ACA Business Strategy 2

Question 1

A UK company is considering expanding into a developing market. According to the stakeholder theory, whose interests should the board consider?

Accepted Answer

All stakeholders including employees, customers, suppliers, communities, and the environment

Answer

Stakeholder theory, reinforced by Section 172 of the Companies Act 2006, holds that directors should consider the interests of all stakeholders — not just shareholders. This includes employees, customers, suppliers, the community, and the environment, as these relationships affect long-term company success.

Question 2

What is the purpose of a SWOT analysis in strategic planning?

Accepted Answer

To identify internal Strengths and Weaknesses and external Opportunities and Threats

Answer

SWOT analysis is a strategic planning tool that identifies internal factors (Strengths the company can leverage, Weaknesses it needs to address) and external factors (Opportunities it can exploit, Threats it needs to mitigate or avoid). It provides a structured overview to inform strategy formulation.

Question 3

According to the BCG Matrix, a product with high market share in a low-growth market is classified as a:

Accepted Answer

Cash cow

Answer

In the BCG (Boston Consulting Group) Matrix, a cash cow has high relative market share in a low-growth market. These products generate strong cash flows with minimal reinvestment needed, providing funds that can be invested in stars and question marks.

Question 4

Which of the following is a characteristic of a mechanistic organisational structure?

Accepted Answer

Highly formalised rules, procedures, and a clear hierarchy

Answer

Mechanistic structures are characterised by high formalisation, centralised authority, rigid hierarchies, narrow spans of control, and specialised job roles. They work well in stable environments but can be slow to adapt to change. Organic structures have the opposite characteristics.

Question 5

Under UK competition law (Competition Act 1998), which of the following practices is prohibited?

Accepted Answer

Agreements between competitors to fix prices

Answer

Price-fixing agreements between competitors are prohibited under Chapter I of the Competition Act 1998 (and Article 101 TFEU where applicable). Such agreements are considered 'by object' restrictions — they are presumed to be anticompetitive regardless of their actual market effect.

ACA ICAEW Practice Test

ACA ICAEW Practice Test

ACA Business Strategy 2