1) 2) 3) 4) 5) Multiple Choice Questions Which of the following best describes PEST analysis? a) _Internalanalysis b) Microanalysis ©) External analysis d) — Macroanalysis (2 marks) When examining the external environment organizations might use PEST analysis. What does PEST stand or? a) Political, Environmental, Social and Technical b) Physical, Environmental, Social and Technical ¢) Physical, Emergent, Strategicand Turbulent qd) Political, Economic, Social and Technical (2 marks) An organization may be divided into three levels. Starting at the top of the organization, what are these levels? a) Strategic, tactical, operational b) Tactical, strategic, operational ©) Strategic, operational, tactical d) Operational, tactical, Strategic (2 marks) D wishes to analyze the internal and external issues that will affect his company. Which single model could D use to accomplish this? a) PEST b) — Valuechain c) SWOT d) — Fiveforces (2 marks) Using Porter's five forces model to examine the profitability of an industry which of the following will lead to higher profitability (assuming everything else being equal)? a) Anincrease in buyer power b) _ Anewentrantinto the industry ©) Anewsuppliertothe industry : 3 The development of an alternative product which meets the needs of the industries' customers (2 marks) Scanned with CamScanner8) 8) 9) 10) Which Ofth € following is one Of Porter's five forces? a) b) rpsence of economies of scale a py capital requirements a igh switching costs artiers to entry (2 marks) Which of the following would a large retailer monitor under the Politica heading as part of a PEST analysis? a) _ Interest rates/State of the economy/Oil price movements b) Sales tax legislation/Changes to planning regulations/Food labeling ©) __ Predicted shopping patterns/Public concerns over small retailers @) Developments in till manufacture/Automated analysis of shopping patterns (2 marks) Which of the following is NOT a benefit of an organization adopting a sustainable approach with regards to its impact on the environment? a) Potential cost savings due to operational efficiencies b) Increased competitive advantage over companies who are not environmentally friendly c) Reduction in the probability of additional environmental legislation d) Less administration required (2 marks) According to Johnson and Scholes the social influences that should be monitored include which of the following? Education levels/Income distribution/Social mobility Cultural tastes/Public attitudes/Consumerism c) Population size/Health/Lifestyle changes d) Employment levels/Housing quality/Social values (2 marks) With regard to world demographics which of the following is correct: The population of the world is decreasing Onaverage the human life span is increasing C) Developing countries are experiencing a “baby boom” ; ; The majorly ‘of health issues, such as diabetes and obesity, have been successfully addressed in the USA and UK (emarks) Scanned with CamScanner11) 12) 13) 14) 15) Muniple Choice Questions Home working refers to: a) b) °) d) Giving employees work th in efore cor me ley shoul a Te 7 Y should finish at home bet ing int Working on people's homes wit im of refurbis! “ fete pl mes with the aim of refurbishing th ple to work from home rather than havi i ing to come into the office Asales person working from house to house to increase his turnover (2marks) Using Mendelow's matrix, how would a stakeholder who has low interest and high power be classified? a) ») °) a) Minimal interest Keep informed Keep satisfied Key player (2 marks) Which of the following is NOT required for a market to be considered ‘perfect’? a) b) °) qd) Itmust have large numbers of customers and suppliers —none of whom have the power to dominate the market Allsuppliers must sell identical products or services There must be no barriers to entry to, or exit from, the market Customers must not spend a high proportion of their income on the goods and services provided by the market (2 marks) Which one of the following is an external stakeholder? a) Finance providers b) Customers c) Shareholders Community at large 2 diate (2 marks) Stakeholder “plotting” or “mapping” is used to: a) Identify the dominant stakeholder b) Group stakeholders in size bands c) Identify the largest stakeholders d) —_ Locate stakeholders geographically came Scanned with CamScanner16) 17) 18) 19) Employees j IN GFF pic a plans to restruct re heavily Unionized, GFF has recently announcer Of ts workforce, recor leading tothe loss of around fifteen percen adoptto managing its ace ‘8 matrix, what approach should GF 4 winimal eon Keopeeea a) ep informed (2 marks Which of the following classifications of stakeholders refers to anyone tha has formal contractual