Question 1

Which TWO of the following are the main questions normally addressed by a mission statement?

Options :

A : How will we compete?

B : What are we providing?

C : How will we increase our market share?

D : What is our preferred future?

E : Why do we exist?

Answer: B,E

Question 2

Diversification is often pursued by firms that are in

Options :

A : high-growth industries with large positive cash flows.

B : regulated industries.

C : fragmented industries with no dominant firms.

D : mature industries with limited growth prospects.

Answer: D

Question 3

Which one of the following statements is true with respect to the role of the finance team in the strategic planning process?

Options :

A : The role of the finance team is exclusively focused on preparing the annual plan.

B : The finance team is responsible for the strategic plan.

C : The role of the finance team is varied and includes analyzing decisions, assuring cash availability in support of initiatives, and measuring performance.

D : The finance team evaluates the strategy but is not involved in strategic planning.

Answer: C

Question 4

Company A is a car manufacturer, it operates in many countries but its domestic market is in Country A.Company A is in the process of acquiring Company B, another company that is based in Country A. Company B specialises in (only) electric cars, which Company A does not currently produce.

Following the acquisition, Company A would grow in size by 20% in volume terms. Which THREE of the following would be MOST likely to be synergistic benefits to Company A of purchasing Company B?

Options :

A : Enhanced profit due to reduced competition in Country A, Reduction in staff costs due to elimination of duplicated administration roles, and A reduction in the volatility of cash flows due the diversification of its activities

B : Cash benefit by sale and leaseback of the acquired factories, Reduction in staff costs due to elimination of duplicated administration roles, and A reduction in the volatility of cash flows due the diversification of its activities

C : Cash benefit by sale and leaseback of the acquired factories, Reduction in staff costs due to elimination of duplicated administration roles, and Cost savings due to economies of scale in purchasing

D : Cost savings due to economies of scale in purchasing, Reduction in staff costs due to elimination of duplicated administration roles, and A reduction in the volatility of cash flows due the diversification of its activities

Answer: D

Question 5

Y has recently published the following statement:

‘Y aims to continually improve shareholder value, by providing the best customer service in the industry to customers.’

Which ONE of the following is this statement most likely to be?

Options :

A : A non-market strategy statement

B : A vision statement

C : A mission statement

D : An objective

Answer: C

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