ACCA: SBL – models Exam Questions with correct Answers

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Porter's Diamond - ANSWER Shows why a company is successful in a specific country 1. Factory Conditions (infrastructure, labour force, etc.) 2. Demand Conditions (what kind of product/service cust... omers demands from a company) 3. Related and supporting industries 4. Strategy, structure and rivalry (how strategy fits within the market and competition) 3 main IT Risks - ANSWER 1.Business continuity; 2.Cyber Security/Data Privacy; 3. New technologies Integrated Reporting + 5 capitals - ANSWER Communication about organisation's strategy and operations to a wide range of stakeholders about how organisation uses it's 6 capitals to create a value. *1. Financial* - funds available to the organisation (debt and equity) *2. Manufactured* - human-created and production oriented equipment and tools. *3. Intellectual* - R&D, innovation and other aspects that helps company to maintain a competitive position *4. Human* - individual capabilities, knowledge skills and experience *5. Social* - relationships within organisation and between organisation and external parties. *6. Natural* - natural resources that a company has at its' disposal 9 Elements of a project plan - ANSWER 1. Purpose 2. Objectives (financial and non-financial) 3. Assumptions 4. Stakeholders and their interests 5. Constrains (and how will they be addrssed) 6. Project perso-nel 7. Quality requirements and control 8. Communications about the project progress 9. Risks 6 considerations for Big Data - ANSWER 1. Set-up costs; 2. Costs of experience needed to interpret and use data 3. Financial and non-financial benefits (e.g. better relationships with customers) 4. Data security and privacy 5. Potential for new and improved services 6. Potential to improve financial management/forecasting 4 Main risks to business model - ANSWER 1. Operational (risks to daily operations e.g. supply of raw materials) 2. Strategic (strategy or business model may not be suitable to the changing market) 3. FX (only if company trades internationally 5. Competition (any actions from competitors) PESTEL - ANSWER Checklist when analysing environment. 1. Political 2. Economic 3. Social 4. technology 5. Ecological 6. Legal 5 Tucker's ethical questions - ANSWER 5 questions when deciding whether action is ethical 1. Is it profitable (shareholder's perspective needs to be considered)? 2. Is it legal? 3. Is it fair? *and* 4. is it right? - consider all stakeholders including the shareholders (e.g. it's unfair to keep non-profitable company) 5. Is it sustainable for the environment? 3 main considerations when dealing with staff - ANSWER 1. Developing staff and their capabilities; 2. Effective and open communication with staff 3. Planning for succession The rational model - ANSWER Approach (steps) of strategic transformation: *1. Position* - gather the information about internal and external position, stakeholders. *2. Choice* - only after the position has been established, an objective is set (e.g. increase profit) and options of achieving it. *3. Implementation* *4. Control* Johnson, Scholes and Whittington model - ANSWER Defines 3 main elements of strategic management: 1. Strategic position; 2. Strategic choices; 3. Strategy in action Main idea is that all 3 elements of strategic management process are inter-related and must be controlled. Logical Incrementalism - ANSWER The idea that not all plans should set strategy for 5 years or so and that future strategies should be an increments of past strategies without a complete redesign. Porter's 4 pricing strategies - ANSWER 1. Cost leadership; 2. Cost Focus 3. Differentiation Leadership 4. Differentiation Focus Leadership - broad Focus - narrow Porter's 4 pricing strategies: Cost Focus VS Differentiation Focus - ANSWER Cost Focus means emphasizing cost-minimization *within a focused market*, and Differentiation Focus means *pursuing a strategic differentiation within a focused market*. 2 ways to achieve success with Cost Leadership Strategy - ANSWER 1. Increasing profits by reducing costs, while charging industry-average prices. 2. Access to the capital needed to invest in technology that will bring costs down. Is it advisable to use few pricing strategies at the same time? - ANSWER No. Porter specifically warns against trying to "hedge your bets" by following more than one strategy. One of the most important reasons why this is wise advice is that the things company need to do to make each type of strategy work appeal to different types of people. 3 Components when assessing a strategy - ANSWER 1. *Suitability* Suitability deals with the overall rationale of the strategy. The key point to consider is whether the strategy would address the key strategic issues underlined by the organisation's strategic position. 2. *Acceptability* Acceptability is concerned with the expectations of the identified stakeholders (mainly shareholders, employees and customers) with the expected performance outcomes, which can be return, risk and stakeholder reactions. 3. *Feasibility* Feasibility is concerned with the resources required to implement the strategy are available, can be developed or obtained. Resources include funding, people, time and information. Factors that should be considered can be summarised under the M-word model. Cultural Web - ANSWER 6 Factors defining the organisational culture 1. *Symbols* - Logos, language, theme, titles, etc. 2. *Power Structures* - who holds the power (one person Vs collaboration) 3. *Organisation structures* - how does organisation structure supports its' culture (e.g. formal VS informal) 4. *Stories* - people and past events (e.g. who is the hero? what kind of events are important?) 