ACCA – SBL PRACTICE TESTS| 370 QUESTIONS| WITH COMPLETE SOLUTIONS, Exams of Company Secretarial Practice

Download ACCA – SBL PRACTICE TESTS| 370 QUESTIONS| WITH COMPLETE SOLUTIONS and more Exams Company Secretarial Practice in PDF only on Docsity! 1 [Document title] ACCA – SBL PRACTICE TESTS| 370 QUESTIONS| WITH COMPLETE SOLUTIONS What structure for Ethical considerations? - Correct answer Tucker's 5 Questions What structure for deciding strategy on public sector projects - Correct answer Public Sector Portfolio Matrix ACCA - 5 Skills? - Correct answer Commercial Acumen -Judgement - Awareness Analysis -Investigate -Enquire -Consider Communication -Inform -Persuade -Clarify Evaluation -Assess -Estimate -Appraise Scepticim -Probe -Question -Challange What model for environmental? - Correct answer PESTEL 5 Forces National What model for competitiveness? - Correct answer Porter 5 forces P a g e 1 | 92 2 [Document title] What model for national competitiveness? - Correct answer Porter's diamond What model for internal resources? - Correct answer M Model What model for outsourcing? - Correct answer Harmon's Process Strategy What model for Parent / Sub advantage? - Correct answer Ashridge Portfolio What model for E(Risk)M? - Correct answer COSO What model for performance? - Correct answer CSF - KPI's Balridge Balanced Score Card Benchmarking Boston Consulting Group Matrix What model for options for growth? - Correct answer Ansoff's Matrix What model for choosing a strategy? - Correct answer SAF S-uitable A-cceptable F-easable What model for assessing new project risk? - Correct answer Likelihood Vs Impact what system of accounting accounts for lifecycle - Correct answer Full cost accounting What is the purpose of Ethics? - Correct answer Convey values Control unethical practice Stimulate improved behaviour P a g e 2 | 92 5 [Document title] - someone is covering up wrongdoing Public Interest means...? - Correct answer - disclosure in good faith - reasonably believe information is substantially true - reasonably believe disclosure to the right prescribed person. Bribery definition - Correct answer offering financial or other advantage to perform a relevant function or activity improperly Any function of a public nature. Any activity connected with a business. Any activity performed in the course of a person's employment any activity performed by, or on behalf of, a group of persons. Bribery legislation - Correct answer Bribery Act 2010 Bribery Offences x 4 - Correct answer Bribing another person Receiving a bribe Bribing a foreign public official (FPO) (To gain financial advantage) A commercial organisation failing to prevent bribery. 6 Principles for Controlling Bribery - Correct answer Proportionate procedures Commitment by management Risk assessment. Due diligence (high risk staff) Communication / Training Monitoring and review "Adequacy of procedures" is a matter for a court to decide. "hospitality" that is reasonable and proportionate is acceptable. Bribery penalties - Correct answer 10 yr imprisonment unlimited fines for companies What impact does company ethics have? - Correct answer Reduces risk P a g e 5 | 92 6 [Document title] Reputational Damage Lower finance costs Easy to find partners / funders Better employees Ethics = Commercial sense Tucker's 5 questions - Correct answer - Is it profitable? Compare courses of action - Is it legal? - Is it fair? - From what perspective - Is it right? - Depends on culture, religion etc - Is it sustainable or environmentally sound? What are the key concepts for Corporate Governance? - Correct answer Fairness Openness/Transparency Independence Probity / Honesty Accountability Integrity Judgement Reputation What is a Corporate Code of Ethics? - Correct answer Written Rules Supported by Management Aligns with Training What action should you take when faced with Ethical Dilemmas? - Correct answer Consider the facts of the situation Consider the ethical principles involved -Personal Ethics -Corporate Ethics -ACCA Ethics Consider the related fundamental principles -Tucker's five question approach might be of help P a g e 6 | 92 7 [Document title] Consider relevant internal procedures - Follow as required Consider alternative courses of action -Escalate internally -Grievance procedures. -Document actions taken -Escalate externally (auditor, legal advisors, professional body) Consider the consequences of each -To self, others, organisations, shareholders, public -Conflicts between stakeholders? -Effects of non-action Finally, disassociate from the issue. Legal advice re employment status or if implicated Statutory duty to report? eg AML Approaches to ethics x 2 - Correct answer Rules = Compliance Based - Systems - Audit - Disciplinary - Back and White processes - Difficult to make a complete list Principles = Integrity Based Principles Emphasis on management Stakeholders: What is the instrumental view? What is the normative view? - Correct answer Instrumental - We don't have to = no obligation Normative - Good and right thing to do >>>> 3. Governance <<<< - Correct answer What is Vision Vs Mission? - Correct answer Mission = Why the firm exists P a g e 7 | 92 10 [Document title] Audit robust, effective and independent - internal and external Disclosure and transparency with stakeholders Shareholders' rights -protected -respected Shareholder have responsibilities too What approaches are there to Governance codes (and Ethics)? - Correct answer *Rules* Legal = penalties for non compliance Sarbanes Oxley Unambiguous = Inflexible Monitored by Judiciary Lots of rules! Total Compliance All breaches = "noncompliance" -Not subtle -Disproportionate time spent on small issues Sign-off of compliance Bureaucratic = Expensive -Value to shareholders of small companies? Can't foresee every ethical dilemma Tick Box compliance *Framework* Principles Expectation of compliance or explanation why not = not legal but not optional Firms decide what is required Cheaper to administer Direct funds to comply with principal issues P a g e 10 | 92 11 [Document title] Monitored by Stock Exchange Principles theoretically cover more edge cases Assumed market/shareholders will penalise poor performers - remove investment - remove Directors Easier for smaller companies - tailored compliance Easier for developing countries (lack of resources re audit + NED etc) Inefficient = always "explaining" What approaches are there to supervision of the