the company as a result of defaults in regulations. One can’t fully ascertain that all the
information provided are true and fair thus the need for an audited account to ensure
accuracy of the report. Where the account is unaudited, there’s room for window dressing
the accounts and information provided. The financial statement is also incomplete and we
can’t give a complete opinion as some vital information needed can’t be gotten. Staff
seemed to be overworked and this has led to their low staff morale in their duties. This is
an ethical issue as it goes against the expectations for staff treatment.
An observation worth evaluating includes the going concern of the business as the
CEO might resign due to the fines the company has to absorb. It might have seemed as a
cost effective measure cutting corners earlier but it sure is a major concern. As quick as
possible, the right thing to do should be done and that is payment of dues to the authority
as its better late than never. The reputational risk attached to this error should be a source
of concern to the company. Their large customer base is a good sign of a great future for the
company as they have what it takes to grow and expand. The increase in training and
development costs also shows signs of plans to improve and be at the top in the industry.
When there are plans to develop staff, then there are plans for improved performance and
efficiency. Lastly, there’s a chance of more income if they go public as they have good
financial records as the company is in a healthy financial state. Going public further
improves the society as it creates jobs and increases flow of cash in the state. This only
entails publicly attracting shareholders by sales of share to the public.
 Phoenix-Adele Global Partners
Accounting house, 1, Communication Road, Lagos, Nigeria.

CONCLUSION
There were visible challenges in the economy like the unpredictable economic
outlook which shows the uncertainties of the future, however there’s a good sign because
of the existing national and internal recognitions MNC has gotten over time. Using the The
Balanced Scorecard we took note of the four basic perspectives and they are the financial,
customer, internal business, and innovation & learning perspectives. Financial perspective
showed safety with the increased profits and its opportunity for increased investments.
Customer perspective had its pros such as the availability of rendering services in 5
additional languages. Unfortunately they seem to have had an increased number in
customer complaints and unresolved cases, this definitely would affect its healthy
customer relationship built over the years. Internal business environment perspective
displayed issues facing the internal management and operations of the business.
Innovation and learning perspective showed that MNC has a very interesting drive for
innovation and learning, this has shown in the funds invested for research and
development. The going concern of the business as the CEO might resign due to the fine
being slammed on the company as a result of the breach in regulations from the regulatory
authorities, is a major worry at this time due to the verisimilitude of the negligence. The
financial statements attached aren’t audited, thus we cannot vouch for the authenticity of
the information provided. Further insight shows staff are overworked and this has led to
their low staff morale in their duties. There’s concern on the performance of staff and it can
be attributed to poor treatment of staff. There are plans of going public and this would
improve the society as it creates jobs and increases flow of cash in the state. This only
entails publicly attracting shareholders by sales of share to the public.

RECOMMENDATION
Having fully analyzed the situation and circumstances surrounding the business, its
advisable that the company fixes up its outstanding with the regulatory authorities and
pays all fines due so as not to threaten the going concern of the business as this may grossly
affect the decision making of interested and anticipated shareholders if they decide to go
public. In relation to the poorly treated staff, it’s safer to create shifts and compensations
for staff so as to balance their work life with normal life. This is essential because it’s only
fair to make the work environment bearable for staff. An audited and complete financial
statement should be provided so as to have a true and fair opinion in our judgments. Where
this is made available, there’s a higher chance of getting real results in terms of issues
 Phoenix-Adele Global Partners
Accounting house, 1, Communication Road, Lagos, Nigeria.

arising. Lastly, MNC should build and develop its strengths such as its customer base and
also improve on its customer relations so as not to have a risk of losing them. Increased
training and development of staff would also increase efficiency of the company thus they
should continue such existing programs.

Product Mix Analysis (REQUIREMENT 2)

As observed in the realities facing the external business environment, there were
uncertainties about the future of the economy, thus the unpredictable economic outlook.
 Phoenix-Adele Global Partners
Accounting house, 1, Communication Road, Lagos, Nigeria.

