ACCA – SBL PRACTICE TESTS| 370 QUESTIONS| WITH COMPLETE SOLUTIONS, Exams of Laboratory Practices and Management

Download ACCA – SBL PRACTICE TESTS| 370 QUESTIONS| WITH COMPLETE SOLUTIONS and more Exams Laboratory Practices and Management 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 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 P a g e 1 | 78 2 [Document title] 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 What are the components of an Ethics policy? - Correct answer E-mployees policies eg equal ops, training T-ransparent & Truthful to shareholders H-ow customers are treated (complaints procedures etc) I-nclude all stakeholders C-ompany Values S-ourcing + Procurement What are limitations to Codes of Ethics? - Correct answer Reduces ethics to a code. Need Personal integrity Incomplete - Cannot capture all dilemmas Regional variations Moral 'right' contingent on context Not legally enforceable What are ethical threats? - Correct answer Cultural Differences Not reported/discovered Internal Pressure P a g e 2 | 78 5 [Document title] 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 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 Consider relevant internal procedures - Follow as required P a g e 5 | 78 6 [Document title] 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 Vision = Where in 5 years Set by Board What is a strategy? - Correct answer Use of resources to gain competitive advantage in a changing environment to fullfill shareholder objectives P a g e 6 | 78 7 [Document title] What is the agency relationship? - Correct answer Owners = Shareholders Directors = Managers, but not owners Auditors = Check on Managers What are the costs of agency? - Correct answer Monitoring of agents -attending AGMs -reading reports + accounts -writing queries Results of comprised trust How to avoid Agency cost? - Correct answer Align Directors' interests with Company interests Why have governance? - Correct answer Investor Confidence Protect Stakeholders Transparency Accountability Reputation Integrity Honesty Responsibility Independence When should Institutional Investors intervene? - Correct answer Concerns over strategy Consistent underperformance (without explanation) NEDs not doing their job properly Internal Controls persistently failing Failure to comply with laws and regulations Inappropriate remuneration policies Poor approach to social responsibility (reputation risk) What are the OECD Principles of corporate governance? - Correct answer Clear basis for effective corporate governance framework = transparency and acceptance of responsibility Shareholders Rights = Agents act in shareholders interests Shareholder treatment = small or large treated the same Stakeholder rights recognised = Co-operation between org and stakeholders P a g e 7 | 78 10 [Document title] 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 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* P a g e 10 | 78 11 [Document title] 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) *Remuneration* Sufficient to attract quality, bit not overpaying Most remuneration related to Corporate and Individual performance Formal and transparent process for developing remuneration policy *Relations with shareholders* Responsibility for engaging shareholders Use AGM to encourage participation What is the role of a CEO? - Correct answer Lead the company - prioritise shareholder interests Develop and implement polices/strategies for shareholder value Assume full responsibility Manage all resources -monitor results -ensure operational and risk controls Oversee management team -interface between board board and staff -Assist appointment of directors Communicating with significant stakeholders, suppliers and regulators What is the role of the Chairman? - Correct answer Leadership of Board Ensures effectiveness of Board Represents company to investors and stakeholders Public face of organisation co-ordinates NEDs Ensuring board receives accurate and timely information Chairman's Statement - Correct answer Conveys important strategic messages P a g e 11 | 78 12 [Document title] Inform shareholders about Legal rights and responsibilities of Directors - Breach = criminal prosecution What Disclosures need to be made? - Correct answer Contracting with own company Substantial Property transactions Loans How are Board Directors dismissed? - Correct answer Retirement -AGM, every 3 years -Longest serving director retires first = phased retirement -Replaced in orderly manner Termination - Death - Resignation - 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 are Board Directors dismissed? - Correct answer *Retirement* -AGM, every 3 years -Longest serving director retires first = phased retirement -Replaced in orderly manner *Termination* - Death - Resignation - Not seeking re-election (see above) - Bankruptcy - Disciplinary procedures *Disqualification* -Wrongful trading (when insolvent) - Improper records P a g e 12 | 78 15 [Document title] 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? *Strategic architecture* Logistics of buying and servicing What are core competencies? What is strategic architecture? - Correct answer *Core