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NCERT Solutions For Class 11 Business Studies Sources of Business Finance

October 9, 2019 by phani

Free PDF download of NCERT Solutions for Class 11 Business Studies Chapter 8 Sources of Business Finance solved by Expert Teachers as per NCERT (CBSE) Book guidelines. All Chapter wise Questions with Solutions to help you to revise complete Syllabus and Score More marks in your examinations.

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MORE QUESTIONS SOLVED

I. Very Short Answer Type Questions Question 1. Give the full form of GDR and ADR. Answer:  Global Depository Receipts and American Depository Receipts

Question 2. State various sources of long term funds. Answer:  Various sources of long term funds include: Equity shares, preference shares, debentures, retained earnings, loans from financial institutions, loans from commercial banks etc.

Question 3. State various sources of short and medium term funds. Answer:  Short term sources include trade credit, factoring, banks and commercial papers. Middle term credit sources include loans from banks, public deposits, loans from financial institutions and lease financing.

Question 4. What are the preferences given to preference shareholders? Answer:

  •  When company winds up, preference shares are paid before equity shares.
  • They also have a right to participate in the premium at the time of redemption.

Question 5. Name two sources of funds under owner’s fund. Answer:  Equity shares and retained earnings

Question 6. Who are called the owners of a company? Answer:  Equity shareholders are called the owners of the company.

Question 7. Which deposits are directly raised from the public? Answer:  Public deposits.

Question 8. What are the two important functions of factors? Answer:  (a) Discounting of bills and collection of the client’s receivables. (b) Providing information to the client on credit worthiness of prospective client.

Question 9. What is the status of debenture holders? Answer:  Debenture holders are creditors of the company.

Question 10. In leasing agreement what right is given to lessee? Answer:  The right to use the asset in lieu of specific prepayment for a specific time period.

Question 11. Preference shares are not suitable for which kind of investors? Answer:  It is not suitable for those investors who want to get a fixed return without failure.

Question 12. What are Indian depository receipts (IDRs)? Answer:  IDR is an instrument in the form of a depository receipt created by the Indian depository in India against the underlying equity shares of the issuing company.

Question 13. Name the two Indian companies which have raised money through issue of GDRs. Answer:  WIPRO and ICICI

Question 14. Who regulates the acceptance of public deposits? Answer:  Reserve Bank of India

Question 15. What is factoring? Answer:  Factoring is a financial service under which the factor of discounting of the bills of exchange of the clients and collects his debts and also provides him information on credit worthiness of perspective client. He charges fees for the services rendered.

Question 16. What are retained earnings? Answer:  A company generally does not distribute all its earnings amongst shareholders in the form of dividend. A portion of the net earnings may be retained in the business of ruse in future. These are called retained earnings.

Question 17. What are public deposits? Answer:  Public deposits are the deposits raised by organizations directly from the public.

Question 18. Specify the objective of I.D.B.I. Answer:  Its objective was to coordinate the activities of other financial institutions including commercial banks. The bank performs three types of functions namely, assistance to other financial institutions, direct assistance to industrial concerns and promotion and coordination of financial technique service.

Question 19. What do you mean by discounting of bills of exchange? Answer:  Discounting of bills of exchange means that the bank pays the person beforehand at less than face value and receives the payment on maturity equivalent to maturity value. The difference between the amount paid and face value is the return for discounting bills of exchange.

Question 20. What is a trade credit? Answer:  Trade credit is the credit extended by one trader to another for the purchase of goods and services.

Question 21. What is debenture? Answer:  A debenture is a document or certificate, which is issued under the common seal of the company, acknowledging its debt to the holders at given terms and conditions.

Question 22. Why preferences are given to preferential shares? Answer: They are given some preferences because they are not given voting rights.

Question 23. State two factors affecting the fixed capital requirement of a firm. Answer:  Size of business and nature of business.

Question 24. Why is equity share capital called ‘Risk Capital’? Answer:  Equity shareholders get return only when profits is left after paying interest on debentures and fixed return on preference shares. Therefore, it is called risk capital as it bears maximum risk.

Question 25. State two factors affecting the working capital requirement of a firm. Answer:  Nature of business and speed of sales turnover.

II. Short Answer Type Questions Question 1. State the meaning of finance. What factors determine working capital and fixed capital requirements of a business? Answer:  No business can be started, run or expanded without finance. There are many sources of finance. Each source has its own merits and demerits. Business needs to choose right source of finance to make the best use of it. Business finance refers to the money required for carrying out business activities. Factors determining working capital requirements of a business:

  •   Whether firm is selling goods on credit or cash: If the firm is selling goods on credit or cash, then its working capital requirements will be more. On the other hand, if it is selling in cash, its working capital requirements will be less.
  •  Speed of sales turnover: A firm whose sales process gets converted into cash soon will have lesser working capital requirements and a firm whose sales process gets converted into cash in delay will have more working capital requirements.
  • Size and scale of business: If business is operating at a larger scale then working capital requirements will be more. On the other hand, if size and scale of operations is small, its working capital requirements will be less.

Factors determining Fixed Capital Requirements

  • Size and scale of business: If business is operating at a larger scale then fixed capital requirements will be more. On the other hand, if size and scale of operations is small, its fixed capital requirements will be less.
  • Technology: A firm using labour intensive method needs lesser fixed capital and a firm using capital intensive methods needs more fixed capital.

Question 2. Why does business enterprise need finance? Answer:  A business needs finance because:

  • Business is concerned with production and distribution of goods and services for the satisfaction of needs of society. There are four factors required for any production: land, labour, capital and entrepreneur. All these factors need to be paid for their services.
  •  No business can be carried without availability of adequate funds.
  • As soon as a decision is taken to start a business, requirement of funds initiates.
  • Finance is called ‘life blood of a business’.
  • It is very important to assess financial needs of the organization and the identification of various sources of finance.

NCERT Solutions For Class 11 Business Studies Sources of Business Finance SAQ Q3.1

Question 5. Preference shares are preferred by company but not by investors. Why? Answer:  Preference shares have a filed percentage dividend before any dividend is paid to the ordinary shareholders. As with ordinary shares a preference dividend can only be paid if sufficient distributable profits are available, although with ‘cumulative’ preference shares the right to an unpaid dividend is carried forward to later years. The arrears of dividend on cumulative preference shares must be paid before any dividend is paid to the ordinary shareholders. From the company’s point of view, preference shares are advantageous in the following ways:

  • Dividends do not have to be paid in a year in which profits are poor, while this is not the case with interest payments on long term debt (loans or debentures).
  • Since they do not carry voting rights, preference shares avoid diluting the control of existing shareholders while an issue of equity shares would not.
  • Unless they are redeemable, issuing preference shares will lower the company’s gearing. Redeemable preference shares are normally treated as debt when gearing is calculated.
  • The issue of preference shares does not restrict the company’s borrowing power, at least in the sense that preference share capital is not secured against assets in the business.
  • The non-payment of dividend does not give the preference shareholders the right to appoint a receiver, a right which is normally given to debenture holders.

However, dividend payments on preference shares are not tax deductible in the way that interest payments on debt are. Furthermore, for preference shares to be attractive to investors, the level of payment needs to be higher than for interest on debt to compensate for the additional risks. For the investor, preference shares are less attractive than loan stock because:

  • They cannot be secured on the company’s assets.
  • The dividend yield traditionally offered on preference dividends has been too low to provide an attractive investment compared with the interest yields on loan stock in view of the additional risk involved.

NCERT Solutions For Class 11 Business Studies Sources of Business Finance SAQ Q6

Question 7. Write a short note on the features of GDRs. Answer: GDRs have the following features:

  • A bank certificate issued in more than one country for shares in a foreign company. The shares are held by a foreign branch of an international bank. The shares trade as domestic shares, but are offered for sale globally through the various bank branches. ‘
  • A financial instrument used by private markets to raise capital denominated in either U.S. dollars or Euros.
  • Holders of GDR are eligible only for capital appreciation and dividend but no voting rights.
  •  These instruments are called EDRs when private markets are attempting to obtain Euros.
  •  It is a negotiable instrument and can be traded freely like any other security.
  • A holder of GDR can convert it into any other security at any time.

Question 8. Name zones of the Lessors and Lessees in India. Answer:  The Lessors

  • Specialised Leasing Companies’
  • Banks and Bank Subsidiaries
  •  Specialised Financial Institutions
  •  Manufacturer Lessors The Lessees
  •  Public Sector Undertakings
  • Mid Market Companies
  • Government Departments and Authorities

NCERT Solutions For Class 11 Business Studies Sources of Business Finance SAQ Q9

Question 10. What is factoring? Discuss its pros and cons. Answer: Debtors are the people who owe money to a business. Debt factoring is a financial service that allows a business to raise funds based on the value owed to them by their debtors. Example: Receiving 80% of debtors’ outstanding debt on selling fabric abroad. Advantages:

  • It reduces the probability of bad debt-debtors.
  •  Non-recourse factoring allows for insurance against bad debts.
  •  Companies don’t have to chase up their own debtors.
  • Immediate sources of finance.

Disadvantages:

  • Without non-recourse factoring, the company will still have to absorb losses.
  •  It is expensive.

III. Long Answer Type Questions Question 1. Explain different types of preference shares which can be issued by a company. Answer:  Different types of preference shares are discussed below:

  • Cumulative and Non-cumulative: The preference shares which enjoy the right to accumulate unpaid dividends in future years if it is not paid during a year are termed as cumulative preference shares. On the contrary, a non-cumulative preference share is one in which dividend is not accumulated if it is not paid in the particular year. .
  • Participating and Non-participating Preference Shares: Those preference shares which have a right to participate in further surplus of a company’s shares which after dividend at certain rate has been paid on equity shares are called participating preference shares. Those preference shares which do not have a right to participate in further surplus of a company’s shares which after dividend at certain rate has been paid on equity shares are called non-participating preference shares.
  •  Convertible and Non-convertible Preference Shares : Those preference shares which can be converted into equity shares within a specified period of time are called convertible preference shares. On the contrary, preference shares which cannot be converted into equity shares within a specified period of time are called non-convertible preference shares.

Question 2. Describe in brief the features of equity shares. Answer:  Equity shares are the most important sources of raising long term capital by a company. They represent the ownership of a company and therefore, the capital raised by issue of these shares is called owner’s funds. Features of equity shares:

  • Voting Rights: They have voting rights and hence they are the owners of the business.
  • Participation in Management: Using their voting rights, equity shares holders get a right to participate in company’s management.
  • Return: These shareholders do not get a fixed dividend. They get according to the earnings of the company. They receive what is left after all other claims on the company’s income and assets have been settled.
  • Risk: They enjoy the reward and also bear the risk of ownership. Therefore, it is also called risk capital.
  • Permanent Capital: Equity capital serves as permanent capital as it is to be repaid only at the time of liquidation of a company.
  • No charge on assets of the company: Funds can be raised though equity issue without creating any charge on the assets of a company. The assets of a company are therefore, free to be mortgaged for the purpose of borrowings, if the need be.
  • More Costly: The cost of equity shares is generally more as compared to the cost of raising funds through other sources.

Question 3. Differentiate between a share and a debenture. Answer:  Following are the main differences between a debenture and a share:

  • Debenture holder is a creditor of the company and cannot take part in the management of the company while a shareholder is the owner of the company. It is the basic distinction between a debenture and a share.
  • Debenture holders will get interest on debentures and will be paid in all circumstances, whether there is profit or loss will not affect the payment of interest on debentures. Shareholder will get a portion of the profits called dividend which is dependent on the profits of the company. It can be declared by the directors of the company out of profits only.
  • Shares cannot be converted into debentures whereas debentures can be converted into shares.
  • Debentures will get priority in getting the money back as compared to shareholder in case of liquidation of a company.
  • There are no restrictions on the issue of debentures at a discount, whereas shares at discount can be issued only after observing certain legal formalities.
  • Convertible debentures which can be converted into shares at the option of debenture holder can be issued whereas shares convertible into debentures cannot be issued.
  • There can be mortgage debentures i.e. assets of the company can be mortgaged in favor of debenture holders. But there can be no mortgage shares. Assets of the company cannot be mortgaged in favor of shareholders.

Question 4. What are retained profits? Discuss their advantages and disadvantages. Answer:  Retained Profits: For any company, the amount of earnings retained within the business has a direct impact on the amount of dividends. Profit re-invested as retained earnings is profit that could have been paid as a dividend. The management of many companies believes that retained earnings are funds which do not cost anything, although this is not true. However, it is true that the use of retained earnings as a source of funds does not lead to a payment of cash. The dividend policy of the company is in practice determined by the directors. From their standpoint, retained earnings are an attractive source of finance because investment projects can be undertaken without involving either the shareholders or any outsiders. The use of retained earnings as opposed to new shares or debentures avoids issue costs. The use of retained earnings avoids the possibility of a change in control resulting from an issue of new shares. Another factor that may be of importance is the financial and taxation position of the company’s shareholders. For example, because of taxation considerations, they would rather make a capital profit (which will only be taxed when shares are sold) than receive current income, and then finance through retained earnings would be preferred to other methods. Advantages of Retained Earnings

  • The management of many companies believe that retained earnings are funds which do not cost anything, although this is not true. However, it is true that the use of retained earnings as a source of funds does not lead to a payment of cash.
  • The use of retained earnings avoids the possibility of a change in control resulting from an issue of new shares.
  •  Another factor that may be of importance is the financial and taxation position of the company’s shareholders. If, for example, because of taxation considerations, they would rather make a capital profit (which will only be taxed when shares are sold) than receive current income, then finance through retained earnings would be preferred to other methods.

Disadvantages of Retained Earnings

  • At the same time, a company that is looking for extra funds will not be expected by investors (such as banks) to pay generous dividends, nor over-generous salaries to owner-directors.
  • Scope of retained earnings is limited by amount of profits. A loss incurring firm has no source called retained earnings.

Question 5. Write a note on international sources of finance. Answer:

  • Commercial banks: Commercial banks all over the world extend foreign currency loans for business purposes. For e.g. Standard Chartered emerged as a major source of foreign currency loans to the Indian industry. The types of loans and services provided by banks vary from country to country.
  • International agencies and Development banks: These bodies provide long and medium term loans and grants to promote the development of economically backward areas in the world. The more notable among them include International Finance Corporation(IFC), EXIM Bank and Asian Development Bank.
  • International Capital Markets: Modern organizations including multinational companies depend upon sizeable borrowing in rupees as well as in foreign currency Prominent financial instruments used for this purpose are: 1. Global Depository Receipts (GDR’s) 2. American Depository Receipts(ADR’s) 3. Foreign Currency Convertible Bonds(FCCB’s)

Question 6. Explain in detail the types of debenture a company can issue. Answer:  Different types of debentures that a company can issue are described below:

  • Convertible and Non-convertible Debenture: Convertible debentures are those debentures that can be converted into equity shares after the expiry of a specified period. On the other hand, non-convertible debentures are those which cannot be converted into equity shares.
  • Registered and Bearer: Registered debentures are those which are duly recorded in the register of debentures holders maintained by the company. These can be transferred only through a regular instrument of transfer. In contrast the debentures which are transferable by more delivery are called bearer debentures.
  • Secured and Unsecured: Secured debentures are such which create a charge on the assets of the company, thereby mortgaging the assets of the company. Unsecured debentures on the other hand do not carry any charge or security on the assets of the company.
  • First and Second: Debentures that are rapid before other debentures are known as first debentures. The second debentures are those which are paid after the first debentures have been paid back.

Question 7. Describe briefly the factors responsible for selecting a source of finance. Answer:  Following factors responsible for selecting a source of finance:

  • Cost: There are two types of cost viz., the cost of procurement of funds and cost of utilizing the funds. Both these costs should be taken into account while deciding about the source of funds that will be used by an organisation.
  • Form of organisation and legal status: The form of business organisation and status influences the choice of a source for raising money. A partnership firm cannot raise money by issue of equity shares as these can be issued only by a joint stock company.
  • Risk Profile: Business should evaluate each of the sources in terms of risk. For example, equity shares are to be repaid only at the time of liquidation of the company. While debentures need to be repaid on maturity date along with interest every six months or annually. Moreover, dividends are to be paid only if there are profits while interest is to be paid in case of loss as well.
  • Financial Strength and Operational Stability: When the earnings of an organization are not stable, fixed charged funds like preference shares and debentures should be carefully chosen as they add to the fixed financial commitments of an organization.
  • Purpose and Time Period: Business should select a source of finance according to time period for which funds are required. If funds are needed for short term, then we can make use of trade credit, commercial papers, bank loan, public deposits, etc but if funds are needed for long run then debentures, preference shares etc. are better.
  • Control: A particular source of fund may affect the control and power of the owners of management of a firm. For example, equity shares dilute the control as they have voting power while other sources do not have voting power but loans from financial institutions, loans from commercial banks and issue of debentures get mortgaged on assets of the company. It dilutes power in different ways.
  • Effect on Credit Worthiness: While choosing a source of finance, am organization also needs to consider its effect on credit worthiness. For example, if the company issues secured debentures then it affects the credit worthiness of company for unsecured debentures of the company. Their willingness to extend further loans as credit to the company gets adversely affected.
  • Tax Benefits: Various sources of finance may also be evaluated in terms of their tax benefits. For example, interest on debentures is tax deductible while divided on preference shares is not tax deductible. Therefore those organizations which are seeking tax advantage may prefer debentures to preference shares.
  • Flexibility and Ease: Another factor which determines the choice of a source of finance is how easily it is available i.e. how less the paper formalities are and how flexible it is i.e. how easily its amount and terms can be modified.

Question 8. What is lease financing? Discuss its merits and demerits. Answer:  A lease is a contractual agreement, in which the owner of the asset grants the other party the right to use the asset in return for a periodic payment, but retains the title over the property. The owner of the asset is called lessor and the party who uses the assets is called lessee. Lessee pays a fixed periodic amount to the lessor. It is called lease rent. When period of lease expires, the asset is returned to the lessor. It is used more frequently with items like computers and electronic items which become obsolete soon. Leasing company (lessor) owns the equipment and hires it out to the customers (lessee pays rental income to hire assets). It is a medium term fund. New companies need expensive equipments to run the business: office, equipment leasing from larger companies like Apple. Merits of Lease financing

  • It allows the lessee to acquire the asset with lesser investment.
  • Simple documentations makes it easier to finance assets.
  •  Lease rentals get tax advantage as they are deductible for computing taxable profits.
  • It reduces initial capital for (new) businesses.
  • It provides added service: maintenance and upgrading.
  • It makes funds available without diluting the ownership of business.
  •  The lease agreement does not bring any change in raising capacity of an organization.
  •  The risk of obsolesce is borne by the lessor.

Demerits of Lease Financing

  • A lessee agreement imposes restrictions on usage of assets. For example, alternation and modification in assets may not be allowed.
  • The normal business operations may be affected if lease is not renewed.
  •  It may result in higher payout obligations in case the equipment is not found useful and the lessee chooses for premature termination of the lease contact.
  •  It never makes lessee the owner of the asset.

IV. Higher Order Thinking Skills (HOTS) Question 1. Mr. John has ? 1,00,000 for investment purposes. Should he invest in equity shares, preference shares, public deposits or debentures? Justify your answer. Answer:  John’s investment depends on many factors:

  • If he wants control in the company or participation in management of the company, he should invest in equity shares.
  • If he wants some certainty in returns and also wants something extra in case of huge profits, he should invest in preference shares.
  • If he wants perfect certainty, he should invest in public deposits or debentures as rate of return is pre fixed.
  • He also needs to see if he wants to invest for short term or long term. If he is interested in short term investment, then he should choose public deposits.
  • If he is interested in middle term investment, he should invest in preference shares or debentures.
  • If he is interested in long term investment, he should invest in equity shares.

Question 2. As a source of finance retained profit is better than other sources. Do you agree with this view? Give reasons for your answer. Answer:  Yes, we agree. Retained earnings are better than other sources of finance because:

  • Retained earnings is a permanent source of funds which an organization can avail of.
  • It enhances capacity of the business to absorb unexpected losses.
  • It does not involve any explicit cost in the form of interest, dividend or flotation cost.
  •  It may increase the process of equity shares of a company.
  • There is a greater degree of operational freedom and flexibility as the funds are generated internally.

V. Value Based Questions Question 1. Retained earnings are not a good source from the values point of view as it is the right of equity shareholders. Do you agree? Justify your answer. Answer:  Equity shareholders get a return only when profits are left after giving interest to debenture holders and preferential dividend to preference shareholders. In case, no profits are left after it, they do not get a return. Therefore, it is unreasonable to transfer funds to general reserves which are called retained profits if there are exceptionally good profits. They took the risk of uncertain returns. Then it is their right to get exceptional returns in good times. But in good times, it is being retained to plough back into the business. Therefore, it is right to say that retained earnings are not a good source from the values point of view as it is the right of equity shareholders.

Question 2. Debentures are good from debenture holders point of view but not for business. Do you agree? Explain. Answer: Debentures are similar to shares, however, debenture holders do not have voting rights on how the business is run. Debentures have certain merits and demerits from business as well as debenture holders point of view. These are explained below: Advantages to Debenture Holders

  • They receive annual interest/ benefits (VIP status or free passes) regardless of whether or not the business is making money.

Disadvantages to Debenture Holders

  • No say in how the business will run.
  • Greatly depends on the business’ success to reuse it’s value.

Advantages to Business

  • Provides good long-term finance without losing control of the business.

Disadvantages to Business

  • Firm increases the amount of long-term liabilities raising the amount of interest payments to the lenders.

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NCERT Solutions for Class 11 Business Studies Chapter 8 - Sources of Business Finance

NCERT Solutions are an exceptionally helpful study resource to prepare well for the CBSE Class 11 Business Studies examinations. This study resource provides students with in-depth knowledge, and the solutions collated by the subject matter experts are easy to comprehend. Students can download the NCERT Solutions for Class 11 Business Studies Chapter 8 – Sources of Business Finance in the link below in PDF and practise offline also.

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Short Questions for NCERT Business Studies Solutions Class 11 Chapter 8

1. What is business finance? Why do businesses need funds? Explain.

The fund required to carry the load of the organisation and its daily operations is called business finance. Businesses need funds due to the following reasons:

1. An organisation needs machinery, buildings, furniture, etc., to set up operations, and to purchase all these items, funds are needed. This is called fixed capital requirement. The amount varies with the type of business.

2. To run day-to-day operations like purchasing raw materials requires regular funds, also called working capital requirement.

