Tag: Financial Accounting

The board of directors of Alex plc are currently considering whether to pursue a new strategy in respect of one of their major strategic business units.

When evaluating a strategic option in this way, the final decision on whether to pursue the strategy or not should be judged against which ONE of the following criteria?

Select ONE answer:

1. A cost of entry test
2. A suitability test
3. An attractiveness test
4. A payoffs test

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Notcorrect
2. Correct == > Gerry Johnson and Kevan Scholes recommend evaluating strategies against the following criteria: Suitability – does the strategy fit the strengths, objectives and image of the company? Feasibility – does the company have the necessary resources to pursue the strategy effectively? Acceptability – is the strategy acceptable to the company’s
3. Not correct
4. Not correct

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Alex, a product manager with Lucy plc, is currently preparing a report for the company’s directors in which he will provide an assessment of each of the company’s existing product lines.

In preparing his report, Alex is making use of the Boston Consulting Group Matrix.

He has classified one product, the Midlander, as having a low market share in a high growth market.

In the conclusion to his report, therefore, we would expect Alex to recommend that, regarding the Midlander, Lucy plc should pursue the following?

Select ONE answer:

1. Either a hold or a divest strategy
2. Either a hold or a harvest strategy
3. Either a build or a harvest strategy
4. Either a build or a leave strategy

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == > With a low market share of a high growth market, the Midlander would be classified as a Question Mark within the BCG matrix, for which the possible recommended strategies are Build or Harvest.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Having entered an overseas market and achieved a reasonably dominant position in just under a year, Alex plc is pleased to have noticed that the threat of new entrants into the market seems to be relatively low.

Which of the following factors is likely to have contributed towards this situation?

Select ONE answer:

1. Low initial capital costs
2. A customer base consisting of a few large customers
3. A highly competitive supplier market
4. The market is for services rather than manufacturing

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Notcorrect
2. Correct == > Low initial capital costs (1) reduce risk in a project by decreasing the break-even point, allowing time to build up a large customer base. This can encourage new entrants. (3) may increase rivalry but it does not affect new entrants; (4) has no effect. The relatively concentrated customer base (2) however means that existing players have a distinct advantage, and it also gives the customers higher bargaining power, so makes the sector less attractive to new entrants.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The marketing director of Alex plc is currently formulating whether one of the company’s products, which is aimed at a small niche market, should be differentiated from its close competitors, although at this stage he is unsure how such differentiation would be achieved in practice.

The decision on whether to differentiate or not is a decision concerning the company’s?

Select ONE answer:

1. Functional strategy
2. Business strategy
3. Competitive strategy
4. Product/market strategy

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == > (1) A functional strategy (A) would be concerned with the role of the marketing function itself within the company. Business strategy (2) is concerned with how the marketing mix would be adjusted in due course if a competitive strategy of differentiation was decided upon. Product/market strategy (4) is concerned with how the business will grow (Ansoff’s Matrix). Competitive strategy (3) is concerned with how the business will compete in terms of source of competitive advantage (cost or differentiation) and extent of competitive scope (broad or narrow).
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.