Board? - Correct answer Unitary Boards Two Tier Boards Describe a Two Tier Board - Correct answer *Supervisory* Chair Employee reps Long Term Strategy *Management* CEO Day to day operations What are the advantages and disadvantages of a Two Tier Board? - Correct answer *Advantages* Separation of Duties Broad representation (eg employees) Independent discussions *Disadvantages* Information flow Power and role confusion Slower decisions Possible stalemates Describe a Unitary Board - Correct answer Exec + NED Exec = operations NED = Guidance All vote P a g e 11 | 92 12 [Document title] What are the duties of directors? - Correct answer -fiduciary duties in best interest of company -use powers appropriately (statute + case law) -avoid conflicts of interests -exercise a duty of care What is the objective of the UK Governance Code? - Correct answer *Management:* -effective -entrepreneurial -prudent *To deliver:* long-term success What are the main principles of the UK Governance Code? - Correct answer *Leadership* - Effective Board for Long-term Success - Division of Roles (Chair + CEO) - Chair meads the Board - NEDs challenge (and vote) *Effectiveness* >50% NEDs (2 x NED if small company) Exec Directors via Nomination Committee (NEDs only) Sufficient capacity Induction + Training Timely Information Annual evaluation of Boards own effectiveness Directors re-elected at intervals *Accountability* Present a balanced and understandable assessment of of company's position and prospects Determine significant risks Maintain sound internal controls Establish formal and transparent reporting, controls and risk management. AUDIT COMMITTEE (NEDs) P a g e 12 | 92 15 [Document title] - Not seeking re-election (see above) - Bankruptcy - Disciplinary procedures *Disqualification* -Wrongful trading (when insolvent) - Improper records - Failing to file (3+ defaults in 5 years) - Failing to file tax returns and pay How to ensure NED independence? - Correct answer Not employed by co within 5 years No material business relationship with Co in last 3 years No remuneration (except director's fee) No family ties within Company No cross directorships Retire after 9 years - familiarity Advantages of NEDs - Correct answer -Monitoring excesses of executives. -External expertise -Perception: Co more trustworthy -Improved communication with shareholders -Independent view Compliance with corporate governance code Disadvantages of NEDs - Correct answer Lack of trust = board problems Quality: few appropriately qualified NEDs Liability: Poor remuneration and liability in law might = fewer NEDs Why is insider trading bad? - Correct answer Not in shareholders best interests Why should Directors be remunerated well? What are some components of Director's Remuneration? - Correct answer Attract P a g e 15 | 92 16 [Document title] Retain Motivate Basic Salary Short long term bonuses Share Schemes Pension / Termination Pension Contributions Other benefits -Car -Property What are some benefits to the firm of a decent remuneration package? - Correct answer reduces Agency Costs - Director's aims aligned to firm 1.cost of capital, 2.return on equity, 3.economic value added, 4.market share, 5.revenue and 6.profit growth Composition of Committees - Audit - Remuneration - Risk - Nomination - Correct answer (Sarbanes Oxley) Audit - 100%NED Remuneration - 100%NED Risk - Majority NED Nomination - Majority NED What are some problems with Not-For-profit organisations? - Correct answer Multiple objectives + conflicts (A&E Vs Surgery) Measuring Outputs -(Patients "feeling well") P a g e 16 | 92 17 [Document title] Financial Contraints -limits to source of funds and ability to spend Political + Public Scrutiny -Greater than commercial -Onerous legal requirements Little Competition + Incentives -Sometimes monopoly services (eg hospitals) What are the "3 E's" - Correct answer Efficiency Effectiveness Economy What is the axes on the Public Sector Portfolio Matrix? What are the components? - Correct answer Public Need Vs Value for Money Back-Drawer - No interest = discontinue Golden Fleece - reduce or educate to increase interest Political Hot-Box - Popular but not value for money. Reduce or educate to decrease public interest Public Sector Star - Fund and increase What are: Strategic Fit Strategic stretch Strategic architecture - Correct answer *Strategic Fit* Strategy to meet market needs *Strategic stretch* Stretching competencies to create new opportunities eg. Apple - computers to music to phones to iPads to TVs? P a g e 17 | 92 20 [Document title] OOSBOPGPB BOOOPS-PG - Correct answer Overview and external environment Outlook Opportunities and risks Business model = Resilent? Strategy and resource allocation Performance Governance Basis of preparation Metrics Why included What is FULL COST ACCOUNTING? - Correct answer Includes company activities, environmental, economic and social costs What is Triple Bottom Line Accounting? - Correct answer PPP - Planet - People - Profit All can be enhanced What are two impacts of ENVIRONMENTAL REPORTING? - Correct answer *Direct Impacts* Manufactoring *Indirect Impacts* Supply Chain - Very hard! What is the Global Reporting Initiative - GRI? - Correct answer Standardised Environmental Reporting Framework ie BEST PRACTICE What are the benefits of Environmental Reporting? - Correct answer Demonstrate accountability to society, govt, suppliers P a g e 20 | 92 21 [Document title] Strengthen accountability to shareholders Demonstrate responsiveness to threats to ethics -poor waste management Gain, maintain or restore legitimacy after environmental errors Convenient place to re-assure re environmental risks and management Systems and knowledge can lower costs and increase efficiency What is the Eco-Management and Audit Scheme (EMAS)? - Correct answer EU AUDIT Certification Evaluate Report Improve ...environmental practice What are the EMAS steps - Correct answer Contact local competent body Initial environmental review -Sets benchmark -Identifies direct/indirect impacts ‣ Energy efficiency ‣ Material efficiency ‣ Water ‣ Waste ‣ Biodiversity ‣ Emissions Define environmental policy and environmental program. Implement the environmental management system. Measure and Audit effectiveness. P a g e 21 | 92 22 [Document title] Repeat for continuous improvement Prepare environmental report for stakeholders achievements and progress towards best practice. EMS and Report verification