2. List sources of raising long-term and short-term finance.

The long-term finance sources are listed below:

1. Equity Shares

2. Debentures

3. Retained earnings

4. Preference shares

5. Loans from banks and other financial institutions

The short-term finance sources are listed below:

1. Commercial papers

2. Trade credit

3. Short-term loans from banks

3. What is the difference between the internal and external sources of raising funds? Explain.

Source Funds generated from within the business Funds generated from outside sources, such as suppliers and investors.
Need Fulfilment Able to fulfil limited needs Can gather many links to raise capital
Security No security required Security required in the form of mortgaging assets

4. What preferential rights are enjoyed by preference shareholders? Explain.

The following rights are enjoyed by preference shareholders:

1. At the time of dividend declaration, be the first to receive a fixed rate of dividend from profits.

2. In case of liquidation, the preference is to receive capital after creditor claims are settled.

3. In case of company dissolution, the preference share capital will be refunded before equity share capital.

5. Name any three special financial institutions and state their objectives.

1. Unit Trust of India (UTI): Established in 1964 as per the Unit Trust of India Act, 1963. The objective of setting up UTI was to mobilise savings and make the funds that are available towards investment in profitable ventures.

2. Life Insurance Corporation of India (LIC): It was set up in 1956 under the LIC Act, 1956, making all existing insurance companies nationalised. The objective is to encourage savings as a premium towards insurance and invest it in the form of loans to industrial units.

3. Industrial Finance Corporation of India (IFCI): It was established in the year 1948 under the Industrial Finance Corporation Act 1948. Its objective was to provide assistance in balanced regional development and encourage entrepreneurs to explore rising sectors of the economy and also contribute towards management education development.

6. What is the difference between GDR and ADR? Explain.

Global Depository Receipts (GDR): GDR is the receipts that are shared by depository banks against company shares. GDR are denoted in US dollars and can be easily converted into shares at any time. They can be listed and traded on all stock exchanges over the world.

American Depository Receipts (ADR): These receipts are issued by companies which are US based and, like other securities, get traded in the market. The only factor is that the trading is restricted to the US Securities market, and these receipts are only sold to US citizens.

Long Questions for NCERT Business Studies Solutions Class 11 Chapter 8

1. Explain trade credit and bank credit as sources of short-term finance for business enterprises.

Trade Credit: The credit offered by one supplier to a purchaser of goods is called trade credit. This helps in promoting the sale of goods and services, as the purchaser is not required to make payment at that time in the form of cash. Such credit is granted only to creditworthy customers. There are factors that influence the volume and period of the credit, and they are as follows:

1. Financial position of the seller

2. Past payment record

3. Volume of purchases

Benefits of Trade Credit

1. It helps a company accumulate inventories for increasing sales in future.

2. Trade creditors do not have any rights over company assets. Therefore, assets can be mortgaged to raise money from other sources.

Bank Credit: Commercial banks provide a source of funds, and these funds are used for different purposes and time periods in the form of overdrafts, cash credits, and discounting bills. These loans need to be paid in a lump sum or by paying in instalments.

Benefits of Bank Credit

1. There is secrecy in providing information about their customers.

2. Provides flexibility in terms of loan repayment.

2. Discuss the sources from which a large industrial enterprise can raise capital for financing modernisation and expansion.

The following sources of capital are suitable for raising capital for expansion:

1. Equity Shares: These are the shares that are part of the owner’s capital. The persons holding such shares are known as equity shareholders, and they enjoy decision-making capacity in management, they also get high returns when the profits of the business get higher.

2. Preference Shares: This is a type of share that gives shareholders a preferential right with regard to the repayment of capital and earning payments after a period of time. The payment to preference shareholders is done as per Section 80 of the Companies Act, 1956.

3. Loans: A business can borrow funds from banks and similar financial institutions for a fixed time at a fixed rate/variable rate, and they have to pay interest.

4. Retained Earnings: These are parts of profit that are kept for use in the future.

5. Debentures: These are instruments that are helpful in raising long-term capital. Debentures are like loans having a fixed rate of return.

3. What advantages does the issue of debentures provide over the issue of equity shares?

Debentures provide the following advantages over equity shares:

1. Issuing equity shares makes the shareholders own the company, and they become entitled to voting rights, while debenture holders do not have any rights in the organisation. They get a fixed amount in the form of payment. Debentures, thus, do not contribute towards the dilution of ownership of the company and can be issued without any risk.

2. For issuing shares, the company has to bear huge costs; also, dividends payment is not tax deductible. For interest paid to debentures, the company receives tax deductions, so issuing debentures is beneficial.

3. Debentures have a fixed rate of return. So, if no profit is also earned, then also the company needs to pay the dividend, which is at a fixed rate. On the other hand, a company issuing equity shares and making profit needs to share more with the shareholders, which varies with the profit earned. Thus, it is better to issue debentures.

4. State the merits and demerits of public deposits and retained earnings as methods of business finance.

Public deposits are raised by organisations directly from the public and which helps them to finance short and medium-term requirements. These deposits provide higher returns than bank deposits. Anyone interested in doing an investment needs to submit a prescribed form along with the amount to be deposited. A deposit receipt will be issued as acknowledgement.

1. Requires very few regulations.

2. Fundraising from the public is less costly than borrowing loans from banks.

3. As depositors do not have any voting rights, ownership is not diluted.

1. Amount of money raised from the public is limited as it depends on willingness and availability of funds.

2. New companies find it difficult to raise funds as trust is less among people.

3. For a firm with a high capital requirement, this will not be a good option.

Retained Earnings: Firms keep a part of profit before distributing the dividends to the shareholders; such profits are kept for future use in business and are called retained earnings.

1. Funds are raised from internal sources and, therefore, do not involve any cost.

2. As retained earnings increase, the price of equity shares also increases.

3. As these are profits which are surplus, it reduces the chances of unexpected loss.

1. Business profits can fluctuate, so retained earnings are uncertain.

2. Investing a large amount of profit into a business can make shareholders unhappy.

3. Funds are misused sometimes as firms do not cash in on the opportunity at the right time.

5. Discuss the financial instruments used in international financing.

The following three financial instruments are mainly used in international financing:

1. American Depository Receipts (ADR): These receipts are issued by companies which are US based and, like other securities, get traded in the market. The only factor is that the trading is restricted to the US Securities market, and these receipts are only sold to US citizens.

2. Foreign Currency Convertible Bonds (FCCB): These are debt securities which are qualified to be converted into depository receipts and equity shares after a certain time period. The terms of conversion and price are specified in advance, and returns on such securities are fixed prior, which is lower than returns on securities that are non-convertible.

3. Global Depository Receipts (GDR): It is the receipts that are shared by depository banks against company shares. GDR are denoted in US dollars and can be easily converted into shares at any time. They can be listed and traded on all stock exchanges over the world.

6. What is commercial paper? What are its advantages and limitations?

One type of credit instrument that is used by creditworthy firms to raise short-term finance for their business is called commercial paper. It is a type of unsecured promissory note with a maturity ranging from 90 to 364 days. It is issued to insurance companies, banks, business firms and pension funds, and it is regulated by RBI (Reserve Bank of India).

1. Lower cost than securing bank loans from commercial banks.

2. A highly liquid asset that can be transferred to anyone.

3. Companies earn good returns by investing the surplus earnings.

4. Provides a continuous source of finance for firms.

Limitations

1. Firms that have a strong market hold can only raise money.

2. Time period cannot be extended in case funds are not available.

Concepts covered in this chapter are listed below:

Learn the concepts mentioned here for good scores in Chapter 8 of NCERT Class 11 Solutions Business Studies –

  • Introduction
  • Meaning, nature and significance of business finance
  • Classification of sources of funds
  • Period basis
  • Source of generation basis
  • Sources of finance
  • Retained earnings
  • Trade credit
  • Lease financing
  • Public deposits
  • The Lessees

Class 11 Business Studies of NCERT Solutions Chapter 8 provides a wide range of illustrative examples, which helps the students to comprehend and learn quickly. The above-mentioned are the NCERT Solutions according to the Class 11 CBSE syllabus. For more solutions and study materials of NCERT Solutions for Class 11 Business studies , visit BYJU’S or download BYJU’S – The Learning App for more information.

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Important Questions for CBSE Class 11 Business Studies Chapter 8 - Sources of Business Finance

  • Class 11 Important Question
  • Business Studies
  • Chapter 8: Sources Of Business Finance

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CBSE Class 11 Business Studies Chapter-8 Important Questions - Free PDF Download

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Study Important Questions for Class 11 Business Studies Chapter 8 - Sources of Business Finance

Very short answer questions (1 mark).

1. What do you mean by ploughing back of profits?

Ans: When a company earns profit, a certain amount or percentage of those profits is retained within the business for future use and this is known as retained earnings. When the business is financed through this source it is known as ploughing back of profit or internal financing.

2. Differ between ADR & GDR.

Ans: The difference between GDR and ADR is:

Basis

GDR

ADR

Meaning

A GDR is a negotiable instrument or an instrument that can be traded freely in various foreign capital markets. 

This instrument is like a regular stock which is purchased and sold in American markets. 


Stands for

Global Depository Receipt

American Depository Receipt

Issued by

These are issued by Indian enterprises in order to raise capital from foreign investors. 

It is issued by American businesses and can be traded on American stock exchanges. Only American citizens are eligible to receive it.

Traded on

It is traded on foreign stock exchanges.

Only be traded in US stock exchanges.

3. State the difference between lessor and lessee with the help of an example.

Ans: The 'lessor' is the person who owns the assets, while the 'lessee' is the person who uses them. Hence, the real owner of the asset is the lessor, while lessee is the temporary owner for the asset.

For example, Amul Dairy Ltd bought machinery from Jindal and Co. on a hire buy arrangement and paid Rs 200000 in lease fees. The lessee is Amul Diary Ltd, while the lessor is Jindal and Co.

4. What type of share capital is also called ‘’Risk Capital”

Ans: Risk capital is another name for equity share capital.

5. Name the return given to debenture holders for using their funds?

Ans: Debenture holders receive a fixed rate of interest for the use of their funds.

6. Name the one unique feature of ‘’Retained Earnings’’ which is not available in any other source of finance?

Ans: It is a self-sustaining source of income with no upfront costs. Retained earnings refers to a percentage of net earnings that is kept in the business for future usage.

7. What is the similarity between ADR and Public Deposits?

Ans: Depositors do not have voting rights in either ADR or Public Deposit, and the company's control is not eroded in both the cases.

8. Which term is concerned with the acquisition and conservation of capital funds in meeting the financial needs of a business enterprise.

Ans: The acquisition and conservation of capital money to meet financial needs is the focus of retained earnings.

9. Name the organization which has been set up by the central as well as State governments to provide medium term and long term loans to the business sector.

Ans: Developmental banks lend to businesses on a medium and long-term basis.

10. Write any one similarity between Equity share capital and preference share capital.

Ans: They are included in the owner's capital.

11. Write the names of 2 Indian companies that offer Factoring services.

Ans: SBI Factors and Commercial Services Ltd., Canbank Factors Ltd., are two Indian companies that provide factoring services.

Short Answer Questions                                        (3 or 4 Marks)

12. What preferential rights are enjoyed by preference shareholders?

Ans: Preference shareholders have the following preferred rights:  

Preference in Dividend: They receive dividends at a fixed rate, and dividends on these shares are paid before dividends on equity shares.

Preference in Repayment: When a corporation closes, preference shares are paid out first, followed by equity shares.

Excess Profits: Preference shares have the right to partake in any excess profits that remain after equity shares have been paid.

Preference in case of dissolution: They have the preference over equity shareholders in the share capital refund in the event of company dissolution.

13. What factors influence the working capital need in a business? write any three

Ans:  The factors influencing the working capital need in a business are:

Nature of Business: Manufacturing business requires more working capital as compared to trading business or service provider.

Business Cycle: During boom period firms require a large amount of working capital to manage the increased sales and production.

Seasonal Factors: Seasonal businesses require more working capital during their season time.

Scale of Operations: Businesses operating on a large scale require larger amounts of working capital as compared to small business firms.

Credit Allowed: A business extending a longer credit period to its buyers will need more working capital as compared to a business doing cash business or offering a lesser credit period.

Production Cycle: Businesses with longer production cycles require more working capital as compared to businesses with short-term production cycles.

Credit Availed: A business organisation receiving longer credit period from their supplier will require lesser working capital as compared to business purchases goods for cash or receive short credit period.

14. Define Share and write any two advantages of it.

Ans: A company needs huge investments to start a business, this amount is known as capital. Since, it is impossible for one individual to bring in such a huge amount of capital, the entire capital is divided into small units known as shares, where each person holding shares is referred to as a shareholder.

It serves as permanent capital as it has to be repaid at the time of liquidation.

Democratic control over the management of the company is given to shareholders through voting rights.

Equity capital establishes a company's creditworthiness and gives prospective loan providers trust.

15. Write any two differences between share and debentures.

Ans: The difference between shares and debentures are:

Basis

Shares

Debentures

Meaning

Owners' funds are referred to as shares

Borrowed funds are referred to as debentures

Returns

In the case of shares, the dividend payment is not fixed, and is based on the profits of the company

In the case of debentures, the corporation pays a fixed rate of interest.

16. Write any three limitations of equity share capital.

Ans: The three limitations of equity share capital are:

The returns are fluctuating in nature so investors who need steady income may not prefer equity shares.

Cost of raising funds from equity shares is quite high as compared to other sources.

It is more of a complicated process and may take longer time to raise funds.

The issuance of additional equity shares dilutes current equity shareholders' voting power and earnings.

17. Write any three advantages of Retained Earnings

Ans: The Merits of Retained Earnings are:

No initial fees: These funds are not subject to any explicit fees, such as floatation costs or interest, because they are raised internally.

Positive share price: A large quantity of retained earnings can cause the price of equity shares to rise.

Loss Absorption: Because these are surplus profits retained in the business, they serve to mitigate the impact of unanticipated losses.

Long answer Questions                                                (5 or 6 Marks)

18. Explain trade credit and Factoring as a source of finance for a business enterprise.

Ans: Trade Credit

It refers to the extension and provision of credit by one one trader to another for the purchase of goods and services, or other supplies without on the spot payment.. 

This is generally used by organizations as short term financing. The terms of trade credit may vary from person to person based on past records and from industry to industry based on industry norms.

A continuous and a convenient source of funds.

It is readily available if credit worthiness is known to the seller.

It helps in increasing the inventory levels in case of increase in sales volume.

While providing funds, It does not create a charge on assets of the firm .

Limitations

There can be chances of over-trading.

Fulfils only limited financial needs.

Costly in comparison to few other sources.

This is a financial service in which a third party, namely factor, renders various services like discounting of bills and collection of clients' debts.  In this  a company gives the responsibility of the collection of debts from the debtors to the factor.  Also, through factoring large amounts of information can be fetched about trading history of the organization, the credit worthiness of debtors etc.

There are two methods of factoring: 

Recourse Factoring: Factor does not assume the credit risk.

Non-recourse factoring: Factor assumes and takes responsibility for the entire credit risk in case the debtor defaults.

A cheaper source of finance as compared to other means such as bank credit.

The organization is relieved from the task of collection of bad debt.

Protection against bad debts to the firm in case of non-recourse factoring

At times, the factor also provides finance to the company, that is he makes advance payment of the debts taken by him to the firm.

It is flexible and does not create charge on assets of the firm.

It can be an expensive source, if there are a number of invoices of smaller amounts.

Customers may not feel comfortable dealing with a third party(factor).

The advance loan supplied by the factoring firm is normally accessible at a higher interest rate.

19. Discuss the various international sources from where the funds can be generated.

Ans: Organizations can raise funds in a variety of ways on a global scale. 

Commercial Banks

Commercial banks throughout the world issue foreign currency loans for business purposes. Banks offer different forms of loans and services depending on the country. These banks act as an important source of financing to non-trade international operations. They extend their support all over the world for foreign currency loans. For example: Standard Chartered.

International Agencies and Development Banks

They provide medium to long term loans for the development of economically backward areas of the world. These are set up by the governments of various developed countries. Example: EXIM Bank and Asian Development Bank (ADB).

International Capital Markets

Various MNCs and corporate houses depend on borrowings in the form of rupees and other foreign currency. A company's local currency shares are sent to the depository bank. Depository receipts are issued by the depository bank in exchange for these shares. The financial instruments used for the same are:

Global Depository Receipts: A GDR is a negotiable instrument or an instrument that can be traded freely in various foreign capital markets. These are issued by the Indian companies to raise funds from abroad and can also be traded on foreign stock exchanges.

American Depository Receipts: This instrument is issued by the American companies and can be traded in American markets. It can be issued to only citizens of America and can only be traded in US stock exchanges.

Indian Depository Receipts: IDRs are issued to Indian residents only and can be traded on Indian Stock Exchange. It is denominated in Indian Rupees. It is issued by an Indian Depository to enable foreign companies to raise funds from Indian Capital Markets. Standard Chartered PLC was the first company to issue IDRs.

Foreign Currency Convertible Bonds (FCCBs): As the name suggests, FCCBs are those bonds or securities which have an option to be converted into equity or depository receipt after a certain span of time. It is generally done at a predetermined rate or exchange rate. It has a fixed rate of interest and is issued in a foreign currency. It resembles the convertible debentures in India.

20. From which source a firm can raise long-term funds as loans when not provided by a commercial bank? Discuss its merits.

Ans: Financial Institutions

There are numerous financial institutions established by the government of India across the country.  These institutions finance the businesses and are set up by both state and central governments. There are development banks especially established to promote industrial development in the country.

Provide long term funds which are not provided by the commercial banks 

Provide various services such as managerial advice, financial and technical advice to the companies.

Increases the goodwill of the borrowing company in the capital markets. 

Funds can be made available even at the time of contingency and can be paid in easy installment without being a burden to the company.

21. What do you mean by owner’s fund? When it is not suitable?

Ans: Funds provided by the owners of the organization are known as Owners' funds. It includes profits that are reinvested into the business. The important sources of owners' funds are 

Retained earnings 

Issue of equity shares.

The non-suitability of using owner’s funds is based on the following factors:

Dilution of Control: The choice of what source from which financing has to be procured also depends upon the extent to which firm is ready for the dilution of control. Such as if existing equity shareholders aren’t willing to dilute the control they enjoy, in such a case the company may issue finance from sources other than equity share capital.

Tax Advantages: Some sources of finance are tax deductible, and hence firms can enjoy tax advantage using those sources. For example interest on debentures is a tax deductible expense, hence firms wanting to enjoy tax benefits may go for these sources. In such a situation, using the owners' fund is not suitable.

Cost: There are two types of costs: the cost of obtaining funds and the cost of putting these funds to use. Both of these costs should be considered when deciding on a funding source. If the cost of the owner's fund exceeds the prospective returns, it should not be issued.

Cash Flow Position: Before raising finance business must consider the projected flow to ensure that it has sufficient cash to pay fixed cash obligations.A company with high liquidity and a good cash flow position can issue debt capital, as the company will have less chances of facing financial risk than the company with a low cash position.

Purpose and time frame: The business should plan for the time frame in which the finances are needed. A short-term requirement, for example, can be addressed by borrowing cash at a low-interest rate via trade credit, commercial paper, or other means. Long-term financing is best accomplished through the issuance of shares and debentures.

Stock Market Conditions: If the stock market is flourishing, and there is a condition of boom then the companies may prefer more equity over debt in the capital structure. However, in the case of a bear market, to avoid any more risks, the companies will prefer more debt over equity in the capital structure.

Ease of issuance of finance: The flexibility and ease with which the firm is able to procure finance also affects the choice of source of finance. Excessive documents, legal restrictions, heavy investigation and other reasons may discourage the company from using a particular source of finance. Hence, if the issue of such a source is difficult, the firm should not go for it.

22. Write the main advantages and disadvantages of Public Deposits.

Ans: Public deposits:  

Organizations raise public deposits from the general public to fund their short- term and medium-term financial needs. The interest rate on these deposits is usually higher than the interest rate on bank deposits. If a person wishes to invest in a business (by making a deposit), he or she must complete and submit a required form together with the deposit. The organization issues a deposit receipt as a mark of debt acknowledgment in exchange for the money borrowed.

Merits of Public Deposits:

Minimal Restrictions: Accepting public deposits as a means of raising funds is a straightforward process with minimal restrictions.

Low cost: The cost of raising funds through public deposits is generally lower than the cost of borrowing money from a commercial bank.

No dilution of control: There are no voting or management rights for depositors. As a result, accepting public deposits does not affect the business's ownership structure.

Demerits of Public Deposits:

Restricted financing: The quantity of money that may be raised from public deposits is restricted because it is dependent on the availability of capital and people's desire to invest in the company in question.

Not suitable for new firms: Because people have little faith in new businesses, it is difficult for them to raise capital through public deposits.

23. Comment on the following sources of International finance 

(i) I.D.R. 

Ans: An Indian Depository Receipt (IDR) is a financial instrument in the form of a Depository Receipt that is denominated in Indian Rupees. An Indian Depository creates it for a foreign firm to raise capital from the Indian securities market. IDRs are issued to Indian residents in the same way that domestic shares are issued, according to SEBI norms. Residents can bid in the same style and technique as they can for Indian shares when the issuer company makes a public offering in India.

(ii) F.C.C.B

Ans: FCCB (Foreign Currency Convertible Bonds) are debt securities with an equity component that can be converted into equity or depository receipts after a set length of time. FCCB holders can choose to convert their bonds into equity shares at a predetermined price or exchange rate or keep the bonds. They have a fixed interest rate that is lower than any other non-convertible debt instrument with a similar interest rate. FCCBs are listed on overseas stock exchanges and traded there.

24. ‘ ’Ojas Auto Ltd. ‘’ is a very well-known auto company in the industry having more equity share capital than long term debt in its capital structure. It is willing to expand and establish a new unit in the backward region and wants to train the tribal women in skill Development to empower them. It has a huge amount of cash reserve of Rs. 1000 crores.

(a) What is the status of the capital structure of the above company?

Ans: The company's financial structure is robust, with more equity share capital than long-term debt in its capital structure and a large cash reserve.

(b) According to you, which source of finance should be used by the company in establishing new units? Give any two reasons in support of your answer.

Ans: As the company has huge cash reserves with itself, it should use retained earnings, or the self-financing technique for the establishment of new unit

When a company earns profit, a certain amount or percentage of those profits is retained within the business for future use and this is known as retained earnings. When the business is financed through this source it is known as ploughing back of profit or internal financing. Retained earnings is a percentage of net earnings that is kept in the business for future usage.

(c) What values does the company exhibit in the above case?

Ans: The following values are displayed by the company:

Balanced Regional Development : The company is willing to expand and open new units in underdeveloped areas, and it contributes to regional development.

Women Empowerment: The company intends to empower indigenous women by training them in skill development.

25. ‘ ’Avika Ltd.’’ company, an IT giant company registered in India wants to top the huge amount of resources for its growth and expansion from U.S.A. for long term needs. It also needs money for a period of fewer than 3 years to meet its medium cum short term needs. The company is following the practice of educating and giving employment to underprivileged youth. 50% of its office electricity is generated through solar power. 

(a) Which two sources of finance should be used by the company to meet its requirement. Write any two characteristics of each source.

Ans: ADR and Public Deposits can be used to satisfy the company's needs.

Public Deposits : Public deposits are deposits that are raised directly from the public by organizations. While depositors receive a greater interest rate than banks, the cost of deposits to the company is lower than the cost of bank borrowings. RBI is in charge of regulating it. Companies typically solicit public contributions over a three-year term.

