Default risk management in the internal marketing of cocoa in Ghana: a case study of Kuapa Kokoo Limited

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Default risk is the uncertainty surrounding an individual or a firm's ability to service its debts and obligations. Prior to default, there is no way to discriminate unambiguously between individuals or firms that will default and those that will not. Default among Purchasing Clerks has led to losses from purchasing activities and this threatens the modest gains made from the tight margins of operations of Licensed Buying Companies. The general purpose of the study was to assess the risk of default among Purchasing Clerks, the contributing factors, and how this is being managed by Licensed Buying Companies in the internal marketing of cocoa in Ghana. Semi structured questionnaires were administered to two groups of employees of Kuapa Kokoo Limited. The sample population of the study was made up of two hundred and fifty eight (258) employees, comprising forty four (44) District Managers, and two hundred and fourteen (214) Purchasing Clerks. The study found that the estimated rate of default among the Purchasing Clerks was 29.91%. The major significant contributing factors to default were, pre-financing of cocoa purchasing, misapplication of funds, Purchasing Clerks absconding with funds, quality related problems, low numbers of dependants, sub-contracting of cocoa purchasing, volume handling and theft of cocoa and funds. It is recommended that a proper and effective risk management system should be put in place by Kuapa Kokoo Limited to reduce the incidence of default among Purchasing Clerks.
A Thesis submitted to the Institute of Distance Learning, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the degree of Commonwealth Executive Masters of Business Administration,