Apply for EMAS register Use EMAS registration to demonstrate to customer, suppliers and investors your commitment to environmental care and improvement Describe ISO 14000 - Correct answer International standards on environmental management. Guidance on -Development of EMS -Environmental auditing. -Qualification criteria for environmental auditors. -Audit program review and assessment material. -Performance targets -Life-cycle issues. Supports EMAS, but not accredited Provides STANDARD metrics >>>>> 6. Strategic Planning <<<<< - Correct answer What is the RATIONAL MODEL of strategic planning? - Correct answer (Linear Model) Where are we? Where do we want to be? What are our options? Which option do we choose? Implement Control Review *POSITION* P a g e 22 | 92 25 [Document title] What are the DISADVANTAGES of Strategic Planning? - Correct answer Too much planning! (Planning is less risky than action) Inflexibility to changes in market, tech, environment Expensive (time and money) >>>> 8. Rational Model in Detail <<<< - Correct answer What is the Mission? - Correct answer Overall Purpose May include: -Values -Culture -Ethics etc What are the stakeholders? Why are they in conflict? - Correct answer Shareholders Vs Employees Dividends - Wages Customers Vs Employees 24 hr trading Public Vs Shareholders Noise - Profitability Lenders Vs Shareholders Low Risk - High Risk What are Direct & Indirect stakeholder claims? - Correct answer Direct = has a voice Indirect = no voice - small customer - the environment - future generations - distant supplier/customer P a g e 25 | 92 26 [Document title] = needs representations (pressure group) Describe Mendelow's Matrix? - Correct answer Power VS Interest Minimal Effort Keep Informed Keep Satisfied (unlikley to take action eg doctors) Key Players - NB what if in conflict? What laws support stakeholders rights - Correct answer Employees - H&S, Employment Law, Grievances Customers - Trading Standards Govt - Taxes, Environmental Suppliers - Creditor protections What is the name given to action ABOVE and BEYOND legal minimums? What are the pro's and cons? - Correct answer Corporate Social Responsibility Good publicity "Good place to work" Vs. Expensive! Profit = Stability, R+D etc Profit = Higher Taxes = Public good Shareholders can give to charity if they want Directors' legal authority to make non-essential payments? Which beneficiaries? Who decides? Describe Carroll's pyramid - Correct answer P-hilanthropic - good citizen E-thical L-egal E-conomic P a g e 26 | 92 27 [Document title] Pro's and Cons of Carrolls Pyramid - Correct answer Easy to understand Hierarchy Emphasises profit Ethics first? Too simple? Easy to ignore What is human capital reporting? - Correct answer People are asset, not expense - Needs effective management - Need safeguarding - Impairment = drop in motivation What aspects need reporting - Correct answer Economic Social Ecological >>>> 9. Environmental Analysis <<<< - Correct answer 1. Macro - PESTEL 2. Market 3. Organisation - Correct answer What are the different scales of Environmental influence? What models are used for Macro scale Environmental Analysis? - Correct answer PESTEL Drivers for Change Porter's Diamond Describe PESTEL - Correct answer PESTEL Political - Brexit, EU changes, Political changes Economic - Interest Rates, Taxes, Economy, FX Social - Ageing population (recruitment, pensions), fashions, cheap air travel. Technological - Banking, retail, publishing, media, phones, medicine, Ecological - Carbon emissions, pollution, global warming, recycling Legal - H&S, equality, regulation, minimum wage P a g e 27 | 92 30 [Document title] = reduces number of total scenarios to consider What are the steps to SCENARIO PLANNING? - Correct answer 1. Identify SCOPE - Time, department, country 2. Identify highest impact factors = PRIORITISE!!!! 3. Identify plausible outcomes for each factor 4. Identify internally consistent combinations of factors 5. Effects of these scenarios 6. What is the response? 7. Confirm assumptions and scenarios in light of responses What are the advantages of SCENARIO PLANNING? - Correct answer Challenges managers and stakeholders to look forward Challenges assumptions about the future, and drivers and forces Forces consideration of unimagined possibilities and tests rationale for current strategies Does NOT forecast the future. Results in several outcomes + a planned response Encourages interal communication and planning (requires broad input) Identifies and evaluates 'weak signals'. (possibly disruptive factors), early facebook = disruptive possibilities for advertising What are the disadvantages of SCENARIO PLANNING? - Correct answer Time-consuming Requires expert analysis = expensive P a g e 30 | 92 31 [Document title] NB include favourable and unfavourable scenarios and plan for both >>>> 10. Competitor Analysis <<<< - Correct answer What does PORTER'S 5 FORCES consider? - Correct answer INDUSTRY attractiveness for LONG TERM success Use for Competitor Analysis What are PORTER'S 5 FORCES? - Correct answer *Rivalry* Perfect Competition - no control over market price to Monopoly (does not mean anyone wants your product) -Use takeovers -Reduce prices to drive rivals out of business -Govts wary of monopolies *Buyer Pressure* - Build in Switching costs - Long Term contracts (profit Vs security) *Supplier Pressure* -could raise prices -could be acquired by competitor -Use multiple sources -acquire own company *New entrants* - can enter with special deals which undercut = Need high barriers to entry -Regulations and licences -High Capital -Technical Expertise -Unique (patented) products *Substitutes* sudden new tech = new substitutes Old industries have to update to maintain market share P a g e 31 | 92 32 [Document title] >>>> 11. Capabilities <<<< - Correct answer What is the resource audit? - Correct answer Mo Model Men Money Markets Materials Management Make-up Machinery What are the components of CAPABILITY? - Correct answer Resources - What you have + Competencies - How you use what you have What is STRATEGIC CAPABILITY? - Correct answer Capability that gives: STRATEGIC ADVANTAGE - over COMPETITORS - over LONG TERM What types of STRATEGIC CAPABILITY are there? - Correct answer Threshold - Minimum to stay in business Additional - give competitive advantage What is a critical success factor? - Correct answer Must do this well to succeed Where does Additional