relationship with the organization? a) Secondary b) External c) Primary 4) Connected (2 marks Which of the followings an ethical proposition? a) Most people consider that there should be more policemen on duty b) Companies should not delay paying their corporation tax bills Until the ver, lastmoment ©) — Suzannaisa very kind person 9) Violentcrimeis thought by many tobe increasingin the city (2 marks} Which of the following statements is/are correct? i) A construction company is bidding for a large project; one of its senior architects has been approached with a Suggestion that transferring some funds into the account of a Planning Committee Chairman would help ensure the bid is successful. Positively reacting to such proposition would be classed as unethical business conduct. ii) It is possible for unqualified people to call themselves accountants and set themselves up in business offering accountancy advice. a) (i) only b) — (ii)only c) Both d) Neither (2 marks) Scanned with CamScanner20) 21) 22) Multiple Choice Questions which of the following accurately sets out the rationale for the accountant's special role in promoting ethical behavior in business? a) _ Financial probity is seen by many as strongly linked to ethical behavior b) The accountant is often viewed as having a special responsibility to act ethically by virtue of his role in relation to the finances and financial records of abusiness c) _ Insmaller companies it is not unusual for the accountant to be the only senior person who has professional qualifications d) The accountant belongs to a profession and therefore has a duty to act in the publicinterest as wellas in the interests of his employer and the shareholders (2 marks) Social responsibility implies that: a) Acompany has to donate part of its profits to charitable causes b) A company has a responsibility not only to shareholders but also to other stakeholders c) __ Societyis responsible for the behavior of certain businesses d) Environmental protection should be at the top of every business agenda (2 marks) Which of the following statements is/are correct? i) If a professional accountant uncovers unethical conduct within the business that they work for, their first step should be to seek advice from their professional body. ii) Registered students of the CMA are not required to comply with the ICMAP's “Code of Ethics and Conduct” until such time as they qualify and are admitted to membership of the ICMAP. a) (i)only b) (ii) only c) Both d) Neither (2 marks) Scanned with CamScanner CHAPTER I23) 24) 25) oma tiONns Which of the followi in makers ina company 's the name given to the situation where decision, cisions Les te ny Not bear a major shar ofthe wealth eect fh A ion result ofabad decision, makers do not suffer direct financial loss as , a i a Risk-free decision making 0) ‘ower without responsibility 4 Separation of decision making from its consequences Separation of ownership and control (2 marks) Which of the following statements is/are correct? i) The separation of ownership and control can be a win-win situation for bot parties. ii) The Combined code on Corporate governance is legislation that imposes legal obligations on all companies, including having to establish Audit ang Remuneration Committees. a) (i)only b) — (i)only c) Both d) ~ Neither (2 marks} The “agency problem’ is best described by which of the following? a) The danger that the managers of a company will manage it in their own interests rather than the interests of all the stakeholders b) When the directors of a company act as agents of the company wher carrying out a major deal c) The employees of a company are seen as agents of the company and thei qualities or lack of them can have a significant positive or negative impac upon the customers of the business d) A situation where, when buying a property, one is suspicious of the ethica standards of the estate agents involved (2 marks 8 Scanned with CamScanner26) 27) 28) 29) mS Ghoice Questions The eaten view of corporate social responsibility (CSR) as opposed to the modern perspective, is best described by which of the following? a sR : es adopted by those Organizations not subject to public scrutiny ¥ to improve its reputati i ene putation and ensure that it has a c) _ CSRoffers no business benefits and des! troys shareholder value a) CSR offers substantial business benefits and has substantial customer appeal (2 marks) Most codes on corporate governance required a listed company to: a) Publish details ofits progress from both a customerandintemal perspective b) Publish the annual report of its audit committee c) Setoutits plans to achieve carbon neutrality in its annual report d) Establish a remuneration committee of at least three independent