All Flashcards
1
Q
What are the 4 things Strategy is concerned with?
A
1) Long term Direction
2) The environment
3) The resources it has
4) The return it makes to Shareholders
2
Q
What are Mintzbergs 5 Ps of Strategy?
A
1) Plan
2) Ploy
3) Pattern
4) Position
5) Perspecitve
3
Q
What are the 3 levels of strategy?
A
1) Corporate strategy
2) Business strategy
3) Functional (operational) strategy
4
Q
What 3 things does strategic management involve?
A
1) Decisions about the scope of a businesses activities
2) Long term direction
3) Allocation of resources
5
Q
What are the 4 key stages to the rational approach to strategic planning?
A
1) Strategic analysis
2) Strategic Choice
3) Implementation of chosen strategies
4) Review and Control
6
Q
What is bounded rationality?
A
The idea that managers do the best they can within the limits of their circumstances, knowledge and experience
7
Q
What are the 2 disadvantages of Formal Strategic Planning?
A
1) Bounded rationality
2) Prescriptive solutions for the long term
8
Q
How does the emergent approach address the 2 problems of formal strategic planning?
A
1) Accepting the final goal is unclear
2) Adapting to human needs
3) Evolving continously
9
Q
What are the 3 stages of the emergent approach?
A
1) Strategic analysis
2) Strategic choice and implementation
3) review and control
10
Q
What are the 7 key characteristics of Strategic Decision as per Johnson and Scholes?
A
1) They concern the scope of the businesses activities
2) They match a businesses activities to its capabilities and the environment in which it operates
3) They revolve around the allocation of resources
4) They set off a chain of lesser operational decisions
5) Based on the values and expectations of senior management
6) They dictate the long term direction the business takes
7) They lead to change in the business
11
Q
What are the 2 fundamental views of strategic planning?
A
1) Positioning based view
2) Resource based view
12
Q
What 4 models relate to the external analysis?
A
1) PESTEL
2) Industry life cycle
3) Porters 5 forces
4) Competitor analysis
13
Q
What 6 models relate to the internal analysis?
A
1) Resource Audit
2) Distinctive Competencies
3) Value Chain
4) Supply Chain
5) Product life cycle
6) BCG Matrix
14
Q
What model/technique relates to the corporate appraisal stage?
A
The SWOT Technique
15
Q
What are the 5 stages of Strategic analysis?
A
1) External Analysis
2) Internal Analysis
3) Corporate Appraisal
4) Missions, goals and objectives
5) Gap analysis
16
Q
What helps with strategic options generation?
A
1) Resource Based Strategies
2) Positioning based Strategies (Porters Generic and Ansoff)
17
Q
What does strategic options generation involve?
A
Coming up with new ideas on how to compete
18
Q
What are the 4 stages of Strategic planning?
A
1) Strategic Analysis
2) Strategic Choice
3) Strategic Implementation
4) Review and Control
19
Q
What are the 3 parts of Strategic Choice?
A
1) Strategic options generation
2) Strategic options evaluation
3) Strategy Selection
20
Q
What are the 3 types of strategy that a business will end up with after undertaking strategic choice?
A
1) Competitive Strategy (how it will compete)
2) Product market Strategy (where it will compete)
3) Institutional Strategy (method of growth)
21
Q
What are the 3 types of environment?
A
1) Physical
2) General (PESTEL)
3) Task (e.g. competitors, suppliers and customers.)
22
Q
What are the 4 S’s used to describe a static environment?
A
1) Static (slow environmental change)
2) Single (product/market)
3) Simple (technology)
4) Safe
23
Q
What are the 4 Ds of a Dynamic environment?
A
1) Dynamic (fast environmental change)
2) Diverse (many products/ many markets)
3) Difficult (due to the above)
4) Dangerous (ignoring the environment can be this)
24
Q
What are the 6 constituent parts of PESTEL?
A
1) Political
2) Economic
3) Social
4) technology
5) Ecology
6) Legal
25
What are the 4 stages of the industry life cycle?
1) Introduction
2) Growth
3) Maturity
4) Decline
26
What are the 4 types of competitor?
1) Brand Competitor
2) Industry Competitor
3) Generic Competitor (completely different product)
4) Form Competitor (e.g matches vs lighter)
27
What are the 4 competitor reaction profiles?
1) Laid back
2) Tiger
3) Selective
4) Stochastic
28
What is a position (resource) audit?
Part of the planning process which examines the current state of the entity. The 9m model are the relevant factors.
29
What are the 4 support activities in the supply chain?