Capability come from x2 - Correct answer Unique resources -Usually IP (Most other assets can be bought) Core Competencies -Advantageous USE of resources (eg apple supply chain) -Difficult to define and copy -Design, production, hardware etc What are KPI's? - Correct answer Measure Critical Success Factors P a g e 32 | 92 35 [Document title] What is the Boston Consulting Group Matrix (BCG)? Describe the BCG - Correct answer Portfolio Analysis = Analyse more than one product Market Growth Vs Market Share (relative to largest) High Growth/Small Share "Problem Child" Can't compete with others' economies of scale Either leave or growth = INVEST!!! NB: R&D + "Invest Margin" = Cash Negative!! becomes... High Growth/High Share "Star" = Good economies of scale But... v attractive = high competition = defend market share INVEST! (Cash Flow Neutral) becomes... Low Growth/High Market Share "Cash Cow" Less attractive = Low competition Initial expenses written off Less need to defend (Cash Positive, but declining) Separately... Low Growth/Low Share "Dog" Leave or sell What is INVESTING THE MARGIN? What BCG sector is the related to? - Correct answer Reducing selling price to win market share P a g e 35 | 92 36 [Document title] = Negative Cashflow BCG = Problem Child High Growth + Low Market Share What is a good strategy for BCG? - Correct answer Get a balance between Cash Cow and Problem Childs = Use cash flow to invest in new products A portfolio of only Cash Cows will not last long Describe some problems with BCG? - Correct answer 1. Emphasis on Market Share Care with niche products (Porsche low share of "cars") = need to define "Market" carefully 2. Care with boundary conditions What is "Low Growth" or "Low Market Share"? This is a guide only. = Can't use to define actions such need for R&D 3. Market share or growth are inadequate Share = Competitive Strength (eg Brand, location) Growth = Risk? Competition? Describe SWOT - Correct answer *Internal* Strengths - eg Production Weaknesses - eg IT System *External* Opportunities - eg Competitor in distress Threats - eg Interest Rates Opportunities - Build on strengths - Strengthen weaknesses Threats - Use strengths to overcome threats (Brands) - strategies to minimise effects of weaknesses. P a g e 36 | 92 37 [Document title] How to improve SWOT Analyses? - Correct answer Link to ACTION Link to other analyses: -Porter 5 Forces -PESTEL -Life Cycle -BCG >>>>> 13. Determining Strategy <<<<< - Correct answer How to determine strategy? - Correct answer *1. Choose Generic* -Cost leadership -Differentiation -Focus *2. Choose Strategic Direction* -Market penetration, efficiency gains, consolidation and withdrawal -Market Development -Product development, and -Diversification. *3. Choose how to grow* -Organic - internal -Merger/acquisition What are Porter's Generic Strategies? - Correct answer Focus Vs Competitive Advantage *Cost Leader* Low Cost - very tight controls (their only strength), possible global (low costs) Usually large companies (efficiencies + scale economies) High Profit -Ordinary Product - Lots of competitors - vulnerable to tech breakthrough -Prices set by market (ie competitors) -Margins of scale - eg RYANAIR P a g e 37 | 92 40 [Document title] -Stuck with one supplier (what if other is more innovative) -Diverts capital from core activities -Increases gearing (variable costs become fixed) -No guarantee management will succeed (different industries) But... -Assurance of supply (can't be undercut, can undercut competitors) -Some efficiencies, but many suppliers share data and integrate very well anyway -Secrecy -Differentiation - Can define exactly how components are supplied (although not unusual) -Generally better to have a group of suppliers and choose based on price/service *Forward Vertical Integration* -Acquire Customer What is UPSTREAM and DOWNSTREAM? - Correct answer Upstream = Supplier Downstream = Customer >>>> 16. Methods of Growth <<<< - Correct answer What are the characteristics of Mergers Vs Organic Growth - Correct answer *Mergers* -Quick -Already functions (new product/market) -High and Immediate Capital -Higher Risk (unknown entity) -Cost of Goodwill (worth it?) -High Disruption (personnel, new boss, new processes) - Info asymmetry. (Seller knows more) *Organic Growth* -Slow -Spread Capital -Substantial Risk (risk from developing new markets products) -No knowledge purchased -No Goodwill cost P a g e 40 | 92 41 [Document title] -No disruption, in fact visibly increased opportunities for staff Describe Joint Ventures - Correct answer Two firms share Capital, Resources, Staff Used for Large Projects -High Capital -High Risk -Need mix of Skills Choose partners carefully Define: -Expectations -Profit Sharing -Exit Describe Licensing - Correct answer Production in multiple locations Save transport costs Low risk for production set up in new locations Describe Franchising - Correct answer Allows set up in Franchisors name Benefit of brand Benefit of supply chain Secure market + volume Security = Lower risk Lots of rules More risk than expected virtually an "employee" Describe Strategic Alliance - Correct answer Alternative to Merger Used if monopoly not allowed (eg legally) Such as airline "Star Alliance" >>>> 17. Strategic Choice <<<< - Correct answer What is Strategic Choice? What model can be used? - Correct answer Ensuring strategic decision is correct! P a g e 41 | 92 42 [Document title] Johnson andScholes Describe Johnson and Scholes - Correct answer *Suitability* Align with Vision, Mission, Strategy Build on strengths Guard against weaknesses Benefit from Opportunities Align with changing markets, competitors *Acceptability* -To stakeholders (key players), but in conflict -So "tolerable" to all *Feasability* Resources (owned or can access) -Money -Personnel -Expertise -Assets What methods are there for portfolio management - Correct answer *Portfolio Management* Hands-off Parent gives Subsidiary targets *Synergy Managers* Specific reason for Associated company eg Double Glazing and Solar Panels *Parental Development* Ashridge Portfolio Display Describe the Ashridge Portfolio Display - Correct answer FEEL Vs Benefit FEEL - Ability of Parent to supply the critical success factors the SBU needs Heartland - High Feel, High Benefit Ballast - High Feel, Low Benefit P a g e 42 | 92 45 [Document title] What are the Categories of Risk? - Correct answer *Strategic Risks* long term nature and