Competencies* Resources which give a competitive advantage Strategy *Strategic Architecture* Combination of Resources What are the 3 levels of strategy? - Correct answer Corporate - Start, change or Stop direction - Divisional decisions (stop product X) SBU - Different market Competitive Advantage Create new opportunities Meet local needs Operational >>>> 4. Integrated Reporting <<<< - Correct answer P a g e 15 | 78 16 [Document title] What is INTEGRATED REPORTING? - Correct answer Not just financials!!!! -Environment -Policies -People -Ethics -Society -Projects - .......Finances! We are responsible! Shows how VALUE created over the short, medium and long term Concise communication of strategy, governance, risks and performance re VALUE CREATION Links VALUE CREATION to 6 CAPITALS and External Environment Aims of INTEGRATED REPORTING - Correct answer Board = effective decisions Investors = actionable information Encourage integrated thinking and practice What are the 6 Capitals of INTEGRATED REPORTING? - Correct answer *Financial* -Cash -Borrowing *Manufactured* - Fixed Assets (new? investment?) * Intellectual* -Investment in R&D, innovation, human resources and external relationships -Impacts competitive advantage. -Brand and reputation *Human* -Knowledge, skills and experience of workforce *Social and relationship* -Resources created between stakeholders -Public, Government etc -Trust *Natural capital* Resources used to provide a return Waste + Recycling P a g e 16 | 78 17 [Document title] What are the common elements of INTEGRATED REPORTING 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 Strengthen accountability to shareholders P a g e 17 | 78 20 [Document title] -----NB----- -Changes to market -Changes to workforce -Changes to environment -Changes to tech What model describes strategic planning as non-linear? Describe this model and its advantages - Correct answer Johnson, Scholes and Whittington Position Choice - Action Circular, need flexibility Every action has immediate reaction What is LOGICAL INCREMENTALISM? What are the disadvantages? - Correct answer Information is never perfect and can never be known, especially 5 yrs in advance Evaluation of options is difficult, time consuming and expensive Bounded rationality = can't know everything Therefore small changes is best. Small changes do not match leaps in tech. eg electric cars, digital cameras What is FREEWHEELING OPPORTUNISM? - Correct answer "Anti-planning" "Entrepreneurial" Feels planning is "restrictive" Responsive to quick changes Bored easily = Struggle to build mature enterprises High Risk - May regret not planning May miss other opportunities What are the advantages of Strategic Planning? - Correct answer *Establishes long- term objectives and activities* - gives security for staff, investors and metric for performance measurement *Better coordination* eg Sales + Production P a g e 20 | 78 21 [Document title] = security *Patience* Long term = investment R+D *Pro-active Management* - lobbying for change etc - advertising - training workforce *Forward Looking* Anticipation > Surprise 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 P a g e 21 | 78 22 [Document title] Indirect = no voice - small customer - the environment - future generations - distant supplier/customer = 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 22 | 78 25 [Document title] New laws Minimum Wage Spending Priorities *Economic* Increasing energy costs + not updating machinery *Social* Ignore customers environmental concerns *Tech* Ignore Social Media *Environmental* Ignore public concerns *Legal* Failure to prepare What is Scenario Planning? - Correct answer Only considering believable and internally consistent futures. ie, use combinations of factors = 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 P a g e 25 | 78 26 [Document title] 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 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* P a g e 26 | 78 27 [Document title] - 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 >>>> 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 P a g e 27 | 78 30 [Document title] 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 = 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 P a g e 30 | 78 31 [Document title] 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. 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 P a g e 31 | 78 32 [Document title] 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 *-- Stuck in the Middle --* NB (not one of Porter's 3 strategies) As above but not the leader = High Costs = Low Profits - no resources to invest in LONG TERM - risk of squeezed out by reduced prices from competitors *Differentiator* High Cost (perhaps better quality components) High Profit Good, unique, targeted products - can set prices - eg Apple *Focus* Focus on small segment of market (either small co, or only one segment is profitable) Then... ... either cost leader or differentiator but usually Niche products = Focus + Differentiator higher prices NB: Not of interest to large companies due to size of segment = can't apply economies of scale Why is a Generic Strategy required? - Correct answer To gain competitive advantage + Earn good profits = Worth risk to shareholders + resources to invest in R&D PPE Training What is Ansoff's Matrix for? - Correct answer Strategic Direction Summarises ALL possible options for growth P a g e 32 | 78 35 [Document title] -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! 