1) Firm infrastructure (planning, finance and QC)
2) Technology Development
3) Human resource management
4) Procurement (resource input acquisition)
30
What are the 5 primary activities in the value chain?
1) Inbound Logistics
2) Operations
3) Outbound Logistics
4) Marketing and Sales
5) Service
31
What do linkages, in relation to the value chain do?
They connect the activities of the value chain
32
What is a star (BCG)?
High market growth and high market share
33
What is a Question mark (BCG)?
Low market share, but high market growth
34
What is a dog (BCG)?
Low market share and Low market growth
35
What is a cash cow (BCG)?
High market share, but low market growth
36
In relation to BCG, what does HOLD mean?
Maintain the market position
37
In relation to BCG, what does HARVEST mean?
Take maximum earning in the short term at the expense of long term development
38
In relation to BCG, what does DIVEST mean?
Release resources for use elsewhere
39
In relation to BCG, what does BUILD mean?
Invest to build market share
40
What model deals with Stakeholder analysis?
Mendelow's Power/Interest Matrix
41
What are Porters 4 Generic competitive strategies?
1) Cost leadership
2) Differentiation
3) Cost-focus
4) Differentiation focus
42
What are the 4 parts of Ansoffs Matrix?
1) Market Penetration
2) Product development
3) Market Development
4) Diversification
43
In Ansoff, a new product in a new market requires...
Diversification
44
In Ansoff, a new product in a current market requires...
Product development
45
In Ansoff, a current product in an existing market requires...
Market penetration
46
In Ansoff, an existing product in a new market requires...
Market development
47
What are Johnson and Scholes 3 criteria for a strategy?
1) Suitability (does it fit the firms operational circumstances)
2) Feasibility (can they actually do it?)
3) Acceptability (to stakeholders)
48
What are the 8 qualities of Good Information?
1) Accurate
2) Complete
3) Cost beneficial
4) User targeted
5) Relevant
6) Authoratative
7) Timely
8) Easy to use
49
What is the difference between data and information?
Information is data that is processed.
50
What are the 6 Criteria for effective information processing?
1) Complete
2) Accurate
3) Timely
4) Inalterability
5) Verifiability
6) Assessability
51
What is upside risk?
The risk that something will go right
52
What is the downside risk?
The risk that something will go wrong
53
What is pure risk?
Describes the possibility that something will go wrong
54
What is speculative risk?
Describes the possibility that something will go better than expected
55
What is risk appetite?
The extent to which a business is prepared to take on risks to achieve its objectives
56
What are the 3 types of attitude to risk?
1) A risk averse attitide
2) Risk Neutral
3) Risk seeking
57
Risk can be categorized in 2 fundamental ways. What are they?
Business and non business risk
58
What does business risk consist of?
1) Strategy
2) Enterprise
3) Product
4) Economic
5) technology
6) Property
59
What does financial risk consist of?
Credit and Market risk
60
What does operational risk consist of?
1) Process
2) People
3) Systems
4) Legal
5) Event risk
61
What is the difference between operational and business risks?
Operational risks face ALL businesses, whilst business risks are specific to that business.
62
What is risk exposure?
Exposure is the measure of the way in which a business is faced by risks.
63
What is risk volatility?
Volatility is how the factor to which a business is exposed is likely to alter.
64
What is risk impact?
Impact (or consequence) refers to measures of the amount of the loss if the
undesired outcome occurs.
65
What is risk probability?
Probability (or likelihood) means how likely it is that a particular outcome will
occur.
66
What is the formula for gross risk?
Gross risk = probability x impact.
67
What is risk management?
The identification, analysis and economic control of risks which threaten the assets or earning capacity of a business.
68
What are the 4 stages of the risk management process?
1) Awareness and identification
2) Analysis (assessment and measurement)
3) Response and control
4) Monitoring and reporting
69
What are the 4 responses to risk?
1) Avoidance
2) Reduction
3) Sharing
4) Acceptance
70
If you have a low risk impact and a low probability...
Accept the risk
71
If you have a high risk impact and a low probability...
Reduce the risk
72
If you have a low risk impact and a high probability...
Share the risk
73
If you have a high risk impact and a high probability...
Avoid the risk
74
What are the 3 main types of crisis?
1) Financial crisis (e.g. liquidity)
2) Public relations crisis
3) Strategic crisis (e.g. changes in the business environment)
75
In a disaster recovery plan, what is a standby procedure?
Some operations can be performed while normal
| services are disrupted.
76
In a disaster recovery plan, what is a recovery procedure?
Once the cause of the breakdown has been discovered or
| corrected.
77
In a disaster recovery plan, what is a personnel management procedure?