type of business changes in competitive and legal environments Over gearing and changes to interest rates eg - not offering online shopping *Operational Risks* Short-term, day-to-day eg machine breaking down key employee leaving fire breaking out debts going bad fraud occurring *Reporting Risks* Unreliable internal and external reporting eg management accounts with errors = poor decisions *Compliance Risk* Penalties Loss or reputation Loss of licence Others... Counterparty Financial FX Performance What are the factors of RISK APPETITE? - Correct answer Stakeholder's Attitude to Risk Risk Capacity - What can the company bear? (resources) What are the benefits or RISK MANAGEMENT? - Correct answer -More predictable cash-flows -Well-run systems (eg maintenance avoids breakdowns) -Limit disaster (eg loss of server, smoke detectors) P a g e 45 | 92 46 [Document title] -Confidence investors, employees, customers, suppliers and partners = Lower Cost of Capital -Matches risk appetite of shareholders NB obtain a BALANCE of risk and return. Describe the RISK MANAGEMENT CYCLE? - Correct answer *Establish a risk management group* Board delegates day-to-day Set goals eg zero accidents, but some bad publicity *Identify risk areas* -Needs investigation (before it happens!) *Assess Scale of Risk* *Develop a risk response strategy* - TARA *Implement and allocate responsibilities* -monitoring schedules -assign accountability *Implement and monitor controls* Document how strategies are realised *Review, refine and repeat* Especially as business evolves What techniques are there for RISK IDENTIFICATION? - Correct answer NB THROW THE NET WIDE!!! -Capture everything even if trivial *Physical inspection and observation* eg safety equipment *Inspect documents* eg accident log P a g e 46 | 92 47 [Document title] *Internal audit* *Outside consultants* eg IT Audit *Observation Competitors* *Enquiries* -employees -customers -suppliers *Brainstorming* *Checklists* Evaluations *Benchmarking* -failure to reach can indicate problems . *External events* -Competitor event eg air accident -economic events *Internal events* eg staff turnover eg injuries on machinery *Leading Event Indicators* -increasing delays for debt repayments *Escalation trigger* Non conforming employees (two warnings etc) *Trends and Causes* eg Decreasing sales caused by old products *Event interdependencies* eg Customer liquidation = excess inventory P a g e 47 | 92 50 [Document title] What are the objectives of internal controls? - Correct answer Orderly & efficient conduct Protection of assets Prevention/ detection of fraud and error Accuracy and completeness of record timely prep of reports BE SCEPTICAL!!! DescribeSOUND internal controls - Correct answer Efficient Effective Economic Embedded >>>> 20. Enterprise Risk Management <<<< - Correct answer What is Enterprise Risk Management? - Correct answer WHOLISTIC!! - Entity wide A Process by Board, Management & Staff of Strategy Setting to Identify potential events which may affect the entity to manage risk within risk appetite provide reasonable assurance regarding achievement of objectives Describe the COSO Framework - Correct answer *Categories of Risk* Strategic Operational Reporting Compliance *Level of Impact* Entity Division Business Unit Subsidiary P a g e 50 | 92 51 [Document title] *Risk Management Approach" Internal - outlook, culture Objective Setting - Confirmed Process - Aligned with Mission - Differs by Department Even Identification Risk Assessment Risk Response (TARA) Control Activities - Policies + Procedures etc Information and Communication - Fast Response Monitoring - Ensure accuracy and ongoing relevance What is RISK CONSOLIDATION? - Correct answer Aggregation of RISK at different levels -eg Insurance for all Group Employees -eg FX risk across the group What are Risk Reports? - Correct answer Required by listed companies What are the aspects of Environmental, Social and Ethical risk management? - Correct answer *Environmental* Balance with performance *Social* Use of "Big Data" to analyse customers Data insecurity Discrimination / Diversity (eg unequal pay) Reputational Risk *Ethical* Safeguarding drug trials Balance testing with delays Pricing. Profit Vs Affordability >>>> 21. Data, Info, Knowledge <<<<< - Correct answer What is DATA? What is Information? P a g e 51 | 92 52 [Document title] What is Knowledge? - Correct answer *Data* Raw Facts eg Invoices *Information* Data + Processing = Useful eg Total Receivables eg Average age of population *Knowledge* Information communicated (not useful if left uncommunicated) What are they 2 types of KNOWLEDGE? - Correct answer *Explicit* Written / Captured *Tacit/Silent* Soft information eg customer social background, customers business plans What if this knowledge is lost? Not easy to define - eg "What defines a good restaurant?" What is Knowledge Management? - Correct answer Uncovering or discovering Recording Distributing (informal options?) Levering (use for other purpose) Keep updated Why is Knowledge Management more important in service economies than manufacturing? - Correct answer Products, components, client needs less closely defined Tacit Knowledge = lots of grey areas How is tacit knowledge shared? - Correct answer Spending time together telling stories What is a LAN? - Correct answer Local Area Network -One Location -Wired together P a g e 52 | 92 55 [Document title] *Numerical sequence checks* -Missing invoices *Choice Constraint* Drop down menus *Batch total checks* Online Operational Risks - Correct answer Anonymity increases risk of fraud = trace all transactions to an employee Hacking / theft of data Describe an IT Recovery Plan - Correct answer Minimisation of physical risks Contingency planning -standby procedures -recovery procedures -personnel management Define responsibilities (in case of panic) Risk assessment Prioritisation of the processing that must be available first Back-ups of data Communication with staff Public relations Business continuity planning Hardware duplication What the 6 x I's of e-Business? - Correct answer *Intelligence* P a g e 55 | 92 56 [Document title] -Tracking -Cookies = Marketing new Products *Individualisation* -Personalised experience -Recommendations *Interactivity* Shopping Making Reviews Forums *Integration* Online order to immediate production Online order to immediate reservation *Independence (Geographical)* Worldwide service Suits