ADR (American Depository Receipt): This instrument is issued by the American companies and can be traded in American markets. It can be issued to only citizens of America and can only be traded in US stock exchanges. This instrument is like a regular stock which is purchased and sold in American markets. 

(b) What values does the company exhibit in the above case?

(Hints- ADR and Public Deposits, Employment Generation, Concern for the environment)

Ans: The following values are demonstrated by the company:

Environmental stewardship: The company uses solar power to generate 50% of its office electricity. As a result, resources are conserved.

Employment Generation: The company is committed to teaching and employing underprivileged youngsters, hence creating job possibilities for them.

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CBSE Class 11 Business Studies Important Questions

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  • Class 11 Business Studies...

Class 11 Business Studies Case Study Questions

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CBSE Class 11 Business Studies Case Study Questions are available on myCBSEguide App . You can also download them from our student dashboard .

For students appearing for grade 11 CBSE exams from the Commerce stream, Business Studies is a fundamental subject. Business Studies is considered to be quite interesting as well as an occupying subject as compared to all other core subjects of the CBSE class 11 commerce stream. To ace this CBSE exam, students are not only required to work hard but they ought to learn to do smart work too.

Among all the other core subjects of the Commerce stream i.e accountancy, economics and business studies, Business Studies is the one that is purely theoretical. It is termed to be comparatively easier and more scoring than the other mandatory subjects of the commerce stream. Many students who opt for the commerce stream after their 10-grade exams desire to learn in-depth about the business organizations and their work, for them the subject is of utmost importance. Business Studies is an essential component of the class 11 commerce stream curriculum.

In order to ace the subject the student needs to have conceptual clarity. CBSE has designed the syllabus for class 11 Business Studies so as to provide students with a basic understanding of the various principles prevalent in the Business organizations as well as their interaction with their corresponding environment.   

Case Study Questions in class 11 (Business Studies)

Case-based questions have always been an integral part of the Business Studies question paper for many years in the past. The case studies have always been considered to be challenging for the students, for such questions demand the application of their knowledge of the fundamental business concepts and principles. Last year i.e-  2021 CBSE introduced a few changes in the Business Studies question paper pattern to enhance and develop analytical and reasoning skills among students.

It was decided that the questions would be based on real-life scenarios encountered by the students.CBSE not only changed the way case-based questions were formulated but also incremented their weightage in the Business Studies question paper. The sole purpose of increasing the weightage of case-based questions in the class 11 curriculum by CBSE was to drift from rote learning to competency and situation-based learning.

What is a case study question? (Business Studies)

In Business Studies, a case study is more like a real-world test of how the implementation works. It is majorly a report of an organization’s implementation of anything, such as a practice,a product, a system, or a service. The questions would be based on the NCERT textbook for class 11 Business Studies. Case-based questions will definitely carry a substantial weightage in the class 11 Business Studies question paper. questions.

A hypothetical text will be provided on the basis of which the student is expected to solve the given case-based question asked in the Business Studies class 11 exam. Initially, the newly introduced case-based questions appeared to be confusing for both the students and the teachers. Perhaps, they were reluctant to experiment with something new but now a lot more clarity is there that has made the question paper quite student-friendly.

Case study questions could be based on any chapter or concept present in the NCERT textbook. Thus, it is expected from the students to thoroughly revise and memorize the key business fundamentals. 

Business Studies syllabus of class 11 CBSE   

The entire Business Studies course is divided into 2 parts:

  • Part A, Foundation of Business
  • Part B, Finance and Trade

The class 11 Business Studies exam is for a total of 100 marks, 80 marks are for the theory and the remaining 20 for the project. Most of the questions are based on the exercises from the NCERT textbook. It is recommended to rigorously go through the contents of the book. A single textbook has been published by NCERT for Class 11 Business studies. There are a total of 10 chapters in this book divided into 2 parts. 

CBSE Class – 11

Business Studies (Code No. 054)

Theory: 80 Marks Time: 3 Hours Project: 20 Marks

1Nature and Purpose of Business1816
2Forms of Business Organizations24
3Public, Private and Global Enterprises1814
4Business Services18
5Emerging Modes of Business1010
6Social Responsibility of Business and Business Ethics12
7Sources of Business Finance3020
8Small Business16
9Internal Trade3020
10International Business14

Case Study Passage (Business Studies class)

As part of these questions, the students would be provided with a hypothetical situation or text, based on which analytical questions will have to be answered by them. It is a must for the students to read the passage in depth before attempting the questions. In the coming examination cycle (2022-23), case-based questions have a weightage of around 30%. These questions can be based on each chapter in the NCERT book for Business Studies, grade 11.

Students must prepare well for the case-based questions before appearing for their Business Studies exam as these questions demand complete knowledge of the various concepts in their syllabus. CBSE plans to increase the weightage of such questions in the upcoming years.

Sample case-based Questions in Business Studies

Business Studies as a subject provides a way of perceiving and interacting with the business ecosystem. It is a core subject of the commerce stream that is purely theoretical and relevantly easier than the other compulsory subjects of the stream. Class 11 Business Studies syllabus is closely related to trade and commerce. The subject cannot be ignored as it is the foundation of many concepts and theories which are studied at an advanced level in class 12.

The case-based questions asked in the CBSE Business Studies question paper for class 11 are of two types:

As per the latest circular issued by CBSE on Assessment and Evaluation practices of the board for the session 2022-23, CBSE has clearly mentioned that competency-based questions including case studies will be different from subjective questions.  

The questions can also be categorized on their difficulty level:

  • Direct: such questions can be easily solved. Their answer is visible in the given passage itself.
  • Indirect/ Analytical: such questions are confusing and tricky. These can be solved by the application of the theory or principle that is highlighted in the provided text. 

How To Prepare For Case-based Questions? (Business Studies grade 11)

Students need to prepare well for the case-based questions before appearing for their class 11 Business Studies exam. Here are some tips which will help the student to solve the case-based questions at ease:

  • Read the provided text carefully
  • Try to comprehend the situation and focus on the question asked
  • Analyze and carefully answer the question asked
  • In general, the passage given would be lengthy in Business Studies case-based questions but their solutions are comparatively short and simple
  • One can significantly save time if they follow a reversal pattern, that is going through the questions before reading the comprehensive case study passage.
  • Answer in a concise manner
  • One should concentrate on solidifying key fundamental principles/theories
  • Go through the NCERT textbook in depth. The language used is crisp and simple.
  • While providing solutions to the case-based question, pick the keyword/keyline based on which you are driving insights.

 In order to excel in the Business Studies class 11 exam, one needs to ignore the shortcut techniques and get to read the NCERT textbook rigorously. Case studies can be easily solved if your key fundamentals are strong and clear. The best part of having these questions is that the asked question itself projects a hint of its answer. These simple points if kept in mind will definitely help the students to fetch good marks in case study questions, class 11 Business Studies. 

Case study question examples in Business Studies

Here a re some given case study questions for CBSE class 11 Business Studies. If you wish to get more case study questions and other study material, download the myCBSEguide app now. You can also access it through our student dashboard.

Business Studies Case Study 1

Read the hypothetical text given and answer the following questions:

Manish, Rahul and Madhav live in the same locality. They used to meet and discuss their ideas. After discussing the recent fire breakout in their area, they decided to take fire insurance for their house or work area. Manish gets his house insured against fire for ₹1 lakh and during the policy period, his house gets damaged due to fire and the actual loss amounts to ₹2.5 lakh. The insurance company acquired the burning material and approved his claim. Rahul gets his godown insured against fire for ₹1 lakh but does not take enough precautions to minimize the chances of fire like installing fire extinguishers in the factory. During the policy, a fire takes place in his godown and he does not take any preventive steps like throwing water and calling the employees from the fire fighting department to control the fire. He suffered a loss of ₹1,20,000. Madhav took a fire insurance policy of ₹20 lakh for his factory at an annual payment of ₹24,000. In order to reduce the annual premium, he did not disclose that highly explosive chemicals are being manufactured in his factory. Due to a fire, his factory gets severely damaged. The insurance company refused to make payment for the claim as it became aware of the highly explosive chemicals.

How much can Manish claim from the insurance company?

  • None of the above

How much compensation can Rahul get from the insurance company?

Which principle is violated in the case of Rahul?

  • Insurable Interest
  • Utmost Good Faith

How much amount is the insurance company liable to pay to Madhav if he files a case against it?

  • Insufficient information

Which principle of Insurance is violated by Madhav?

  • Insurable interest
  • Subrogation
  • Proximate Cause

The insurance company acquired the burnt material and approved his claim. Which principle of Insurance is highlighted in the given statement.

  • (a) Mitigation
  • (a) Utmost Good Faith
  • (d) Subrogation

Business Studies Case Study 2

 Sarthak Electronics Ltd. has a loss of Rs 15,00,000 to pay. They are short of funds so they are trying to find means to arrange funds. Their manager suggested a claim from the insurance company against stock lost due to fire in the warehouse. He actually meant that they can put their warehouse on fire and claim from insurance companies against stock insured. They will use the claim money to pay the loan.

  • Will the company receive a claim if the surveyor from the insurance company comes to know the real cause of fire?
  • Write any two Values which the company ignores while planning to arrange money from false claims.
  • State any three elements of fire insurance

Business Studies Case Study 3

OLX and qickr are examples of well-known websites used to conduct business. Tarasha’s sofa set got spoiled in the rain. Her friend suggested that she should change the fabric so that it looks new and put it for sale on Olx. Tarasha followed her friend’s advice and got her sofa repaired so that it looked better and uploaded nicely clicked pictures on the website without disclosing the fact that it was damaged from the inside. She found a buyer and sold it for Rs 10,000. After five days the buyer found the real state of the sofa set and called Tarasha but she did not answer any of the calls.

  • identify the type of business highlighted in the above case.
  • Identify any two values which are overlooked by Tarasha.
  • Explain any two benefits and limitations of e-business.

Advantages of case study questions in Business Studies

Class 11 Business Studies syllabus is not very vast but has to be focussed upon as it forms the base for your 12th grade Business Studies syllabus. Students are supposed to prepare themselves thoroughly from the NCERT textbook. The Case-based questions prominently focus on the real and current scenarios of the Business world. Approximately 30% of the question paper will comprise case study questions that demand high-order thinking and reasoning skills from the students. The students ought to practice class 11 Business Studies case-based questions from the various options available to them, so as to excel in the subject.

  • Enhance the qualitative and quantitative analysis skills of students
  • Provides an in-depth understanding of the key Business theories/concepts
  • Inculcate intellectual capabilities in students
  • Help students retain knowledge for a longer period of time
  • The questions would help to discard the concept of rote learning
  • Case studies promote and strengthen practical learning.

“Failure is success if you learn from it”

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What are Financial Statements?

  • #1 Financial Statements Example – Cash Flow Statement
  • #2 Financial Statements Example – Income Statement
  • #3 Financial Statements Example – Balance Sheet

Additional Resources

Financial statements examples – amazon case study.

An in-depth look at Amazon's financial statements

Financial statements are the records of a company’s financial condition and activities during a period of time. Financial statements show the financial performance and strength of a company . The three core financial statements are the income statement , balance sheet , and cash flow statement . The three statements are linked together to create the three statement financial model . The analysis of financial statements can help an analyst assess the profitability and liquidity of a company. Financial statements are complex. It is best to become familiar with them by looking at financial statements examples.

In this article, we will take a look at some financial statement examples from Amazon.com, Inc. for a more in-depth look at the accounts and line items presented on financial statements.

Learn to analyze financial statements with Corporate Finance Institute’s Reading Financial Statements course!

Financial Statements Examples

#1 Financial Statements Example – Cash Flow Statement

The first of our financial statements examples is the cash flow statement. The cash flow statement shows the changes in a company’s cash position during a fiscal period. The cash flow statement uses the net income figure from the income statement and adjusts it for non-cash expenses. This is done to find the change in cash from the beginning of the period to the end of the period.

Most companies begin their financial statements with the income statement. However, Amazon (NASDAQ: AMZN) begins its financial statements section in its annual 10-K report with its cash flow statement.

Example of Cash Flow Statement from Amazon

The cash flow statement begins with the net income and adjusts it for non-cash expenses, changes to balance sheet accounts, and other usages and receipts of cash. The adjustments are grouped under operating activities , investing activities , and financing activities . 

The following are explanations for the line items listed in Amazon’s cash flow statement. Please note that certain items such as “Other operating expenses, net” are often defined differently by different companies:

Operating Activities:

Operating Activities from Amazon's Cash Flow Statement

Depreciation of property and equipment (…) :  a non-cash expense representing the deterioration of an asset (e.g. factory equipment).

Stock-based compensation :  a non-cash expense as a company awards stock options or other stock-based forms of compensation to employees as part of their compensation and wage agreements.

Other operating expense, net:  a non-cash expense primarily relating to the amortization of Amazon’s intangible assets .

Other expense (income), net: a non-cash expense relating to foreign currency and equity warrant valuations.

Deferred income taxes : temporary differences between book tax and actual income tax. The amount of tax the company pays may be different from what it shows on its financial statements.

Changes in operating assets and liabilities :  non-cash changes in operating assets or liabilities. For example, an increase in accounts receivable is a sale or a source of income where no actual cash was received, thus resulting in a deduction. Conversely, an increase in accounts payable is a purchase or expense where no actual cash was used, resulting in an addition to net cash.

Investing Activities:

Investing Activities from Amazon's Cash Flow Statement

Purchases of property and equipment (…):  purchases of plants, property, and equipment are usages of cash. A deduction from net cash.

Proceeds from property and equipment incentives: this line is added for additional detail on Amazon’s property and equipment purchases. Incentives received from property and equipment vendors are recorded as a reduction in Amazon’s costs and thus a reduction in cash usage.

Acquisitions , net of cash acquired, and other: cash used towards acquisitions of other companies, net of cash acquired as a result of the acquisition. A deduction from net cash.

Sales and maturities of marketable securities :  the sale or proceeds obtained from holding marketable securities (short-term financial instruments that mature within a year) to maturity. An addition to net cash.

Purchases of marketable securities:  the purchase of marketable securities. A deduction from net cash.

Financing Activities:

Financing Activities from Amazon's Cash Flow Statement

Proceeds from long-term debt and other: cash obtained from raising capital by issuing long-term debt. An addition to net cash.

Repayments of long-term debt and other: cash used to repay long-term debt obligations. A deduction from net cash.

Principal repayments of capital lease obligations: cash used to repay the principal amount of capital lease obligations. A deduction from net cash.

Principal repayments of finance lease obligations: cash used to repay the principal amount of finance lease obligations. A deduction from net cash.

Foreign currency effect on cash and cash equivalents : the effect of foreign exchange rates on cash held in foreign currencies.

Supplemental Cash Flow Information:

Supplemental Cash Flow Information from Amazon's Cash Flow Statement

Cash paid for interest on long-term debt: cash usages to pay accumulated interest from long-term debt.

Cash paid for interest on capital and finance lease obligations:  cash usages to pay accumulated interest from capital and finance lease obligations.

Cash paid for income taxes , net of refunds:  cash usages to pay income taxes.

Property and equipment acquired under capital leases:  the value of property and equipment acquired under new capital leases in the fiscal period.

Property and equipment acquired under build-to-suit leases: the value of property and equipment acquired under new build-to-suit leases in the fiscal period.

#2 Financial Statements Example – Income Statement

The next statement in our financial statements examples is the income statement. The income statement is the first place for an analyst to look at if they want to assess a company’s profitability .

Want to learn more about financial analysis and assessing a company’s profitability?  Financial Modeling & Valuation Analyst (FMVA)® Certification Program  will teach you everything you need to know to become a world-class financial analyst!

Financial Statements Examples - Income Statement

The income statement provides a look at a company’s financial performance throughout a certain period, usually a fiscal quarter or year. This period is usually denoted at the top of the statement, as can be seen above. The income statement contains information regarding sales , costs of sales , operating expenses, and other expenses.

The following are explanations for the line items listed in Amazon’s income statement:

Operating Income (EBIT):

Operating Income from Amazon's Income Statement

Net product sales: revenue derived from Amazon’s product sales such as Amazon’s first-party retail sales and proprietary products (e.g., Amazon Echo)

Net services sales: revenue generated from the sale of Amazon’s services. This includes proceeds from Amazon Web Services (AWS) , subscription services, etc.

Cost of sales: costs directly associated with the sale of Amazon products and services. For example, the cost of raw materials used to manufacture Amazon products is a cost of sales.

Fulfillment: expenses relating to Amazon’s fulfillment process. Amazon’s fulfillment process includes storing, picking, packing, shipping, and handling customer service for products.

Marketing : expenses pertaining to advertising and marketing for Amazon and its products and services. Marketing expense is often grouped with selling, general, and administrative expenses (SG&A) but Amazon has chosen to break it out as its own line item.

Technology and content:  costs relating to operating Amazon’s AWS segment.

General and administrative :  operating expenses that are not directly related to producing Amazon’s products or services. These expenses are sometimes referred to as non-manufacturing costs or overhead costs. These include rent, insurance, managerial salaries, utilities, and other similar expenses.

Other operating expenses, net:  expenses primarily relating to the amortization of Amazon’s intangible assets.

Operating income :  the income left over after all operating expenses (expenses directly related to the operation of the business) are deducted. Also known as EBIT .

Net Income:

Net Income from Amazon's Income Statement

Interest income:  income generated by Amazon from investing excess cash. Amazon typically invests excess cash in investment-grade , short to intermediate-term fixed income securities , and AAA-rated money market funds.

Interest expense : expenses relating to accumulated interest from capital and finance lease obligations and long-term debt.

Other income (expense), net:  income or expenses relating to foreign currency and equity warrant valuations.

Income before income taxes : Amazon’s income after operating and non-operating expenses have been deducted.

Provision for income taxes: the expense relating to the amount of income tax Amazon must pay within the fiscal year .

Equity-method investment activity, net of tax:  proportionate losses or earnings from companies where Amazon owns a minority stake .

Net income: the amount of income left over after Amazon has paid off all its expenses.

Earnings per Share (EPS):

Earnings per Share from Amazon's Income Statement

Basic earnings per share :  earnings per share calculated using the basic number of shares outstanding.

Diluted earnings per share: earnings per share calculated using the diluted number of shares outstanding.

Breakdown of Earnings per Share Formula

Weighted-average shares used in the computation of earnings per share: a weighted average number of shares to account for new stock issuances throughout the year. The way the calculation works is by taking the weighted average number of shares outstanding during the fiscal period covered.

For example, a company has 100 shares outstanding at the beginning of the year. At the end of the first quarter, the company issues another 50 shares, bringing the total number of shares outstanding to 150. The calculation for the weighted average number of shares would look like below:

100*0.25 + 150*0.75 = 131.25

Basic: the number of shares outstanding in the market at the date of the financial statement.

Diluted : the number of shares outstanding if all convertible securities (e.g. convertible preferred stock, convertible bonds ) are exercised.

#3 Financial Statements Example  – Balance Sheet

The last statement we will look at with our financial statements examples is the balance sheet. The balance sheet shows the company’s assets , liabilities , and stockholders’ equity at a specific point in time.

Learn how a world-class financial analyst uses these three financial statements with CFI’s  Financial Modeling & Valuation Analyst (FMVA)® Certification Program !

Financial Statements Examples - Consolidated Balance Sheet

Unlike the income statement and the cash flow statement, which display financial information for the company during a fiscal period, the balance sheet is a snapshot of the company’s finances at a specific point in time. It can be seen above in the line regarding the date.

Compared to the Cash Flow Statement and Statement of Income, it states ‘December 31, 2017’ as opposed to ‘Year Ended December 31, 2017’. By displaying snapshots from different periods, the balance sheet shows changes in the accounts of a company.

The following are explanations for the line items listed in Amazon’s balance sheet:

Assets from Amazon's Balance Sheet

Cash and cash equivalents : cash or highly liquid assets and short-term commitments that can be quickly converted into cash.

Marketable securities:  short-term financial instruments that mature within a year.

Inventories :  goods currently held in stock for sale, in-process goods, and materials to be used in the production of goods or services.

Accounts receivable , net and other: credit sales of a business that have not yet been fully paid by customers.

Goodwill :  the difference between the price paid in an acquisition of a company and the fair market value of the target company’s net assets.

Other assets: Amazon’s acquired intangible assets, net of amortization. This includes items such as video, music content, and long-term deferred tax assets.

Liabilities:

Liabilities from Amazon's Balance Sheet

Accounts payable : short-term liabilities incurred when Amazon purchases goods from suppliers on credit.

Accrued expenses and other: liabilities primarily related to Amazon’s unredeemed gift cards, leases and asset retirement obligations, current debt, acquired digital media content, etc.

Unearned revenue : revenue generated when payment is received for goods or services that have not yet been delivered or fulfilled. Unearned revenue is a result of revenue recognition principles outlined by U.S. GAAP and IFRS .

Long-term debt: the amount of outstanding debt a company holds that has a maturity of 12 months or longer.

Other long-term liabilities: Amazon’s other long-term liabilities, which include long-term capital and finance lease obligations, construction liabilities, tax contingencies, long-term deferred tax liabilities, etc. (Note 6 of Amazon’s 2017 annual report).

Stockholders’ Equity:

Stockholder's Equity from Amazon's Balance Sheet

Preferred stock : stock issued by a corporation that represents ownership in the corporation. Preferred stockholders have a priority claim on the company’s assets and earnings over common stockholders. Preferred stockholders are prioritized with regard to dividends but do not have any voting rights in the corporation.

Common stock : stock issued by a corporation that represents ownership in the corporation. Common stockholders can participate in corporate decisions through voting.

Treasury stock , at cost: also known as reacquired stock, treasury stock represents outstanding shares that have been repurchased from the stockholder by the company.

Additional paid-in capital :  the value of share capital above its stated par value in the above line item for common stock ($0.01 in the case of Amazon). In Amazon’s case, the value of its issued share capital is $17,186 million more than the par value of its common stock, which is worth $5 million.

Accumulated other comprehensive loss:  accounts for foreign currency translation adjustments and unrealized gains and losses on available-for-sale/marketable securities.

Retained earnings :  the portion of a company’s profits that is held for reinvestment back into the business, as opposed to being distributed as dividends to stockholders.

As you can see from the above financial statements examples, financial statements are complex and closely linked. There are many accounts in financial statements that can be used to represent amounts regarding different business activities. Many of these accounts are typically labeled “other” type accounts, such as “Other operating expenses, net”. In our financial statements examples, we examined how these accounts functioned for Amazon.

Now that you have become more proficient in reading the financial statements examples, round out your skills with some of our other resources. Corporate Finance Institute has resources that will help you expand your knowledge and advance your career! Check out the links below:

  • Financial Modeling & Valuation Analyst (FMVA)® Certification Program
  • Financial Analysis Fundamentals
  • Three Financial Statements Summary
  • Free CFI Accounting eBook
  • See all accounting resources
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Open access cases.

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sources of finance case study with solution

A number of universities and organizations provide access to free business case studies.  Below are some of the best known sources.