5. *Paradigm* - basic assumptions that are taken for granted (e.g. company is run for the wealth of a single family or to help the community) 4. Drawbacks of a Rules-based compliance - ANSWER 1. Can be expensive to implement and some companies may lack the required resources 2. People setting the rules must be extremely competent 3. Does not encourage innovation and adaptability 4. Application of same requirements to corporations of various size may not be cost efficient. 3. Advantages of a Principles-based governance - ANSWER 1. Cover areas undefined by rules (e.g. can require professional development which won't be covered by a ruleset) 2. Less costly for both - company and a regulator; 3. Flexibility. Requires to focus on key areas which may differ across industries. 6 benefits of IR - ANSWER 1. *Decisions making.* Connectors made in IR and extended data allows investors to better evaluate performance and social impact; 2. *Reputation.* Greater transparency shall increase reputation; 3. *Harmonisation.* RI provides standard reporting platform which could reduce compliance to various local standards 4. *Communication.* Will help to strengthen the bond between shareholders and company and allow alignments of interests. 5. *Relationships.* Will lead to improved trust and allow to address shareholders concerns. 3 key issues when CEO and Chairmen are the same person - ANSWER 1. *Power* - single person holds too much control over company; 2. *Accountability* - considering that chairmen shall supervise CEO it's difficult to decide who's accountable for Management; 3. *Workload* - both roles requires a lot of time and effort therefore can it can be difficult for a single person to keep both 3 main issues for NEDs joining the board - ANSWER 1. Different management style and culture; 2. Need to establish communication with personnel; 3. Lack of knowledge of company's operations and other specifics 3Es - ANSWER Method used to assess the performance of a non-profit or government company. 1. *Economy.* Obtain good quality inputs at the lowest possible price. 2. *Efficiency.* Deliver service of the appropriate standard at minimum cost, time and effort. 3. *Effectiveness.* achieving primary objective (N.B. in case of a public company this can be a non-profit objective) Porter's 5 forces - ANSWER 1. Threat of substitutes; 2. Threat of new entries 3. Bargaining power of customers; 4. Bargaining power of suppliers 5. Competitive rivalry Porter's value chain - ANSWER Value chain is broken down into 5 main activities 1. Inbound logistics; 2. Operations 3. Outbound logistics; 4. Marketing and Sales; 5. Services (customer service, repair, etc.) 4 Functions of a Risk Committee - ANSWER 1. Recommend risk management strategy; 2. Review reports on key risks; 3. Advise on risk appetite; 4. Informing shareholders Risk Management: TARA - ANSWER 4 Risk Treatments: 1. Transfer 2. Avoid 3. Reduce 4. Accept TARA - assignment of treatment's - ANSWER RA AT X axis - impact; Y axis - probability. TARA: Transfer - ANSWER This means to share the risk with another party. Common example will be to buy an insurance to share part of the risk of losses with insurance company. For example, this strategy is suitable when the risk has a significant impact to the company but low probability to occur. It is better to transfer rather than reduce in this case because the risk may not occur. However transfer is limited if there is no alternative arrangements for bearing the risk. TARA: Avoid - ANSWER This means to avoid the activity that causes the risk. For example, this strategy is suitable when the risk is likely to occur and has a significant impact. However if it is strategically vital to undertake the activity, then transference or reduction may have to be undertaken. TARA: Reduce - ANSWER This means to reduce the risk exposure probably by carrying out the activity in a different way. For example, this strategy is suitable when the risk does not have significant impact but likely to occur. This is to reduce the likelihood of occurrence by using different method to carry out the activity. However if reduction cannot be done, company might have to accept the risk if it does not have significant impact or avoid it if otherwise. TARA: Accept - ANSWER This means to accept the risk and do nothing. For example, this strategy is suitable when the risk has a low impact and low probability of occurrence. This is because the risk is not really a matter even if it is realised. ACURATE - qualities of information - ANSWER A - Accurate; C - Cost-beneficial; U - User targeted (i.e. readers mus understand it) R - Relevant T - Timely E-marketing - 3 Is - ANSWER 1. *Interactivity* - consider how company can engage in two way communication with customers (e.g. discussions, test drives, etc.) 2. *Intelligence* - using methods to identify the needs of customers; 3. *Individualism* - preparing individually tailored proposals Balogun and Hope Hailay's matrix (4 types) - ANSWER Matrix used to analyse nature and scope of the change X axis - scope (realignment or transformation) Y axis - nature (incremental or big bang) According to the factors above, all changes are classified into 4 categories; 1. *Adaptation* (low scope and minimum nature) 2. *Evolution* (high scope, but minimum nature) 3. *Reconstruction* (small scope but large nature) 4. *Revolution* (large scope and large nature) [Show More]

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