Policies to ensure that the recovery and standby procedures are implemented
properly.
78
Which type of company does not have perpetual succession?
Sole Trader
79
What is the difference between a joint venture and a strategic alliance?
A strategic alliance is informal
80
What are the limits of financial statements?
1) Conventionalised representation
2) Backward looking
3) Omission of non financial information
81
What is the difference between Information systems and Information technology?
Information systems is software, whilst Technology is hardware
82
What are the 7 types of Information Systems?
1) Transaction processing system (TPS)
2) Management information system (MIS)
3) Executive support system (ESS)
4) Decision support system (DSS)
5) Expert system
6) Knowledge work systems (KWS)
7) Office automation systems (OAS)
83
Its staff regularly use Word Processing software to help productivity.
Office automation system
84
Customers can fill out an online form that asks detailed questions depending on the make, model and age of their car. This allows them to create a report on the
car’s safety and estimated value.
Expert System
85
When a customer buys a product from DA the details of what they’ve bought and how much it cost are captured in the invoicing system.
Transaction processing system (TPS)
86
Board members can examine yearly sales by product line in a dashboard of high level graphs and figures
Executive support system (ESS)
87
Staff use video-conferencing software to help share knowledge when they’re on the road.
Knowledge work systems (KWS)
88
Middle management can see monthly sales by location and product using the
reporting software.
Management information system (MIS)
89
Finance uses spreadsheets to model what will happen to cash flows if sales
decrease by 10%.
Decision support system (DSS)
90
What are the 6 qualities of a secure information system?
1) Availability
2) Confidentiality
3) Integrity
4) Authenticity
5) Non-repudiation
6) Authorisation
91
What are the 6 controls for security information?
1) Prevention
2) Detection
3) Deterrance
4) Recovery procedures
5) Correction procedures
6) Threat avoidance
92
What is Data verification, as an integrity control?
Data verification involves ensuring data entered matches source
documents.
93
What is Data validation, as an integrity control?
Data validation involves ensuring that data entered is not incomplete or
unreasonable
94
What are the 5 checks for data validation?
1) Check digits
2) Control totals (Does the number of documents entered total match the number of documents the user has?)
3) Hash totals
4) Range Checks
5) Limit Checks
95
What is a logical access system?
Use of passwords
96
What are the 4 finance functions?
1) Recording financial transactions
2) Management accounting:
3) Financial reporting
4) Treasury management
97
What are the 2 fundamental qualitative characteristics of financial statements?
1) Relevance
| 2) Faithfulness of representation
98
What are the 4 types of information?
1) Planning Information
2) Operational information
3) Tactical information
4) Strategic information
99
What does planning information do?
it helps people involved in the planning process
100
What does operational information do?
It helps people carry out their day to day activities (e.g. how many operatives needed on one shift)
101
What does tactical information do?
It helps people deal with short term issues and opportunities
102
What does strategic information do?
Supports major long term decision making
103
What 6 things are management accounting responsible for?
1) Cost accounting
2) Budgeting
3) Management decision making
4) Performance measurement
5) Capital budgeting and decision making
6) Pricing
104
What 6 things are treasury management responsible for?
1) Cash budgets
2) Long term finance decisions
3) Managing Financial risk
4) Raising Investment finance
5) Managing of cash (includes FX)
6) Management of working capital
105
What 3 things are financial reporting responsible for?
1) Preparation of financial statements
2) Tax
3) Provision of information to external regulators
106
What 3 things do NFPs use to measure performance?
1) Economy (reduction of costs)
2) Effectiveness (measure of achievement)
3) Efficiency ( effective and minimum cost)
107
What is a critical success factor?
The products/features that are particularly valued by customers and thus what the firm needs to really excel at
108
What are the performance standards that are used to measure the achievement of the CSF?
Key Performance Indicators
109
Who issues the sustainability reporting guidelines?
The Global Reporting Initiative
110
What 3 categories does a GRI report have?
Economic, Social and Environmental
111
What are the 4 categories of a balanced scorecard?
1) Customer (how do they see us?)
2) Internal business processes (what are we good at?)
3) Innovation and learning (long term success factors)
4) FInancial
112
What are the 6 types of money market financial instruments?
1) Treasury Bills
2) Deposits
3) Certificates of deposits
4) Gilts
5) Bonds
6) Commerical Paper
113
What is the difference between equity and debt?
Equity is from shareholders, debt is from loans
114
In terms of risk and return, what do debt holders face?
Debt holders face lower risk, but lower returns.
115
In terms of risk and return, what do equity holders face?
Equity holders face higher risk, but higher returns.
116
What is working capital?