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Sources Of Finance

  • Harvard Case Studies

Harvard Business Case Studies Solutions – Assignment Help

In most courses studied at Harvard Business schools, students are provided with a case study. Major HBR cases concerns on a whole industry, a whole organization or some part of organization; profitable or non-profitable organizations. Student’s role is to analyze the case and diagnose the situation, identify the problem and then give appropriate recommendations and steps to be taken.

To make a detailed case analysis, student should follow these steps:

STEP 1: Reading Up Harvard Case Study Method Guide:

Case study method guide is provided to students which determine the aspects of problem needed to be considered while analyzing a case study. It is very important to have a thorough reading and understanding of guidelines provided. However, poor guide reading will lead to misunderstanding of case and failure of analyses. It is recommended to read guidelines before and after reading the case to understand what is asked and how the questions are to be answered. Therefore, in-depth understanding f case guidelines is very important.

Harvard Case Study Solutions

porter's five forces model

porter’s five forces model

STEP 2: Reading The Sources Of Finance Harvard Case Study:

To have a complete understanding of the case, one should focus on case reading. It is said that case should be read two times. Initially, fast reading without taking notes and underlines should be done. Initial reading is to get a rough idea of what information is provided for the analyses. Then, a very careful reading should be done at second time reading of the case. This time, highlighting the important point and mark the necessary information provided in the case. In addition, the quantitative data in case, and its relations with other quantitative or qualitative variables should be given more importance. Also, manipulating different data and combining with other information available will give a new insight. However, all of the information provided is not reliable and relevant.

When having a fast reading, following points should be noted:

  • Nature of organization
  • Nature if industry in which organization operates.
  • External environment that is effecting organization
  • Problems being faced by management
  • Identification of communication strategies.
  • Any relevant strategy that can be added.
  • Control and out-of-control situations.

When reading the case for second time, following points should be considered:

  • Decisions needed to be made and the responsible Person to make decision.
  • Objectives of the organization and key players in this case.
  • The compatibility of objectives. if not, their reconciliations and necessary redefinition.
  • Sources and constraints of organization from meeting its objectives.

After reading the case and guidelines thoroughly, reader should go forward and start the analyses of the case.

STEP 3: Doing The Case Analysis Of Sources Of Finance:

To make an appropriate case analyses, firstly, reader should mark the important problems that are happening in the organization. There may be multiple problems that can be faced by any organization. Secondly, after identifying problems in the company, identify the most concerned and important problem that needed to be focused.

Firstly, the introduction is written. After having a clear idea of what is defined in the case, we deliver it to the reader. It is better to start the introduction from any historical or social context. The challenging diagnosis for Sources Of Finance and the management of information is needed to be provided. However, introduction should not be longer than 6-7 lines in a paragraph. As the most important objective is to convey the most important message for to the reader.

After introduction, problem statement is defined. In the problem statement, the company’s most important problem and constraints to solve these problems should be define clearly. However, the problem should be concisely define in no more than a paragraph. After defining the problems and constraints, analysis of the case study is begin.

STEP 4: SWOT Analysis of the Sources Of Finance HBR Case Solution:

SWOT analysis helps the business to identify its strengths and weaknesses, as well as understanding of opportunity that can be availed and the threat that the company is facing. SWOT for Sources Of Finance is a powerful tool of analysis as it provide a thought to uncover and exploit the opportunities that can be used to increase and enhance company’s operations. In addition, it also identifies the weaknesses of the organization that will help to be eliminated and manage the threats that would catch the attention of the management.

This strategy helps the company to make any strategy that would differentiate the company from competitors, so that the organization can compete successfully in the industry. The strengths and weaknesses are obtained from internal organization. Whereas, the opportunities and threats are generally related from external environment of organization. Moreover, it is also called Internal-External Analysis.

In the strengths, management should identify the following points exists in the organization:

  • Advantages of the organization
  • Activities of the company better than competitors.
  • Unique resources and low cost resources company have.
  • Activities and resources market sees as the company’s strength.
  • Unique selling proposition of the company.

WEAKNESSES:

  • Improvement that could be done.
  • Activities that can be avoided for Sources Of Finance.
  • Activities that can be determined as your weakness in the market.
  • Factors that can reduce the sales.
  • Competitor’s activities that can be seen as your weakness.

OPPORTUNITIES:

  • Good opportunities that can be spotted.
  • Interesting trends of industry.
  • Change in technology and market strategies
  • Government policy changes that is related to the company’s field
  • Changes in social patterns and lifestyles.
  • Local events.

Following points can be identified as a threat to company:

  • Company’s facing obstacles.
  • Activities of competitors.
  • Product and services quality standards
  • Threat from changing technologies
  • Financial/cash flow problems
  • Weakness that threaten the business.

Following points should be considered when applying SWOT to the analysis:

  • Precise and verifiable phrases should be sued.
  • Prioritize the points under each head, so that management can identify which step has to be taken first.
  • Apply the analyses at proposed level. Clear yourself first that on what basis you have to apply SWOT matrix.
  • Make sure that points identified should carry itself with strategy formulation process.
  • Use particular terms (like USP, Core Competencies Analyses etc.) to get a comprehensive picture of analyses.

Pest analysis

  • Pest analysis

STEP 5: PESTEL/ PEST Analysis of Sources Of Finance Case Solution:

Pest analyses is a widely used tool to analyze the Political, Economic, Socio-cultural, Technological, Environmental and legal situations which can provide great and new opportunities to the company as well as these factors can also threat the company, to be dangerous in future.

Pest analysis is very important and informative.  It is used for the purpose of identifying business opportunities and advance threat warning. Moreover, it also helps to the extent to which change is useful for the company and also guide the direction for the change. In addition, it also helps to avoid activities and actions that will be harmful for the company in future, including projects and strategies.

To analyze the business objective and its opportunities and threats, following steps should be followed:

  • Brainstorm and assumption the changes that should be made to organization. Answer the necessary questions that are related to specific needs of organization
  • Analyze the opportunities that would be happen due to the change.
  • Analyze the threats and issues that would be caused due to change.
  • Perform cost benefit analyses and take the appropriate action.

PEST FACTORS:

  • Next political elections and changes that will happen in the country due to these elections
  • Strong and powerful political person, his point of view on business policies and their effect on the organization.
  • Strength of property rights and law rules. And its ratio with corruption and organized crimes. Changes in these situation and its effects.
  • Change in Legislation and taxation effects on the company
  • Trend of regulations and deregulations. Effects of change in business regulations
  • Timescale of legislative change.
  • Other political factors likely to change for Sources Of Finance.

ECONOMICAL:

  • Position and current economy trend i.e. growing, stagnant or declining.
  • Exchange rates fluctuations and its relation with company.
  • Change in Level of customer’s disposable income and its effect.
  • Fluctuation in unemployment rate and its effect on hiring of skilled employees
  • Access to credit and loans. And its effects on company
  • Effect of globalization on economic environment
  • Considerations on other economic factors

SOCIO-CULTURAL:

  • Change in population growth rate and age factors, and its impacts on organization.
  • Effect on organization due to Change in attitudes and generational shifts.
  • Standards of health, education and social mobility levels. Its changes and effects on company.
  • Employment patterns, job market trend and attitude towards work according to different age groups.

case study solutions

  • Social attitudes and social trends, change in socio culture an dits effects.
  • Religious believers and life styles and its effects on organization
  • Other socio culture factors and its impacts.

TECHNOLOGICAL:

  • Any new technology that company is using
  • Any new technology in market that could affect the work, organization or industry
  • Access of competitors to the new technologies and its impact on their product development/better services.
  • Research areas of government and education institutes in which the company can make any efforts
  • Changes in infra-structure and its effects on work flow
  • Existing technology that can facilitate the company
  • Other technological factors and their impacts on company and industry

These headings and analyses would help the company to consider these factors and make a “big picture” of company’s characteristics. This will help the manager to take the decision and drawing conclusion about the forces that would create a big impact on company and its resources.

STEP 6: Porter’s Five Forces/ Strategic Analysis Of The Sources Of Finance Case Study:

rp_hbr-case-study-solutions-analyses-300x232.png

To analyze the structure of a company and its corporate strategy, Porter’s five forces model is used. In this model, five forces have been identified which play an important part in shaping the market and industry. These forces are used to measure competition intensity and profitability of an industry and market.

porter’s five forces model

These forces refers to micro environment and the company ability to serve its customers and make a profit. These five forces includes three forces from horizontal competition and two forces from vertical competition. The five forces are discussed below:

  • THREAT OF NEW ENTRANTS:
  • as the industry have high profits, many new entrants will try to enter into the market. However, the new entrants will eventually cause decrease in overall industry profits. Therefore, it is necessary to block the new entrants in the industry. following factors is describing the level of threat to new entrants:
  • Barriers to entry that includes copy rights and patents.
  • High capital requirement
  • Government restricted policies
  • Switching cost
  • Access to suppliers and distributions
  • Customer loyalty to established brands.
  • THREAT OF SUBSTITUTES:
  • this describes the threat to company. If the goods and services are not up to the standard, consumers can use substitutes and alternatives that do not need any extra effort and do not make a major difference. For example, using Aquafina in substitution of tap water, Pepsi in alternative of Coca Cola. The potential factors that made customer shift to substitutes are as follows:
  • Price performance of substitute
  • Switching costs of buyer
  • Products substitute available in the market
  • Reduction of quality
  • Close substitution are available
  • DEGREE OF INDUSTRY RIVALRY:
  • the lesser money and resources are required to enter into any industry, the higher there will be new competitors and be an effective competitor. It will also weaken the company’s position. Following are the potential factors that will influence the company’s competition:
  • Competitive advantage
  • Continuous innovation
  • Sustainable position in competitive advantage
  • Level of advertising
  • Competitive strategy
  • BARGAINING POWER OF BUYERS:
  • it deals with the ability of customers to take down the prices. It mainly consists the importance of a customer and the level of cost if a customer will switch from one product to another. The buyer power is high if there are too many alternatives available. And the buyer power is low if there are lesser options of alternatives and switching. Following factors will influence the buying power of customers:
  • Bargaining leverage
  • Switching cost of a buyer
  • Buyer price sensitivity
  • Competitive advantage of company’s product
  • BARGAINING POWER OF SUPPLIERS:
  • this refers to the supplier’s ability of increasing and decreasing prices. If there are few alternatives o supplier available, this will threat the company and it would have to purchase its raw material in supplier’s terms. However, if there are many suppliers alternative, suppliers have low bargaining power and company do not have to face high switching cost. The potential factors that effects bargaining power of suppliers are the following:
  • Input differentiation
  • Impact of cost on differentiation
  • Strength of distribution centers
  • Input substitute’s availability.

STEP 7: VRIO Analysis of Sources Of Finance:

Vrio analysis for Sources Of Finance case study identified the four main attributes which helps the organization to gain a competitive advantages. The author of this theory suggests that firm must be valuable, rare, imperfectly imitable and perfectly non sustainable. Therefore there must be some resources and capabilities in an organization that can facilitate the competitive advantage to company. The four components of VRIO analysis are described below: VALUABLE: the company must have some resources or strategies that can exploit opportunities and defend the company from major threats. If the company holds some value then answer is yes. Resources are also valuable if they provide customer satisfaction and increase customer value. This value may create by increasing differentiation in existing product or decrease its price. Is these conditions are not met, company may lead to competitive disadvantage. Therefore, it is necessary to continually review the Sources Of Finance company’s activities and resources values. RARE: the resources of the Sources Of Finance company that are not used by any other company are known as rare. Rare and valuable resources grant much competitive advantages to the firm. However, when more than one few companies uses the same resources and provide competitive parity are also known as rare resources. Even, the competitive parity is not desired position, but the company should not lose its valuable resources, even they are common. COSTLY TO IMITATE: the resources are costly to imitate, if other organizations cannot imitate it. However, imitation is done in two ways. One is duplicating that is direct imitation and the other one is substituting that is indirect imitation. Any firm who has valuable and rare resources, and these resources are costly to imitate, have achieved their competitive advantage. However, resources should also be perfectly non sustainable. The reasons that resource imitation is costly are historical conditions, casual ambiguity and social complexity. ORGANIZED TO CAPTURE VALUE: resources, itself, cannot provide advantages to organization until it is organized and exploit to do so. A firm (like Sources Of Finance)  must organize its management systems, processes, policies and strategies to fully utilize the resource’s potential to be valuable, rare and costly to imitate.

case study solutions

STEP 8: Generating Alternatives For Sources Of Finance Case Solution:

After completing the analyses of the company, its opportunities and threats, it is important to generate a solution of the problem and the alternatives a company can apply in order to solve its problems. To generate the alternative of problem, following things must to be kept in mind:

  • Realistic solution should be identified that can be operated in the company, with all its constraints and opportunities.
  • as the problem and its solution cannot occur at the same time, it should be described as mutually exclusive
  • it is not possible for a company to not to take any action, therefore, the alternative of doing nothing is not viable.
  • Student should provide more than one decent solution. Providing two undesirable alternatives to make the other one attractive is not acceptable.

Once the alternatives have been generated, student should evaluate the options and select the appropriate and viable solution for the company.

STEP 9: Selection Of Alternatives For Sources Of Finance Case Solution:

It is very important to select the alternatives and then evaluate the best one as the company have limited choices and constraints. Therefore to select the best alternative, there are many factors that is needed to be kept in mind. The criteria’s on which business decisions are to be selected areas under:

  • Improve profitability
  • Increase sales, market shares, return on investments
  • Customer satisfaction
  • Brand image
  • Corporate mission, vision and strategy
  • Resources and capabilities

Alternatives should be measures that which alternative will perform better than other one and the valid reasons. In addition, alternatives should be related to the problem statements and issues described in the case study.

STEP 10: Evaluation Of Alternatives For Sources Of Finance Case Solution:

If the selected alternative is fulfilling the above criteria, the decision should be taken straightforwardly. Best alternative should be selected must be the best when evaluating it on the decision criteria. Another method used to evaluate the alternatives are the list of pros and cons of each alternative and one who has more pros than cons and can be workable under organizational constraints.

STEP 11: Recommendations For Sources Of Finance Case Study (Solution):

There should be only one recommendation to enhance the company’s operations and its growth or solving its problems. The decision that is being taken should be justified and viable for solving the problems.

Solutions to Mini Case Studies


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Case Studies for Corporate Finance cover

Case Studies for Corporate Finance

  • By (author): 
  • Harold Bierman, Jr ( Cornell )
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  • Description
  • Supplementary

Case Studies for Corporate Finance: From A (Anheuser) to Z (Zyps) (In 2 Volumes) provides a distinctive collection of 51 real business cases dealing with corporate finance issues over the period of 1985–2014. Written by Harold Bierman Jr, world-renowned author in the field of corporate finance, the book spans over different areas of finance which range from capital structures to leveraged buy-outs to restructuring. While the primary focus of the case studies is the economy of the United States, other parts of the world are also represented. Notable to this comprehensive case studies book are questions to which unique solutions are offered in Volume 2, all of which aim to provide the reader with simulated experience of real business situations involving corporate financial decision-making. Case studies covered include that of Time Warner (1989–1991), The Walt Disney Company (1995), Exxon–Mobil (1998), Mitsubishi's Zero Coupon Convertible Bond (2000), and Apple (2014).

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  • Pilgrim's Pride (2003)
  • Intel (1991)
  • Marriott's Spin-Off (1992)
  • Host Marriott (1998)
  • LTCM (1998)
  • Salomon: Share Repurchase (1997)
  • Microsoft (2003–2004)
  • Berkshire Hathaway, Inc.
  • Florida Power & Light Company (FPL) (1994)
  • DIRECTV (2011)
  • Apple (2014)
  • "Chain Saw" AL and Sunbeam (1995–1998)
  • Sun Company, Inc. (1995)
  • AutoNation (2006)
  • Kerr–McGee and Icahn (2005)
  • Pfizer–Zoetis (2013)
  • Hoffman–Sterling–Kodak (1986)
  • Bendix–Marietta–Allied (1982)
  • E–II Holding Inc. (1987)
  • LBO of RJR Nabisco (1988)
  • RJR Nabisco (1993)
  • RJR–KKR–Borden (1994)
  • Hilton–ITT–Starwood (1997)
  • Anheuser–Busch–InBev (2008)
  • Merck–Shering Plough (2009)
  • The Acquisition of by P&G (2005)
  • P&G and the Gillette Company (2005)
  • Time Warner (1989–1991)
  • Income Deposit Security (IDS) (2004)
  • ZYPs (1999) Bank Austria
  • The Walt Disney Company (SPN) (1995)
  • Media One Group (1998)
  • Computer Associates: A Synthetic Convertible
  • Philips Petroleum, Mesa and Icahn (1985)
  • Marrietta Corporation (1994–1996)
  • The Managerial Buyout of United States Can Company (2000)
  • Metromedia (1984)
  • Hertz (2006)
  • Fortress Investment Group (2007)
  • The Blackstone Group
  • TIFD vs USA (Nov 2004) GECC
  • DIMAR Company: A Lease or Buy Case(2006)
  • Sale-Lease of 399 Park Avenue (2002)
  • Guandong International Trust (1993)
  • Marlin Water Trust (1998)
  • Sanofi-Synthelabo and Aventis (2004)
  • Merger Water Trust (1998)
  • SAFRA Republic: Debenture (1997)
  • Shinsei Bank (Japan 2000–2004)

FRONT MATTER

  • Pages: i–xiii

https://doi.org/10.1142/9789813148895_fmatter

  • About the Author
  • Acknowledgment

Section 1: Capital Structure

  • Pages: 3–63

https://doi.org/10.1142/9789813148895_0001

The four cases in this section all involve the common stock section of the capital structure. It is very difficult to generate value by implementing strategies just using common stock.

Section 2: Excessive Use of Debt(also see Mergers: Raids)

  • Pages: 67–70

https://doi.org/10.1142/9789813148895_0002

  • Long-Term Capital Management (LTCM) (1998)

Section 3: Dividend Policy — Share Repurchase

  • Pages: 73–125

https://doi.org/10.1142/9789813148895_0003

During investment from the stockholders after a dividend, the funds flow in a circle from the firm to investors and back to the firm. Thus, with a given investment policy, in the absence of taxes and transaction costs, logically dividend policy should not affect the value of a firm. Since investor taxes are necessary for dividend policy to matter, we shall focus on the interrelationship of dividend policy and tax regulations.

Section 4: Restructuring

  • Pages: 129–232

https://doi.org/10.1142/9789813148895_0004

  • “Chain Saw” AL and Sunbeam (1995–1998)
  • Kerr-McGee and Icahn (2005)
  • Pfizer-Zoetis (2013)

Section 5: Mergers: Raids: Use of Debt

  • Pages: 235–394

https://doi.org/10.1142/9789813148895_0005

  • Hoffman–Sterling–Kodak (1986)
  • Bendix–Marietta–Allied (1982)
  • E-II Holdings Inc. (1987)
  • RJR–KKR–Borden (1994)
  • Hilton–ITT–Starwood (1997)
  • Anheuser-Busch–InBev (2008)
  • Merck and Schering-Plough (2009)
  • The Acquisition of Gillette by P&G (2005)
  • P&G and the Gillette Company (2005)

Section 6: Use of Exotics

  • Pages: 397–482

https://doi.org/10.1142/9789813148895_0006

In this section, we consider unusual financial instruments and strategies for corporations. It is interesting that none of the situations exploits directly capital structure or dividend policy, two of the more obvious areas of corporate strategy available for increasing shareholder value.

Section 7: Leveraged Buyouts

  • Pages: 485–578

https://doi.org/10.1142/9789813148895_0007

A leveraged buyout may be executed by an individual, a group, one or more private equity firms, or a corporation. The buyer needs to have some investible capital and to have access to additional capital that can be borrowed so that the price being asked can be covered. The borrowed portion of the purchase price is the leveraged part of the LBO. Thus, with an LBO, a firm is being purchased and a significant part of the purchase price is being financed with borrowed (debt) capital.

Section 8: Non-Conventional Corporations

  • Pages: 581–653

https://doi.org/10.1142/9789813148895_0008

The author actually invested in Fortress and Blackstone to gather information for this book. But in the summer of 2011, he received information from the two companies necessary for his 2010 tax reports. No expected return could reward him sufficiently for the increased complexity in filing his federal income tax forms.

Section 9: Buy vs. Lease

  • Pages: 657–668

https://doi.org/10.1142/9789813148895_0009

Fundamental misunderstandings about the relative merits of the two modes of financing (buy or lease) continue to persist…

Section 10: An International Element

  • Pages: 671–726

https://doi.org/10.1142/9789813148895_0010

  • Balance-of-trade data and information and international trade theory.
  • Currency exchange rate theory and institutions.
  • The impact of currency exchange rate changes (actual or expected) on debt and investment decisions and on accounting measures.
  • Tax considerations.

BACK MATTER

  • Pages: 727–738

https://doi.org/10.1142/9789813148895_bmatter

Harold Bierman is the Nicholas H Noyes Professor Emeritus of Business Administration at Cornell University, USA. He has been a consultant for many public organizations and industrial firms and is the author of more than 200 books and articles in the fields of accounting, finance, investment, taxation and quantitative analysis. In 1985, he was named the winner of the prestigious Dow Jones Award of the American Assembly of Collegiate Schools of Business for his outstanding contributions to collegiate management education.

sources of finance case study with solution

Test: Sources of Business Finance- Case Based Type Questions - Commerce MCQ

15 questions mcq test - test: sources of business finance- case based type questions, direction: match the following sources of finance given in column i with their merits given in column ii..

  • A. 1. (iv), 2. (iii), 3. (ii), 4. (i)
  • B. 1. (ii), 2. (iii), 3. (iv), 4. (i)
  • C. 1. (iii), 2. (iv), 3. (ii), 4. (i)
  • D. 1. (iv), 2. (i), 3. (ii), 4. (iii)

2. Public Deposits: The deposits that are raised by organisations directly from the public are known as public deposits.

3. Equity shares: Equity shares are long-term financing sources for any company. These shares are issued to the general public and are non-redeemable in nature.

4. Debentures: Debentures are a debt instrument used by companies and government to issue the loan.

sources of finance case study with solution

Direction: Match the following demerits given in column I with related sources of funds given in column II.

  • A. 1. (iii), 2. (iv), 3. (ii), 4. (i)
  • B. 1. (ii), 2. (iv), 3. (iii), 4. (i)
  • C. 1. (ii), 2. (i), 3. (iii), 4. (iv)
  • D. 1. (iv), 2. (iii), 3. (i), 4. (ii)

2. Retained earnings: Retained earnings (RE) is the amount of net income left over for the business after it has paid out dividends to its shareholders.

3. Public deposit: The deposits that are raised by organisations directly from the public are known as public deposits. Rates offered on public deposits are higher than of bank deposits. But, there is higher risk in public deposits.

4. Debentures: Debentures are a debt instrument used by companies and government to issue the loan. Debentures are also known as a bond which serves as an IOU between issuers and purchaser.

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Direction: Match the following sources of funds given in column I with their salient features given in column II.