NEDs (2 marks) Amajorlong standing problem of both internal and external auditors is set out inwhich of the following? a) They often have to report on the activities of relatively inaccessible overseas subsidiaries b) They reportto the people whose activities they report on c) Their knowledge of the business is usually substantially weaker than those whose systems they report on d) Itis very easy for experienced staff to conceal fraudulent transactions (2 marks) The most obvious public oversight of corporate governance is via which of the following? a) Publication by companies of their Annual Report and Accounts b) The Audit Report . c) The reports of investigative journalists qd) Internet searches (2 marks) Scanned with CamScannerOL (sysew Z) s6ulpuejssapunsiw yno yo: ] ! 1S /Bulpue}ssepun jo ang] yO a1do} ey) Jo asnjold papunos @PIAOId/uoHedioied. 112916 rie é o1do} ey) ul sez8}U) UayeMeay/a|qeioWaW sayoseds eyeW (q JS919JU! JO |9AQ] JS@ | /SP1099d BY} J0y AEWUNS epIAdI (e eBuymosioy ayy jo yorym ul 3No- y9S o1e (UOSJadujeYo ayy Jo yse} JUBYOdUI Ue) BuZZeWUUNS yo Seanoelqo ay, (syrew z) SSOUBAIOA{Je ]SOD/SE}NUI|W/SSEUI}aUU! | /UON}E19S1Q (e diysuepeeyAoeiooweq/sseuuui4/sseuusdQ (9 Jeyew yoelgng/diysiequeyyezig/uouny — (9 ssouanisioaq/pesdgyAuneig/diysuewureyg —(B ESease Busmojjo} ey} JO YOIYM UJ UONBOJUNWLUOD aANdA}Ja B4OW 40}: seuyjapin6 Bulfjdde Aq ewooseno aq ued seayJWWod jo seBejUEApesip ey Jo eUoS (sysew Z) ofjesoowlep a1ow se|uedwiog/uonedioned 1a}2e16 premo}seaow — (PD (0 uoyjuBooes esow UeAlé yeIS/SuoNeZ! jueBJ0 Jo syyoud Buyseesou} soljod ul punou6 es1U80 84} 01 enoW/SepmINe joouos sseulsng (4 ao10p 0M ayy WO1) SesNssalq/SUONEZIUEBIO Jo Ayyxa|dus09 PUB e2!S fe 4810198; BU|MO}]O} 84} Jo YOIYM Jo 1/NS@/ B SB puewep uJ aso Uae aq OF Ay (Syst a aeeee dey spiooessedosd einsug/Suisyng ezwuUIW/EuUUTs YiooWs (BP uoy99}9p iquyuyndey spiose sedoid einsug (0 gnon aeos/GuAingezwuin, — (q idyejpue Aoualsisuooainsuy —(e jperew i uanelg/Si0¥2W} Gujeaw deey/Ae| Prey oyeyioes / UONes Buysem owt wore sioquiew deeyjeud st eBuymo}1o} a4) 40 Yo] yA ®reiyoe 0} paubssep 2! suosano 221049 aIdnINW (ce (Ze ayy] ae SPBNIWWIOD = (1g. 12 suojjesodo ea} JWOD 40 eanpasoid jo sains ay, (og ‘Scanned with CamScanner34) 35) 36) 37) Multiple Choice Questions roe ens nine types of ‘value activity’ in a firm which he categorized in 0 types; primary activities and ‘supportactivities, Which of the following isa support activity? a) Inbound logistics b) Procurement c) Service d) Marketing and sales (2 marks) J Ltd. is considering implementing a new corporate structure. Ithas chosen a structure that maximizes its structural flexibility, but has two sets of management, leading to dual command and increased conflict. Which organizational structure has J chosen? a) Divisional b) Matrix c) Entrepreneurial d) Functional (2 marks) Which of the following are ALL primary activities in the value: chain? a) Inbound logistics, Operations, Service b) Procurement, Operations, Marketing and Sales ©) Inbound logistics, Outbound logistics, Infrastructure d) Outbound logistics, Technology development, Service (2 marks) toys. One of its activities includes receiving L is a company that retails ng its inventory levels to ensure it does not run deliveries of toys and mariagi out of any items. According to Porter's Value Chain, which activity is being described within L? a) Procurement b) _ Inbound logistics c) Operations d) Infrastructure (2 marks) 1 Scanned with CamScanner38) 39) 40) 41) Which of thy 'e follow’ inthe midiers ing, According to Porter, results in a firm becoming “stuc, a) 3 {ing o be both a costleaderand focused <) "ying to be acost leader a) Trying tobe focused Trying tobe botha cost leader and aditforentiator (2 marks) Which of the following statements is/are correct? i) ii) If a company is trying to pursue a cost leadership strategy, it will aim to Produce products that are of lower quality and which are therefore cheaper, Service is a secondary activity in Porter's value chain. (only (ii) only Both Neither (2 marks) Hofstede looked for national differences in an attempt to find aspects of culture that might influence business behavior. Which of the following is one of Hofstede's key dimensions of national differences? Position-power Uncertainty avoidance Work-relaxation Task-people (2 marks) D Greaves and Co has a culture where there is one central ‘source of powei (David Greaves) and few procedures or rules. How would D Greaves and Co's culture be classified by Handy? Power Role Task Person (2 marks) Scanned with CamScanner42) 43) 44) Multiple Choice Questions lu ‘cas Training is a small entrepreneurial organization led by Frank Lucas who started the business 2 years ago. Frank Is central to all the key decisions