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B. DETAILED REPORT

3. Detailed findings and recommendations

Group Legal and Negotiation Strategy for Nakolia.

We have pursued, it would seem, a suicidal combination of a rather spurious court challenge
against the government of Nakolia and at the same time negotiating with them. Our Mendelow

Analysis had pointed the government of Nakolia as a Key Player so care should be taken to not
ruin our relationship any further. We have operated for years in Nakolia under a different
government which was unseated by the current one on a security reform mandate. It should be

expected that this government, like any other, would seek to be re-elected by actually
demonstrating its firm commitment to security, and that can quite easily be done at our expense;
so we need to tread carefully. This issue is as an Opportunity in our SOWT analysis (Appendix

1) as we have 4 options under consideration to address the biggest threat we face:

OPTION 1, TAKE UNILATERAL ACTION
We can act unilaterally by paying in full the sum of S$58 billion and then pursue the court action.
There is a 98% (strong) chance of winning and recovering our payment but be assured we

would have alienated the newly-elected, and we would presume, a popular government of the
people of Nakolia on whom we depend at least for our license to operate. To our benefit, we will
have as much time as we need, 24 months, to fully comply with the sim card registration

requirements. Should we lose however, we could see ourselves not only incurring legal fees
but being imposed punitive costs. Even if we pay in full and decide to reverse the legal

challenge, the amount is not only massive but it may give the impression we are an arrogant
company with deep pockets and could provoke the government to be even more punitive in the
future. As aforementioned, the government is a key player in this market; so we cannot afford

to be in court with them on this rather 'politically-charged, security-related and emotional matter'
especially given how strongly the Nakolian people feel about this issue and given that we have

other options that would restore the relationship. In fact, this amount is over 5 times the
provision of S$10,499m we have made for 2016 as well as the S$11,529m (S$64,190m-
S$52,661m) projected increase in long-term debt to pay down the fine amongst others. It will

simply damage our balance sheet and throw out all our 4 Key Investor Ratios.

Developed by The CharterQuest Institute for 'The CFO Case Study Competition 2016'
www.charterquest.co.za | Email: thecfo@charterquest.co.za