Niche (focused differentiators) *Industry* Internet has restructured multiple industries - Travel bookings - Banking - eReaders What are the advanatages of e-business - Correct answer Better: Costs Controls Communications Capability - Penetration/lower inventory Customer Service Competitive Advantage Describe some eBusiness Patterns - Correct answer E-shopping E-auctions Reintermediation (Expedia, GoCompare) P a g e 56 | 92 57 [Document title] Disintermediation (Book on BA) Countermediation (Opodo - owned by airlines) Advertising Other businesses (eg Pay-per-click) Advertise own business Link Amazon to your inventory E-procurement - Auto reordering (supermarkets) CRM. What is Disintermediation Reintermediation Countermediation - Correct answer Disintermediation - Remove agents eg Book direct with BA Reintermediation - Comparison shopping eg GoCompare Countermediation - Opodo - owned by airlines What are the components of CRM? - Correct answer Acquiring customers Retaining customers -Tracking orders -Points -Customised experience - Recommendations Extending customers - Buying more What are the barriers to eBusiness? - Correct answer Set up costs P a g e 57 | 92 60 [Document title] - Spurious Conclusions Employee monitoring Hacking Security What can BIG DATA Achieve? - Correct answer If ANALYSED...! Better -Marketing -Customer relationships -Customer Loyalty -Competitive Strength -Operational Efficiency -Discover new sources of revenue Reduce Costs Why Innovate/Disruptive? - Correct answer Innovation = applied + successful Disruptive = total change to market (eg iTunes) AirBnB Uber Must innovate to survive >>>> 24. Marketing <<<< - Correct answer What approaches are there to Marketing? - Correct answer Product-led - Might not sell - Too Expensive Production-led - High efficiencies - Might not sell Sales-led - Maybe Buyers Remorse P a g e 60 | 92 61 [Document title] Marketing-led - What will potential customers want? - What do they appreciate? - What will they pay? -Then create products to match What is Market Segmentation? - Correct answer Split by...: -Age -Sex -Occupation -Location -Dry Hair, Greasy Hair Design products for each segment ie NOT one product fits all What types or Targeting are there? - Correct answer Undifferentiated - One product suits all (Unlikley) Differentiated -One product per segment Concentrated -ONE Product for only ONE Segment -Niche / Differentiator - Strategic Focus Strategy - Small company - Only one segment profitable What are the 4 (or 7) P's of Product Positioning? (AKA McCarthy's Marketing Mix) - Correct answer *Product* -Brand -Design --Functions by segment (eg calcualators, or tools) -Quality -Packaging *Price* -Also discounts P a g e 61 | 92 62 [Document title] -Credit terms if seasonal - can quickly change if required (unlike design) -Terms (suit to client eg credit) *Promotion* -Advertising -Sales promotion - Try out samples, BOGOF -Personal selling -Sales Person -Public relations - Publicity, Press, Community *Place* -Direct from Distributor (IT) -Retail (Consumer Goods) - Style of outlet (Luxury Brand Vs Supermarket) Long chain = each requires margin = expensive ----FOR SERVICES----- *People* really important *Process* phone website *Physical evidence = Customer Experience* Dress Business Card Office Completion -Email -Receipt -E-ticket What is PUSH and PULL Promotion? - Correct answer PUSH -Get into Shops -Personal Selling P a g e 62 | 92 65 [Document title] Market Orientated -for UNIQUE products = Matches Segment needs = Higher Prices >>>> 25. Internal Audit / Control - Correct answer What is the key characteristic of Internal Audit? - Correct answer INDEPENDENCE!! Also IOPCP What is the point on Internal Audit? - Correct answer Ensure firms policies and procedures are followed HR Recruitment Stock Production Finance Complaints Procurement Social / Environmental What are the 5 elements of Internal Control? - Correct answer The control environment -Work Culture (esp SMT) Risk assessment -Apply where HIGHEST RISK Control activities Information and communication - Reports etc - Management Accounts Monitoring - Do controls work? - Are they being implemented What are some typical controls? - Correct answer Segregation of duties P a g e 65 | 92 66 [Document title] Physical Authorisation and approval Management and supervision Organisation / Structure -eg Sales team can't decide prices Arithmetic and accounting -reconciliations Who is responsible for Internal Controls? - Correct answer Board and Management! What is the format of an Internal Audit report? - Correct answer Deficiency Effect Recommendation When would the need for Internal Audit change? - Correct answer Change in size / complexity Known incident (internal or industry) Change in risk Change in structures >>>> 26. FInance <<<< - Correct answer What is MANAGING for VALUE? What choices need to be made? - Correct answer Maximise shareholder benefit for resources used With consideration of: -risk appetite -Stability -ethics *Choices* Capital Requirement? P a g e 66 | 92 67 [Document title] What sources of Capital? How to invest? - Current Assets - Non Current Asses How to control operations? What happens to average Cost of Capital when gearing rises? - Correct answer It rises. What is CAPITAL MATCHING? - Correct answer Match duration of loan to life of asset Factory: Equity debentures Equipment: " + terms loans Inventory: overdraft What is working capital? - Correct answer Current Assets - Current Liabilities or... Inventory + Receivables less Payables + Overdraft What is over-trading? - Correct answer Insufficient working capital for volume of business Low Liquidity!! Low Current Ratio Low Quick Ratio High Revenue High Current Assets High NC Assets Assets paid for by overdraft / receivables Negligible increase in Owners capital P a g e 67 | 92 70 [Document title] • Good/poor supervision • Good/poor machine maintenance . Fixed overhead expenditure variance: - Correct answer • Wrong budget • Unexpected level of expenditure Fixed overhead volume variance: - Correct answer Wrong budget • Different output to what was expected. Sales price variance: - Correct answer • Wrong budget • Different selling price to what was expected. Sales volume variance: - Correct answer • Wrong budget • Different selling price to what was expected (affects demand) • Change in marketing • Economic changes >>>> 28. Capital Rationing <<<< - Correct answer What is capital