1. Management accounting and strategy

Question 1

With the Evolution of data analytics for management accountants, what are the 5 types of uses over time?

Answer 1

Descriptive analytics
Diagnostic analytics
Predictive analytics
Prescriptive analytics
Adaptive analytics

Question 2

What are the main objectives of the treasury management?

Answer 2

Efficient and effective treasury management will ensure,
cash surpluses are invested
cash shortages are funded
interest rate and currency risks are managed
that appropriate liquidity is maintained.

Question 3

What are some examples of treasury functions day to day?

Answer 3

• • Acquiring the optimum level of finance (refer to Unit 15) for the organisation to meet its financial objectives.
• • Managing interest rate risk, foreign exchange risk and commodity risk in accordance with organisational policy.
• • Advising management on capital structure, and managing the organisation’s liquid assets and working capital (i.e. cash management).
• • Liaising with the organisation’s banks and credit agencies.
• • Investor relations.
• • Dividend policy and disbursement.
• • Share structure.
• • Mergers and acquisitions analysis.

Question 4

What are the four types of treasury structures?

Answer 4

Outsourced
Centralised
Decentralised
Combination of centralised and decentralised

Question 5

What are the three levels of strategies?

Answer 5

Corporate strategy
Business strategy
Functional strategy

Question 6

What are the four steps of the strategic planning process?

Answer 6

1. Decide what to achieve (vision/mission).
2. Find different ways of accomplishing it (by analysing the current environment and developing strategic alternatives).
3. Select the most appropriate alternatives and implement them (strategic selection and implementation).
4. Track the outcomes, taking corrective action or adapting the strategic plans (monitor and manage the implementation of strategy).

Question 7

What are two types of Internal Analysis that can be performed for the organisation in step 2 of the strategic planning process?

Answer 7

Value chains

RBV ( Resource-based view)

Question 8

What are four types of External Analysis that can be performed for the organisation in step 2 of the strategic planning process?

Answer 8

PESTELE
Porter’s five forces
Competitor analysis
Risk analysis

Question 9

Whats is the Resource-based view (RBV) Analysis and the five strategic characteristics of resources?

Answer 9

1. Identify the resources that the organisation possesses.
2. Apply a series of tests to each resource, to see whether or not the resource can form the basis of competitive advantage. Strategically important resources have five characteristics.
   (a) Valuable
   (b) Rare
   (c) Inimitable
   (d) Non-substitutable
   (e) Exploitable.

Question 10

What are the five forces that shape industry competition? (Porter’s Five Forces)

Answer 10

Bargaining power of suppliers
Threat of new entrants
Rivalry among existing organisations (industry competitors)
Threat of substitute products or services
Bargaining power of buyers

Question 11

Porter argues that to create competitive advantage in a particular industry, an organisation needs to adopt one of three generic strategies?

Answer 11

1. Cost leadership.
2. Differentiation.
3. Focus or niche (i.e. either cost leadership or differentiation, but only for a niche market). If neither it would be default be broad

Question 12

What are five types of business strategies for revenue?

Answer 12

1. Broad low-cost provider – appealing to a wide spectrum of customers by achieving a lower cost structure than its rivals.
2. Broad differentiation provider – by offering a point of difference around products or services that is different from its rivals and appeals to a broad spectrum.
3. Best-cost provider – by providing excellent value to customers by offering high-quality goods or services to customers at a lower cost profile than its rivals.
4. Focused strategy based on low costs – by achieving a lower cost profile than its rivals, and that is focused on delivery to a narrow band of customers.
5. Focused strategy based on differentiation – by offering a point of difference to customers that appeals to a narrow band of customers.

Question 13

What are the five stages of the ‘cycle of control’ when implementing a strategy?

Answer 13

Plan
Execute
Monitor
Evaluate
Correct

Question 14

What is a responsibility centre?

Answer 14

a business unit or division within an organisation. It is headed up by a manager who is responsible for the unit’s or division’s activities and results

Question 15

What are the four main categories of responsibility centres?

Answer 15

1. Cost centre – A responsibility centre in which a manager is responsible only for costs (e.g. assembly or finishing department).
2. Revenue centre – A responsibility centre in which a manager is responsible only for sales (e.g. marketing department).
3. Profit centre – A responsibility centre in which a manager is responsible for both revenues and costs (e.g. plant managers).
4. Investment centre – A responsibility centre in which a manager is responsible for revenues, costs and investments (e.g. divisions).

Question 16

What are the 5 fundamental principles of The Code (IESBA Code of Ethics for Professional Accountants)

Answer 16

Integrity
Objectivity
Professional competence and due care
Confidentiality
Professional behaviour