Made in the firm. Hi firm is knowledge and business awareness Is critical to the ‘S success. Which of Handy's cultural types is present in Lucas Training? a) Power b) Role c) Task qd) Person (2 marks) Which of the: following statements about culture is/are correct? i) Schein argues that those who lead a company in its early days have a ‘Substantial influence on its culture. Handy's power culture is characterized by the fact it exists to satisfy the needs of the particular individual(s) involved in the organization. ii) a) (i)only b) —(idjonly c) Both d) Neither (2 marks) GOT plc has recently formed a team that has been asked to design new products and services. The team have had some problems, with a great deal of initial conflict between the individual members. However, this seems to have eventually been solved and the team is now producing a number of new ideas each week. According to Tuckman, which stage of team development has the group reached? a) Norming b) Storming c) Forming d) Performing (2 marks) (=a a HA Scanned with CamScanner45) 46) 47) 48) Multiple Choice Questions for bureaucratic businesseg Employees in country U tend to prefer working rs who will provi, They expect there to be a large number of powerful manage! guidance ona day-today basis. e these staff member, Which of the following traits, as identified by Hofstede, ar displaying? a) — Masculinity b) Low power-distance Collectivism . High uncertainty avoidance @ most Which writer on culture argued that the first leaders of a company create the culture and that it is essential that leaders understand the culture of an organization? a) Handy b) Hofstede c) Mullins d) Schein (2 marks) Which of the four cultural types identified by Handy is often associated with the matrix structure? a) Power b) Role c) Task d) Person (2 marks) Which of the following statements is/are correct? i) Within a formal organization an informal organization will be present. i) The informal organization can either enhance or hold back the business. a) (only >) Gionly °) Both 4) Neither (2 marks) Scanned with CamScanner49) 50) 51) 52) Multiple Choice Questions {i managers choose to work with the informal groups within their department | Which of the following is likely? [ng @) _Lowerlevels of motivation and productivity te b) _Higherlevels of motivation and productivity ni §}) _Areductionin he perceived authority of the managers ey tendency for employees to attach less weight to formal forms of |oS communication z (2marks) | A product has a price elasticity of demand of 1. If prices rise by 5%, what will the impact be on the number of units sold? | a) Thenumber of units sold wll rise by more than 5% b) The number of Units sold will fall by exactly 5% c) The number of units sold will fall by more than 5% d) The number of units sold will not change (2 marks) Which of the following statements is/are correct? i) Inthe long term, costs tend to rise due to diseconomies of scale, il) For a market to be perfect, the products and services sold by all suppliers must be identical. a) (only b) — (ionly c) Both d) Neither (2 marks) A downward shift in the supply curve could be caused by which of the following reasons? a) Technological innovations b) Higher material costs c) Increased indirect taxation d) Reduction in the availability of labor in the market (2 marks) Scanned with CamScannerCHAPTER | 53) Multiple Choice Questions The effect of high inflation on people who save in we SRR e happens (a “precautionary motive") is best described by W! of the following? a) — Theywillsave less b) — Theywillsave more | c) Theywillstop savingandincrease spending d) — Theywillstop saving (2 marks Scanned with CamScanner2) 3) 4) 5) 6) 7) 8) 9) OSS TO MCOs c PESTis concerned with th H ° 00) : planning. xternal analysis firms Carry out as part of their strategic d PEST analysis provides fo S a ur ke st Brvronmen ae four Koy factors against which to review how the The three levels of control are strategic, tactical and operational. c swor looks at a company's strengths, weaknesses, opportunities and threats — which covers both internal and external issues. PEST and Five forces look externally, while the value chain looks at internal issues. c A new supplier to the industry will lead to lower costs as the suppliers have to become more competitive to maintain market share. This in turn will increase the profitability for the industry to which it supplies. d The other four forces are: power of suppliers; power of customers; competitive rivalry; threat of substitute products. m [14 1) S o < x U b The other items listed would be monitored under the following headings: A= Economic heading; C = Social heading; D = Technological heading d Itis unlikely that adopting a sustainable approach will reduce administration. It may even cause an increase, as time must be spent ensuring that the operations of the business are sustainable. a Johnson and Scholes also suggested that Population demographics, Lifestyle changes and Consumerism should be monitored. 