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 P a g e 35 | 78 36 [Document title] -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 Value Trap - Low Feel, High Benefit (Wrong advice) Alien - Low Feel, Low Benefit (No match or need) >>>> 18. RISK <<<< - Correct answer What is RISK? - Correct answer QUANTIFIABLE DISPERSION in OUTCOMES If not quantifiable, then it's UNCERTAINTY What are the 3 types risk? - Correct answer *Pure risk* Chance of loss No chance of a gain AKA 'downside risk' *Speculative Risk* AKA 'two-way risk' Could be positive or negative eg entering a market, developing a new product *Upside risk* Probability of Gain What is objective / Subjective Risk - Correct answer Obtetive = quantifiable P a g e 36 | 78 37 [Document title] Subjective = Estimate (models, decision trees etc) - Scepticism Why is some Risk desirable? - Correct answer No reward without risk What is Conformance and Performance? - Correct answer *Conformance* Control of Downside Risk *Performance* Take advantage of opportunities to increase returns What is IFAC? - Correct answer Balance of Conformance and Performance. Compliance = Avoid excessive failure != success Good Conformance != Success Poor Conformance can lead to failure What is ALARP? - Correct answer Reduce risks to AS LOW AS REASONABLY POSSIBLE -Not to Zero (eg not offering credit) What impact does the Board have on RISK? - Correct answer Sets -Appetite -Attitude Informed by: -Risk Capacity -Risk Strategy What is the role of the RISK MANAGER? - Correct answer EMBED risk throughout the entity operations Raise AWARENESS throughout the entity "No blame" culture Describe the Risk Matrix for new projects Give examples - Correct answer High Risk + High Return Cautiously Examine - start operations in new country High Risk + Low Return Avoid - JV with high risk company Low Risk + High Return P a g e 37 | 78 40 [Document title] *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 Describe the Risk Map (TARA, 4Ts) - Correct answer Severity of Impact Vs Probability Low Impact + Low Probability ACCEPT Losing a phone Low Impact and High Probability REDUCE FREQUENCY/CONTROL(TREAT) Loss of Crew High Impact + Low Probability P a g e 40 | 78 41 [Document title] TRANSFER / INSURANCE Remove Asbestos IT System offline High Impact + High Probability AVOID Loss of SMT - long term contracts What is TREATING the risk? - Correct answer Reducing the risk What is Gross and Net Risk? When is NET risk low enough? - Correct answer *Gross* Risk BEFORE controls, transfer, mitigation *Net* Risk AFTER Controls, Transfer, mitigation Is NET risk within risk appetite? What are the components of GROSS RISK? - Correct answer *Asset* Property, cash, people, reputation *Threat* Trying to protect against eg destruction of property, theft, injury, damage to reputation. *Vulnerability* weaknesses eg no fire alarms, cash not banked, no hand rails on stairs, poor PR. Describe the RISK CUBE What is the purpose? - Correct answer Reduce NET RISK by applying counter measures: Reduce Asset -Set credit limit lower Reduce Threat -Do Credit Check, bank references etc Reduce Vulnerability -Increase reserves, access to loans or overdraft etc Describe the RISK REGISTER - Correct answer ๏ Description of the risk P a g e 41 | 78 42 [Document title] ๏ Date identified ๏ Its estimated likelihood of occurrence before mitigation ๏ Its likely impact before mitigation ๏ Pre-mitigation rating ๏ The risk owner (who is responsible for dealing with the risk ๏ Detailed response strategy (TARA) ๏ Its estimated likelihood of occurrence after mitigation ๏ Its likely impact before mitigation after mitigation ๏ Post mitigation rating ๏ Date by when response should be implemented ๏ Date response implemented ๏ Signed off by risk owner What is an internal control? - Correct answer A system to provide reasonable assurance that a firm's objectives will be achieved - checks / balances - reviews 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 P a g e 42 | 78 45 [Document title] -One Location -Wired together What is a WAN? - Correct answer Wide Area Network - Separated Locations (eg Cities) - LANs connected via public internet What is a EXTRANET? - Correct answer Link to external organisation eg link to supplier for ordering What are the options for IT communications? - Correct answer Wired - static WIFI - convenient but limited range 4G - What are the 3 main steps of NETWORK security? - Correct answer *Access control* Login/password *Confidentiality* Encryption *Data Integrity* Parity checks What are the advantages of Cloud Computing? - Correct answer Low spec local machines (Thin client) -otherwise spec for highest demand software All processing on a remote server Consistent version of software Reduces costs of: Hardware Software - (only 1 x licence) Maintenance What are the disadvantages of Cloud Computing? - Correct answer Loss