  • B. 1. (iv), 2. (iii), 3. (ii), 4. (i)
  • C. 1. (i), 2. (iv), 3. (ii), 4. (iii)
  • D. 1. (iii), 2. (ii), 3. (iv), 4. (i)

2. Preference shares: Preference shares, more commonly referred to as preferred stock, are shares of a company's stock with dividends that are paid out to shareholders before common stock dividends are issued.

3. Retained earnings: Retained earnings (RE) is the amount of net income left over for the business after it has paid out dividends to its shareholders. The decision to retain the earnings or distribute them among the shareholders is usually left to the company management.

4. Global Depository Receipts: A global depositary receipt (GDR) is a certificate issued by a bank that represents shares in a foreign stock on two or more global markets.

Direction: Read the following text and answer the questions on the basis of the same:

Faulad Steel Ltd. is a multi-product company, manufacturing steel pipes in wide range for wide spectrum of application. Recently the company received a big order from an MNC for which it requires additional funds. The finance manager reported that the company is not in a position to bear extra burden of explicit cost and equity shareholders insisted not to issue more shares as it can affect their control consideration. Now, the company has only one option, i.e., ploughing back of profit.

Q. ‘Company is not in a position to bear extra burden of explicit cost.’ Identify the meaning of explicit cost in the context of equity shares.

  • A. Dividend
  • B. Interest
  • C. Market value of shares
  • D. Operating expenses

Q. Right to control is enjoyed by which of the following sources of finance?

  • A. Debentures
  • B. Equity shares
  • C. Retained earnings
  • D. Preference shares

Q. ’.............. can affect their control consideration.’ What is the meaning of control consideration in this context?

  • A. Control over funds
  • B. Control over management
  • C. Control over risks
  • D. Control over the activities of the company

Q. In the above case, which of the following sources of finance is most suitable?

  • B. Debentures
  • D. Bank loans

Direction: Read the following text and answer the questions that follow:

Saksham Ltd., a firm manufacturing textiles, needs to finance its day-to-day expenses, like, wages, rent, maintain stock of raw material, etc. Other than this, the company also decides to set up a new plant at an estimated cost of ` 5 crores. The finance manager of the company, Mr. Ramakant was asked by the management to do the financial planning by identifying most suitable source of raising long-term funds for financing the investment decision and short-term sources for working capital decision. As per the suggestions of Mr. Ramakant, the company approached their raw material supplier to give them credit for three months, so that the company can get cloth for making garments without making immediate payment. For long-term investment, the company had issued equity and preference shares to meet its requirement. This decision resulted in payment of large amount of taxes to government as dividend on shares is not deducted from total income of the company before calculating income tax. But this situation could be avoided if company had chosen borrowed funds as a source of finance.

Q. State the source of finance, suggested by Mr. Ramakant to finance working capital decision.

  • A. Trade credit
  • B. Public deposits
  • C. Equity and Preference shares
  • D. Retained earnings

Trade credit is commonly used by business organizations as a source of short-term financing.

Q. State the factors which have not been kept in mind for selecting source of long-term finance.

  • A. Risk involved
  • B. Financial capacity of the firm
  • C. Time period
  • D. Tax benefits

Equity, which has no final repayment date of a principal, can be seen as an instrument with non finite maturity.

Q. State the source of finance which can give the benefit of tax saving.

  • A. Equity Shares
  • C. Both (a) and (b)
  • D. Neither (a) nor (b)

Companies use debentures when they need to borrow the money at a fixed rate of interest for its expansion.

Q. Identify the fund needed for the day-to-day operations of business.

  • A. Working capital
  • B. Trading capital
  • C. Equity capital
  • D. Debt capital

Equity shares are long term sources of Business Finance.

Match the Columns

sources of finance case study with solution

  • A. 1-(b); (2)-(a); (3)-(c)
  • B. 1-(b); (2)-(c); (3)-(a)
  • C. 1-(a); (2)-(c); (3)-(b)
  • D. None of the above

2. Commercial Bank: The term commercial bank refers to a financial institution that accepts deposits, offers checking account services, makes various loans, and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses.

3. Debenture: A debenture is a bond issued with no collateral. Instead, investors rely upon the general creditworthiness and reputation of the issuing entity to obtain a return of their investment plus interest income. Examples of debentures are Treasury bonds and Treasury bills.

sources of finance case study with solution

  • B. 1-(b); (2)-(c); (3)-(b)
  • C. 1-(c); (2)-(b); (3)-(a)

2. Industrial development Bank: Industrial Development Bank of India was established in 1964 by an act to provide credit and other financial facilities for the development of the fledgling Indian industry.

3. Industrial development corporation: The National Industrial Development Corporation LTD is a Non-govt company, incorporated on 20 Oct, 1954. It's a public unlisted company and is classified as company limited by shares'.

sources of finance case study with solution

  • A. 1-(b); (2)-(c); (3)-(a)

2. First state of state finance corporation: The State Financial Corporations Act, 1951, with the basic objective of promoting and developing small scale and medium scale industries in the State with a special focus on spreading industrial culture in the rural, semi-urban and backward areas of the State.

3. Public Deposit: The deposits that are raised by organisations directly from the public are known as public deposits. Rates offered on public deposits are higher than of bank deposits. But, there is higher risk in public deposits. Public deposits cater to both short term and medium term finance requirements.

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James Quinn, Adam Blumenthal, and Jaan Elias
 


This case was made possible by the generosity of Adam M. Blumenthal ’89 MPPM and Steven M. Silver ’90 B.A.


 

James Quinn, Jaan Elias, and Adam Blumenthal
 

 This  case has been made possible by the generous support of the Jane Mendillo YC ’80, ’84 MBA and Ralph Earle ’84 MBA Fund and The International Center for Finance at the Yale School of Management.


Jaan Elias, Adam Blumenthal, James Shovlin, and Heather E. Tookes

 This case was made possible by the generosity of Adam M. Blumenthal ’89 MPPM and Steven M. Silver ’90 B.A.


Jaan Elias, Adam Blumenthal, James Shovlin, and Heather E. Tookes


This case was made possible by the generosity of Adam M. Blumenthal ’89 MPPM and Steven M. Silver ’90 B.A.


 

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articles

Perspectives

Re-engineering F&A, Procurement and HR Operations for Scalability

25 september 2024.

A WNS Perspective

  • A leading manufacturer sought to streamline and centralize its F&A , HR and procurement processes, replacing scattered and manual practices with automated, standardized systems.
  • Leveraging its domain expertise, process excellence methodologies, transformation frameworks and automation capabilities, WNS transformed the client's workflows, enhancing efficiency and accuracy across key functions like invoice processing, payroll and procurement.
  • The collaboration resulted in scalable, cohesive operations with improved turnaround times, better compliance and a more efficient overall system, setting the stage for future growth and adaptability.

A Four-year Transformative Odyssey of Achievement through Co-creation

This case study encapsulates the collaborative journey of WNS and a US-based hydro-equipment manufacturer as we turned scattered and disparate Finance and Accounting (F&A), Human Resources (HR) and procurement practices into a centralized and significantly more automated system. The objective was to expedite invoice resolutions, improve customer experience and scale operations.

sources of finance case study with solution

In the era of flourishing green technologies…

Businesses are thriving in a wave of innovation. Local authorities and industries are implementing pioneering solutions to achieve their net-zero, de-carbonization and circularity goals, fueling the demand for sustainable business. However, fragmented supply chains and ad-hoc / manual processes impede operational efficiency and productivity.

For a leading hydro-equipment maker…

The challenge was managing its F&A, HR and procurement operations scattered across multiple locations, operating companies and lines of business. These functions wrestled with ad-hoc and manual processes, information silos and a workforce only partially equipped with the requisite knowledge.

The repercussions of this disjointed approach were evident in the client’s Enterprise Resource Planning (ERP) platform, which held invoices in limbo due to information gaps. Over a six-month period, the cumulative value of these stalled invoices amassed to a staggering USD 18 Million.

Dispersed, disconnected processes, along with diverse systems and policies, and a lack of critical-to-quality parameters spawned non-standardized practices and operational inefficiencies. Consequently, documentation, accountability and visibility into crucial business facets suffered.

Key challenges across the three functions encompassed:

sources of finance case study with solution

Accounts Payable (AP)

Absence of formal procedures to address blocked supplier invoices resulted in >75 percent of the invoices being over a year old.

sources of finance case study with solution

Record-to-Report (R2R)

Ad-hoc practices at different locations impacted reconciliations, the accuracy of reports and timelines.

sources of finance case study with solution

Manual handling of new employee records led to payroll delays.

Workflow was hampered by disparate activities, multiple hand-offs and high Turnaround Times (TAT).

sources of finance case study with solution

Raising Orders

The manual and fragmented nature of sales and purchase order processing resulted in error-prone documentation.

Employee Skilling

Manual training and assessment methodologies led to heightened reliance on subject matter experts.

sources of finance case study with solution

Team Structure

Distributed ownership and a lack of clear sub-processes translated into protracted TAT and errors across all stages.

The client sought to consolidate and standardize its systems – streamlining the F&A, HR and procurement workflows – and establish a scalable, adaptive model for a dynamic business milieu.

Stepping in as a co-creation partner, WNS leveraged…

Its in-house transformation frameworks and partner ecosystem of intelligent technologies to re-invent the client’s F&A and HR functions. Concurrently, WNS Procurement – the high-impact, digital procurement ecosystem and supply chain capability at WNS – collaborated with the client to transform the procurement landscape. Our performance model harmonized service-level agreements and key performance indicators with the client’s commercial and financial goals.

A team of ~60 Full-time Equivalents (FTE) consolidated and centralized F&A, HR and procurement services spanning diverse platforms using a cost-effective shared services model. This was bolstered by robotic process automation woven into various work streams to unlock productivity and efficiency. A case management tool was deployed to integrate invoice processing and helpdesk activities to ensure a seamless supplier experience. Finally, WNS developed and deployed comprehensive business process documentation, with a periodic review mechanism.

Highlights of our solution included:

F&A and HR Solutions

Establishing centralized services from India and the Philippines

Sensitizing vendors to the correct use of the AP helpdesk for reduced volumes in invoice processing

Automating the Statement of Accounts (SOA) in Credit & Collection for proactive delivery to suppliers

Initiating an ongoing correspondence to steer customers to adopt the Corporate Trade Exchange (CTX) payment process

Creating detailed month-close trackers

Centralizing the rewards and recognitions program with a clear approvals mechanism

Crafting a centralized hub to manage tickets, owners and status queries, coupled with the implementation of a single-parent payroll ticket for every pay cycle

Establishing a quality team for daily / live audits and periodic governance

Re-defining the “as-is” process while driving process maturity based on HR best practices

Procurement Solutions

Streamlining and standardizing all process flows and touchpoints between AP and procurement for efficiency and faster invoice resolutions

Automating sales order creation using the SAP system and Electronic Data Interchange (EDI)

Digitizing new-hire training and evaluation for maximized output

Employing value-stream mapping to re-organize teams for clear accountability, reduced escalations and improved customer satisfaction

Leveraging SAP to automate Framework Orders (FO) in bulk, reducing human error and improving TAT

Prioritizing customer satisfaction scores using the Voice of Customer (VoC) methodology, facilitated by regular interactions with key stakeholders and informed by feedback / action plans

The large-scale transformation unveiled...

Cohesive, centralized F&A, HR and procurement practices, fortified by automation and trained FTEs, driving customer, supplier and employee-friendly policies. Key benefits included:

sources of finance case study with solution

Augmented Scalability

  • >USD 130 Million in total transactions handled by the collections team
  • >8,400 transactions handled across all activities in HR shared services
  • >70,000 transactions handled annually in payroll

sources of finance case study with solution

Amplified Decision Support

  • Real-time monitoring and efficient resource allocation to resolve blocked invoices
  • Greater visibility for clients: Status, aging and open liability at the entity, profit center and location levels

sources of finance case study with solution

Elevated Experience

  • 10/10 VoC scores consistently received
  • ~10 percent reduction in escalations
  • ~5 percent faster TAT across sub-processes
  • >90 percent reduction in payroll TAT for processing rewards and recognition
  • Enhanced supplier experience due to improved on-time payment

sources of finance case study with solution

Enhanced Process Outcomes

  • 34 percent reduction in overdue invoices
  • 20 percent increase in auto cash application through process improvement
  • Outstanding invoice value halved down to USD 9 Million
  • The aging period of invoices reduced from a year to <90 days
  • >40 percent reduction in the daily average of outstanding blocked invoices
  • ~80 percent reduction in TAT from FO automation
  • Reduction in payroll cycle time
  • Optimization in span control
  • 100 percent achievement in accurate and timely service delivery
  • Integrated HR helpdesk established for Tier 1 and 2 queries

Join the conversation

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Open Access

Peer-reviewed

Research Article

‘Our project, your problem?’ A case study of the WHO’s mRNA technology transfer programme in South Africa

Roles Conceptualization, Data curation, Formal analysis, Funding acquisition, Investigation, Methodology, Project administration, Supervision, Writing – original draft, Writing – review & editing

* E-mail: [email protected]

Affiliations Faculty of Medicine, Department of Pharmacology, Dalhousie University, Halifax, Canada, Health Justice Institute, Schulich School of Law, Dalhousie University, Halifax, Canada

ORCID logo

Roles Conceptualization, Data curation, Formal analysis, Writing – original draft, Writing – review & editing

Affiliations Program of Ethics, Politics and Economics, Yale University, New Haven, Connecticut, United States of America, Information Society Project, Yale Law School, New Haven, Connecticut, United States of America

  • Matthew Herder, 
  • Ximena Benavides

PLOS

  • Published: September 23, 2024
  • https://doi.org/10.1371/journal.pgph.0003173
  • Peer Review
  • Reader Comments

Table 1

In June 2021 the World Health Organization (WHO) and the Medicines Patent Pool (MPP) launched an mRNA technology transfer programme. With a South African consortium serving as the hub, the programme aimed to increase vaccine manufacturing capacity in low- and middle-income countries (LMICs) in view of the “vaccine apartheid” that was observed during COVID-19. Following Clarke’s “situational analysis,” the present study assessed whether the mRNA programme differs from the approach and practices that comprise current biopharmaceutical production. Numerous documentary sources, including legal agreements underpinning the programme, funding agreements, and patent filings, were reviewed. Semi-structured interviews with 35 individuals, ranging from the programme’s architects and university scientists to representatives from LMIC vaccine manufacturers taking part in the programme were also conducted. While the mRNA programme may improve the sharing of knowledge, other design features, in particular, weak conditionalities around product affordability, participants’ freedom to contract with third parties, and acceptance of market-based competition, are in line with the status quo. Further, WHO and MPP’s tight control over the programme evokes the dynamics that are often in play in global health, to the detriment of empowering LMIC-based manufacturers to generate mRNA products in response to local health needs.

Citation: Herder M, Benavides X (2024) ‘Our project, your problem?’ A case study of the WHO’s mRNA technology transfer programme in South Africa. PLOS Glob Public Health 4(9): e0003173. https://doi.org/10.1371/journal.pgph.0003173

Editor: Roojin Habibi, University of Ottawa Faculty of Law - Common Law, CANADA

Received: February 7, 2024; Accepted: August 22, 2024; Published: September 23, 2024

Copyright: © 2024 Herder, Benavides. This is an open access article distributed under the terms of the Creative Commons Attribution License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

Data Availability: In order to preserve the confidentiality of people who participated in this research, but do not wish their identities to be disclosed we are unable to share interview transcripts in their entirety. The research ethics board at Dalhousie University approved this research provided that participants' identities would remain confidential. Inquiries about data availability related to this project can be sent to [email protected] .

Funding: One author (MH) holds a Chair in Applied Public Health, funded by the Canadian Institutes of Health Research (CIHR) and Public Health Agency of Canada (PHAC). This Chair carries a salary award as well as funding for research activities. However, neither CIHR nor PHAC played any role whatsoever in the design of the present study, data collection, analysis or writing process.

Competing interests: We have read the journal’s policy and the authors of this manuscript have the following competing interests: Matthew Herder was a member of the Patented Medicine Prices Review Board (PMPRB), Canada’s national drug pricing regulator, and received honoraria for his public service, June 2018 – February 2023. The PMPRB had no role whatsoever in the design or conduct of this research. Ximena Benavides worked for GAVI - The Vaccine Alliance, COVAX Facility, from May to October of 2021, as a Yale Institute for Global Health fellow.

Introduction

In June 2021 Afrigen Biologics, a for-profit company based in Cape Town, South Africa set out to change the global landscape of biopharmaceutical production. Chosen by the World Health Organization (WHO) to serve as the hub of an mRNA technology transfer programme, Afrigen’s initial task was to make an mRNA COVID-19 vaccine against SARS-CoV-2 and distribute the technology to manufacturers located in other low- and middle-income countries (LMICs). The motivation was plain: established makers of COVID-19 vaccines, especially mRNA vaccines, had largely neglected populations in LMICs [ 1 , 2 ]. In view of that “vaccine apartheid,”[ 3 ] building capacity to make vaccines locally for local populations became imperative. The WHO turned to a model of knowledge-sharing that was previously deployed in response to concerns that the global influenza virus sharing network was under-serving people in LMICS [ 4 – 6 ]. Another Geneva-based organization, the Medicines Patent Pool (MPP), was charged with managing the mRNA programme’s fundraising and legal needs.

Within six months Afrigen succeeded in producing its own mRNA COVID-19 candidate, “AfriVac 2121 [ 7 ].”. The programme has the potential to be transformative as a model of vaccine production [ 8 ], encompassing both upstream research and development (R&D) and ‘end-to-end’ vaccine manufacturing. Still, the initiative faces several risks, including precarious levels of funding, the looming threat of patent litigation by established mRNA vaccine manufacturers, and a range of governance issues that have complicated the work of an organization created out of dire need—all the while trying to develop the technical capacity to produce high-quality mRNA-based technologies that protect against not only COVID-19 but also tuberculosis (TB), malaria, human immunodeficiency virus (HIV), and other diseases that disproportionately afflict people in LMICs.

We set out to study, using qualitative research methods, to what extent the WHO/MPP-managed mRNA programme differs from the approach and practices that comprise current biopharmaceutical production. We describe the key features of the status quo as a basis for comparison with the mRNA programme under our findings below. Combining insights from documentary sources, including the legal architecture underpinning the programme, patent filings related to mRNA products, and data from semi-structured interviews with 35 individuals involved in the programme, we find that the design of this initiative is largely in line with dominant approaches to vaccine production, steeped in the neocolonial dynamics that are often in play in the sphere of global health [ 9 – 14 ], and at risk of failing to enhance equitable access even if it ultimately succeeds in one day making mRNA vaccines.

A ‘situational analysis’ of the mRNA programme amidst global power imbalances

Our research followed a “situational analysis” approach—a form of grounded theory, which develops theories through observations and multiple sources of data [ 15 ]. Under situational analysis, data collection and analysis occur in parallel, requiring constant comparison between new sources of data and the preliminary, but evolving, analysis. We describe the multiple sources of data incorporated into our situational analysis below, which has been applied by social scientists to gain insight into complex systems, comprising a variety of actors with diverging interests [ 16 , 17 ]. At the same time, we were cognizant of the power imbalances that afflict global health from the study’s inception [ 13 , 18 – 21 ]. Attention to power differences among the variety of actors and institutions engaged in the mRNA programme, and the multiple drivers of power imbalances, was central to our data collection and analysis.

Document analysis

Multiple types of documents were analyzed by both researchers; a few minor inconsistencies in interpretation occurred but were resolved through discussion. The first type of document was a range of legal documents that codify the relationships between different actors in the mRNA programme, which, pursuant to a memorandum of understanding, the WHO tasked MPP with drafting and implementing. These “programme agreements [ 22 ]” are in place between MPP and the three principal members of the South African “consortium”, that is, Afrigen, another Cape Town-based vaccine manufacturer called Biovac, and the South African Medical Research Council (SAMRC). The “technology transfer template agreement,” which served as the basis for negotiations with LMIC manufacturer partners to the hub, as well as the finalized agreements between MPP and thirteen of the fifteen programme “partners” that have signed a technology transfer agreement, all of which are publicly available from MPP’s website (accessed: March 30, 2024), were also analyzed. (Only Bio-Manguinhos (Brazil) and BiovaX (Kenya) have not signed such an agreement). Additionally, research agreements shared by interview participants were analyzed, including a funding agreement between scientists at the University of Cape Town and the SAMRC, a research collaboration agreement between the United States’ (US) National Institute of Allergy and Infectious Diseases (NIAID, a component of the National Institutes of Health (NIH)) and Afrigen, as well as sample clauses from Afrigen’s collaboration agreements with entities outside the programme. Powerpoint presentations and other information shared at the programme’s inaugural meeting held in Cape Town, April 17–21, 2023, as well as a regional meeting in Bangkok, Thailand, October 31 –November 1, 2023 were also incorporated into the study. To gain insight into the relationship between countries sponsoring the programme and WHO/MPP, an access to information (ATI) request was filed with the Canadian government, which is the second highest funder of the mRNA programme. Our ATI request yielded 153 pages of correspondence, agreements, and other documentation that we incorporated into our analysis. ( see S1 Letter and S1 Document for further details about our request and the corresponding disclosure package) Finally, a dataset of patent applications as well as withdrawn and granted patents, compiled and made publicly available by MPP [ 23 ] was analyzed to understand the evolving patent landscape related to mRNA technologies in South Africa and other LMICs tied to the programme.

Semi-structured interviews

We used a purposive sampling strategy, contacting individuals that hold leadership positions within their respective organizations or who have relevant experience, for example, in a relevant scientific field. Within the consortium (n = 12), we interviewed executives of Afrigen (3) and Biovac (1), as well as officials from SAMRC and other parts of the South African government (3), and university-based scientists (5). We also interviewed WHO (3) and MPP (4) officials, which we refer to as the ‘programme’s architects’ (n = 7), and representatives from vaccine manufacturers based in Argentina (2), Brazil (2), Serbia (1), India (1), Bangladesh (2), and another LMIC (2), which are now described as programme partners (n = 10). Finally, we interviewed scientists from the global North and other outside experts, businesses, and organizations (n = 6) that have supported or taken part in the programme in some fashion or work in the field of epidemic preparedness. Only one individual (of 36 that we contacted) declined to participate in an interview. The majority of interview participants (29 of 35 that chose to participate) agreed to be interviewed ‘on the record’, allowing quotations to be attributed to them by name. ( Table 1 ) One researcher (MH) traveled to Geneva, Cape Town, Chicago, and Bangkok to recruit and run interviews in person (n = 16). Nineteen interviews took place virtually and usually involved both researchers (MH, XB).

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https://doi.org/10.1371/journal.pgph.0003173.t001

Research ethics statement

We received ethics approval to conduct this study from Dalhousie University’s Social Sciences and Humanities Research Ethics Board (REB# 2022–6457) and Yale University’s Institutional Review Board (IRB#2000034524). After discussing the purpose, benefits and risks associated with our research, all individuals we interviewed provided verbal consent to participate in the study at the outset of each interview. Consent was thus recorded as part of each interview transcript. All interviews occurred between February 2023 and January 2024.