89 Scanned with CamScanner10) 11) 12) 13) 14) 15) 16) 17) b ical care and better nutrition, * longa ue to improved standards of medi { diabetes and obesity are becoming more serious 4 ang increasing 11d population is growing. However, the problems o birth rate is falling, but the wor ce i it allows staff to ach working has become a popular trend as it achieve tonite palanoe while the company potentially reduces its costs Via rene savings. . © Mendelow's matrix helps to identify the relationships that should be uit different stakeholders. Wi d A, B and C are correct. The fourth requirement is perfect information for a customers and suppliers. da A, Band C are connected stakeholders. The level of dominance is normally assessed in terms of power i and influence. needs of the key players must be considered during the formulation and eae ofnewstrategies. b Employees are likely to be seen as key is is m re y players, This is because they are unionized, he a fhem mon Power, and the proposals involve the loss of many obs, leading to a @'s of interest. GFF will need to involve its workers in its strategic planning Process ifit wishes its restructuring to bea ‘success. c By definition, Don't it stakeholders, forget that primary Stakeholders include connected and intemal 90 ‘al Scanned with CamScanner18) 19) 20) 2) 22) 2) 24) ti | oe Sree b ethics IS Concerned with goo Mog statements are factual ones with rosin What You shou Ical conten fought to « tt fo. The other ¢ Anethical dilemma involves a gi is the “right” or “wrong” thing tonatlon Where a ‘" decisi ; 7 lo. ; lon-m business. An “accountant” Giving bribos ig seon Hy an has to decide : ‘do 0 what professional accountants. because M2¥® © bo quaitied, Gunn tea Way 19 do accountancy body (such as the ACCA elong to an code. ) and have no obligation ta folow atest d Aprofessionis characterized by a nu anethical code. ¥ @ number of factors of which one is compliance with b Social responsibility is a duty to all stake in a way that takes into account the it whole. ‘eholders of an undertaking to make decisions interests of the environment and society as a d A professional accountant should first consult with whoever is responsible for governance or ethics within their organization. They should contact their professional body if his fails to resolve the issue. Allregistered students, affiliates and members of the ICMAP are requiredto comply [iat with the Code. d This situation can occur in charities, other not - for — profit organizations, in financial mutuals and local government as well as large companies. a i it it holders are Managers can get on with full-time mariagement of the business. Shareho inerested in the return from their investment and do not have the skils, time or the inclination to concern themselves with day-to-day matters. Note that the Combined Code on corporate governance established guidelines for governance of public companies only. 91 en Scanned with CamScanner25) 26) 27) 28) 29) 30) 31) Answers to MCQs managers The shareholders will want to build in safeguards to Se be en ana an {he business in the interests of all he stakeholders fairly, et aatialareaares iw Own interests. Thus the problem can be solved by aligning directors and the interests of the company. ce fe solely to make money fo, jes sI y T jonalists argue that companies should operat t one voce that isnota company's role to worry about: ‘social responsibilities, a It is a stated principle in most codes on Corporate Govemance tat no det should be involved in deciding the level of their co rupert remuneration committee should be responsible for setting the remune ofa the executive directors and the chairman, including pension rights and any compensation payments. b it it it then the role of auditors, Audit committees, with knowledgeable NEDs, may strengthen the role . They should comprise at least three NEDs and should act as the first point of contact for both internal and external auditors. Companies are required by law to send a copy (or a summarized version) to each shareholder, but most companies will post a copy on their website or will provide a Paper copy free of charge to any member of the company who requests one. d Other key objectives of the rules of Procedure include enabling both sides in an argument to state their case and. ensuring consistency and fair play are maintained. The sheer size and complexity of modern enterprises make it increasingly impossible for isolated individuals