of service Loss of data Data held by 3rd Party Give some examples of Mobile Tech - Correct answer Restaurant Ordering Sales staff immediate ordering Pilots carrying plans and docs Access to emails Identify IT Risks - Correct answer -Inaccurate systems or programmes -Unauthorised access P a g e 45 | 78 46 [Document title] -Multiple access to database -Unauthorised privileges -Unauthorised changes to Master Files (credit limit, prices) Unauthorised changes to systems or programs -Failure to maintain/update -Potential loss of data -Inability to access data What are the 2 types of IT Controls? - Correct answer General - Policies and Procedures Application - Operational checks Describe 4 General IT Controls - Correct answer *Access* -Physical access -Login Access -Hierarchical Privileges *Data centre and network operations* -Back-up -Anti-virus software and firewalls -Disaster recovery (flood, fire etc) *OS acquisition, change and maintenance* Updates + patches *Application acquisition, development, and maintenance* -Accuracy -Stability Describe Application Controls - Correct answer *Input checks* -Range Tests -Format Tests -Dependency Tests (arrival date < departure date) -Digital Check *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 P a g e 46 | 78 47 [Document title] 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* -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) P a g e 47 | 78 50 [Document title] -Massive amount, too big for Excel etc - Every sale, every click, every pageview, every message *Variety* -non-uniform, internal + external -dates, text, location, prices, devices, graphics, voice, video, diagnostic info *Velocity* - arrives and processed quickly *4th V = Veracity* What is STRUCTURED and UNSTRUCTURED data? - Correct answer Defined field, sizes Unstructured Voice Word docs Excel Video What is done with BIG DATA? - Correct answer Data Mining -connected sales Predictive - Upsell to Business Class Text Analysis -Scan Gmail for keywords Voice Statistical Analysis - Tracking of trends and correlations What are the dangers of BIG DATA? - Correct answer ANALYTICS - How to make sense of this data? Cost Regulation - GDPR Loss and theft of data - Back ups - Regulatory - Civil Action P a g e 50 | 78 51 [Document title] Incorrect data (veracity) - 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 Marketing-led - What will potential customers want? - What do they appreciate? - What will they pay? -Then create products to match P a g e 51 | 78 52 [Document title] 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 -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 P a g e 52 | 78 55 [Document title] When Marginal Profit = Marginal Cost information very unreliable *"Break Even"* Fixed OH / Contribution (= Sales - Marginal) High Sale price = Low volume needed Try and then review *Cost Plus (%)* But competitive? Cover Fixed costs? Competition Based - for ORDINARY products - Suitable if PERFECT COMPETITION 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 P a g e 55 | 78 56 [Document title] - Reports etc - Management Accounts Monitoring - Do controls work? - Are they being implemented What are some typical controls? - Correct answer Segregation of duties 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* P a g e 56 | 78 57 [Document title] Capital Requirement? 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 What are the solutions to overtrading? - Correct answer Raise finance from shares Fund from retained earnings Improve inventory control Improve receivables control Delay further expansion P a g e 57 | 78 60 [Document title] 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? 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 P a g e 60 | 78 61 [Document title] 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 >>>> 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 P a g e 61 | 78 62 [Document title] (Days) Current Ratio - Correct answer Current Assets / Current Liabilities Quick Ratio - Correct answer (Current Assets - Inventory) / Current Liabilities Gearing - Correct answer Debt / Equity or Debt / (Equity + Debt) Interest Cover - Correct answer PBIT / Interest Earnings per Share - Correct answer Earnings after Tax & dividends --------------------------------- Number of Shares May decrease when new shares are issues & before new capital builds revenues PE Ratio What does this show? - Correct answer Price / Earnings per share Shows market optimism/pessimism >>>> 31. Forecasting <<<< - Correct answer What are 5 forecasting techniques? - Correct answer ๏ Linear regression and coefficients of determination ๏ Time series analysis ๏ Expected values ๏ Decision trees ๏ Scenario planning What does and r and r^2 mean? - Correct answer r = correlation r^2 = Coefficient of determination (how much of Δ Dependent is explained by Δ Independent) >>>> 32. Management <<<< - Correct answer What is MANAGEMENT? - Correct answer Getting things done through PEOPLE P a g e 62 | 78 65 [Document title] 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 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 P a g e 65 | 78 66 [Document title] 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 