Working capital are all the current assets and liabilities that are used for trading (e.g. inventories)
117
What is the aggressive method of financing current assets?
Short term finance (e.g. overdrafts) being used to pay for all of the fluctuating current assets and some of the permanent assets.
118
What is the defensive method of financing current assets?
Short term finance only covers a small part of the fluctuating current assets. Long term finance covers all of the permanent assets and some of the fluctuating assets.
119
Why is short term finance cheaper than long term finance?
1) Long term finance is more risky, so higher interest rates
| 2) Long term finance may not allow early repayment
120
What are the 2 risks of short term finance?
1) Renewal risk (bank could refuse)
| 2) Interest rate risk
121
What are the 4 motives that a business would want to hold onto cash?
1) Transactions motive (e.g. paying wages)
2) FInance motive (e.g. interest payments)
3) Precautionary motive (rainy day fund)
4) Investment motive
122
What are the 4 benefits of financial intermediation?
1) Small amounts deposited by savers can be pooled to provide larger loan packages to businesses
2) Short term savings can be transferred to long term borrowing
3) Search costs for firms seeking loan reduced
4) Risk is reduced for customers as their money not tied up to one borrower.
123
What is the clearing mechanism?
This is the mechanism which determines the interval between when money is paid into the bank and when it is usable.
124
What are the 5 clearing mechanisms?
1) General clearing (slow)
2) Electronic fund transfer (e.g.card readers)
3) BACS (quick-usually used for salaries)
4) Clearing House Automated Payment System (CHAPS-for large amounts. Quick).
5) SWIFT (international, quick)
125
What are the 2 types of banks?
Primary and secondary banks
126
What is monetary stability?
To do with macroeconomics
127
What is financial stability?
To do with reducing systemic risk
128
What are the 2 entities that monitor financial stability?
1) Financial Policy Commitee (concerned with large scale)
| 2) Prudential Regulation Authority (concerned with individual entities)
129
What are the 4 relationships between customer and bank?
1) Receivable / Payable
2) Bailor / Bailee
3) Principal / Agent
4) Mortgagor / Mortgagee
130
What are marketable securities?
Short term, highly liquid investments that can be easily converted into cash.
131
What are the 6 main types of financial instruments?
1) Treasury Bills
2) Deposits
3) Certificates of deposit
4) Gilts
5) Bonds
6) Commerical Paper
132
What are the main points regarding treasury bills?
1) Government backed debt
2) Large (50k +)
3) Run for 3 months
4) Low risk
133
What are the main points regarding deposits?
1) Money customers have given to banks
| 2) Higher risk/ return (than T-bills)
134
What are the main points regarding CDs?
Same as deposits but large (50k+), fixed term and they are also tradeable. Deposits are not.
135
What are the main points regarding Gilts?
Very similar to T-bills, but they are longer term. Still low risk and return.
136
What are the main points regarding Bonds?
Company debt. High risk/return
137
What are the main points regarding Commercial Paper?
Same as bonds, but only issued by large companies
138
What are the 6 main Capital markets?
1) Stock Market
2) Banking System
3) Bond Markets
4) Leasing
5) Debt factoring
6) International markets
139
What are the 3 sources of equity finance?
1) Retained Earnings
2) Rights issue
3) New Issue of shares
140
What are the 4 factors to consider when making rights issue?
1) Issue costs (admin)
2) Shareholder reactions
3) Control
4) Unlisted companies (can't easily trade shares)
141
What are the 4 main sources of debt finance?
1) Overdrafts
2) Debt factoring
3) Loan stock (loans)
4) Leasing
142
What is the coupon rate?
Interest rate
143
What is the redemption value of a loan
Extra value. If a loan is issued at 10k, but the borrower has to repay 15k
144
What is the redemption date of the loan?
When the loan is repayable
145
What are the 2 types of lease?
FInance Lease and Operating Lease
146
What are the 3 ways a small business can get money?
1) Through Business Angels
2) Venture Capitalists
3) Through AIM
147
What are the 3 ways in which exporters can reduce their risk?
1) Bill of Exchange
2) Letters of Credit
3) Export Credit Insurance
148
What 3 things do professional accountants do?
1) They measure (e.g. asset value)
2) They make disclosures
3) They help stakeholders make decisions
149
What are the 2 major areas of work for an accountant?
1) FInancial reporting
| 2) Assurance
150
Who sets the international accounting standards?
The IASB (International Accounting Standards Board)
151
In addition to the standard requirements, what extra requirements do public practice accountants need?
1) Practicing Certificate
2) Code of Ethics
3) Professional Indemnity Insurance
152
What are the 4 reserved areas of practice?
