CPA CFE Strategy and Governance 3

Question 1

What is a key characteristic of a blue ocean strategy?

Accepted Answer

Creating uncontested market space by offering innovative value that makes competition irrelevant

Answer

Blue ocean strategy involves creating new market space where competition is irrelevant, rather than competing in crowded existing markets (red oceans). It focuses on value innovation — simultaneously pursuing differentiation and low cost to open up new demand.

Question 2

Under Canadian securities regulation, what is the role of National Instrument 52-109?

Accepted Answer

It requires CEO and CFO certification of annual and interim filings, including internal controls over financial reporting

Answer

NI 52-109 requires the CEO and CFO of reporting issuers to personally certify the accuracy of financial statements and the effectiveness of internal controls over financial reporting and disclosure controls and procedures, similar to US SOX requirements.

Question 3

In strategic management, what does the value chain analysis identify?

Accepted Answer

The primary and support activities that create value and can provide competitive advantage

Answer

Value chain analysis, developed by Michael Porter, breaks down a firm's activities into primary activities (inbound logistics, operations, outbound logistics, marketing and sales, service) and support activities (firm infrastructure, HRM, technology, procurement) to identify sources of competitive advantage.

Question 4

What is the primary objective of a PESTEL analysis?

Accepted Answer

To scan the macro-environment for Political, Economic, Social, Technological, Environmental, and Legal factors affecting the organization

Answer

PESTEL analysis systematically examines the macro-environmental factors that influence an organization: Political (government policy), Economic (growth, inflation), Social (demographics, culture), Technological (innovation), Environmental (sustainability), and Legal (regulations).

Question 5

What is the fiduciary duty of a director under Canadian corporate law?

Accepted Answer

To act honestly and in good faith with a view to the best interests of the corporation

Answer

Under the Canada Business Corporations Act (CBCA), directors owe a fiduciary duty to act honestly and in good faith with a view to the best interests of the corporation. This includes exercising the care, diligence, and skill of a reasonably prudent person.

CPA CFE Practice Test

CPA CFE Practice Test

CPA CFE Strategy and Governance 3