CA Business Strategy & Advisory 2

Question 1

A company operating in a mature, low-growth industry with high market share is best described in the BCG matrix as a:

Accepted Answer

Cash Cow

Answer

Cash Cows have high market share in low-growth markets and generate excess cash with little investment needed.

Question 2

Which strategic tool analyzes Value, Rarity, Imitability, and Organization to assess sustainable competitive advantage?

Accepted Answer

VRIO Framework

Answer

The VRIO framework evaluates resources across four dimensions to determine if they can deliver lasting competitive advantage.

Question 3

A US manufacturer acquires a raw material supplier to reduce input costs. This is an example of:

Accepted Answer

Backward vertical integration

Answer

Backward vertical integration involves acquiring suppliers that are upstream in the value chain.

Question 4

In advisory engagements, which financial metric best indicates a company's ability to service debt from operating cash flows?

Accepted Answer

Interest coverage ratio

Answer

The interest coverage ratio (EBIT divided by interest expense) directly measures how many times operating earnings cover interest obligations.

Question 5

Porter's generic strategy of 'differentiation focus' targets:

Accepted Answer

A narrow segment with unique product attributes

Answer

Differentiation focus combines a niche market scope with a differentiation competitive advantage, not broad market reach.

(CA) Chartered Certified Accountant Practice Test