1) Statutory Audit
2) Investment business
3) Insolvency
4) Probate (dealing with wills)
153
What are the 2 approaches to ethical principles?
1) Compliance based (rules based)
| 2) Ethics based (principle based)
154
What are the 5 fundamental ethical principles of the ICAEW?
1) Confidentiality
2) Objectivity
3) Professional competence and due care
4) Integrity
5) Professional behaviour
155
Which body establishes a code of ethics?
International Federation of Accountants (IFAC)
156
Which body is the highest in the UK?
The Consultative Committee of Accountancy Bodies (CCAB).
157
Which are the 5 members of the CCAB?
1) ICAEW
2) ICAS
3) ICAI (Ireland)
4) ACCA
5) CIPFA
158
What does the ICAEW stand for?
Institute of Chartered accountants in England and Wales
159
What does ICAS stand for?
Institute of Chartered accountants of England and Wales
160
What does ICAI stand for?
Institute of Chartered accountants of Ireland
161
What does ACCA stand for?
Association of chartered certified accountants
162
What does CIPFA stand for?
Chartered Institute of public finance and accountancy
163
What is the aim of IFAC?
IFAC's aim is to protect the public interest. It does this by providing best practice guidance for professional accountants.
164
What 4 things should the accountancy regulation NOT do?
1) Protect vested interests from competition
2) Be for personal gain
3) Be disproportionate to the benefit gained
4) Distort competition
165
What are the 4 methods of regulation?
1) Government legislation
2) Delegated legislation (via regulators)
3) Self regulation
4) A mix of the above
166
Who are the key competitors of an effective oversight mechanism?
1) Government
2) Regulators
3) Members of the profession
4) The public
167
Who is the head of the Oversight mechanism?
The Professional Oversight Board. This is an organ of the FRC
168
What are the 3 main roles of the Professional Oversight Board?
1) Independent oversight
2) Statutory oversight of the supervision of the auditing profession
3) Statutory monitoring of the quality of the auditing
169
Where does the POB not have statutory powers?
In non audit areas
170
For non audit areas, how do the CCAB bodies need to respond to the POB's recommendations?
They need to consider them carefully, and either implement them in a reasonable time, or give a reason in writing why they wont.
171
For audit areas, how do the CCAB bodies need to respond to the POB's recommendations?
They need to do what they are told. Here, the POB has statutory powers. It can refer matters to the Professional Discipline and CRR.
172
What 5 things does the FRC do?
1) Setting standards (Corporate governance, financial reporting etc.)
2) Monitor and review the quality of audit and financial reporting
3) Regulation of the audit profession
4) Overseeing self regulation in the accountancy/audit/actuarial profession
5) Act as the ultimate disciplinary body
173
What are the 2 main divisions under the FRC?
The Conduct Committee and the Codes and Standards Committee
174
Which divisions are under the FRC's Conduct Committee?
1) Professional Oversight
2) Professional Discipline
3) Corporate reporting review
4) Audit Quality review
175
Which divisions are under the FRC's Codes and Standards Committee?
1) Actuarial Policy
2) Audit and Assurance
3) Accounting and reporting policy
4) Corporate governance
176
What does the Accounting and Reporting Policy (ARP) do?
Make changes to the Accounting Standards
177
What does the Audit and Assurance (AA) under the FRC do?
They deal with standards for audit
178
What does the Corporate Reporting Review (CRR) under the FRC do?
Looks at situations where big firms have not followed the requirements of the companies act.
179
What does the Professional Discipline (PD) under the FRC do?
Investigate any allegations of misconduct, where it is considered to be a public interest.
180
What does the UKLA stand for?
The UK Listing Authority
181
What is the role of the Financial Ombudsmen?
They settle disputes between providers of financial services and their customers
182
The ICAEW have their own disciplinary/complaints procedures. Who is responsible for this?
The Professional Standards Department (PSD)
183
What are the 3 bye laws which if broken mean you can bring a claim to the ICAEW?
1) Breaching a regulation
2) Departing from guidance
3) Bringing discredit to the ICAEW
184
What is the procedure for the ICAEW complaints?
1) Conciliation (try and mediate things)
2) Investigation (if conciliation doesn't work)
3) Disciplinary proceedings (if the investigation reveals something)
185
What is the agency problem?
The idea that the actions of the agent may not be congruent with the goals of the principal. The agent would be the managers of the company. The principal would be the shareholders.
186
What does corporate governance seek to do?
Corporate governance seeks to protect the stakeholders of a company against some of the actions of that company
187
What are the 4 broad perspectives on Corporate governance?
