ACA Business Strategy

Question 1

According to Porter's Five Forces framework, which of the following would INCREASE the bargaining power of buyers in a UK industry?

Accepted Answer

Availability of many substitute products

Answer

When many substitute products are available, buyers have more alternatives and can more easily switch away from a supplier's products, increasing their bargaining power. High switching costs, low buyer concentration, and strong brand loyalty all reduce buyer power.

Question 2

In Ansoff's Growth Matrix, which strategy involves selling new products to existing markets?

Accepted Answer

Product development

Answer

Product development involves creating new products or services for existing markets. Market penetration focuses on existing products in existing markets, market development takes existing products to new markets, and diversification involves new products in new markets.

Question 3

Under the UK Companies Act 2006, what is the primary duty of company directors?

Accepted Answer

To act in a way they consider would be most likely to promote the success of the company for the benefit of its members as a whole

Answer

Section 172 of the Companies Act 2006 requires directors to act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, having regard to various factors including the long-term consequences of decisions.

Question 4

What does a PESTEL analysis examine?

Accepted Answer

Political, Economic, Social, Technological, Environmental, and Legal external factors

Answer

PESTEL analysis is a strategic tool for analysing the macro-environmental factors that affect an organisation. Each letter represents a category of external influence: Political, Economic, Social, Technological, Environmental, and Legal factors that could impact the business.

Question 5

Which of the following best describes a 'cost leadership' strategy as defined by Michael Porter?

Accepted Answer

Becoming the lowest-cost producer in the industry while maintaining acceptable quality

Answer

Cost leadership involves achieving the lowest cost of production in an industry, allowing the company to either undercut competitors on price or earn higher margins at market prices. This requires economies of scale, efficient operations, and tight cost control, while maintaining quality acceptable to customers.

ACA ICAEW Practice Test

ACA ICAEW Practice Test

ACA Business Strategy