rationing? - Correct answer Can't afford all options! How to calculate capital rationing? - Correct answer *If indivisible* NVP (COST and RETURN) Choose best permutation *If divisible* NVP (COST and RETURN) per $ invested Choose projects in order of NPV NB Check cost of capital is reasonable given different investment types (same risk?) What is sensitivity analysis? - Correct answer The amount an input must change to give NPV = 0 How to calculate sensitivity? Which inputs are sensitive? P a g e 70 | 92 71 [Document title] What PV's are needed for Sales Price & Sales Volume What should be checked? - Correct answer Project NPV / Input PV Low value = Sensitive NB: Sales Price = PV Revenue Sales volume = PV Revenue - PV Marginal Costs Also check: Reliability of input estimate -Scrap Value -Sales projections Within Management Control? How to calculate sensitivity of Discount Rate? - Correct answer IRR = NPV = 0 IRR = Low + [(NPL / NP diff) x (Rate diff)] High = 15 Low = 10 NPV(High) = -10000 NPV(Low) = 50000 10 + (50/60) x (15-10) NB Straight line estimate Straight line valid? (no odd cashflows) Check for likelihood of interest rate change How to decide where to use scarce resources? - Correct answer Choose the project that gives: highest contribution/unit of scare resource. How to decide MAKE or BUY? - Correct answer (Buy Price - Cost to Make) / units of scarce resource P a g e 71 | 92 72 [Document title] >>>> 30. Ratios! <<<< - Correct answer What are some problems with ratios? - Correct answer Need a reference -previous year -trend -industry benchmark -competitor Just one figure -Liable to bias (end of year push) -Average over year Interdependent Gross Profit Margin - Correct answer Gross Profit / Sales Net Profit Margin - Correct answer Net Profit / Sales ROCE - Correct answer PBIT / Long term capital Long term capital = Shares + Reserves + Long term debt Asset Turnover - Correct answer Sales / Long Term Capital How much revenue for each $ of capital ROCE (alternative) - Correct answer Net Profit Margin x Asset Turnover Inventory Days - Correct answer Inventory / COGS x 365 Receivables Days - Correct answer Receivables / Credit Sales x 365 Payables Days - Correct answer Payables / Credit purchases x 365 Cash Operating Cycle - Correct answer Inventory + Receivables - Payables (Days) Current Ratio - Correct answer Current Assets / Current Liabilities P a g e 72 | 92 75 [Document title] What are the problems with trait theories? - Correct answer Not always true -personality? -Intelligence? -Experience? Not always appropriate to the situation -Often inappropriate Complete list? Good for both genders? Having all traits unlikely Too many exceptions Traits ill-defined Having traits != good leader Describe the Human Relations approach - Correct answer Workers are human and like to be involved with the process Describe CONTINGENCY Theory What factors are important to consider? - Correct answer Leadership should depend on context Relationship between leaders and followers Depends on structure of task - Clear tasks are easier to lead Position power - Conferred authority What are problems with CONTINGENCY - Correct answer Western Bias - Authority, cohesion etc Gender Bias - Male Focus on Leaders/ Followers, not politics, symbols, structures Describe STYLE THEORY - Correct answer Management APPROACH should be contingent on the situation. ie FLEXIBLE P a g e 75 | 92 76 [Document title] How to deal with RESISTANCE to CHANGE? - Correct answer Education and Communication = Raise awareness Participation and Involvement = integrate staff viewpoint Facilitation and Support = Training/Counselling Negotiation and Agreement = Comprise + Compensating Manipulation and Co-optation = Spin info or "buy-off" resistors Coercion = make compulsory Describe McGregor THEORY X and THEORY Y - Correct answer X = Lazy, only work to earn Y = Interested, problem solving Describe the ASHRIDGE MANAGEMENT COLLEGE model - Correct answer Management Style TELLS - Autocratic SELLS CONSULTS JOINS - Democratic (loss of controlling function) Describe HANDY's BEST FIT theory - Correct answer Leader Staff Task Environment Works best if there is a match in all 4 Time/resources short + Repetitive = Autocratic (TIGHT) More time + Complex Problems = Democratic (LOOSE) Describe Adair's ACTION CENTERED leadership What type of leadership theory is this? - Correct answer Individuals Vs Group Vs TASK But...Focus depends on situation, no "one size fits all" BEHAVIOURAL THEORY P a g e 76 | 92 77 [Document title] What is an INTRAPRENEUR - Correct answer Innovative Manager Seeks some risk (not like entrepreneur) Pursues own ideas Vs Salary Business Skills Vs Admin skills Own Research Vs Market Research Action Vs Delegation What can encourage INTRAPRENEURS? - Correct answer Welcome new ideas Remove admin and cultural barriers Grant ownership of new ideas Embrace failure What are the components of Corporate Culture? - Correct answer National Culture Founders - esp if new History Organisation _ organic vs acquisition Current Leadership Style - eg autocratic Internal Structure Why is Corporate Culture important? - Correct answer Needs to match tasks required Describe the CULTURAL WEB - Correct answer Symbols and titles Separate Vs Shared Offices Logos Colours Power relations Who decides what to do? Organisational structure Tall VS Wide Control systems Control Vs Initiative P a g e 77 | 92 80 [Document title] Describe Mintzberg for Entrepreneurial Machine Bureaucracy Professional Bureaucracy - Correct answer Entrepreneurial Apex + Operating Core Machine Bureaucracy Strong Techno Structure = QA Professional Bureaucracy Short Middle Line = communication between workers and Apex Small Techno Structure = Unique documents Describe Boundaryless Organisations - Correct answer Virtual external unit respond to temporary opportunities. Hollow all non-core operations are outsourced Focus on core products Modular get parts from providers and assemble What are the advantages to outsourcing? - Correct answer Focus on its core Cost savings economies of scale (esp offshoring) Cost certainty Risk to provider Cost restructuring All variable VS Fixed + variable Cutting edge expertise and talent. Esp in fast moving industries P a g e 80 | 92 81 [Document title] Quality Defined by SLA Risk transference eg Asbestos removal Capacity Management to cope with variable demand What are the DISADVANTAGES of outsourcing? - Correct answer Unexpected