Tag: Profit Making

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.

Lucy is carrying out a PESTEL analysis for her employers, Alex plc.

During her research, the ageing of the UKs’ population has become apparent to Lucy as a potentially important strategic issue for the company.

In which section of her analysis should Lucy record this matter?

Select ONE answer:

1. P
2. S
3. T
4. L

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  –> Age is a demographic factor that falls under the Social aspect of PESTEL analysis
3. Not correct
4. Not correct

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

Alex works for Lucy plc.

Alex has been asked by his manager, Bob, to undertake an internal analysis of the company as part of a STRATEGIC planning review.

Which ONE of the following analytical techniques will be useful in this context?

Select ONE answer:

1. Porter’s five forces analysis
2. PESTEL analysis
3. Value Chain Analysis
4. Ansoff’s Matrix

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 –> Options (1) and (2) are methods of analysing the company’s external environment . Option (4) is a means of assessing potential growth strategies of the company.
4. Not correct

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