This is because there’s no assurance on what the economy would be like in the nearest
future. However, in the midst of the uncertainties facing the future of the economy, MNC
has still gained national and international recognitions which is a major strength they can
brag about in their financial and business environment.
Calculations from report shows that home internet service yielded the highest
revenue as well as the highest gross profit/contribution among the four main sources of
revenue. This means that MNC should further strengthen the capacity and the services for
providing the home internet service. The service with second highest generating revenue is
the mobile internet service, followed by the mobile telephony and lastly the business
internet service. Combining these leads to an interesting revenue for the organization,
however more expenses should be made in order of its revenue generation and its
contribution, this is because the highest source of revenue has the capacity of generating
much more as that’s where the demand is. While the home internet service yields a
revenue and contribution of N360,000 and N252,000 respectively, the business internet
service generated a revenue and contribution of N75,000 and N53,250 respectively. The
differences are over N180,000 and it’s safe to say more should be spent to develop the
home internet service.
We had a decrease in the gross profit margin from 18.8% in 2014 to 17.5% in 2015.
Various factors could have contributed to it including the poor staff morale and
inexperienced staff hired during the year. The net profit margin and the return on capital
employed also dropped marginally in 2015. This means that there was a lot of errors
and/or difficulties experienced in the year 2015. Debt ratio stood at 22.6% in 2015 which
is quite high for an introduction of debt. The current ratio in 2015 was 0.5 : 1 which is
below the standard industry average of 2 : 1.
The poor morale of the staff is a major issue facing the business as it can grossly
affect profitability where a lot is spent on labour and there’s no reward for the expense
made on over heads. More incentives should be made available to the staff. Also, another
concern is managing the relationship between the consultants and the operators, this is
because where there’s a seamless flow of work between the two different class of staff,
there’s room for improvements for the inexperienced hires to pick up and catch up in their
learning process. There should be mandatory measures to ensure that there’s a good
relationship between the operators and consultants. The declining profitability might just
be the biggest issue as that’s the goal of every business, measures to tackle this include a
more friendly way to ensure that staff are well treated and that customer requests are also
timely met. The reports from customer complaints and response are quite bad and could
largely affect the business. The company should ensure that all customer complaints are
fully and timely resolved.
The financial statements were not audited, thus the authenticity and accuracy of the
report can’t be completely assured since there’s no independent opinion. There’s no
 Phoenix-Adele Global Partners
Accounting house, 1, Communication Road, Lagos, Nigeria.

industry average to measure performance with other companies in same industry.

Financial statement was also incomplete, some important decision making statements
aren’t available and this is imperative at this level of decision making. This is necessary as it
serves as a benchmark for measurement of performance. The survey carried out by the
marketing department might have been tampered with to favor their performance. The
staff ought to be treated properly so as to encourage the best of them being put into the
business. Where staff aren’t comfortable with work, they wouldn’t bring out there best.
Worthy of evaluation is the issue of staff hire. There’s need to hire experienced staff
because they get to instantly make an impact and serve as a room for growth for the
inexperienced staff. Where this isn’t done there would always be increase in customer
complaints and could lead to a drop in customer patronage. It is also possible to for the
operators and consultants to have basic knowledge of the job description of each other, this
can help in covering up where there’s a deficiency of staff or man power at each moment.
CEO’s possible resignation may greatly impact the financial situation of the business.
External consultants can be hired to reach out to customers to understand their sincere
complaints and suggestions on what they feel could be done to improve the service they
desire.
CONCLUSION
There was an unforeseeable economic outlook in the economy at this time, thus the
caution in decision making across all sectors. From the report we observed that home
internet service yielded the highest revenue as well as the highest gross
profit/contribution among the four main sources of revenue. Followed by the second
highest generating revenue which is the mobile internet service, then the mobile telephony
and lastly the business internet service. Combining these leads to an interesting revenue
for the organization, however more expenses should be made in order of its revenue
generation and its contribution. While the home internet service yielded a revenue and
contribution of N360,000 and N252,000 respectively, the business internet service
generated a revenue and contribution of N75,000 and N53,250 respectively. The
differences are over N180,000 and it’s safe to say more should be spent to develop the
home internet service. A visible and worrisome decrease in the gross profit margin from
18.8% in 2014 to 17.5% in 2015 is a concern. Various factors could have contributed to it
including the poor staff morale and inexperienced staff hired during the year. The net profit
margin and the return on capital employed also dropped marginally in 2015. This means
that there was a lot of errors and/or difficulties experienced in the year 2015. Debt ratio
stood at 22.6% in 2015 which is quite high for an introduction of debt. The current ratio in
2015 was 0.5 : 1 which is below the standard industry average of 2 : 1. The financial
statement was unaudited, the financial statement was incomplete and there was no
industry average available for comparison and target. There’s indeed need to fix up the
situation of the staff to enhance performance and productivity.
 Phoenix-Adele Global Partners
Accounting house, 1, Communication Road, Lagos, Nigeria.

RECOMMENDATION
MNC should ensure that all staff are appropriately trained and encouraged to be
value adding in every situation they find themselves. This would help reduce customer
complaints. Improving customer service must be imperative at this point in their business
level. The financial statements should be learnt from, so as to avoid recurring mistakes that
could lead to low profitability. Cost minimization should be key in all planning, thus the
need to introduce budgets in the system. Expenses on staff development and training
shouldn’t reduce rather they should increase and improve on it. An audited and complete
financial statement should be provided to give a true and fair view of an independent
opinion. All outstanding dues to the regulatory authorities should be settled and paid off.
This has to be done so as to eliminate the threat of going concern where the CEO has to
resign.