or small groups to meet the decision-demands of their organizations, pecondly, the growing Pressures from all sections of the workforce for a greater say in 'e decisior making processes of their organizations are creating expectations lat decision making will become more open and democratic, 92 Scanned with CamScanner92) 33) 34) 38) 36) 37) 38) b rity - the committee’ : na inare ney al Ges ey AVY SHOU bo spelled out, g Membership ~ the members of C OPPortunities for 3 Size~ ifthe group istoo matter commitle® Work should be ing 2 US be seactey german, eabh ited to subj carefully. Subject group discussion ect matter that can be handler handled in d There are two Ways of accomplishin, this objects ofthe salient points as you have understood eo at intervals, to gi Nu to give a sum someone else to summarize and Check that their su tng © test understanding by invi ling by inviting Immary accords with you! : b The primary activities are inboun marketing and sales and service, S development, human resources and 1d logistics, operation upPort activities infrastructure. ', outbound logistics, are procurement, technology b JLtd. has chosen a matrix structure. Note that this is the only structure that involves having two sets of management. This is supposed to provide i divisional and matrix structures. on a The primary activities are inbound logistics, operations, outbound logistics, marketing and sales and service. Support activities are procurement, technology development, human resources and infrastructure. b Receiving and managing inventory is inbound logistics. Make sure you don't get confused between this and procurement, which involves sourcing the units from suppliers. d a differentiator usually results a leader and Porter argues that trying to be both a cost lea ae compettive advantage ~ 2 in the firm becoming stuck in the middle with no cle tecipe for disaster. Scanned with CamScanner39) 40) 41) 42) 43) 44) 45) 46) a rico sonsitive” markot a cost leadership 4, industry for a given level of quays’ 4 he For companies competing ina “price son calls for being the low-cost producer in at does not mean that products are “cheap and cheerful, moroly that com, quality is matched rather than bettered. Service is a primary’ y in Porters ar chain. ividualism versus collectivism, Uncen, b ity versus femininity, Confucianism vera! Hofstede's 5 dimensions are indi avoidance, power distance, masculini dynamism. a Power culture is characterized by one central source of power, few procedures nq rules. a Power culture is characterized by one central source of power, few procedures ang rules. a Once the culture exists, the attributes/criteria for the later leaders are determinedby the culture. Thus the link between culture and leadership is very strong. Handys ‘power' culture occurs where there is one main source of power and influence. The definition given is for the ‘person’ culture. d The team has moved beyond the conflict (or storming) stage — and have now moved onto ‘performing’. d Employees like to be guided by powerful managers. This would tend to indicate high uncertainty avoidance. Note that the fact that staff members accept powertul managers would indicate a high power distance index. d. Schein also described three levels of culture: artefacts, espoused values and basic 94 Scanned with CamScannerru) 48) 49) 50) 51) 52) 53) assumptions: and values, c the task culture is basicall lems ar 'Y conce it OO ie aetmance is Ped with the Go structurally, this culture is often Udged in ton ntrous and suce SOCiAted with moot (Sul 1oCessful sol w 8 a lution ne withthe Ind problems solved are market research organizatis: software design. SAnizations, the matrix ontertainment i ae and example: indust = : ny 2nd computer Allorganizations have some mix of th tw 1e two, Managers need to be aware i anal structure compan nn informal structure and looser formal structure so that th ermal One. This coun homens managers must take account of the! ce eee can. A te very eat mal structureindecisionsnenins oY 23" . lecision making. If managers can work with the informs ; al cea, porigherlevelsof motivation and procuaiy, nn Met GeParment ere shou b Ifthe PED is greater than one, units sold wil 4 : ill fal less than one, units sold will fall more slowiyfhanthepton a eat c Both statements are correct. a Adownwards shift in the supply curve occurs when the cost of production falls. Only ptions would all cause an upward shift of option. Awould enable this to happen— the other of supply. b i inty inflati no save They will save more due to the uncertainty inflation creates. Those people wl to spend later (a “transactions motive’) will save less to avoid the purchasing power of their money being eroded. 95 Scanned with CamScanner