1) The Corporate Perspective
2) The Public Policy Perspective
3) The Stakeholder Perspective
4) The Stewardship Perspective
188
With regards to the Corporate Perspective on Corporate governance, how can you identify them?
This perspective cares about the shareholders. It seeks to maximise wealth
189
With regards to the Public Policy Perspective on Corporate governance, how can you identify them?
This perspective cares about everyone, especially the public at large.
190
With regards to the Stakeholder Perspective on Corporate governance, how can you identify them?
It cares about Stakeholders of the company only
191
With regards to the Stewardship Perspective on Corporate governance, how can you identify them?
It only cares about the company (as a separate legal entity) itself.
192
What are the 2 broad types of financial systems?
1) Bank based systems
| 2) Market based systems
193
What is a bank based financial system?
This is where households put their money into banks, rather than physical investments. This means that the banks have a lot of power (and are heavily regulated). Most businesses are financed by banks and there is heavy integration. Markets are VOLATILE as businesses are financed by debt from the bank, and thus interest payments need to be paid regardless of profit fluctuations. It is therefore more risky.
194
What is a market based financial system?
Households bear more risk than in the bank based system. Therefore there is more of a market for physical assets, which means ultimately that people put less money in the bank, making banks less important. Equity finance is more important than bank debt finance.
195
Is the UK Corporate governance code based in law?
No, purely guidance
196
With regards to the UK Corporate governance code, what is the comply or explain feature?
A company must make a disclosure in its financial statements with regards to if they have complied with the code. If they haven't they must explain why, and then it is up to the shareholders to decide if they agree.
197
What are the 5 main principles for companies according to the UK Corporate governance code?
1) Leadership
2) Board effectiveness
3) Accountability/Audit
4) Renumeration
5) Investor relationships
198
What is the board of a company made up of?
1) Executive directors
| 2) Non executive directors
199
What proportion of the board should NEDs make up?
50% at least.
200
For a FTSE 350 company, how often do members of the board need to be re-elected?
Every year
201
For non FTSE 350 companies, when should members of the board be re-elected?
The first AGM after their appointment, and every 3 years after that.
202
When should NEDs be re-elected?
Every year, if they have served for more than 9 years.
203
What are the 3 committees supporting corporate governance?
1) Audit committee
2) Renumeration committee
3) Nomination committee
204
What is the audit committee?
Responsible for the review of the financial statements. Made up of 3 NEDs (2 in smaller firms). These guys deal with the external auditors (e.g. reviewing their independence)
205
What is the remuneration committee?
Responsible for how much the directors should get paid. Usually consists of 3 NEDs (2 for smaller firms)
206
What is the nomination committee?
Responsible for recommending the appointment of NEDs and EDs. Must have at least 3 members, the majority of which should be NEDs
207
What are the 2 types of board structures?
1) Unitary Board
| 2) Dual Board
208
What are the 2 components of a dual board?
1) Management board (EDs)
| 2) Supervisory Board (NEDs)
209
What is the key difference between the unitary board system and the dual board system?
Dual board system is split into 2 components, and the NEDs are elected by both the shareholders AND employees.
210
What is the goal of internal controls?
To help a company achieve its objectives
211
In what 3 ways does Internal controls help a company achieve its objectives?
1) Effective and efficient operations
2) Reliable Financial reporting
3) Compliance with applicable laws and regulation
212
In order to maintain a sound system of internal control, what does the Governance code recommend?
Use of the Turnbull Guidance
213
What 6 things does an internal control system help a company do?
1) Operate effectively and efficiently
2) Respond appropriately to RISKS
3) Safeguard assets
4) Liabilities are identified and managed
5) Ensure the quality of internal and external reporting
6) Compliance with applicable laws and regulation
214
What is the stewardship code?
This applies to institutional investors (e.g. pension funds).
215
What are the 7 principles of the stewardship code?
1) Publicly disclose how they are going to do their job
2) How they will manage their conflicts of interest
3) Monitor the companies they invest in
4) Guidelines on escalation
5) Working collectively with other investors
6) Clear policy on voting
7) Periodic reporting on their stewardship
216
What are the 5 Nolan Principles?
IOOAH
1) Integrity
2) Objectivity
3) Openness
4) Accountability
5) Honesty
217
What are Phillipa Foster Back's 5 business values?
FRTTT
1) Fairness
2) Responsibility
3) Trust
4) Transparency
5) Truth
218
What are Phillipa Foster Back's 5 attributes and behaviors of ethical leaders?
FACHO
1) Fair mindedness
2) Ability to listen
3) Courage
4) Honesty
5) Openness
219
What is the EMS?