Data coding and analysis

Consistent with situational analysis, data collection and analysis occurred in parallel. We created memos summarizing key exchanges or text, interpreting both interview and documentary data to identify lines of inquiry and points to follow up during future interviews. MH and XB generated a list of concept areas, in turn, developing a set of situational maps to define relationships between all the entities involved in the mRNA programme as well as key dynamics (e.g., influence of funding organizations; competing institutional priorities) that are often operative in the field of global health and access to medicines. We followed a constant comparative method throughout our research process, and met regularly to discuss uncertainties, unresolved questions, and points of divergence among interview participants.

Review by independent equity advisory committee

Our research process, data analysis, and preliminary findings were developed in consultation with an Independent Equity Advisory Committee (IEAC). Comprised of six members with diverse expertise in clinical trials, global health policy, access to medicines, and bioethics, the IEAC has extensive experience working with or inside organizations, such as WHO, the South Centre, Universities Allied for Essential Medicines, Médecins Sans Frontières, and the Health Justice Initiative. While the IEAC had no direct involvement in data collection, access to interview data, or control over our analysis, it played an essential role in helping to identify potential participants and critically appraising our preliminary findings and, at bottom, ensuring that our approach was attentive to the larger social and political context in which our research is situated.

We first examine the mRNA programme’s origins (2020–2021) and then compare its design to the four paradigmatic features of global biopharmaceutical production, which we abstracted from a review of literature and evidence from numerous scholarly disciplines; namely, 1) weak conditionalities attached to publicly funded science; 2) secret, transactional R&D partnerships; 3) a high degree of financialization; and, 4) market-based governance. Below, we elaborate upon, and juxtapose these four features against, our findings about the mRNA programme following an examination of the political context and policy choices that were made early on during the pandemic yet, as we show, continue to constrain the programme’s approach and practices.

Politicized origins: Building the mRNA technology transfer programme

Foreseeing access challenges from the start of the pandemic [ 2 , 24 , 25 ], WHO became home to several attempts to improve access to COVID-19 vaccines and other needed interventions in LMICs. Each differed markedly in terms of their approach to mitigating access challenges and the actors involved. The first, the “Access to COVID-19 Tools Accelerator” (ACT-A), was launched in April 2020 by a mix of public and private actors, including WHO, the government of France, the European Commission, the Bill and Melinda Gates Foundation, and three biopharmaceutical industry associations [ 25 ]. The vaccine-focused arm of ACT-A, COVID-19 Vaccines Global Access or “COVAX” (governed by Gavi, the Vaccine Alliance, the Coalition for Epidemic Preparedness Innovations (CEPI), and WHO), was intended to procure vaccines for LMICs by leveraging the collective purchasing power of high-income countries (HICs). With HICs prioritizing domestic populations at the expense of equitable global distribution, however, COVAX’s charitable approach failed to secure vaccines for LMICs [ 26 – 28 ]. A second initiative, the COVID-19 Technology Access Pool (C-TAP), created by WHO, the government of Costa Rica, and other member states, followed in May 2020 [ 29 ]. In contrast to ACT-A’s charity-based approach, C-TAP sought to distribute control of the intellectual property (IP), data, and knowledge related to COVID-19 interventions. Pooling a variety of technologies through voluntary licenses, vaccine and other product manufacturers could in-license technologies to address population needs in LMICs [ 30 ] rather than depending on vaccine donations from HICs—a move applauded by civil society but fiercely contested by industry, its allies, and the Gates Foundation [ 31 , 32 ].

Meanwhile, individuals inside and adjacent to WHO began crafting a third proposal, predicated on building capacity to manufacture vaccines in LMICs for LMICs. Martin Friede, the WHO’s lead coordinator for vaccine research, and Marie-Paule Kieny, the Chair of MPP’s Governance Board and formerly an Assistant Director-General at WHO were especially influential. Drawing upon a “hub and spoke” model of vaccine manufacturing that WHO deployed once before [ 5 , 33 , 34 ], they envisioned a centralized knowledge sharing system with a view to enhancing local vaccine production capacity in LMICs. Friede recalls how they arrived at this model in the context of influenza vaccines:

[I]t was very easy finding experts in terms of the vaccines because the world is full of retired people used to making influenza vaccines, but […] we realized these were generally quite old gentlemen and they got very tired going around the world teaching the same process at each facility […]. And this is when the concept was born of us creating a central hub, again, a corporate direction of interest. (MF)

Several crucial questions about the design of the model, in the context of COVID-19, nevertheless remained: How would it fit within WHO and the organization’s other newly launched COVID-19 access initiatives? Who would oversee its operations? Would there be one central hub or several spread across different regions? What vaccine platform(s) should command its focus for technology transfer purposes?

According to the lead of WHO’s IP Unit, Erika Dueñas Loayza, the original plan was to embed the COVID-19 hub within C-TAP. On behalf of WHO, Loayza’s team was actively seeking voluntary licenses from COVID-19 vaccine manufacturers.(EDL) Any new IP generated by the hub or its spokes would in turn become part of C-TAP’s pool, thus distributing control to LMIC-based manufacturers as their productive capacity increased. However, as industry opposition to C-TAP grew because of the threat that it posed to IP-holders’ control over COVID-19 interventions [ 32 ], then-WHO assistant director general (ADG) of access to medicines and health products, Dr. Mariângela Simão, and then-WHO Chief Scientist Dr. Soumya Swaminathan opted to “move the mRNA [programme] away from C-TAP to the ACT-[Accelerator]”—an outcome that MPP’s Kieny also favoured.(EDL) Although CEPI was the nominal lead for the “development and manufacturing” workstream within COVAX [ 25 ], it was the Kieny-led MPP that would later assume, in concert with WHO, responsibility for the design, day-to-day oversight, and fundraising for the hub.(CG)

Once positioned inside ACT-A, WHO issued a call for expressions of interest for “one or more” technology transfer hubs in April 2021 [ 35 ]. Afrigen’s chief executive Petro Terblanche remembers recognizing the opportunity: “We are small, but we know tech transfer.”(PT) Terblanche’s strategy of assembling a “consortium” together with Biovac and SAMRC for the WHO application proved wise. Friede describes the decision-making process inside WHO, which culminated in the selection of the Afrigen-led proposal on July 21, 2021:

[T]he WHO’s PDVAC, which is the production and development of vaccines advisory committee, decided that mRNA was the first platform to go for first because of its flexibility, potentially lower cost, and speed with which you could look at different antigens and whether they work or not. […] Then WHO put out a call for expressions of interest to be the hub initially, and a number of companies applied. South Africa came with a consortium, which is the only one that did come with a consortium, consisting of Afrigen as the hub, Biovac as the first spoke and the South African Medical Research Council as the research institute to feed into potentially new pathogens, potentially second-generation technologies and so on. And so that was attractive because they came as a consortium, and clearly also the fact that it was in Africa was attractive to them because Africa was the standout continent of inequity and access.(MF)

Brazil’s Bio-Manguinhos, a non-profit, state-owned company that is part of the Oswaldo Cruz Foundation, submitted a competing bid. Their proposal contemplated building ‘end-to-end’ mRNA manufacturing capacity, that is, the complete production process—from antigen design to producing the drug substance, drug product, and the fill and finish phase of inputting doses into vials—and then transferring the know-how from one LMIC manufacturer to another.(PN) Sotiris Missailidis, then head of vaccine innovation at Bio-Manguinhos, details how things shifted in the months that followed the Afrigen announcement in June 2021:

Africa was announced first, but I think it’s important to say that, in the beginning, at least, what we had understood […] was that the model was going to be a decentralized model. So there were going to be two hubs in Africa [and] there were going to be two hubs, regional hubs in Latin America. There were going to be two regional hubs in Asia. […] And each of them then would have spokes, potentially, that would be partners that had an interest in producing and accepting the technology. So we applied to be original hub. We didn’t apply to be a spoke, ever. And we got selected. […] What I didn’t know was that, at some stage, […] there was a decision taken from WHO or whoever, that as there was increasing political and financial pressure, many people wanted to come in. […] So the decision was taken to have one central hub and everybody else would be spokes.(SM)

It remains unclear why the change in plans occurred. Bio-Manguinhos learned of their ‘spoke status’ when they visited Afrigen in April 2022—six months after WHO indicated they would be a regional hub.(SM,PN) [ 36 ] The minutes from WHO’s PDVAC meetings show that multiple hubs were still being contemplated as late as November 2021 [ 37 ]. According to Patricia Neves, project manager for Bio-Manguinhos’ center for vaccines using mRNA, MPP officials queried “why are you here [in Cape Town visiting Afrigen] if you are developing your own technology?”(PN) At the time, MPP was focused on securing a voluntary license from Moderna or another more established mRNA manufacturer even though WHO had previously tried and failed to secure such a license.(EDL) MPP’s track record shows that it adheres to the norms of market-based competition and contract-based solutions even though voluntary licenses frequently exclude countries with strong manufacturing capacity, such as Brazil [ 38 , 39 ]. Perhaps this organizational philosophy explains why MPP appeared to be unsupportive of Bio-Manguinhos’ plan to establish end-to-end manufacturing capacity, at least in early 2022. Yet, Missailidis explains why mastering every step of the production process is critical to national health security:

We don’t do fill and finish. We need to have all the technology transferred up to… Well in the traditional vaccines, the master cell bank and everything. And we need to be able to produce [the active pharmaceutical ingredient] 100% properly. This is a condition for any tech transfer we’ve ever done […] because of guaranteed national production in Brazil. […] [H]istory shows that when the epidemics or pandemics or whatever else, you can’t guarantee that you have the vaccine when you want it. […] So, when we spoke, for example, to Moderna for COVID, didn’t even speak with us. Pfizer did, but they were not eager to do a tech transfer, they wanted to do fill and finish. Which we said ‘Look, you know we’re not doing that. This is not our motto. That’s not how we work.’(SM)

Two years on, the mRNA programme continues to evolve. The programme currently encompasses a diverse array of actors, including the South African consortium and fourteen other LMIC-based spokes ( Fig 1 ), which are now referred to as ‘partners’ because of the negative connotations of the term ‘spoke’.(CG) The programme’s architects have also come around to the idea of creating the end-to-end manufacturing capacity first espoused by Bio-Manguinhos and echoed by Afrigen not long after it became the hub. At a meeting in Bangkok in the fall of 2023, WHO and MPP officials outlined potential sub-consortia—engaging partners both inside and outside of the programme—focused on R&D around pathogens of shared, regional interest. In this way, Bio-Manguinhos or other manufacturers that assume the lead for a particular sub-consortium might become de facto hubs for a given target.(CN) Expanding the programme’s focus upstream is also seen as crucial to its overall sustainability given that demand for COVID-19 vaccines is now limited.(PT,CG,AK, MF, CN) Yet, as we show in the sections that follow, a number of choices made by its architects about what commitments participation in the programme entails, what kinds of support should be provided to Afrigen and others, and how the programme is governed, may limit the programme’s potential as a collaborative effort to improve equitable access to mRNA interventions in LMICs. Our analysis reveals that the programme’s relatively weak commitments to access and affordability, preservation of companies’ respective freedom to contract, consolidation of control by powerful actors in Geneva, and deference to the market as the ultimate arbiter of which entities will survive, both resembles the status quo and risks fragmentation within the programme, to the potential detriment of equitable access in LMICs.

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Notes : (1) Two participating manufacturers, Biovac (South Africa) and Biovaccines Nigeria, are shown on the boundary between public and private ownership because each entity is a public-private partnership. All other entities depicted in the figure are state-controlled enterprises (i.e., publicly owned) or private companies. (2) For the purposes of this figure, the term ‘experienced’ refers to entities that have produced at least one vaccine that has been licensed for clinical use. Several manufacturers that fall into the ‘experienced’ half of the figure have produced more than one vaccine. The entities in the ‘inexperienced’ sphere have not yet fully developed a vaccine; however, some have generated sales through other products.

https://doi.org/10.1371/journal.pgph.0003173.g001

Critical inputs from publicly funded science, weak conditionalities & measured charity

The first defining feature of biopharmaceutical production concerns the limited quid pro quo that the public sector receives in exchange for supplying private actors with financing, biopharmaceutical R&D, and product leads. Despite significant government investments in, and publicly funded researchers’ extensive contributions to the development of vaccines and other products [ 40 – 45 ], weak conditionalities tend to be attached to government and philanthropic funding of biopharmaceutical R&D. Generally, public funding (whether in the form of research grants, collaborative research agreements, or advance procurement agreements) stipulates an obligation of data transparency (e.g., publishing studies). Also, the right of university scientists to continue to conduct research with the technology in question is usually included in IP agreements. But clauses that stipulate where manufacturing should occur, when and where products can be distributed, or how resulting goods are to be priced, are not standard [ 46 – 49 ]. Instead, conventional wisdom is to grant maximum discretion to recipients of public funding, including universities and government laboratories, as well as private actors about how to commercialize biopharmaceuticals. Under this logic, informed by the dominant approach that maximization of profits encourages innovation, the state’s role is not to shape—but simply subsidize—biopharmaceutical innovation [ 47 ].

Consistent with most early-stage biopharmaceutical R&D, the funding for the mRNA programme comes solely from governmental sources. Charged with the responsibility of fundraising, MPP secured financial commitments from France, the European Commission, Germany, Norway, Belgium, and Canada alongside the government of South Africa and the African Union [ 50 ]. To date, these donors have committed USD 117 million to the programme (with USD 89 million received so far (CN), the majority (73%) of which has been allocated to the consortium, including Afrigen, with the remainder (27%) supporting LMIC partners. According to MPP, which holds the bulk of the funds in Geneva, the USD 117 million is “seed money.” By 2026 the programme is expected to be “self-sustaining [ 50 ].” Still, MPP is continuing to seek additional funding, in particular, from the US government, which, in contrast to the WHO’s influenza technology transfer hub [ 51 ], has yet to offer any direct financial support for the mRNA programme.

Countries donating funds—or contemplating doing so—have shaped the programme in multiple ways. Germany, for example, earmarked a portion of its funding for a staff position at the hub. With only German or French nationals deemed eligible for the role by the funder, however, Afrigen was unable to fill the position.(PT) The government records obtained through an access to information request reveal that Canada, the second largest donor country, has stipulated that its funding be allocated to the hub in Cape Town and four select countries hosting manufacturers participating in the programme: Senegal, Nigeria, Kenya, and Bangladesh [ 52 ]. Further, according to one interview participant, while HICs are supportive of transferring technology to LMICs, they would prefer that such transfers do not extend to the more upstream inputs into mRNA vaccine production, including novel LNPs and antigens. Nevertheless, researchers at a number of publicly funded institutions located in South Africa as well as others abroad, including the University of Witwatersrand (Wits), the University of Cape Town and the North-West University, the University of Pennsylvania, as well as the US’ NIH/NIAID, have already made substantial contributions to various aspects of mRNA product development at Afrigen.(CF,PT,PA,CdK,XB)

At the start of the manufacturing process the aim is developing an ‘antigen’ that will provoke an immune response, conferring protection against a given pathogen. For Afrigen’s AfriVac 2121, the lab of Patrick Arbuthnot at Wits drew upon information already in the public domain to design a plasmid, a circular piece of DNA which can be propagated efficiently in bacteria and then prepared in larger amounts to use as a template, and shared it with Afrigen.(PA) NIAID’s Vaccine Research Center (VRC) similarly contributed to the plasmid construction and purification steps in line with current “good manufacturing practices” (cGMP) standards set by regulatory authorities.(XB,CF) After entering into a Research Collaboration Agreement with Afrigen in March 2022, the VRC shared its knowledge and hosted Afrigen scientists for onsite training [ 53 , 54 ]. Demonstrating the value of being part of a consortium, Afrigen will pull in more contributions from publicly funded researchers at Wits, the University of Cape Town, and other South African universities, as it increases its focus on the development of second-generation technologies, such as novel lipid nanoparticles (LNPs),(CdK) and new disease targets like TB, malaria, and HIV.

The critical question is whether the funding that has been secured for the programme and supporting the development of these second-generation mRNA technologies has been leveraged into a shared set of commitments geared towards improving equitable access. The relationships among the actors involved in the mRNA programme are defined by a set of legal agreements crafted by MPP. ( see S1 Table ) Under the technology transfer template agreement and all but one finalized technology transfer agreement involving MPP and LMIC partners, the latter are granted a “non-exclusive, royalty-free, non-sublicensable, non-transferable, irrevocable, fully paid-up, royalty-free licence” to the technology as well as any rights held by Afrigen and the Biovac “to make, or have made, use, offer for sale, sell, have sold, export or import” in their respective territories and other LMICs (as defined by the World Bank) [ 22 ]. In return, LMIC partners must grant to MPP upfront a “worldwide” non-exclusive, royalty-free license to “practice and have practiced the data and the Inventions for the purposes of fulfilling its mission to facilitate the development and equitable access of health technologies” that is “non-transferable, but sub-licensable.” As WHO’s Friede explains, the programme is akin to an IP sharing club comprised of the South African consortium as well as the thirteen other LMIC manufacturers that have signed an agreement to date:

[T]he key objective here is that for us, open means open for LMICs. It does not mean open for [HICs]. So, if Wits can generate some revenue providing a license for use and sale within [the] US, Canada, Europe, Australia, good for them, on condition that for all of the LMICs, there is a fully paid-up, royalty-free license available.(MF)

The programme’s pooled, multilateral approach to knowledge production is rare in the biopharmaceutical sector. MPP’s head legal counsel, Chan Park, notes that this deviation from standard practice stems from the fact that MPP was in a fundamentally different position compared to when it is attempting to secure a voluntary license from a multinational pharmaceutical company to an existing therapy:

When we’re negotiating with big pharma on a drug that they have already developed and are commercializing, our leverage is far lower. We can ask nicely for it and if they say no, we can ask again, and if they say no again, we just have to live with it. But here we’re building it from the ground up. We’re providing the funding, and so we can say, ‘This is a project for [LMICs] and that’s it.’(CP)

Still, there are a number of notable incongruities embedded in the programme’s underlying legal architecture, which run the risk of fragmenting the larger, collective enterprise of improving equitable access to mRNA products in LMICs. To start, some of the partners have yet to sign on. According to Bio-Manguinhos’ Missailidis, the Brazilian manufacturer cannot sign such an agreement because of its pre-existing, exclusive technology transfer agreement with AstraZeneca.(SM) His colleague leading Bio-Manguinhos’ mRNA vaccine project, Patricia Neves, also intimates that the idea that technology developed by Bio-Manguinhos, using funding from the Brazillian government (as opposed to funding from the mRNA programme) would flow to manufacturers from participating LMICs, which in some cases, are for-profit commercial entities, without anything in return is an “injustice.”(PN)

The issue of royalties also proved to be a sticking point within the South African consortium. According to a South African government official, a lot of back and forth with MPP was required:

[I]f somebody has spent 20 years developing a piece of IP, it’s really hard for them to say take it and go and do what you like with it. And a manufacturer can make a markup of 15%, but I’m going to get nothing from it. So that to us was a disconnect that we had quite a lot of discussion around. […] And we can’t just have somebody else outside the country making money offered, but we have to balance that with affordability and access. And that’s the balance we’re constantly struggling to achieve.(XX)

An unevenness between LMIC partners and the South African university laboratories funded by the SAMRC, where the former must share their IP royalty-free and the latter may expect a return, is thus embedded in the programme. (CP,XX) None of the executed technology transfer agreements between MPP and LMIC partners state this; on the contrary, the license granted from MPP to partners is framed as “royalty free.” However, the Grant Agreement with SAMRC grants MPP a “non-exclusive, transferable, sublicensable, irrevocable, worldwide, license to practice and have practiced the data and Inventions for the purposes of fulfilling its mission to facilitate the development and affordable and equitable access of mRNA technologies in low- and middle-income countries (as defined by the World Bank), which license may include a royalty sacrifice.” ( see S1 Table ) Thus, inventions patented by SAMRC-funded researchers, including second-generation mRNA technologies such as the novel LNP, may be rewarded with royalties whereas new IP generated by partners using mRNA technology will not.

A second IP-related incongruity in the programme’s legal architecture concerns the territorial limitations imposed upon IP licenses among different actors involved in the mRNA programme. As the central intermediary, MPP is granted a “worldwide” license to IP that is generated by both members of the South African consortium as well as LMIC partners. In turn, partners (with the exception of Indonesia’s BioFarma) are entitled to receive IP via MPP but only for use, sale, export or import within LMICs. For its part, BioFarma managed to negotiate a “worldwide, non-sublicensable” license to the IP it receives from MPP; it can therefore use, sell, and export such IP globally, but it cannot sub-license it to other entities in LMICs or HICs. That flexibility of licensing IP they generated to companies based in HICs only extends to members of the South African consortium (excluding Biovac as one of the partners). ( see S1 Table )

Notwithstanding the leverage the programme’s funding conferred, MPP also stopped short of requiring that resulting mRNA products be priced affordably for populations in need outside of a “Public Health Emergency of International Concern” (PHEIC). If an mRNA product developed by one or more LMIC partners targets a PHEIC, they cannot charge more than the cost of production plus a twenty-percent mark-up [ 22 ]. ( see S1 Table ) However, none of the pathogens being targeted by the programme’s partners—from TB to respiratory syncytial virus (RSV), malaria, and other infectious diseases—are currently designated as a PHEIC. Thus, consistent with industry norms, the mRNA programme does not contractually constrain partners’ pricing decisions. Rather, the assumption is that by targeting LMIC markets, the price of the final product will, of necessity, be affordable; otherwise LMIC governments will simply not pay for it. “Traditionally,” Charles Gore recalls, “MPP has not interfered in pricing. Our model is based on competition, and clearly we are potentially giving this to 15 companies around the world.”(CG, emphasis added)

In contrast, researchers in South Africa who receive funding through the SAMRC must, under the terms of the funding, ensure that any “resulting products”—regardless of whether they target a PHEIC or not—will “be made available and accessible at an affordable price to people most in need within [LMICs].” Revealing differential treatment among participants in the programme, SAMRC-funded researchers and partners with products targeting a PHEIC have agreed to some form of pricing constraint whereas Afrigen has no such obligation unless and until it is in receipt of funding from SAMRC.

Significant questions about the enforceability of affordability clauses exist. Although they have included such clauses for “many, many years,” one South African government official emphasizes, “it’s really an aspirational clause” because “we haven’t had to yet really test that.”(XX) Other funders in the field of infectious diseases, notably CEPI and the Gates Foundation, are experimenting with various pricing commitments, such as “costs of manufacturing plus” a set percentage and tiered pricing (where products are priced lower in LMICs than HICs through confidential discounts) [ 55 ]. (JC) In contrast, MPP appears to be comfortable relying on free-market competition among LMIC-based manufacturers instead of imposing affordability clauses when it comes to products generated by virtue of participating in the mRNA programme.