EXECUTIVE SUMMARY

Balanced Scorecard Model analysis (REQUIREMENT 1)

CONCLUSION
 Phoenix-Adele Global Partners
Accounting house, 1, Communication Road, Lagos, Nigeria.

There were visible challenges in the economy like the unpredictable economic
outlook which shows the uncertainties of the future, however there’s a good sign because
of the existing national and internal recognitions MNC has gotten over time. Using the The
Balanced Scorecard we took note of the four basic perspectives and they are the financial,
customer, internal business, and innovation & learning perspectives. Financial perspective
showed safety with the increased profits and its opportunity for increased investments.
Customer perspective had its pros such as the availability of rendering services in 5
additional languages. Unfortunately they seem to have had an increased number in
customer complaints and unresolved cases, this definitely would affect its healthy
customer relationship built over the years. Internal business environment perspective
displayed issues facing the internal management and operations of the business.
Innovation and learning perspective showed that MNC has a very interesting drive for
innovation and learning, this has shown in the funds invested for research and
development. The going concern of the business as the CEO might resign due to the fine
being slammed on the company as a result of the breach in regulations from the regulatory
authorities, is a major worry at this time due to the verisimilitude of the negligence. The
financial statements attached aren’t audited, thus we cannot vouch for the authenticity of
the information provided. Further insight shows staff are overworked and this has led to
their low staff morale in their duties. There’s concern on the performance of staff and it can
be attributed to poor treatment of staff. There are plans of going public and this would
improve the society as it creates jobs and increases flow of cash in the state. This only
entails publicly attracting shareholders by sales of share to the public.

RECOMMENDATION
Having fully analyzed the situation and circumstances surrounding the business, its
advisable that the company fixes up its outstanding with the regulatory authorities and
pays all fines due so as not to threaten the going concern of the business as this may grossly
affect the decision making of interested and anticipated shareholders if they decide to go
public. In relation to the poorly treated staff, it’s safer to create shifts and compensations
for staff so as to balance their work life with normal life. This is essential because it’s only
fair to make the work environment bearable for staff. An audited and complete financial
statement should be provided so as to have a true and fair opinion in our judgments. Where
this is made available, there’s a higher chance of getting real results in terms of issues
arising. Lastly, MNC should build and develop its strengths such as its customer base and
also improve on its customer relations so as not to have a risk of losing them. Increased
training and development of staff would also increase efficiency of the company thus they
should continue such existing programs.
 Phoenix-Adele Global Partners
Accounting house, 1, Communication Road, Lagos, Nigeria.

Product Mix Analysis (REQUIREMENT 2)

CONCLUSION
There was an unforeseeable economic outlook in the economy at this time, thus the
caution in decision making across all sectors. From the report we observed that home
internet service yielded the highest revenue as well as the highest gross
profit/contribution among the four main sources of revenue. Followed by the second
highest generating revenue which is the mobile internet service, then the mobile telephony
and lastly the business internet service. Combining these leads to an interesting revenue
for the organization, however more expenses should be made in order of its revenue
generation and its contribution. While the home internet service yielded a revenue and
contribution of N360,000 and N252,000 respectively, the business internet service
generated a revenue and contribution of N75,000 and N53,250 respectively. The
differences are over N180,000 and it’s safe to say more should be spent to develop the
home internet service. A visible and worrisome decrease in the gross profit margin from
18.8% in 2014 to 17.5% in 2015 is a concern. Various factors could have contributed to it
including the poor staff morale and inexperienced staff hired during the year. The net profit
margin and the return on capital employed also dropped marginally in 2015. This means
that there was a lot of errors and/or difficulties experienced in the year 2015. Debt ratio
stood at 22.6% in 2015 which is quite high for an introduction of debt. The current ratio in
2015 was 0.5 : 1 which is below the standard industry average of 2 : 1. The financial
statement was unaudited, the financial statement was incomplete and there was no
industry available for comparison and target. There’s indeed need to fix up the situation of
the staff to enhance performance and productivity.
RECOMMENDATION
MNC should ensure that all staff are appropriately trained and encouraged to be
value adding in every situation they find themselves. This would help reduce customer
complaints. Improving customer service must be imperative at this point in their business
level. The financial statements should be learnt from, so as to avoid recurring mistakes that
could lead to low profitability. Cost minimization should be key in all planning, thus the
need to introduce budgets in the system. Expenses on staff development and training
shouldn’t reduce rather they should increase and improve on it. An audited and complete
financial statement should be provided to give a true and fair view of an independent
opinion. All outstanding dues to the regulatory authorities should be settled and paid off.
This has to be done so as to eliminate the threat of going concern where the CEO has to
resign.
 Phoenix-Adele Global Partners
Accounting house, 1, Communication Road, Lagos, Nigeria.