EMS stands for the environmental management systems. It consists of a set of procedures for compliance with environmental policy objectives.
220
What are Neil Cowans 4 key aspects of business ethics?
TROT
1) Transparency
2) Real acceptance of responsibility
3) Openness
4) Trust
221
Which act protects whistleblowers?
The Public Interest Disclosure Act
222
What 5 factors determine demand?
1) Price
2) Inter-related goods (e.g. substitutes and complements)
3) Income levels
4) Fashion and expectation
5) Income distribution
223
What 5 factors determine supply?
1) Price (that they can get for the goods)
2) Prices of other goods
3) Prices of related goods
4) Costs of making the goods
5) Changes in technology
224
What is equilibrium price?
The price of a good at which the volume demanded by consumers and the volume businesses are willing to supply are the same.
225
What is the formula for the price elasticity of demand?
Change in Quantity (%) / Change in Price (%)
226
When PED is less than 1, what does this mean?
Inelastic demand
227
When PED is more than 1, what does this mean?
Elastic demand
228
When PED is 1, what does this mean?
Unit elasticity
229
What are the 6 factors influencing PED for a good?
1) Availability of substitutes
2) Time horizon
3) Competitors pricing
4) Luxuries and necessities
5) % of income spent on a good
6) Habit forming goods
230
What is positive price elasticity of demand?
Where increasing price, actually increases demand.
231
What 2 types of goods reflect a positive PED?
1) Giffen good
| 2) Veblen good
232
What is income elasticity of demand?
How much demand changes when income rises
233
What is the equation for income elasticity of demand?
% Change in Quantity demanded / % Change in household income
234
What is cross elasticity of demand?
How much the demand for one good changes in response to a change in price of another good
235
What is the equation for cross elasticity of demand?
% change in quantity of good A demanded / % change in the price of good B
236
What is Price elasticity of supply?
A measure of the responsiveness of supply to a change in price
237
What is the equation for Price elasticity of supply?
% change in quantity supplied / % change in price
238
If income elasticity is greater than 1, what type of good is this?
Luxury good
239
If income elasticity is between 1 and 0, what type of good is this?
Normal good
240
If income elasticity is lower than 1, what type of good is this?
Inferior good
241
When cross elasticity is positive, two goods are...
Substitutes
242
When cross elasticity is negative, two goods are...
Complements
243
When cross elasticity is 0, two goods are...
Unrelated
244
What are the 5 types of market structure?
1) Perfect competition
2) Monopoly
3) Monopolistic competition
4) Oligopoly
5) Duopoly
245
What are the 5 characteristics of Perfect competition?
1) Many small buyers and sellers
2) Low barriers to entry
3) Perfect information
4) Homogenous products
5) No collusion
246
What kind of profit does perfect competition result in?
Normal profit only
247
In regards to price, what are suppliers in a Perfect Competition market?
Price takers-they cannot change the price.
248
What are the 3 characteristics of Monopoly structure?
1) One (main) supplier
2) Many buyers
3) High Barriers to entry
249
What kind of profit does a monopoly structure result in?
Supernormal profits
250
What are the 6 characteristics of Monopoly competition?
1) Many buyers and sellers
2) Some product differenitation
3) Branding (in order to achieve differentiation)
4) Some customer loyalty
5) Low barriers to entry
6) Significant advertising
251
What kind of profit does a monopoly competition result in?
Normal profits in the long run
252
What are the 3 arguments in favour of the free market (perfect competition)?
1) Efficient
2) Free markets are impersonal (rational)
3) Efficient allocation of economic resources (more efficient than the gvt)
253
What 4 factors can cause market failure?
1) Market imperfection
2) Externality
3) Public goods
4) Economies of scale (leads to monopolies)
254
What are the 4 factors of production?
1) Land
2) Labour
3) Capital
4) Entrepreneurship
255
What are the 4 roles the government has in the national economy?
1) Produces certain goods (public goods)
2) Purchases certain goods
3) Invests by purchasing capital goods
4) Makes transfer payments from one section to the economy from another
256
In a recession, what is the government likely to do?
Boost overall demand
257
In a boom, what is the government likely to do?
Dampen overall demand
258
What are the two types of inflation?
Demand pull Inflation and Cost Push Inflation
259
What are the 2 types of macroeconomic policies?
1) Demand side
| 2) Supply side
260
What does demand side macroeconomic policy include?
1) Monetary Policy (interest rates)
| 2) Fiscal Policy (tax and spending)
261
What are the 2 main reasons regulation is put in place?
1) Address market failure
| 2) Deal with the problem of irreversibility (sustainability)
262
What are the 4 responses businesses can have to regulation?