In effect, the programme’s approach reduces the pursuit of equitable access to the task of fostering more localized production. This is a logical step towards addressing local population health needs. But localized access is never guaranteed, particularly with initiatives that are expected to be “self-sustaining” businesses. Whether local manufacturers ultimately develop and sell their wares to local populations at an affordable price assumes, first, that those same manufacturers will maintain control over how their products are designed, where they will be launched and at what price; and, second, that local manufacturers’ own business models and resource constraints will not compromise their pursuit of localized access and affordability. As we explain next, the web of transactional relationships that Afrigen and other programme participants have entered into may complicate that mission.

Transactional R&D: Testing the limits of voluntary licensing

Under the dominant model of biopharmaceutical production, partnerships among the multiple actors engaged in the development of a biopharmaceutical product—from publicly funded labs to start-up companies, providers of research materials and equipment, contract research organizations (CROs), and large multinational manufacturers—tend to be secret and transactional in nature [ 56 – 59 ]. Whether the aim is to secure research materials such as reagents or lipids, a license to use IP, assistance with recruiting participants for a clinical trial, or purchase outright a medium-sized company with a promising therapeutic candidate, agreements are generally actioned under conditions of confidentiality between two partners, with one typically acquiring the asset of interest from the other. Thus, enclosed , bilateral partnerships — often short in duration—dominate biopharmaceutical R&D. More open and continuous knowledge-sharing arrangements through multilateral collaboration are, in contrast, relatively uncommon [ 33 ].

The original budget the South African consortium submitted to WHO was predicated on receiving technology transfer from an established mRNA manufacturer.(PT) Securing voluntary licenses to use IP is at the core of MPP’s work and philosophy [ 38 ]. The organization “has no intention […] of infringing any patents,” MPP wrote while seeking funding from the Canadian government, “not least because MPP’s key partners for licensing are pharmaceutical companies [ 52 ].” However, none of the HIC-based mRNA companies—Pfizer, BioNTech, Moderna, or CureVac—were interested in sharing their technology with the mRNA programme: “They didn’t even want to talk.”(PT) As a result, “the project turned into a green fields vaccine innovation,” that is, “product development from nothing,”(PT) just as Bio-Manguinhos had proposed in 2021.(PN)

Looking to scale up rapidly but “wisely,”(CF) Afrigen began enhancing its own in-house capabilities where possible while outsourcing other elements of the manufacturing process. In order to make the drug substance and then formulate it into a product with the addition of an LNP, Afrigen purchased off the shelf a microfluidic device from Precision Nanosystems, a Canadian firm, to assist with the LNP encapsulation process.(CF) Fenner, Afrigen’s scientific director, details how Afrigen overcame the key hurdle only to change plans in order to streamline costs for its LMIC-based programme partners down the road:

[W]e knew that it was difficult to do LNP formulations and we saw all the skepticism and everything from everywhere else. […] But for us we were like, ‘Well, what was all the hype about really? We have been able to do it.’ So we did use the Precision NanoSystems [PNI] machine, it’s not that difficult to use. […] And if you don’t have access to lipids to do the actual formulation, the company themselves have a lipids mix which is proprietary to the company that they make available to their customers. And so that you can then formulate the mRNA into an LNP. […] Having said that, we decided to not scale up on the [PNI] machine for the actual manufacturing. [T]he reason why we chose [another] machine is because that we thought that it is more simple to operate and that it has a lower running cost associated with it, which would be more appropriate for [LMICs].(CF)

While Fenner noted that Precision NanoSystems was acquired by Danaher Corporation after Afrigen began using its PNI machine, it was not clear whether Danaher’s record of acquiring products and increasing prices, including for a TB diagnostic test [ 60 , 61 ], factored into Afrigen’s decision to shift to another microfluidic device.

To demonstrate that AfriVac 2121 was ‘non-inferior’ to the Moderna and Pfizer/BioNTech’s vaccines, it is necessary to perform preclinical testing in one or more animal models. The architects of the mRNA programme decided that aspect would be done by Xavier de Lamballerie’s lab in Marseille, France, given that lab’s experience using a hamster model to conduct SARS-CoV-2 challenge studies [ 62 ]. Marie-Paule Kieny, chair of the MPP’s board, explains:

[W]e wanted to have this in a center where the model has been validated internationally. So if Xavier de Lamballerie publishes that these results are equivalent, everybody will believe it. If somebody in Afrigen is saying that it’s the same, ‘Uh-uh.’ So, he’s neutral, he’s independent, he has no skin in the game. So he’s testing the system. And now that we have this, so he has a lot of other studies to do, he will do neutralization of variants and so on and so forth, so this will be one package. And now he is also starting immunization of another batch of hamsters with the Afrigen product, the Moderna product, the Pfizer product, and this hamster will be challenged.(MPK)

When Lamballerie’s preclinical studies of AfriVac 2121 are complete, the hamster model will be transferred to South Africa.(MPK,CF) As a result, “the local university [in Cape Town] is actually being capacitated…there’s essentially a transfer of knowledge and protocols between the two so that in the future we would be able to do it in South Africa.”(CF)

At each turn of the manufacturing process knowledge gaps are thus identified and addressed, often with the help of outsiders. Terblanche reports that Afrigen has at least nine different “cooperative research and development agreements” (CRADAs) at the “active implementation stage.”(PT) [ 63 – 66 ] In some cases, the outsider’s contribution is coupled with a commitment to assist Afrigen or another consortium member in gaining internal capacity, such as the hamster challenge model or performing GLP compliant toxicology studies, which Afrigen has outsourced to a “one stop shop” in India.(CF) In other instances, it is not clear whether the bilateral agreements will precipitate sustained collaboration around a shared set of goals. Meanwhile, mRNA programme partners are striking new deals and funding arrangements of their own. Bangladesh’s Incepta, for example, has partnerships in the works or already in place with the University of Pennsylvania, Afrigen, Imperial College London, US NIH, and the Belgian company Quantoom.(MMA,MK)

It is notable that all of these bilateral CRADAs, funding agreements, and other contracts are the product of the programme’s design. WHO and MPP, as the programme’s architects, have chosen to place minimal constraints upon programme participants’ ability to enter into bilateral agreements with external actors. The only stipulation under MPP’s technology transfer template agreement is, if a partner of the mRNA programme obtains access to IP of a third party, the partner undertakes to “use reasonable efforts to negotiate a licence to MPP for such” third party IP. According to Terblanche, Afrigen has carried those access commitments through all of its CRADAs; where potential partners have balked at those terms, Afrigen has backed away from the deal.(PT) None of Afrigen’s bilateral deals, nor those of programme partners, are publicly available, however.

Participating in the programme is a business opportunity. Serbia’s Torlak Institute, for instance, has offered to sell reagents used during the production of influenza vaccines to other partners during the first programme-wide meeting held in Cape Town in April 2023.(LD) “I think this is the interesting part that we have,” Bio-Manguinhos Missailidis explains, “you create a network that eventually there will be bilateral agreements within the network of people interested in some of our projects.”

Outside actors engaged in the mRNA space have also increased their deal flow by virtue of their connections with the programme. According to Jose Castillo, head of Quantoom, which is known for its machines that automate an early part of the mRNA production process, already counts seven of the fifteen partners as its “customers” and is in active discussions with the other partners as well.(JC) Quantoom’s contracts with the programme’s partners moreover run deeper than simply selling its machines. Castillo recounts how he “knock[s] on the door talking about tech, but the contract I sign is a collaboration agreement”(JC). In return for assisting a partner to design an antigen against a pathogen of interest, Quantoom acquires a non-exclusive license to any project-related IP the partner in question generates.(JC) With agreements in place with many of the programme’s participants, Quantoom stands to add substantially to its IP assets, rendering it an attractive target for acquisition by a larger entity. Castillo’s previous company, Artelis, was ultimately acquired by Danaher in 2015 [ 67 ].

The programme’s architects are thus walking a fine line between trying to seed collaboration within and on the margins of the programme and trusting all involved to thread the commitments to IP access throughout that evolving web of relationships. Terblanche and Castillo appear steadfast in their commitment to the programme’s stated objectives, yet cognizant of their respective organizations’ vulnerability to market forces. Terblanche shares her thinking:

I have a very strong, purpose driven, public health orientation. But I’m not stupid, I know my company needs to be financially viable to deliver on that promise. But greed is not my sin. Okay? I think that’s the difference. But I can’t tell you […] what will be the next CEO’s orientation? If Avacare [Afrigen’s primary shareholder] dilute or sell[s] us […] I have no control. So the only control I now have is agreements of care, which is public access. And these agreements will survive shareholders’ ownership. That’s the only thing I can do.(PT)

The decision to rely, to a significant extent, on private actors, banded together through CRADAs and other contracts, to build and share mRNA manufacturing capacities in LMIC settings is a signature feature of the programme. It is also reflective of the demonstrated preferences of its main architects, especially MPP, which has ascended in prominence in the sphere of global health as a result of the programme’s development.

Financialization’s intermediaries: MPP as a rising ‘power broker’ in global health

A third defining feature of the biopharmaceutical sector today meriting comparison with the mRNA programme stems from the industry’s highly financialized character. While the financialization of an industrial sector can manifest in several ways, the concept has generally been used to refer to the “increasing role of financial motives, financial markets, financial actors and financial institutions in the operation” of both domestic and international economies [ 68 ]. In the biopharmaceutical sector, the shift toward financialization is evident in the move by most major firms to become publicly traded on one or more stock exchanges (as opposed to family-owned businesses reliant solely on product sales for revenues) since the mid-twentieth century, the increasing importance assigned to maximizing shareholder value by financial actors with a controlling interest in many biopharmaceutical firms, and the growing reliance upon the tools of the financial sector, including mergers and acquisitions, and share buybacks and dividends, as the primary means to generate revenues [ 57 , 69 , 70 ].

The consequences of biopharmaceutical financialization are also several-fold. With financial companies, such as banks, venture capital firms, and asset management groups today often owning a controlling interest in any given biopharmaceutical firm, the strategic direction of those firms tends to become “more short-term oriented seeking to maximise immediate shareholder returns instead of making investments that look to the long-term health of the company [ 69 ].” Financialized biopharmaceutical companies may also increase prices for products already on the market to offset the cost of share buybacks and dividends, allocate greater resources towards marketing and advertising instead of R&D, and outsource R&D and manufacturing activities to countries, including LMICs, where labor costs are lower to the detriment of companies’ in-house capabilities [ 69 , 70 ]. In fact, many biopharmaceutical firms actually outsource R&D and manufacturing activities to third-party CROs rather than perform the work in-house [ 71 ]. Outsourcing R&D has, in turn, created a space for a variety of intermediaries and consultants to develop business models of their own, connecting large firms with CROs and other service suppliers in exchange for a fee, claims to IP, and reputational capital that flows from bridging various steps in the R&D process.

There is no indication that any of the mRNA programme’s direct participants mirror the financialization that is evident among more established biopharmaceutical companies. Neither Afrigen, nor its primary shareholder Avacare, are publicly traded companies. The same is true of the other private companies partnering with the programme. None of the companies involved appear to be using the tools of finance such as share buybacks as a means to generate returns. While some inputs into the manufacturing process have been secured from outside entities, Afrigen, Biovac, and programme partners in other LMICs are invested in developing their R&D and manufacturing capacities in-house in an effort to increase local production in LMICs. The Belgium company Quantoom, which has locked in partnerships with most LMIC manufacturers in the programme, may be amassing an interest in each partner’s IP. But Quantoom’s machines, which automate the in vitro transcription step of mRNA production, seem to contribute meaningfully to the manufacturing process.

While MPP’s position within the programme is not a symptom of financialization, the role that the foundation plays is analogous to the intermediaries that link together biopharmaceutical R&D and production supply chains. Like the industry’s many intermediaries, MPP’s presence simultaneously adds value to, and imposes a drain upon, the mRNA programme.

Through the programme’s legal architecture, MPP has positioned itself as the central intermediary for technology transfer. Afrigen is the nominal hub for partners to receive training and it has provided a 3-day course about mRNA manufacturing to most participating manufacturers. However, it is MPP—at times, with the assistance of outside consultants (MMA, CN)—that has assumed the role of conducting site visits, assessing the needs and capabilities of each partner, and conveying the knowledge, data, and IP generated by the consortium. Awaiting for MPP to visit its facilities, representatives from one partner noted that receiving the transfer directly from Afrigen, as the producer of the drug substance, might be more efficient. But the partner cautions that its technology transfer agreement is with MPP, not Afrigen. As a result, “all the information comes from MPP.” That is, “Afrigen to MPP and MPP to the spoke, [i.e.] to the technology transfer recipient.”(XZ,XA)

Having MPP as a ‘middleperson’ is not the optimal way to provide technology transfer.(AK,EW,PN,PT) Typically, technology is transferred from one party, which has direct experience utilizing it, to another, through both sharing of hands-on know-how and detailed documentation such as ‘Standard Operating Procedures.’ Even in that two-party scenario mistakes occur, for example, when experimental protocols are not sufficiently delineated. Introducing an intermediary into the process, which lacks hands-on experience practicing the technology in question, increases the chances that the transfer will be unsuccessful. Nevertheless, over the course of 2022–2023, MPP created its own technology transfer unit, comprised of five individuals with doctoral and master degrees in chemical engineering and other fields as well as varying levels of experience in the pharmaceutical industry [ 72 ], to manage technology transfer within the mRNA programme. According to some interview participants, this has precipitated frustration with MPP’s approach to technology transfer:

The MPP is spending gobs of money on creating a group that is supposed to be doing tech transfer. I’ve worked for more than 30 years in the industry. You do not have a remote group that does tech transfer. If a group is going to do tech transfer, it needs to be in the facility that’s sending the technology out. They need to be the detailed subject matter experts. So they seem to be building this empire that’s going to do what, I don’t know. And they seem to be micromanaging and want to be in charge of everything.(AK)

In that participant’s view, “if [the programme] doesn’t succeed, it’s going to be because of that kind of dynamic, not because the science doesn’t work.”(AK) Altering that dynamic, moreover, requires tact:

MPP now takes the funding for that [technology transfer] part and it goes to MPP because they have the team. So I don’t want to be seen, now I want all the money for Afrigen. It’s a […] sensitive thing because people I think, they go sometimes, “because oh, you’re Afrigen, you just want to dominate and control.”(PT)

Afrigen will, according to Terblanche, assume responsibilities for the technology transfer in 2024. But whether the Cape Town company’s people will be resourced to travel, train, and transfer technology to partners remains “under negotiations.”(PT)

MPP clearly has the potential to add value to the programme in the IP domain. Its core expertise lies in evaluating patent landscapes for legal risk and negotiating licensing agreements with IP holders. MPP has compiled the patent landscape associated with mRNA technologies; the findings to date are worrisome. Of the nine LMICs linked to the programme through a partner for which patent data is available, patent applications have, according to MPP’s dataset, increased markedly since a PHEIC was declared in January 2020 [ 23 ]. (see S2 Table ) More than a third (56 of 159) of all patenting activity related to mRNA since 2006 in the 15 countries connected to the programme (concentrated mainly in South Africa, Brazil, India and Serbia) occurred between 2020 to 2022. Further, there are reportedly an increasing number of “use patents” (purporting to claim IP on the use of mRNA technology against a given disease, e.g., malaria) being filed in South Africa and other LMICs. WHO’s Friede says such patents could block Afrigen and partners’ R&D plans, “especially […] in countries like South Africa where there’s no substantive examination [of patent applications to ensure they meet standards of novelty, non-obviousness, and utility].”(MF)

Notably, MPP’s work on the IP dimension of the programme does not extend to providing the South African consortium or other LMIC-based manufacturing partners with legal opinions about their respective “freedom to operate,” (FTO) i . e ., to conduct research and product development without undue risk of patent infringement litigation. The memorandum of understanding between WHO and MPP states that MPP will “provide IP analysis and commission [FTO] assessments for the Partners, as necessary [ 22 ].” However, the technology transfer agreements entered into with each partner refer only to providing “IP analysis…as practicable and appropriate” rather than supporting FTO assessments. MPP has reportedly provided funding for some partners to pay for FTO analyses by local law firms.(FL) Afrigen, however, has had to seek out independent legal advice using its own funding.(AK,PT) At least one partner is under the impression that the patent data that MPP has prepared and presented at programme meetings amounts to FTO guidance.(XZ,XA) But presenting a high-level summary of all the patent documents that exist is not the same as an in-depth interpretation of the scope of each patent granted in a jurisdiction—the core inquiry involved in crafting an FTO opinion.

The IP strategy behind the programme appears instead to be that the programme will meet incumbents’ IP positions with IP of its own. Glaudina Loots of South Africa’s department of science and innovation emphasises that the university scientists funded by the programme are keeping “the patent lawyers quite happy.”(GL) At least two patent applications have been filed to date, one pertaining to antigen design and another on a novel LNP technology, with each listing inventors from the University of Witwatersrand, including Arbuthnot and chemist Charles de Koning. Arbuthnot contextualizes the importance of these new patent applications in light of the programme’s goals of not just manufacturing a COVID-19 vaccine but also producing second generation mRNA technologies:

The lipid nanoparticle part of an mRNA vaccination technology is very, very important, so we’ve been doing a lot of work on that, and it’s a particularly interesting project, actually, with some synthetic organic chemists here in Johannesburg at Wits as well, who are using a bio-renewable source for the manufacturer of the important ionizable lipids, they’re called. […] We’re very excited about this because the lipids that are made to put into the vaccines that are used by, say, Moderna and Pfizer, are based on petroleum chemistry, so they’re not bio-renewable products at all. If we are able to get products that can work as lipid nanoparticles, this is potentially something that could be quite big, and we’re very excited and enthusiastic and working quite hard at trying to do that. That’s an example of something that would enable us to have freedom to operate where we wouldn’t have, wouldn’t be dependent on the [IP] of anybody else.(PA)

While the experimental work to determine whether the bio-renewable lipid works is ongoing, “the medicines patent pool guys in Geneva,” de Koning emphasises, “are telling us, ‘You need to patent the stuff’” to ensure the hub has FTO.(CdK) Underscoring the potential strategic value of these patents in the event that the consortium or programme partners are confronted by a competitor down the road, WHO’s Friede offers that “if that IP stands up to be really powerful, and we run into problems with certain companies, that IP might be a bargaining chip.”(MF) In other words, a strategy of “defensive patenting” could help shield the programme from threats of patent infringement from outsiders while also sharing knowledge among participating manufacturers [ 73 , 74 ]. The success of that strategy will depend on whether the patents are ultimately granted.

In short, MPP’s philosophy around IP, FTO, and contractual, negotiation-based solutions is imprinted on the programme; and, through its control over the programme, MPP has grown significantly in size and stature in the world of access to medicines. In the five years leading up to the pandemic, MPP’s annual budget was in the range of CHF 5–6 million [ 75 ]. Since the pandemic began and the mRNA programme was launched, MPP’s annual income has increased roughly fourfold (to CHF 23 and CHF 19 million in 2021 and 2022, respectively), the number of staff has jumped from 25 to 44, and their budget for external consultants has doubled [ 75 ]. Yet, it is not clear that MPP’s presence and philosophy will work to the advantage of the programme’s different participants. For instance, other go-to sources of funding in the field of infectious diseases, including the US NIH, the Gates Foundation and CEPI, have steered away from funding the programme as a whole. Gates recently provided USD 40 million spread between Cape Town-based Biovac, L’Institut Dakar in Senegal, and Quantoom, which has agreements with several programme partners [ 76 ]. CEPI has likewise supplied funding to four manufacturers taking part in the mRNA programme,(CN) including Indonesia’s BioFarma [ 77 ]. None of these awards will flow through MPP, however. “I don’t understand” why MPP and Gates are not working together, Quantoom’s chief executive Castillo explains, and I have “that conversation with MPP and the same conversation with Gates, and not only with Gates, but with Mr. Gates.”(JC)

Institutions engaged in the field of global health have long competed for resources, goodwill, and influence [ 78 – 81 ]. To the extent that there is fallout between actors vying for influence in Geneva, its impact upon the mRNA programme will not be uniform. Having expanded its portfolio of work to the realm of technology transfer, developed funding relationships with several HIC governments, opened a local chapter in South Africa, and launched a new strategic plan [ 82 ], MPP’s place as a new “power broker” [ 81 ] within the sphere of global health appears assured. In contrast, the business at the heart of the programme, Afrigen, has thus far been unable to secure funding from Gates and other sources, and is, according to its head executive, increasingly “vulnerable” to financial strain.(PT)

The sustainability question: Market-based governance

The fourth and final feature of the status quo is that control over the direction of biopharmaceutical production is concentrated in the hands of powerful, private actors that are, at bottom, governed by the market . Established firms calculate the ‘net present value’ (NPV) of one disease target versus another, which systematically devalues diseases that are endemic in LMICs and thus offer lesser financial returns [ 83 – 85 ]. The entrance of the Gates Foundation and other philanthropic organizations has supplied new research funding for TB, HIV, malaria, and many other “neglected diseases.” However, it is far from clear that these dominant organizations are prepared to rethink IP-intensive R&D practices or enforce access commitments in the service of public health [ 32 , 81 , 86 , 87 ]. They, too, are private actors, wielding significant influence over governments and entire scientific fields outside—and unaccountable to—the broader public.

Afrigen has targeted eleven potential diseases for mRNA product development. Unlike the standard approach to R&D, Terblanche suggests that the prospect of financial gains has not shaped the hub’s priorities to date:

Somebody asked me, […] ‘Your pipeline of 11. How did you get to it?’ I said, ‘I look at the unmet need, I look at the region. I look at whether there are vaccines or not, and I look whether the mRNA is suitable for it. And I look at whether we have access to antigens.’ And they said, ‘And what about the market?’ I said, ‘I’ve not included the market in my decision-making. I’m driving a need. And I’m not driving a profit, I’m driving a need, I’m driving sustainability.’ (PT)

Multiple proposals focusing on Lassa fever, RSV, and other disease targets, have since been turned down by a variety of funders, leaving Terblanche to concede that her “hand will now be forced to prioritize” in light of market rewards.(PT)

The architects of the programme appear to have accepted Afrigen’s precarity from the start, anticipating that the Cape Town firm might not survive in the hyper-competitive mRNA marketplace. The absence of pricing commitments parallel to those imposed upon programme partners or a commitment to allocate up to ten percent of “real-time production” capacity in the event of a PHEIC within the four corners of Afrigen’s Grant Agreement with MPP [ 22 ] ( see also S2 Table ) could be interpreted as an incentive for Afrigen to commercialize its technology. Read in conjunction with the views of the programme’s architects, the omission of these terms from the Grant Agreement likely suggests that the architects did not contemplate that Afrigen would ever generate mRNA products of its own. Recalling that some of the companies that took part in the influenza hub later shut down production, WHO’s Friede estimates that if a handful of LMIC manufacturers manage to make mRNA vaccines, the newer programme will be an overall success.(MF) Charles Gore of MPP notes, “we are funding [Afrigen] to develop and then shift [the technology] out,” but “they don’t [yet] have a business model.”(CG) Like any private enterprise engaged in biopharmaceutical innovation, MPP’s Marie-Paule Kieny speculates that Afrigen will, in the end, probably yield to market forces:

[W]ill the hub always be a necessity? I would argue no. […] The hub is really there to establish a first platform and improvement, and to help with an early pipeline. After that we are fully aware that Afrigen is a private company, at one point they will try to find somebody to buy them out and to get the benefit. I don’t know, what can we do? (MPK)

The near inevitability of Afrigen’s exit in the eyes of those who designed the programme speaks to an underlying failure of imagination concerning how the mRNA programme is governed. During the pandemic, calls for more “inclusive and decentralized” governance structures have grown [ 88 ] in order to shield initiatives such as the mRNA programme from the risks and constraints posed by dominant market actors. At a minimum, a more inclusive and decentralized structure would entail two key changes to the programme. First, representatives from participating LMICs capable of steering the programme’s R&D towards local population would need to be directly involved in the programme’s overall governance and day-to-day decision-making. Second, multiple actors would need to serve as regional mRNA hubs—as originally planned—in order to mitigate the risk that one organization’s failure (or acquisition by an outside actor) might compromise the programme as a whole.