costs Changes = added cost Difficult to reverse process Loss of internal know-how Increase in prices Damage to reputation If low quality Non-congruent objectives and loss of managerial control Supplier = Efficiency Buyer = Innovation = different objectives + values Dependency on other company Quality Bankruptcy Confidentiality/security Information sharing What is HARMON's PROCESS STRATEGY MATRIX? - Correct answer Should I outsource? Describe HARMON's PROCESS STRATEGY MATRIX - Correct answer Complexity/Dynamism VS Strategic Importance If important, do NOT outsource If NOT complex, then AUTOMATE P a g e 81 | 92 82 [Document title] What are the steps for process standards for outsourced work? - Correct answer Process Activity standards - What happens? Process Performance Standards - SLA agrees standards Process Management Standards - How is process controlled? What is the impact of process standards for outsourced work? - Correct answer standardisation and commoditisation = buying on price What are SHARED SERVICES? - Correct answer All HR or Billing for all offices from one location Helped by new IT >>>>> 36. Business Change <<<<< - Correct answer Why should a business change? - Correct answer Avoid STRATEGIC DRIFT What is the BUSINESS CHANGE LIFECYCLE? - Correct answer Planning -Goals -Allocate responsibilities Analyse existing activities - Any problems Design new approach -Explore alternatives -choose best to achieve goals Development -Redesign -Devise metrics Implement -inc Training Review ...then repeat P a g e 82 | 92 85 [Document title] - data analysis *Workforce focus* - How to assess staff capability and capacity requirements? - Suitable to fulfill development goals? - How are staff recruited, trained and motivated to give high performance? - Does Staff management support the organisation's strategy and goals? *Operations Focus* How does org design, manage, improve and innovate its products and services? How is operational efficiency and effectiveness improved? eg subcontract? How is the QA achieved? *Measurement, analysis and knowledge management* How does org select, gather, analyse and manage its data, information, and knowledge assets? How does it learn and how does it manage its information technology? *Results* Appropriate KPIs Monitor, compare and investigate What is Benchmarking? - Correct answer Comparison Vs: Strategic Best in Class Industry International Pros and Cons of Benchmarking - Correct answer *Pros* Rank Improvement Motivating Ideas P a g e 85 | 92 86 [Document title] *Cons* Lack on innovation - looking at others Wrong Benchmark De-motivating Cost Where to get info??? What are the aspect of CHANGE FEASABILITY? - Correct answer TOES! Technically feasibility Operational feasibility Economic feasibility Socially acceptability >>>> 37. Business Process Change <<<< - Correct answer What is a business Process? - Correct answer Change Inputs into Outputs Satisfy customer needs (customers internal or external) How can business processes be changed? - Correct answer Automation - stock order if inventory is low Rationalisation = process redesign eg remove bottleneck Process re-engineering Radical restructuring eg move to JIT What are the 4 redesign patterns? - Correct answer Re-engineering. Rethink from scratch = major improvements Simplification After disorganised growth = efficiencies P a g e 86 | 92 87 [Document title] Value-added analysis. Remove all non-value adding activities Remove needless duplication/reworking Analysis of gaps and disconnects Flows of information and products between departments. Poor comms = non-value added activity. What are the 4 Scopes of Change? - Correct answer Speed = Incremental- Big Bang Vs Scope = Realignment - Transformation Reconstruction = Realignment + Big Bang Revolution = BigBang + Transformation (High Risk) Adaption = Incremental + Realignment (Low Risk) Evolution = Incremental + Transformation What is the Balogun and Hope Hailey kaleidoscope? - Correct answer Aspects of change for people Describe the Balogun and Hope Hailey kaleidoscope CONTEXT - Correct answer Time Long = Discussions Short = Autocratic Scope -Whole org? -One department? Preservation -Keep what works Diversity of readiness for change Open Vs Resistant Capability P a g e 87 | 92 90 [Document title] What are some possible project stages? - Correct answer ๏ Initiation/initial screening ๏ Risk assessment = TARA -transfer -avoid -reduce -accept ๏ Business case ๏ Project plan ๏ Executing ๏ Monitoring and controlling/project milestones ๏ Closing: delivery/review Describe the Business Case - Correct answer ๏ Cost / benefit analysis - Measure soft benefits? eg training ๏ Net present value/payback/ROCE ๏ Sensitivity analysis and risk analysis ๏ Forecasting techniques ๏ Expected values ๏ Decision trees What are Ward and Daniels 4 x BENEFITS? - Correct answer Observable Not Predictable Not Measurable -improved morale Measurable ...but not predictable eg Increased Sales from Customer satisfaction Quantifiable -measurable and predictable Financial -measurable and predicted -Then use DCF to assess project NB - difficult to predict. --Could use a pilot scheme --Simulation P a g e 90 | 92 91 [Document title] --Use vendor info from other users What are the components of PROJECT RISK? - Correct answer 1. Well defined project? 2. Scope 3. Complexity Ill defined + Wide scope + Complex = RISK What is in the PROJECT INITIATION document? - Correct answer Defines the project -scope -deliverables Justifies the project -cost/benefit analysis -risk analysis Secures funding Defines the roles and responsibilities + Operational Info = Immediate action + productivity eg -Assignments -Schedule -HR -Control -QA What is the difference between PROJECT SPONSOR and MANAGER? - Correct answer *Sponsor* _pays -Responsible -Makes ultimate decisions *Manager* -Controls day-to-day P a g e 91 | 92 92 [Document title] -Presents updates and options to sponsor What are the 4 x Variables of Project Management? - Correct answer SCOPE Vs TIME Vs COST Vs QUALITY What is contained in a Completion Report? - Correct answer Delivery of objectives ...Or agreed changes Final Budget Arrange post project reviews -Post Project (smooth? Participants?) -Post Implementation (Benefits delivered?) How can extra marks be gained? - Correct answer Make a point Explaining consequences Suggest solutions this indicates... the impact of this is... management need to... P a g e 92 | 92