Rituals and routines Sales Success = ring a bell Myths and stories "Overcoming great obstacles" Organisational assumptions Never miss a deadline Provide Healthcare at all ORGANISATIONAL ASSUMPTIONS eg ETHICS Describe Handy's CULTURE CLASSIFICATIONS - Correct answer Power culture - Individual leader CEO Role culture Bureaucracies = layers and titles +formality Slow to adapt Title > Task Task culture -Motivated, flexible, adaptable, and eager to learn. Person culture Focus on individual ambitions eg doctors use org for infrastructure, not really interested >>>> 34. Organisational Structure <<<< - Correct answer P a g e 66 | 78 67 [Document title] Describe FUNCTIONAL STRUCTURE - Correct answer Divide org by Function Finance Sales Production Efficient Like minded people together but Conflicts between powerful departments Describe Divisional Structure - Correct answer Independent Business units Geography (eg EU , US) Product Customer (eg Govt contracts) Describe MATRIX STRUCTURE - Correct answer Perhaps many projects x Departments Multiple Managers (need to resolve conflict) -Encourages (forces) communication Describe TALL vs WIDE structures - Correct answer TALL Many Managers = Expensive Slow Formal WIDE (modern) Few Managers - Greater Responsibility Fast Informal What are the advantages /disadvantages of CENTRALISATION / DECENTRALISATION? - Correct answer Decentralisation SMT have time for strategy Better + faster local decisions Motivating (delegate responsibility) Staff Development (levels of responsibility) But... Dysfunctional Decision Making Duplication of Effort Describe Mintzberg - Correct answer APEX - Board Middle Line - Managers Operating Core - Workers Support Staff - Finance Techno-Structure - Operating procedures etc P a g e 67 | 78 70 [Document title] >>>>> 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 What it POPIT? - Correct answer Aspects to consider when making changes Describe POPIT - Correct answer People -Roles, job descriptions, competences, motivation, rewards, culture. Organisation -capabilities -structure Processes -How is core business carried out? -Analyse value chain -understand activities and linkages. IT -architecture -capabilities Why is HR difficult? - Correct answer Staff can leave P a g e 70 | 78 71 [Document title] Need motivation Higher skills in demand More services = more client contact Diverse clients = diverse workforce Job mobility = more recruitment What is the Balridge Model for? - Correct answer Performance What are the elements of the Baldrige Model? - Correct answer -- Org Profile -- Leadership - Clear? Governance? Strategy - Based on resources? CSF? Customers - Service? Support? Segmented? Operations - Processes Workforce - IDP? Training &Dev? Results -- DATA!! Measurement + Knowledge Management -- Describe the Baldrige model - Correct answer *Organisational profile* Mission Values Products Assets Regulatory Scenario 'Sets the scene' *Leadership* How do directors and managers direct the company? What is current corporate governance? Is this the best model? *Strategic planning* What is the process? How implemented, monitored and reviewed? Formal or informal? Much effort? P a g e 71 | 78 72 [Document title] Looking ahead? *Customer focus* How does org interact? Customer requirements? Complaints? Building relationships? How to improve customer service? How to identify opportunities? -market research, social media, user forums, customer surveys, - loyalty programs - 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 P a g e 72 | 78 75 [Document title] -Authority of change agent Describe the Balogun and Hope Hailey kaleidoscope DESIGN CHOICES - Correct answer Change path Time scales Scope Criteria for success Change start point Top down Vs Autocratic Change style Dictatorial VS Participative Change interventions Educating Communicating Change roles Who is responsible? Describe Lewin's FORCE FIELD ANALYSIS - Correct answer Change makes fear/resistance so... REDUCE RESISTANCE -Communicate/Explain Why what, when, how -Participate Describe Lewin's 3 Step - Correct answer 1. "Unfreeze" - Explain why, get ready to embrace change 2. Changes - Training, new process 3. Refreeze - changes become stable - NB NO SLIPPING BACK Describe using a Change Agent - Correct answer Expensive but... Experienced - good at getting people on board Wide knowledge of options Independent - no old politics, self interest etc Accountability - ie not with Board! What are some characteristics of PROJECTS? - Correct answer Non routine P a g e 75 | 78 76 [Document title] Unique, one-off problems Teams from different departments -Terminology -priorities -attitudes -costs perception Delayed benefit (until project completion) = RISKY!!!!!!!!!! What are the components of a Strategic Plan? - Correct answer ๏ Start date ๏ Duration ๏ Finish date ๏ A relationship to other projects: after some, before others etc ๏ A cost ๏ A person responsible ๏ A closely defined set of outcomes ๏ Stages of a project 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 P a g e 76 | 78 77 [Document title] 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 --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* P a g e 77 | 78