Instead, WHO and MPP internalized programme decision-making within two hand-picked committees, leaned on private actors like Afrigen to play crucial roles, preserved their discretion about what projects and partnerships to pursue, and limited input from LMIC governments and civil society during the programme’s first two-plus years of operation. Members of the South African consortium, including scientists funded by the mRNA programme, also registered concerns about the lack of transparency surrounding the allocation of resources inside the programme. (ALW,ER)

The privatized approach to governance preserves the programme architects’ control over the programme. The function of the “Scientific and Technical Review Committee” (or “STeRCO”) is mainly to advise WHO and validate “high-level funding envelopes,” including “the funding for the transfer of technology, the hamster model from Marseille to South Africa” and the purchase of large GMP equipment for preparation of mRNA for Afrigen.(MPK) For its part, the mRNA Scientific Advisory Committee (mSAC), which includes several notable experts with ties to industry, HIC governments, and academia, plays a more technical role, for example, evaluating the funding proposals submitted by South African researchers connected to the consortium. Reflecting their close working relationship, MPP’s Kieny chairs the STeRCO while WHO’s Friede chairs mSAC; the WHO is the secretariat for STeRCO while MPP supports mSAC’s meetings and deliberations; and, the decisions by both serve to validate the use of funds from one source or the other ( Fig 2 ). Missing altogether from this governance structure is any direct representation from LMIC governments whose needs and interests the programme is meant to serve.

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Notes : (1) This figure provides a schematic representation of the organizations and actors involved in the mRNA programme, and the inter-relationships between them. We contrast how the mRNA programme has been described in principle (Panel A) where Afrigen is described as the “hub” and manufacturers in LMICs are partners (or spokes), versus how the mRNA programme appears to work in practice based upon our findings (Panel B). (2) There are several important differences between Panel A and Panel B, including the fact that all of the technology transfer agreements are between partnering manufacturers and MPP (represented by double-arrowed lines). The only direct collaboration between Afrigen and a partner is with Bio-Manguinhos; the two organizations are in negotiations regarding a partnership focused on RSV (represented by the dashed line). Panel B also shows that all of the funding that has been secured for the programme flows through MPP (and WHO to a lesser extent). Members of the South African consortium as well as programme partners must negotiate access to funding from MPP, which, together with WHO, has delegated decision-making to the mSAC and STeRCo committees. Finally, Panel B also highlights other actors involved in the programme, including researchers at the University of Witwatersrand, the University of Cape Town, and North-West University (represented as Wits, UCT, and North-West, respectively), and the Belgium-based company, Quantoom, which has formed bilateral relationships with Afrigen and the majority of LMIC-based manufacturing partners. (3) While the figure’s details derive from our research findings, they are not intended to provide a comprehensive picture of the mRNA programme. For example, recently the programme’s architects have put into place a “Funders Forum” for countries and organizations that have provided financial support for the mRNA programme, and four new R&D consortia involving programme partners and outside actors were announced in March 2024 [ 89 ]. In order to limit the complexity of the figure, these new structures are not represented here.

https://doi.org/10.1371/journal.pgph.0003173.g002

Collectively, these choices reflect the programme’s alignment with the dominant, market-drive approach to biopharmaceutical production. By design, the programme cannot stop Afrigen or other private companies embedded in the programme (e.g., Quantoom) from capitalizing upon the IP they amass through the programme or, if needed to satisfy their shareholders, sell their stake when the right offer materializes. Importantly, such a transaction would not mean that LMIC partners would be deprived of access to IP generated by Afrigen or other parts of the South African consortium. Similarly, a partner that patents an improvement of an mRNA technology that they receive from the programme cannot claim exclusive ownership over that new IP. Rather, the terms of the various agreements underpinning the programme pre-empt those possibilities. “[I]t’s a self-executing grant-back obligation,” MPP’s head lawyer Park stresses, so “if a spoke partner invents something, patents it, the license automatically comes back to us.”(CP) Notwithstanding this safeguard, however, the prospect of Afrigen exiting the space altogether or other parts of the consortium selling (on a non-exclusive basis) its IP assets to an entity based in an HIC, is in tension with the programme’s stated goals of building local mRNA manufacturing capacity in LMICs.

The foregoing findings raise questions about the design choices embedded into the mRNA programme, how best to empower LMIC-based manufacturers, and what additional steps need to be taken to ensure that this initiative enhances equitable access. We explore each in turn by way of conclusion.

A facsimile of the status quo in biopharmaceutical production?

Assessed against the dominant mode of biopharmaceutical production, we find that the mRNA programme nuances—but does not substantially depart from—at least three of the four key features of the status quo. Funding sources wield considerable influence over the mRNA programme, and university-based researchers and publicly funded institutions have made critical contributions to manufacturing processes and second-generation mRNA technologies. Yet, apart from requiring IP sharing inside the programme, the architects of the programme opted not to stipulate terms of affordability upon partners’ products (outside of the context of a PHEIC) on the strength of the assumption that market competition (either between the actors involved in the programme or with other mRNA manufacturers) will naturally yield that outcome. Further, the programme preserves every players’ freedom to contract with third parties. Thus, the programme’s commitment to IP sharing rests on each organization’s willingness to carry that condition through its various bilateral relationships, which have grown during the course of the programme. It is unclear if the programme provides oversight with respect to these bilateral transactions and, unlike the various legal agreements underpinning the programme, bilateral transactions between members of the South African consortium or manufacturing partners in other LMICs and third parties are also not publicly available. Finally, even though the entities involved are not embracing financialization in the manner of HIC-based biopharmaceutical companies, it appears that global market forces, rather than representatives of LMICs or local health needs, will ultimately decide what pathogens are prioritized for product development and whether Afrigen, the company at the heart of the programme, has a sustainable business model. To their credit, WHO and MPP are trying to seed collaboration within the programme, match-making participants around pathogens of shared interest and regional need [ 90 ]. But with trust among the diverse players still a work-in-progress, asymmetries in the programme’s legal architecture in terms of who stands to earn IP royalties and where products generated with the help of the programme can be sold, and funding shortfalls on the horizon for the hub in Cape Town,(PT) it is far from clear that these collaborations within the programme will materialize before difficult decisions about licensing IP to HIC contexts will need to be made in the name of sustainability.

Rather than forming a collective enterprise, the relationships among local producers engaged in the programme are fragile and participants appear just as vulnerable to market forces as they were before the programme was created in 2021. This outcome is a by-product of how the programme has been designed, in particular, a number of choices made by MPP while constructing the programme. MPP’s pursuit of a voluntary license from Moderna or another mRNA manufacturer arguably made sense initially given the state of the global health emergency when the programme began. However, MPP’s preference for a voluntary deal with an HIC-based manufacturer also appears to have undercut Bio-Manguinhos’ bid to become one of the mRNA hubs back in 2021. Bio-Manguinhos proposed building up end-to-end mRNA manufacturing capacity and ‘South-to-South’ technology transfer—a vision that the programme is now coming around to two-plus years later. The moment that a voluntary license from an established entity was not forthcoming, a deeper rethink of the programme’s architecture and norms was needed. Instead, most of the features of status quo biopharmaceutical production have been carried through the mRNA programme and MPP continues to court voluntary agreements from Moderna and other HIC-based biopharmaceutical manufacturers [ 91 ].

From remotely managed tech transfer to LMIC manufacturer empowerment

The mRNA programme’s design reflects both the resource constraints that (in the absence of more funding) the programme must operate under as well as MPP’s own institutional preferences around IP, competition, and solving access problems through voluntary (as opposed to mandatory) mechanisms. Without more funding from HIC governments, philanthropic organizations, or other sources, MPP was likely hard-pressed to demand that participating manufacturers agree to pricing constraints for mRNA products outside of a PHEIC. The money to make mRNA vaccines, in short, has to come from somewhere. Still, focusing exclusively on that economic reality obscures the high degree of control that the programme’s architects have maintained over all decision-making, resource allocation, and technology transfer activities.

Representatives from LMICs, including South Africa, are largely excluded from the programme’s governing structures. Likewise, civil society organizations from LMICs are not meaningfully represented on the programme’s STeRCo or mSAC committees. All of the funding for the programme sits in Geneva; only SteRCo and mSAC can decide if and when funding should be allocated. When Afrigen or another entity that is part of the programme is in need of additional funds, for instance, for the purposes of scaling up the next phase of technology transfer, or to pay for manufacturing equipment, it must engage in negotiations with MPP in order to access funding. Technology transfer, too, has to date been managed almost entirely by MPP’s new technology transfer unit notwithstanding the inefficiencies that this approach may carry.

It remains to be seen whether MPP, which has ascended in the sphere of global health during the pandemic as a result of its role as the central power broker for the entire mRNA programme, will over time cede some of its control and take the steps necessary to truly empower LMIC manufacturers. The move to create R&D consortia as part of the programme, constructed around pathogens of shared interest, holds promise. Providing FTO opinions to LMIC manufacturers when needed, advising LMIC governments about when and how to invoke compulsory licenses, stepping back from micromanaging technology transfer among programme participants—all of those actions stand to re-distribute control and decision-making authority to the researchers, organizations, and governments in LMICs. Yet, compulsory licensing runs counter to MPP’s way of doing business with established manufacturers and relinquishing control over the exchange of mRNA technology is in tension with the foundation’s newfound mantle as the go-to facilitator of technology transfer within the sphere global health.

Far from unique to the mRNA programme, conflicts around power and control are commonly in play within multilateral initiatives. In theory, “multistakeholder models of governance promise greater participation of different stakeholders;” yet, in practice, “these models can also undermine the authority of intergovernmental organizations, while expanding opportunities for powerful private actors to exert influence over governing structures, and concentrating power among parties with less democratic accountability to poorer countries and populations [ 12 ].” MPP’s rise has added to the “forum shifting”, turf wars, and competition that preoccupies a number of global health institutions claiming, or already commanding, political capital from Geneva [ 78 , 81 ]. Too often in the past initiatives with the stated intention of combatting neglected diseases in LMICs have remained under the control of organizations rooted in HICs [ 92 ]. Claiming ownership over the mRNA programme, its architects see themselves as “giving” mRNA technology to LMIC partners.(MF,CG,MPK) Many partners in turn express gratitude to be involved but, as often occurs when power imbalances exist, remain subjugated by the gift [ 81 ]. If the mRNA programme’s “decolonial aspirations” are to be realized [ 93 ], participating manufacturers in LMICs must be more empowered to collaborate South-to-South, build technological capacity, and generate mRNA interventions that are responsive to the health needs of, and affordable for, local populations.

Translating investments in the mRNA programme into LMIC-centered scientific infrastructure, participatory rights, and power

The mRNA programme has in one sense already succeeded. Producing an mRNA COVID-19 candidate with limited assistance from outside actors in a six-month timeframe demonstrates the South African hub’s technical capacity. From another perspective, the programme’s success should not be construed exclusively in terms of product development, but its potential as a lasting safeguard of local production capacity in LMICs. Afrigen and the programme’s partners are moving on to target other pathogens. Even if those efforts do not yield safe and effective mRNA vaccines against TB, RSV, malaria, and other priority diseases, the programme can still have a lasting impact by generating an accessible body of scientific knowledge, tools, and people with the know-how to apply them—provided that those outputs remain within the reach of, and are responsive to, LMIC health needs.

The idea of linking public funding for biopharmaceutical innovation to public scientific infrastructure, participatory rights, and power gained renewed attention during COVID-19 [ 47 , 88 , 94 – 96 ]. However, most governments demanded little to nothing in terms of IP sharing, equitable access, and reasonable pricing commitments from biopharmaceutical companies in exchange for the massive public investments that were made towards mRNA vaccines, among other interventions [ 45 , 49 , 96 ]. The mRNA programme improves on this state of affairs by requiring sharing of IP among the South African universities and LMIC partners who have signed onto the programme. Yet it does not stop SAMRC-funded university labs from also licensing their IP to actors in HICs or LMIC partners from entering into bilateral deals that capitalize upon the IP and know-how they have gained through the programme. Quantoom, the Belgium-based company that is formally outside the programme and thus not subject to its IP sharing commtiments, has struck partnerships with the majority of the programme’s manufacturers. Afrigen, for its part, can be sold to a third party if and when its primary shareholder decides that that course of action offers greater return than continued participation in the mRNA programme. All of these flexibilities that were built into the programme’s design introduce a risk that the knowledge, tools, and know-how generated by the mRNA programme may be exploited or extracted by outside corporations that do not share the goal of improving equitable access in LMICs.

To mitigate that risk and ensure that the programme’s outputs remain grounded in LMICs, a number of changes to the programme’s legal architecture and governance structures are worthy of consideration. First, the programme’s commitment to transparency should be extended throughout its operations. In particular, there must be greater transparency within the programme, such that Afrigen and other manufacturers can participate in, and have an understanding of, the decisions that are made by STeRCo and mSAC as well as the expectations of funders, including HIC governments. Similarly, the effort to make the programme’s legal architecture transparent should encompass any bilateral deals that members of the South African consortium or LMIC manufacturing partners secure. Making those transactions transparent will help guard against the risk that the programme’s collective IP and know-how will be captured by commercial outsiders. Second, representatives from LMICs taking part in the programme as well as civil society organizations from LMIC regions must have a stronger voice in the mRNA programme’s decision-making structures. Running forums with LMICs and civil society after decisions have already been made by STeRCo or mSAC is insufficient. It distances the work of the programme from the very people it is intended to serve. Third, the prospect of Afrigen—the hub at the centre of the programme—being acquired by an outside entity, or dissolved altogether due to financial challenges, must be more proactively addressed. The architects of the mRNA programme contend that outcome is essentially inevitable. However, steps can be taken to ensure that the publicly funded R&D infrastructure, product leads, and scientific know-how that Afrigen has amassed are not lost in the event of a private acquisition or insolvency. In return for additional funding, WHO and MPP should require Afrigen to make all of its IP and know-how available to the other members of the programme. Further, WHO and MPP should engage with the government of South Africa to see if corporate restructuring, acquisition by the state, or some other strategic investment offers a means to preserve public control over the knowledge and assets that Afrigen, in collaboration with others inside and outside the consortium, has developed during the course of the programme.

Public investment intended to improve equitable access to health interventions, such as mRNA vaccines, requires policy innovation in the form of participatory rights for LMIC communities and a protected stake in the scientific infrastructure and knowledge that that investment generates [ 96 , 97 ]. Revised with those fundamental goals in mind, the mRNA programme can position LMICs to lead where many HICs fell short in the context of COVID-19.

The provision of a technological solution, including vaccines, is no safeguard for equitable access. Attention to social context and structural challenges is needed to realize technology’s emancipatory potential. Our situational analysis of the WHO’s technology transfer mRNA programme, including semi-structured interviews with 35 individuals involved to varying degrees in the programme, suggests that the needs and perspectives of LMICs are not sufficiently centered in the programme. Further, the architects of the programme are working within the existing system of biopharmaceutical production and, at the same time, preserving their own control over the programme’s design and preferred measures meant to remedy shortfalls in equitable access to mRNA-based interventions. In particular, MPP continues to champion voluntary IP licensing as the optimal means to improve local production capacity in LMICs even though that mechanism did not attract collaboration from more established mRNA manufacturers in the context of COVID-19 and slowed adoption of a more transformative end-to-end approach to R&D and manufacturing. The technological outcomes of the mRNA programme remain uncertain. Absent significant reform and concerted effort to redistribute not just IP, but agency to LMIC actors, there is a significant risk that the programme, which is claimed by WHO and MPP as a collective effort to improve manufacturing capacity in LMICs for LMICs, will not solve the problem of equitable access to biopharmaceutical innovation.

Supporting information

S1 letter. response from global affairs canada to access to information request..

https://doi.org/10.1371/journal.pgph.0003173.s001

S1 Document. Disclosure Package from Global Affairs Canada.

https://doi.org/10.1371/journal.pgph.0003173.s002

S1 Table. Comparison of Legal Agreements Underlying the mRNA Programme.

https://doi.org/10.1371/journal.pgph.0003173.s003

S2 Table. mRNA Related Patent Filings in Countries with Participants in the mRNA Programme.

https://doi.org/10.1371/journal.pgph.0003173.s004

Acknowledgments

The authors express our gratitude to Morris Odeh, PhD student at Schulich School of Law, Dalhousie University, for research assistance on mRNA patent data in South Africa and LMICs; to the members of the IEAC (Fatima Hassan, Françoise Baylis, Jason Nickerson, Reshma Ramachandran, Srinivas Murthy, and Viviana Munoz) for their contributions and insightful feedback to this work and conversations that helped shape the form and substance of this manuscript and research project at large; to the Health Justice Initiative (HJI) for their support and engagement throughout this process; and to Els Torreele, Amy Maxmen, Melissa Barber, and Amy Kapczynski for their feedback, suggestions, and assistance during the research and writing process. Any errors or inconsistencies are solely the responsibility of the authors. Finally, we are especially grateful to the many individuals who took part in interviews in connection with this research project. We hope our findings will play a constructive role as the work of the mRNA programme continues. All views in this paper are the authors and do not represent the views of the institutions they are affiliated with.

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Water resources management for multi-source ecological restoration goals in an oasis: a case study of bohu county irrigation area in xinjiang, china.

sources of finance case study with solution

1. Introduction

2. materials and methods, 2.1. study area, 2.2. research methods, 2.2.1. ecological water level, 2.2.2. hydrological simulation, 2.2.3. regulation based on single well groundwater, 2.2.4. calculation of water balance in hydrological interaction areas, 2.3. data availability, 3.1. ecological water level calculation and diagnosis of groundwater issues in irrigation districts, 3.2. water resource regulation in irrigation districts based on ecological water levels, 3.3. water resources regulation based on ecological water demand of small lake, 3.3.1. regional water cycle process mechanism, 3.3.2. regional water resources regulation plan under the ecological water demand requirements of small lake, 4. discussion, 4.1. discussion on the calculation of ecological water levels, 4.2. discussion on the problems facing regional groundwater and regulatory solutions, 4.3. discussion on the regional water resource circulation mechanism and overall regional water resource regulatory solutions, 5. conclusions, author contributions, data availability statement, conflicts of interest.

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Click here to enlarge figure

No.Type of CropsIrrigation Start MonthIrrigation End MonthNumber of
Irrigations		Amount of Each Irrigation (m ∙hm )Conventional Irrigation 75% Guaranteed Rate
Irrigation Quota (m ∙hm )
1Spring wheatMid-AprilEarly July5–8 450~6754800
2Spring cornEarly JuneEarly September6–8600~7505325
3RiceEarly MayLate August114,70014,700
4CottonLate MayMid-August8–10450~6006600
5BeetsEarly JuneLate August7–9525~6005775
6VegetablesMid-MayEarly October6–8450~6006225
7Fruit treesMid-AprilEarly October5–7450~6003750
8RapeLate MayMid-August4–6450~5253600
9BeansLate MayLate August6–8300~4504875
R
2.31 m N/m996 8.6 mm1.69 m4 m
LevelWater Depth Range (m)Average Water Level to be Raised (m)Jan. (m /d)Feb. (m /d)Mar. (m /d)Apr. (m /d)May (m /d)Jun. (m /d)
115–9800−1705−1705−1705−1705
29–5300−389−389−389−389
35–4100−62.4−62.4−62.4−62.4
44–1.690000000
/d) /d) /d) /d) /d) /d)
115–98−1705−1705−1705−170500
29–53−389−389−389−38900
35–41−62.4−62.4−62.4−62.400
44–1.690000000
MonthApr.MayJun.Jul.Aug.Sep.Oct.Nov.Dec.
Percentage decrease in area for Level 1 100100100
Percentage decrease in area for Level 2 10093.2985.78100100100
Percentage decrease in area for Level 386.5890.3144.2262.9864.0930.8691.5592.5289.43
Percentage increase in area of ecological water level5259.1968.7187.2186.5860.1368.163.3242.56
Current percentage of ecological water level area91.9596.1887.0587.2186.5887.2395.1794.8894.97
Crop Type Irrigation Quota ( )Surface Water Supply to Small Lake ( )Groundwater Recharge to Small Lake ( )Total ( )
Spring wheat4800534.0907.068541.158
Spring corn5325532.6486.880539.527
Rice14,700485.90110.628496.529
Cotton6600527.9566.910534.866
Beet5775530.6896.913537.602
Vegetable6225531.7436.880538.622
Fruit trees3750528.4976.448534.945
Rape3600538.0236.916544.939
Beans4875534.1786.944541.122
Crop TypeDifference between Total Recharge and Water Inflow from BSLM West BranchThe Minimum Allocated Water Volume of the West Branch of BLSM Water Diversion Hub under the
Ecological Water Demand Requirements of Small Lake
Spring wheat17.842817.842
Spring corn19.473819.473
Rice62.471862.471
Cotton24.134824.134
Beets21.398821.398
Vegetables20.378820.378
Fruit trees24.055824.055
Rape14.061814.061
Beans17.878817.878
Groundwater regulation31.902831.902
Average24.632824.632
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Share and Cite

Guo, C.; Liu, T.; Niu, Y.; Pan, X. Water Resources Management for Multi-Source Ecological Restoration Goals in an Oasis: A Case Study of Bohu County Irrigation Area in Xinjiang, China. Water 2024 , 16 , 2708. https://doi.org/10.3390/w16192708

Guo C, Liu T, Niu Y, Pan X. Water Resources Management for Multi-Source Ecological Restoration Goals in an Oasis: A Case Study of Bohu County Irrigation Area in Xinjiang, China. Water . 2024; 16(19):2708. https://doi.org/10.3390/w16192708

Guo, Chenyu, Tie Liu, Yaxuan Niu, and Xiaohui Pan. 2024. "Water Resources Management for Multi-Source Ecological Restoration Goals in an Oasis: A Case Study of Bohu County Irrigation Area in Xinjiang, China" Water 16, no. 19: 2708. https://doi.org/10.3390/w16192708

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