1) Entrenchment (no response)
2) Mere compliance
3) Full compliance
4) Innovation (Porter hypothesis)
263
Which act directly regulates the amount of competition in a market?
Competition Act 1998
264
Which chapter of the act deals with anti competitive agreements?
Chapter 1, Article 81
265
Which chapter of the act deals with abuse of a dominant position?
Chapter 2, Article 82
266
Which act made Cartel Activity a criminal act?
Enterprise Act 2002
267
Which government body investigates breaches of the Competition Act/ Enterprise Act?
The Office of Fair Trading (OFT)
268
Which government body promotes competition?
Competition and Markets Authority (CMA)
269
What are the 5 personal qualities of accountants?
1) Reliability
2) Responsibility
3) Timeliness
4) Courtesy
5) Respect
270
The FRCs UK corporate governing code forms part of the...
UKLA disclosure rules and transparency rules. Formely the Listing rules
271
What are the 4 types of manager?
1) Line Manager
2) Functional Manager
3) Staff Manager
4) Project Manager
272
According to Mintzberg, what are the 3 managerial roles?
1) Informational
2) Interpersonal
3) Decisional
273
What does the managerial informational role involve?
The informational role (checking data received and passing it on to relevant people, as well as acting as the 'spokesperson' for his or her team).
274
What does the managerial interpersonal role involve?
The interpersonal role (acting as leader for his or her own team, and linking with the managers of other teams).
275
What does the managerial decisional role involve?
It is in this role that managers actually 'do' what we perceive as managing ie: allocate resources, negotiate, solve problems and act as an
entrepreneur.
276
Likerts authoritative – participative continuum identified 4 leadership styles. What are they?
1) Exploitative-Authoratative
2) Benevelent-Authoratitive
3) Consultative
4) Participative
277
What are Morgans 8 organisational metaphors?
1) Machine
2) Organism
3) Brain
4) Culture
5) Political System
6) Psychic prison
7) Flux and transformation
8) An instrument of domination
278
What are Taylors three basic assumptions about human behaviour at work?
1) People are rational economic animals concerned with maximising their economic gain
2) People respond as individuals, not groups
3) People can be treated in a standardised fashion, like machines
279
What is McGregors model?
Theory X and Theory Y
280
In McGregors model, what does Theory X mean?
1) Individuals dislike work and avoid it where possible
| 2) Coercion, control and punishment are therefore needed
281
In McGregors model, what does Theory Y mean?
1) Physical and mental effort in work is as natural as rest or play
2) Commitment to the objective is driven by rewards
282
What are the 5 characteristics of a group?
1) Common sense of identity
2) Common aim or purpose
3) Existence of group norms (ie expected/accepted standards of behaviour)
4) Communication within the group
5) The presence of a leader
283
What are Tuckmans 4 stages of group development?
1) Forming
2) Storming
3) Norming
4) Performing
284
What are Belbin's 8 team roles?
1) Leader
2) Shaper
3) The Plant
4) The Evaluator
5) The resource-investigator
6) Company worker
7) Team worker
8) Finisher
285
What is the difference between the hard and soft approach to HRM?
The hard approach emphasises the resources element of HRM. The soft approach emphasises the human element of HRM.
286
What are Harvard 'Four Cs' model of HRM?
1. Commitment
2. Competence
3. Congruence
4. Cost-effectiveness
287
What are the 4 orientations?
1) Marketing orientation
2) Sales Orientation
3) Production Orientation
4) Product Orientation
288
What is an FMCG?
Fast moving consumer good
289
What are the 4P's of the marketing mix?
1) Product
2) Price
3) Promotion
4) Place
290
What are the 3 elements of a product?
1) Basic (or core) product – a car
2) Actual product – a Ford Focus
3) Augmented product – Ford Focus with 0% finance or extended warranty.
291
What are the four main types of promotion ('the communication mix')?
1) Sales promotion (such as 'buy one, get one free' offers)
2) Advertising
3) Public relations
4) Personal selling
292
What are the key variables that operation management is concerned with?
1) Demand for goods and services
2) Resources
3) Capacity of eg machinery and people
4) Inventory levels
5) Performance of the process which creates the goods or services
293
What are the 4 elements of a procurement mix?
1) Quantity
2) Quality
3) Price
4) 'Lead time':
294
What are the 5 types of business structure?
1) Simple structure
2) Machine bureaucracy
3) Professional bureaucracy
4) Divisionalised
5) Adhocracy
295
What are the main influences on a business’s pricing? are
1) Costs
2) Competitors
3) Customers
4) Corporate objectives
